Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

(Mark One)

 

☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

 

or

 

☐      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________________ to ________________

 

Commission File Number 333-212268

 

CARO HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

Nevada
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
7 Castle Street, Sheffield, UK		S3 8LT
(Address of principal executive offices)		(Zip Code)

 

[phone]

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

 

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 past 90 days. ☒ Yes      ☐ NO

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes      ☐ NO

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☒ YES      ☐ NO

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY 

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES      ☐ NO

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. 40,000,000 shares of common stock issued and outstanding as of November 03, 2022

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation		9
Item 3. Quantitative and Qualitative Disclosures About Market Risk		12
Item 4. Controls and Procedures		12
PART II - OTHER INFORMATION		13
Item 1. Legal Proceedings		13
Item 1 A. Risk Factors		13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		13
Item 3. Defaults Upon Senior Securities		13
Item 4. Mine Safety Disclosures		13
Item 5. Other Information		13
Item 6. Exhibits		13
SIGNATURES		14

 

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PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

CARO HOLDINGS INC.

BALANCE SHEETS

 

		September 30,				March 31,
		2022				2022
		(Unaudited)
ASSETS
Current Assets
Prepaid expenses		$	7,045			$	-
Total Current Assets			7,045				-
TOTAL ASSETS		$	7,045			$	-
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities		$	15,150			$	20,203
Due to related party			50,345				1,800
Total Current Liabilities			65,495				22,003
TOTAL LIABILITIES			65,495				22,003
Stockholders’ Deficit
Preferred stock: 75,000,000 authorized; $0.00001 par value. No shares issued and outstanding			-				-
Common stock: 75,000,000 authorized; $0.00001 par value. 40,000,000 shares issued and outstanding			400				400
Additional paid in capital			185,028				185,028
Accumulated deficit			(243,878	)			(207,431	)
Total Stockholders’ Deficit			(58,450	)			(22,003	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	7,045			$	-

 

The accompanying notes are an integral part of these unaudited financial statements.

 

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CARO HOLDINGS INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the Three Months Ended								For the Six Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
Operating Expenses
General and administration		$	25,875			$	15,100			$	36,447			$	34,279
Total operating expenses			25,875				15,100				36,447				34,279
Net loss		$	(25,875	)		$	(15,100	)		$	(36,447	)		$	(34,279	)
Net Loss Per Common Share – Basic and Diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted Average Common Shares Outstanding			40,000,000				7,705,000				40,000,000				7,705,000

 

The accompanying notes are an integral part of these unaudited financial statements

 

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CARO HOLDINGS INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND SEPTEMBER 30, 2021

(Unaudited)

 

Six Months Ended September 30, 2022 

 

										Additional								Total
		Common Stock								Paid in				Accumulated				Stockholder’s
		Number of Shares				Amount				Capital				Deficit				Deficit
Balance - March 31, 2022			40,000,000			$	400			$	185,028			$	(207,431	)		$	(22,003	)
Net loss			-				-				-				(10,572	)			(10,572	)
Balance - June 30, 2022			40,000,000			$	400			$	185,028			$	(218,003	)		$	(32,575	)
Net loss			-				-				-				(25,875	)			(25,875	)
Balance - September 30, 2022			40,000,000			$	400			$	185,028			$	(243,878	)		$	(58,450	)

 

Six Months Ended September 30, 2021

 

										Additional								Total
		Common Stock								Paid in				Accumulated				Stockholder’s
		Number of Shares				Amount				Capital				Deficit				Deficit
Balance - March 31, 2021			7,705,000			$	77			$	49,973			$	(146,332	)		$	(96,282	)
Net loss			-				-				-				(19,179	)			(19,179	)
Balance - June 30, 2021			7,705,000			$	77			$	49,973			$	(165,511	)		$	(115,461	)
Net loss			-				-				-				(15,100	)			(15,100	)
Balance - September 30, 2021			7,705,000			$	77			$	49,973			$	(180,611	)		$	(130,561	)

 

The accompanying notes are an integral part of these unaudited financial statements.

