CALETHOS, INC. The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Annual Report.
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Our audited financial statements are stated in
Plan of Operations
Following the Change of Control Transactions, as described above, our board of
directors determined to establish our company in the rapidly-growing legal
We will require substantial financing to commence meaningful business operations and to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development plans, any commercialization efforts or other operations. We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs. In addition, even if we are able to obtain sufficient funding to commence our business operations, we may need to pursue additional financing in the future to make expenditures and/or investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses or fund our growth, including through acquisitions. Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to commence our proposed business operations, to continue to grow and support our business and to respond to business challenges could be significantly limited.
Over the course of 2019 and the first three quarters of 2020, our Chief
Executive Officer,
It is the current intention of the board of directors for our company to develop and manufacture a next generation high-performance computer system that is scalable, upgradeable, and cost effective for processing cryptocurrencies, tokens and blockchain-based transactions.
Results of Operations for the years ended
The following summary should be read in conjunction with our audited financial
statements for the years ended
For the years ended December 31,
2020 2019
Revenues $ - $ -
Operating Expenses
Professional fees 340,000 1,154,000
General and administrative 51,000 40,000
Total Expenses 391,000 1,194,000
Financing costs (227,000 ) (305,000 )
Loss on extinguishment of series A convertible
preferred stock (138,000 ) -
Net loss $ (756,000 ) $ (1,499,000 )
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Revenue
For the years ended
Expenses
Our operating expenses decreased from
Financing Costs
Our financing cost of approximately
Loss on extinguishment of series A convertible preferred stock
Our loss on extinguishment of series A convertible preferred stock of
approximately
Liquidity and Capital Resources
Our financial position as of
Working Capital
For the years ended December 31,
2020 2019
Current Assets $ 2,000 $ 125,000
Current Liabilities (1,325,000 ) (686,000 )
Working (Deficit) Capital $ (1,323,000 ) $ (561,000 ) Working capital decreased from a
Cash Flows
For the years ended December 31,
2020 2019
Net cash used by operating activities
Net cash provided by investing activities - 12,000 Net cash provided by financing activities 60,000 529,000 Change in cash during the period (123,000 ) 123,000 Cash, beginning of period 123,000 - Cash, end of period $ -$ 123,000
Cash used in operating activities decreased by approximately
Cash provided by financing activities related to the approximately
11 Going Concern
The audited financial statements included in this Report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. We are a "shell company" with no meaningful assets or operations presently. Our company has not generated revenues in the last two fiscal years, has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon: (i) continued financial support from our shareholders; (ii) the ability of our company to continue raising necessary debt or equity financing to achieve its operating objectives; and (iii) our ability to acquire assets and establish a business or merge or otherwise acquire business opportunities.
Our independent auditors included an explanatory paragraph in their report on
our financial statements for the year ended
Application of Critical Accounting Policies
The preparation of financial statements in conformity with
Basis of Presentation
The financial statements and related notes included in this Annual Report are
presented in accordance with
Use of Estimates and Assumptions
The preparation of financial statements in conformity with US GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are readily apparent from other sources. The actual results experienced by our company may differ materially from our management's estimates. To the extent there are material differences, future results may be affected. Estimates used in preparing these financial statements include the fair value of share-based payments, deferred income taxes, financial instruments and assumptions relating to going concern.
Income Taxes
We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statements and the tax basis of assets and liabilities, and net operating loss carry forwards based on using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the year that includes the enactment date. Deferred tax assets are only recognized to the extent that it is considered more likely than not that the assets will be realized.
12 Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing the net loss by the weighted average number of outstanding common shares during the year. Diluted loss per share gives effect to all potentially dilutive common shares outstanding during the year, including convertible debt, stock options and share purchase warrants, using the treasury stock method. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on loss per share.
Recent Accounting Pronouncements
We do not believe that any recently issued, but not yet effective accounting standards if currently adopted, will have a material effect on our financial statements.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial position, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
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