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EX-31.1 - CERTIFICATION - Taylor Consulting Inc.tayo_ex311.htm
EX-32.1 - CERTIFICATION - Taylor Consulting Inc.tayo_ex321.htm
EX-21 - SUBSIDIARIES OF THE REGISTRANT - Taylor Consulting Inc.tayo_ex21.htm

 

 

UNITED STATES
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2015

 

or

 

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission File Number: 333-181226

 

TAYLOR CONSULTING, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

30-0721344

(State or other jurisdiction
of Incorporation or organization)

(I.R.S. Employer
Identification Number)

 

3200 Southwest Freeway, Suite 3300

Houston, Texas

77027

(Address of principal executive offices)

(Zip code)

 

Registrant's telephone number, including area code:713-840-6099

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months. Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting company

x

(Do not check is smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of November 16, 2015, there are 11,269,460 shares of common stock issued and outstanding.

 

 

 


TABLE OF CONTENTS

 

PART I — FINANCIAL INFORMATION 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

4

 

 

Consolidated Balance Sheets (Unaudited)

 

 

4

 

 

Consolidated Statements of Operations (Unaudited)

 

 

5

 

 

Consolidated Statement of Changes in Stockholders' Deficit (Unaudited)

 

 

6

 

 

Consolidated Statements of Cash Flows (Unaudited)

 

 

7

 

 

Notes to the Unaudited Consolidated Financial Statements

 

 

8

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

 

15

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

 

17

 

Item 4.

Controls and Procedures

 

 

17

 

 

 

 

 

 

PART II — OTHER INFORMATION 

 

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

 

19

 

Item 1A.

Risk Factors

 

 

19

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

19

 

Item 3.

Defaults upon Senior Securities

 

 

19

 

Item 4.

Mine Safety Disclosures

 

 

19

 

Item 5.

Other Information

 

 

19

 

Item 6.

Exhibits

 

 

20

 

 

 
2
 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as "plan", "anticipate", "believe", "estimate", "should", "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2015. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the "SEC"), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

OTHER PERTINENT INFORMATION

 

When used in this report, the terms, "we," the "Company," "our," and "us" refers to Taylor Consulting, Inc., a Delaware corporation.

 

 
3
 

 

PART I — FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

TAYLOR CONSULTING, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

 

 

 

September 30,
2015

 

 

March 31,
2015

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$140,319

 

 

$21,392

 

Land inventory

 

 

58,539

 

 

 

64,627

 

Accounts receivable, net of bad debt allowance of $0 and $0, respectively

 

 

871

 

 

 

 

Security deposits

 

 

750

 

 

 

750

 

Short-term property loans

 

 

1,416

 

 

$

 

Total current assets

 

 

201,895

 

 

 

86,769

 

 

 

 

 

 

 

 

 

 

Fixed assets net of accumulated depreciation of $228 and $119, respectively

 

 

607

 

 

 

716

 

Assets of discontinued operations

 

 

 

 

 

61,970

 

TOTAL ASSETS

 

$202,502

 

 

$149,455

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$106,740

 

 

$223,015

 

Deferred revenue

 

 

 

 

 

1,000

 

Short-term notes payable to related party

 

 

5,000

 

 

5,000

 

Total current liabilities

 

 

111,740

 

 

 

229,015

 

 

 

 

 

 

 

 

 

 

Convertible notes payable, net of discount of $480,195 and $427,244, respectively

 

 

10,058

 

 

 

16,587

 

Note payable to related party

 

 

51,197

 

 

 

51,197

 

Accrued interest payable

 

 

9,222

 

 

 

16,686

 

Liabilities of discontinued operations

 

 

 

 

4,382

 

TOTAL LIABILITIES

 

 

182,217

 

 

 

317,867

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Common Stock, $0.000001 par value; 90,000,000 shares authorized; 10,734,460 and 8,065,537 shares issued and outstanding at September 30, 2015 and March 31, 2015, respectively

 

 

11

 

 

 

8

 

Preferred Stock, $0.000001 par value; 10,000,000 shares authorized; 1,000,000 shares issued and outstanding at September 30, 2015 and March 31, 2015, respectively

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

1,435,384

 

 

 

666,827

 

Accumulated deficit

 

 

(1,415,111)

 

 

(835,248)

Total stockholders' equity (deficit)

 

 

20,285

 

 

 

(168,412)
 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

$202,502

 

 