 

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CARO HOLDINGS INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the Six Months Ended
		September 30,
		2022				2021
Cash Flows from Operating Activities:
Net loss		$	(36,447	)		$	(34,279	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Prepaid expenses			(7,045	)			-
Accounts payable and accrued liabilities			43,492				33,920
Net Cash Used in Operating Activities			-				(359	)
Cash Flows from Financing Activities:
Advancement from related party			-				500
Net Cash Provided by Financing Activities			-				500
Net Changes in Cash and Cash Equivalents			-				141
Cash and Cash Equivalents, beginning of period			-				1,429
Cash and Cash Equivalents, end of period		$	-			$	1,570
Supplemental Disclosure Information:
Cash paid for interest		$	-			$	-
Cash paid for taxes		$	-			$	-
Non-Cash Investing and Financing Activities:
Operating expenses paid by related party		$	50,345			$	26,000

 

The accompanying notes are an integral part of these unaudited financial statements.

 

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CARO HOLDINGS INC.

NOTES TO UNAUDITED THE FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Caro Holdings Inc. (the “Company”) was incorporated in the State of Nevada on March 29, 2016 and engaged in the subscription box business with initial focus on offering sock subscriptions to its customers. The Company is now engaged in the development of its Direct To Consumer systems and methodologies where the Company analyze the marketplace and work with mid-size brands that have a strong bricks and mortar presence, and have a desire to increase their digital presence.

   

Effective April 28, 2022, Rozh Caroro, the previous sole director, CEO and majority shareholder of the Company, entered into a stock purchase agreement for the sale of 36,795,000 shares of Common Stock of the Company to Christopher McEachnie. As a result of the stock transfer, Mr. McEachnie holds approximately 92% of the issued and outstanding shares of Common Stock of the Company, and as such he is able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company. Also effective April 25, 2022, the previous sole officer and director of the Company, Rozh Caroro, resigned her positions with the Company. Upon her resignation, Mr. McEachnie was appointed as Chief Executive Officer, Treasurer and Secretary, and sole Director of the Company.

    

The Company is located at 7 Castle Street, Sheffield, UK.

 

NOTE 2 – GOING CONCERN UNCERTAINTY

 

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $243,878, and a net loss of $36,447 for the six months ended September 30, 2022. The Company did not generate revenues during the six months ended September 30, 2022. These factors among others raise substantial doubt about our ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Management believes that the current actions to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. There are no assurances that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with generally accepted accounting principles used in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K.

 

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year.

 

This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended March 31, 2022 included in the Company’s Annual Report on Form 10-K as filed with the SEC on October 17, 2022.

 

Use of Estimates

 

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 and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Related Parties

 

We follow ASC 850, “Related Party Disclosures”, for the identification of related parties and disclosure of related party transactions (see Note 4).

 

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Fair Value of Financial Instruments

 

ASC 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value.

 

The Company’s financial instruments primarily include accounts payable and accrued liabilities. It is management’s opinion that the carrying values are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.

 

Management believes it is not practical to determine the fair value of accounts payable and accrued liabilities, and note payable to related parties and lease and management arrangement with related parties, if any, because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

 

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 

Net Income (Loss) per Share

 

Basic net income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed similar to basic net income (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. If applicable, diluted net income per share assumes the conversion, exercise or issuance of all common stock instruments, such as convertible notes, unless the effect is to reduce a loss or increase earnings per share. As of September 30, 2022, there were no dilutive potential common shares.

 

Recently 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.

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

During the six months ended September 30, 2022, the sole director and Chief Executive Officer (“CEO”) of the Company, who was appointed on April 25, 2022, paid $50,345 on behalf of the Company for business operation purpose.

 

As of September 30, 2022 and March 31, 2022, there was $50,345 due to the current director and CEO of the Company and $1,800 due to the former director and CEO of the Company, respectively.

 

NOTE 5 – EQUITY

 

Authorized Stock

 

The Company’s authorized common stock consists of 75,000,000 shares at $0.00001 par value.

 

Common Stock

 

As of September 30, 2022 and March 31, 2022, the issued and outstanding common stock was 40,000,000 shares.

 

NOTE 6 – RISKS AND UNCERTAINTIES

 

In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at September 30, 2022. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company in the future. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this financial statements. These estimates may change, as new events occur and additional information is obtained.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation

 

FORWARD-LOOKING STATEMENTS

 

This quarterly 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 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.

 

Our unaudited financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

 

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

 

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Caro Holdings Inc., unless otherwise indicated.

