What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-09-01 compared with 2020-09-25 · 324 added, 320 removed, 99 unchanged (87% of the section changed)

STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TO FINANCIAL STATEMENTS AND NOTES

1 unchanged sentence

Balance Sheets as of June 30, 2021 and 2020

Statements of Income (Loss) for the years ended June 30, 2020 and 2019

Statements of Stockholders’

Deficit for the years ended June 30, 2020 and 2019

Statements of Loss for the years ended June 30, 2021 and 2020

Statements of Stockholders’ Deficit for the years ended June 30, 2021 and 2020

Statements of Cash Flows for the years ended June 30, 2021 and 2020

4 unchanged sentences

on the Financial Statements

have audited the accompanying balance sheets of Waterside Capital Corporation (the “Company”) as of June 30, 2020,

and 2019 and the related statements of income (loss), stockholders’

deficit, and cash flows for each of the two years in

the period ended June 30, 2020, and the related notes (collectively referred to as the “financial statements”).

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

30, 2020, and 2019, and the results of its operations and its cash flows for each of the two years in the period ended June 30,

2020, in conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared to assume the Company will continue as a going concern.

have audited the accompanying balance sheets of Waterside Capital Corporation (the “Company”) as of June 30, 2021 and 2020,

and the related statements of loss, stockholders’ deficit, and cash flows for each of the two years in the period ended June 30,

2021, 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, 2021 and 2020, and the results of its

operations and its cash flows for each of the two years in the period ended on June 30, 2021, in conformity with accounting principles

generally accepted in the United States of America.

accompanying financial statements have been prepared assuming the Company will continue as a going concern.

As discussed in Note

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

The Company has

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

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

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.

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.

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.

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 or fraud.

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

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.

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.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated

or required to be communicated to the board of directors and that (1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

for Complex Debt Transactions—Refer to Note 3 to the Financial Statements

Audit Matter Description

Company has an outstanding convertible promissory note with Roran Capital LLC and during the current year, the Company borrowed additional

funds under the convertible promissory note.

The embedded conversion feature allows the outstanding debt and interest obligations to

be converted to common stock at a fixed discount rate to the trading value of the Company’s common stock.

Such hybrid instruments

require the embedded conversion feature to be analyzed if it meets the criteria for bifurcation to be separately accounted for as a derivative

financial instrument.

If the embedded conversion feature is not bifurcated, the intrinsic value of the conversion option is calculated

to determine the debt discount associated with the conversion feature.

evaluation of whether the embedded conversion feature should be bifurcated from the host debt contract and separately accounted for as

a derivative financial instruments is highly complex.

The related audit effort in evaluating management’s analysis of the correct

application of the accounting literature in U.S.

GAAP was extensive and required a high degree of auditor judgment.

the Critical Audit Matter was Addressed in the Audit

obtained management’s analysis of applicable accounting guidance related to the determination if the embedded conversion feature

should be bifurcated and accounted for separately.

We reviewed the applicable accounting literature for debt and derivatives, noting the

conclusions reached by management that the embedded conversion feature should not be separately treated as a derivative financial instrument

were consistent with U.S.

obtained management’s calculation of the intrinsic value of the embedded conversion

feature that was recorded as a debt discount based on the funds provided and recalculated

the intrinsic value.

traced the amounts borrowed into the Company’s bank statements.

confirmed the overall outstanding debt balance with the creditor.

agreed the amount recorded into additional paid-in capital to the debt discount recorded.

tested that the amortization of the debt discount recorded to interest expense was correct.

/s/ HASKELL & WHITE LLP

have served as the Company’s auditor since 2017.

CAPITAL CORPORATION

30, 2021 and 2020

June 30, 2020

June 30, 2019

LIABILITIES & EQUITY

Current Liabilitites

Accounts Payable

Convertible Note Payable - Roran, net of debt discount

Accrued Interest Payable

Total Current Liabilities

Total Liabilities

& STOCKHOLDERS’ DEFICIT

Common Stock, $1.00 par value, 10,000,000 shares authorized, 6,082,214 and

1,915,548 shares issued and outstanding, as of June 30, 2020 and June 30, 2019, respectively

Additional Paid-In Capital

Accumulated Deficit

Note Payable - Roran

Interest Payable

Current Liabilities

Stock, $ 1.00 par value, 10,000,000 shares authorized, 6,082,214 shares issued and outstanding, as of June 30, 2021 and June 30, 2020

Paid-In Capital

( 17,930,352 )

( 17,813,690 )

Total Stockholders Deficit

TOTAL LIABILITIES & STOCKHOLDERS DEFICIT

Stockholders Deficit

LIABILITIES & STOCKHOLDERS DEFICIT

accompanying Notes are an integral part of these Financial Statements.