$149,455

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
4
 

 

TAYLOR CONSULTING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 

 

 

Six months ended
September 30,

 

 

Three months ended
September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

$65,929

 

 

$9,170

 

 

$12,100

 

 

$5,450

 

COST OF GOODS SOLD

 

 

7,177

 

 

 

 

 

 

2,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

58,752

 

 

 

9,170

 

 

 

9,460

 

 

 

5,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

340,677

 

 

 

233,896

 

 

 

183,926

 

 

 

156,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(281,925)

 

 

(224,726)

 

 

(174,466)

 

 

(150,840)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(357,792)

 

 

 

 

 

(108,327)

 

 

 

Interest Income

 

 

49

 

 

 

 

 

 

49

 

 

 

 

Other income (expense), net

 

 

(357,743)

 

 

 

 

 

(108,278)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

 

(639,668)

 

 

(224,726)

 

 

(282,744)

 

 

(150,840)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from discontinued operations

 

 

6,772

 

 

 

(602)

 

 

3,563

 

 

 

(602)

Net gain on sale of discontinued operations

 

 

53,033

 

 

 

---

 

 

 

53,033

 

 

 

---

 

NET LOSS

 

$(579,863)

 

$(225,328)

 

$(226,148)

 

$(151,442)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER COMMON SHARE: Basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$(0.07)

 

$(0.03)

 

$(0.03)

 

$(0.02)

Discontinued Operations

 

 

0.01

 

 

 

(0.00)

 

 

0.01

 

 

 

(0.00)

Net Income/(Loss)

 

$(0.06)

 

$(0.03)

 

$(0.02)

 

$(0.02)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Basic and diluted

 

 

9,663,782

 

 

 

8,020,000

 

 

 

10,304,025

 

 

 

8,020,000

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
5
 

 

TAYLOR CONSULTING, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(UNAUDITED)

 

 

 

Series EPreferred Stock

 

 

Common Stock

 

 

Additional

Paid In

 

 

Accumulated

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, March 31, 2015

 

 

1,000,000

 

 

$1

 

 

 

8,065,537

 

 

$8

 

 

$666,827

 

 

$(835,248)

 

$(168,412)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for conversion of notes payable

 

 

 

 

 

 

 

 

2,668,923

 

 

 

3

 

 

 

371,782

 

 

 

 

 

 

371,785

 

Beneficial conversion discount on issuance of convertible note payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

396,775

 

 

 

 

 

 

396,775

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(579,863)

 

 

(579,863)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, September 30, 2015 (unaudited)

 

 

1,000,000

 

 

$1

 

 

 

10,734,460

 

 

$11

 

 

$1,435,384

 

 

$(1,415,111)

 

$20,285

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
6
 

 

TAYLOR CONSULTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 

 

 

Six months ended
September 30,

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$(579,863)

 

$(225,328)

(Income) loss from continuing operations

 

 

(59,805)

 

 

602

 

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

 

 

 

 

 

 

 

 

Amortization of discount on convertible note payable

 

 

343,824

 

 

 

 

Preferred stock issued for services

 

 

 

 

 

1

 

Depreciation and amortization

 

 

109

 

 

 

1,383

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and accrued revenue

 

 

(871)

 

 

(170)

Land inventory

 

 

6,088

 

 

 

 

Prepaid expenses and other current assets

 

 

(1,416)

 

 

 

Income tax receivable

 

 

 

 

 

1,913

 

Accounts payable and accrued liabilities

 

 

(116,275)

 

 

96,140

 

Accrued interest payable

 

 

13,968

 

 

 

 

Deferred revenue

 

 

(1,000)

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(395,241)

 

 

(125,459)
 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of land

 

 

 

 

 

(64,627)

Capitalized website development

 

 

 

 

 

(7,720)

NET CASH USED IN INVESTING ACTIVITIES

 

 

 

 

 

(72,347)
 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

396,775

 

 

 

249,565

 

Proceeds from notes issued

 

 

 

 

 

51,197

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

396,775

 

 

 

300,762

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

Cash flow from (used) in operating activities

 

 

117,393

 

 

 

(63,239)

NET CASH PROVIDED (USED) BY DISCONTINUED OPERATIONS

 

 

117,393

 

 

 

(63,239)
 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

118,927

 

 

 

39,717

 

 

 

 

 

 

 

 

 

 

CASH, at the beginning of the period

 

 

21,392

 

