[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[ X ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed 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 last 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration statement was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
The aggregate market value of Common Stock held by non-affiliates of the Registrant, as of June 30, 2015, the last business day of the Registrant’s most recently completed second fiscal quarter was $7,700,000 based on the closing market price of $1.10.
Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.
Cautionary Note Regarding Forward-Looking Statements
This transition report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
All references in this transition report on Form 10-K to the "Company," "Axiom Holdings," “Axiom,” "we," "us" or "our" are to Axiom Holding, Inc. and our wholly-owned subsidiaries Quality Resort Hotels, Inc. and Horizon Resources Co. Ltd.
Business Development
Axiom Holdings, Inc. was incorporated in the State of Nevada on August 7, 2013. Our fiscal year end is December 31. The company's administrative address is, 11637 Orpington St, Orlando, FL 32817. The telephone number is (407) 412-6432.
Axiom had revenues of $2,665 and had a net loss of $20,540 for the three months ended December 31, 2015, and had $0 of cash on hand at December 31, 2015. In addition to minimal revenues, we have relied upon the sale of our securities to investors and corporate officers and directors for funding.
On August 17, 2015, a change in control of the Company occurred. On that date, Michael Hay and Jake Martin, our officers and directors, sold their shares in a private transaction to three persons who are now officers, directors, employees or consultants of the Company. The shares sold represented an aggregate of 200,000,000 shares of the Company's Common Stock. On August 17, 2015, Chua Seong Seng was appointed as the President, Chief Executive Officer and a director, Lim Wei Lin was appointed as Secretary and a director, and Low Tuan Lee was appointed as Chief Financial Officer, Treasurer and a director of the Company.
On September 16, 2015, the Company filed a Certificate of Amendment changing the Company’s name to Axiom Holdings, Inc. and increasing the authorized shares of common stock to 3,000,000,000 shares of common stock, with par value of $0.001 per share, and 50,000,000 shares of preferred stock with a par value of $0.001 per share. The amendment was approved by shareholders holding 58.5% of the issued and outstanding stock.
On February 19, 2016, Chua Seong Seng resigned as Chief Executive Officer, President and as a director and Lim Wei Lin resigned as Secretary and as a director.
On February 19, 2016, Low Tuan Lee was appointed Chief Executive Officer and President, and will retain his position as Chief Financial Officer and director.
Axiom has never declared bankruptcy, been in receivership, or involved in any legal proceeding.
Principal Products, Services and Their Markets
Axiom Holdings, Inc., and its wholly-owned Florida based subsidiary Quality Resort Hotels, Inc., has been marketing discount vacation packages to sought-after resort destinations throughout North America. The vacation packages target families and/or couples over the age of 28 that have an annual household income in excess of $100,000.
Patents, Trademarks, Licenses, Agreements or Contracts
Other than trade-marking the respective logos and branding, there are no other aspects of the business that require a patent or product license. We have not entered into any vendor agreements or contracts that give or could give rise to any obligations or concessions.
Governmental Controls, Approval and Licensing Requirements
We are not currently subject to direct federal, state or local regulation other than the requirement to have a business license for the areas in which we conduct business.
Number of Employees
Axiom has no employees, the officers and director are largely donating their time to the development of the company, and intend to do whatever work is necessary to bring us to viability.
Plan of Operation
The following discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this Prospectus. Except for the historical information contained herein, the discussion in this Prospectus contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this Prospectus should be read as being applicable to all related forward-looking statements wherever they appear in this Prospectus. The Company's actual results could differ materially from those discussed here.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have generated limited revenues and have limited operating history. There is no assurance we will ever reach this point. Accordingly, we must raise sufficient capital from sources. Our only other source for cash at this time is investments by others. We must raise cash to stay in business. In response to these problems, management intends to raise additional funds through public or private placement offerings.
