Attached files

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EX-32.2 - EXHIBIT 32.2 - Alternative Investment Corpexhibit322.htm
EX-32.1 - EXHIBIT 32.1 - Alternative Investment Corpexhibit321.htm
EX-31.2 - EXHIBIT 31.2 - Alternative Investment Corpexhibit312.htm
EX-31.1 - EXHIBIT 31.1 - Alternative Investment Corpexhibit311.htm
EX-10.30 - EXHIBIT 10.30 - Alternative Investment Corpexhibit1030.htm
EX-10.29 - EXHIBIT 10.29 - Alternative Investment Corpexhibit1029.htm
EX-10.28 - EXHIBIT 10.28 - Alternative Investment Corpexhibit1028.htm
EX-10.27 - EXHIBIT 10.27 - Alternative Investment Corpexhibit1027.htm
EX-10.26 - EXHIBIT 10.26 - Alternative Investment Corpexhibit1026.htm
EX-10.25 - EXHIBIT 10.25 - Alternative Investment Corpexhibit1025.htm
EX-10.24 - EXHIBIT 10.24 - Alternative Investment Corpexhibit1024.htm
EX-10.23 - EXHIBIT 10.23 - Alternative Investment Corpexhibit1023.htm
EX-10.22 - EXHIBIT 10.22 - Alternative Investment Corpexhibit1022.htm
EX-10.21 - EXHIBIT 10.21 - Alternative Investment Corpexhibit1021.htm
EX-10.20 - EXHIBIT 10.20 - Alternative Investment Corpexhibit1020.htm
EX-10.19 - EXHIBIT 10.19 - Alternative Investment Corpexhibit1019.htm
EX-10.18 - EXHIBIT 10.18 - Alternative Investment Corpexhibit1018.htm
EX-10.17 - EXHIBIT 10.17 - Alternative Investment Corpexhibit1017.htm
EX-10.16 - EXHIBIT 10.16 - Alternative Investment Corpexhibit1016.htm
EX-10.15 - EXHIBIT 10.15 - Alternative Investment Corpexhibit1015.htm
EX-10.14 - EXHIBIT 10.14 - Alternative Investment Corpexhibit1014.htm
EX-10.13 - EXHIBIT 10.13 - Alternative Investment Corpexhibit1013.htm
EX-10.12 - EXHIBIT 10.12 - Alternative Investment Corpexhibit1012.htm
EX-10.11 - EXHIBIT 10.11 - Alternative Investment Corpexhibit1011.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________

 

FORM 10-K

____________________________

 

☐  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended September 30, 2019

 

OR

 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-34858

____________________________

 

ALTERNATIVE INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

________________________

 

Nevada   98-0568076
(State or other jurisdiction of incorporation or organization)   (IRS Employee Identification No.)
     

150 East 52nd Street, Suite 1102

New York, NY

  10022
(Address of principal executive offices)   (Zip Code)

 

 Registrant’s telephone number, including area code: (917) 480-1169

____________________________

 

Securities registered under Section 12(b) of the Exchange Act:

None

 

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $.001 Par Value

(Title of class)

_____________________________

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes  ☒ No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes  ☒ No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes  ☐ No

 

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes  ☐ No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐ Accelerated filer  ☐
Non-accelerated filer  ☐ Smaller reporting company  ☒
(Do not check if a smaller reporting company) Emerging growth company   ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☒ Yes  ☐ No

 

As of March 31, 2019, the aggregate market value of the Common Stock held by non-affiliates of the registrant was $35,856 based upon the closing price of $1.72 on the OTC Bulletin Board system. For purposes of this response, the registrant has assumed that its directors, executive officers and beneficial owners of 5% or more of its Common Stock are deemed affiliates of the registrant.

 

As of January 13, 2020, the registrant had 432,192 shares of its Common Stock, $0.001 par value, outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

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ALTERNATIVE INVESTMENT CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019

 

TABLE OF CONTENTS

  

    Page
PART I    
     
Item 1. Business 4
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 9
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Mine Safety Disclosures 9
     
PART II    
     
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 10
Item 6. Selected Financial Data 11
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 14
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 16
Item 9A. Controls and Procedures 16
Item 9B. Other Information 17
     
PART III    
     
Item 10. Directors, Executive Officers and Corporate Governance. 18
Item 11. Executive Compensation. 19
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 20
Item 13. Certain Relationships and Related Transactions, and Director Independence. 20
Item 14. Principal Accounting Fees and Services. 20
     
PART IV    
     
Item 15. Exhibits, Financial Statement Schedules. 22
Item 16. Signatures 24

 

 

 

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PART I

 

FORWARD-LOOKING STATEMENTS

 

Certain statements made in this Annual Report on Form 10-K are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Registrant's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Registrant. Although the Registrant believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Registrant or any other person that the objectives and plans of the Registrant will be achieved.

 

The forward-looking statements included in this Form 10-K and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "believe", "anticipate", "future", "potential", "estimate", "encourage", "opportunity", "growth", "leader", "expect", "intend", "plan", "expand", "focus", "through", "strategy", "provide", "offer", "allow", “commitment", "implement", "result", "increase", "establish", "perform", "make", "continue", "can", "ongoing", "include" or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-K are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements. Our actual results could differ materially from the forward-looking statements. Important factors that could cause actual results to differ materially from expectations reflected in our forward-looking statements include those described in Item 1A, "Risk Factors."

 

Item 1.  Business

 

General

 

Alternative Investment Corporation (the "Company", “AIKO”, “we”, “us” or “our”) was incorporated in Nevada on March 26, 2007.

 

On July 23, 2010, Canton Investments Ltd. (“CIL”) acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between CIL and Wireless One International Limited (“Wireless One”), Bing HE and Ning HE, the Company’s former directors, and other various shareholders.  Pursuant to the terms of the Stock Purchase Agreement, CIL purchased from Wireless One and Bing HE and Ning HE 575,000 shares of the Company’s outstanding common stock for $205,750.  CIL also purchased 122,000 shares of the Company’s outstanding common stock for $36,600 from various shareholders.  As a result of the change in control, CIL owned a total of 697,000 shares of the Company’s common stock representing 91.54%.

 

In accordance with the change in control Mr. Bing HE resigned as the Company's President, CEO, and any other positions held by him on July 23, 2010. The resignation was not the result of any disagreement with the Company or any matter relating to the Company's operations, policies or practices. The same date Mr. Robert M. Price was named as the new Director, Chief Executive Officer and Chief Financial Officer.

 

On May 10, 2012, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Paradigm Resource Management Corporation.

 

On September 10, 2012, CIL contributed 600,000 shares of common stock to the Company’s treasury. The Company immediately retired and canceled these shares. As a result of the contribution of shares, CIL owns a total of 97,000 shares of the Company’s common stock representing 44%.

 

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On July 24, 2013, the Company entered into an agreement with AMSA Development Technology Co Ltd (“AMSA”) to acquire 402,300 shares of TOSS Plasma Technologies Ltd. (“TPT”) previously held by AMSA in exchange for 17,933 shares of its common stock. The 402,300 shares of TPT represent 10.1% of TPT’s outstanding common stock. The agreement also provides AMSA an option to acquire an additional 22,417 shares of the Company’s common stock and provides the Company an option to acquire an additional 402,300 shares of TPT common stock from AMSA.

 

On December 4, 2013, the Company and AMSA entered into an Amendment to the Agreement dated July 24, 2013. Under the terms of the amendment, the Company had the option to acquire up to a total of 3,432,000 shares of TPT from AMSA and AMSA had the option to acquire up to a total of 114,933 shares of common stock of the Company. The options expired on June 2, 2014.

 

On September 10, 2015, the Company and AMSA entered into a Rescission Agreement to fully rescind the previous acquisition agreement of shares of TPT and returned previously issued shares of each company to each other.

 

On September 18, 2015, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Alternative Investment Corporation.

 

On April 1, 2016, the Company entered into a Shareholders’ Agreement (the “Agreement”) with Basil and Barns, Inc., a New York corporation incorporated on February 2, 2016, (“B&B Inc.”), Fess Holdings LLC, Basil and Barns LLC and JIF Holdings LLC to acquire 55% of the outstanding common shares of B&B Inc.