 

 

3,075

 

 

 

 

 

 

 

 

 

 

CASH, at the end of the period

 

$140,319

 

 

$42,792

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

 

 

$

 

Taxes

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Noncash investing and financing transaction:

 

 

 

 

 

 

 

 

Refinance of advances into convertible notes payable

 

$

 

 

$249,565

 

Beneficial conversion discount on convertible note payable

 

$396,775

 

 

$249,565

 

Conversion of convertible notes payable

 

$371,785

 

 

$

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
7
 

 

TAYLOR CONSULTING, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2015

 

Note 1. General Organization and Business

 

Taylor Consulting Inc. ("Taylor" or, collectively with its subsidiaries, the "Company") was incorporated in Delaware on February 29, 2012. Taylor engaged in consulting to improve performance enhancement and maximization of basketball related activities. As of January 1, 2015, the Company has discontinued its basketball consulting business to focus on the real estate opportunities. Our year-end is March 31.

 

On April 3, 2014, we formed Third Avenue Development LLC ("Third Avenue") on April 3, 2014 under the laws of the State of Texas. The Company engages in acquiring properties in the country's top performing real estate markets, specifically those that are experiencing booms as a result of mineral and oil development.

 

On October 10, 2014, Third Avenue acquired White Buffalo Property Solutions, LLC ("White Buffalo"), a Texas limited liability company. White Buffalo, a licensed real estate broker based in Abilene, Texas, compliments our ability to offer real estate services in the Texas oil market.

 

Note 2. Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the six months ended September 30, 2015, the Company had a net loss of $579,863 and negative cash flow from operating activities of $395,241. As of September 30, 2015, the Company had working capital of $90,155. Management does not anticipate having positive cash flow from operations in the near future.

 

These factors raise a substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated 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.

 

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or implement its business plan. Without additional capital, the Company will not be able to remain in business.

 

Management has plans to address the Company's financial situation as follows:

 

In the near term, management plans to continue to focus on raising the funds necessary to implement the Company's business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company's financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company's ability to continue as a going concern.

 

In the long term, management believes that the Company's projects and initiatives will be successful and will provide cash flow to the Company, which will be used to finance the Company's future growth. However, there can be no assurances that the Company's planned activities will be successful, or that the Company will ultimately attain profitability. The Company's long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.

 

 
8
 

 

Note 3. Summary of Significant Accounting Policies

 

Interim Financial Statements

 

The accompanying these unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended March 31, 2015 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the "SEC").

 

The results of operations for the six month period ended September 30, 2015 are not necessarily indicative of the results to be expected for the full fiscal year ending March 31, 2016.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Note 4. Sale of Kent Storage

 

On July 31, 2015, we completed the sale of the Kent Storage ("Kent") self-storage facility for $120,000.

 

We have recognized Kent as a discontinued operation, in accordance with ASU 2014-08 Reporting Discontinued Operations and Disclosures of Disposals of Components of Entity.

 

Assets and Liabilities of Discontinued Operations

 

 

 

September 30,
2015

 

 

March 31,
2015

 

Assets of discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

 

$857

 

Accounts receivable

 

 

 

 

 

122

 

Prepaid expenses

 

 

 

 

 

607

 

Fixed assets

 

 

 

 

 

60,384

 

Total assets held for disposal

 

$

 

 

$61,970

 

 

 

 

 

 

 

 

 

 

Liabilities of discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

 

 

$3,094

 

Customer security deposits

 

 

 

 

 

1,288

 

Total liabilities held for disposal

 

$

 

 

$4,382

 

 

 
9
 

 

Income and Expenses of Discontinued Operations

 

 

 

Six months ended
September 30,

 

 

Three months ended
September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$6,495

 

 

$1,970

 

 

$2,120

 

 

$1,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

277

 

 

 

(2,572)

 

 

1,443

 

 

 

(2,572)

Gain on sale of Kent Storage Units

 

 

53,033

 

 

 

 

 

 

53,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) due to discontinued operations

 

$59,805

 

 

$(602)

 

$56,596

 

 

$(602)

 

General and administrative expenses were negative during the three and six months ended September 30, 2015, as we released excess accruals for property taxes upon sale of Kent Street Storage.

 

Note 5. Note Payable to Related Party

 

Notes payable consisted of the following at September 30, 2015 and March 31, 2015:

 

 

 

September 30,
2015

 

 

March 31,
2015

 

Note payable in the original principal amount of $51,197, issued September 30, 2014 and due September 30, 2019, bearing interest at 5% per year.

