10-Q 1 ctdt_10q.htm FORM 10-Q Blueprint
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2016
 
OR
 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from 4-1-2016 to 6-30-16
 
Commission File No. 000-53286
 
CENTAURUS DIAMOND TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
71-1050559
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
1000 W. Bonanza Rd.
Las Vegas, Nevada 89106
(Address of principal executive offices, zip code)
 
(702) 382-3385
(Registrant’s telephone number, including area code)
 
____________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically 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 (or for such shorter period that the registrant was required to submit and post such files). Yes    ☐ No ☒
 
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.  (check one):
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
(Do not check if a smaller reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act):    Yes ☐ No ☒
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes    ☐ No ☐
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
As of June 30, 2016, there were 211,267,623 shares of common stock, $0.001 par value per share, outstanding.

 
 
 
CENTAURUS DIAMOND TECHNOLOGIES, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2016
 
INDEX
 
Index
 
 
 
Page
 
 
 
 
 
 
 
Part I.
Financial Information
 
 
 
 
 
 
 
 
 
Item 1.
Financial Statements
 
 
 
 
 
 
 
 
 
 
 
Balance Sheets as of June 30, 2016 (unaudited) and March 31, 2016.
 
 
F-1
 
 
 
 
 
 
 
 
 
 
Statements of Operations for the three months ended June 30, 2016 and 2015. (Unaudited).
 
 
F-2
 
 
 
 
 
 
 
 
 
 
Statements of Cash Flows for the three months ended June 30, 2016 and 2015. (Unaudited).
 
 
F-3
 
 
 
 
 
 
 
 
 
 
Notes to Unaudited Financial Statements (Unaudited).
 
 
F-4
 
 
 
 
 
 
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
 
4
 
 
 
 
 
 
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
 
 
14
 
 
 
 
 
 
 
 
 
Item 4.
Controls and Procedures.
 
 
15
 
 
 
 
 
 
 
 
Part II.
Other Information
 
 
 
 
 
 
 
 
 
 
 
Item 1.
Legal Proceedings.
 
 
15
 
 
 
 
 
 
 
 
 
Item 1A.
Risk Factors.
 
 
15
 
 
 
 
 
 
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
 
 
15
 
 
 
 
 
 
 
 
 
Item 3.
Defaults Upon Senior Securities.
 
 
15
 
 
 
 
 
 
 
 
 
Item 4.
Mine Safety Disclosures.
 
 
15
 
 
 
 
 
 
 
 
 
Item 5.
Other Information.
 
 
15
 
 
 
 
 
 
 
 
 
Item 6.
Exhibits.
 
 
16
 
 
 
 
 
 
 
 
Signatures
 
 
17
 
 
 
2
 
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q of Centaurus Diamond Technologies, Inc., a Nevada corporation, contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995.  In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology.  These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Actual results may differ materially from the predictions discussed in these forward-looking statements.  The economic environment within which we operate could materially affect our actual results.
 
Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
 
All references in this Form 10-Q to the  “Company”, “Centaurus Diamond Technologies, Inc.”, “Centaurus Diamond Technologies,” “we”, “us,” or “our” are to Centaurus Diamond Technologies, Inc.
 
 
 
3
 
 
PART I. FINANCIAL INFORMATION
ITEM   1.   FINANCIAL STATEMENTS
 
Centaurus Diamond Technologies, Inc.
Balance Sheets
 
 
 
 As of
 
 
 As of
 
 
 
June 30, 2016
 
 
March 31, 2016
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 ASSETS
 
 
 
 
 
 
 CURRENT ASSETS:
 
 
 
 
 
 
 Cash
 $2,937 
 $13,155 
 
    
    
 Total Current Assets
  2,937 
  13,155 
 
    
    
 PROPERTY AND EQUIPMENT
    
    
 Property and equipment
  8,000 
  8,000 
 Accumulated depreciation
  (6,400)
  (6,000)
 
    
    
 Total Property and Equipment, net
  1,600 
  2,000 
 
    
    
 OTHER ASSETS
    
    
 Autogenous Impact Mill Technology
  1 
  1 
 Patent
  1 
  1 
 Deposits
  19,340 
  - 
 
    
    
 Total Other Assets
  19,342 
  2 
 
    
    
Total Assets
 $23,879 
 $15,157 
 
    
    
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    
    
 CURRENT LIABILITIES:
    
