UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2015 or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________to ____________________
333-192647
Commission file number
Nukkleus Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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38-3912845
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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3324 West University Ave, Suite 120, Gainesville, FL
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32609
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(Address of principal executive offices)
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(Zip Code)
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800-604-1724
Registrant’s telephone number, including area code
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.0001
Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 day. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 [ ]
(Does not currently apply to the Registrant)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 if the Exchange Act.
Large accelerated filter o Accelerated filter o
Non-accelerated filter o (Do not check if a smaller reporting company) Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
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Class
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Outstanding February 3rd, 2016
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Common Stock, $0.0001 par value per share
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166,535,100 shares
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements reflect the good faith judgment of our management, these statements can be based only on facts and factors of which we are currently aware. Consequently, forward-looking statements are inherently subject to risks and uncertainties. Actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.
Forward-looking statements can be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements under the captions “Risk Factors,” “Management’s Discussion and Analysis or Plan of Operation” and “Description of Business,” as well as other sections in this report. Such forward-looking statements are based on our management’s current plans and expectations and are subject to risks, uncertainties and changes in plans that may cause actual results to differ materially from those anticipated in the forward-looking statements. You should be aware that, as a result of any of these factors materializing, the trading price of our common stock may decline. These factors include, but are not limited to, the following:
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·
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the availability and adequacy of capital to support and grow our business;
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economic, competitive, business and other conditions in our local and regional markets;
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actions taken or not taken by others, including competitors, as well as legislative, regulatory,
judicial and other governmental authorities;
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competition in our industry;
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Changes in our business and growth strategy, capital improvements or development plans;
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the availability of additional capital to support development; and
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·
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other factors discussed elsewhere in this annual report.
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The cautionary statements made in this annual report are intended to be applicable to all related forward-looking statements wherever they may appear in this report.
We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.
1
TABLE OF CONTENTS
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Item 1.
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Business.
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3
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Item 1A.
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Risk Factors.
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3
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Item 1B.
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Unresolved Staff Comments.
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3
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Item 2.
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Properties.
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3
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Item 3.
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Legal Proceedings.
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3
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Item 4.
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Submission of Matters to a Vote of Security Holders
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3
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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4
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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5
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk.
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7
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Item 8.
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Financial Statements and Supplementary Data.
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8
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
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9
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Item 9A.
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Controls and Procedures.
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9
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Item 9B.
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Other Information.
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10
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Item 10.
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Directors, Executive Officers and Corporate Governance.
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12
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Item 11.
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Executive Compensation.
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13
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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14
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence.
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14
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Item 14.
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Principal Accounting Fees and Services.
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15
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Item 15.
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Exhibits, Financial Statement Schedules.
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16
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SIGNATURES
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16
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2
PART I
Item 1. Business.
Nukkleus Inc (formerly Compliance & Risk Management Solutions Inc) (the “Company”) was formed on July 29, 2013 in the State of Delaware as a for-profit Company and established a fiscal year end of September 30. The Company was organized to engage in the business of providing corporate governance, compliance and risk management business services and technology solutions. On February 25th, 2015, John Nettlefold closed a transaction in which he purchased a total of 137,795,000 shares of restricted stock of the Company, representing 88% of the shares in the Company from Mountain Laurel Holdings. At the same time, Mr. Christopher Neuert, the former Director resigned his position at that time and the shareholders of the company elected Mr. Nettlefold as Director of the Company. Subsequent to the change in control on February 25th, 2015, the new Director John Nettlefold decided to transition the company from business technology to advertising technology. By late July, management had decided that many of the underlying factors of Mr. Nettlefold’s business would not be feasible as presented. As such, on July 26th, 2015, the previous Merger Agreement was rescinded.
Since this rescission, the Company has been conducting due diligence and reviewing several possibilities within the technology arena.
Item 1A. Risk Factors.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 1B. Unresolved Staff Comments.
None
Item 2. Properties.
We do not own any real estate or other properties.
Item 3. Legal Proceedings.
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
No director, officer, or affiliate of the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.
Item 4. Submission of Matters to a Vote of Security Holders
None
3
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
On November 25, 2014, FINRA informed the Company that it had cleared the Company’s request to be quoted on the OTC Bulletin Board and OTC Link under the symbol CRMV. Since then, the Company had one trade $0.10 which is the price of the stock as of the date of this report.
Holders of Our Common Stock
As of the date of filing we had 17 shareholders of our common stock.
