NOTES TO
RESTATED
FINANCIAL STATEMENTS
FEBRUARY 29, 2020
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Anvi Global Holdings, Inc., (the Company) was incorporated under the laws of the State of Nevada on August 15, 2012, and intended to sell crepes in Czech Republic. That proposed business was abandoned when a change of control of the Company was effected May 6, 2014.
On April 30, 2014, Tatiana Fumioka (the Seller), entered into a Common Stock Purchase Agreement (the Stock Purchase Agreement) pursuant to which the Seller agreed to sell to Mr. Rama Mohan R. Busa (the Purchaser), with his principal place of business in Cary, NC, the 72,000,000 shares of common stock of the Company owned by Ms. Fumioka, constituting approximately 75.83% of the Companys outstanding common stock at that time, to be transferred to the name of Mr. Rama Mohan R. Busa, for $375,000. The sale was consummated on May 6, 2014. As a result of the sale, there was a change of control of the Registrant. This was a private transaction between the Seller and Purchaser, and no new shares of the Company were sold or issued.
On September 27, 2017 the Company changed its name from Vetro Inc. to Anvi Global Holdings, Inc. On November 21, 2017, FINRA approved the new symbol ANVI, and a 9-for-1 forward split of the Companys common shares. The Companys corporate office is at 1135 Kildaire Farm Rd., Suite 319-4, Cary, NC 27511.
As reported in a Form 8-K filed with the SEC on May 24, 2018, the Company entered into a Memorandum of Business Association (MOA) with Team Universal Infratech Pvt. Ltd (TUI), pursuant to which TUI, a 12-year old Indian infrastructure development company based in Hyderabad, agreed to enter into a Joint Venture (the JV) with the Registrant, to execute certain projects TUI is currently holding, and also which may include TUIs future projects which are in the pipeline. The Company and TUI have agreed and proposed to create a legally valid joint venture entity (JV), with the Company having majority control of the JV stock and control of all operations of the specified projects which are executed pursuant to the JV. Because of the signing of that MOA, the Company also announced that it was no longer a shell, as that term is defined in the SECs Rule 12b-2.
The Companys obligation under the MOA is to raise $6,000,000 within 60 days of the signing of the MOA; however, on February 14, 2019, the date by which the Registrant was required to raise these funds, the date was extended by mutual agreement for nine months, to November 14, 2019. To date, the Company has not raised any of the funds required by the MOA.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Companys financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Companys cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount.
12
Cash and Cash Equivalents
The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. There were no cash equivalents for the years ended February 29, 2020 and February 28, 2019.
Fair Value of Financial Instruments
Fair value is defined 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 Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below:
Level 1:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.
Level 3:
Level 3 inputs are unobservable inputs.
The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values.
The carrying amounts of Notes Payable approximate the fair value as the notes bear interest rates that are consistent with current market rates.
Revenue recognition
The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as ASC 606), effective January 1, 2019. The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (ASC 606). The Company determines revenue recognition through the following steps:
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·
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Identification of a contract with a customer;
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·
|
Identification of the performance obligations in the contract;
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|
·
|
Determination of the transaction price;
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·
|
Allocation of the transaction price to the performance obligations in the contract; and
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|
·
|
Recognition of revenue when or as the performance obligations are satisfied.
|
Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.
13
Income taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Companys control, it is at least reasonably possible that managements judgment about the need for a valuation allowance for deferred taxes could change in the near term.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for unrecognized tax benefits is recorded for any tax benefits claimed in the Companys tax returns that do not meet these recognition and measurement standards. As of February 29, 2020 and February 28, 2019, no liability for unrecognized tax benefits was required to be reported.
Stock-based Compensation
We account for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50, Equity-Based Payments to Non-Employees (ASC 505-50). ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.
We account for employee stock-based compensation in accordance with the guidance of Financial Accounting Standards Board (FASB) ASC Topic 718, Compensation Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. There are no potentially dilutive shares as of February 29, 2020 and February 28, 2019.
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Companys control, it is at least reasonably possible that managements judgment about the need for a valuation allowance for deferred taxes could change in the near term.
14
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for unrecognized tax benefits is recorded for any tax benefits claimed in the Companys tax returns that do not meet these recognition and measurement standards. As of February 29, 2020, and February 29, 2019, no liability for unrecognized tax benefits was required to be reported.
Recent Accounting Pronouncements
On June 20, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, CompensationStock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC718 and forgo revaluing the award after this date. The guidance is effective for interim and annual periods beginning after December 15, 2018. The adoption of this standard did not result in a material change to the earnings.
In November 2019, the FASB issued ASU 2019-10, Financial InstrumentsCredit Losses (Topic 326), Derivative and Hedging (Topic 815, and Leases (Topic 841). This new guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods. While the Company is continuing to assess the potential impacts of ASU 2019-10, it does not expect ASU 2019-10 to have a material effect on its financial statements.
NOTE 3 - GOING CONCERN
The accompanying
restated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated a deficit of
$1,137,445
as of February 29, 2020, had a net loss of
$218,412
and used $31,860 of cash in operations. The Company requires capital for its contemplated operational and marketing activities. The Companys ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Companys contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Companys ability to continue as a going concern. The
restated
financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
The Company has discussed ways in order to mitigate conditions or events that may raise substantial doubt about its ability to continue as a going concern, there are no assurances that any of these measures will successfully mitigate or be effective at all. (1) The Company shall pursue financing plans to raise funds to judiciously spend towards operational expenses, (2) The Company shall continue to employ low cost measures to operate its business and analyze any unnecessary cost or expense, (3) The Company will seek to avoid unnecessary expenditures, travel, and lodging costs that are not mission critical to its business.