 

On February 27, 2017, the Company entered into an agreement with B&B Inc., Fess Holdings LLC, Basil and Barns LLC and JIF Holdings LLC, wherein the Company has been unable to provide funding as per the original April 1, 2016 Agreement, having only provided $360,000 to date, the parties agreed to allow the Company to assign its remaining funding obligations and its ownership shares to a new ownership, in consideration of $50,000 to be paid to the Company and forfeiture of the $360,000 acquisition deposit. As of February 27, 2017, the Company is no longer participating in the original Agreement, directly or through related parties. As of December 31, 2016, the Company recorded a forfeiture of the acquisition deposit of $310,000 in the accompanying statement of operations.

 

On November 30, 2017, Mr. Daniel Otazo, Director, Chief Executive Officer and interim Chief Financial Officer, resigned. Mr. Otazo’s resignation was not a result of any disagreement with the Company.

 

On December 1, 2017, the Shareholders of the Corporation voted to elect Mr. Antonio Treminio as Director and CEO of the Company. Mr. Treminio, 46, has over 20 years of experience in the financial markets with special focus on corporate financing for private and public companies.

 

The Company is focused on new investment opportunities which lie in the real estate sector with primary focus on distressed real estate assets and/or alternative real estate developments as well as other technologies in the biotech sector.

 

Employees

 

As of September 30, 2019, the Company had two full-time employees and one consultant who was retained and fulfilled the roles of Chief Executive and Chief Financial Officer.

 

Available Information

 

All reports of the Company filed with the SEC are available free of charge through the SEC’s Web site at www.sec.gov. In addition, the public may read and copy materials filed by the Company at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain additional information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

 

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Item 1A.  Risk Factors

 

The following important factors among others, could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this Form 10-K or presented elsewhere by management from time to time.

 

There is substantial doubt about the Company’s ability to continue as a going concern.

 

Our auditor's report on our fiscal year 2019 financial statements expresses an opinion that substantial doubt exists as to whether we can continue as a going concern. Because our officers and directors may be unable or unwilling to loan or advance any additional capital to the Company, we may not have the funds necessary to continue our operations. See "September 30, 2019 Audited Financial Statements."

 

We have a limited operating history; thus, we cannot predict whether we will be successful in meeting our financial obligations.

 

We were established in March 2007. We have disposed of any line of business that previously have cash generating operations and currently have no revenue stream. We currently have $3,218 of cash and are reliant upon our officers, directors, and shareholders to fund the operating expenses of the Company while we assess and evaluate our next business strategy. There is no guarantee that our officers, directors and shareholders will continue to fund these activities.

 

If our strategy is unsuccessful, we will not be profitable, and our stockholders could lose their investment.

 

There is no guarantee that our strategy for obtaining or developing assets will be successful or that if successfully developed, will result in the Company becoming profitable.  If our strategy is unsuccessful, we may fail to meet our objectives and not realize the revenues or profits from the business we pursue that may cause the value of the Company to decrease, thereby potentially causing our stockholders to lose their investment.

 

We have not paid any cash dividends in the past and have no plans to issue cash dividends in the future, which could cause the value of our common stock to have a lower value than other similar companies which do pay cash dividends.

 

We have not paid any cash dividends on our common stock to date and do not anticipate any cash dividends being paid to holders of our common stock in the foreseeable future. While our dividend policy will be based on the operating results and capital needs of the business, it is anticipated that any earnings will be retained to finance our future expansion. As we have no plans to issue cash dividends in the future, our common stock could be less desirable to other investors and as a result, the value of our common stock may decline, or fail to reach the valuations of other similarly situated companies who have historically paid cash dividends in the past.

 

It is more difficult for our shareholders to sell their shares because we may not regain listing on the OTC:QB. Also, we may never be, eligible for NASDAQ or any national stock exchange.

 

We are not presently, nor is it likely that for the foreseeable future we will be, eligible for inclusion in NASDAQ or for listing on any United States national stock exchange.  To be eligible to be included in NASDAQ, a company is required to have not less than $4,000,000 in net tangible assets, a public float with a market value of not less than $5,000,000, and a minimum bid price of $4.00 per share. At the present time, we are unable to state when, if ever, we will meet the NASDAQ application standards.  Unless we are able to increase our net worth and market valuation substantially, either through the accumulation of surplus out of earned income or successful capital raising financing activities, we will never be able to meet the eligibility requirements of NASDAQ.  As a result, it will be more difficult for holders of our common stock to resell their shares to third parties or otherwise, which could have a material adverse effect on the liquidity and market price of our common stock.

 

Effective August 1, 2018, the Company was downgraded from the OTC:QB to the OTC Pink. There is also no assurance as to the depth or liquidity of any such market or the prices at which holders may be able to sell the Shares. An investment in these Shares may be totally illiquid and investors may not be able to liquidate their investment readily or at all when they need or desire to sell.

 

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Volatility of stock prices

 

In the event a public market continues for our Common Stock, market prices will be influenced by many factors, and will be subject to significant fluctuation in response to variations in operating results of the Company and other factors such as investor perceptions of the Company, supply and demand, interest rates, general economic conditions and those specific to the industry, developments with regard to the Company's activities, future financial condition and management.

 

Canton Investments Ltd. owns indirectly through related parties approximately 44% of our outstanding common stock, and has significant influence over our corporate decisions, and as a result, if you invest in us, your ability to affect corporate decisions will be limited.

 

Canton Investments Ltd. (“CIL”) holds 191,118 shares of our common stock, representing approximately 44% of the outstanding shares of our common stock.  Accordingly, CIL will have significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control even after such conversion and exercise by other investors, as CIL may continue to be our largest shareholder. The interests of CIL may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other shareholders. Additionally, potential investors should take into account the fact that any vote of shares purchased will have limited effect on the outcome of corporate decisions.

 

We may not be able to effectively control and manage our growth, which would negatively impact our operations.

 

If the Company’s business and markets grow and develop, it will be necessary for us to finance and manage expansion in an orderly fashion.  We may face challenges in managing and expanding our business and in integrating any acquired businesses with our own. Such eventualities will increase demands on our existing management, workforce and facilities. Failure to satisfy increased demands could interrupt or adversely affect our operations and cause administrative inefficiencies.

 

We may be unable to successfully execute any of our identified or other unidentified business opportunities that we determine to pursue.

 

We currently have a limited operational infrastructure.  In order to pursue business opportunities, we will need to build our infrastructure and operational capabilities. Our ability to do any of these successfully could be affected by any one or more of the following factors, among others, our ability to:

 

 raise substantial additional capital to fund the implementation of our business plan;
 execute our business strategy;
manage the expansion of our operations and any acquisitions we may make, which could result in increased costs, high employee turnover or damage to customer relationships;
 attract and retain qualified personnel;
  manage our third-party relationships effectively; and
 accurately predict and respond to the rapid technological changes in our industry and the evolving demands of the markets we serve.

 

The Company’s failure to adequately address any one or more of the above factors could have a significant impact on its ability to implement its business plan and its ability to pursue other opportunities that arise.

 

Limited liability of Directors and Officers.

 

The Company has adopted provisions to its Articles of Incorporation and Bylaws which limit the liability of its Officers and Directors, and provide for indemnification by the Company of its Officers and Directors to the full extent permitted by Nevada corporate law, which generally provides that its officers and directors shall have no personal liability to the Company or its stockholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives an improper personal benefit.  Such provisions substantially limit the shareholder's ability to hold officers and directors liable for breaches of fiduciary duty and may require the Company to indemnify its officers and directors.

 

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If the Company decides to operate internationally, there are risks which could adversely affect operating results.

 

Currently, we have no projects, projections or foreign interest involving international operations. However, the Company may in the future, given the opportunity, decide to pursue projects, business, or otherwise conduct operations internationally. Doing business in foreign countries does subject the Company to additional risks, any of which may adversely impact future operating results, including:

 

 international political, economic and legal conditions;

 

 our ability to comply with foreign regulations and/or laws affecting operations and projects;

 

 difficulties in attracting and retaining staff and business partners to operate internationally;

 

 language and cultural barriers;

 

 seasonal reductions in business activities and operations in the countries where our international projects are located;

 

 integration of foreign operations;

 

 potential adverse tax consequences; and

 

 potential foreign currency fluctuations.

 

Factors beyond the control of the Company

 

Projects for the acquisition and development of the Company’s products are subject to many factors, which are outside our control. These factors include general economic conditions in North America and worldwide (such as recession, inflation, unemployment, and interest rates), competitive products and the regulation by federal and state governmental authorities and regulatory agencies.

