Forward-Looking Statements
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains
forward-looking statements. The Securities and Exchange Commission (the "SEC")
encourages companies to disclose forward-looking information so that investors
can better understand a company's future prospects and make informed investment
decisions. This Quarterly Report and other written and oral statements that we
make from time to time contain such forward-looking statements that set out
anticipated results based on management's plans and assumptions regarding future
events or performance. We have tried, wherever possible, to identify such
statements by using words such as
"anticipate,""estimate,""expect,""project,""intend,""plan,""believe,""will" and
similar expressions in connection with any discussion of future operating or
financial performance. In particular, these include statements relating to
future actions, future performance or results of current and anticipated sales
efforts, expenses, the outcome of contingencies, such as legal proceedings, and
financial results.
We caution that the factors described herein, and other factors could cause our
actual results of operations and financial condition to differ materially from
those expressed in any forward-looking statements we make and that investors
should not place undue reliance on any such forward-looking statements. Further,
any forward-looking statement speaks only as of the date on which such statement
is made, and we undertake no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which such statement is
made or to reflect the occurrence of anticipated or unanticipated events or
circumstances. New factors emerge from time to time, and it is not possible for
us to predict all of such factors. Further, we cannot assess the impact of each
such factor on our results of operations or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
General
The following discussion highlights Kid Castle results of operations and the
principal factors that have affected our financial condition as well as our
liquidity and capital resources for the periods described and provides
information that management believes is relevant for an assessment and
understanding of the statements of financial condition and results of operations
presented herein. The following discussion and analysis are based on our audited
Financial Report, which we have prepared in accordance with United States
generally accepted accounting principles. You should read this discussion and
analysis together with such financial statements and the related notes thereto.
Kid Castle Educational Corporation through its operating subsidiary, GiveMePower
Corporation, operates and manages a portfolio of real estate and financial
services assets and operations to empower black persons in the United States
through financial tools and resources. The Corporation is primarily focused on:
(1) creating and empowering local black businesses in urban America; and (2)
creating real estate properties and businesses in opportunity zones and other
distressed neighborhood across America.
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Basis of Presentation
The consolidated financial statements of the Company therefore include
GiveMePower Corporation and its wholly owned subsidiaries of Alpharidge Capital
LLC. ("Alpharidge"), Community Economic Development Capital, LLC. ("CED
Capital"), and subsidiaries, in which GiveMePower has a controlling voting
interest and entities consolidated under the variable interest entities ("VIE")
provisions of ASC 810, "Consolidation" ("ASC 810"), after elimination of
intercompany transactions and accounts.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, in which the Company has a controlling voting interest and
entities consolidated under the variable interest entities ("VIE") provisions of
ASC 810, "Consolidation" ("ASC 810"). Inter-company balances and transactions
have been eliminated upon consolidation.
ASC 810 requires that the investor with the controlling financial interest
should consolidate the investee/affiliate. ASC 810-10 requires that an equity
interest investor consolidates a VIE when it retains an investment in the
entity, is considered a variable interest investor in the entity, and is the
primary beneficiary of the entity. An investor in a VIE is a "variable interest
beneficiary" when, per an arrangement's governing documents, the investor will
absorb a portion of the VIE's expected losses or will receive a portion of the
entity's "residual returns." The variable interest beneficiary retaining a
controlling financial interest in the VIE is designated as its "primary
beneficiary" and must consolidate the VIE. A variable interest beneficiary
retains a "controlling financial interest" in a VIE when that beneficiary
retains the power to direct the activities of the VIE that have the greatest
influence over the VIE's economic performance and retains an obligation to
absorb the VIE's significant losses or the right to receive benefits from the
VIE that could potentially be significant to the VIE. Based on the ASC 810 test
above, Kid Castle Educational Corporation is the primary beneficiary of
GiveMePower Corporation (the "VIE") because Kid Castle retained a controlling
financial interest in the VIE and has the power to direct the activities of the
VIE, having the greatest influence over the VIE's economic performance and
retains an obligation to absorb the VIE's significant losses and the right to
determine and receive benefits from the VIE.
