What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2018-09-05 compared with 2018-04-12 · 258 added, 181 removed, 190 unchanged (70% of the section changed)

5 unchanged sentences

of Stockholders’

Equity (Deficit) for the years ended June 30, 2017 and 2016

Deficit for the years ended June 30, 2018 and 2017

of Cash Flows for the years ended June 30, 2018 and 2017

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the Board of Directors and Stockholders

Capital Corporation

have audited the balance sheets of Waterside Capital Corporation (the “Company”) as of June 30, 2017 and 2016 and

the related statements of operations, stockholders’

equity (deficit), and cash flows for the years then ended.

These financial

statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial

statements based on our audit.

conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

An audit also includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that

our audit provides a reasonable basis for our opinion.

our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Waterside

Capital Corporation as of June 30, 2017 and 2016, and the results of its operations and its cash flows for the years then ended,

Waterside Capital Corporation

on the Financial Statements

have audited the accompanying balance sheets of Waterside Capital Corporation (the “Company”) as of June 30, 2018

and 2017 and the related statements of operations, stockholders’

equity (deficit), and cash flows for each of the two years

in the period ended June 30, 2018, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of

June 30, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended June

30, 2018, in conformity with accounting principles generally accepted in the United States of America.

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As discussed in Note

1 to the financial statements, the Company has experienced liquidity issues and has no working capital.

Further, the Company has

no active business to generate cash flows to repay its current and future obligations.

These conditions raise substantial doubt

about the Company’s ability to continue as a going concern.

Management’s plans in regard to this uncertainty are also

described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Irvine, California

1 to the financial statements, the Company has experienced liquidity issues and does not have working capital.

The Company’s

has no active business to generate cash flows to repay its current and future obligations.

These conditions raise substantial

doubt about the Company’s ability to continue as a going concern.

Further information and management’s plans

in regard to this uncertainty are also described in Note 1.

The financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

HASKELL & WHITE LLP

have served as the Company’s auditor since 2017.

September 04, 2018

CAPITAL CORPORATION

30, 2018 and 2017

Current Assets

Assets, net of accumulated depreciation

& STOCKHOLDERS EQUITY (DEFICIT)

Interest Payable -SBA

& STOCKHOLDERS DEFICIT

Note Payable –

Roran, net of debt discount

Interest Payable

Current Liabilities

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Paid-In Capital

Equity (Deficit)

(10,574,869 )

(10,200,948 )

LIABILITIES & STOCKHOLDERS EQUITY (DEFICIT)

Stockholders Deficit

LIABILITIES & STOCKHOLDERS DEFICIT

accompanying Notes are an integral part of these Financial Statements.

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Administrative

Average Number of Common Shares Outstanding –

Weighted Average

Number of Common Shares Outstanding –

Basic and Diluted

Net Loss Per Share

accompanying Notes are an integral part of these Financial Statements.

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of Stockholders’

Equity (Deficit)

the years ended June 30, 2018 and 2017

Net Loss for the year

Beneficial Conversion Feature

Net Loss for the year

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Cash flows from operating activities:

Adjustments to reconcile

net loss to net cash used in operating activities:

on investments and other assets

and amortization expense

cash used in operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of interest

Loss on investments and other assets

Depreciation and amortization expense

Changes in assets and liabilities

Accounts payable

Accrued interest payable

Net cash used in operating activities

Cash flows from investing activities:

from sale/settlement of investments

Net cash provided

by investing activities

Proceeds from sale/settlement of investments

Net cash provided by investing activities

Cash flows from financing activities:

Net cash used in

financing activities

Net (decrease) increase in cash

Payments on SBA judgment

Roran Capital:

Loan from Roran

Roran Capital:

Note from Roran

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

Cash, beginning of year

Cash, end of year

Supplemental disclosure of non-cash investing

Conversion of investment

into notes receivable

Transfer of note

receivable to SBA to settle part of accrued interest

Supplemental disclosure of non-cash investing activity

Transfer of note receivable to SBA to settle part of accrued interest

accompanying Notes are an integral part of these Financial Statements.