Axiom Holdings has limited operations, limited revenue, limited financial backing and limited assets. We are currently seeking new business opportunities with established business entities for merger with or acquisition of a target business. In certain instances, a target business may wish to become our subsidiary or may wish to contribute assets to us rather than merge. We have not yet begun negotiations or entered into any definitive agreements for potential new business opportunities, and there can be no assurance that we will be able to enter into any definitive agreements.
We may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.
In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer retain a majority control of our company. In addition, it is likely that as part of the terms of the acquisition transaction, one or more new officers and directors would join the Company.
We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. We believe that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company may be scarce, or we may be unable to obtain the ones that we want. We can provide no assurance that we will be able to locate compatible business opportunities.
We have not yet entered into any definitive agreements for potential new business opportunities. There can be no assurance that we will be able to identify an appropriate business opportunity or acquire the financing necessary to enable us to pursue a transaction if an appropriate opportunity is identified.
In the next 12 months, our plan of operations is expected to be as follows:
For the next 12 months of business development, we expect we will require $30,000 for ongoing regulatory fees, plus an undetermined amount of funding to complete our business development. Funding is currently not available. We may need significant additional funding should other business opportunities become available to us.
Our officers and directors will not receive any compensation during the development stage and will be donating their time until the Company is generating profits and positive cash flow from operations.
As we are a public entity, subject to the reporting requirements of the Exchange Act, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these accounting, legal and other professional costs would be a minimum of $30,000 in the next year and will be higher, in the following years, if our business volume and activity increases. Increased business activity could greatly increase our professional fees for reporting requirements and this could have a significant impact on future operating costs. The difference between having the ability to sustain our cash flow requirements over the next twelve months and the need for additional outside funding will depend on how fast we can generate sales revenue.
At present, we do not have enough cash on hand to cover our reporting costs for the next 12 months. In order to proceed with our business plan, we will have to find alternative sources of funds, like a second public offering, a private placement of securities, or loans from our officers or third parties (such as banks or other institutional lenders). Equity financing could result in additional dilution to then existing shareholders. If we are unable to meet our needs for cash from either money that we raise from our equity, or possible alternative sources, then we may be unable to continue to maintain, develop or expand our operations.
We have no plans to undertake any product research and development during the next 12 months.
Reports to Security Holders
Axiom Holdings will voluntarily make available an annual report including audited financials on Form 10-K to security holders. We will file the necessary reports with the SEC pursuant to the Exchange Act, including but not limited to, the report on Form 8-K, annual reports on Form 10-K, and quarterly reports on Form 10-Q.
The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports and other electronic information regarding At Play Vacations and filed with the SEC at http://www.sec.gov.
As a "smaller reporting company", we are not required to provide the information required by this Item.
Item 1B. Unresolved Staff Comments.
As a "smaller reporting company", we are not required to provide the information required by this Item.
Our principal business and corporate address is 11637 Orpington St., Orlando, FL 32817; the telephone number is (407) 412-6432. We have no intention of finding, in the near future, another office space to rent during the development stage of the company.
We do not currently have any investments or interests in any real estate, nor do we have investments or an interest in any real estate mortgages or securities of persons engaged in real estate activities.
Item 3. Legal Proceedings.
We know of no material pending legal proceedings to which our company is a party or of which any of our properties, or the properties of our subsidiaries, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or has a material interest adverse to our company or our subsidiaries.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our company's common stock is quoted on the OTC Markets (the “OTCBB”) under the symbol "AIOM". Our stock was not eligible to trade until November 5, 2014.
The following table sets forth the quarterly high and low bid prices for the common stock from November 5, 2014 to December 31, 2015. The prices set forth below represent inter-dealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions.
|
|
High
|
|
|
Low
|
|
Quarter ended December 31, 2014
|
|
$
|
1.10
|
|
|
$
|
1.10
|
|
Quarter ended March 31, 2015
|
|
$
|
1.10
|
|
|
$
|
1.10
|
|
Quarter ended June 30, 2015
|
|
$
|
1.10
|
|
|
$
|
1.10
|
|
Quarter ended September 30, 2015
|
|
$
|
1.10
|
|
|
$
|
1.10
|
|
Quarter ended December 31, 2015
|
|
$
|
1.10
|
|
|
$
|
0.02
|
|
Holders
As of March 1, 2016, there were 13 stockholders of record and an aggregate of 340,000,000 shares of our common stock were issued and outstanding.