 

$51,197

 

 

$51,197

 

Total notes payable to related party

 

 

51,197

 

 

 

51,197

 

 

The note is payable to Mustang Investments and Property Group, LLC ("Mustang Investments"), which is owned by Scott Wheeler, our CEO. It is secured by the 47 unimproved lots that were purchased with the proceeds. The interest on this note accrued each month and is payable along with the principal on the maturity date.

 

At September 30, 2015, we also have another $5,000 note payable due to Mustang Investments. The note is due on demand with no interest.

 

Note 6. Convertible Notes Payable

 

During the six months ended September 30, 2015, we received advances from View Ventures, Inc. totaling $396,775. Vista View Ventures paid the advances to KM Delaney and Associates ("KMDA"), and subsequently by KMDA to the Company on behalf of Vista View Ventures, Inc. These advances are typically converted to convertible notes on a quarterly basis as discussed below.

 

 
10
 

 

Convertible notes payable consisted of the following at September 30, 2015 and March 31, 2015:

 

 

 

September 30,

2015

 

 

March 31,
2015

 

Convertible note in the amount of $249,565, issued September 30, 2014, maturing September 30, 2016, bearing interest at 10% per year, convertible into common stock at a rate of $0.20 per share

 

$

 

 

$249,565

 

Convertible note in the amount of $120,297, issued December 31, 2014, maturing December 31, 2016, bearing interest at 10% per year, convertible into common stock at a rate of $0.08 per share.

 

 

19,499

 

 

 

120,287

 

Convertible note in the amount of $73,979, issued March 31, 2015, maturing March 31, 2017, bearing interest at 10% per year, convertible into common stock at a rate of $0.11 per share.

 

 

73,979

 

 

 

73,979

 

Convertible note in the amount of $113,806, issued June 30, 2105, maturing June 30, 2017, bearing interest at 10% per year, convertible into common stock at a rate of $0.03 per share.

 

 

113,806

 

 

 

 

Convertible note in the amount of $282,969, issued September 30, 2015, maturing September 30, 2018, bearing interest at 10% per year, convertible into common stock at a rate of $0.02 per share.

 

 

282,969

 

 

 

 

 

Total convertible notes payable

 

 

490,253

 

 

 

443,831

 

 

 

 

 

 

 

 

 

 

Less: discount on noncurrent convertible notes payable

 

 

(480,195)

 

 

(427,244)

Long-term convertible notes payable, net of discount

 

$10,058

 

 

 

16,587

 

 

All of the above notes are unsecured. All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock if that conversion would result in the holder owning more than 4.99% of the Company's common stock.

 

Convertible notes issued

 

During the six months ended September 30, 2015, the Company has signed Convertible Promissory Notes totaling $396,775 with Vista View Ventures Inc. that refinance non-interest bearing advances into convertible notes payable. These notes are payable at maturity and bear interest at ten percent per year. The holder of the notes may not convert the convertible promissory note into common stock if that conversion would result in the holder owning more than 4.99% of the Company's outstanding common stock on the conversion date. The convertible promissory notes are convertible into common stock at the option of the holder.

 

Date Issued

 

Maturity Date

 

Interest Rate

 

 

Conversion Rate

 

 

Amount of Note

 

June 30, 2015

 

June 30, 2017

 

 

10%

 

$0.03

 

 

$113,806

 

September 30, 2015

 

September 30, 2018

 

 

10%

 

 

0.02

 

 

 

282,969

 

Total

 

 

 

 

 

 

 

 

 

 

 

$396,775

 

 

 
11
 

 

We evaluated the terms on the new note in accordance with ASC Topic No 815-40, Derivatives and Hedging – Contracts in Entity's Own Stock, and determined that the underling common stock is indexed to our common stock. We determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date the note was issued, and deemed it less than the market value of underlying common stock at the inception of the note. Therefore, we recognized beneficial conversion features of $113,806 and $282,969 on June 30, 2015 and September 30, 2015, respectively. The beneficial conversion features were recorded as increase in additional paid-in capital and a discount to the convertible note payable. During the six months ended September 30, 2015 and 2014, we amortized beneficial conversion discounts of $343,824 and $0, respectively, to interest expense.

