NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2021 and 2020
1.
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature
of Business Interdyne Company (the "Company")
was incorporated in October 1946 in the state of California. The Company is a dormant shell currently seeking new opportunities. On November
22, 1988, the Company filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Central District of California. On May 17, 1990, the Company’s Amended Plan of Reorganization (the “Plan”)
was confirmed by Bankruptcy Court, and the Plan became effective May 29, 1990. On July 20, 1990, the Bankruptcy Court approved a stipulation
for nonmaterial modifications to the Plan. All claims and interest have been settled in accordance with the terms of the Plan. On August
22, 1990, the Board of Directors approved a change in the Company’s year-end to June 30, pursuant to the Plan.
Basis
of Preparation The accompanying financial
statements have been prepared in accordance with generally accepted accounting principles used in the United States of America.
Going
Concern The Company’s financial statements
have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets,
and liquidation of liabilities in the normal course of business. As of June 30, 2021, the Company has an accumulated deficit of $487,798,
and a net loss of $30,625 for
the year ended June 30, 2021. The Company did not generate revenues during the year ended June 30, 2021 and may not have sufficient cash
in hand to fund its operations for the next twelve months. These factors, among others, raise substantial doubt about the Company’s
ability to continue as a going concern. 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. The Company will have to rely on its related parties to fund its operations. There are no assurances such funds will be available
when needed.
Related
Party The
Company follows ASC 850, “Related Party Disclosure”, for the identification of related parties and disclosure of related
party transactions. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries,
controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company,
its management, members of the immediate families of principal owners of the Company and its management and other parties with which
the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent
that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly
influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting
parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests is also a related party.
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.
Income
Taxes The Company accounts for income taxes
in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) codified within Accounting Standards
Codification (“ASC”) Topic No. 740-10, Income Taxes. Deferred income taxes are recognized for the temporary differences
between the tax basis of assets and liabilities and their financial reporting amounts. The Company assesses, on an annual basis, the
realizability of its deferred tax assets. A valuation allowance for deferred tax assets is established if, based upon available evidence,
it is more likely than not that all or a portion of the deferred tax assets will not be realized.
Use
of Estimates The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain
estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification
of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the
Company’s historical results as well as management’s future expectations. The Company’s actual results may vary from
those estimates and assumptions.
Net
Loss per Share The Company adopted ASC No.
260, “Earnings Per Share”, that requires the reporting of both basic and diluted earnings (loss) per share. Basic
earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC No. 260, “Earnings
Per Share”, any anti-dilutive effects on net income (loss) per share are excluded. The Company has no potentially dilutive
securities outstanding for any years presented. Weighted average shares for computing net loss per share were 39,999,942
for each of the years presented.
Fair
Value of Financial Instruments The
Company applies the provisions of accounting guidance, FASB Topic ASC 825 that requires all entities to disclose the fair value of financial
instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate
fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction
between willing parties.
Fair
Value Measurement
The Company’s financial instruments consist principally of cash, accrued professional fees, due to related party and other accrued
expenses. ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments establish a framework for measuring fair
value, establish a fair value hierarchy based on the quality of inputs used to measure fair value, and enhance disclosure requirements
for fair value measurements.
Fair
Value Hierarchy
The
Company has categorized its financial instruments, based on the priority of inputs to the valuation technique, into a three-level fair
value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3).
Financial
assets and liabilities recorded on the balance sheet are categorized based on the inputs to the valuation techniques as follows:
Level
1 Financial assets and liabilities for which values are based on unadjusted quoted prices for identical assets or liabilities
in an active market that management has the ability to access.
Level
2 Financial assets and liabilities for which values are based on quoted prices in markets that are not active or model
inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (commodity derivatives
and interest rate swaps).
Level
3 Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs
that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions
about the assumptions a market participant would use in pricing the asset or liability.
