Notes
to the Financial Statements
For
the Years Ended August 31, 2020 and 2019
NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS
On
April 28, 2015, Horizon Group Holding, Inc., a Florida corporation, entered into a Share Exchange Agreement (the “Agreement”)
with BorrowMoney.com Inc., a New York Corporation (“BMNY”) pursuant to which BorrowMoney.com Inc., would become a
wholly-owned subsidiary of Horizon Group Holding, Inc. The share exchange was accounted for as a reverse acquisition with BorrowMoney.com
Inc., being treated as the acquiring company for accounting purposes. Pursuant to the agreement, Horizon Group Holding changed
its name to BorrowMoney.com, Inc. (BMFL).
In
connection with the Agreement, the Company acquired 100% of the issued shares of BMNY, in a share exchange where 10,000 shares
of the Company were issued to the stockholders of BMNY in exchange for each share of BMNY for a total issuance of 20,000,000 common
shares.
BMNY,
a wholly-owned subsidiary of the Company as a result of the Agreement, was incorporated under the laws of the state of New York
on August 9, 2010.
BorrowMoney.com,
Inc. (the “Company”) provides an internet-based platform that can match prospective borrowers with mortgage and loan
providers.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation - The accompanying financial statements have been prepared in accordance with United States generally
accepted accounting principles (“U.S. GAAP”).
Going
Concern - The Company adopted Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going
Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU
2014-15”). The accompanying financial statements have been prepared assuming the Company will continue as a going concern,
which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
The Company has earned $2,148 revenue for the year ended August 31, 2020 and $0 for the year ended August 31, 2019.
The
Company is commencing operations to generate sufficient revenue; however, the Company’s cash position may not be sufficient
to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering.
While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its
ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going
concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and
its ability to raise additional funds by way of private offerings. The financial statements do not include any adjustments related
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.
Accounting
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 certain reported amounts and disclosures.
These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities,
and the reported amounts of revenues and expenses. Accordingly, actual results could differ from those estimates.
Risks
and Uncertainties - The Company intends to operate in a highly competitive industry that is subject to intense competition,
government regulation and rapid technological change. The Company’s operations are subject to significant risk and uncertainties
including financial, operational, technological, regulatory and other risks associated with an emerging business, including the
potential risk of business failure.
Cash
and Cash Equivalents - For financial statement presentation purposes, the Company considers those short-term, highly liquid
investments with original maturities of three months or less to be cash or cash equivalents. There were no cash equivalents on
August 31, 2020 and 2019.
Concentrations
of Credit Risk - Accounts which potentially subject the Company to concentrations of credit risk consist of cash, cash
and cash equivalents. The Company considers all highly liquid instruments with an original purchased maturity of three months
or less to be cash equivalents. The Company maintains its cash and equivalents at insured financial institutions. The balances
of which, at times may exceed the FDIC insured limits. Management believes the risk of loss is minimal.
Fair
Value of Financial Instruments - The Company’s financial instruments consist of cash and notes payable. Management
estimates that the fair value of the notes payable does not differ materially from the aggregate carrying value of these financial
instruments recorded (at cost) in the accompanying balance sheets. We have financial assets and liabilities, not required to be
measured at fair value on a recurring basis, which primarily consist of cash, payables, and debt. The carrying value of cash and
payables, approximate their fair values due to their short-term nature. Considerable judgment is required in interpreting market
data to develop the estimates of fair value and, accordingly, the estimates are not necessarily indicative of the amounts that
the Company could realize in a current market exchange.
Fair
Value Measurements - The Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level
3 measurements).
The
three levels of inputs which prioritize the inputs used in measuring fair value are:
Level
1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that
the Company has the ability to access.
Level
2: Inputs to the valuation methodology include:
|
●
|
Quoted
prices for similar assets or liabilities in active markets;
|
|
●
|
Quoted
prices for identical or similar assets or liabilities in inactive markets;
|
|
●
|
Inputs
other than quoted prices that are observable for the asset or liability; and
|
|
●
|
Inputs
that are derived principally from or corroborated by observable market data by correlation or other means.
|
If
the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term
of the asset or liability.
Level
3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The
assets or liabilities fair value measurement level within the fair value hierarchy is based on the lowest level of any input that
is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize
the use of unobservable inputs.
When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in
current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy
based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur.
For the fiscal years ended August 31, 2020 and 2019 there were no significant transfers of financial assets or financial liabilities
between the hierarchy levels.
Revenue
Recognition - In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09,
Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue
recognition. In August 2015, the FASB issued ASU No. 2015- 14, Revenue from Contracts with Customers (Topic 606): Deferral
of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities
to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update
No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross
versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance
includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred
to the customers. The new standard further requires new disclosures about contracts with customers, including the significant
judgments the registrant has made when applying the guidance. We adopted the new standard effective September 1, 2018 using the
modified retrospective method.
Revenues
are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration
the Company expects to be entitled to in exchange for transferring those goods or services.
