ITEM 1. BUSINESS
The Company was incorporated under the laws of the State of Nevada on November 25, 2014, at which time it acquired a certain all-natural product based skincare formula to be used with a regimen of procedures using home-care micro-needle devices to remove unwanted tattoos through a do-it-yourself program from Kyle Markward, our former president. The Company at this time believes its skincare formula along with the recommended usage of standard home-care use micro-needle devices in an orderly and weekly regimen of procedures can be an acceptable alternative to laser or caustic chemical process, an all-natural tattoo removal product. Mr. Markward resigned from his positions as an officer and director of the Company in connection with the change in control described below. Mr. Markward’s resignation was not due to any disagreements of any nature with the Company.
The Company issued 3,000,000 (30,000 post reverse stock split effective February 27, 2017, see Note 1 to the Company’s financial statements) shares of its common stock to Mr. Markward at inception in exchange for organizational services incurred upon incorporation. Following our formation, we issued an additional 1,000,000 (10,000 post reverse stock split) shares of our common stock to Mr. Markward, in exchange for a certain all-natural product based formula to be used with a regimen of home-care micro-needle devices to remove unwanted tattoos through a DIY or do-it-yourself program. (See Note 1 to the Company’s financial statements.).
On October 13, 2016, a change in control of the Company occurred by virtue of the Company's largest shareholder, Kyle Markward, selling 4,000,000 (40,000 post reverse stock split) shares of the Company’s common stock to James Oliver, an individual residing in Florida, which represents 50% of the Company’s total issued and outstanding shares of common stock. Such 4,000,000 (40,000 post reverse stock split) shares sold represent all of the shares of the Company’s common stock owned by Mr. Markward.
Effective October 13, 2016, the Board of Directors (the “Board”) of the Company appointed Mr. James Oliver as President, Secretary and as a member of the Company’s Board. On the same day the Board elected Mr. Benjamin Teare as the Company’s Chief Operations Officer.
With the change in control certain liabilities of the Company were forgiven and/or paid for on behalf of the Company by our founder, former president and chief executive officer, Mr. Markward. Total liabilities approximated $165,000 which included legal fees owed to our legal counsel of $2,500. On October 18, 2016, the Company, reported on a Form 8-K that it had filed Articles of Merger with the Nevada Secretary of State, whereby it entered into a statutory merger with its wholly-owned subsidiary, with the effect being that the Company changed its name to from “Remove-By-You, Inc.” to “Gain Cities Limited” (the “Name Change”).
The Company is a development stage company and has no financial resources. We have not established or attempted to establish a source of equity or debt financing. Our independent registered public accounting firm has included an explanatory paragraph in their report emphasizing the uncertainty of our ability to remain a going concern.
Business
In connection with the change in control, the Company has decided to enter into the business of sports betting arbitrage and expects to sell analytics used by customers in placing legal bets on sporting events.
ITEM 1A.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES
The Company operates out of a virtual office, with a mailing address of 950 NW 53rd St., Suite 337, Miami, Florida. The Company’s officers work from their respective virtual offices, which may be where they are housed at the time.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market for our Common Stock
Our common stock is not listed on any stock exchange. Although our common stock is currently quoted on the OTCQB under the symbol “GCTY,” there is no established public market for shares of our common stock, and only one trade of our common stock has taken place. Any quotations reflect interdealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. We obtained the GCTY symbol on November 23, 2016.
On October 19, 2016, 500 (5 post reverse stock split) shares of our common stock sold for a price of $4.50 per share ($450 post reverse stock split).
Shareholders of Record
As of April 30, 2017, an aggregate of 8,000,000 (80,000 post reverse stock split) shares of our common stock were issued and outstanding and owned by 8 shareholders of record.
Recent Sales of Unregistered Securities
None.
Repurchase of Equity Securities
We have no plans, programs or other arrangements in regards to repurchases of our common stock.
Dividends
We have not since November 25, 2014 (date of inception) declared or paid any cash dividends on our common stock and currently do not anticipate paying such cash dividends. We currently anticipate that we will retain all of our future earnings for use in the development and expansion of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our Board of Directors (the “Board”) and will depend upon our results of operations, financial condition, tax laws and other factors as the Board, in its discretion, deems relevant.