1 unchanged sentence

CAPITAL CORPORATION

of Income (Loss)

the Years Ended June 30, 2021 and 2020

Administrative expenses

Interest expense

Total Expense

Gain on Extinguishment of Debt

Net Loss (Income)

Weighted Average Number of Common Shares Outstanding- Basic and Diluted

Net Loss (Income) Per Share- Basic and Diluted

Administrative

$ ( 116,662 )

$ ( 128,467 )

Average Number of Common Shares Outstanding- Basic and Diluted

Loss Per Share- Basic and Diluted

accompanying Notes are an integral part of these Financial Statements.

1 unchanged sentence

CAPITAL CORPORATION

of Stockholders’

of Stockholders’ Deficit

the Years Ended June 30, 2021 and 2020

($1 Par Value)

Balance at June

2 unchanged sentences

Beneficial conversion feature

Net income for the year

Balance at June 30, 2019

Conversion of note payable

and accrued interest

( 4,016,666 )

loss for the year

at June 30, 2020

$ ( 17,813,690 )

$ ( 121,662 )

Beneficial conversion feature

Conversion of note payable and accrued interest

Net loss for the year

Balance at June 30, 2020

loss for the year

at June 30, 2021

$ ( 17,930,352 )

$ ( 208,324 )

accompanying Notes are an integral part of these Financial Statements.

3 unchanged sentences

the Years Ended June 30, 2021 and 2020

Cash Flow from Operating Activities

Net loss (income)

Adjustments to reconcile net loss (income) to net cash used:

Amortization of debt discount

Gain on extinguishment of debt

from Operating Activities

$ ( 116,662 )

Changes in assets and liabilities

Accounts Payable

Accrued Interest Payable

Net cash used by operating activities

Cash flow from Financing Activities

Proceeds from convertible note payable

Net cash provided by financing activities

Net cash increase for year

Cash at beginning of year

Cash at end of period

Supplemental disclosure of non-cash financing activity

Intrinsic value of embedded beneficial conversion feature on convertible note payable

Conversion of note payable and accrued interest to common stock

$ ( 128,467 )

to reconcile net loss (income) to net cash used in operating activities:

of debt discount

in assets and liabilities

Interest Payable

cash used in operating activities

from Financing Activities

from convertible note payable

cash provided by financing activities

(decrease) increase for year

at beginning of year

Cash at end of year

disclosure of non-cash financing activity

value of embedded beneficial conversion feature on convertible note payable

of note payable and accrued interest to common stock

accompanying Notes are an integral part of these Financial Statements.

3 unchanged sentences

1 – 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.

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 “

Court ”)

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 Company (“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 “ Court ”)

entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting

Money Judgment (the “

Order ”).

The Order appointed the SBA receiver of the Company for the purpose of marshaling

and liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America,

on behalf of the SBA, against the Company in the amount of $11,770,722.

The Court assumed jurisdiction over the Company, and the

SBA was appointed receiver effective May 28, 2014.

Company effectively stopped conducting an active business upon the appointment of the SBA as the receiver, and the commencement

of the court-ordered receivership (the “

Receivership ”).

Over the course of the Receivership the activity of

the Company was limited to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom

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.

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

and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”.

Upon termination of the Receivership Roran took possession of all books and records made available to it by the SBA, and Roran

spent and has continued to spend its funds to maintain the viability of the Company.

Money Judgment (the “ Order ”).

The Order appointed the SBA receiver of the Company for the purpose of marshaling and

liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America, on

behalf of the SBA, against the Company in the amount of $ 11,770,722 .

The Court assumed jurisdiction over the Company, and the SBA was

appointed receiver effective May 28, 2014.

Company effectively stopped conducting an active business upon the appointment of the SBA as the receiver, and the commencement of the

court-ordered receivership (the “ Receivership ”).

Over the course of the Receivership the activity of the Company was

limited to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom 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.

Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders

c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”.

Upon termination of the Receivership Roran

took possession of all books and records made available to it by the SBA.

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

On April 22, 2020,

the SEC issued an order declaring that the Company has ceased to be an investment company.

As a result the Company is now a reporting

company under the Securities Exchange Act of 1934, as amended.

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.

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 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.

Roran, which is a related

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

For further discussion of the advances made by Roran, see Notes 3 and 4.

On April 22, 2020, the SEC

issued an order declaring that the Company had ceased to be an investment company.

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.

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 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.

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 previously agreed

to loan our Company funds to meet our most critical cash requirements.