Stock Option Grants
To date, we have not granted any stock options.
Transfer Agent and Registrar
The transfer agent for our common stock is Issuer Direct Corporation, 500 Perimeter Park Drive, Suite D, Morrisville, NC 27560, telephone: (919) 481-4000.
Dividends
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
Recent Sales of Unregistered Securities
On February 25th, 2015, Mr. John Nettlefold closed a transaction in which he purchased a total of 137,795,000 shares of restricted stock of the Company, representing 88% of the shares in the Company from Mountain Laurel Holdings.
On July 27th, 2015, Charms Investments, Inc. closed a transaction in which it acquired the majority restricted block from the Director John Nettlefold, representing 88% of the company’s shares.
Stock-Based Compensation:
4
None.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include by are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
Overview
The Company has decided to not pursue its original business plan and is currently in the process of evaluating new business opportunities. Our CEO is exploring such options.
Our auditor has expressed substantial doubt as to whether we will be able to continue to operate as a “going concern” due to the fact that the Company has incurred net operating losses of $118,333 from inception though September 30, 2015 and has not yet established on going source of revenues sufficient to cover its operating costs and allow it continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining the adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
Results of Operations
Summary of Key Results
For the year ended September 30, 2015 versus September 30, 2014
Revenues and Cost of Revenues
Total revenue for the year ended September 30, 2015, versus September 30, 2014 were $32,469 and $102,951, respectively. Revenues are from professional services rendered. The decrease in revenue was due to loss of clients and revisions to the Company’s business plan.
Cost of revenues for the year ended September 30, 2015 versus September 30, 2014 were, $14,665 and $29,361, respectively. Cost of revenue included merchant account charges of $165 and $1,111, respectively. The remaining amount, $14,500 and $28,250, respectively were related party independent contractor labor costs for the delivery of the professional services. The decrease in costs was due to loss of clients and revisions to the Company’s business plan.
5
Operating Expenses
Total operating expenses for the year ended September 30, 2015 versus September 30, 2014, where $62,980 versus $123,850, respectively. These amounts include $13,827 and $39,250, respectively, in related party independent contractor costs for accounting and financial reporting. The amounts also included $0 and $8,400, respectively, in stock based compensation. The remaining amounts were primarily third party professional fees. The decrease in costs where primarily due to revisions to the Company’s business plan.
Liquidity and Capital Resources
At September 30, 2015, we had cash of $0 and a working capital deficit of $22,132. Since inception, we have raised $58,350 in equity capital.
We had a total stockholders’ deficit of $22,132 and an accumulated deficit of $118,333 as of September 30, 2015.
We had $59,487 and $30,806 in net cash used in operating activities for the years ended September 30, 2015 and September 30, 2014, respectively. These include $45,176 and $50,260 in net losses, respectively. Cash flows used in operating activities included changes in operating assets and liabilities totaling $14,311 and $11,054 for the twelve months ended September 30, 2015 and September 30, 2014, respectively.
We had $46,583 and $21,050 of net cash provided by financing activities for the years ended September 30, 2015 and September 30, 2014, respectively.
As of September 30, 2015, we did not have any fixed operating expenses.
Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis.
With respect to shares issued for services, our board of directors determines the value of the services provided and authorizes the issuance of shares based upon the fair market value of our shares.
6
Off-Balance Sheet Arrangements
We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
7
Item 8. Financial Statements and Supplementary Data.
NUKKLEUS INC
(FORMERLY, COMPLIANCE & RISK MANAGEMENT SOLUTIONS INC)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014
8
NUKKLEUS INC
(FORMERLY COMPLIANCE & RISK MANAGEMENT SOLUTIONS INC)
INDEX TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2015
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Report of Independent Registered Public Accounting Firm
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F-2
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Financial Statements
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Balance Sheets as of September 30, 2015 and 2014
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F-3
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Statements of Operations for the years ended September 30, 2015 and 2014
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F-4
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Statements of Stockholders’ (Deficit) for the years ended September 30, 2015 and 2014
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F-5
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Statements of Cash Flows for the years ended September 30, 2015 and September 30, 2014
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F-6
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Notes to Financial Statements
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F-7
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F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Nukkleus, Inc. (FKA -Compliance & Risk Management Solutions Inc.)