    
 Accounts payable and accrued expenses
 $39,581 
 $39,171 
 Default judgement liability
  112,968 
  112,968 
 Note payable - Bauta
  12,000 
  12,000 
 Advances from stockholders
  354,386 
  276,394 
 
    
    
 Total Current Liabilities
  518,935 
  440,533 
 
    
    
Total Liabilities
  518,935 
  440,533 
 
    
    
 STOCKHOLDERS' EQUITY (DEFICIT):
    
    
 Common stock par value $0.001: 450,000,000 shares authorized;
    
    
 226,267,623 and 220,520,623 shares issued and outstanding
    
    
 at June 30, 2016 and March 31, 2016, respectively
  226,267 
  220,520 
 Additional paid-in capital
  2,191,544 
  1,842,591 
 Stock subscriptions payable (receivable)
  (83,000)
  118,100 
 Accumulated deficit
  (2,829,867)
  (2,606,587)
 
    
    
 Total Stockholders' Equity (Deficit)
  (495,056)
  (425,376)
 
    
    
 Total Liabilities and Stockholders' Equity (Deficit)
 $23,879 
 $15,157 
 
    
    
 
See accompanying notes to the financial statements.
 
 
 
F-1
 
 
Centaurus Diamond Technologies, Inc.
 Statements of Operations
 
 
 
For the Three
 
 
For the Three
 
 
 
Months Ended
 
 
Months Ended
 
 
 
June 30, 2016
 
 
June 30, 2015
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 Revenue
 $- 
 $- 
 
    
    
 Operating Expenses
    
    
 Rent - related party
  17,244 
  8,522 
 General and administrative expenses
  206,036 
  177,188 
 
    
    
 Total operating expenses
  223,280 
  185,710 
 
    
    
 Loss from Operations
  (223,280)
  (185,710)
 
    
    
 Other Income (Expense)
    
    
 Loss on impairment of long-lived assets
  - 
  (5,502)
 
    
    
 Other income (expense), net
  - 
  (5,502)
 
    
    
 Loss before Income Tax
  (223,280)
  (191,212)
 
    
    
 Income Tax
  - 
  - 
 
    
    
 Net Loss
 $(223,280)
 $(191,212)
 
    
    
 Net Loss per Common Share - Basic and Diluted
 $(0.00)
 $(0)
 
    
    
 Weighted average common shares outstanding:
    
    
 - basic and diluted
  223,236,238 
  88,947,253 
 
    
    
 
 See accompanying notes to the financial statements.
 
 
 
F-2
 
 
Centaurus Diamond Technologies, Inc.
 Statements of Cash Flows
 
 
 
For the Three
 
 
For the Three
 
 
 
Months Ended
 
 
Months Ended
 
 
 
June 30, 2016
 
 
June 30, 2015
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 Net loss
 $(223,280)
 $(191,212)
 Adjustments to reconcile net loss to net cash used in operating activities
    
    
 Stock issued for services
  - 
  155,000 
 Depreciation expense
  400 
  400 
 Loss on impairment of long-lived assets
  - 
  5,502 
 Changes in operating assets and liabilities:
    
    
 Deposits
  (19,340)
  - 
 Accounts payable and accrued expenses
  410 
  - 
 Net cash used in operating activities
  (241,810)
  (30,310)
 
    
    
 CASH FLOWS FROM FINANCING ACTIVITIES:
    
    
 Cash received from stock subscriptions
  153,600 
  13,000 
 Advance received from (repaid to) stockholders
  77,992 
  16,217 
 Net cash provided by financing activities
  231,592 
  29,217 
 
    
    
 Net change in cash
  (10,218)
  (1,093)
 
    
    
 Cash at beginning of the reporting period
  13,155 
  1,781 
 
    
    
 Cash at end of the reporting period
 $2,937# 
 $688 
 
    
    
 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
    
    
 Interest paid
 $- 
 $- 
 Income tax paid
 $- 
 $- 
 
    
    
 NON CASH FINANCING AND INVESTING ACTIVITIES:
    
    
 Stock issued for repayment of SH Advances
 $- 
 $150,000 
 Stock issued to fulfil stock subscriptions
 $354,700 
 $- 
 
    
    
 
See accompanying notes to the financial statements.
 
 
 
F-3
 
 
Centaurus Diamond Technologies, Inc.
June 30, 2016 and 2015
Notes to the Unaudited Financial Statements
 
Note 1 – Basis of Presentation
 
The accompanying unaudited condensed interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2016 and notes thereto contained in the information filed as part of the Company’s Form 10-K, which was filed on September 5, 2018.
 