Revenue
is recognized based on the following five step model:
|
●
|
Identification
of the contract with a customer
|
|
●
|
Identification
of the performance obligations in the contract
|
|
●
|
Determination
of the transaction price
|
|
●
|
Allocation
of the transaction price to the performance obligations in the contract
|
|
●
|
Recognition
of revenue when, or as, the Company satisfies a performance obligation
|
.
Costs
to Obtain Customer Contracts
Sales
commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs
are capitalized and amortized on a straight-line basis over the anticipated period of benefit. We determined the period of benefit
by taking into consideration the length of our customer contracts, our technology lifecycle, and other factors. Amortization expense
is recorded in sales and marketing expense within our statement of operations. Historically we have not incurred incremental cost
to acquire customer contracts.
Stock-Based
Awards - The Company measures the cost of employee services received in exchange for an award of equity instruments, including
stock options, based on the grant- date fair value of the award and to recognize it as compensation expense over the period the
employee is required to provide service in exchange for the award, usually the vesting period. The Company estimates the fair
value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award
that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statement
of operations. The forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates. For the fiscal years ended August 31, 2020 and 2019 no awards were granted.
Income
Taxes - The Company accounts for deferred income taxes on the asset and liability method whereby deferred tax assets are
recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion
of all of the deferred tax assets will not be realized.
When
tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions
that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50
percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax
benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As
of August 31, 2020 the Company had no unrecognized tax benefits, and the Company had no positions which, in the opinion of management,
would be reversed if challenged by a taxing authority.
The
Company’s evaluation of tax positions was performed for those tax years which remain open to audit. The Company may, from
time to time, be assessed interest or penalties by the taxing authorities, although any such assessments historically have been
minimal and immaterial to the Company’s financial results. In the event the Company is assessed interest and/or penalties,
such amounts will be classified as income tax expense in the financial statements.
Loss
Per Common Share - The basic earnings (loss) per common share is computed by dividing net income (loss) available to common
stockholders by the weighted average number of common shares outstanding. Diluted loss per share is computed similarly to basic
loss per share except that the denominator is increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of August 31,
2020 and 2019 there were 50,000 warrants and no potentially dilutive securities outstanding, respectively, all of which were excluded
from loss per share calculation due to their anti-dilutive effect.
Related
Party Transactions - The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification
of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include (a)
affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such
terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities
would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15,
to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and
profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management
of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management
or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its
own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting
parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The financial statements
shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation
of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a) the nature
of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal
amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary
to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for
each of the periods for which income statements are presented and the effects of any change in the method of establishing the
terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet
presented and, if not otherwise apparent, the terms and manner of settlement
Recently
issued accounting pronouncements – The Company does not believe that any recently issued effective pronouncements, or
pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial
statements.
NOTE
3 - RELATED PARTY TRANSACTIONS
Related
party debt consists of the following as of August 31, 2020 and 2019, respectively:
|
|
Year
Ended
|
|
|
Year
Ended
|
|
|
|
August
31, 2020
|
|
|
August
31, 2019
|
|
Note payable to related
party bearing interest at 8% in 2020 and 4% prior to 2019. Balance at beginning of year
|
|
$
|
407,559
|
|
|
$
|
330,220
|
|
Proceeds
|
|
|
84,188
|
|
|
|
138,339
|
|
Repayments
|
|
|
-
|
|
|
|
(61,000
|
)
|
Balance at end of year
|
|
|
491,747
|
|
|
|
407,559
|
|
Less current
portion
|
|
|
(491,747
|
)
|
|
|
(407,559
|
)
|
Due after one
year
|
|
$
|
-
|
|
|
$
|
-
|
|
In
connection with the note, the Company has an accrued interest obligation as of August 31, 2020 and August 31, 2019 of $81,797
and $44,566, respectively. As of August 31, 2020, and 2019, the outstanding principal balance was $491,747 and $407,559, respectively
for the above note. At the beginning of the year ended 2020, The interest rate was changed from 4% to 8%.
The
Company utilizes approximately 1,500 square feet of office space in 512 Bayshore Dr, Fort Lauderdale Florida. The space is owned
by the President and is provided without charge to the Company. In addition, the Company utilizes approximately 1,200 square feet
of office space at 4403 Peters Road, Fort Lauderdale, Florida which is provided without charge to the Company by the CFO.
NOTE
4 - EQUITY
Common
Stock Warrants
In
July 2019, the Company granted common stock warrants to purchase 50,000 shares of common stock to a service provider. The warrants
have a 4.4-year term and an exercise price of $0.10 per share. The warrants are fully earned upon issuance and become exercisable
on January 1, 2020. During the year ended August 31, 2019, the fair value of $49,950 was recorded as share-based compensation.
The
Company valued the warrants using the Black-Scholes model with the following key assumptions ranging from: Stock price, $0.38,
Exercise price, $0.10, Term Remaining 2.3 years, Volatility 52.5%, Annual risk-free interest rate, 0.5%. At August 31, 2020 there
was $14,200, in intrinsic value of outstanding stock warrants.