 

Lack of diversification

 

Because of the limited financial resources that the Company has, we do not currently intend to diversify our operations.  Our inability to diversify our activities into more than one area will subject the Company to economic fluctuations and therefore increase the risks associated with the Company’s operations.

 

If internal control over financial reporting becomes ineffective, our business and future prospects may suffer.

 

With the participation of the Chief Executive and Financial Officer, Antonio Treminio, our management evaluated the effectiveness of the Company's internal control over financial reporting as of September 30, 2019 based upon the framework in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management has concluded that, as of September 30, 2019, the Company had material weaknesses in its internal control over financial reporting. Specifically, management identified the following material weaknesses at September 30, 2019.

 

1.Lack of oversight by independent directors in the establishment and monitoring of required internal controls and procedures;
2.Lack of functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
3.Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting;
4.Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes.

 

 

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As a result of the material weakness described above, management has concluded that, as of September 30, 2019, we did not maintain effective internal control over financial reporting, involving the preparation and reporting of our financial statements presented in conformity with GAAP.

 

We understand that remediation of material weaknesses and deficiencies in internal controls is a continuing work in progress due to the issuance of new standards and promulgations. However, remediation of any known deficiency is among our highest priorities. Our management will periodically assess the progress and sufficiency of our ongoing initiatives and make adjustments as and when practical and necessary.

 

Future changes in financial accounting standards and other applicable regulations by various governmental regulatory agencies may cause lower than expected operating results and affect our reported results of operations.

 

Changes in accounting standards and their application may have a significant effect on our reported results on a going forward basis and may also affect the recording and disclosure of previously reported transactions. New standards have occurred and will continue to occur in the future.

 

The Sarbanes-Oxley Act of 2002 and various new rules subsequently implemented by the Securities and Exchange Commission (“SEC”) and the NASDAQ National Market have imposed additional reporting and corporate governance practices on public companies.

 

In addition, if we do not adequately continue to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in the future, we may not be able to accurately report our financial results or prevent error or fraud, which may result in sanctions or investigation by regulatory authorities, such as the SEC. Any such action could harm our business, financial results or investors’ confidence in our Company, and could cause our stock price to fall.

 

Item 1B.   Unresolved Staff Comments

 

None.

 

Item 2.  Properties

 

The Company maintains a correspondence office as its principal executive office, which is located at 150 East 52nd Street, Suite 1102 New York, New York 10022.  The Company believes that the current facilities are suitable for its current needs.

 

Item 3.  Legal Proceedings

 

On August 13, 2019, the Company received a registered letter dated August 7, 2019 from the law firm of Smith, Carroad, Levy & Parikh, P.C. pursuant to a Summons and Complaint filed with the Supreme Court of New York on April 4, 2019. The plaintiff, Raich Ende Malter & Co. LLP., claims that the Company owes past due fees in the amount of $49,281 for auditing, accounting, management consulting and tax services rendered for the fiscal years ended September 30, 2016 and 2017. The summons was improperly served to an unknown party to the Company. (Index # 153512-2019 filed with the Supreme Court of New York). The Company has fully accrued this amount as General and Administrative expense on its Statement of Operations for the year ended September 30, 2019. The Company continues to try to resolve this issue with plaintiff.

 

Item 4.  Mine Safety Disclosures

 

Not applicable.

 

 

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PART II

 

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Market Information

 

As the Company is a “smaller reporting company,” it is not required to provide the performance graph required in paragraph (e) of Item 201.

 

We have one class of securities, Common Voting Equity Shares ("Common Stock"). Our common stock is quoted on the OTC Pink Market (“OTC:PINK”) under the symbol "AIKO". As of January 13, 2020, the Company’s common stock was held by 35 shareholders of record, which does not include shares that are held in street or nominee name.

 

The closing share prices presented below represent prices between broker-dealers and do not include retail mark-ups and mark-downs or any commission to the dealer.  The following chart is indicative of the fluctuations in the stock prices:

 

  

For the Year Ended

September 30, 2019

  

For the Year Ended

September 30, 2018

 
   High   Low   High   Low 
First Quarter  $4.00   $0.60   $20.50   $2.75 
Second Quarter  $3.60   $0.60   $3.00   $0.85 
Third Quarter  $4.00   $0.90   $22.00   $0.65 
Fourth Quarter  $3.50   $1.40   $50.00   $1.00 

 

As of January 13, 2020, subsequent to September 30, 2019 the stock had stock prices ranging from $1.12 to $10.49 per share.

 

Our authorized capital stock consists of 1,600,000,000 shares of common stock, par value $0.001 per share. The holders of our common stock:

 

*       have equal ratable rights to dividends from funds legally available if and when declared by our board of directors;

*       are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;

*       do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and

*       are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.

 

We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of our securities.

 

The Company’s transfer agent is Nevada Agency & Trust Co. of Reno, Nevada.

 

Dividend Distributions

 

We have not historically and do not intend to distribute dividends to stockholders in the foreseeable future.

 

Securities authorized for issuance under equity compensation plans

 

The Company does not have any equity compensation plans.

 

 

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Penny Stock

 

Our common stock is considered "penny stock" under the rules of the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market System, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that:

 

-contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws;
-contains a description of the nature and level of risks in the market for penny stocks in both public offerings and secondary trading;
-contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
-contains a toll-free telephone number for inquiries on disciplinary actions;
-defines significant terms in the disclosure document or in the conduct of trading in penny stocks;
-and contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with:

 

-bid and offer quotations for the penny stock;
-the compensation of the broker-dealer and its salesperson in the transaction;
-the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the marker for such stock; and
-monthly account statements showing the market value of each penny stock held in the customer's account.

 

In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.

 

These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

 

Related Stockholder Matters

 

None.

 

Purchase of Equity Securities

 

None.

 

Item 6.  Selected Financial Data.

 

As the Company is a “smaller reporting company,” this item is inapplicable.

 

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operation.

 

You should read the following discussion of our results of operations and financial condition with the audited financial statements and related notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs, and that involve numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this report. Actual results may differ materially from those contained in any forward-looking statements.  See “Cautionary Statement Concerning Forward-Looking Statements.”

 

11 

 

 

Plan of Operation

 

The Company is focused on new investment opportunities which lie in the real estate sector with primary focus on distressed real estate assets and/or alternative real estate developments as well as other technologies in the biotech sector.

 

Results of Operations

 

For the Years Ended September 30, 2019 and 2018

 

Revenues

 

The Company had no revenue for the years ended September 30, 2019 and 2018.

 

Operating Expenses

 

For the year ended September 30, 2019, general and administrative expenses were $260,409 compared to $386,000 for the same period in the prior year.  The decrease in the current year was due to lower consulting fee of $99,200 and no stock-based compensation in the current year compared to $55,250 recorded in the previous year offset by increased payroll expense of $35,300.  Professional fees for the year ended September 30, 2019 were $82,781 compared to $46,750 for the same period in the prior year.  The increased fees were due to accrued accounting fees recorded in the amount of $49,281 relative to a legal complaint filed by Raich Ende Malter & Co. LLP, a former accounting firm.

 

Other Income (Expense)

 

For the year ended September 30, 2019 we incurred $43,845 of interest expense compared to $20,050 for the same period in the prior year.  We earned $11,557 of interest income for the year ended September 30, 2019 compared to $15,539 for the same period in the prior year. During the year ended September 30, 2018, the Company recognized a loss of $15,504 due to non-recoverable investments. Our net loss to our shareholders for the year ended September 30, 2019 was $375,478 compared to $452,765 for the same period in the prior year.

 

Liquidity and Capital Resources

 

At September 30, 2019, we had cash of $3,218 and a deficit in working capital of $847,276 compared to cash of $5,620 and a working capital deficit of $614,216 at September 30, 2018. We used cash in operating activities of $306,748 and $121,776 for the years ended September 30, 2019 and 2018, respectively. The principal elements of cash flow used in operations for the year ended September 30, 2019 included a net loss of $375,478, decrease in accounts payable of $20,327, increase in accrued expenses of $46,582 and an increase in interest payable of $36,789.  The principal elements of cash flow used in operations for the year ended September 30, 2018 included a net loss of $452,765, $55,250 of stock-based compensation, a loss due to uncollectability $15,504, increase in accounts payable of $221,631.  