Because GiveMePower Corporation is 88% controlled by Kid Castle Educational
Corporation, the consolidation rule requires the Revenue, Assets and Liabilities
recognized and disclosed on the financial statements of GiveMePower Corporation
are also recognized and disclosed on the financial statements of Kid Castle
Educational Corporation pursuant to ASC 810.
Overview
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The Company and Nature of Business
Kid Castle Educational Corporation, a Delaware corporation, ("Kid Castle," "the
Company," "We," "KDCE," "Us" or "Our') operates and manages a portfolio of real
estate and financial services assets and operations to empower black persons in
the United States.
Kid Castle was the result of a share exchange transaction, commonly referred to
as a reverse merger, pursuant to which shareholders of an offshore operating
company take control of a U.S. company that has no operations (commonly referred
to as a shell company), and the offshore operating company becomes a subsidiary
of the U.S. company. In KDCE case, the offshore company was Higoal Developments
Ltd., which was the parent company of Kid Castle Internet Technologies Limited
and Kid Castle Education Software Development Co. Limited, KDCE's operating
companies that run our English language instruction business. The U.S. or shell
company, at the time of the share exchange, was King Ball International
Technology Corporation.
Kid Castle used to be a Florida corporation until the company voluntarily
dissolved its Florida registration with intention to simultaneously incorporate
in Delaware and convert into a Delaware corporation. Although the company
immediately finalized its registration effort to convert into a Delaware
Corporation, the company's registered agent who was supposed to submit the
registration package to the Delaware Secretary of State for certification,
failed to make a timely submission. Later in January 2019, when the company
realized that the Delaware incorporation/registration package/process was never
submitted to the Delaware Secretary of State nor completed in any other way or
form, the Company went ahead and resubmitted the required registration package
and was then formally re-incorporated in Delaware and convert into a Delaware
corporation. Thus, the company was formally incorporated in Delaware and
converted into a Delaware Corporation in January 2019.
The re-incorporation in Delaware, which occurred in January 2019, has placed at
risk, voidable and unenforceable, all and any liabilities that may have accrued,
including any material agreements the Company may have executed during the
period between March 22, 2011 and January 2019. To the best of our knowledge,
no such liabilities that were accrued and no material agreement were entered
into by the company during the period between March 22, 2011 and January 2019.
In addition, there could be penalties or legal liabilities that may have accrued
as a result of conducting business from 2011 to 2019 without properly
registering with any State. To the best of our knowledge, as at September 7,
2020, no such penalties or liabilities has accrued to the company accrued as a
result of conducting business from 2011 to 2019 without properly registering
with any State. However, there is no guarantee that such penalties or
liabilities would not accrue or arise in the future.
On October 21, 2019, pursuant to a stock purchase agreement dated October 2,
2019, Cannabinoid Biosciences, Inc., a California corporation, purchased one (1)
million shares of its preferred shares (one preferred share is convertible 1,000
share of common stocks) of the Company, representing 97.82% of our total issued
and outstanding voting shares of common stock and preferred stock.
Simultaneously with the purchase, the officers and directors of the Company
resigned and Frank I Igwealor, Chairman and CEO, Secretary, Treasurer, and
Director.
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Following the consummation of the October 21, 2019 transactions, the Company
decided to restart filing important information immediately. The Company used
the Form 10-12(g) to register its common stock with the SEC.
Most Recent Addition to Our Business and Organization
Crypto Currency Mining Operation
During the period between March 3 to March 16 2021, the Company tried
unsuccessfully, to acquire Bitcentro/Buzzmehome's CryptoCurrency mining
operations in Canada for $500,000 in cash. The deal fell through because of
misunderstanding between parties as to the timing and duration of due diligence
period.
After the failed acquisition attempt, the Company contracted with Brady
Fernandes, a Los Angeles resident who claimed expertise in the crypto mining
industry. The Company contracted with Brady for $9,200 to commence the project
of helping the company to build out its own in-house cryptocurrency mining farm.
Brady has commenced building our first rig and has also ordered the necessary
equipment to add rigs to our crypto currency mining farm. On April 28, 2021, the
Company paid additional $10,000 to Mr. Fernandez for ordering additional
equipment for building out it crypto currency mining farm.
