The accompanying notes are an integral part of
these unaudited financial statements
The accompanying notes are an integral part of
these unaudited financial statements
The accompanying notes are an integral part of
these unaudited financial statements
The accompanying notes are an integral part of
these unaudited financial statements
Notes to the Unaudited Financial Statements
June 30, 2022
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Nhale Inc. (“NHLE” or the “Company”)
was incorporated as GankIt Corporation in the state of Nevada on March 8, 2012, with a fiscal year end of May 31, which was subsequently
changed to December 31 by unanimous consent of Directors in 2019.
Until May 12, 2014, we were an e-commerce business
focused on selling a diverse set of products through a website that could either be won through a bidding process or purchased at a discount
to the suggested retail price.
On May 12, 2014, Riverview Heights, LLC purchased
20,000,000 shares of common stock of the 30,000,000 total issued and outstanding shares common stock of Company, thus becoming the Majority
Shareholder (hereafter the “Majority Shareholder”).
On February 9, 2021, Bridgeview Capital Partners,
LLC purchased 500,000 shares of Convertible Preferred Series A Stock of the 500,000 total issued and outstanding Convertible Preferred
Series A Stock of the Company.
The Company is focused on the development, branding
and distribution of non-flame smoking devices. The Company is not actively trading during the current reporting period.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements
of Nhale, Inc. (“NHLE” or the “Company”) have been prepared in accordance with accounting principles generally
accepted in the United States of America.
Use of estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment.
Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial
instruments
The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of
the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States
of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels
of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active
markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices
in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable
inputs and not corroborated by market data. The carrying amount of the Company’s financial assets and liabilities, such as prepaid
expenses and accrued expenses approximate their fair value because of the short maturity of those instruments.
Income taxes
The Company follow ASC 740-10-30, which requires
recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the
assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs
Act (“TCJA”) was signed into law by the President of the United States. TCJA is a tax reform act that among other things, reduced
corporate tax rates to 21 percent effective January 1, 2018. FASB ASC 740, Income Taxes, requires deferred tax assets and
liabilities to be adjusted for the effect of a change in tax laws or rates in the year of enactment, which is the year in which the
change was signed into law. Accordingly, the Company adjusted its deferred tax assets and liabilities at December 31, 2017, using
the new corporate tax rate of 21 percent.
The Company adopted ASC 740-10-25 (“ASC
740-10-25”) with regard to uncertainty income taxes. ASC 740-10-25 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, we 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 50% likelihood of being realized upon ultimate settlement. ASC
740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, and accounting in interim
periods and requires increased disclosures. We had no material adjustments to our liabilities for unrecognized income tax benefits according
to the provisions of ASC 740-10-25.
Net income (loss) per
common share
Net income (loss) per common share is computed
pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing
net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per
common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding
shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common
shares assumes that the Company incorporated as of the beginning of the first period presented. As at the beginning and ending of the
six months reporting period, there are 30,000,000 outstanding common shares and 500,000,000 potentially dilutive shares, respectively,
from convertible preferred stock; however, these shares have not been considered in the weighted average share calculation as their inclusion
would be anti-dilutive due to the net loss for the year ended.
Related parties
A party is considered to be related to the Company
if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with
the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal
owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly
influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting
parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Recently issued accounting
pronouncements
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have
a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The Company’s unaudited financial statements
are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates
the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established any source
of revenue to cover its operating costs and has an accumulated deficit of $3,411,327 as at June 30, 2022. These conditions raise substantial
doubt about the company’s ability to continue as a going concern.
In addition to operational expenses, as the Company
executes its business plan, it is incurring expenses related to complying with its public reporting requirements. In order to finance
these expenditures, the Company has raised capital in the form of debt, which will have to be repaid, as discussed in detail below. The
Company has depended on loans from private investors and outside investors for most of its operating capital. The Company will need to
raise capital in the next twelve months in order to remain in business.
Management anticipates that significant dilution
will occur as a result of any future sales of the Company’s common stock and this will reduce the value of its outstanding shares.
The Company cannot project the future level of dilution that will be experienced by investors as a result of its future financings, but
it will significantly affect the value of its shares.
The accompanying financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications
of liabilities that may result from the possible inability of the Company to continue as a going concern.
NOTE 4 – PAYABLES AND ACCRUED INTERESTS
Schedule of payables | |
Jun. 30, 2022 | | |
Dec. 31, 2021 | |
Payables | |
$ | 489,044 | | |
$ | 489,044 | |
Accrued Interests | |
| 1,529,033 | | |
| 1,458,796 | |
Total | |
$ | 2,018,077 | | |
$ | 1,947,840 | |
NOTE 5 – NOTES PAYABLE
During 2013 - 2016 the Company borrowed an aggregate
amount of $1,240,000 and issued 24 promissory notes in total maturing 2015 - 2018. As at June 30, 2022 and December 31, 2021, there were
23 promissory notes with an aggregated amount of $1,190,000 in default.
Weighted average interest rate of default was
23.6%-23.8% during the reporting periods ended June 30, 2022 and 2021. The Company accrued interest expenses of $70,238 for the six months
ended June 30, 2022 and 2021 respectively.
NOTE 6 – COMMON STOCK AND PREFERRED
STOCK
The Company has 100,000,000 shares of common stock
authorized at par value of $0.0001, and 30,000,000 shares of common stock were issued and outstanding at beginning and end of the reporting
period at total par value of $3,000 and an aggregated amount of share premium of $110,250.
The Company has 1,000,000 shares designated Series
A preferred stock at par value of $0.0001, and 500,000 issued as at beginning and end of the reporting period with total par value of
$50 and an aggregated amount of share premium of $89,950.
NOTE 7 – INCOME TAXES
Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards 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. The Company has evaluated Staff Accounting
Bulletin No. 118 regarding the impact of the decreased
tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment. The U.S. federal income tax rate of 21% is being used due to the new tax law recently enacted.
Deferred income taxes reflect the tax consequences
on future years of differences between the tax bases. Net operating loss carry-forwards and tax benefits arising therefore are as follows:
Deferred tax assets | |
Jun. 30, 2022 | | |
Dec. 31, 2021 | |
Net operating loss (NOL) brought forward | |
$ | 3,270,852 | | |
$ | 2,899,902 | |
Net loss for the period / year | |
| 140,475 | | |
| 370,950 | |
NOL carried forward | |
$ | 3,411,327 | | |
$ | 3,270,852 | |
| |
| | | |
| | |
Tax benefit from NOL carried forward | |
$ | 852,832 | | |
$ | 817,713 | |
Valuation allowance | |
| (852,832 | ) | |
| (817,713 | ) |
Deferred tax assets | |
$ | – | | |
$ | – | |
The Company’s tax loss
carried forward will begin to expire in 2030.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
As at the end of the reporting period, the company
has no commitments and contingencies to disclose.
NOTE 9 – RELATED-PARTY TRANSACTIONS
The company was not engaging in any business activities
during the reporting periods, and has no related party transactions to disclose.
NOTE 10 – SUBSEQUENT EVENTS
As at the date these financial statements are
ready to be released, the Company has no subsequent events to disclose.
NOTE 11 – IMPACTS OF THE COVID-19 PANDEMIC
As the Company is not actively trading in the
current reporting period, there is no impact of the COVID-19 pandemic on financial statements as at and for the quarterly ended June 30,
2022.