When
the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement
is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. The carrying amounts
of cash, accrued professional fees and other accrued expenses approximate fair value because of the short-term nature of these items.
Per ASC Topic 820 framework these are considered Level 3 inputs where estimates are unobservable by market participants outside of the
Company and must be estimated using assumptions developed by the Company.
It
is not, however, practical to determine the fair value of amounts due to related party 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.
Lease
On
July 1, 2019, the Company adopted ASU 2016-02, Leases (together with all amendments subsequently issued thereto, “Topic 842”),
using the modified retrospective approach and elected to utilize the Optional Transition Method. The adoption did not impact the Company’s
previously reported financial statements nor did it result in a cumulative effect adjustment to retained earnings as of July 1, 2019.
Recent
Accounting Pronouncements
In
December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective
for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective
basis, with early adoption permitted. For the Company, the new standard was effective on July 1, 2021 and it does not expect the adoption
of this guidance to have a material impact on its financial statements.
Management
has considered all other 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.
2.
RELATED PARTY TRANSACTIONS
An
officer of the Company charged a management fee totaling $6,000
for each of the years ended June 30, 2021 and
2020 for the use of a home office, accounting and other services. During the years ended June 30, 2021 and 2020, the officer also paid
operating expense of $0 and
$25,
respectively, on behalf of the Company to support the Company’s operation and these payments were fully reimbursed to him. The
balance due to this officer was $27,000 and
$21,000 as
of June 30, 2021 and 2020, respectively. The amounts due to this officer are unsecured, bearing no interest and are payable on demand.
3.
INCOME TAXES
Income
taxes for the years ended June 30, 2021 and 2020 represent state minimum franchise tax of $800.
The Company had net operating loss carryovers for federal income tax purposes totaling approximately $221,731 and
$191,106,
as of the years ended June 30, 2021 and 2020, respectively. The ultimate realization of such loss carryovers will be dependent on the
Company attaining future taxable earnings. Based on the level of historical operating results and projections of future taxable earnings,
management believes that it is more likely than not that the Company will not be able to utilize the benefits of these carryovers. The
effective tax rates for the years ended June 30, 2021 and 2020 were 21%.
As of June 30, 2021 and 2020, the Company had full valuation allowances recorded against the deferred tax assets of $46,564 and
$40,132,
respectively. If not utilized, the carryovers expire beginning between fiscal 2027 and fiscal 2038. NOLs generated in tax years prior
to June 30, 2018, can be carryforward for twenty years, whereas NOLs generated after June 30, 2018 can be carryforward indefinitely.
The
Company files income tax returns in the U.S. federal jurisdiction and in the state of California. With few exceptions, the Company is
no longer subject to U.S. federal and state tax examinations by tax authorities for the years ending June 30, 2014 and earlier.
According to Section 382 of the Internal Revenue Code of 1986, as amended, ownership changes may limit the amount of the NOL carry forwards
that can be utilized annually to offset future taxable income and tax, respectively.
4.
COMMITMENTS AND CONTINGENCIES
In
March 2017, the Company received a letter from the County of Santa Clara, California, which claimed that the Company is delinquent on
its property taxes relating to tax year 1988/1989 in the amount of $80,238.07
including penalties which should be paid immediately. The Company believes that these property taxes were related to the period prior
to the filing of the reorganization of the Company under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for
the Central District of California on November 22, 1988 and the eventual confirmation of the Company’s Amended Plan of Reorganization
(the “Plan”) by the Bankruptcy Court on May 17, 1990, and thus have been settled in accordance with the terms of the Plan
and are therefore invalid. The Company has informed the County of Santa Clara that if it wants to assert its claim, it would have to
petition to the Bankruptcy Court for relief. The Company does not recognize the said claim and therefore has not recorded any tax liabilities
related to this claim. If the County of Santa Clara claim is adjudicated to be valid and the Company is liable, the tax liabilities imposed
could have a material effect on the Company’s result of operations and financial position.