Note 2 – Summary of Significant Accounting Policies
 
Critical Accounting Policies and Use of Estimates
 
In the opinion of Management, all adjustments necessary for a fair statement of results for the fiscal years presented have been included. These financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) generally accepted in the United States of America.
 
GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, inventories, adequacy of allowances for doubtful accounts, valuation of long-lived assets, income taxes, equity-based compensation, litigation and warranties. The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events.
 
The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from those estimates.
 
Cash and Cash Equivalents
 
There are only cash accounts included in our cash equivalents in these statements. For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of three months or less to be cash equivalents. There are no short-term cash equivalents reported in these financial statements.
 
Property and Equipment
 
Property and equipment are to be stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets, which range from three to ten years and are typically consistent with tax-basis useful lives. Maintenance and repairs are charged to operations as incurred.
 
Revenue Recognition
 
The Company has generated no revenue as of the date of this filing.
 
The Company will recognize product revenue, net of sales discounts, returns and allowances, in accordance Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB No. 104”) and ASC 605. These statements establish that revenue can be recognized when persuasive evidence of an arrangement exists, delivery has occurred and all significant contractual obligations have been satisfied, the fee is fixed or determinable, and collection is considered probable.
 
 
F-4
 
 
Inventory
 
The Company records inventory at the lower of cost or fair market value.
 
Income Taxes
 
The company has net operating loss carryforwards as of June 30, 2016 totaling $2,829,867. A deferred tax benefit of approximately $594,272 has been offset by a valuation allowance of the same amount as its realization is not assured.
 
Due to the current uncertainty of realizing the benefits of the tax NOL carry-forward, a valuation allowance equal to the tax benefits for the deferred taxes has not been established. The full realization of the tax benefit associated with the carry-forward depends predominately upon the Company’s ability to generate taxable income during future periods, which is not assured.
 
Long-Lived Assets
 
Long-lived assets to be held and used are tested for recoverability whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. Certain long-lived assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell.
 
Fair Values of Financial Instruments
 
ASC 825 requires the Corporation to disclose estimated fair value for its financial instruments. Fair value estimates, methods, and assumptions are set forth as follows for the Corporation’s financial instruments. The carrying amounts of cash, receivables, other current assets, payables, accrued expenses and notes payable are reported at cost but approximate fair value because of the short maturity of those instruments.
 
Stock-Based Compensation
 
The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.
 
Effects of Recently Issued Accounting Pronouncements
 
The Company has reviewed all recently issued accounting pronouncements noting that they do not affect the financial statements.
 
Per Share Computations
 
Basic net earnings per share are computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares and the dilutive potential common shares outstanding during the period. All shares were considered anti-dilutive at June 30, 2016 and 2015.
 
Reclassification
 
Certain reclassifications have been made to conform to prior periods’ data to the current presentation. These reclassifications had no effect on reported income.
 
Fiscal Year End
 
The Company elected March 31st as its fiscal year ending date.
 
 
F-5
 
 
Subsequent Events
 
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
 
Derivative Financial Instruments
 
The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of June 30, 2016, the Company’s only derivative financial instrument was an embedded conversion feature associated with convertible promissory note due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion.
 
Note 3 – Going Concern
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. For the three months ended June 30, 2016, the Company incurred a net loss of $(223,280) and the net cash flow used in operations was $(241,810) and its accumulated net losses from inception through the period ended June 30, 2016 is $(2,829,867), which raises substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s development activities since inception have been financially sustained through capital contributions from shareholders.
 
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
 
Our activities have been financed primarily from the advances of major shareholder.
 
The Company plans to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through this or any other offerings.
 
Note 4 – Property and Equipment
 
The Company has acquired all of its office and field work equipment with cash payments. The total fixed assets consist of various equipment items and the totals are as follows:
 
Asset
 
June 30,
2016
 
Equipment
 $8,000 
Accumulated depreciation
  (6,400)
Net Fixed Assets
 $- 
 
Depreciation expenses for the three months ended June 30, 2016 and 2015 was $400 and $400, respectively.
 