We have audited the accompanying balance sheets of Nukkleus, Inc. (FKA -Compliance & Risk Management Solutions Inc.) as of September 30, 2015 and 2014, and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nukkleus, Inc. (FKA -Compliance & Risk Management Solutions Inc.) as of September 30, 2015 and 2014, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurring net losses since inception and has a working capital deficit as of September 30, 2015. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.
/s/ Rosenberg Rich Baker Berman & Company
Somerset, New Jersey
February 3, 2016
F-2
NUKKLEUS INC
BALANCE SHEETS
AS OF SEPTEMBER 30, 2015 AND 2014
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ASSETS
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2015
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2014
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CURRENT ASSETS:
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Cash or cash equivalents
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$ | - | $ | 12,904 | ||||
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TOTAL CURRENT ASSETS
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- | 12,904 | ||||||
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TOTAL ASSETS
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$ | - | $ | 12,904 | ||||
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LIABILIATIES AND STOCKHOLDERS' (DEFICIT)
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CURRENT LIABILITIES:
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Accounts payable and accrued expenses
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$ | - | $ | 14,311 | ||||
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Due to Shareholder
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21,882 | - | ||||||
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Accrued taxes
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250 | 250 | ||||||
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TOTAL CURRENT LIABILITIES
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22,132 | 14,561 | ||||||
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TOTAL LIABILITIES
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22,132 | 14,561 | ||||||
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STOCKHOLDERS' (DEFICIT):
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Preferred stock, $.0001 par value, 15,000,000 shares authorized,
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none issued and outstanding
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- | - | ||||||
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Common stock, $.0001 par value, 300,000,000 shares authorized,
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166,535,100 shares issued and outstanding,
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as of September 30, 2015 and 2014, respectively
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16,654 | 16,654 | ||||||
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Additional paid-in capital
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79,547 | 54,846 | ||||||
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Retained deficit
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(118,333 | ) | (73,157 | ) | ||||
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TOTAL STOCKHOLDERS' (DEFICIT)
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(22,132 | ) | (1,657 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
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$ | - | $ | 12,904 | ||||
The accompanying notes to financial statements are
an integral part of these statements.
F-3
NUKKLEUS INC
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014
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Year Ended September 30, 2015
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Year Ended September 30, 2014
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Revenues:
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Professional service revenues
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$ | 32,469 | $ | 102,951 | ||||
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Total Revenues
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32,469 | 102,951 | ||||||
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Cost of revenues
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165 | 1,111 | ||||||
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Cost of revenues from a related party
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14,500 | 28,250 | ||||||
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Gross Profit
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17,804 | 73,590 | ||||||
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Operating expenses:
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Stock based compensation
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- | 8,400 | ||||||
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General and administrative
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49,153 | 76,200 | ||||||
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General and administrative costs from a related party
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13,827 | 39,250 | ||||||
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Total operating expenses
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62,980 | 123,850 | ||||||
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Loss from operations
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(45,176 | ) | (50,260 | ) | ||||
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(Loss) before taxes
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(45,176 | ) | (50,260 | ) | ||||
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Income tax provision
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- | - | ||||||
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Net (loss) applicable to common shareholders
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$ | (45,176 | ) | $ | (50,260 | ) | ||
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Net (loss) per share - basic and diluted
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$ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted number of shares outstanding - | ||||||||
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Basic and diluted
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166,535,100 | 165,431,985 | ||||||
The accompanying notes to financial statements are an integral part of these statements.
F-4
NUKKLEUS INC
STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014
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Preferred Stock
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Common
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Paid-In
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Sub
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Retained
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Stockholders'
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|||||||||||||||||||||||||||
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Shares
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Par Value
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Shares
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Par Value
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Capital
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Rec'b
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(Deficit)
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(Deficit)
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Balance September 30, 2013
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- | $ | - | 159,094,170 | $ | 15,909 | $ | 46,141 | $ | (20,000 | ) | $ | (22,897 | ) | $ | 19,153 | ||||||||||||||||
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Issuance of common stock
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826,770 | 83 | 967 | 1,050 | ||||||||||||||||||||||||||||
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Issuance of common stock for services
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6,614,160 | 661 | 7,738 | 8,400 | ||||||||||||||||||||||||||||
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Subscription receivable payment
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- | - | 20,000 | - | ||||||||||||||||||||||||||||
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Net loss for period
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- | - | (50,260 | ) | (50,260 | ) | ||||||||||||||||||||||||||
| - | - | |||||||||||||||||||||||||||||||
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Balance September 30, 2014
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- | $ | - | 166,535,100 | $ | 16,653 | $ | 54,846 | $ | - | $ | (73,157 | ) | $ | (1,657 | ) | ||||||||||||||||
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Forgiveness of shareholder loan
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- | - | 24,701 | 24,701 | ||||||||||||||||||||||||||||
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Net loss for period
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- | - | (45,176 | ) | (45,176 | ) | ||||||||||||||||||||||||||
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Balance September 30, 2015
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- | $ | - | 166,535,100 | $ | 16,653 | $ | 79,547 | $ | - | $ | (118,333 | ) | $ | (22,132 | ) | ||||||||||||||||
The accompanying notes to financial statements are an integral part of these statements.