 

For the year ended September 30, 2018, the Company received a repayment of commercial paper in the amount of $100,000.

 

Cash generated in our financing activities was $304,346 and $17,000 for the years ended September 30, 2019 and 2018, respectively. Financing activities for the year ended September 30, 2019 included proceeds of $166,961 from a line of credit and $137,385 of accounts payable converted to the line of credit.

 

We do not have sufficient resources to effectuate our business. As of September 30, 2019, we had cash of $3,218.

 

We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.

 

12 

 

 

Going Concern

 

Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

 

The accompanying 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 incurred a net loss of $375,478 for the year ended September 30, 2019, had an accumulated deficit of $2,203,543, and has a stockholders’ deficit of $984,662 at September 30, 2019. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company is highly dependent on its ability to continue to obtain investment capital and loans from an affiliate and shareholder in order to fund the current and planned operating levels. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to bring in income generating activities and its ability to continue receiving investment capital and loans from an affiliate and shareholder to sustain its current level of operations. No assurance can be given that the Company will be successful in these efforts.

 

Critical Accounting Policies and Estimates

 

Our significant accounting policies are described in Note 2 of the audited financial statements included elsewhere in this report. The preparation of the financial statements in accordance with U.S. GAAP requires management to make significant judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. Our financial position and results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information. Significant accounting policies, including areas of critical management judgments and estimates, include the following:

 

Impairment or Disposal of Long-Lived Assets

 

The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.

 

Stock Based Compensation

 

The Company accounts for Stock-Based Compensation under ASC Topic 718-10 (“ASC 718-10”), 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 is a revision to SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related implementation guidance. 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.

 

Off-Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

13 

 

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

As the Company is a “smaller reporting company,” this item is inapplicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14 

 

 

 

Item 8. Financial Statements and Supplementary Data.

 

Index Page
   
Report of Independent Registered Public Accounting Firm – Haynie & Company F-1
Financial Statements  
Balance Sheets F-2
Statements of Operations F-3
Statements of Cash Flows F-4
Statements of Stockholders’ Deficit F-5
Notes to Financial Statements F-6

 

 

 

 

 

 

 

 

 

15 

 

 

 

 

  

F-1 

 

 

 

ALTERNATIVE INVESTMENT CORPORATION

Balance Sheets

 

 

   September 30, 2019   September 30, 2018 
ASSETS          
Current assets:          
Cash and cash equivalents  $3,218   $5,620 
Miscellaneous receivable other, net   366    366 
Prepaid expenses   —      654 
Total current assets   3,584    6,640 
Total assets  $3,584   $6,640 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
Current liabilities:          
Accounts payable  $175,341   $195,668 
Accrued expense   58,054    11,472 
Line of Credit - related party, current portion   192,961    26,000 
Loan payable, short-term - related party   136,000    136,000 
Accrued interest - including related party   56,531    19,743 
Amount due to shareholder - related party   231,973    231,973 
Total current liabilities   850,860    620,856 
Line of credit related party - net of current portion   137,386    —   
Total liabilities   988,246    620,856 
           
Stockholders' deficit:          
Common stock, $.001 par value, 1,600,000,000 shares authorized, 432,192 and 431,991 shares issued and outstanding as of September 30, 2019 and September 30, 2018, respectively   432    432 
Additional paid-in capital   1,218,529    1,213,497 
Treasury stock, at cost   (80)   (80)
Accumulated deficit   (2,203,543)   (1,828,065)
Total stockholders' deficit   (984,662)   (614,216)
Total liabilities and stockholders' deficit  $3,584   $6,640 

 

The accompanying notes are an integral part of the financial statements.

 

F-2 

 

 

 

ALTERNATIVE INVESTMENT CORPORATION

STATEMENTS OF OPERATIONS

 

   The years ended September 30, 
   2019   2018 
Revenue  $—     $—   
Cost of revenue   —      —   
Gross profit   —      —   
           
Operating expenses          
General and administrative expenses   260,409    386,000 
Professional fees   82,781    46,750 
Total operating expenses   343,190    432,750 
           
Loss from operations   (343,190)   (432,750)
           
Other income (expense):          
Interest income   11,557    15,539 
Interest expense   (43,845)   (20,050)
Loss from uncollectability   —      (15,504)
Total other (expense)   (32,288)   (20,015)
           
Loss before income taxes  $(375,478)  $(452,765)
           
Provision for income taxes   —      —   
           
Net loss  $(375,478)  $(452,765)
           
Net loss per share - basic and diluted  $(0.87)  $(2.07)
           
Weighted average number of shares outstanding - Basic and Diluted   431,991    218,632 

 

The accompanying notes are an integral part of the financial statements.

 

F-3 

 

 

ALTERNATIVE INVESTMENT CORPORATION

Statements of Cash Flows

 

   The years ended September 30, 
   2019   2018 
         
Cash flows from operating activities          
Net loss  $(375,478)  $(452,765)
Adjustments to reconcile net loss to net cash used in operations:          
Stock based compensation   —      55,250 
Loss due to uncollectability   —      15,504 
Changes in operating assets and liabilities:          
Imputed interest on amounts due to shareholder   7,032    8,158 
Interest receivable   (2,000)   21,176 
Accounts payable   (20,327)   221,631 
Miscellaneous receivable   —      (13,846)
Interest payable   36,789    11,892 
Accrued expenses   46,582    11,472 
Prepaids and deposits   654    (248)
Net cash used in operating activities   (306,748)   (121,776)
           
Cash flows from investing activities:          
Repayment of commercial paper investment   —      100,000 
Net cash provided by (used in) investing activities   —      100,000 
           
Cash flows from financing activities:          
Proceeds from line of credit   166,961    44,000 
Accounts payable converted to line of credit   137,385    —   
Repayments on note payable   —      (27,000)
Net cash provided by financing activities   304,346    17,000 
           
Net (decrease) in cash   (2,402)   (4,776)
Cash and cash equivalents at beginning of year   5,620    10,396 
Cash and cash equivalents at end of year  $3,218   $5,620 
           
Supplemental disclosure of cash flow information:          
Cash paid for taxes  $—     $—   
Cash paid for interest  $—     $—   
Imputed interest classified as additional paid in capital  $—     $—   
Debt converted for stock to be issued  $—     $155,000 
Related party forgiveness of debt classified as additional paid in capital  $—     $61,017 
Interest reclassed to Additional Paid in Capital - imputed interest  $7,032   $—   
Stock issuable awarded as stock-based compensation  $—     $17,462 

 

The accompanying notes are an integral part of the financial statements.

 

 

F-4 

 

 

 

ALTERNATIVE INVESTMENT CORPORATION

Condensed Statements of Stockholders' (Deficit)

For the Year Ended September 30, 2018

 

   Common stock   Paid-in   Common           Total 
           capital   stock   Treasury   Accumulated   stockholders' 
   Shares   Amount   (deficiency)   issuable   stock   deficit   deficit 
Balance, September 30, 2017   173,058   $173   $472,086   $574,975   $(80)  $(1,375,300)  $(328,146)
                                    
Related party debt forgiveness - doubtful collection   —      —      (61,017)   —      —      —      (61,017)
                                    
Interest on Related Party Note Payable - imputed interest   —      —      17,462    —      —      —      17,462 
                                    
Stock-based compensation   65,000    65    55,185    —      —      —      55,250 
                                    
Common stock issuable   11,781    12    574,963    (574,975)   —      —      —   
                                    
Shares issued as debt conversion @$0.85/share   182,353    182    154,818    —      —      —      155,000 
                                    
Net loss for the year ended September 30, 2018   —      —      —      —      —      (452,765)   (452,765)
                                    
Balance, September 30, 2018   432,192   $432   $1,213,497   $—     $(80)  $(1,828,065)  $(614,216)

   

 

ALTERNATIVE INVESTMENT CORPORATION

Statements of Stockholders' (Deficit)

For the Year Ended September 30, 2019

 

   Common stock   Paid-in   Common           Total 
           capital   stock   Treasury   Accumulated   stockholders' 
   Shares   Amount   (deficiency)   issuable   stock   deficit   deficit 
Balance, September 30, 2018   432,192   $432   $1,213,497   $—     $(80)  $(1,828,065)  $(614,216)
                                    
Interest on Related Party Note Payable - imputed interest   —      —      7,032    —      —      —      7,032 
                                    
Related party debt forgiveness - doubtful collection   —      —      (2,000)   —      —      —      (2,000)
                                    
Net loss for the year ended September 30, 2019   —      —      —      —      —      (375,478)   (375,478)
                                    
Balance, September 30, 2019   432,192   $432   $1,218,529   $—     $(80)  $(2,203,543)  $(984,662)

 

The accompanying notes are an integral part of the condensed financial statements.