 
F-6
 
 
Note 5 – Advances from Stockholders and Related Party Transactions
 
Related Parties
 
Related parties with whom the Company had transactions are:
 
Related Parties
 
Relationship
Alvin Snaper
 
Chairman and majority stockholder of the Company
Chas Radovich
 
CEO and Stockholder of the Company
Leroy Delisle
 
Stockholder of the Company
 
Advances from and Stockholders
 
From time to time, stockholders of the Company advance funds to the Company for working capital purposes. Those advances are unsecured, non-interest bearing and due on demand. Below are the details of the advances by party:
 
 
 
Chas Radovich
 
 
Leroy Delisle
 
 
Alvin Snaper
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2016
 $170,016 
 $106,378 
 $- 
 $276,394 
Advances for the three months
    
    
    
    
  ended June 30, 2016
  41,915 
  36,077 
  - 
  77,992 
Balance at June 30, 2016
 $211,931 
 $142,455 
 $- 
 $354,386 
 
Operating Lease from Chairman
 
On June 5, 2012 the Company entered into a lease agreement, for office space for its corporate office at 1000 W. Bonanza, Las Vegas, Nevada 89106, with its Chairman, Alvin Snaper, at $2,500 plus utilities per month on a month-to-month basis, effective June 15, 2012. During the three months ended June 30, 2016 and 2015, the Company has paid or accrued $17,244 and $8,522, respectively, of rent.
 
Note 6 – Stockholders' Equity
 
Shares Authorized
 
Upon formation the total number of shares of all classes of capital stock which the Company is authorized to issue is four hundred fifty million (450,000,000) shares with a par value of $0.001, all of which are designated as Common Stock.
 
Common Stock
 
Immediately prior to the consummation of the Acquisition Agreement on June 5, 2012, the Company had 113,525,000 common shares issued and outstanding.
 
Upon consummation of the Acquisition Agreement on June 5, 2012, the then majority stockholders of the Company surrendered 85,575,000 shares of the Company's common stock which was cancelled upon receipt and the Company issued 43,850,000 shares of its common stock pursuant to the terms and conditions of the Acquisition Agreement.
 
On February 3, 2016, the Company issued 7,103,333 shares at various values to fulfil $212,000 of stock subscriptions.
 
On February 3, 2016, the Company issued 6,150,000 shares of common stock to acquire the Autogenous Impact Mill technology from one of its stockholders at a value of $6,150. The stockholder owned the asset for over 20 years and the asset was fully depreciated. Assets acquired from related parties are recorded and the seller’s depreciated value; therefore, the Company recorded the asset at $1. The remaining $6,149 was recorded as research and development expenses.
 
On February 3, 2016, the Company issued 120,000 shares of common stock at $0.03 per share as a payment against an accounts payable balance.
 
 
F-7
 
 
On February 3, 2016, the Company issued 111,000 shares of common stock at $0.0495 per share as a payment against an accounts payable balance.
 
Between September 3, 2015 and November 5, 2015, the Company issued 1,161,290 shares at an average value of $0.011 as a $13,000 payment towards a note payable.
 
On June 8, 2015, the Company issued 30,000,000 shares of common stock at $0.005 per share to pay down $150,000 of the advances from shareholders.
 
On June 8, 2015, the Company issued 30,000,000 shares of common stock at $0.005 per share for a total of $150,000 in exchange for services.
 
On June 8, 2015, the Company issued 1,000,000 shares of common stock at $0.005 per share for a total of $5,000 in exchange for website design services.
 
On February 3, 2016, the Company issued 70,675,000 shares of common stock at $0.013 per share in exchange for $918,775 of services.
 
On May 18, 2016, the Company issued 5,747,000 shares of common stock at various values to fulfil $354,700 of stock subscriptions.
 
There are 226,267,623 shares of common stock issued as of June 30, 2016 and March 31, 2016.
 
Note 7: Convertible Promissory Notes
 
During the year ended March 31, 2016, the Company issued a revolving convertible promissory note to an investor for borrowing up to $250,000. The Company borrowed $25,000 under this revolving convertible promissory note during the year ended March 31, 2016 as follows: $2,500 paid directly towards legal and document fees, $5,500 paid directly towards interest expense and $17,000 deposited into the Company’s bank account. The convertible promissory note (i) are unsecured, (ii) bear interest at the rate of 5% per annum (of which six months is guaranteed with each funding), and (iii) are due the 45 days after the funding of the initial funding and six months after all subsequent funding. The convertible promissory note is convertible at any time at the option of the investor into shares of the Company’s common stock that is determined by dividing the amount to be converted by the lowest trading price of the Company’s common stock during the five days prior to conversion. If the convertible is in default, the convertible promissory note is into shares of the Company’s common stock that is determined by dividing the amount to be converted by 60% the lowest trading price of the Company’s common stock during the five days prior to conversion.
 