We have dedicated a line-item, "Crypto Currency Mining Rigs," on our balance to
track all our investments in the Crypto Currency Mining Operation. We plan to
build out a fully operating farm in California, using solar energy to mitigate
the high cost of energy in California.
Current Business and Organization - Alpharidge
The Company, through its three wholly owned subsidiaries, Alpharidge Capital,
LLC ("Alpharidge"), Malcom Wingate Cush Franklin LLC ("MWCF"), and Opportunity
Zone Capital LLC ("OZC"), seeks to empower black persons in the United States
through financial tools and resources as follows:
? Alpharidge and OZC Real estate operations - Real estate operations would
consist primarily of rental real estate, affordable housing projects,
opportunity zones, other property development and associated HOA activities.
OZC development operations would be primarily through a real estate
investment, management and development subsidiary that focuses primarily on
the construction and sale of single-family and multi-family homes, lots in
subdivisions and planned communities, and raw land for residential
development; and
? MWCF financial empowerment - MWCF would utilize operate the tools of financial
education/training, mergers and acquisitions, private equity and business
lending to invest and empower young black entrepreneurs, seeding their viable
business plans and ideas and creating jobs in their communities. MWCF is
primarily focused on: (1) creating and empowering local black businesses in
urban America; and (2) creating real estate in opportunity zones and other
distressed neighbourhood across America.
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? Cash Management, Opportunistic and Event-Driven Investments: The Company keeps
no more than 10% of its total assets in liquid cash or investments portfolio,
which is actively managed by its directors and officers and invest primarily
in equity investments on a long and short basis. The Company's cash management
policy which requires that the Company actively invests its excess cash into
stocks, bonds and other securities is intended to provide the company greater
levels of liquidity and current income. The Company uses proprietary trading
models to capitalize on real-time market anomalies and generate ongoing income
in the forms similar to hedge funds. Where necessary, the Company uses seeded
entities to pursue real-time market transactions in publicly traded securities
including but not limited to stocks, bonds, options, futures, forex, warrants,
and other instruments.
Alpharidge's Entrepreneurship Development Initiative
In April of 2021, Alpharidge launched its Entrepreneurship Development
Initiative which entails: (1) Portfolio - acquiring OTC trading shells with stop
signs and cleaning them up to become Pink Current, then merging them with
emerging businesses controlled by Alpharidge-trained entrepreneurs; and (2)
Custodianship - use the custodianship process in Nevada and Delaware to acquire
custodianship of abandoned OTC-trading shells, clean them up to become Pink
Current, then merging them with emerging businesses controlled by
Alpharidge-trained entrepreneurs.
On April 22, 2021, Alpharidge retained a Nevada based Attorney to petition for
custodianship of Mondial Ventures, Inc. Alpharidge later lost the attempt and
expensed all related cost as Professional fees - legal. On May 5, 2021,
Alpharidge purchase from the open market, Labwire, Inc., (LBWR) and Waypoint
Biomedical, Inc., both of which it has brought Pink Current. As at the date of
this reports, Alpharidge' Entrepreneurship Development Initiative Portfolio has
bought also purchase Nano Mobile Healthcare, Inc. to make it 3 shells. The
Custodianship has petitioned for MNVN, HMLA, TONR, ECMH, ABWN, FPMI, NTGL, CGUD,
ICOA, SRBT, USWF, NWTT, USBC, WRMA, WWRL, HERF, NRCD, TGMR, ITRX, AFFN, UTDE,
AOBI, SRCX, ADCV, DVFI, APWL, CIVX, NHLG, ILIM, CCWF, TMXN, MNDP, JPEX, SVLT,
MTEI, CAMG, CDBT, ERGO, NOUV, ICNM, PRDL, OCLG, ILST and FCGD, altogether 44
petitions filed within 8 weeks. Of the 44, Alpharidge lost, walked-away, or
withdrew from 9 petitions." Cost related to the successful petitions were
capitalized on the Company's balance sheet as "Entrepreneurship Development" and
those related to failed petitions were expensed in the period incurred as
"Professional Fees - legal."