 

Conversions to Common Stock

 

During the six months ended September 30, 2015 and subsequent to quarter end, the Company's primary Convertible Note Holder, Vista View Ventures, has sold or assigned portions of their Convertible debt to third parties. The third parties who have been assigned debt are Montego Blue Enterprises Corporation, Groupers Invest Ltd., and Jaxon Group Corp. During the six months ended September 30, 2015, the client has sold or assigned $80,000 to Groupers Invest Ltd. and $157,600 to Montego Blue Enterprises Corporation. These portions of the notes are converted upon assignment, and therefore no outstanding debt at period-end is owed to any entity other than Vista View Ventures. There were no modifications of the terms of debt made during the assignment.

 

During the six months ended September 30, 2015, Vista View Ventures, Groupers Invest, and Montego Blue Enterprises converted, in the aggregate, principal and accrued interest in the amounts shown below into shares of common stock at a rate of $0.20 per share in connection with the Convertible Note Payable dated September 30, 2014. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.

 

Date

 

Amount
Converted

 

 

Number of Shares Issued

 

 

Discount amortized to interest expense

 

April 14, 2015

 

$80,000

 

 

 

400,000

 

 

$62,851

 

April 23, 2015

 

 

60,000

 

 

 

300,000

 

 

 

56,005

 

April 24, 2015

 

 

80,000

 

 

 

400,000

 

 

 

75,176

 

May 22, 2015

 

 

43,785

 

 

 

218,923

 

 

 

40,368

 

Total

 

$263,785

 

 

 

1,318,923

 

 

 

234,400

 

 

During the six months ended September 30, 2015, Vista View Ventures and Montego Blue Enterprises converted, in the aggregate, principal and accrued interest in the amounts shown below into shares of common stock at a rate of $0.08 per share in connection with the Convertible Note Payable dated December 31, 2014. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.

 

Date

 

Amount
Converted

 

 

Number of Shares Issued

 

 

Discount amortized to interest expense

 

July 1, 2015

 

 

67,200

 

 

 

840,000

 

 

 

57,651

 

September 14, 2015

 

 

40,800

 

 

 

510,000

 

 

 

35,714

 

Total

 

$108,000

 

 

 

1,350,000

 

 

 

93,365

 

 

 
12
 

 
Note 7. Debt Commitments

 

During the next five years, we will need to repay $541,450 of principal due on our notes and convertible notes. The repayment schedule is as follows:

 

 

 

Twelve months ended September 30,

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

Total

 

Convertible notes payable

 

 

 

 

$207,284

 

 

$282,969

 

 

 

 

 

 

 

 

$490,253

 

Notes payable

 

 

 

 

 

 

 

 

 

 

$51,197

 

 

 

 

 

$51,197

 

Capital lease obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

$207,284

 

 

$282,969

 

 

$51,197

 

 

 

 

 

$541,450

 

 

Note 8. Related Party Transactions

 

During the six months ended September 30, 2015, KM Delaney & Associates has provided office space and certain administrative functions to the Company. The services include provision of a furnished executive suite, use of office equipment and supplies, accounting and bookkeeping services, treasury and cash management services, financial reporting, and other support staffing requirements. As part of the services provided to us, KMDA receives advances from the lender (see footnote 4) and disburses those funds to us. During the six months ended September 30, 2015, KMDA billed us $88,881 for those services. This included $54,000 for the three months ended March 31, 2015, which we have previously accrued. As of September 30, 2015, we owed KMDA $100,376, which is included in accounts payable on the balance sheet.

 

Note 9. Stockholders' EquityConversion of shares

 

During six months ended September 30, 2015, we issued 2,668,923 shares of common stock as a result of conversions of convertible notes payable principal and accrued interest of $371,785.

 

Note 10. Business Segments

 

The Company has two reportable operating segments: (1) real estate investing and (2) real estate brokerage services. These reportable segments are managed separately due to differences in their products. We discontinued our basketball consulting and coaching segment on January 1, 2015.