F-5
NUKKLEUS INC
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014
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Year Ended September 30, 2015
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Year Ended September 30, 2014
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net (loss)
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$ | (45,176 | ) | $ | (50,260 | ) | ||
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Adjustments to reconcile net income (loss) to cash used in operating activities:
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Stock based compensation
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- | 8,400 | ||||||
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Change in operating assets and liabilities:
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Accounts payable and accrued expenses
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(14,311 | ) | 11,054 | |||||
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Net cash used in operating activities
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$ | (59,487 | ) | $ | (30,806 | ) | ||
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CASH FLOW FROM FINANCING ACTIVITIES:
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Proceeds from subscription receivable payment
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- | 20,000 | ||||||
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Advances from shareholder
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21,882 | - | ||||||
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Expenses covered by seller
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24,701 | - | ||||||
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Proceeds from Issuance of common stock
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- | 1,050 | ||||||
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Net cash provided by financing activities
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$ | 46,583 | $ | 21,050 | ||||
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NET DECREASE IN CASH
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(12,904 | ) | (9,756 | ) | ||||
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CASH AND CASH EQUIVALENTS at beginning of period
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12,904 | 22,660 | ||||||
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CASH AND CASH EQUIVALENTS at end of period
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$ | - | $ | 12,904 | ||||
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Supplemental disclosure of cash flow information
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Cash paid for:
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Interest
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$ | - | $ | - | ||||
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Income Taxes
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$ | - | $ | - | ||||
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Supplemental schedule of non-cash investing and financing activities
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Forgiveness of loan from shareholder
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$ | 24,701 | - | |||||
The accompanying notes to financial statements are an integral part of these statements.
F-6
NUKKLEUS INC
NOTES TO FINANCIAL STATEMENTS
Note 1. The Company History and Nature of the Business
Nukkleus Inc (formerly Compliance & Risk Management Solutions Inc) (the “Company”) was formed on July 29, 2013 in the State of Delaware as a for-profit Company and established a fiscal year end of September 30. The Company was organized to engaged in the business of providing corporate governance, compliance and risk management business services and technology solutions. On February 25th, 2015, John Nettlefold closed a transaction in which he purchased a total of 137,795,000 shares of restricted stock of the Company, representing 88% of the shares in the Company from Mountain Laurel Holdings. At the same time, Mr. Christopher Neuert, the former Director resigned his position at that time and the shareholders of the company elected Mr. Nettlefold as Director of the Company.
Subsequent to the change in control on February 25th, 2015, the new Director John Nettlefold decided to transition the company from business technology to advertising technology. To this effect, on May 22nd, 2015, Mr. Nettlefold undertook a Merger between Nukkleus Inc., a Nevada entity and Compliance Risk & Management Solutions, Inc., a Delaware entity & former name of this Company
On July 2nd, 2015 the state of Delaware Approved Amendment of the Articles to increase the Authorized shares of the Company to 300,000,000. On July 6th, 2015, the state of Delaware approved the forward stock split at the ratio of 39.37:1. FINRA gave final approval for this forward stock split, name change and ticker symbol change from CRMV to the current NUKK on July 24th, 2015. All share amounts have been changed retroactively to reflect the forward stock split.
By late July, management had decided that many of the underlying factors of Mr. Nettlefold’s business would not be feasible as presented. As such, on July 26th, 2015, the previous Merger Agreement was rescinded.
On July 27th, 2015, Charms Investments, Inc. closed a transaction in which it acquired the majority restricted block from the Director John Nettlefold, representing 88% of the company’s shares.
On August 17th, 2015, Mr. Nettlefold resigned as Director of the Company, and on the same day the majority of the shareholders elected Mr. Peter Maddocks as Director of the Company. Since this transition, the Company has been conducting due diligence and reviewing several possibilities within the technology arena.
The financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. Since inception, the Company has incurred net losses of $118,333 and has a working capital deficit of $22,132 at September 30, 2015. Our ability to continue as a going concern is dependent upon achieving sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.
We need to either borrow funds or raise additional capital through equity or debt financings. However, we cannot be certain that such capital (from our shareholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.
F-7
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Organization
The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.
Cash and Cash Equivalents
For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. The Company’s cash and cash equivalents are located in a United States bank.
Loss per Common Share
Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar 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. There were no dilutive financial instruments issued or outstanding for the period ended September 30, 2015.
Revenue Recognition
Prior to February 13, 2015, the Company derived its revenue from the sale of general compliance and risk management consulting services (professional services revenue). The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.
Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition The Company recognizes revenue when all of the following conditions are met:
|
●
|
there is persuasive evidence of an arrangement;
|
|
|
●
|
the service has been provided to the customer;
|
|
|
●
|
the collection of the fees is reasonably assured; and
|
|
|
●
|
the amount of fees to be paid by the customer is fixed or determinable.
|
The Company records revenue as services are performed. Invoicing is done at the beginning of each month for the services to be rendered that month.
Income Taxes
F-8
The Company accounts for income taxes pursuant to FASB ASC 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2015 the carrying value of accounts payable-trade and accrued liabilities approximated fair value due to the short-term nature and maturity of these instruments.
Stock-Based Compensation
Stock compensation arrangements with non-employee service providers are accounted for in accordance ASC 505-50 Equity-Based Payments to Non-Employees, using a fair value approach.
Estimates
The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of September 30, 2015. Actual results could differ from those estimates made by management.
Significant Customers
For the year ended September 30, 2015, the Company had one customer that represented 94% of the Company's total revenues. For the year ended September 30, 2014, the Company had three customers that represented 60%, 18% and 18% of total revenues.
3. Common Stock
The Company is authorized to issue 300,000,000 shares of common stock and 15,000,000 preferred stock, both $0.0001 par value. As of September 30, 2015 the Company had 166,535,100 common shares outstanding.
F-9
On February 25, 2015, Mountain Laurel Holdings, Inc sold all of their shares in the Company, 150,899,300 to John Nettlefold. On July 27, 2015, Charms Investment Inc purchase those shares from Mr. Nettlefold.
4. Income Taxes
The provision for income taxes for the years ended September 30, 2015 and 2014 was as follows (assuming a 15% effective tax rate):
|
Year ended September 30, 2015
|
Year ended September 30, 2014
|
|||||||
|
Current Tax Provision:
|
||||||||
|
Federal-State-Local
|
- | - | ||||||
|
Total current tax provision
|
$ | - | $ | - | ||||
|
Deferred Tax Provision:
|
||||||||
|
Federal
|
- | - | ||||||
|
Loss carry-forwards
|
(6,534 | ) | (7,539 | ) | ||||
|
Change in valuation allowance
|
6,534 | 7,539 | ||||||
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Total deferred tax provision
|
$ | - | $ | - | ||||
|
The Company had deferred income tax asset as of September 30, 2015 as follows:
|
||||||||
|
Loss carry-forwards
|
$ | (17,426 | ) | |||||
|
Less - valuation allowance
|
17,426 | |||||||
|
Total net deferred tax assets
|
$ | - | ||||||
The Company provided a valuation allowance equal to the deferred income tax assets for the year ended September 30, 2015 because it is not presently known whether future taxable income will be sufficient to utilize the loss carry-forwards.
As of September 30, 2015, the Company had approximately $118,333 in tax loss carry-forwards that can be utilized future periods to reduce taxable income, and expire by the year 2035.
The Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits.
The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed. All periods since inception are still subject to examination.
F-10
5. Related Party Loans and Transactions
Ocean Cross Business Solutions Group LLC.
On August 1, 2013, the Company engaged the services (the “Agreement”) of Ocean Cross Business Solutions Group LLC (“OCBSG”), to provide assistance with filing of the SEC Form S-1, general accounting, finance, general management and client delivery services. OCBSG is owned by William Schloth, the husband of the former majority shareholder MLH. The Agreement provides for a monthly consulting fee of $5,000. The Agreement may be terminated by either party at any time. As of September 30, 2015, no amount was due to OCBSG. The Company has reflected this arrangement in the statement of operations as related party expenses. For the year ended September 30, 2015, the Company reported a total of $28,237 for this expense. Of which, $14,500 was reflected as cost of revenue and $13,824 as operating expenses. The Agreement was terminated with the change of control.