Securities Authorized for Issuance under Equity Compensation Plans
None.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data to our financial statements located elsewhere in this Annual Report on Form 10-K is not required for smaller reporting companies under Article 8 Regulation S-X.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our financial statements and related notes thereto included elsewhere in this registration statement. Portions of this document that are not statements of historical or current fact are forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this registration statement should be read as applying to all related forward-looking statements wherever they appear in this registration statement. From time to time, we may publish forward-looking statements relative to such matters as anticipated financial performance, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. All statements other than statements of historical fact included in this section or elsewhere in this report are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
The following discussion and analysis of our plan of operations should be read in conjunction with our financial statements and related notes appearing in our filings with the Securities and Exchange Commission. This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under the heading of “Risk Factors” and elsewhere in this prospectus.
The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K.
The discussion and analysis of the Company’s financial condition and results of operations is based upon its financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (or "GAAP"). The preparation of those financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities at the date of its financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Our Ability To Continue as a Going Concern
Our independent registered public accounting firm has issued its report dated May 5, 2017 in connection with the audit of our financial statements as of November 30, 2016 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern. Our financial statements as of November 30, 2016 have been prepared under the assumption that we will continue as a going concern. If we are not able to continue as a going concern, it is likely that holders of our common stock will lose all of their investment. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.
We are a development stage company and have extremely limited financial resources. We have not established a source of equity or debt financing. Our independent registered public accounting firm included an explanatory paragraph in their report emphasizing the uncertainty of our ability to remain a going concern.
We will seek to obtain the necessary financing by contacting potential funding sources known to the professional and business contacts of our president. There are no assurances that we will obtain sufficient financing or resources to enter into agreements with product manufacturers, developers or sales/marketing firms. We do not have any cash or other resources to commence the use of outside consultants. Failure to obtain financing would impair our ability to implement our plans and likely result in the Company ceasing operations.
Financial Condition and Results of Operation
Results of Operations for Fiscal Year ended November 30, 2016 and November 30, 2015
Expenses
Expenses for the twelve months ended November 30, 2016 were $119,979. We incurred approximately $84,063 for product development costs, which includes both consultants and travel expense on behalf of the Company, $27,134 for audit/review services and other expenses associated with our being a publicly reporting registrant with the SEC, and $8,782 for general and administrative costs. Expenses for the twelve months ended November 30, 2015 were $69,097. We incurred approximately $43,575 for product development costs, which includes both consultants and travel expense on behalf of the Company, $23,443 for audit/review services and other expenses associated with being a publicly reporting registrant with the SEC, and $2,079 for general and administrative costs. The Company will continue to incur ever increasing product development costs into the foreseeable future. The Company intends to actively manage its product development, outside consultants and other expenses to coincide with its business plan execution and product development. The Company began operations in November 2014.
Gain (Loss) before provision for income taxes
Gain before provision for incomes taxes for the twelve months ended November 30, 2016 was $45,631. The Company recognized other income of $165,610 through debt forgiveness. In connection with the Change in Control transaction (see Financial Statement Footnote 1 - Organization) our founder negotiated and guaranteed the forgiveness of certain debts of the Company through the sale of his shares. The Company recognized debt forgiveness of $165,610. This transaction occurred on or about October 13, 2016. The Company recognized a reduction in accounts payable from vendors of $90,200 and debt forgiveness from unrelated parties of $75,410. No consideration was paid for the debt forgiveness received by the Company. These are one time transactions that the Company incurred or received and we do not expect to incur or receive these types of transactions in the future. We recorded no provision for federal or state income taxes in the twelve months. Loss before provision for incomes taxes for the twelve months ended November 30, 2015 was $69,097. We recorded no provision for federal or state income taxes. We have not generated any revenues from our intended products or services.
Basic and diluted loss per share
Basic and diluted gain (loss) per share for the twelve months ended November 30, 2016 was $0.57 per share. Basic and diluted number of shares outstanding was 80,000 shares of our common stock. Basic and diluted loss per share for the twelve months ended November 30, 2015 was $(1.20) per share. Basic and diluted number of shares outstanding was 57,427 shares of our common stock.
Liquidity
We have paid all costs relating to our offering as of November 30, 2016. Total offering costs were $23,577. Excess proceeds were used for general working capital purposes. Amounts related to non-offering costs will generally be paid when due and or otherwise accrued on the books and records or until we are able to pay the amounts in full either from revenues or from loans from related or nonrelated third parties. Obligations for expenses, when recorded as liabilities for lengthy periods of time, could preclude us from assistance from other sources, or at a minimum, make further financing difficult for the Company.