 

 
13
 

 

The results of operations and financial position of the two reportable operating segments and corporate were as follows:

 

Results of Operations:

 

 

 

Six months ended September 30,

 

 

Three months ended September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Real estate investing

 

$29,129

 

 

$1,150

 

 

$6,000

 

 

$1,150

 

Real estate brokerage services

 

 

36,800

 

 

 

 

 

 

6,100

 

 

 

 

Basketball consulting

 

 

 

 

 

8,020

 

 

 

 

 

 

4,300

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$65,929

 

 

$9,170

 

 

$12,100

 

 

$5,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate investing

 

$21,951

 

 

$1,150

 

 

$3,359

 

 

$1,150

 

Real estate brokerage services

 

 

36,801

 

 

 

 

 

 

6,101

 

 

 

 

Basketball consulting

 

 

 

 

 

8,020

 

 

 

 

 

 

4,300

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$58,752

 

 

 

9,170

 

 

$9,460

 

 

 

5,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate investing

 

$23,686

 

 

$7,567

 

 

$10,334

 

 

$7,567

 

Real estate brokerage services

 

 

49,189

 

 

 

 

 

 

22,741

 

 

 

 

Basketball consulting

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

267,802

 

 

 

226,329

 

 

 

150,851

 

 

 

148,723

 

 

 

$340,677

 

 

$233,896

 

 

$183,926

 

 

$156,290

 

 

Corporate operating expense includes general and administrative costs not allocated to operating segments.

 

 

 

September 30,

2015

 

 

March 31,
2015

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

 

 

 

Real estate investing

 

$194,391

 

 

$78,912

 

Real estate brokerage services

 

 

6,737

 

 

 

7,179

 

Discontinued operations

 

 

 

 

 

61,970

 

Corporate

 

 

1,374

 

 

 

1,394

 

 

 

$202,502

 

 

$149,455

 

 

Note 11. Subsequent Events

 

The Company evaluated material events occurring between the end of our reporting period, September 30, 2015, and through the date when the consolidated financial statements were available to be issued for disclosure consideration.

 

On October 26, 2015, Jaxon Group Corp. converted $58,850 of principal and accrued interest into 535,000 shares of common stock in connection with our convertible promissory note issued on March 31, 2015.

 

 
14
 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview

 

Taylor Consulting Inc. ("Taylor" or, collectively with its subsidiaries, the "Company") was incorporated in Delaware on February 29, 2012. Taylor engaged in consulting to improve performance enhancement and maximization of basketball related activities. As of January 1, 2015, the Company has discontinued its basketball consulting business to focus on the real estate opportunities. Our year-end is March 31.

 

On April 3, 2014, we formed Third Avenue Development LLC ("Third Avenue") on April 3, 2014 under the laws of the State of Texas. The Company engages in acquiring properties in the country's top performing real estate markets, specifically those that are experiencing booms as a result of mineral and oil development.

 

On October 10, 2014, Third Avenue acquired White Buffalo Property Solutions, LLC ("White Buffalo"), a Texas limited liability company. White Buffalo, a licensed real estate broker based in Abilene, Texas, compliments our ability to offer real estate services in the Texas oil market.

 

Critical Accounting Policies

 

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the condensed consolidated financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed consolidated financial statements.

 

While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

 

For a full description of our critical accounting policies, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report for the year ended March 31, 2015 on Form 10-K.

 

Results of Operations

 

Six months ended September 30, 2015 compared to the six months ended September 30, 2014.

 

Revenue

 

Revenue increased to $65,929 for the six months ended September 30, 2015, compared to $9,170 for the six months ended September 30, 2014. The increase is due to increased property sales by Third Avenue, our real estate investing company and increased broker commissions from White Buffalo, our real estate brokerage services company.

 

Cost of Goods Sold

 

Cost of goods sold increased to $7,177 for the six months ended September 30, 2015, compared to $0 for the comparable period in 2014. This related entirely to unimproved real estate sold by Third Avenue.

 

Gross Profit

 

Gross profit increased to $58,752 for the six months ended September 30, 2015, compared to $9,170 for the six months ended September 30, 2014. The increase is because both Third Avenue and White Buffalo began earning revenue during the current year.

 

 
15
 

 

General and Administrative Expenses

 

We recognized general and administrative expenses in the amount of $340,677 and $233,896 for the six months ended September 30, 2015 and 2014, respectively. The increase was due to the increased activity at Third Avenue and White Buffalo, and an increase in professional fees.

 

Interest Expense

 

Interest expense increased from $0 for the six months ended September 30, 2014 to $357,792 for the six months ended September 30, 2015. Interest expense for the six months ended September 30, 2015 included amortization of discount on convertible notes payable in the amount of $343,824, compared to $0 for the comparable period of 2014. The remaining amount is the result of interest on our convertible notes during the current period. In the prior period, we held no interest-bearing loans.