Alpharidge Capital LLC anticipates its Entrepreneurship Development to be an
ongoing business. It expects to generate income and expense cost related to
this line of business.
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Current Business and Organization - CED Capital
Community Economic Development Capital, LLC. ("CED Capital"), a California
limited liability company, is a specialty real estate holding company for
specialized assets including, affordable housing, opportunity zones properties,
industrial and commercial real estate, and other real estate related services.
CED Capital principal business objective is to maximize returns through a
combination of (1) generating good profit while making substantial social
impact, (2) sustainable long-term growth in cash flows from increased rents, and
(3) potential long-term appreciation in the value of its properties from capital
gains upon future sale. The Company is engaged primarily in the ownership,
operation, management, acquisition, development and redevelopment of
predominantly multifamily housing and specialized industrial properties in the
United States. Additionally, its specialized industrial property strategy is to
acquire and own a portfolio of specialized industrial properties, including
multifamily properties. This strategy includes the following components:
[ ] Owning Specialized Real Estate Properties and Assets for Income. The Company
intends to acquire multifamily housings, economic development real estates
and multifamily properties. The Company expects to hold acquired properties
for investment and to generate stable and increasing rental income from
leasing these properties to licensed growers.
[ ] Owning Specialized Real Estate Properties and Assets for Appreciation. The
Company intends to lease its acquired properties under long-term, triple-net
leases. However, from time to time, the Company may elect to sell one or
more properties if the Company believes it to be in the best interests of
its stockholders. Accordingly, the Company will seek to acquire properties
that it believes also have potential for long-term appreciation in value.
[ ] Affordable Housing. Its motto is: "acquiring distressed/troubled properties,
securing generous government subsidies, empowering low-income families, and
generating above-market returns to investors."
[ ] Preserving Financial Flexibility on the Company's Balance Sheet. The Company
intends to focus on maintaining a conservative capital structure, in order
to provide us flexibility in financing its growth initiatives.
Competition
Our business is highly competitive. We are in direct competition with more
established private equity firms, private investors and management companies.
Many management companies offer similar products and services for business
rollups and consolidations. We may be at a substantial disadvantage to our
competitors who have more capital than we do to carry out acquisition,
operations and restructuring efforts. These competitors may have competitive
advantages, such as greater name recognition, larger capital-base, marketing,
research and acquisition resources, access to larger customer bases and channel
partners, a longer operating history and lower labor and development costs,
which may enable them to respond more quickly to new or emerging opportunities
and changes in customer requirements or devote greater resources to the
development, acquisition and promotion.
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Increased competition could result in us failing to attract significant capital
or maintaining them. If we are unable to compete successfully against current
and future competitors, our business and financial condition may be harmed.
We hope to maintain our competitive advantage by keeping abreast of market
dynamism that is face by our industry, and by utilizing the experience,
knowledge, and expertise of our management team. Moreover, we believe that we
distinguish ourselves in the ways our model envisaged transformation of
businesses.
Government Regulation
Our activities currently are subject to no particular regulation by governmental
agencies other than that routinely imposed on corporate businesses. However, we
may be subject to the rules governing acquisition and disposition of businesses,
real estates and personal properties in each of the state where we have our
operations. We may also be subject to various state laws designed to protect
buyers and sellers of businesses. We cannot predict the impact of future
regulations on either us or our business model.
Intellectual Property
We currently have no patents, trademarks or other registered intellectual
property. We do not consider the grant of patents, trademarks or other
registered intellectual property essential to the success of our business.
Employees
We do not have a W-2 employee at the present. Frank Ikechukwu Igwealor, our
President, Chief Executive Officer and Chief Financial Officer, is our only
full-time staff As of June 30, 2021, pending when we could formalize an
employment contract for him. In addition to Mr. Igwealor, we have three
part-time unpaid staff who helps with bookkeeping and administrative chores.
Most of our part-time staff, officers, and directors will devote their time as
needed to our business and are expect to devote at least 15 hours per week to
our business operations. We plan on formalizing employment contract for those
staff currently helping us without pay. Furthermore, in the immediate future,
we intend to use independent contractors and consultants to assist in many
aspects of our business on an as needed basis pending financial resources being
available. We may use independent contractors and consultants once we receive
sufficient funding to hire additional employees. Even then, we will principally
rely on independent contractors for substantially all of our technical and
marketing needs.