 

 

F-5 

 

 

ALTERNATIVE INVESTMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 1 – NATURE OF BUSINESS, PRESENTATION AND GOING CONCERN

 

Organization

 

Alternative Investment Corporation (the "Company") was incorporated in Nevada on March 26, 2007. As of the date hereof, the Company has no operations.

 

On September 18, 2015, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Alternative Investment Corporation.

 

The Company is focused on new investment opportunities which lie in the real estate sector with primary focus on distressed real estate assets and/or alternative real estate developments as well as other technologies in the biotech sector.

 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the SEC.

 

Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”).

 

Going Concern

 

The accompanying 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 incurred net losses of $375,478 and $452,765 for the year ended September 30, 2019 and 2018, respectively. At September 30, 2019, the Company had an accumulated deficit of $2,203,543 and stockholders’ deficit of $984,662. These conditions raise substantial doubt about the ability of the Company to continue as a going concern.  The ability of the Company to continue as a going concern is dependent upon its ability to develop and sustain a viable business model capable of generating sufficient revenues to support ongoing operations and overhead and to continue to raise investment capital through the sale of Company stock. No assurance can be given that the Company will be successful in these efforts.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.  No assurance can be given that the Company will be successful in these efforts.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Significant estimates in the accompanying financial statements include the valuation of share-based payments and the valuation allowance on deferred tax assets.

 

F-6 

 

 

ALTERNATIVE INVESTMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Fair Value of Financial Instruments

 

ASC 825 "Financial Instruments" codified Statement of Financial Accounting Standard No. 107, Disclosures about fair value of financial instruments, requires that the Company disclose estimated fair values of financial instruments. Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments, none of which are held for trading purposes, approximate the carrying values of such amounts. The Company did not have any financial instruments at September 30, 2019 and 2018.

 

Accounts payable

 

The Company accounts for expenses on the accrual basis of accounting under US GAAP (Generally Accepted Accounting Principles) where expenses are recorded when incurred.  Invoices for expense are recorded in the period in which they are incurred and reflected in accounts payable on the balance sheet of the Company.  Often expenses should be accounted for prior to an invoice being received. These amounts are reflected in accrued expense in the Company’s financial statements.  As of September 30, 2019 and 2018, the Company has accrued payables of $175,341 and $195,668, respectively.

 

Earnings (Loss) Per Share

 

The Company computes income (loss) per share in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) ASC Topic 260, “Earnings Per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period.

 

Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares for periods in which the Company incurs losses as their effect is anti-dilutive.  As of September 30, 2019 and 2018, respectively, there were no common share equivalents outstanding which would be deemed as dilutive.

 

Reclassifications

 

Certain prior year amounts have been reclassified to conform to the current period presentation. The reclassifications had no effect on the net loss or cash flows of the Company.

 

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

 

In June 2018, the FASB issued ASU No. 2018-07, “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” which addresses accounting for issuance of all share-based payments on the same accounting model. Previously, accounting for share-based payments to employees was covered by ASC Topic 718 while accounting for such payments to non-employees was covered by ASC Subtopic 505-50. As it considered recently issued updates to ASC 718, the FASB, as part of its simplification initiatives, decided to replace ASC Subtopic 505-50 with Topic 718 as the guidance for non-employee share-based awards. Under this new guidance, both sets of awards, for employees and non-employees, will essentially follow the same model, with small variations related to determining the term assumption when valuing a non-employee award as well as a different expense attribution model for non-employee awards as opposed to employee awards. The ASU is effective for public business entities beginning in 2019 calendar years and one year later for non-public business entities. The Company is assessing the impact, if any, of implementing this guidance on its financial position and results of operations.

 

F-7 

 

 

ALTERNATIVE INVESTMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

 

The Company has evaluated all other new ASU's issued by FASB and has concluded that these updates do not have a material effect on the Company's financial statements as of September 30, 2019.

 

NOTE 4 – LOAN RECEIVABLE

 

On January 18, 2017, the Company issued a loan to B&B Inc. in the amount of $11,000 at annual rate of eight percent (8%) and was due on July 18, 2018. Accrued interest at September 30, 2019 and 2018 was $2,375 and $1,495, respectively. As of September 30, 2019 and 2018, the Company has fully reserved this loan and accrued interest as doubtful to be collected.

 

On October 1, 2017, the Company entered into a $15,000 loan agreement with Visit Brands Inc. This is a demand loan bearing a 5% interest. Under this agreement the Company advanced Visit Brands Inc. $9,037 on October 3, 2017 and $4,500 on November 3, 2017. As of September 30, 2019 and 2018, the Company has fully reserved this note as it is doubtful that it will ever be collected. As of September 30, 2019 the note had accrued interest of $1,329.

 

All accrued interest has also been fully allowed as doubtful to be collected as of September 30, 2019.

 

NOTE 5 – RELATED PARTIES

 

As of September 30, 2019 and 2018, $231,973, was due to Canton. This is an unsecured loan, non-interest bearing and there is no repayment date. Interest has been calculated at an imputed interest rate of 3% and reflected as interest expense and as an increase to additional paid in capital in the amount of $7,032 and $17,462 for the years ended September 30, 2019 and 2018, respectively.  On April 1, 2018, Canton elected to convert $80,000 of the amount due into 94,118 common restricted shares of the Company ($0.85 per share).

 

On April 1, 2016, the Company issued a loan to Fingi Inc., a company of which Canton may be deemed a controlling person, in the amount of $50,000. The terms include no monthly payments with interest compounding monthly at an annual rate of four percent (4%). The entirety of the accrued interest and principal were originally due on December 31, 2016.  The note remained in default until November 8, 2017, when the Company entered into an amendment agreement on this note to extend the maturity date to June 30, 2018.  For the year ended September 30, 2019 and 2018, $7,008 and $5,008 has been recognized, respectively, as interest income and included in the consolidated statements of operations. As of September 30, 2019 and 2018, the Company has fully reserved these loans as uncollectable. As of September 30, 2019, the Company has stopped accruing interest receivable on these notes.

 

On February 2, 2016, the Company entered into an expense sharing agreement with Fingi Inc (“Fingi”). Fingi is company for which Canton, our largest shareholder, may be deemed a controlling entity. Under the expense sharing agreement, the Company shares the rent and utility expenses incurred in connection with occupancy of office space that is being leased by Fingi Inc. During the year ended September 30, 2019, amount due for rent was $5,684 per month. For the year ended September 30, 2019 and 2018 rent and utilities expenses amounted to $75,367 and $72,927, respectively.

 

Related party transactions are not necessarily indicative of an arm’s length transaction or comparable to a transaction that had been entered into with independent parties.

 

As of September 30, 2019 and 2018, the Company had a liability due to its former Chief Executive and Chief Financial Officer, Daniel Otazo in the amount of $2,000 and $6,000, respectively.  The amount was reflected in accounts payable on the Company’s financial statements. Amounts are due under a compensation for services provided agreement.  Mr. Otazo resigned from the Company in all official capacities on November 30, 2017.  As of September 30, 2019, the Company had a liability due to its current Chief Executive and Chief Financial Officer, Antonio Treminio, in the amount of $109,051.

 

F-8 

 

 

ALTERNATIVE INVESTMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 5 – RELATED PARTIES (CONTINUED)

 

As of September 30, 2019, Alternative Strategy Partners Pte. Ltd. (“ASP”) was considered a related party. As a shareholder, ASP owns 20.4% of the outstanding stock of the Company as well as $380,347 of current debt. Additionally, ASP has committed to lend an additional $669,653 to the Company under a line of credit agreement (SEE NOTE 6).

