Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
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
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.
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
State the aggregate market value of the voting and nonvoting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter.
The sole purpose of this Amendment No. 2 to the Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2019, is to add the Report of Independent Registered Public Accounting Firm dated 14th November 2020 along with the audited financial statements of Carnegie Development INC, as of December 31, 2019 and 2018.
No other changes have been made to the Form 10-K. This Amendment No. 2 to the Form 10-K speaks as of the original filing date of the Form 10-K and does not reflect all events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the Form 10-K.
1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Carnegie Development Inc., is a publicly trading company under the symbol, “CDJM”
The Company Website is http://carnegie-development.com/
This Company was previously known as:
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Escue Energy Inc until July 1, 2019
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○ State of incorporation changed from Delaware to Nevada in 2015
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eDoorways Corporation, Inc. until 2015
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M Power Entertainment, Inc. until 2007
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GK Intelligent Systems, Inc. until 2005
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Technicraft Financial, Ltd. until 1994
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Incorporated in Delaware in February 1988
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Effective July 1st, 2019 the Articles of Incorporation has been amended and the new name is Carnegie Development, Inc.
On Friday 5th June 2020, FINRA approved the name change as well as the symbol change. The new CUSSIP is 14350V108
Going concern
The Company has an accumulated deficit of $ 3,859,183 as on the reporting date and there was no revenue since inception.
The Company acquired six special purpose entities in Texas. As of 14th November 2020, this Company awaits to receive the audited financial statements for these six special purpose entities to formalize the acquisition in compliance with the regulations. These six special purpose entities are engaged in land development and construction of multi-family homes.
The Company is also seeking debt or equity financing to fund its development plan although no financing arrangements are currently in place and the Company can provide no assurance that financing will be available on acceptable terms. However, the management believes that the actions for (a) obtaining the additional funds and (b) implementing its strategic plans, provide the opportunity for the Company to continue as a going concern.
Basis of Presentation
This Company uses the enterprise reporting under the provisions of Statement of Financial Accounting Standards (“SFAS”) no. 7. The accompanying financial statements are prepared in accordance with Generally accepted accounting principles (“US GAAP”) in the United States of America.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements requires the 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 of the financial statements and the reporting amounts of revenues and expenses for the reported period. Actual results will differ from those estimates.
Included in these estimates are legal risks and exposures, valuation of stock-based compensation, the potential outcome of future tax consequences of events that have been recognized in the financial statement or tax returns.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
Concentration of Credit Risks
The Company is subject to concentrations of credit risk primarily from cash and cash equivalents.
The Company’s cash and cash equivalents accounts are held at financial institutions and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. As on the reporting date, there were no cash balances in excess of federally insured limits.
Product Concentration
Since September 2020, the Company is focusing on real estate development activities.
Fair Value of Financial Instruments
The Company accounts, for the assets and liabilities measured at fair value on a recurring basis, in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1 : Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2 : Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 : Unobservable inputs for which there is little or no market data, which require the use of the reporting entities own assumptions.
The Company did not have any Level 2 or Level 3 assets or liabilities on the reporting date.
Additional Disclosures Regarding Fair Value Measurements
The carrying value of cash and cash equivalents, credit card payable, accounts payable and loan from related party approximate their fair value due to the short maturity of these items.
Revenue Recognition
The Company recognizes revenue on arrangements in accordance with ASC 606 — Revenue from Contracts with Customers. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of the resulting receivable is reasonably assured. Since inception and until now, this company has not earned any revenue.
Advertising
The Company expenses advertising costs as incurred. The Company did not spend any money for the advertising, during the reporting period.
Share-Based Payment
The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, Under the fair value recognition provisions of this topic, stock based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.
Basic and Diluted Earnings per Share
Basic earnings per share are calculated by dividing the income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period. Diluted earnings per share are computed using the weighted average number of shares of Common Stock and dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). Earnings per share calculations are provided as part of the income statement.
Fair Value Measurements
For certain financial instruments, including cash and cash equivalents, credit card payable, accounts payable and loan from related party, the carrying amounts approximate fair value due to their relatively short
maturities.
The Company follows ASC 820-10, "Fair Value Measurements and Disclosures." ASC 820-10 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheet for current liabilities qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The three levels of valuation hierarchy are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices 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 asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with ASC 815.
ASC 825-10 "Financial Instruments." permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The Company chose not to elect the option to measure the fair value of eligible financial assets and liabilities.
Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.
Special Purpose Entities
Effective 30th September 2020, this company shall report the consolidated financial statements to include the financial statements of the newly acquired six special purpose entities
Net Income per Share
The Company computes net income (loss) per share in accordance with ASC 260-10, “Earnings per Share.” The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period using the “as if converted” basis.
3 LOAN FROM RELATED PARTY
A short term loan was extended by a related party to finance working capital requirements of the Company. The loan is unsecured, and non- interest bearing, with no set terms of repayment.
4 COMMON STOCK AND PREFERRED STOCK
Common Stock
There is currently only one class of common stock. Each share common stock is entitled to one vote.
The authorized number of shares of common stock of the Company on the reporting date was 250,000,000 shares with a par value per share of $0.00001. Authorized shares that have been issued and outstanding are 46,203,716 as on the reporting date. Past dues were settled by share issuance as reflected in Statement of Shareholders equity.