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ORGANIZATION AND OPERATIONS

Capital Corporation (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was

a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment

Corporation (“SBIC”).

The Company previously made equity investments in, and provided loans to, small businesses to

finance their growth, expansion, and development.

Under applicable SBA regulations, the Company was restricted to investing only

in qualified small businesses as contemplated by the Small Business Investment Act of 1958.

As a registered investment company

under the Investment Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment

objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective.

Company made its first investment in a small business in October 1996.

Capital Corporation (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was a closed-end

investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Corporation

(“SBIC”).

The Company previously made equity investments in, and provided loans to, small businesses to finance their

growth, expansion, and development.

Under applicable SBA regulations, the Company was restricted to investing only in qualified

small businesses as contemplated by the Small Business Investment Act of 1958.

As a registered investment company under the Investment

Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment objective was to provide

its shareholders with a high level of income, with capital appreciation as a secondary objective.

The Company made its first investment

in a small business in October 1996.

May 28, 2014, with the Company’s consent, the court having jurisdiction over the action filed by the SBA (the “

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to the SBA and for the expenses of the Receivership.

On June 28, 2017 the Receivership was terminated with the entry of

a Final Order by the Court.

On June 28, 2017 the Receivership was terminated with the entry of a Final

Order by the Court.

The Final Order specifically stated that “Control of Waterside shall be unconditionally transferred

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expended, and has continued to expend, its own funds to maintain the viability of the Company.

Company has no assets of any value, and the Company no longer has the SBIC license from the SBA.

The Company is clearly no longer

operating as a registered investment company under the Investment Company Act.

The Company will now seek to either (i) enter into

a new business;

or, (ii) merge with, or otherwise acquire, an active business which would benefit from operating as a public entity,

and has undertaken a search to identify the best possible candidate(s) in order to provide value to the shareholders of the Company.

Company has no operating assets of any value, and the Company no longer has the SBIC license from the SBA.

is clearly no longer operating as a registered investment company under the Investment Company Act.

The Company will now seek

to either (i) enter into a new business;

or, (ii) merge with, or otherwise acquire, an active business which would benefit from

operating as a public entity, and has undertaken a search to identify the best possible candidate(s) in order to provide value

to the shareholders of the Company.

The Company has filed with the SEC an Application

pursuant to Section 8(f) of the Investment Company Act of 1940 for an order declaring that the Company has ceased to be a registered

investment company.

In response to that filing, the SEC issued to the Company comments in a letter dated May 16, 2018.

responded to those comments with the filing of an Amended Application on June 4, 2018.

As of the date of this Annual Statement,

the Company has not received any response from the SEC in regard to the Amended Application.

accompanying financial statements of our Company have been prepared in accordance with accounting principles generally accepted

in the United States.

The Company effectively ceased operations and it has net losses through the date of these financial

Our financial statements have been presented on the basis that our business is a going concern, which contemplates

the realization of assets and the satisfaction of liabilities in the normal course of business.

We are subject to the risks and

uncertainties associated with a business with no operating business or assets and no revenue, as well as limitations on our operating

capital resources.

We have incurred operating losses and negative operating cash flows since the Receivership, and we expect to

continue to incur operating losses and negative operating cash flows at least through the near future.

Roran, which is a related

party to the Company, has agreed to advance our Company funding in order to partially meet our most critical cash requirements.

For further discussion of the advances made by Roran, see the section titled “Subsequent Events”.

The Company effectively ceased operations and it continues to have net losses through the date of

these financial statements.

Our financial statements have been presented on the basis that our business is a going concern, which

contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

We are subject to

the risks and uncertainties associated with a business with no operating business or assets and no revenue, as well as limitations

on our operating capital resources.

We have incurred operating losses and negative operating cash flows since the Receivership,

and we expect to continue to incur operating losses and negative operating cash flows at least through the near future.

which is a related party to the Company, has agreed to advance our Company funding in order to partially meet our most critical

cash requirements.

For further discussion of the advances made by Roran, see Notes 4 and 6.