 

NOTE 6 – LINE OF CREDIT – RELATED PARTY

 

During the year ended September 30, 2018, The Company received $26,000 from ASP in the form of advances under three promissory notes bearing an interest rate of 8%.   During the year ended September 30, 2019, ASP loaned the Company $259,916 under separate one-year 8% notes. Additionally, on March 8, 2019, ASP wired $74,768 to the primary lessor of the office space where the Company maintains its corporate office. Since the Company pays 50% of the rent under an expense sharing agreement, the amount of $37,384 was recorded as a loan from ASP on the Company’s balance sheet as loans payable. On August 8, 2019, the Company entered into a $1,000,000 Line of Credit agreement with ASP. The Line of Credit has an expiration date of December 31, 2024. As a result of this agreement, monthly rental payments paid by ASP in the amount of $130,339, previously recorded as accounts payable was transferred to ASP Loan payable and interest was applied retroactively. Under this agreement, all former advances were applied toward the overall cap of the line of credit. As of September 30, the Company had $669,653 available under the agreement. As of September 30, 2019, collective accrued interest on all notes and advances was $24,063.

 

As of September 30, 2019, all advances are covered by notes payable except the $137,386 covered by the blanket agreement for monthly rental payments paid by ASP and previously recorded as accounts payable. This amount has a due date co-terminus with the overall agreement of December 31, 2019. The balance of the non-current portion of the line of credit at September 30, 2019 was $137,386.

 

NOTE 7 – NOTES PAYABLE - RELATED PARTY

 

On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding to Fess Group Holdings LLC notes were transferred to Canton Investments, Ltd. As of February 28, 2018, these notes were considered related party notes.

 

Notes payable – related party consisted of the following as of:

 

      

September 30,

2019

  

September 30,

2018

 
Canton Investments, Ltd.   (a)   $35,000   $35,000 
Canton Investments, Ltd.   (b)    4,000    4,000 
Canton Investments, Ltd.   (c)    35,000    35,000 
Canton Investments, Ltd.   (d)    7,000    7,000 
Canton Investments, Ltd.   (e)    5,000    5,000 
Alternative Strategy Partners Pte. Ltd.   (f)    50,000    50,000 
Total notes payable – Related party        136,000   $136,000 
Less - current portion of these notes       $(136,000)  $(136,000)
Notes Payable – Related Party       $—     $—   

 

(a) On November 30, 2016, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $35,000. The note had a maturity date of May 30, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of September 30, 2019, this note had accrued interest of $7,932.

 

(b) On January 3, 2017, the Company entered into a six-month 8% loan agreement with JIFM in the amount of $4,000. The note had a maturity date of July 3, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of September 30, 2019, this note had accrued interest of $877.

 

 

F-9 

 

 

ALTERNATIVE INVESTMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 7 – NOTES PAYABLE - RELATED PARTY (CONTINUED)

 

(c) On January 17, 2017, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $35,000. The note had a maturity date of July 17, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of September 30, 2019, this note had accrued interest of $7,564.

 

(d) On January 19, 2017, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $7,000. The note had a maturity date of July 19, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of September 30, 2019, this note had accrued interest of $1,510.

 

(e) On January 23, 2017, the Company entered into a six-month 8% loan agreement with JIFM LLC in the amount of $5,000. The notes had a maturity date of July 23, 2017.  The Company is currently trying to cure the default under this note.  On February 28, 2018, the noteholder, JIFM LLC., entered into a settlement agreement with Basil and Barnes Holding LLC.  Under terms of the settlement all outstanding notes were transferred to Canton Investments, Ltd.  As of September 30, 2019, this note had accrued interest of $1,074.

 

(f) On January 31, 2017, the Company entered into a six-month 8% loan agreement with Basil and Barns Capital Inc. in the amount of $50,000.  The note had a maturity date of July 31, 2017.  The Company is currently trying to cure the default under this note.  On June 15, 2018, Basil and Barns Capital Inc. assigned this note to ASP. At September 30, 2019, the note has accrued interest of $10,652.

 

NOTE 8 – INVESTMENT IN COMMERCIAL PAPER

 

On June 8, 2015 and July 3, 2015, respectively, the Company invested into two $100,000 two-year convertible bonds from Bullion Japan Inc. each of those two days for a total investment of $200,000. The bonds matured July 3, 2017 and June 8, 2017, respectively, earning interest at eight percent (8%) per annum paid quarterly, and are convertible into common stock of Bullion Japan Inc. at the Company’s option any time prior to the maturity date at a price of JPY ¥8,035 ($6.46) per share.

 

On December 15, 2017, the Company entered into a memorandum of agreement to extend maturity date of the July 3, 2015 bond to March 30, 2018.  The same terms as the original agreement prevailed and the Company continued to accrue interest.  As of September 30, 2019 and 2018, the Company has recorded an allowance for the unrecoverability of this investment in the amount of $100,000.

 

On December 28, 2017, Bullion Japan paid accrued interest through April 2018 in the amount of $33,160.  Bullion Japan Inc. further paid the principal of $100,000 relative to the June 8, 2015 note on that same day.  Upon payment accrued interest was $28,624.  As a result of this payment in excess of accrued interest the Company recorded deferred interest revenue in the amount of $4,356.  At September 30, 2018 all deferred revenue was recognized. As of September 30, 2019, the Company had a balance of $11,486 in accrued interest that has been fully reserved as doubtful as it relates to future collection.

 

NOTE 9 – COMMON STOCK

 

The Company has authorized 1,600,000,000 shares of Common Stock, $0.001 par value.  At September 30, 2019 and 2018, the Company had 432,192 shares issued and 431,991 shares outstanding.

 

No shares were issued during the year ended September 30, 2019.

 

 

 

F-10 

 

 

ALTERNATIVE INVESTMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 9 – COMMON STOCK (CONTINUED)

 

During the year ended September 30, 2018, the Company received a conversion notice pursuant to an unsecured, non-interest bearing loan with no repayment date whereby the noteholder elected to convert $80,000 of the amount due into 94,118 common shares of the Company’s restricted stock ($0.85 per share).

 

During the year ended September 30, 2018, the Company received a conversion notice pursuant to a direct payment, non-interest bearing arrangement with no repayment date, recorded in accounts payable on the Company’s balance sheet, whereby the noteholder elected to convert $75,000 of the amount due into 88,235 common shares of the Company’s restricted stock ($0.85 per share).

 

During the year ended September 30, 2018, the Company entered into or amended compensation agreements with two consultants and one employee to issue 65,000 common restricted shares of Company stock at a value of $55,250 ($0.85 per share).

 

NOTE 10 – INCOME TAXES

 

No provision was made for income taxes for the years ended September 30, 2019 and 2018 as the Company had incurred net losses for tax purposes of $375,478 and $452,765, respectively.

 

Deferred income taxes reflect the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The components of the net deferred income tax assets are approximately as follows:

 

Deferred income tax assets: 

September 30,

2019

  

September 30,

2018

 
Net operating loss carry forwards  $439,700   $361,200 
Valuation allowance   (439,700)   (361,200)
Net deferred income tax assets  $—     $—   

 

The Company has established a full valuation allowance on our deferred tax asset because of a lack of sufficient positive evidence to support its realization. The valuation allowance increased by $78,500 and $98,700 for the years ended September 30, 2019 and 2018, respectively.

 

At September 30, 2019, the Company has net operating loss carry forwards of approximately $2,094,000, $1,700,000 that will fully expire with the tax year ending September 30, 2037.  For tax years beginning after December 31, 2017, the carry-back option is no longer available and carry forward provisions are limited to eighty percent of taxable income but do not expire.  The potential tax benefit of these losses may be limited due to certain change in ownership provisions under Section 382 of the Internal Revenue Code (“IRS”) and similar state provisions.

 

On December 22, 2017, Public Law 115-97, informally referred to as the Tax Cuts and Jobs Act (“the TCJA”) was enacted into law. The TCJA provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended, that impact corporate taxation requirements. Effective January 1, 2018, the federal tax rate for corporations was reduced from 35% to 21% for US taxable income and requires one-time re-measurement of deferred taxes to reflect their value at a lower tax rate of 21%.  Also, mandatory repatriation of untaxed foreign earnings and profits will be taxed at 15.5% to the extent the underlying assets are liquid and 8% on the remaining balance. There are other provisions to the TCJA, such as conversion of a worldwide system to a territorial system, limitations on interest expense and domestic production deductions, which will be effective in fiscal year 2019. The Company anticipates its effective tax rate to be 28% to 30%, excluding the one-time impact of the TCJA for fiscal year 2018 primarily due to the reduction in the federal tax rate. The Company’s actual effective tax rate for fiscal year 2018 may differ from management’s estimate due to changes in interpretations and assumptions. Due to the timing of enactment and complexity of the TCJA, the Company is unable to estimate a reasonable range of the one-time impact associated with mandatory repatriation, re-measurement of deferred taxes and other provisions of the TCJA.