Preferred Stock
Series A - [1] Designation: A series of preferred stock is hereby designated as Series A Preferred Stock. [2] Liquidation Preference: The holders of the Series A Preferred Stock has no liquidation preference. [3] Dividends: The holders of the Series A Preferred Stock shall not receive dividend. [4] Number: The number of shares is fixed at 1,000. As on the reporting date, 1,000 shares are authorized, issued and outstanding. [5] Conversion: The Series A Preferred Stock is not convertible into shares of common stock. [7] Voting Rights: The Series A Preferred Stock, collectively, are entitled to that number of votes which shall equal Seventy-five percent (75%) of all eligible votes. There is currently 1 shareholder of record of the company’s common stock.
Additional paid in capital
Additional paid in capital as on the current balance sheet date is attributable to Series A preferred stock.
5 GENERAL AND ADMINISTRATIVE EXPENSE
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2019
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2018
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USD
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USD
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Taxes and licenses
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223,356
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-
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Legal and professional expense
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88,526
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-
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Administrative expenses
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6,922
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Dues and subscription
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3,271
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Bank charges
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182
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Office expenses
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169
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Managerial remuneration
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60,000
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322,426
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60,000
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6 RELATED PARTY TRANSACTIONS
Related parties include the shareholders, directors, key management personnel of the Company, and entities which are controlled or significantly influenced by any or all such parties.
The company has transactions with the related parties which arise in the normal course of business from the commercial transactions and same are reviewed and approved by the board.
Since 2019, this company is in receipt of short-term loans every now and then from a private business entity to pay the bills. The Chairman & the CEO of this company is also managing that private business entity which is providing the short-term loans every now and then to this company.
None of the directors or officers received any remuneration from the Company during 2019 (2018: $60,000)
7 INCOME TAXES
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination
Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.
A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows:
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2019
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2018
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USD
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USD
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Deferred tax assets :
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Net operating loss carryovers
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3,859,183
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3,536,757
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Stock-based compensation
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-
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Other temporary differences
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Total deferred tax assets
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3,859,183
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3,536,757
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Valuation allowance
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(3,859,183
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(3,536,757
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Net deferred tax asset
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-
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As on the reporting date, the Company had net operating loss carryovers of $3,859,183 that may be applied against future taxable income and expires at various dates between 2026 and 2031, subject to certain limitations. The Company has a deferred tax asset arising substantially from the benefits of such net operating loss deduction and has recorded a valuation allowance for the full amount of this deferred tax asset since it is more likely than not that some or all of the deferred tax asset may not be realized
8 CONTINGENCIES AND COMMITMENTS
Contingencies
Silverland Finance Ltd, Platinum Investment Corporation, Lin Zhou, Jin Wang, and Li Jun (collectively known as plaintiffs) have filed a law suit on (i) Wal1007, LLC, (ü) Wal1009, LLC, (iii) Timothy Barton, (iv) Sada Cumber, and (v) Carnegie Development, Inc. (collectively known as defendants) on November 15, 2019 in the 44th Judicial District of Texas in Dallas County, Texas, Case No DC-19-18361 and on 25th November, 2019, this company was served with the notice of the court case. On December 30, 2019 thiscompany filed its (i) Plea in Abatement; (ii) Rule 91A Motion to Dismiss Plaintiff’s Original Petition (“Motion to Dismiss”); (iii) Special Exceptions and Original Answer denying the causes of action asserted against CDI, and (iv) Motion for Protective Order and Motion to Stay Discovery Pre-Trial Proceedings. Upon Plaintiffs filing an Amended Petition thereafter, this company withdrew the Motion to Dismiss on February 5, 2020. No other material events occurred in this case as on 21st march 2020.
The Management expects probable outflow as a result of this litigation to be remote and hence no provision provided.
Capital commitments
At 31 December 2019, the Company had capital commitments amounting to USD Nil (2018: USD Nil).
9 SUBSEQUENT EVENTS
On 11 March 2020, the World Health Organization made an assessment that the outbreak of a coronavirus (COVID-19) can be characterized as a pandemic. As a result, the economic and risk environment in which the company operates has been impacted. This situation arising and any possible impact to these financial statements is considered a subsequent, non-adjusting event
The situation, including the government and public response to the challenges, continue to progress and rapidly evolve. Therefore, the extent and duration of the impact of these conditions remain uncertain and depend on future developments that cannot be accurately predicted at this stage, and a reliable estimate of such an impact cannot be made at the date of authorization of these financial statements.
10 RESTATEMENT OF PRIOR YEAR COMPARATIVES
Certain figures for the previous year were regrouped/reclassified, wherever necessary, to conform to current year’s presentation. However, such reclassifications do not have any impact on the Company’s previously reported financial results.
11 MANAGEMENT ASSERTIONS ON CRITICAL AUDIT MATTERS
Manuals and handbooks: Absence of written manuals and handbooks is the concern for the audit. Since the Company is involving experienced professionals for the day to day operations, the need for specialized training was not felt. So also, the need for the written manuals and handbooks. However, the Management is aware of the need for standard operating procedures to educate and train its growing general staff. Preparation of manuals and handbooks has begun.