On December 8, 2014, we entered into a legal services agreement with our former legal counsel, Krueger LLP. This agreement provided for legal fees of $20,000, payable $5,000 upon starting and the remainder from offering proceeds. We paid our former legal counsel the remaining amount that is due. Legal representation may include business, tax, and general contract legal advice.
Loan Related Party - The Company with its change in control transaction (see Note 1 - Organization) our founder negotiated and guaranteed the forgiveness of certain debts of the Company through the sale and the resulting forgiveness of that debt; the Company recognized an increase in additional paid in capital of $4,500. This transaction occurred on or about October 13, 2016. Loan Non-Related Party - The Company with its change in control transaction (see Note 1 - Organization) our founder negotiated and guaranteed the forgiveness of certain debts of the Company. The Company recognized debt forgiveness of $75,410 from the unrelated party. This transaction occurred on or about October 13, 2016. Accounts Payable - In connection with the Change in Control transaction (see Note 1 - Organization) our founder negotiated and guaranteed the forgiveness of certain debts of the Company through the sale of his shares. The Company recognized debt forgiveness of $165,610. This transaction occurred on or about October 13, 2016. The Company recognized a reduction in accounts payable from vendors of $90,200 and debt forgiveness from unrelated parties of $75,410. No consideration was paid for the debt forgiveness received by the Company.
As of November 30, 2016, we owed approximately $15,000 in connection with organizational costs, product development and other expenses associated with our business operations. We have no formal agreements, written or oral, with any vendors or providers for specific performance of payment for services or expenses rendered. There are no other significant liabilities as of November 30, 2016. We continued to seek deferred payment on most of our expenses and will continue to seek deferred payment from our vendors and other service providers.
As of November 30, 2016, we owed approximately $0 in connection with an interest-free demand loan from a nonrelated party, approximately $0 to our founder and former chief executive officer and $15,663 in accounts payable to various vendors. The proceeds of which were primarily used as payment towards legal fees, PCAOB accounting fees, and other fees associated with our offering and skincare consultants that we have engaged to help us in our development and improvement of our products and services and readying them for market.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.
Material Events and Uncertainties
Our operating results are difficult to forecast. Our prospects should be evaluated in light of the risks, expenses and difficulties commonly encountered by comparable early stage companies. The continuation of our business is dependent upon obtaining further financing, a successful program of development, marketing and distribution of product and services, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. We will pursue various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
GAIN CITIES LIMITED
NOVEMBER 30, 2016
PLS CPA, A PROFESSIONAL CORP.
t 4725 MERCURY STREET #210 t SAN DIEGO t CALIFORNIA 92111t
t TELEPHONE (858)722-5953 t FAX (858) 761-0341 t FAX (858) 764-5480
t E-MAIL changgpark@gmail.com t
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Gain Cities Limited (formerly known as Remove-By-You, Inc.)
We have audited the accompanying balance sheets of Gain Cities Limited (formerly known as Remove-By-You, Inc.) (the “Company”) as of November 30, 2016 and 2015, and the related statements of operations, changes in shareholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gain Cities Limited (formerly known as Remove-By-You, Inc.) as of November 30, 2016 and 2015, and the result of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s losses from operations raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ PLS CPA
PLS CPA, A Professional Corp.
May 5, 2017
San Diego, CA. 92111
Registered with the Public Company Accounting Oversight Board
GAIN CITIES LIMITED
(FKA REMOVE-BY-YOU, INC.)
BALANCE SHEETS
On February 27, 2017, the Company’s board of directors approved a reverse stock split at a rate of one share for every one hundred shares. All share and per share amounts have been adjusted for all periods presented.
See notes to the financial statements.
GAIN CITIES LIMITED
(FKA REMOVE-BY-YOU, INC.)
STATEMENTS OF OPERATIONS
On February 27, 2017, the Company’s board of directors approved a reverse stock split at a rate of one share for every one hundred shares. All share and per share amounts have been adjusted for all periods presented.
See notes to the financial statements.
GAIN CITIES LIMITED
(FKA REMOVE-BY-YOU, INC.)