Description of Securities
The authorized capital stock of our company consists of 3,000,000,000 shares of common stock, at $0.001 par value, and 1,000,000 shares of preferred stock, at $0.001 par value.
Transfer Agent
Our transfer agent is Clear Trust, LLC, 16540 Pointe Village Dr, Suite 210, Lutz, FL 33558.
Dividend Policy
The Company does not anticipate paying dividends on the Common Stock at any time in the foreseeable future. The Company's Board of Directors currently plans to retain earnings for the development and expansion of the Company's business. Any future determination as to the payment of dividends will be at the discretion of the Board of Directors of the Company and will depend on a number of factors including future earnings, capital requirements, financial conditions and such other factors as the Board of Directors may deem relevant.
Securities Authorized for Issuance Under Equity Compensation Plans
We do not have any equity compensation plans.
Recent Sales of Unregistered Securities
We did not sell any equity securities which were not registered under the
Securities Act of 1933
during the three months ended December 31, 2015.
Use of Proceeds from Registered Securities
We did not sell any equity securities which were not registered under the
Securities Act of 1933
during the three months ended December 31, 2015.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 6. Selected Financial Data.
As a "smaller reporting company", we are not required to provide the information required by this Item.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report on Form 10-K. The following discussion contains forward‑looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report on Form 10-K.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Results of Operations
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
The following table provides selected financial data about our company as of December 31, 2015 and September 30, 2015
.
Balance Sheet Date
|
|
December 31, 2015
|
|
|
September 30, 2015
|
|
Cash
|
|
$
|
-
|
|
|
$
|
1,317
|
|
Total Assets
|
|
$
|
5,000
|
|
|
$
|
11,723
|
|
Total Liabilities
|
|
$
|
54,403
|
|
|
$
|
40,586
|
|
Stockholders' Deficit
|
|
$
|
(49,403
|
)
|
|
$
|
(28,863
|
)
|
Our cash decreased by $1,317 or 100%, primarily due to payment of the professional fees. Our liabilities increased $13,817 or 34% due to an increase in accounts payable of $9,860, an increase due to related parties of 6,622 and a decrease in deferred revenue of $2,665.
The following table provides the results of operations for the three months ended December 31, 2015 and 2014:
|
|
Three Months Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
2,665
|
|
|
$
|
6,005
|
|
Cost of revenue
|
|
|
2,110
|
|
|
|
3,221
|
|
Gross profit
|
|
|
555
|
|
|
|
2,784
|
|
Selling, general and administrative
|
|
|
5,128
|
|
|
|
3,149
|
|
Professional fees
|
|
|
15,967
|
|
|
|
19,325
|
|
Net operating loss
|
|
$
|
20,540
|
|
|
$
|
19,690
|
|
Our revenue and gross profit decreased in the three months ended December 31, 2015, as compared to the same period in 2014, due to decreased bookings. The reason for the fewer bookings in 2015 over the same period in 2014, was an effort on the part of management to control costs and to try to generate profitable revenues. The marketing and overhead costs in 2014 were excessive and generated a loss. Hence, management needed to reevaluate its methodology and prove that its business model could function more efficiently. Website services were reduced, along with the expense of third party website optimizers, and finally the expense of Google AdWords was curtailed. The result of these measures saw revenue decrease during the three months ended December 31, 2015, by $3,340 or 56%, as compared to the same period during 2014. Gross profit decrease during the three months ended December 31, 2015, by $2,229 or 80%, as compared to the same period during 2014. And during the three months ended December 31, 2015 we incurred selling, general and administrative fees of $5,128, compared to general and administrative fees of $3,149 during the same period ended December 31, 2014. The increase in administrative expenses by $1,979 or 63%, during the three months ended December 31, 2015, was primarily due to management fee of $1,249 and regulatory fees of $3,200. In terms of professional fees, in the three months ended December 31, 2015, we incurred fees of $15,967, compared to professional fees of $19,325 during the same period ended December 31, 2014. The decrease in professional fees for the three months ended December 31, 2015, of $3,358 or 17%, was generally related to a one-time fee of $12,000 for applying for DTC eligibility in 2014 and a $8,525 increase in accounting fee, as compared to 2014. Our net loss from operations decreased $850 or 4% during the three months ended December 31, 2015.