Due to the potential adjustment in the conversion price associated with this convertible promissory note based on the Company’s stock price, the Company has determined that the conversion feature is considered a derivative liability. The embedded conversion feature was initially calculated to be $22,739 which are recorded as a derivative liability as of the date of issuance. The derivative liability was recorded as a debt discount to the convertible promissory note. The debt discount is being amortized over the term of the convertible promissory note. The Company recognized interest expense of $22,739 during the year ended March 31, 2016 related to the amortization of the debt discount. Also during the year ended March 31, 2016, this revolving convertible promissory note was cancelled and any remaining balances of the convertible note and derivative liability were combined into a note payable. The balance of this note payable is $12,000 as of June 30, 2016 and March 31, 2016.
 
Note 8 – Income Tax Provision
 
Deferred tax assets
 
At June 30, 2016, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $2,829,867 that may be offset against future taxable income through 2036. The carry-forwards begin to expire in the year 2025. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets of approximately $594,272 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a full valuation allowance.
 
 
F-8
 
 
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realization. The valuation allowance increased approximately $46,889 for the three months ended June 30, 2016.
 
Components of deferred tax assets are as follows:
 
Net deferred taxes – Non-current
 
June 30,
2016
 
Expected income tax benefit from NOL carry-forwards
 $594,272 
Less valuation allowance
  (594,272)
Deferred tax assets, net of valuation allowance
 $- 
 
Income taxes in the statements of operations
 
A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:
 
 
 
June 30,
2016
 
Federal statutory income tax rate
  21.00%
Change in valuation allowance on net operating loss
    
  carry-forwards
  (0.21)
Effective income tax rate
 $- 
 
Note 9 - Commitments, Contingencies and Concentrations
 
Except for as follows the Company does not have any commitments, contingencies or concentrations:
 
In May 2017, the Company lost a civil suit whereby the court awarded the plaintiff a default judgment of $112,968. See Note 7. The Company has accrued $112,968 for this judgement as of June 30, 2016 and March 31, 2016. There were no legal fees incurred with respect to this default judgement.
 
Note 10 – Subsequent Events
 
In preparing the financial statements, management has evaluated events and transactions for potential recognition or disclosure through the date that the financial statements were available to be issued and determined there were no subsequent events resulting in adjustments to or disclosure in the financial statements, except as follows:
 
In November 2017, 15,000,000 shares of common stock were returned to Treasury at $0.005 per share. The shares were originally issued in exchange for $75,000 of services; therefore in addition to reducing the common stock and APIC balances by a total of $75,000, accumulated deficit was reduced by $75,000.
 
On November 16, 2017, the Company entered into a stock purchase agreement with an outside investor; whereby 1,000,000 shares were to be issued for $0.05 per share for a total of $50,000. The $50,000 was received from the outside investor on November 16, 2017 and the shares are yet to be issued; therefore, the Company has recorded a stock subscription liability of $50,000 on the balance sheet.
 
On June 4, 2018, the Company entered into a stock purchase agreement with an outside investor; whereby 400,000 shares were to be issued for $0.05 per share for a total of $20,000. The $20,000 was received from the outside investor on June 4, 2018 and the shares are yet to be issued; therefore, the Company has recorded a stock subscription liability of $20,000 on the balance sheet.
 
This is an accrual account used to capture stock-cash timing differences while presenting information consistent with transfer agent records.
 
 
F-9
 
 
Subsequent to June 30, 2017, stockholders have advanced funds to the Company or have paid for expenses on behalf of the Company. On September 30, 2017, these stockholders elected to contribute these advances to the Company as additional paid-in capital. See the roll forward of stockholder advances below:
 
 
 
Chas Radovich
 
 
Leroy Delisle
 
 
Alvin Snaper
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2016
 $211,931 
 $142,455 
 $- 
 $354,386 
Advances for the period
    
    
    
    
  ended September 30, 2017
  139,838 
  115,082 
  11,000 
  265,920 
Advances converted to APIC
  -351,769 
  -257,537 
  -11,000 
  -620,306 
Balance at September 30, 2017
  - 
  - 
  - 
  - 
Advances from October 1, 2017
    
    
    
    
  to date of issuance of these
    
    
    
    
  financial statements
  8,312 
  125,600 
  10,700 
  144,612 
Balance at date of issuance
 $8,312 
 $125,600 
 $10,700 
 $144,612 
 
 
 
F-10
 
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
Centaurus Diamond Technologies, Inc. was incorporated in the State of Nevada on July 24, 2007 and has a fiscal year end of March 31.  We are a development stage Company.   Implementing our planned business operation is dependent on our ability to raise approximately $3,000,000.
 