For further discussion of the Roran loan, see Notes 3 and

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

a result of the aforementioned factors, management has concluded that there is substantial doubt about our ability to continue

as a going concern.

Our independent registered public accounting firm, in its report on our 2020 financial statements, raised

substantial doubt about our ability to continue as a going concern.

Our financial statements as of and for the year ended June

30, 2020, do not contain any adjustments for this uncertainty.

a result of the aforementioned factors, management has concluded that there is substantial doubt about our ability to continue as a going

Our independent registered public accounting firm, in its report on our 2021 financial statements, raised substantial doubt

about our ability to continue as a going concern.

Our financial statements as of and for the year ended June 30, 2021, do not contain

any adjustments for this uncertainty.

2 – SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America

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 dates of the financial statements and the reported amounts of revenues and expenses

during the reporting periods.

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

to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the

financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities that are not readily apparent from other sources.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting

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

estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial

statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values

of assets and liabilities that are not readily apparent from other sources.

regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes

in facts and circumstances, historical experience and reasonable assumptions.

After such evaluations, if deemed appropriate, those

estimates are adjusted accordingly.

After such evaluations, if deemed appropriate, those estimates

are adjusted accordingly.

results could differ from those estimates.

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.

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 not bifurcated

and 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.

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 instrument.

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.

conversion feature – The issuance of the convertible debt described in Note 3 generated a beneficial conversion feature

(“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is not bifurcated

and 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.

CAPITAL CORPORATION

4 unchanged sentences

(a) the nature of the relationship(s)

(b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed,

for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding

of the effects of the transactions on the financial statements;

for which income statements are presented and the effects of any change in the method of establishing the terms from that used

in the preceding period;

and, (d) amounts due from or to related parties as of the date of each balance sheet presented and, if

not otherwise apparent, the terms and manner of settlement.

(b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each

of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects

of the transactions on the financial statements;

are presented and the effects of any change in the method of establishing the terms from that used in the preceding period;

amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner

of settlement.

and Contingencies

1 unchanged sentence

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.

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

Management 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, 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.

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

can be estimated, then the estimated liability would be accrued in the Company’s financial statements.

If the assessment

indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be

estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material,

would be disclosed.

contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would

be disclosed.

can be estimated, then the estimated liability would be accrued in the Company’s financial statements.

If the assessment indicates

that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then

the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Tax Assets and Income Taxes Provision

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.

Under ASC 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.

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.

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

Under ASC 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.

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

2 unchanged sentences

tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.

makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous

estimates of tax liability.

In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in

these jurisdictions.

In management’s opinion, adequate provisions for income taxes have been made for all years.

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

makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates

of tax liability.

In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions.

In management’s opinion, adequate provisions for income taxes have been made for all years.

If actual 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,

and the prior four (4) years for state purposes;

however, as a result of the Company’s operating losses, all tax years remain

subject to examination by tax authorities.

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

the prior four (4) years for state purposes;

however, as a result of the Company’s operating losses, all tax years remain subject

to examination by tax authorities.

Income (Loss) Per Common Share

Company computes net income or loss per share in accordance with ASC 260 Earnings Per Share.

Basic net income (loss) per share

is computed by dividing the net income (loss) available to common stockholders for the period by the weighted average number of

shares of common stock outstanding during the period.

The calculation of diluted net income (loss) per share gives effect to common

stock equivalents;

Basic net income (loss) per share is computed

by dividing the net income (loss) available to common stockholders for the period by the weighted average number of shares of common

stock outstanding during the period.

The calculation of diluted net income (loss) per share gives effect to common stock equivalents;

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

Issued Accounting Pronouncements

time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies that are adopted by the Company

as of the specified effective date.

Unless otherwise discussed, we believe that the impact of recently issued standards that are

not yet effective will not have a material impact on our financial position or results of operations upon adoption.

time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies that are adopted by the Company as

of the specified effective date.

Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet

effective will not have a material impact on our financial position or results of operations upon adoption.

CAPITAL CORPORATION

2 unchanged sentences

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.

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 “

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.

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.

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.

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 interest.

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

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.

The SBA was informed

of this determination.

The Board also decided to consent to the receivership process.

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

Court ”)

On April 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.

The SBA was informed of this determination.

The Board also

decided to consent to the receivership process.

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

entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting

Money Judgment (the “

Order ”).

The Order appointed the SBA receiver of the Company for the purpose of marshaling

and liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America,

on behalf of the SBA, against the Company in the amount of $11,770,722.

Such amount represents $11,700,000 in principal and $70,722

in accrued interest.

Money Judgment (the “ Order ”).