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The Company has no written employment contract or agreement with any person.
Currently, we are not actively seeking additional employees or engaging any
consultants through a formal written agreement or contract. Services are
provided on an as-needed basis to date. This may change in the event that we are
able to secure financing through equity or loans to the Company. As our company
grows, we expect to hire more full-time employees.
Results of Operations
Three and Six Months ended June 30, 2021, as Compared to Three and Six Months
Ended June 30, 2021, 2020
Revenues - The Company recorded $3,376,528 and $4,042,194 in revenue for the
three and six months ended June 30, 2021 as compared to $0 and $0 for the same
period of June 30, 2020.
Operating Expenses - Total operating expenses for the three and six months ended
June 30, 2021, was $77,645 and $133,123, due to increased operating activities
during the period ended June 30, 2021.
Net Income - Net income for three and six months ended June 30, 2021 was
$416,494 and $866,764. Gross income from operation includes unrealized gain of
$712,532 and $759,999 for the three and six months ended June 30, 2021.
OCI - Unrealized Gain or Other Comprehensive Income for three and six months
ended June 30, 2021, was of $712,532 and $759,999, as compared to Unrealized
Loss of $(4,402) and $(67,818) for the three six months ended June 30, 2020. The
other comprehensive income of $712,532 and $759,999 were a result of
mark-to-market/fair value adjustment to Trading Securities for the period.
Financial Condition, Liquidity and Capital Resources
As of June 30, 2021, the Company had a working capital of $1,037,406, consisting
of $62,272 in cash, $2,227,539 in Trading Securities, and $1,252,405 in
short-term loan.
For the six months period ended June 30, 2021, the Company used cash of $54,693
on operating activities, generated cash of $19,935 on investing activities, and
used cash of $230,481 on financing activities, resulting in an increase in total
cash of $60,642 and a cash balance of $62,269 for the period.
The Company does believe our current cash balances will be sufficient to allow
us to fund our operating plan for the next twelve months. However, our ability
to continue as a going concern is still dependent on us obtaining adequate
capital to fund operation or maintaining consecutive quarterly profitability. If
we are unable to obtain adequate capital, or maintaining consecutive quarterly
profitability, we could be forced to cease operations or substantially curtail
its drug development activities. These conditions could raise substantial doubt
as to our ability to continue as a going concern. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts and classification of liabilities
should we be unable to continue as a going concern.
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Our principal sources of liquidity are: (1) Crypto Currency Mining, (2) Real
Estate Sales, and (3) Trading Securities. In the past, we have been generating
cash from loans to us by our major shareholder. In order to be able to achieve
our strategic goals, we need to further expand our business and implement our
business plan. To continue to develop our business plan and generate sales,
significant capital has been and will continue to be required. Management
intends to fund future operations through private or public equity and/or debt
offerings. We continue to engage in preliminary discussions with potential
investors and broker-dealers, but no terms have been agreed upon. There can be
no assurances, however, that additional funding will be available on terms
acceptable to us, or at all. Any equity financing may be dilutive to existing
shareholders. We do not currently have any contractual restrictions on our
ability to incur debt and, accordingly we could incur significant amounts of
indebtedness to finance operations. Any such indebtedness could contain
covenants which would restrict our operations.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("U.S. GAAP") requires
estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosures of contingent assets
and liabilities in the consolidated financial statements and accompanying notes.
The SEC has defined a company's critical accounting policies as the ones that
are most important to the portrayal of the company's financial condition and
results of operations, and which require the company to make its most difficult
and subjective judgments, often as a result of the need to make estimates of
matters that are inherently uncertain.
Based on this definition, we have identified the critical accounting policies
and judgments addressed which are described in Note 2 to our condensed
consolidated financial statements included elsewhere in this Quarterly Report.
Although we believe that our estimates, assumptions and judgments are
reasonable, they are based upon information presently available. Actual results
may differ significantly from these estimates under different assumptions,
judgments or conditions.
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KID CASTLE EDUCATIONAL CORPORATION 