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
In connection with the preparation of our Annual Report on Form 10-K, an evaluation was carried out by management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) as of September 30, 2015. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
During evaluation of disclosure controls and procedures as of September 30, 2015 conducted as part of our annual audit and preparation of our annual financial statements, management conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective. Management determined that at September 30, 2015, we had a material weakness that relates to the relatively small number of employees who have bookkeeping and accounting functions and therefore prevents us from segregating duties within our internal control system.
9
Management’s Report on Internal Control over Financial Reporting
Management is responsible for the preparation and fair presentation of the financial statements included in this annual report. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and reflect management’s judgment and estimates concerning effects of events and transactions that are accounted for or disclosed.
Management is also responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting includes those policies and procedures that pertain to our ability to record, process, summarize and report reliable data. Management recognizes that there are inherent limitations in the effectiveness of any internal control over financial reporting, including the possibility of human error and the circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement presentation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.
In order to ensure that our internal control over financial reporting is effective, management regularly assesses controls and did so most recently for its financial reporting as of September 30, 2015. This assessment was based on criteria for effective internal control over financial reporting described in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, management has concluded that, as of September 30, 2015, we had a material weakness that relates to the relatively small number of employees who have bookkeeping and accounting functions and therefore prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.
This annual report filed on Form 10-K does not include an attestation report of the Company’s 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 temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Item 9B. Other Information.
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth the name and age of officers and director as of the date hereof. Our executive officers are elected annually by our board of directors. Our executive officers hold their offices until they resign, are removed by the Board, or his successor is elected and qualified.
10
Directors and Executive Officers
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Name
|
Age
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Position
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||
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Peter Maddocks
|
59
|
Director, President, CEO, Secretary, Treasurer and Chief Accounting Officer
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||
| Christopher Neuert |
46
|
Former Director, President, CEO, Secretary, Treasurer and Chief Accounting Officer |
Set forth below is a brief description of the background and business experience of our current executive officers or directors.
Mr. Peter Maddocks, 59, is a Chartered Accountant who worked for KPMG before he entered the banking world as a financial controller with Citibank, ANZ, Abbey National and Grindlays. He spent several years in senior financial controller positions with Citibank private banking in London, as financial controller of Citibank Italy and South East Europe, based in Rome and with Citibank venture capitals emerging markets group. Mr. Maddocks also currently serves as Director of two privately held property development companies in London
Board of Directors
The minimum number of directors we are authorized to have is one and the maximum is five. In no event may we have less than one director. Although we anticipate appointing additional directors in the future, as of the date hereof we have one director, Mr. Peter Maddocks.
Directors on our Board of Directors are elected for one-year terms and serve until the next annual security holders’ meeting or until their death, resignation, retirement, removal, disqualification, or until a successor has been elected and qualified. All officers are appointed annually by the Board of Directors and serve at the discretion of the Board. Currently, directors receive no compensation for their services on our Board.
All directors will be reimbursed by us for any accountable expenses incurred in attending directors meetings provided that we have the resources to pay these fees. We will consider applying for officers and directors liability insurance at such time when we have the resources to do so.
Committees of the Board of Directors
Concurrent with having sufficient members and resources, our Board of Directors intends to establish an audit committee and a compensation committee. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will review and recommend compensation arrangements for the officers and employees. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees. We believe that we will need a minimum of three independent directors to have effective committee systems.
As of the date hereof, we have not established any Board committees.
11
Family Relationships
No family relationship exists between any director, executive officer, or any person contemplated to become such.
Director Independence
We currently do not have any independent directors serving on our board of directors.
Possible Potential Conflicts
The OTCBB on which we plan to have our shares of common stock quoted does not currently have any director independence requirements.
No member of management will be required by us to work on a full time basis. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer's understanding of his/her fiduciary duties to us.
Currently we have only one officer and one director (both of whom are the same person), and will seek to add additional officer(s) and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.
We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
Involvement in Certain Legal Proceedings
None of our directors or executive officers has, during the past ten years:
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·
|
has had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;
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|
·
|
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
|
·
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been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities;
|
|
·
|
been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
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|
·
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been subject or a party to or any other disclosable event required by Item 401(f) of Regulation S-K.
|
12
Code of Business Conduct and Ethics
We currently do not have a Code of Business Conduct and Ethics.