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
On February 27, 2017, the Company’s board of directors approved a reverse stock split at a rate of one share for every one hundred shares. All share and per share amounts have been adjusted for all periods presented.
See notes to the financial statements.
GAIN CITIES LIMITED
(FKA REMOVE-BY-YOU, INC.)
STATEMENTS OF CASH FLOWS
On February 27, 2017, the Company’s board of directors approved a reverse stock split at a rate of one share for every one hundred shares. All share and per share amounts have been adjusted for all periods presented.
See notes to the financial statements.
GAIN CITIES LIMITED
(FKA REMOVE-BY-YOU, INC.)
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 2016
NOTE 1 - ORGANIZATION
Gain Cities Limited (formerly known as Remove-By-You, Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on November 25, 2014. The Company issued 3,000,000 (30,000 post reverse stock split effective February 27, 2017, see Note 10 - Subsequent Events) shares of common stock to its founder at inception in exchange for organizational costs which consisted of services. Following its formation, the Company issued 1,000,000 (10,000 post reverse stock split) shares of common stock to our founder, as consideration for the purchase of a business plan along with several product formulas and an assorted selection of micro-needle devices for use in a proprietary tattoo removal business. Our founder paid approximately $1,000 for this developed product formula, along with the micro-needle devices with which he personally developed a unique program and results. The acquisition was valued at $1,000.
The Company’s product formulas and tattoo removal service will use proprietary technology that will enable the user to safely remove his or her tattoo with minimal effort and discomfort. The Company’s product formula along with the micro-needle device program will safely remove the ink and design and allow the body to heal naturally without scarring.
On October 13, 2016, the Company experienced a change in control (“Change in Control”). With the Change in Control certain liabilities of the Company were forgiven and/or paid for on behalf of the Company by our founder, former president and chief executive officer. Total liabilities at the time approximated $165,000 which included legal fees owed to our legal counsel. The board of directors nominated Mr. James Oliver to the board of directors on October 13, 2016.
On October 18, 2016, the Company, reported on a Form 8-K that it had filed Articles of Merger with the Nevada Secretary of State, whereby it entered into a statutory merger with its wholly-owned subsidiary, with the effect being that the Company changed its name to from “Remove-By-You, Inc.” to “Gain Cities Limited” (the “Name Change”).
The Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the Name Change be effected in the market. The Company’s ticker symbol changed to “GCTY” to reflect the Name Change.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Accounting
The Company’s financial statements are prepared using the accrual method of accounting. The Company elected a November 30th, year-end.
b. Cash Equivalents
For purposes of the balance sheet and statement of cash flows, the Company considers all liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
c. Stock-based Compensation
The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options.
d. Use of Estimates and Assumptions
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
e. Earnings (Loss) per Share
The basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares during the period. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.
f. Income Taxes
Income taxes are provided in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
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.
No provision was made for Federal income tax.
g. Revenue Recognition
We will recognize revenues in accordance with ASC 605, Revenue Recognition, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. We will recognize revenue when: (i) persuasive evidence of an arrangement exists; (ii) shipment of products has occurred or services have been rendered; (iii) the sales price charged is fixed or determinable; and (iv) collection is reasonably assured. Our shipment terms will generally be FOB shipping point as outlined in our invoices or sales order.
h. Advertising
Advertising is expensed in the period in which it is incurred. There has been no advertising expense in the reporting periods presented.
i. Intangible Assets
Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment. For the period November 25, 2014 (inception) through November 30, 2014 we recognized $1,000 in amortization expense.
j. Fair Value of Financial Instruments
ASC 820 defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
·
Level 1 - Valuation based on quoted market prices in active markets for identical assets or liabilities.
·
Level 2 - Valuation based on quoted market prices for similar assets and liabilities in active markets.
·
Level 3 - Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments or interest rates that are comparable to market rates. These financial instruments include cash and accounts payable. The Company’s bank accounts are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk and are carried at amortized costs which approximates the fair value.
k. Recently Issued Accounting Pronouncements
In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company is currently in the process of evaluating the impact of the adoption on its financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance.
In January 2016, the FASB issued ASU 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance.
In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement -Period Adjustments”. Changes to the accounting for measurement-period adjustments relate to business combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill as a result of changes made to the balance sheet amounts of the acquiree. The measurement period is the period after the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition). The changes eliminate the requirement to make such retrospective adjustments, and, instead require the acquiring entity to record these adjustments in the reporting period they are determined. The new standard is effective for both public and private companies for periods beginning after December 15, 2015. The Company is currently evaluating the impact of adopting this guidance.
