CAHO Caro Holdings Inc (PK)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

For the quarterly period ended September 30, 2024

or

For the transition period from__________to__________

Commission File Number 333-212268

(786) 755-3210

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes   ☐ NO

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ YES   ☒ NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES   ☐ NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. 37,175,808 shares of common stock issued and outstanding as of November 11, 2024

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

CARO HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

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

CARO HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

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

CARO HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(UNAUDITED)

Six Months Ended September 30, 2024

Six Months Ended September 30, 2023

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

CARO HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

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

CARO HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. 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. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Caro Holdings Inc., unless otherwise indicated.

General Overview

Our History

Our company was incorporated on March 29, 2016 in the State of Nevada. Initially we engaged in the subscription box business with a focus on offering sock subscriptions to our customers. Our subscription box was a package of a pair of socks sent directly to a customer on a recurring basis. The company was controlled and operated by Rozh Caroro from inception till April of 2022.

Effective April 28, 2022, Rozh Caroro, the previous sole director, CEO and majority shareholder of the Company, entered into a stock purchase agreement and sold controlling interest of the Company to Christopher McEachnie. Rozh Caroro resigned her positions with the Company and Christopher McEachnie was appointed as Chief Executive Officer, Treasurer and Secretary, and sole Director of the Company. His job was to increase shareholder value by looking for opportunities in the digital space.

Mr. McEachnie began to seek experienced operators to assist in the development of the company. On September 21, 2022, the Company incorporated a subsidiary Caro Holdings International Ltd. and appointed Meriesha Rennalls to streamline operations, hire employees, consultants and contractors including the development of a software and ecommerce platform. Between September 2022 and December 2023, the company produced a platform that can be used for a variety of businesses including B2B, B2C and D2C. The core product is now complete and the company is soliciting clients in multiple industries. The subsidiary will continue to modify and enhance the ecommerce software for its chosen vertical markets and will allow those community to sell, market and distribute their products. The company intends to create subsidiaries in markets where it perceives a significant sales opportunity.

Effective December 31, 2022 the company issued 20,000,000 shares to Noise Comms Limited and subsequently the 36,795,000 shares were returned to Treasury and were cancelled, such that indirectly Meriesha Rennalls now holds approximately 53% of the issued and outstanding shares of Common Stock of the Company, and as such she is able to control the election of our board of directors, approve all matters upon which shareholder approval is required and, ultimately, the direction of our Company. 

Prior to September 2022, we were an early-stage company and our activities had been limited to the to the formation of our business strategy and the raising of funds to support our mission.

Our Current Business

We are now engaged in the deployment of our B2B, B2C and Direct to Consumer (D2C) systems and methodologies where we target specific vertical markets. We look for small to mid-size brands that have a strong brick-and-mortar presence and have a desire to increase their digital presence.

Our D2C system is a fully integrated 360° platform that allows marketing, analytics and e-commerce functionality wrapped around an industry-specific directory listing platform. The analytical data provides insight from multiple channels to facilitate successful marketing decisions based on a client’s entire business performance.

Based on these analytics, the system can immediately deploy personalization and optimization independently, and enhance understanding of how customer interactions vary across different regions. Furthermore, our infrastructure is designed to take advantage of growth opportunities with minimal additional costs.

Since September 2022, the company has been actively engaged in soliciting and identifying clients in across a broad spectrum of industries. It has also been engaged in several marketing activities to attract partners, clients and beta testers who are providing valuable feedback in order for us to ensure our system meets their needs and expectations.

The Company is also looking to provide its marketplace platform to the pet care and spirit industries in the United States and the United Kingdom. The Company is also engaging in a full array of marketing activities including social media, attending trade shows and fairs, online conferences, and utilizing identified experts in affiliate marketing, pay-per-click, organic, search, engine, optimization, and social media marketing to promote D2C commerce.

On December 29, 2022, the Company entered into a software license agreement with Noise Comms Ltd. for the acquisition of a Unified Communications Platform which enables multi-party communications between brands and consumers in consideration of 20,000,000 shares of common stock valued at $258,000.

On November 14, 2023, the Company agreed to acquire a marketplace provider in the spirits industry, a non-affiliated corporation based in Wyoming, under which the Company will issue, on a pro-rata basis, up to 12,550,000 shares of common stock based on the company reaching future milestones in exchange for 100% of the issued and outstanding shares of the company making it a wholly owned subsidiary of the Company. The shares will remain in escrow with the company until those milestones.

We are still a small early-stage development company with minimal revenues and limited cash on hand. We have sustained losses since inception and have relied upon loans from directors and officers and the sale of our securities for funding. We have never declared bankruptcy, been in receivership, or been involved in any kind of legal proceeding.

Marketing, Advertising, and Promotion

We believe that our systems will become one of our most important assets. Our ability to successfully create brand awareness is dependent upon our ability to address the changing needs and priorities of each brand’s target customers. To that end, we plan to focus much of our marketing efforts to recruit partners. We will then apply our methodologies to better understand their customers and their needs and ensure we align our brand messages in the marketing, and the channels through which we deliver these messages, to the target customers.

Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net loss decreased from $181,386 for the three months ended September 30, 2023 to $68,155 for the three months ended September 30, 2024 due to decreases in operating expenses and other expenses.