Item 11. Executive Compensation.
EXECUTIVE COMPENSATION
2015 Summary Compensation Table
The following table presents summary information regarding the total compensation awarded to, earned by, or paid to each of the named executive officers for services rendered to us for the year ended September 30, 2015
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Name and Principal Position
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|
Fiscal
Year
|
|
Salary
($)
|
|
Bonus
($)
|
Stock
Awards
($)(1)
|
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||||
|
Mr Petter Maddocks, President, CEO,
|
|
2015
|
|
|
--
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|
|
--
|
|
--
|
|
|
--
|
--
|
||||||||||
|
CFO, director
|
||||||||||||||||||||||||
Other than as set forth in the table above, there has been no cash or non-cash compensation awarded to, earned by or paid to any of our officers and directors for the year ended September 30, 2015. We do not intend to pay salaries in the next twelve months. We do not currently have a stock option plan, non-equity incentive plan or pension plan.
Director Compensation
Our directors will not receive a fee for attending each board of directors meeting or meeting of a committee of the board of directors. All directors will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with attending board of director and committee meetings.
Employment Agreement
The Company currently has no employment agreements with its officers or directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information as of February 3rd, 2016 with respect to the beneficial ownership of our common stock, the sole outstanding class of our voting securities, by (i) any person or group owning more than 5% of each class of voting securities, (ii) each director, (iii) each executive officer named in the Summary Compensation Table in the section entitled “Executive Compensation” above and (iv) all executive officers and directors as a group. As of February 3rd, 2016, we had 166,535,100 shares of common stock issued and outstanding.
13
Beneficial ownership is determined under the rules of the Securities and Exchange Commission and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder.
Shares of common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of the date of this Registration statement are considered outstanding and beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
|
Name And Address
|
Beneficially
Owned
|
Percentage
Owned
|
||||||
|
Charms Investment Ltd (1)
|
150,899,300
|
82.79
|
%
|
|||||
|
All directors and officers as a group (1 persons)
|
0
|
0
|
%
|
|||||
_____________________
|
(1)
|
Charms investments has its address at 519 NW 60th St, Suite c, Gainesville, FL
|
Item 13. Certain Relationships and Related Transactions, and Director Independence.
We had a consulting agreement dated August 1, 2013 with Ocean Cross Business Solutions Group LLC (“OCB”) under which OCB will provide certain general accounting, finance and assistances with the filing of this S1. Mr. William Schloth is the president and owner of OCB. Mr. Schloth is the husband of the sole owner (Mary Ellen Schloth) of MHL., our former majority shareholder. During the period from inception July 29, 2013 through September 30, 2015 we recorded $77,500 for these various services. At September 30, 2015 the Company did not owe any money to OCB for these services. The contract was terminated as part of the change of control.
We believe that the foregoing transactions were in our best interests. Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is us at is authorized, approved or ratified by the board. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we will utilize our audit committee for the review of potential conflicts of interest.
Except as set forth above, none of the following persons has any direct or indirect material interest in any transaction to which we are a party since our incorporation or in any proposed transaction to which we are proposed to be a party:
|
(A)
|
Any of our directors or officers;
|
|
|
(B)
|
Any proposed nominee for election as our director;
|
|
|
(C)
|
Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our common stock; or
|
|
|
(D)
|
Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary of our company.
|
14
Item 14. Principal Accounting Fees and Services.
The following table indicates the fees billed to us for services performed for the:
|
Year Ended September 30, 2015
|
Year Ended September
30, 2014
|
|||||||
|
Audit Fees
|
$ | 15,000 | $ | 14,000 | ||||
|
All Other Fees
|
- | 500 | ||||||
|
Total
|
$ | 15,000 | $ | 14,500 | ||||
15
PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following exhibits are incorporated into this Form 10-K Annual Report:
|
Exhibit
Number
|
Description
|
|
|
Rule 13a-14(a) Certification of the Chief Executive and Financial Officer
|
||
|
Section 1350 Certification of Chief Executive and Financial Officer
|
|
*
|
Filed along with this document
|
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
NUKKLEUS
|
||
|
Dated: February 3rd, 2016
|
By:
|
/s/Peter Maddocks
|
|
Chief Executive and Financial Officer, Director
|
||
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.
|
Signature
|
Title
|
Date
|
|
/s/Peter Maddocks
|
Chief Executive Officer and Accounting Officer, Director
|
February 3rd, 2016
|
16