In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” An entity should measure inventory within the scope of this update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard is effective for annual reporting periods beginning after December 15, 2016 and related interim periods. Early adoption is permitted. The Company does not believe this standard will have a material effect on its financial position, results of operations, or cash flows.
There have been three new ASUs issued amending certain aspects of ASU 2014-09. ASU 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross Versus Net),” was issued in March, 2016 to clarify certain aspects of the principal versus agent guidance in ASU 2014-09. In addition, ASU 2016-10 “Identifying Performance Obligations and Licensing” issued in April 2016, amends other sections of ASU 2014-09 including clarifying guidance related to identifying performance obligations and licensing implementation. Finally, ASU 2016-12, “Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients” provides amendments and practical expedients to the guidance in ASU 2014-09 in the areas of assessing collectability, presentation of sales taxes received from customers, noncash consideration, contract modification and clarification of using the full retrospective approach to adopt ASU 2014-09. The Company is currently evaluating the impact of the various guidance.
The Company 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 accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying financial statements, the Company had negative working capital of $5,553 and an accumulated deficit of $30,476 at November 30, 2016. As of November 30, 2016, the Company had not generated revenues and had no committed sources of capital or financing.
Management anticipates the Company will attain profitable status and improve liquidity through continued business development and additional debt or equity investment in the Company. Management is pursuing sources of financing. The Company’s continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance that the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in the financial statements. The financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary should the Company be unable to continue in existence.
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 - SHARE CAPITAL
The Company is authorized to issue 100,000,000 shares of common stock ($0.001 par value) and 1,000,000 shares of preferred stock ($0.001 par value).
The Company upon inception issued 3,000,000 (30,000 post reverse stock split) shares of its common stock to its incorporator (our former chief executive officer and president), for organizational services. These services were valued at $3,000. Following its formation, the Company issued 1,000,000 (10,000 post reverse stock split) shares of common stock to its incorporator, as consideration for the purchase of a comprehensive business plan along with detailed product formula and commercially available micro-needle devices to be used with that product formula. Our incorporator, incurred approximately $1,000 in costs and or payments to develop and refine the tattoo removal process utilizing the product formula and micro-needle devices. The acquisition of the business plan, devices and product formula was valued at $1,000.
The Company on June 24, 2015 completed its offering pursuant to a registration statement filed on Form S-1. The Company issued 4,000,000 (40,000 post reverse stock split) shares of its common stock to 26 investors. The investors paid $0.01 ($1.00 post reverse stock split) per share for a total investment of $40,000.
The Change in Control (see Note 1 - Organization) and our founder, a former officer and director settling certain outstanding debts of the Company and the resulting forgiveness of that debt; the Company recognized a one-time increase to its additional paid in capital of $4,500. This occurred on or about October 13, 2016.
At November 30, 2016, there were 8,000,000 (80,000 post reverse stock split) shares of common stock issued and outstanding. There are no shares of preferred stock issued or outstanding.
NOTE 5 - LOAN - RELATED PARTY
For the twelve months ending November 30, 2016 the Company received $4,500 in loan proceeds from our founder, a former officer and director of the Company. The related party loan was entered into in order to pay for certain working capital expenses. This loan was unsecured and carried no interest rate or a repayment term.
The Company with its change in control transaction (see Note 1 - Organization) our founder negotiated and guaranteed the forgiveness of certain debts of the Company through the sale and the resulting forgiveness of that debt; the Company recognized an increase in additional paid in capital of $4,500. This transaction occurred on or about October 13, 2016.
NOTE 6 - LOAN - NONRELATED PARTY
For the twelve months ended November 30, 2016 the Company received $50,380 in loan proceeds from a nonrelated party. This resulted in approximately $75,000 in total debt being owed to this nonrelated party. We secured an interest free loan from the nonrelated party in order to fund working capital expenditures. This nonrelated party loan was unsecured and carried no interest rate or repayment term.
The Company with its change in control transaction (see Note 1 - Organization) our founder negotiated and guaranteed the forgiveness of certain debts of the Company. The Company recognized debt forgiveness of $75,410 from the unrelated party. This transaction occurred on or about October 13, 2016.
