Organization, Consolidation and Presentation of Financial Statements

3 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements:

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies

1.  Organization and Nature of Business

The Company was incorporated as Implant Technologies, Inc. in 1980 under the laws of the State of Minnesota.  On April 26, 2006 the Company entered the development stage when it revived its corporate charter.  On September 17, 2007, the Company changed its name to Oasis Online Technologies, Corp. and began development of technology for secure storage of online data.  In November 2010, the Company changed its name to Capital Group Holdings, Inc. and has focused on developing a Telemedicine platform under the Company’s wholly-owned subsidiary OneHealthPass, Inc. 

For the period from April 26, 2006 (date of commencement of the Development Stage) to September 30, 2011, the Company has not generated revenues from operations.  The Company’s primary activities during this period have been developing its products, developing markets, securing strategic alliances and securing funding. Therefore, the Company is considered to be in the development stage, in accordance with the provisions of ASC 915-10-05,Accounting and Reporting by Development Stage Enterprises.

2.  Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission.  These financial statements should be read in conjunction with the consolidated financial statements and notes thereto (the “Audited Financial Statements”) contained in the Company’s Annual Report for the fiscal year ended June 30, 2011 on Form 10-K filed with the Securities and Exchange Commission on July 26, 2012.  Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted.  These interim financial statements include all adjustments consisting of normal recurring entries, which in the opinion of management are necessary to present a fair statement of the results for the period. The results of operations for the three month period ended September 30, 2011 are not necessarily indicative of the operating results for the full year.

Use of Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period.  The Company has identified matters subject to significant estimation and judgment to include amounts related to asset impairments, recoverability of deferred tax balances, useful lives of fixed assets, payroll tax liabilities, and stock based compensation.  Actual results may differ from the estimates provided.

Taxes

At September 30, 2011, management had recorded a full valuation allowance against the net deferred tax assets related to temporary differences and operating losses in the current period because there is significant uncertainty as to the realization of the deferred tax assets. Based on a number of factors, the currently available, objective evidence indicates that it is more-likely-than-not that the net deferred tax assets will not be realized.

The Company has accrued for unremitted payroll taxes, and employee withholdings due to various state and federal agencies along with accrued interest and penalties on the amounts outstanding as of September 30, 2011 as part of accrued payroll liabilities.

Earnings per Share

Net Loss Per Share – Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. The Company has other potentially dilutive securities outstanding that are not shown in a diluted net loss per share calculation because their effect in both fiscal years would be anti-dilutive. The following chart lists the securities as of September 30, 2011, that were not included in the computation of diluted net loss per share because their effect would have been antidilutive:

	Common Shares
Common stock subscribed		429,200
Warrants to purchase common stock		2,562,214
Convertible promissory notes		20,000
		3,011,414

Fair Value of Financial Instruments

ASC 820, Fair Value Measurement, requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company’s cash, stock subscription receivable, accrued liabilities, accounts payable, and accounts payable-related party approximate their estimated fair values due to their short-term maturities. 

For assets and liabilities measured at fair value, the Company uses the following hierarchy of inputs:

Level one - quoted market prices in active markets for identical assets or liabilities;

Level two - inputs other than level one inputs that are either directly or indirectly observable; and

Level three - unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Notes receivable, convertible notes payable and payroll tax liabilities approximate their estimated fair value based on the borrowing rates available to the Company for loans of similar terms and maturities.  Convertible notes payable are carried at fair value based on their carrying amounts less a note discount for the relative fair value of the attached warrants issued with the notes.    Warrants issued were valued using the Black-Scholes option pricing model, which uses level three inputs (see note 6).  The notes have a maturity of less than one year and are classified as short-term liabilities.

Advertising

The Company expenses advertising costs as incurred.

Recently Issued Accounting Pronouncements

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its consolidated financial statements.

3.  Going Concern and Liquidity

The Company has total accumulated losses as of September 30, 2011 of ($10,943,153), and has had negative cash flows from operating activities during the period from inception through September 30, 2011. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  As such, the Company’s Independent Registered Public Accounting Firm has expressed a going concern opinion in their most recent audit report, dated July 25, 2012, for the year ended June 30, 2011.

If new sources of financing are insufficient or unavailable, we will modify our growth and operating plans to the extent of available funding, if any. Any decision to modify our business plans would harm our ability to pursue our growth plans. If we cease or stop operations, our shares could become valueless. Historically, we have funded operating, administrative and development costs through the sale of equity capital. If our plans and/or assumptions change or prove inaccurate, and we are unable to obtain further financing, or such financing and other capital resources, in addition to projected cash flow, if any, prove to be insufficient to fund operations, our continued viability could be at risk. To the extent that any such financing involves the sale of our equity, our current stockholders could be substantially diluted. There is no assurance that we will be successful in achieving any or all of these objectives in the future.

These condensed consolidated financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing will be obtained as required and that our assets will be realized, and liabilities settled in the ordinary course of business. If we are unable to obtain additional financing we may cease operations and not be able to execute on our operating plans. Accordingly, these condensed consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

The Company had not been compliant with SEC reporting deadlines, but management has opted to make the necessary filings to be become compliant with the Securities and Exchange Commission (SEC) reporting guidelines to assist the Company’s efforts to raise capital in order to execute on the Company’s business strategy.  Management is attempting to raise capital, secure strategic alliances, and to operate the business strategy, however there is no assurance that these will be attained.