The following table provides the results of operations for the years ended September 30, 2015 and 2014:
|
|
Year Ended September 30,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
22,310
|
|
|
$
|
45,476
|
|
Cost of revenue
|
|
|
9,936
|
|
|
|
23,132
|
|
Gross profit
|
|
|
12,374
|
|
|
|
22,344
|
|
Selling, general and administrative
|
|
|
24,741
|
|
|
|
73,214
|
|
Professional fees
|
|
|
49,381
|
|
|
|
24,092
|
|
Net operating loss
|
|
$
|
61,748
|
|
|
$
|
74,962
|
|
Our revenue and gross profit decreased in the year ended September 30, 2015, as compared to the same period in 2014, due to decreased bookings. The reason for the fewer bookings in 2015 over the same period in 2014, was an effort on the part of management to control costs and to try to generate profitable revenues. The marketing and overhead costs in 2014 were excessive and generated a loss. Hence, management needed to reevaluate its methodology and prove that its business model could function more efficiently. Website services were reduced, along with the expense of third party website optimizers, and finally the expense of Google AdWords was curtailed.
The result of these measures saw revenue decrease during the year ended September 30, 2015, by $23,166 or 51%, as compared to the same period during 2014. Gross profit decreased during the year ended September 30, 2015, by $9,970 or 45%, as compared to the same period during 2014. And during the year ended September 30, 2015 we incurred selling, general and administrative fees of $24,741, compared to general and administrative fees of $73,214 during the same period ended September 30, 2014. The decrease in administrative expenses by $48,473 or 66%, during the year ended September 30, 2015, enabled us to book more efficiently and were able to reduce our loss from operations. The activity in 2014 included trial and error, while the activity in 2015 had much less trial, fewer errors, and greater efficiency. In terms of professional fees, in the year ended September 30, 2015, we incurred fees of $49,381, compared to professional fees of $24,092 during the same period ended September 30, 2014. The increase in professional fees for the year ended September 30, 2015, of $25,289 or 105%, was generally related to a one-time fee of $12,000 for applying for DTC eligibility and a $5,700 increase in reporting fees, as compared to 2014. Our net loss from operations, due primarily to our cost cutting in advertising and selling expenses, decreased $13,214 or 18% year ended September 30, 2015.
Liquidity and Financial Condition
Working Capital
The following table provides selected financial data about our company as of December 31, 2015 and September 30, 2014.
|
December 31,
2015
|
|
September 30,
2015
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
5,000
|
|
|
$
|
11,723
|
|
|
$
|
(6,723
|
)
|
Current Liabilities
|
|
$
|
54,403
|
|
|
$
|
40,586
|
|
|
$
|
13,817
|
|
Working Deficiency
|
|
$
|
(49,403
|
)
|
|
$
|
(28,863
|
)
|
|
$
|
(20,540
|
)
|
Our working capital decreased as of December 31, 2015 as compared to September 30, 2015 due to an increase in accrued liabilities of $11,725 for accrued accounting fees, and a reduction in current assets by $6,723, due to a decrease in preaid expenses by $2,500, cash of $1,317, and credit card hold backs of $796. For December 31, 2015, the Company’s assets only consisted of prepaid expenses of $5,000.