Revenue increased from $Nil for the three months ended September 30, 2023 to $5,626 for the three months ended September 30, 2024.

Operating expenses for the three months ended September 30, 2024 included audit and accounting fees, legal fees, software development expenses and consulting fees. The decrease in operating expenses was primarily due to reduced software ad website development cost and audit fees.

Other expense decreased from $115,584 for the three months ended September 30, 2023 to $27,656 for the three months ended September 30, 2024. The decrease in other expense was primarily due to a reduction in debt issuance costs.

Six Months Ended September 30, 2024 Compared to Six Months Ended September 30, 2023

Net loss decreased from $327,632 for the six months ended September 30, 2023 to $114,583 for the six months ended September 30, 2024 due to the decrease in operating expenses and other expenses.

Revenue increased from $Nil for the six months ended September 30, 2023 to $24,443 for the six months ended September 30, 2024.

Operating expenses for the six months ended September 30, 2024 included audit and accounting fees, legal fees, software development expenses and consulting fees. The decrease in operating expenses was primarily due to reduced software ad website development cost and audit fees.

Other expense decreased from $149,650 for the six months ended September 30, 2023 to $51,250 for the six months ended September 30, 2024. The decrease in other expense was primarily due to a reduction in debt issuance costs.

Liquidity and Financial Condition

Our total current assets as of September 30, 2024 were $245,062 compared to $233,716 as of March 31, 2024. The increase is primarily due to the increase in cash, accounts receivable and other receivable, promissory note receivable and interest receivable.

Our total current liabilities as of September 30, 2024, were $1,039,329 compared to $947,035 as of March 31, 2024. The increase was primarily due to the increase in convertible notes, accrued interest payable, and amounts due to related parties.

Working capital deficiency increased from $713,319 as of March 31, 2024 to $794,267 as of September 30, 2024, mainly due to the increase in convertible notes, accrued interest payable, and amounts due to related parties.

The report of our auditors on our audited financial statements for the fiscal year ended March 31, 2024, contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have achieved limited operating revenues since our inception. We have been dependent on sales of equity securities to conduct operations. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.

Operating Activities

For the six months ended September 30, 2024, net cash used in operating activities was $50,361, related to our net loss of $114,582 offset by amortization of $18,428 and loss on convertible notes of $49,667 and increased by changes in operating assets and liabilities of $3,874.

For the six months ended September 30, 202, net cash used in operating activities was $169,090, related to our net loss of $327,632 offset by loss on convertible notes of $132,000 and changes in operating assets and liabilities of $26,543.

Investing Activities

For the six months ended September 30, 2024 and 2023, net cash used in investing activities was $1,869 and $27,305 primarily for loan advancement to an unaffiliated company, respectively.

Financing Activities

For the six months ended September 30, 2024, net cash provided by financing activities was $74,500 primarily from proceeds from the issuance of convertible notes.

For the six months ended September 30, 2023, net cash provided by financing activities was $201,900 attributed to proceeds from the issuance of convertible notes of $198,000 and promissory notes of $3,900.

Cash Requirements

We will require additional cash as we expand our business. Initially, to carry out our business plan, we will need to raise additional capital. There can be no assurance that we will be able to raise additional capital or, if we are able to raise additional capital, the terms we be acceptable to us. Currently we do not have any inventory.

These conditions indicate a material uncertainty that casts significant doubt about our ability to continue as a going concern. We require additional debt or equity financing to have the necessary funding to continue operations and meet our obligations. We have continued to adopt the going concern basis of accounting in preparing our financial statements.

We will require additional financing in order to enable us to proceed with our plan of operations. There is no assurance that any party will advance additional funds to us in order to continue our future plans for operations.

We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

Critical Accounting Policies and Significant Judgments and Estimates

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 reported amounts of income and expense during the reporting periods presented.

Our critical estimates include revenue recognition and intangible assets. Although we believe that these estimates are reasonable, actual results could differ from those estimates given a change in conditions or assumptions that have been consistently applied. We also have other policies that we consider key accounting policies, such as our policy for revenue recognition, however, the application of these policies does not require us to make significant estimates or judgments that are difficult or subjective.

The critical accounting policies used by management and the methodology for its estimates and assumptions are as follows:

Convertible Financial Instruments

We bifurcate conversion options from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.

When we have determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on her evaluation as of the end of the period covered by this report, Meriesha Rennalls, our President, Chief Operating Officer, Secretary and Director, has concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses in our internal control over financial reporting.

As disclosed in our Quarterly Report on Form 10-Q for the three months ended September 30, 2024, based on management’s assessment of the effectiveness of our internal controls over financial reporting, management concluded that our internal controls over financial reporting were not effective as of September 30, 2024, due to inadequate segregation of duties and ineffective risk management, and insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. Management believes the above weakness constitute material weaknesses in our internal control over financial reporting. Until such time, if ever, that we remediate the material weakness in our internal control over financial reporting we expect that the material weaknesses in our disclosure controls and procedures will continue.

Changes in Internal Control over Financial Reporting

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.

Item 1A. Risk Factors

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the six months ended September 30, 2024, the Company issued 670,808 shares of common stock for the repayment of convertible note principal amount of $32,330 and accrued interest of $1,207.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

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.