 

General Overview

 

Our company was incorporated on March 29, 2016 in the State of Nevada. We had been engaged in the subscription box business with our initial focus on offering sock subscriptions to our customers. Our subscription box was a package of a pair of socks that will be sent directly to a customer on a recurring basis. For example, a potential subscriber would subscribe to receive a pair of socks once a month for either a period of 6 months or 12 months. Our subscription sock boxes were a marketing strategy and a method of product distribution, allowing us to target a wide range of customers and cater to their variety of specific needs and interests.

We are a small early-stage development company. To date, our company’s activities have been limited to the sourcing of our advertising channels, initial branding efforts, and in our formation and the raising of equity capital.

We have no revenues and have limited cash on hand. We have sustained losses since inception and have relied upon loans from directors and officers and the sale of our securities for funding. We have never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding.

 

Our Current Business

 

Since our original idea, online commerce and the direct-to-consumer market has had sustained growth. As a result of Covid, this method of sales and distribution has grown exponentially. There are thousands of manufacturers and retailers that have traditionally sold their goods and services offline. Our plan has evolved from the original idea from being both the merchant and the distribution marketplace to strictly a marketplace and a direct-to-consumer enabler.

 

We are now engaged in the development of our Direct To Consumer systems and methodologies where we analyze the marketplace and work with mid-size brands that have a strong bricks and mortar presence, and have a desire to increase their digital presence.

 

Our Direct to Consumer System (D2C) will be a fully integrated, end-to-end system that allows full control of data that provides insight from multiple channels so together with our clients successful marketing decisions can be based on the entire business’ performance. Based on these analytics, the system can immediately deploy personalization and optimization independently and readily understand how customer interactions vary across different regions. Furthermore, we believe we have the necessary infrastructure to take advantage of growth opportunities with minimal additional costs.

 

We have not developed any new or unique products or services that have not already been announced, but have plans to create or acquire complementary systems in the next year.

 

Marketing, Advertising, and Promotion

 

We believe that our systems will become one of our most important assets. Our ability to successfully create brand awareness is dependent upon our ability to address the changing needs and priorities of each brand’s target customers. To that end, we plan to focus much of our marketing efforts to recruit partners and then to apply our methodologies to better understand their customers and their needs and ensure we align our brand messages in our marketing, and the channels through which we deliver these messages, to our target customers.

 

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Results of Operations

 

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

 

		Three Months Ended
		September 30,								Change				Change
		2022				2021				Amount				Percentage
Operating expenses		$	25,875			$	15,100			$	10,775				71	%
Loss from operations			(25,875	)			(15,100	)			(10,775	)			71	%
Net loss		$	(25,875	)		$	(15,100	)		$	(10,775	)			71	%

  

During the three months ended September 30, 2022 and 2021, we did not generate revenues.

 

Operating expenses for the three months ended September 30, 2022 consisted of consulting fees, audit and accounting fees, transfer agent fees, and legal fees. The increase in operating expenses was primarily a result of an increase in development activities.

 

Six Months Ended September 30, 2022 Compared to Six Months Ended September 30, 2021

 

		Six Months Ended
		September 30,								Change				Change
		2022				2021				Amount				Percentage
Operating expenses		$	36,447			$	34,279				2,168				6	%
Loss from operations			(36,447	)			(34,279	)			(2,168	)			6	%
Net loss		$	(36,447	)		$	(34,279	)		$	(2,168	)			6	%

 

During the six months ended September 30, 2022 and 2021, we did not generate revenues.

 

Operating expenses for the six months ended September 30, 2022 consisted of consulting fees, audit and accounting fees, transfer agent fees and legal fees. The increase in operating expenses was primarily a result of an increase in development activities.

   

Liquidity and Financial Condition

 

Working Capital (Deficiency)
		September 30, 2022				March 31, 2022
Current Assets		$	7,045			$	-
Current Liabilities			65,495				22,003
Working Capital (Deficiency)		$	(58,450	)		$	(22,003	)
Cash Flows
		Six Months Ended
		September 30,
		2022				2021
Cash used in Operating Activities		$	-			$	(359	)
Cash provided by Financing Activities		$	-			$	500
Net changes in cash during period		$	-			$	141

   

Our total current assets as of September 30, 2022 were $7,045 as compared to total current assets of $0 as of March 31, 2022. The increase was primarily due to an increase in prepaid deposits.