CAPITAL CORPORATION

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SIGNIFICANT ACCOUNTING POLICIES

Company elected 30 June as its fiscal year-end date.

Company elected June 30 th as its fiscal year-end date.

of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

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during the reporting periods.

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached

8 unchanged sentences

results could differ from those estimates.

Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure

of related party transactions.

to section 850-10-20 the related parties include (a) affiliates (“Affiliate”

means, with respect to any specified

Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under

common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act) of the Company;

(b) entities for which investments in their equity securities would be required, absent the election of the fair value option

under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing

Financial Instruments

Company bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial

instruments if certain criteria are met.

The criteria include circumstances in which (a) the economic characteristics and risks

of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host

contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured

at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings

as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative

An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under

applicable GAAP.

the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts

are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the

fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded

in the instrument.

Beneficial conversion feature –

The issuance of the convertible debt described in Note 4 generated a beneficial conversion feature (“BCF”), which

arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the

money at inception because the conversion option has an effective strike price that is less than the market price of the underlying

stock at the commitment date.

The Company recognized the BCF by allocating the intrinsic value of the conversion option, which

is the number of shares of common stock available upon conversion multiplied

by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment

date, resulting in a discount on the convertible debt (recorded as a component of additional paid in capital).

The BCF is amortized

into interest expense over the life of the related debt.

Company follows subtopic 850-10 of the FASB Accounting Standards Codification (“ASC”) for the identification

of related parties and disclosure of related party transactions.

to ASC 850-10-20 related parties include (a) affiliates (“Affiliate”

means, with respect to any specified Person,

any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common

control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act) of the Company;

entities for which investments in their equity securities would be required, absent the election of the fair value option under

the Fair Value Option Subsection of ASC 825–10–15, to be accounted for by the equity method by the investing

(c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship

5 unchanged sentences

one of the transacting parties might be prevented from fully pursuing its own separate interests;

and (g) other parties

that can significantly influence the management or operating policies of the transacting parties or that have 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

and (g) other parties that can

significantly influence the management or operating policies of the transacting parties or that have 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.

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and Contingencies

Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.

conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which

will only be resolved when one or more future events occur or fail to occur.

The Company assesses such contingent liabilities,

and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings

that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived

merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected

to be sought therein.

Company follows ASC 450-20 to report accounting for contingencies.

Certain conditions may exist as of the date the financial

statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events

occur or fail to occur.

Management assesses such contingent liabilities, and such assessment inherently involves an exercise

In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted

claims that may result in such proceedings, management evaluates the perceived merits of any legal proceedings or un-asserted

claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability

7 unchanged sentences

Tax Assets and Income Taxes Provision

Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification.

Paragraph 740-10-25-13

which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded

in the financial statements.

Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position

only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on

the technical merits of the position.

The tax benefits recognized in the financial statements from such a position should be measured

based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.

Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting

in interim periods and requires increased disclosures.

The Company had no material adjustments to its liabilities for unrecognized

income tax benefits according to the provisions of paragraph 740-10-25-13.

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

Company adopted the provisions of ASC 740-10-25-13.

ASC 740-10-25-13 which addresses the determination of whether

tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that

the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that

has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.

ASC 740-10-25-13 also provides

guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires

increased disclosures.

The Company had no material adjustments to its liabilities for unrecognized income tax benefits according

to the provisions of ASC 740-10-25-13.

estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying

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taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

years that remain subject to examination by major tax jurisdictions are generally the prior three (3) years for federal purposes,

10 unchanged sentences

however, potential common shares are excluded if their effect is anti-dilutive.

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

Issued Accounting Pronouncements

4 unchanged sentences

INVESTMENTS AND NOTES RECEIVABLE

Company’s legacy assets primarily consisted of prior investments that were composed of equity and debt securities.

the years ended June 30, 2016 and 2017, the investments were either in default or distressed in nature.

The Receiver liquidated

the assets through negotiations and the investments are written down to their estimated net realizable value through recognizing

other-than-temporary impairment losses.