 

 

F-11 

 

 

ALTERNATIVE INVESTMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

NOTE 10 – INCOME TAXES (CONTINUED)

 

IRS Section 382 places limitations (the “Section 382 Limitation”) on the amount of taxable income which can be offset by net operating loss carry forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Generally, after a change in control, a loss corporation cannot deduct operating loss carry forwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the net operating loss and tax credit carry forwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has not concluded its analysis of Section 382 through September 30, 2018 but believes the provisions will not limit the availability of losses to offset future income.

 

The Company is subject to income taxes in the U.S. federal jurisdiction and the state of Nevada. The tax regulations within each jurisdiction are subject to interpretation of related tax laws and regulations and require significant judgment to apply. As of September 30, 2019, the Company has not filed any tax returns. As of September 30, 2019, tax years 2007 through 2018 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years.

 

NOTE 11 – CURRENT LITIGATION

 

On August 13, 2019, the Company received a registered letter dated August 7, 2019 from the law firm of Smith, Carroad, Levy & Parikh, P.C. pursuant to a Summons and Complaint filed with the Supreme Court of New York on April 4, 2019. The plaintiff, Raich Ende Malter & Co. LLP., claims that the Company owes past due fees in the amount of $49,281 for auditing, accounting, management consulting and tax services rendered for the fiscal years ended September 30, 2016 and 2017. The summons was improperly served to an unknown party to the Company. (Index # 153512-2019 filed with the Supreme Court of New York). The Company has fully accrued this amount as General and Administrative expense on its Statement of Operations for the year ended September 30, 2019. The Company continues to try to resolve this issue with plaintiff.

 

NOTE 12 – SUBSEQUENT EVENTS

 

The Company has analyzed its operations subsequent to September 30, 2019 to the date these financial statements were issued and has not found any transactions or events requiring disclosure.

 

 

 

 

 

 

F-12 

 

 

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A.   Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to chief executive and chief financial officers to allow timely decisions regarding disclosure.

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are not effective as of such date.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

The management of the Company is responsible for the preparation of the financial statements and related financial information appearing in this Annual Report on Form 10-K. The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The management of the Company is also responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company's internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

 

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

 

Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

 

Management, including the Chief Executive Officer and Chief Financial Officer, does not expect that the Company's disclosure controls and internal controls will prevent all error and all fraud. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Further, over time, control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

 

16

 

 

 

With the participation of the Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the Company's internal control over financial reporting as of September 30, 2019 based upon the framework in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management has concluded that, as of September 30, 2019, the Company had material weaknesses in its internal control over financial reporting. Specifically, management identified the following material weaknesses at September 30, 2019:

 

1. Lack of oversight by independent directors in the establishment and monitoring of required internal controls and procedures;

2. Lack of functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

3. Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting;

4. Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes.

 

As a result of the material weakness described above, management has concluded that, as of September 30, 2019, we did not maintain effective internal control over financial reporting, involving the preparation and reporting of our financial statements presented in conformity with GAAP.

 

We understand that remediation of material weaknesses and deficiencies in internal controls is a continuing work in progress due to the issuance of new standards and promulgations. However, remediation of any known deficiency is among our highest priorities. Our management will periodically assess the progress and sufficiency of our ongoing initiatives and make adjustments as and when practical and necessary.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

Other than items noted above, there were no other changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B.   Other Information.

 

None.

 

 

 

17 

 

 

 

PART III

 

Item 10.   Directors, Executive Officers and Corporate Governance.

 

The following table sets forth information with respect to persons who are serving as directors and officers of the Company.  Each director holds office until the next annual meeting of shareholders or until his successor has been elected and qualified.

 

            Held
            Position
Name   Age   Positions   Since
             
Shuichi Uda   46   Director   8/21/2015
             
Antonio Treminio   48   Director, Chief Executive Officer and Chief Financial Officer   12/01/2017

 

Biography of Directors and Officers

 

Mr. Antonio Treminio, 47, was appointed by the Shareholders of the Corporation on December 1, 2017 as Director and Chief Executive Officer and Interim Chief Financial Officer of the Company. Mr. Treminio has over 20 years of experience in the financial markets with special focus on corporate financing for private and public companies. Over the years Mr. Treminio has assisted a number of different publicly traded companies meet and/or secure their capital requirements for expansion and/or growth.  Mr. Treminio has been previously employed by Dean Witter Reynolds, as well at PaineWebber and has been a successful investment banker, entrepreneur and has successfully help fund, grow and up-list several of his previous companies to markets such as NASDAQ, AMEX and the NYSE.  Mr. Treminio studied Business Administration at Loyalist College in Belleville, Ontario, Canada in 1993. He is also member of renown Japan Karate Association, holds a first degree Blackbelt in Shotokan Karate.

 

On December 1, 2017, the Shareholders of the Corporation voted to elect Mr. Antonio Treminio as Director and CEO of the Company. The same day Mr. Daniel Otazo, the previous Director, Chief Executive Officer and interim Chief Financial Officer, tendered his resignation. Mr. Otazo’s resignation was not a result of any disagreement with the Company.

 

Mr. Shuichi Uda was appointed as a Director of the Company on August 21, 2015. Mr. Uda is the founder & CEO of Dragoon Capital Inc., a full-service investment-banking firm (Japanese Financial Service Agency License No. 1032). Mr. Uda has also held executive positions at Silvertail in London and as Chief Consultant for Funai Consulting Co., Ltd. prior to founding Dragoon Capital in Tokyo. Mr. Uda holds a BA in Industrial Design from the Kobe Design University.

 

Our directors are elected at the annual meeting of the shareholders, with vacancies filled by the Board of Directors, and serve until their successors are elected and qualified, or their earlier resignation or removal. Officers are appointed by the board of directors and serve at the discretion of the board of directors or until their earlier resignation or removal.  Any action required can be taken at any annual or special meeting of stockholders of the corporation which may be taken without a meeting, without prior notice and without a vote, if consent of consents in writing setting forth the action so taken, shall be signed by the holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office, its principle place of business, or an officer or agent of the corporation having custody of the book in which the proceedings of meetings are recorded.

 

Indemnification of Directors and Officers

 

Nevada Corporation Law allows for the indemnification of officers, directors, and any corporate agents in terms sufficiently broad to indemnify such persons under certain circumstances for liabilities, including reimbursement for expenses, incurred arising under the 1933 Act. The Bylaws of the Company provide that the Company will indemnify its directors and officers to the fullest extent authorized or permitted by law and such right to indemnification will continue as to a person who has ceased to be a director or officer of the Company and will inure to the benefit of his or her heirs, executors and Consultants; provided, however, that, except for proceedings to enforce rights to indemnification, the Company will not be obligated to indemnify any director or officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized by the Board of

 

18 

 

 

Directors. The right to indemnification conferred will include the right to be paid by the Company the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition.

 

The Company may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Company similar to those conferred to directors and officers of the Company. The rights to indemnification and to the advancement of expenses are subject to the requirements of the 1940 Act to the extent applicable.

 

Furthermore, the Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another company against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Nevada General Corporation Law.

 

Committees of the Board of Directors

 

None.

 

Auditors

 

Our independent registered public accounting firm for the year ended September 30, 2019 and 2018 was Haynie & Company.

 

Code of Ethics

 

We do not currently have a Code of Ethics because we have limited business operations and only two officers/directors on the Board. We believe a code of ethics would have limited utility at this stage. We intend to adopt such code of ethics that would cover our business as soon as possible.

 

Item 11.  Executive Compensation.

 

Our directors do not receive any stated salary for their services as directors or members of committees of the board of directors, but by resolution of the board, a fixed fee may be allowed for attendance at each meeting. Directors may also serve the company in other capacities as an officer, agent or otherwise, and may receive compensation for their services in such other capacity. No such fees have been paid to any director since incorporation. Reasonable travel expenses are reimbursed.

 

The following tables set forth information concerning all cash compensation awarded to, earned by or paid to all individuals serving as the Company’s principal executive officers during the last two completed fiscal years, and all non-cash compensation awarded to those same individuals as of September 30, 2019.