  

Our total current liabilities as of September 30, 2022 were $65,495 as compared to total current liabilities of $22,003 as of March 31, 2022. The increase was attributed by an increase in due to related party.

  

Working capital deficiency increased from $22,003 as of March 31, 2022 to $58,450 as of September 30, 2022 mainly due to an increase in due to related party.

  

The report of our auditors on our audited financial statements for the fiscal year ended March 31, 2022, contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have achieved limited operating revenues since our inception. We have been dependent on sales of equity securities to conduct operations. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.

 

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Operating Activities

 

For the six months ended September 30, 2022, net cash used in operating activities was $0, related to our net loss of $36,447, increased by an increase in prepaid expense of $7,045 and offset by an increase in accounts payable and accrued liabilities of $43,492.

  

For the six months ended September 30, 2021, net cash used in operating activities was $359, related to our net loss of $34,279 which was offset by an increase in accounts payable and accrued liabilities of $33,920.

 

Investing Activities

 

We did not use any funds for investing activities for the six months ended September 30, 2022 and September 30, 2021.

 

Financing Activities

 

We did not have any financing activities for the six months ended September 30, 2022.

 

During the six month ended September 30, 2021, net cash provided by financing activities was $500 from advancement from the former Director of the Company.

 

Cash Requirements

 

We will require additional cash as we expand our business. Initially, to carry out our business plan, we will need to raise additional capital. There can be no assurance that we will be able to raise additional capital or, if we are able to raise additional capital, the terms we be acceptable to us. Currently we do not have any inventory.

 

These conditions indicate a material uncertainty that casts significant doubt about our ability to continue as a going concern. We require additional debt or equity financing to have the necessary funding to continue operations and meet our obligations. We have continued to adopt the going concern basis of accounting in preparing our financial statements.

 

We will require additional financing in order to enable us to proceed with our plan of operations. There is no assurance that any party will advance additional funds to us in order to continue our future plans for operations.

 

We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Critical Accounting Policies

 

Basis of Presentation

 

The financial statements are prepared in accordance with generally accepted accounting principles used in the United States of America (“US GAAP”).

 

Use of Estimates

 

In preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those estimates.

  

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Fair Value of Financial Instruments

 

ASC 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value.

 

Our Company’s financial instruments primarily include accrued liabilities. It is management’s opinion that the carrying values are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.

 

Management believes it is not practical to determine the fair value of accounts payable and accrued liabilities, and note payable to related parties and lease and management arrangement with related parties, if any, because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

 

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 

Net Income (Loss) per Share

 

Basic net income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed similar to basic net income (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. If applicable, diluted net income per share assumes the conversion, exercise or issuance of all common stock instruments, such as convertible notes, unless the effect is to reduce a loss or increase earnings per share.

 

Income Taxes

 

Income tax expense is based on reported income before income taxes. Our company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 

Recently Issued Accounting Pronouncements

 

Management has considered all recent accounting pronouncements issued. Our company’s management believes that these recent pronouncements will not have a material effect on our company’s financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on her evaluation as of the end of the period covered by this report, Meriesha Rennalls, our President, Chief Operating Officer, Secretary and Director, has concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses in our internal control over financial reporting.

 

As disclosed in our Quarterly Report on Form 10-Q for the six months ended September 30, 2022, based on management’s assessment of the effectiveness of our internal controls over financial reporting, management concluded that our internal controls over financial reporting were not effective as of September 30, 2022, due to inadequate segregation of duties and ineffective risk management, and insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. Management believes the above weakness constitute material weaknesses in our internal control over financial reporting. Until such time, if ever, that we remediate the material weakness in our internal control over financial reporting we expect that the material weaknesses in our disclosure controls and procedures will continue.

 

Changes in Internal Control over Financial Reporting

 

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.

 

Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit Number		Description of Exhibits
31.1		Certification by the Principal Executive Officer
32.1		Certification by the Principal Executive Officer

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		CARO HOLDINGS INC.
		(Registrant)
Dated: November 14, 2022		/s/ Meriesha Rennalls
		Meriesha Rennalls
		President, Chief Operating Officer, Secretary (Principal Executive Officer)

 

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