NOTE 7 - DEFERRED OFFERING COSTS
Deferred offering costs consist principally of accounting, legal and other fees incurred that were related to our direct public offering efforts. Deferred offering costs were offset against the net proceeds received from the offering. As of June 24, 2015, deferred offering costs of $23,577 were credited against additional paid in capital. Accounts payable include deferred offering costs of $2,500 owed to our legal counsel as of November 30, 2015. This amount was paid in full on October 13, 2016. As of November 30, 2016 we owed zero costs associated with our completed offering.
NOTE 8 - DEBT FORGIVENESS
In connection with the Change in Control transaction (see Note 1 - Organization) our founder negotiated and guaranteed the forgiveness of certain debts of the Company through the sale of his shares. The Company recognized debt forgiveness of $165,610. This transaction occurred on or about October 13, 2016.
The Company recognized a reduction in accounts payable from vendors of $90,200 and debt forgiveness from unrelated parties of $75,410. No consideration was paid for the debt forgiveness received by the Company.
NOTE 9 - INCOME TAXES
As of November 30, 2016, the Company had net operating loss carry forward of $30,476. This amount may be available to reduce future years’ taxable income.
Realization of deferred tax asset is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forward is expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance.
Reconciliation between statutory rate and the effective tax rate for both periods and as of November 30, 2016 and 2015:
NOTE 10 - SUBSEQUENT EVENTS
The Company evaluated all events that occurred after the balance sheet date of November 30, 2016 through the date these financial statements were issued. The Company determined there were the following reportable subsequent events.
On February 27, 2017 the Company’s board of directors approved and on March 7, 2017 the Company filed an amendment to its Articles of Incorporation to effect a reverse stock split of its common stock. The reverse stock split exchanged one (1) share for every one hundred (100) shares issued and outstanding at the time. All share and per share amounts have been adjusted to reflect this reverse split.
As part of the reverse stock the Company adjusted additional paid in capital by the change in number of shares multiplied by its par value. The Company recognized an increase of $7,920 in additional paid in capital and reflected that for all periods presented.
The Company received an additional $10,708 in related party loans for the three months ended February 28, 2017 and an additional $7,000 in related party loans during the month of March 2017 for working capital purposes.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no disagreements with accountants on accounting and financial disclosure.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing periods specified in the SEC's rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officer has concluded that the Company's disclosure controls and procedures are effective in reaching that level of assurance.
At the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.
Management's Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company's Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
As of November 30, 2016, management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on the criteria established by COSO management concluded that the Company's internal control over financial reporting was effective as of November 30, 2016.
This Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting as smaller reporting companies are not required to include such report and EGC’s are exempt from this requirement entirely until they are no longer an EGC. Management’s report is not subject to attestation by the Company’s independent registered public accounting firm.
Limitations on the Effectiveness of Controls
Management has confidence in its internal controls and procedures. The Company’s management believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected.
Changes in Internal Controls
There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended November 30, 2016 that have materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following table sets forth certain information regarding the executive officer and director of the Company as of November 30, 2016.
All directors of the Company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. Officers of the Company are appointed by our Board and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
___________
(1) Kyle Markward - founded the Company in November 2014 and resigned his positions with the Company effective October 13, 2016. He graduated from Western Connecticut State University with a Bachelor’s Degree in Science - Mathematics (2008). Upon graduation, he began employment as a Materials Handler (Level 1), ultimately leading to the position of Production Planner for ASML Holding, NV (ASML), a Dutch company.
James Oliver - Mr. Oliver, is an experienced statistician with a degree in Economics from the University of Illinois in 2002. After graduation, James worked for various insurance companies in the field of Actuarial Science. Prior to founding Gain Cities Limited, a sports arbitrage company located in Florida, in May 2015, he worked for seven years with Progressive Insurance, as an Actuary Officer.
Benjamin Teare - Mr. Teare graduated from North Dakota State University in 1998 with a degree in Physical Education. An avid sports fan, Mr. Teare worked with numerous major sports clubs in North America after graduation. Prior to founding Gain Cities Limited in May 2015, Mr. Teare was General Manager at Newport Sports Management, where he negotiated player contracts and trade deals, handled media relations and promotional events for his firm.
Term of Office
Each director is elected by the Board and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.