 

Name and Principal Position   Year   Salary   Bonus  

Stock

Awards

 

All Other

Compensation

  Total
                                   
Shuichi Uda (2)   2019   $   $   $   $   $
Director   2018   $   $   $   $   $
                                   
Antonio Treminio (3)   2019   $ 60,000   $   $   $   $ 60,000
Chief Executive Officer, Interim Chief   2018   $ 55,000   $   $ 25,500   $   $ 80,500
Financial Officer, and Director                                  

 

(1)Mr. Shuichi Uda was appointed as a Director on August 21, 2015.

 

(2)Mr. Treminio was appointed Director, Chief Executive Officer and Interim Chief Financial Officer on December 1, 2017. No salary has been paid to Mr. Treminio as of this report date. All amounts due Mr. Treminio are currently recorded as Accounts Payable on the Company’s Balance Sheet as of September 30, 2019.

 

19 

 

 

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table shows the number and percentage of shares of the Company’s common stock owned of record and beneficially by each director and each officer of the Company, and by each person beneficially owning more than five (5%) percent of any class of the common stock, as of September 30, 2019. Except as otherwise noted, the address of the referenced individual is c/o Alternative Investment Corporation, 150 East 52nd Street, Suite 1102 New York, New York 10022.

 

As used in the table below, the term “beneficial ownership” means the sole or shared power to vote or direct the voting, or to dispose or direct the disposition, of any security. A person is deemed as of any date to have beneficial ownership of any security that such person has a right to acquire within 60 days after such date. Except as otherwise indicated, the stockholders listed below have sole voting and investment powers with respect to the shares indicated.

 

                Percent
    Title of Stock   Beneficial       of
Name and Position   Class   Ownership       Class (3)
                     
Canton Investments Ltd. (1)   Common Stock     191,118   (Direct)     44.2%
Alternative Strategy Partners PTE LTD   Common Stock     88,235   (Direct)     20.4%
Antonio Treminio   Common Stock     30,000         6.9%
Tidwell Limited (2)   Common Stock     22,500   (Direct)     5.2%
                     
All Directors and Officers as a Group   Common Stock     30,000         6.9%

_____________

(1)Canton Investments Ltd. ("CIL") is a company incorporated in Hong Kong having its offices at Corner Hutson & Eyre Streets, Blake Bld. #302, Belize City, Belize.

 

(2)Tidwell Limited is a company incorporated in Hong Kong having its offices at 78 Des Voeux Rd., Hong Kong

 

(3)The percentage of common stock is calculated based upon 432,192 shares outstanding as of January 9, 2019.

 

Item 13.   Certain Relationships and Related Transactions, and Director Independence.

 

The Company has a formal written agreement with the current Chief Executive and Interim Chief Financial Officers, Antonio Treminio who was appointed on December 1, 2017.  The amounts of compensation and other terms of any full-time employment arrangements would be determined, if and when, such arrangements become necessary.

 

Item 14.   Principal Accounting Fees and Services.

 

The following table sets forth the fees billed by our principal independent accountants, Haynie & Company during the years ended September 30, 2019 and Green & Company CPA’s for the year ended 2018, for the categories of services indicated.

 

  Years Ended September 30,
Category 2019   2018
Audit Fees $ 17,000   $ 12,800
Audit Related Fees   -     -
Tax Fees   -     -
All Other Fees   -     -
Total $ 17,000   $ 12,800

 

Audit fees. Consists of fees billed for the audit of our annual financial statements and review of our interim financial information and services that are normally provided by the accountant in connection with year-end and quarter-end statutory and regulatory filings or engagements.

 

Audit-related fees. Consists of fees billed for services relating to review of other regulatory filings including registration statements, periodic reports and audit related consulting.

 

20 

 

 

 

Tax fees. Consists of professional services rendered by our principal accountant for tax compliance, tax advice and tax planning.

Other fees. Other services provided by our accountants.

 

Audit Committee Pre-Approval Policies and Procedures

 

Effective May 6, 2003, the SEC adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

 approved by our audit committee; or

 

entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

 

We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors.

 

21 

 

 

 

PART IV

 

Item 15.  Exhibits, Financial Statement Schedules

 

Financial Statements

 

See Item 8. Financial Statements and Supplementary Data

 

Exhibits

 

Exhibit 3.1 Articles of incorporation (2)
Exhibit 10.1 February 27, 2017 agreement to terminate April 1, 2016, Shareholders’ Agreement with Basil and Barns, Inc. to acquire 55% of the outstanding common shares of B&B Inc. (2)
Exhibit 10.2 Resignation letter of Mr. Daniel Otazo as Director, Chief Executive Officer and interim Chief Financial Officer, dated November 30, 2017 (1)
Exhibit 10.3 Related party debt conversion agreement with Canton date April 1, 2018 (2)
Exhibit 10.4 Related party debt conversion agreement with Alternative Strategy Partners April 1, 2018 (2)
Exhibit 10.5 Six-month 8% loan agreement with Basil and Barns Capital Inc. in the amount of $50,000 dated January 31, 2017 (2)
Exhibit 10.6 Six-month 8% loan agreement with JIFM LLC in the amount of $35,000 dated November 30, 2016 (2)
Exhibit 10.7 Six-month 8% loan agreement with JIFM LLC in the amount of $35,000 dated January 17, 2017 (2)
Exhibit 10.8 Form of 12-month 8% promissory notes with Alternative Strategy Partners in the cumulate amount of $26,000 dated August 20, 2018, September 12, 2018 and September 20, 2018 (2)
Exhibit 10.9

12-month 8% promissory notes with Alternative Strategy Partners in the amount of $7,000 dated October 3, 2018 (3)

Exhibit 10.10 Line of credit agreement with Alternative Strategies Partners, Ltd. with a maximum of $1,000,000 credit dated August 8, 2019 (4)
Exhibit 10.11 Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $8,000 dated January 11, 2019
Exhibit 10.12 Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $15,000 dated February 11, 2019
Exhibit 10.13

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $15,000 dated March 20, 2019

Exhibit 10.14

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $500 dated March 28, 2019

Exhibit 10.15

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $10,000 dated May 4, 2019

Exhibit 10.16

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $10,000 dated May 23, 2018

Exhibit 10.17

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% Promissory Note in the amount of $800 dated May 29, 2019

Exhibit 10.18

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $6,800 dated June 4, 2019

Exhibit 10.19

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $3,000 dated June 13, 2019

Exhibit 10.20

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $2,200 dated June 21, 2019

Exhibit 10.21

Alternative Strategy Partners Pte Ltd (ASP) Related Party 8% - Promissory Note in the amount of $5,400 dated June 13, 2018

Exhibit 10.22

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $2,348 dated July 2, 2019

Exhibit 10.23

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $5,500 dated July 11, 2019

Exhibit 10.24

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $5,300 dated July 29, 2019

 

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Exhibit 10.25

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $5,500 dated August 19, 2019

Exhibit 10.26

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $949 dated August 22, 2019

Exhibit 10.27

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $5,380 dated August 28, 2019

Exhibit 10.28

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $5,500 dated September 26, 2019

Exhibit 10.29

Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $5,400 dated September 12, 2019

Exhibit 10.30 Alternative Strategy Partners Pte Ltd (ASP) - Related Party 8% - Promissory Note in the amount of $10,000 dated September 11, 2019
Exhibit 31.1 Rule 13a-14(a) Certification by the Chief Executive Officer *
Exhibit 31.2 Rule 13a-14(a) Certification by the Chief Financial Officer *
Exhibit 32.1 Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
Exhibit 32.2 Certification by the Interim Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
   
101.INS XBRL Instance Document **
101.SCH XBRL Taxonomy Extension Schema Document **
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document **
101.DEF XBRL Taxonomy Extension Definition Linkbase Document **
101.LAB XBRL Taxonomy Extension Label Linkbase Document **
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document **

 

*Filed herewith.
  
**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

(1)Included by reference whereby originally filed on Form 8-K on December 5, 2017
(2)Included by reference whereby originally filed on Form 10-K on January 15, 2019
(3)Included by reference whereby originally filed on Form 10-Q on February 19, 2019
(4)Included by reference whereby originally filed on Form 10-Q on August 19, 2019

 

 

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SIGNATURES

 

Item 16.   Signatures

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

/s/ Antonio Treminio   January 14, 2020
Antonio Treminio, Chief Executive Officer   Date

 

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

/s/ Antonio Treminio   January 14, 2020
Antonio Treminio, Chief Executive Officer   Date

 

 

 

 

 

 

 

 

 

 

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