 

Net Loss

 

We incurred a net loss of $579,863 for the six months ended September 30, 2015 as compared to $225,328 for the comparable period of 2014. The decrease in the net loss was primarily the result of the increase in interest expense, primarily on our convertible notes.

 

Three months ended September 30, 2015 compared to the three months ended September 30, 2014.

 

Revenue

 

Revenue increased to $12,100 for the three months ended September 30, 2015, compared to $5,450 for the three months ended September 30, 2014 due to higher sales of unimproved real estate and increased real estate commissions.

 

Cost of Goods Sold

 

Cost of goods sold increased to $2,640 for the three months ended September 30, 2015, compared to $0 for the comparable period in 2014. During the period ended September 30, 2014, our revenue came from sources that provided services, and did not incur cost of sales.

 

Gross Profit

 

Gross profit increased to $9,460 for the six months ended September 30, 2015, compared to $5,450 for the three months ended September 30, 2014 as a result of to higher sales of unimproved real estate and increased real estate commissions.

 

General and Administrative Expenses

 

We recognized general and administrative expenses in the amount of $183,926 and $156,290 for the three months ended September 30, 2015 and 2014, respectively. The increase is due to higher professional fees and higher costs at our Third Avenue and White Buffalo subsidiaries as they began earning revenue.

 

Interest Expense

 

Interest expense increased from $0 for the three months ended September 30, 2014 to $108,327 for the six months ended September 30, 2015. Interest expense for the three months ended September 30, 2015 included amortization of discount on convertible notes payable in the amount of $101,616, compared to $0 for the comparable period of 2014. The remaining amount is the result of interest on our convertible notes during the current period. In the prior period, we held no interest-bearing loans.

 

 
16
 

 

Net Loss

 

We incurred a net loss of $226,148 for the three months ended September 30, 2015 as compared to $151,442 for the comparable period of 2014. The increase in the net loss was primarily the result of increased interest expense and higher professional fees.

 

Liquidity and Capital Resources

 

At September 30, 2015, we had cash on hand of $140,319. The company has working capital of $90,155 . Net cash used in operating activities for the six months ended September 30, 2015 was $395,241. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of September 30, 2015.

 

Additional Financing

 

Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.

 

Off Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

This item is not applicable to small reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Management's Report on Internal Control over Financial Reporting

 

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2015. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2015, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

 
17
 

 

1.

As of September 30, 2015, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

 
2.

As of September 30, 2015, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

 

Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

 

Change in Internal Controls Over Financial Reporting

 

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to have a material effect, our internal controls over financial reporting.

 

 
18
 

 

PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

 

ITEM 1A. RISK FACTORS

 

This item is not applicable to small reporting companies.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On April 14, 2015, we issued 400,000 shares of common stock upon conversion of an $80,000 portion of a convertible note.

 

On April 23, 2015, we issued 300,000 shares of common stock upon conversion of a $60,000 portion of a convertible note.

 

On April 24, 2015, we issued 400,000 shares of common stock upon conversion of an $80,000 portion of a convertible note.

 

On May 22, 2015, we issued 218,923 shares of common stock upon conversion of a $43,785 portion of a convertible note.

 

On July 1, 2015, we issued 67,200 shares of common stock upon conversion of a $67,200 portion of a convertible note.

 

On September 14, 2015, we issued 510,000 shares of common stock upon conversion of a $40,800 portion of a convertible note.

 

Each issuance of securities was issued without registration in reliance of the exemption from registration Section 3(a)9 of the Securities Act of 1933.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The Company has not defaulted upon senior securities.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

This item is not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 
19
 

 

ITEM 6. EXHIBITS

 

3.1

Articles of Incorporation1

3.2

Bylaws1

14

Code of Ethics1

21

Subsidiaries of the Registrant3

31.1

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer.

32.1

Section 1350 Certification of principal executive officer and principal financial accounting officer.

101*

XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q.2,3

_________________

(1)

Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on May 8, 2012

 
(2)

In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed "furnished" and not "filed."

 
(3)

Filed or furnished herewith

 
(4)

To be submitted by amendment

 

 
20
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Taylor Consulting, Inc.

 

 

 

Date: November 16, 2015

BY:

/s/ Scott Wheeler

 

 

Scott Wheeler

 

 

President, Secretary, Treasurer, Principal Executive Officer, Principal Financial and Accounting Officer and Sole Director.

 

 

 

21