Family Relationships
There are no family relationships between or among any of our directors, executive officers and incoming directors or executive officers.
Involvement in Certain Legal Proceedings
No director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
Committees of the Board
Our Board held no formal meetings in the prior fiscal year. All proceedings of the Board were conducted by resolutions consented to in writing by the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Revised Statutes and the bylaws of our Company, as valid and effective as if they had been passed at a meeting of the directors duly called and held. We do not presently have a policy regarding director attendance at meetings.
We do not currently have a standing nominating or compensation committee of the Board, or any committee performing similar functions. Our Board performs the functions of nominating and compensation committees.
Audit Committee
Our Board has not established an audit committee within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Instead, the entire Board acts as the audit committee within the meaning of Section 3(a)(58)(B) of the Exchange Act and will continue to do so until such time as a separate audit committee has been established.
Audit Committee Financial Expert
We currently have not designated anyone as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K as we have not yet created an audit committee of the Board.
Code of Ethics
We adopted a Code of Ethics (the “Code”) that applies to directors, officers and employees, including our chief executive officer and chief financial officer. A written copy of the Code is available upon written request to the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Not applicable.
Nominations to the Board of Directors
Our directors take a critical role in guiding our strategic direction and oversee the management of the Company. Board candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the stockholders, diversity, and personal integrity and judgment.
In addition, directors must have time available to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the Company.
In carrying out its responsibilities, the Board will consider candidates suggested by stockholders. If a stockholder wishes to formally place a candidate’s name in nomination, however, he or she must do so in accordance with the provisions of the Company’s Bylaws. Suggestions for candidates to be evaluated by the proposed directors must be sent to the Board of Directors, at the Company’s address listed on the cover of this Report.
Director Nominations
As of November 30, 2016, we did not make any material changes to the procedures by which our shareholders may recommend nominees to our Board.
Board Leadership Structure and Role on Risk Oversight
Mr. Oliver currently serves as our principal executive officer and sole director of the Company. We have determined this leadership structure was duly appropriate for us because of our small size, limited operations and resources. The Board will continue to evaluate our leadership structure and modify as deemed appropriate based on size, resources and operations of the Company. It is anticipated that our Board will establish procedures and guidelines to determine an appropriate role for members of the Board in risk oversight function of the Company.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between our Board and the board or compensation committee of any other company, nor has any interlocking relationship existed in the past.
Employment Arrangements
None of our officers, directors, or employees are party to employment agreements with the Company. The Company has no pension, health, annuity, bonus, insurance profit sharing or similar benefit plans; however, the Company may adopt such plans in the future. There are no personal benefits available for directors, officers or employees of the Company.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
General Philosophy
Our Board is solely responsible for establishing and administering our executive and director compensation plans, if any.
Executive Compensation
The following table sets forth the salaries and director fees we paid to our current and former executive officer(s) during the fiscal years ended November 30, 2016 and 2015, respectively:
There is no formal employment agreement or arrangement with any of our officers or directors at this time.
1 Mr. Markward resigned from his positions as an officer and director of the Company effective October 13, 2016.
Grants of Plan-Based Awards Table
None of the named executive officers received any grants of stock, option awards or other plan-based awards during the fiscal years ended November 30, 2016 and November 30, 2015.
Options Exercised and Stock Vested Table
None of the named executive officers exercised any stock options, nor were there any restricted stock units held by our named executive officers vested, during the fiscal years ended November 30, 2016 and November 30, 2015.
Outstanding Equity Awards at Fiscal Year-end Table
None of the named executive officers held any unexercised options and unvested stock awards previously awarded as of November 30, 2016.
Potential Payments upon Termination or Change-in-Control
SEC regulations state that we must disclose information regarding agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection with any termination of employment or change in control of the company. We currently have no employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities following a change-in-control. As a result, we have omitted this table.
Compensation of Directors
We have no standard arrangement to compensate directors for their services in their capacity as directors. Directors are not paid for meetings attended. However, we intend to review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.
The following table sets forth compensation paid to our non-executive (and executive) directors for the fiscal year ended November 30, 2016.
Pension Table
None.
Retirement Plans
We do not offer any annuity, pension, or retirement benefits to be paid to any of our officers, directors, or employees in the event of retirement. There are also no compensatory plans or arrangements with respect to any individual named above which results or will result from the resignation, retirement, or any other termination of employment with our company, or from a change in the control of our Company.