NOTE 4 PREPAID TRANSACTIONS
As of February 29, 2020, the Company has $10,000 of prepaid expenses which is being amortized over the next ten months for OTC Markets annual fee.
As of February 28, 2019, the Company had $22,500 of prepaid expenses, of which $10,000 was amortized over the next ten months for OTC Markets annual fee and $12,500 was for prepaid legal fees.
NOTE 5 - RELATED PARTY TRANSACTIONS
On May 28, 2014, the Company executed a service agreement with Strategic-IT Group Inc. Strategic-IT Group Inc. is owned and operated by Rama Mohan R. Busa, CEO. Services to be provided at $12,000 a month include, but are not limited to, providing office space, IT and related services, business consulting, and investor relations. As of February 29, 2020 and February 28, 2019, the Company has an accrued, unpaid balance due of $828,000 and $684,000, respectively.
Since 2018 Rama Mohan R. Busa, CEO, has advanced funds to the Company from his personal account and related companies. The advances are to pay for operating expenses, are unsecured, non-interest bearing and due on demand. As of February 29, 2020 and February 28, 2019, the balance due was $221,565 and $189,765, respectively.
15
During the year ended February 29, 2020, the Company had advanced $103,700 to Anvi Private towards the operating expenses involved in procurement and logistics of supplying the ore to the unaffiliated South African company from which the Company has received the sales advance (Note 1). As of February 29, 2020, the advance has been expensed to cost of revenue.
NOTE 6 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. The U.S. federal income tax rate of 21% is being used.
Net deferred tax assets consist of the following components as of:
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February 29,
2020
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February 28,
2019
|
|
Federal income tax benefit attributable to:
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|
|
|
|
|
|
Current Operations
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|
$
|
45,900
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|
|
$
|
46,400
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|
Less: valuation allowance
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|
(45,900
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)
|
|
|
(46,400
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)
|
Net provision for Federal income taxes
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|
$
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|
|
|
$
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|
|
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 fiscal years ending, due to the following:
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February 29,
2020
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February 28,
2019
|
|
Deferred tax asset attributable to:
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|
|
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Net operating loss carryover
|
|
$
|
(239,000
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)
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|
$
|
(193,000
|
)
|
Less: valuation allowance
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|
|
239,000
|
|
|
|
193,000
|
|
Net deferred tax asset
|
|
$
|
|
|
|
$
|
|
|
At February 29, 2020, the Company had net operating loss carry forwards of approximately
$239,000
that may be offset against future taxable income from the year 2020 to 2039. No tax benefit has been reported in the February 28, 2019 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2015.
16
NOTE 7 RESTATEMENT
Per ASC 250-10
Accounting Changes and Error Corrections,
the February 29, 2020 financial statements are being restated to account for an invoice that was not recorded into accounts payable as of February 29, 2020.
The following table summarizes changes made to the February 29, 2020 balance sheet.
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|
February 29, 2020
|
|
Balance Sheet:
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Cash
|
|
$
|
493
|
|
|
$
|
|
|
|
$
|
493
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|
Prepaids
|
|
|
10,000
|
|
|
|
|
|
|
|
10,000
|
|
Total assets
|
|
$
|
10,493
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|
|
$
|
|
|
|
$
|
10,493
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
21,733
|
|
|
$
|
18,140
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|
|
$
|
39,873
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|
Accrued liabilities, related party
|
|
|
828,000
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|
|
|
|
|
|
|
828,000
|
|
Due to an officer
|
|
|
221,565
|
|
|
|
|
|
|
|
221,565
|
|
Total liabilities
|
|
|
1,071,298
|
|
|
|
18,140
|
|
|
|
1,089,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
119,950
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|
|
|
|
|
|
|
119,950
|
|
Additional paid-in capital
|
|
|
(61,450
|
)
|
|
|
|
|
|
|
(61,450
|
)
|
Accumulated deficit
|
|
|
(1,119,305
|
)
|
|
|
(18,140
|
)
|
|
|
(1,137,445
|
)
|
Total Stockholders Equity
|
|
|
(1,060,805
|
)
|
|
|
(18,140
|
)
|
|
|
(1,078,945
|
)
|
Total liabilities and stockholders equity
|
|
$
|
10,493
|
|
|
$
|
|
|
|
$
|
10,493
|
|
The following table summarizes changes made to the year ended February 29, 2020 Statement of Operations.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended February 29, 2020
|
|
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Revenue
|
|
$
|
137,910
|
|
|
$
|
|
|
|
$
|
137,910
|
|
Cost of revenue
|
|
|
103,700
|
|
|
|
|
|
|
|
103,700
|
|
Gross margin
|
|
|
34,210
|
|
|
|
|
|
|
|
34,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
234,482
|
|
|
|
18,410
|
|
|
|
252,622
|
|
Net Loss
|
|
$
|
(200,272
|
)
|
|
$
|
18,410
|
|
|
$
|
(218,412
|
)
|
NOTE
8
SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the
restated
financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements, other than the following:
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate. While it is unknown how long these conditions will last and what the complete financial effect will be to the company, to date, the Company is experiencing an indefinite delay in the execution of its JV with TUI (Note 1).
The Companys affiliated privately-owned company Anvi Global, Inc. (ANVI Private) has been actively pursuing mining opportunities in Zimbabwe. Although, the Company was able to complete its first transaction for the procurement and sale of chromium ore, due to the difficulties with conducting business in Zimbabwe, the Company will not continue to pursue the mining activities in that country.
17