The Order appointed the SBA receiver of the Company for the purpose of marshaling and

liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America, on

behalf of the SBA, against the Company in the amount of $ 11,770,722 .

Such amount represents $ 11,700,000 in principal and $ 70,722 in accrued

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, 2020, the Company’s outstanding judgment payable totaled $0 as the judgment had been satisfied in full.

of June 30, 2021, the Company’s outstanding judgment payable totaled $ 0 as the judgment has been satisfied in full.

CAPITAL CORPORATION

TO THE FINANCIAL STATEMENTS

Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017.

As such, all amounts

due to the outstanding judgment payable were 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.

Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017.

As such, all amounts due

to the outstanding judgment payable were 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 was 0.094 %.

The Company satisfied the

judgment in full as Roran agreed to forgive the judgment and as of June 30, 2019, recognized a gain on extinguishment of debt

of $10,584,254, which is fully offset by NOLs for income tax purposes.

September 19, 2017, the Company issued a Convertible Promissory Note in an amount up to $150,000 in favor of Roran which was increased

to $200,000 on June 17, 2019 and $250,000 on December 13, 2019 (the “

Note ”).

The Note was issued pursuant to

a Convertible Loan Agreement with Roran (the “

Loan Agreement ”).

All outstanding principal and accrued interest

on the Note is due and payable on the maturity date, which was March 19, 2019 and then extended to September 19, 2019 and then

June 19, 2020 and a further extension is being negotiated.

Amounts borrowed under the Note bear interest at 12% per annum.

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.

As a result of the advances made pursuant to the Loan Agreement, the Company has incurred total

obligations of $104,838 as of June 30, 2020 (exclusive of accrued interest).

During the year ended June 30, 2020, the total advances

were $60,000.

The Company satisfied the judgment

in full as Roran agreed to forgive the judgment and as of June 30, 2019, recognized a gain on extinguishment of debt of $ 10,584,254 ,

which is fully offset by NOLs for income tax purposes.

September 19, 2017, the Company issued a Convertible Promissory Note in an amount up to $ 150,000

in favor of Roran which was increased to $ 200,000

on June 17, 2019 and $ 250,000

on December 13, 2019 (the “ Note ”).

The Note was issued pursuant to a Convertible Loan Agreement with Roran (the “ Loan Agreement ”).

All outstanding principal

and accrued interest on the Note

is due and payable on the maturity date, which was March 19, 2019 and then extended to September 19, 2019 and then June 19, 2020 and

a further extension is being negotiated.

borrowed under the Note bear interest at 12 %

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.

As a result of the advances made pursuant to the Loan Agreement, the Company has incurred total obligations of $ 149,838

as of June 30, 2021 (exclusive of accrued interest).

During the year ended June 30, 2021, the total advances were $ 45,000 .

The Company recorded a BCF due the conversion option of $ 30,000 , and the unamortized balance at June 30, 2021 is $ 0 .

The amount is netted against the note payable balance as a debt discount with the corresponding entry to additional paid-in

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.

4 - RELATED PARTY TRANSACTIONS

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

Chairman of the Board:

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

of the Board:

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

June 30, 2020

Convertible Note Payable

Interest on Convertible Note Payable

June 8, 2020, Roran Capital converted $124,500 principal amount of its promissory note with Waterside Capital Corporation

(the “Company”) and $25,500 of accrued and unpaid interest thereon, totaling $150,000, into 4,166,666 shares of

Company Common Stock at the stated conversion price per share of $0.036.

The remaining balance due on the promissory note,

as of the conversion date, was $104,838 in principal and $19,988 in interest, and the Company has not yet amended its

Loan Agreement and Promissory Note with Roran Capital to extend the maturity date, which expired on June 19, 2020.

SCHEDULE OF AMOUNTS OWED TO RELATED PARTIES

Convertible Note

on Convertible Note Payable

Due to related parties

June 8, 2020, Roran Capital converted $124,500 principal amount of its promissory note with the Company and $25,500 of accrued and unpaid

interest thereon, totaling $ 150,000 ,

into 4,166,666

of the Company’s common stock at the stated conversion price per share of $ 0.036 .

The remaining balance due on the promissory note, as

of the conversion date, was $ 104,838

in principal and $ 19,988

in interest, and the Company has not yet amended

its Loan Agreement and Promissory Note with Roran Capital to extend the maturity date, which expired on June

5 - SUBSEQUENT EVENTS

Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were

issued to determine if they must be reported.

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued

to determine if they must be reported.

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

were no disagreements with our accountants on accounting or financial disclosure matters during 2021 and 2020, 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 2017 to serve as the Company’s independent registered public accounting firm.

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

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

2017 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