The
Company has not declared or paid any dividends or returned any capital to common stock shareholders as of August 31, 2020 and
2019.
Sale
of Common Stock
On
September 3, 2019, the Company sold 10,000 shares of restricted common stock at $1.00 per share and has a subscription receivable
of $4,000 related to that sale as of August 31, 2020.
NOTE
5 – INCOME TAXES
The
Company has approximately $765,000 as of August 31, 2020 in available net operating loss (NOL) carryovers available to reduce
future income taxes. These carryovers expire at various dates through the year 2040.
Future
utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual
limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state
provisions. The annual limitation may result in the expiration of NOL and tax credit carryforwards before full utilization.
The
Company determines whether it is more likely than not that a tax position will be sustained upon examination based upon the technical
merits of the position. If the more- likely-than-not threshold is met, the Company measures the tax position to determine the
amount to recognize in the financial statements. The Company performed a review of its material tax positions in accordance with
these recognition and measurement standards. The Company has concluded that there are no significant uncertain tax positions requiring
disclosure, and there are not material amounts of unrecognized tax benefits.
On
December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes include, but
are not limited to, a corporate tax rate decrease from 35% to 21%, effective for tax years beginning after December 31, 2017,
the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax
on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We use the asset and liability method
of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income
tax rate from 35% to 21% under the Tax Act, we revalued our ending net deferred tax assets at August 31, 2018, which were fully
offset by a valuation allowance.
Deferred
tax assets and liabilities are determined based on the difference between financial statement and tax bases using enacted tax
rates in effect for the year in which the differences are expected to reverse. The components of the current and deferred provision
at August 31, 2020 and 2019 were as follows:
Following
is a summary of the components giving rise to the tax provision.
|
|
August
31, 2020
|
|
|
August
31, 2019
|
|
Currently payable:
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
|
-
|
|
Total currently
payable:
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(30,000
|
)
|
|
|
(18,000
|
)
|
State
|
|
|
(6,400
|
)
|
|
|
(4,000
|
)
|
Total Deferred:
|
|
|
(36,400
|
)
|
|
|
(22,000
|
)
|
Less increase in allowance
|
|
|
36,400
|
|
|
|
22,000
|
|
Net deferred
|
|
|
-
|
|
|
|
-
|
|
Total income
tax provision (benefit)
|
|
$
|
36,400
|
|
|
$
|
22,000
|
|
|
|
August
31, 2020
|
|
|
August
31, 2019
|
|
Individual components giving rise to
the deferred tax assets are as follows:
|
|
|
|
|
|
|
|
|
Futures tax benefit arising
from net operating loss carryovers
|
|
$
|
195,000
|
|
|
$
|
171,000
|
|
Less valuation
allowance
|
|
|
(195,000
|
)
|
|
|
(171,000
|
)
|
Net deferred
|
|
$
|
-
|
|
|
$
|
-
|
|
For
the fiscal years ended August 31, 2020 and 2019, the valuation allowance increased primarily as a result of the increase in net
operating losses. In assessing the realizability of deferred income tax assets, management considers whether it is more likely
than not that some portion or all of the deferred income tax assets will not be realized.
NOL
Carryforwards and Other Matters
The
Company files income tax returns in the U.S. federal jurisdiction and the state of Florida. The Company’s federal and state
tax years for the 2018 fiscal year and forward are subject to examination by taxing authorities.
The
Company did not have any unrecognized tax benefits as of August 31, 2020 and 2019. The Company’s policy is to account for
any interest expense and penalties for unrecognized tax benefits as part of the income tax provision. The Company does not anticipate
that unrecognized tax benefits will significantly increase or decrease within the next twelve months.
The
item accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes
are as follows:
|
|
For the Year
|
|
|
For the Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
August
31, 2020
|
|
|
August
31, 2019
|
|
Income
tax at federal statutory rate
|
|
|
(21.00
|
)%
|
|
|
(21.00
|
)%
|
State
tax, net of federal effect
|
|
|
(4.46
|
)%
|
|
|
(4.46
|
)%
|
|
|
|
(25.46
|
)%
|
|
|
(25.46
|
)%
|
Valuation
allowance
|
|
|
25.46
|
%
|
|
|
25.46
|
%
|
Effective
rate
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
NOTE
6 – SUBSEQUENT EVENTS
On
June 19, 2020, the Company’s board of directors unanimously approved a five-for-one split (the “Stock Split”)
of the Company’s common stock approved by all shareholders. The effective date of this five-for-one split was October 23,
2020. No functional shares were issued in connection with the Stock Split. If, as a result of the Stock Split, a stockholder would
have been entitled to a fractional share, each fractional share was rounded up. The October 23, 2020 Stock Split resulted in an
increase of 87,332,000 shares of our outstanding shares of common stock. The par value of the Company’s stock was also changed
from $0.0001 to $0.001. The cusip number was changed to 100054204. The 2019 prior cusip number was 100054105.
Subsequent
to August 31, 2020, and after the above mentioned stock split, the Company sold 10,000 shares of common stock for $1 per share.
Proceeds of $10,000 have been received.