The activity in the investment account is as follows:

Company’s legacy assets primarily consisted of prior investments that were composed of equity and debt securities that

were either in default or distressed in nature.

The Receiver liquidated the assets through negotiations and the investments

are written down to their estimated net realizable value through recognizing other-than-temporary impairment losses.

in the investment account is as follows:

Balance at June 30, 2016

Cash proceeds collected

Exchange for Note Receivable

Balance at June 30, 2017

Cash proceeds collected

June 30, 2018

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

part of a settlement on an investment, during the year ended June 30, 2016 the Receiver exchanged part of an investment for two

4 unchanged sentences

NOTES PAYABLE

March 30, 2010, the SBA notified the Company that its account had been transferred to liquidation status and that the then

outstanding debentures of $16.1 million plus accrued interest (the “Debentures”) were due and payable within

fifteen days of the date of the letter.

March 30, 2010, the SBA notified the Company that its account had been transferred to liquidation status and that the then outstanding

debentures of $16.1 million plus accrued interest (the “Debentures”) were due and payable within fifteen days of the

date of the letter.

The Company did not possess adequate liquid assets to make this payment.

The Company negotiated

terms of a settlement agreement with the SBA effective September 1, 2010, which allowed the Company’s management

to liquidate the portfolio so long as there are no events of default.

The Debentures were repurchased by the SBA in September

2010, represented by a Note Agreement between the SBA and the Company.

The Company negotiated terms of a

settlement agreement with the SBA effective September 1, 2010, which allowed the Company’s management to liquidate the portfolio

so long as there are no events of default.

The Debentures were repurchased by the SBA in September 2010, represented by a Note

Agreement between the SBA and the Company.

The Note Agreement had a maturity of March 31, 2013.

In the event of a default, the SBA had the ability to seek receivership.

May 24, 2012 the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment

schedule under the Note Agreement (the “

In the event of a default, the

SBA had the ability to seek receivership.

May 24, 2012 the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment schedule

under the Note Agreement (the “

Notice ”).

Under the terms of the Notice and the Note Agreement the

SBA maintained a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

Under the terms of the Notice and the Note Agreement the SBA maintained

a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.

November 20, 2013 the SBA filed a complaint in the United States District Court for the Eastern District of Virginia seeking,

among other things, receivership for the Company and a judgment in the amount outstanding under the Note Agreement plus continuing

The complaint alleged that as of October 31, 2013 there remained an outstanding balance of $11,762,634 under

the Note Agreement, including interest, which continued to accrue at the rate of $2,021 per day.

The SBA, in filing the complaint,

requested that the court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA

as permanent receiver of the Company for the purpose of liquidating all of the Company’s assets and satisfying the claims

of its creditors in the order of priority as determined by the court.

The complaint alleged that as of October 31, 2013 there remained an outstanding balance of $11,762,634 under the Note

Agreement, including interest, which continued to accrue at the rate of $2,021 per day.

The SBA, in filing the complaint, requested

that the court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA as permanent

receiver of the Company for the purpose of liquidating all of the Company’s assets and satisfying the claims of its creditors

in the order of priority as determined by the court.

Company initially took steps to contest the legal action initiated by the SBA and to oppose the receivership action.

29, 2014 the Board of Directors of the Company, as then constituted (the “

Board ”), met to reconsider

the decision to contest the SBA’s legal action.

In light of developments occurring since December of 2013, including projections

of its portfolio companies and discussions with the SBA, the Board determined, after consultation with and advice of its counsel,

that it was not in the best interests of the Company and its shareholders to continue to contest the legal action.

informed of this determination.

Board ”), met to reconsider the decision

to contest the SBA’s legal action.

In light of developments occurring since December of 2013, including projections of its

portfolio companies and discussions with the SBA, the Board determined, after consultation with and advice of its counsel, that

it was not in the best interests of the Company and its shareholders to continue to contest the legal action.

The SBA was informed

of this determination.

The Board also decided to consent to the receivership process.

10 unchanged sentences

The Court assumed jurisdiction over the Company and the SBA was appointed receiver effective May 28, 2014.