Compensation Committee
We do not have a separate compensation committee. Instead, our Board reviews and approves executive compensation policies and practices, reviews salaries and bonuses for other officers, administers our stock option plans and other benefit plans, if any, and considers other matters that may be brought forth to it.
Risk Management Considerations
We believe that our compensation policies and practices for our employees, including our executive officers, do not create risks that are reasonably likely to have a material adverse effect on our Company.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Long-Term Incentive Plans and Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreement s regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreement s have been granted or entered into or exercised by our officer or director or employees or consultants since we were founded.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of shares of our Common Stock owned beneficially as of April 17, 2017, by: (i) our director; (ii) our named executive officer; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.
Notes:
(1) Based on 8,000,000 (80,000 post reverse stock split) shares of common stock issued and outstanding as of April 30, 2017. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.
(2) No officers, directors, or 5% shareholders, have the right to acquire any additional common shares of the Company within sixty (60) days of this report.
Securities Authorized for Issuance under Equity Compensation Plans
None.
Non-Cumulative Voting
The holders of our shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of Directors, can elect all of the Directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of our Directors.
Transfer Agent
The Transfer Agent for our common stock is Action Stock Transfer Corporation, 2469 E. Fort Union Blvd, Suite 214, Salt Lake City, Utah 84121. Its telephone number is (801) 274-1088.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
For the twelve months ending November 30, 2016 the Company received $4,500 in loan proceeds from Kyle Markward, our founder, a former officer and director of the Company. The related party loan was entered into in order to pay for certain working capital expenses. This loan was unsecured and carried no interest rate or a repayment term. The loan was forgiven in connection with the change in control that occurred on or about October 13, 2016.
The Company with its change in control transaction our founder negotiated and guaranteed the forgiveness of certain debts of the Company through the sale and the resulting forgiveness of that debt; the Company recognized an increase in additional paid in capital of $4,500. This transaction occurred on or about October 13, 2016. Mr. Markward in connection with the sale of his shares, forgave all amounts that were owed to him or that he had paid on behalf of the Company. The holder of the related-party debt (Mr. Markward) in effect changed the nature of his investment in the Company from debt to equity, so no gain is recognized in net income, and a corresponding increase to additional paid in capital is made in accordance with FASB ASC Section 470-50-40, Debt Modifications and Extinguishments.
Other than the foregoing, none of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.
Review, Approval or Ratification of Transactions with Related Persons
Although we adopted a Code of Ethics, we still rely on our Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company.
Director Independence
For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB and the OTCQB do not have any director independence requirements. The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
According to the NASDAQ definition, neither Mr. Kyle Markward nor Mr. James Oliver are an independent director because they held the title of officer in the Company at the time they were a director.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table presents the fees for professional audit services rendered by PLS CPA, a professional corporation (“PLS CPA’s”) for the audit of the Company’s annual financial statements for the fiscal year ended November 30, 2016 and 2015 and fees billed for other services rendered by PLS CPA’s during those periods. All services reflected in the following fee table for 2016 and 2015 were pre-approved, respectively, in accordance with the policy of the Board.
Notes:
(1) Audit fees consist of audit and review services, consent and review of documents filed with the SEC. For fiscal year ended November 30, 2016 and 2015.
In its capacity, the Board pre-approves all audit (including audit-related) and permitted non-audit services to be performed by the independent auditors. The Board will annually approve the scope and fee estimates for the year-end audit to be performed by the Company’s independent auditors for the fiscal year. With respect to other permitted services, the Board pre-approves specific engagements, projects and categories of services on a fiscal year basis, subject to individual project and annual maximums. To date, the Company has not engaged its auditors to perform any non-audit related services.
PART IV
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Annual Report on Form 10-K
(a) Financial Statements
(b) Exhibits
__________
* Filed with initial filing of the Company’s registration statement on Form S-1, January 20, 2015.
# Filed herewith.
** The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GAIN CITIES LIMITED
(Registrant)
Date: May 5, 2017
By:
/s/ James Oliver
James Oliver
Chairman, President, Chief Executive Officer, Chief
Financial Officer, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures
Title(s)
Date
/s/ James Oliver
Director (Principal Executive Officer, Principal Financial
May 5, 2017
James Oliver
Officer and Principal Accounting Officer)