Cash Flows
|
Three Months Ended December 31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Cash Flows Used in Operating Activities
|
|
$
|
(1,317
|
)
|
|
$
|
(23,835
|
)
|
Cash Flows Provided by (Used in) Investing Activities
|
|
|
-
|
|
|
|
-
|
|
Cash Flows Provided by Financing Activities
|
|
|
-
|
|
|
|
-
|
|
Net Increase (decrease) in Cash During Period
|
|
$
|
(1,317
|
)
|
|
$
|
(23,835
|
)
|
|
Year Ended September 30,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Cash Flows Used in Operating Activities
|
|
$
|
(32,349
|
)
|
|
$
|
(70,331
|
)
|
Cash Flows Provided by (Used in) Investing Activities
|
|
|
-
|
|
|
|
-
|
|
Cash Flows Provided by Financing Activities
|
|
|
-
|
|
|
|
100,000
|
|
Net Increase (decrease) in Cash During Period
|
|
$
|
(32,349
|
)
|
|
$
|
29,669
|
|
Cash Flows from Operating Activities
We have not generated positive cash flow from operating activities. For the three months ended December 31, 2015, cash used in operating activities was $1,327 consisting of a net loss of $20,540 which was reduced by a reduction in accounts receivable and restricted cash of $796, solely by proceeds received from restricted cash of $796, a decrease in prepaid expenses of $4,610 and an increase in accounts payable of $9,860, and was increased by an decrease in deferred revenue and customer deposits of $2,665. For the three months ended December 31, 2014, cash used in operating activities was $23,835 consisting of a net loss of $19,690 and was increased by an increase in accounts receivable and restricted cash, solely from an increase in restricted cash of $5,427, an increase in prepaid expenses of $1,980 and a decrease in accounts payable of $2,134 and reduced by an increase in deferred revenue and customer deposits of $5,395.
For the year ended September 30, 2015, cash used in operating activities was $32,349 consisting of a net loss of $61,748 which was reduced by a reduction in accounts receivable and restricted cash of $2,924, solely by proceeds received from restricted cash of $2,924, and an increase in accounts payable of $599, and was increased by an increase in prepaid expenses of $9,610. For the year ended September 30, 2014, cash used in operating activities was $70,331 consisting of a net loss of $74,962 and was increased by an increase in accounts receivable and restricted cash, solely from an increase in restricted cash of $3,720, and reduced by a decrease in prepaid expenses of $3,850 and an increase in accounts payable of $4,501.
Cash Flows from Investing Activities
From inception (August 7, 2013) to December 31, 2015, we did not use any cash for investing activities.
Cash Flows from Financing Activities
We have financed our operations from the issuance of equity. For the three months ended December 31, 2015 and 2014, we did not generate any cash from financing activities.
For the year ended September 30, 2015, we did not generate any cash from financing activities. For the year ended September 30, 2014, we generated $70,000 from the issuance of 7,000,000 shares of our common stock during September 2014 and $30,000 from the short-term loan from a related party.
Going Concern
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay for our expenses. This is because we have generated limited revenues and have operating losses since inception. There are no assurances that we will be able to obtain additional financing through either private placements, and/or bank financing or other loans necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us.
Application of Critical Accounting Policies
Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $0 and $1,317 in cash and cash equivalents as at December 31, 2015, and September 30, 2015, respectively.
Financial Instruments
The Company follows ASC 820
,"Fair Value Measurements and Disclosures,"
which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company's financial instruments consist principally of cash and restricted cash, prepaid expense, and accounts payable and accrued liabilities and amounts due to related parties. Pursuant to ASC 820, the fair value of the Company's cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the Company's other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Revenue Recognition
The Company recognizes revenue when it is earned and realizable based on the following criteria: persuasive evidence that an arrangement exists, services have been rendered, the price is fixed or determinable and collectability is reasonably assured.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
Off-Balance Sheet Arrangements
We do not have any 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 are material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.