REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Global Smart Capital Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Global Smart Capital Corp. (the Company) as of November 30, 2017, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the year ended November 30, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2017, and the results of its operations and its cash flows for the year ended November 30, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2 to the financial statements, the Company has recurring losses, negative working capital and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. If the Company is unable to obtain financing, there could be a material adverse effect on the Company.
Haynie & Company
Salt Lake City, Utah
April 20, 2018
We have served as the Company’s auditor since 2018.
(the accompanying notes are an integral part of these audited financial statements)
(the accompanying notes are an integral part of these audited financial statements)
(the accompanying notes are an integral part of these audited financial statements)
(the accompanying notes are an integral part of these audited financial statements)
NOTES TO AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 2017 AND 2016
NOTE 1 - ORGANIZATION AND OPERATIONS
Global Smart Capital Corp (the “Company”) was incorporated in Nevada on September 18, 2014 (“Inception”) as Todex Corp. and changed its name, on February 2, 2017, to Global Smart Capital Corp. On April 13, 2016, and on December 30, 2016 through changes of control new management was appointed, in February 2017, and is developing a new business plan for the Company.
NOTE 2 - GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company incurred a net loss of $141,333 during the year ended November 30, 2017 and as of the same date had an accumulated deficit of $216,321 compared to a net loss of $59,937 and an accumulated deficit of $74,988 for the year ended November 30, 2016. If the Company is unable to generate profits and is unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or private placement of common stock.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”), applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company’s year-end is November 30.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
GLOBAL SMART CAPITAL CORP
NOTES TO AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 2017 AND 2016
Cash and Cash Equivalents
The majority of cash is maintained with a major financial institution in the United States. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Fair value of Financial Instruments
The carrying value of cash, deposits, accounts payable, loan from related party and revenue approximates their fair value due to their short-term maturity.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Revenue Recognition
The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Basic and Diluted Earnings (Loss) Per Shar
e
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company had no potentially dilutive debt or equity instruments issued and outstanding during the year ended November 30, 2017 and therefore basic and diluted earnings (loss) per share are equal.
GLOBAL SMART CAPITAL CORP
NOTES TO AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 2017 AND 2016
Recently Adopted Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 4 – STOCKHOLDERS’ EQUITY
On August 21, 2017 the Company increased the authorized common stock to 500,000,000 common shares and changed its par value from $0.001 to $ 0.0001 per share. The 10,000,000 preferred shares, with a par value of $0.0001 per share remained unchanged. As of November 30, 2017, and November 30, 2016, the Company had 12,519,064 and 8,580,000 common shares issued and outstanding, respectively. As of the same dates there were no preferred shares issued.
On September 28, 2017, the Company issued 50,000 restricted common shares, to five individuals for services provided, recorded at a cost of $0.10 per share or a total of $5,000.
On November 28, 2017, the Company issued 889,064 restricted common shares to two hundred and forty seven individuals for services provided, recorded at a cost of $0.10 per share or a total of $88,906.
During the year ended November 30, 2017, the Company issued, 3,000,000 restricted common shares recorded at a cost of $0.01 per share for a total cost of $30,000, for consulting services over a six pmonth period. $22,295 was recorded as an expense during the year ended November 30, 2017 and $7,705 was recorded as a prepaid expense at November 30, 2017.
NOTE 5 – RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
On April 13, 2016, in connection with the purchase and sale of a majority of the Company’s outstanding shares of common stock, Vladislav Emolovich resigned from all positions held, after appointing Dominic Chappell as the Company’s sole officer and director.
On May 6, 2016, and subsequently through November 30, 2016, the, then, current sole Officer and Director made unsecured, non-interest bearing cash advances, to pay operating costs, to the Company, in the amount of $35,043. The entire balance remained unpaid at November 30, 2016.
GLOBAL SMART CAPITAL CORP
NOTES TO AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 2017 AND 2016
On December 30, 2016, our majority shareholder, Retail Acquisitions Limited, sold its entire interest in the company, consisting of 6,000,000 shares of our common stock, in three separate transfers of 2,000,000 shares each, to three investors: Ranxu Fu, Mak Shee Fu and Roux and Sons Hk. Ltd. The shares sold by Retail Acquisitions Limited constitute 69.93% of the 8,580,000 shares of common stock issued and outstanding.
On February 6, 2017, Dominic Chappell, who subsequently resigned on February 22, 2017, appointed the following additional directors and officers:
Mr. Johannes Petrus Roux, Director, Chairman and CEO
Mr. Mak Shee Fu, Director
Mr. Ranxu Fu, Director
On July 17, 2017 the Company issued 3,000,000 common shares recorded at a cost of $0.01 per share for a total of $30,000, to a related party for consulting services, to be provided over a six month period.
During the year ended November 30, 2017, the Company President and Director made unsecured, non-interest bearing cash advances, to pay operating costs, to the Company, in the amount of $26,879, which amount remained unpaid at November 30, 2017.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Contractual
The new management has provided, at no cost, office space on an as needed basis.
NOTE 7 – INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. .Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. For the years ended November 30, 2017 and 2016 we used 34% as an effective rate. The Tax Cuts and Jobs Act was enacted on December 22, 2017 which reduced the U.S.corporate statutory tax rate from 35% to 21% for the year ended November 30, 2018.
Net deferred tax liabilities consist of the following components as of November 30, 2017:
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
NOL Carryover
|
|
$
|
34,041
|
|
|
$
|
25,496
|
|
Valuation allowance
|
|
|
(34,041
|
)
|
|
|
(25,496
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
GLOBAL SMART CAPITAL CORP
NOTES TO AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 2017 AND 2016
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended November 30, 2017 due to the following:
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Book Income
|
|
$
|
(48,053
|
)
|
|
$
|
(20,379
|
)
|
Stock for Services
|
|
|
39,508
|
|
|
|
-
|
|
Other differences
|
|
|
-
|
|
|
|
(189
|
)
|
Valuation allowance
|
|
|
8,545
|
|
|
|
20,568
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
At November 30, 2017, the Company had net operating loss carry forwards of approximately $100,100 that may be offset against future taxable income from the year 2018 through 2037. No tax benefit has been reported in this November 30, 2017 financial statement since the potential tax benefit is offset by a valuation allowance of the same amount. Because of the changes in ownership, net operating loss carry forward may be limited as to its use in future years. Income tax years from November 30, 2014 remain subject to examination.
NOTE 8 – SUBSEQUENT EVENTS
On January 22, and February 15, 2018 the Company issued, respectively, for services rendered, 488,359 and 360,591 common restricted shares.
On January 24, 2018 Johannes Roux and Mak Shee Fu resigned from their positions as Co-chairmen and Lou Yunfeng was elected as Chairman and CEO.