Going Concern
 
To date the Company has little operations and no revenues, and consequently has incurred recurring losses from operations.  No revenues are anticipated until we complete the implement our initial business plan, as described in this Form 10-Q.  The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations.  Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.
 
Our activities have been financed primarily from the proceeds of share subscriptions.
 
The Company plans to raise additional funds through debt or equity offerings.  There is no guarantee that the Company will be able to raise any capital through this or any other offerings.  
 
PLAN OF OPERATION
 
To date we have not generated any revenue. The operations of Innovative have historically been funded by its founder and sole shareholder, Alvin A. Snaper, through advances from Mr. Snaper.  From time to time, Mr. Snaper has advanced funds to Innovative for working capital purposes.
 
Our current cash requirements are moderate and will be used for development, and we anticipate generating losses.  In order to execute on our business strategy, we will require additional working capital, commensurate with the operational needs of our planned marketing, development and production efforts.  We believe that our cash on hand and working capital will be sufficient to meet our anticipated cash requirements for the next eight (8) months and we have no short term plans to raise additional funds.  We are currently focused on developing a prototype process for our technology.  As we proceed to commercialize our product, we may seek additional debt or equity financing to assist with manufacturing and distribution. There is no guarantee we will be successful in raising capital or obtaining loans in the future, or upon terms that are favorable or satisfactory to us, and any failure could have a material adverse effect on our business objectives and operations.
 
Since inception, Innovative has had on-going operations, including creating a strategic plan, identifying significant employees and management, drafting and filing a patent, negotiating terms with manufacturers and designers and developing a marketing plan.
 
Our current and future operations are and will be focused on researching and developing our technology for the manufacture of industrial grade cultured diamonds that are chemically, optically and physically the same as their natural counterparts, the integration of the intellectual property we have acquired through the Acquisition, and the continued evaluation of potential strategic acquisitions and/or partnerships.
 
Our first year after Closing will be dedicated to research and development, with the goal being the creation of a commercially viable production process derived from our proprietary technology.
 
We intend to lease the equipment and space necessary for us to conduct the next stage of research and development into our technologies.  We have begun negotiations with the owners of the required equipment and facilities but do not, at present, have any such lease agreements in place.  We anticipate that the cost of leasing the equipment and space necessary for our research and development efforts to cost approximately $130,000 over the next twelve months.
 
Provided our research and development activities are successful, we will thereafter seek to develop the equipment, protocols and systems for ongoing batch production of industrial cultured diamonds on a volume basis. Upon completion of the development phase, we anticipate we will need to relocate because we believe we will need approximately 10,000 square feet to house our employees and production machines.
    
 
4
 
 
RESULTS OF OPERATIONS
 
For the three months ended June 30, 2016 and 2015.
 
We have generated no revenues since inception. 
 
For the three months ended June 30, 2016, we incurred $223,280 in operating expenses, comprised of $17,244 of rent paid to our President, and $206,036 in general and administrative expenses.  For the three months ended June 30, 2015, we incurred $185,710 in operating expenses, comprised of $8,522 of rent paid to our President and $177,188 in general and administrative expenses.
 
The following table provides selected financial data about our company as of June 30, 2016 and March 31, 2016.
 
Balance Sheet Data
 
June 30,
2016
 
 
March 31,
2016
 
Cash and Cash Equivalents
 $2,937 
 $13,155 
Total Assets
 $23,879 
 $15,157 
Total Liabilities
 $518,935 
 $440,533 
Shareholders’ Deficit
 $(495,056)
 $(425,376)
 
GOING CONCERN
 
Although we have recognized some nominal amount of revenues since inception, we are still devoting substantially all of our efforts on establishing the business and, therefore, still qualifies as a development stage company. From inception to June 30, 2016, the Company had accumulated losses of $2,829,867.  Our independent public accounting firm included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent public accounting firm.  Our financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
 
LIQUIDITY AND CAPITAL RESOURCES
 
At June 30, 2016, we had a cash balance of $2,937. Our expenditures over the next 12 months are expected to be approximately $60,000, unless we raise $3,000,000 to fund our 12-month plan of operation.
 