June 28, 2017, the Receivership was terminated and a final order entered by the Court provided Roran with control of the Company.

As of June 30, 2018, the Company’s outstanding judgment payable totaled $10,427,300, and interest payable totaled $156,933.

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

The Company’s outstanding judgment payable

owed to the SBA was purchased by Roran from the SBA in July 2017.

As such, all amounts due under the outstanding judgment payable

are now owed to Roran rather than the SBA.

Upon purchase, the Company began to accrue interest that was due under the original

terms of the judgment payable.

The statutory interest rate is 0.094%.

The Company has accrued $9,385 in interest on the judgment

payable during the year ended June 30, 2018.

September 19, 2017, the Company entered into a Convertible Loan Agreement with Roran (the “Loan Agreement”).

to the Loan Agreement, Roran agreed to loan to the Company an amount not to exceed a total of $150,000 in principal over 18-months.

Each advance under the Loan Agreement will be documented under a Convertible Promissory Note issued by the Company in favor of

Roran (the “Note”).

The Note bears interest at the rate of 12% per annum and is due in 18-months.

Roran has the right

to convert all or any portion of the Note into shares of the Company’s common stock at a conversion price equal to 60% of

the share price.

a result of the advances made pursuant to the Loan Agreement, the Company has incurred total obligations of $99,338 as

of June 30, 2018.

The Company recorded a BCF due the conversion option of $60,133 and the unamortized balance at June 30,

2018 is $36,283.

The amount is netted against the note payable balance as a debt discount with the corresponding entry

to additional paid-in capital.

The debt discount has been amortized as interest expense through the maturity date.

5 - INVESTMENTS AND NOTES RECEIVABLE

Company’s legacy assets primarily consisted of prior investments that were composed of equity and debt securities.

the Receivership, the investments were either in default or distressed in nature.

The Receiver liquidated the assets through negotiations

and the investments were written down to their estimated net realizable value through recognizing other-than-temporary impairment

During the year ended June 30, 2016, the Receiver liquidated the remaining investment assets and recognized

a loss of $100,425.

part of a settlement on an investment, during the year ended June 30, 2016, the Receiver exchanged part of an investment for two

$75,000 notes receivable with consecutive 1 year terms.

The first note receivable was repaid during the period ended September

The other $75,000 note receivable was transferred to the SBA to settle part of the accrued interest outstanding on the

SBA judgment later in the 2017 fiscal year.

6 - RELATED PARTY TRANSACTIONS

following individuals and entities have been identified as related parties based on their family affiliation with our Chairman

of the Board:

following amounts were owed to related parties, affiliated with the CEO and Chairman of the Board, at the dates indicated:

Judgment Payable (acquired

by Roran from SBA)

Interest on Judgment

Convertible Note

Payable (See Note 4)

Interest on Convertible Note

SUBSEQUENT EVENTS

1 unchanged sentence

issued to determine if they must be reported.

On September 19, 2017 the Company entered into a Convertible Loan Agreement

with Roran (the “Loan Agreement”).

Pursuant to the Loan Agreement, Roran agreed to loan to the Company an amount not

to exceed a total of $150,000 in principal over 18-months.

Each advance under the Loan Agreement will be documented under a Convertible

Promissory Note issued by the Company in favor Roran (the “Note”).

The Note bears interest at the rate of 12%

per annum and is due in 18-months.

Roran has the right to convert all or any portion of the Note into shares of the Company’s

common stock at a conversion price equal to 60% of the share price.

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

were no disagreements with our accountants on accounting or financial disclosure matters during 2018 and 2017, respectively.

the past the Company was not required to engage an independent registered public accounting firm due to its status as a

registered investment company.

Since the Company is no longer a registered investment company, it engaged the services of Haskell

& White, LLP in January 2018 to serve as the Company’s independent registered public accounting firm.

the past the Company was not required to engage an independent registered public accounting firm due to its status as a registered

investment company.

Since the Company is no longer a registered investment company, it engaged the services of Haskell & White

LLP in January 2018 to serve as the Company’s independent registered public accounting firm.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data