We must raise approximately $3,000,000, to complete our plan of operation for the next 12 months.  Additionally, we anticipate spending an additional $60,000 on general and administration expenses and complying with reporting obligations, and general administrative costs.   Additional funding will likely come from equity financing from the sale of our common stock, if we are able to sell such stock. If we are successful in completing an equity financing, existing stockholders will experience dilution of their interest in our Company. We do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our plan of operation. In the absence of such financing, our business will fail.
 
There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our business and our business will fail.
 
OFF BALANCE SHEET ARRANGEMENTS
 
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
 
 
5
 
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
The Company’s unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented.  Unaudited interim results are not necessarily indicative of the results for the full fiscal year.  These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended March 31, 2016 and notes thereto contained in the information filed as part of the Company’s Form 10-K, which was filed on September 5, 2018.
 
The financial statements include all accounts of the Company as of June 30, 2016 and March 31, 2016 and for the three months ended June 30, 2016 and 2015.
 
Use of Estimates and Assumptions
 
The 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
 
The Company’s significant estimates include the fair value of financial instruments; the carrying value and recoverability of long-lived assets, including the values assigned to and the estimated useful lives of property and equipment and patent; expected term of share options and similar instruments , expected volatility of the entity’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) ; income tax rate, income tax provision and valuation allowance of deferred tax assets; and the assumption that the Company will continue as a going concern.   Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
 
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable 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.
 
Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, if deemed appropriate, those estimates are adjusted accordingly.
 
Actual results could differ from those estimates.
 
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 has adopted 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 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (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 of the FASB Accounting Standards Codification 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 of the FASB Accounting Standards Codification are described below:
 
 
6
 
 
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 observable inputs and not corroborated by market data.
 
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
 
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.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
 
The carrying amount of the Company’s financial assets and liabilities, such as cash, and prepayments and other current assets, approximate their fair values because of the short maturity of the instrument.
 
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
 
It is not, however, practical to determine the fair value of advances from stockholder, if any, due to their related party nature.
 
Carrying Value, Recoverability and Impairment of Long-Lived Assets
 
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include property and equipment, and patent, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
 
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
 
The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) regulatory changes.  The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
 
The impairment charges, if any, is included in operating expenses in the accompanying statements of operations.
 
Fiscal Year End
 
The Company elected March 31st as its fiscal year ending date.
 
 
7
 
 
Cash Equivalents
 
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. The Company did not have cash equivalent as of June 30, 2017.
 
Property and Equipment
 
Property and equipment is recorded at cost.  Expenditures for major additions and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred.  Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of five (5) to seven (7) years.  Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.
 
Patent
 
The Company follows the guidelines as set out in paragraph 350-30-25-3 and paragraph 350-30-35-6 of the FASB Accounting Standards Codification for patent.  For acquired patents the Company records the costs to acquire patents as patent and amortizes the patent acquisition cost over its remaining legal life, or estimated useful life, or the term of the contract, whichever is shorter. For internal developed patents, all costs incurred to the point when a patent application is to be filed are expended as incurred as research and development expense; patent application costs, generally legal costs, thereafter incurred are capitalized, which are to be amortized once the patents are granted or expended if the patent application is rejected. The Company amortizes the internal developed patents over the shorter of the expected useful lives or the legal lives of the patents, which are generally 17 to 20 years for domestic patents and 5 to 20 years for foreign patents from the date when the patents are granted. The costs of defending and maintaining patents are expended as incurred. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.
 
Related Parties
 
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
 
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) 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; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
 
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of or combined financial statements is not required in those statements. The disclosures shall include:  a) the nature of the relationship(s) involved; 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; c) the dollar amounts of transactions for each of the periods 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.
 
 
8
 
 
Commitments and Contingencies
 
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
 
If 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.
 
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
 
Revenue Recognition
 
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
 
The Company will derive its revenue from sales contracts with customers with revenues being generated upon the shipment of products upon commencing operations.  Persuasive evidence of an arrangement is demonstrated via invoice, product delivery is evidenced by warehouse shipping log as well as a signed bill of lading from the trucking company or third party carrier and title transfers upon shipment, based on free on board (“FOB”) warehouse ; the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.
 
Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
 
The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).
 
Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.  If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
 
 
9
 
 
The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model.  The ranges of assumptions for inputs are as follows:
 
Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments.  The Company uses historical data to estimate holder’s expected exercise behavior .  If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
 
Expected volatility of the entity’s shares and the method used to estimate it.  Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index.  The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility.  If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
 
Expected annual rate of quarterly dividends.  An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends.  The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
 
Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used.  The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.
 
Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.
 
Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.
 
Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.
 
 
10
 
 
Income Tax Provision
 
The Company follows paragraph 740-10-30-2 of the FASB Accounting Standards Codification, 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 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 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 Operations in the period that includes the enactment date.
 
The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification . Paragraph 740-10-25-13 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under paragraph 740-10-25-13 , the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.   Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13 .
 
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
 
Management 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.
 
Uncertain Tax Positions
 
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the interim period.
 
Limitation on Utilization of NOLs due to Change in Control
 
Pursuant to the Internal Revenue Code Section 382 (“Section 382”), certain ownership changes may subject the NOL’s to annual limitations which could reduce or defer the NOL.  Section 382 imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.”  In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period.  In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may be carried over to later years.  The imposition of this limitation on its ability to use the NOLs to offset future taxable income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.
 
 
11
 
 
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 to reflect the potential dilution that could occur from common shares issuable through stock options and warrants .
 
Cash Flows Reporting
 
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification .
 
Subsequent Events
 
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the   financial statements were issued .  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
 
Recently Issued Accounting Pronouncements
 
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20.
 
Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The ASU states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although “major” is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation.
 
The ASU also requires additional disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. In addition, the ASU requires disclosure of the pre-tax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements.
 
The ASU is effective for public business entities for annual periods beginning on or after December 15, 2014, and interim periods within those years.
 
In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”)
 
 
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This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
 
To achieve that core principle, an entity should apply the following steps:
 
1.
Identify the contract(s) with the customer
2.
Identify the performance obligations in the contract
3.
Determine the transaction price
4.
Allocate the transaction price to the performance obligations in the contract
5.
Recognize revenue when (or as) the entity satisfies a performance obligations
 
The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers.  Qualitative and quantitative information is required about the following:
 
1.
Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)
2.
Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations
3.
Assets recognized from the costs to obtain or fulfill a contract.
 
ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities.  Early application is not permitted.
 
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.
 
The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
 
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.
 
Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments.
 
The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage.
 
 
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The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.
 
Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915.
 
In June 2014, the FASB issued the FASB Accounting Standards Update No. 2014-12 “Compensation—Stock Compensation (Topic 718) : Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”).
 
The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period.  The Update requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.
 
The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.
 
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 3.
 
 
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ITEM 4. CONTROLS AND PROCEDURES.
 
DISCLOSURE CONTROLS AND PROCEDURES
 
Under the supervision and with the participation of our management, our principal executive officer and our principal financial officer are responsible for conducting an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report.  Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared.  Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective as of June 30, 2016.
 
There were no changes in the Company’s internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
 
PART II.  OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS.
 
The Company is not currently subject to any legal proceedings.  From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant.  There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of operations.
 
ITEM 1A. RISK FACTORS
 
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.
 
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
None.
 
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.
 
None.
 
ITEM 4.  MINE SAFETY DISCLOSURES.
 
None.
 
ITEM 5.  OTHER INFORMATION.
 
None.
 
 
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ITEM 6.  EXHIBITS.
 
(a)   
Exhibits required by Item 601 of Regulation SK
 
Exhibit
 
Description
 
Articles of Incorporation (1)
 
Bylaws (1)
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *
 
XBRL Instance Document
101.SCH *
 
XBRL Taxonomy Extension Schema Document
101.CAL *
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE *
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
*
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
(1)   Filed and incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-151339), as filed with the Securities and Exchange Commission on June 2, 2008.
 
 
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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.
 
 
 
CENTAURUS DIAMOND TECHNOLOGIES, INC.
 
(Name of Registrant)
 
 
Date: December 13, 2018
By:
/s/ Chaslav Radovich
 
 
Name:
Chaslav Radovich
 
Title:
President and Director
(principal executive officer, principal financial
officer and principal accounting officer)
 
 
 
 
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EXHIBIT INDEX
 
Exhibit
 
Description
3.1
 
Articles of Incorporation (1)
3.2
 
Bylaws (1)
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *
 
XBRL Instance Document
101.SCH *
 
XBRL Taxonomy Extension Schema Document
101.CAL *
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE *
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
*
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
(1)   Filed and incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-151339), as filed with the Securities and Exchange Commission on June 2, 2008.
 
 
 
 
 
 
 
 
 
 
 
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