NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE
1 – NATURE OF BUSINESS
Stakool,
Inc. was incorporated in the State of Delaware under the name, PLR, Inc. in 1993, and went through a series of name changes and
reorganizations. In November 1997 the Company moved its domicile to the State of Nevada. Through 2008 several additional name
changes were made. On August 21, 2008, the Company changed its name to Hybid Hospitality, Inc.
On
June 16, 2011, Stakool entered into a Letter of Intent of Sale and Purchase with Anthus Life Corp., a privately held Nevada corporation
(“Anthus Life”).
On
July 20, 2011, Stakool and Anthus Life executed an Agreement of Sale and Purchase whereby Anthus Life received 77,588,470 shares
of 79,388,470 issued and outstanding shares of Stakool common stock, as well as 10,000,000 Preferred Shares of Stakool in exchange
for scheduled payments, totaling $350,000 and 1,300,000 shares of Stakool common stock the “Agreement of Sale and Purchase”).
The parties amended the Agreement of Purchase and Sale as of January 19, 2012, providing, among other things, for the issuance
of an additional 2,650,000 shares of Stakool common stock to certain parties. All stock has been issued under the Agreement of
Sale and Purchase and, as of December 31, 2012, $355,000 has been paid.
Anthus
Life Corp. was incorporated in Nevada on June 4, 2009. Anthus was a developer and manufacturer of natural and organic food products
packaged for consumer consumption. The Company had one product line in the natural food category. In 2013 the Company terminated
its production of products due to a lack of working capital. However as additional funds have been secured by the new management
team, production will resume in the near future.
On
March 15, 2013 all officers and directors resigned from the Company and Mr. Joseph C. Canouse was appointed President, Chief Executive
Officer, and Director. On April 20, 2013 Mr. Kevin P. Quirk joined the Company and was appointed President, Chief Executive Officer.
Mr. Canouse, who continued as a Director, assumed the title of Chief Financial Officer.
Effective
August 5, 2013 the Company completed a 1 for 100 reverse stock split, which reduced the number of issued and outstanding common
shares from 2,903,888,889 to approximately 29,039,066. Fractional shares produced as a result of this reverse stock split were
rounded up to the next whole share. The consolidated financial statements have been retroactively adjusted to reflect this reverse
stock split.
On
September 26, 2013 the name of the Company was changed to Fresh Promise Foods, Inc. and the Company also reduced the number of
authorized shares of common stock from four billion (4,000,000,000) to four hundred seventy five million (475,000,000).
The
company is headquartered in Alpharetta, Georgia and currently in the process of developing new health frood products and seeking
acquisition opportunities.
NOTE 2
–
GOING
CONCERN
The Company’s consolidated financial
statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has
incurred a net loss of $639,084 for the year ended December 31, 2013 and the Company had an accumulated deficit of $7,608,511
and a working capital deficit of $903,232 of December 31, 2013. The ability of the Company to continue as a going concern is dependent
on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain
adequate capital, it could be forced to cease operations.
In order to continue as a going concern,
the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for
the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses.
However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company
will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory
to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations.
However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING
BASIS
The
Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP
accounting”). The Company has adopted a December 31 fiscal year end.
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the financial statements of the Fresh Promise Foods Inc., Inc. and its wholly-owned
subsidiary Anthus Life Corp. All significant inter-company balances and transactions within the Company and subsidiary have been
eliminated upon consolidation.
CASH
AND CASH EQUIVALENTS
Fresh
Promise Foods Inc. considers all highly liquid investments with maturities of three months or less to be cash equivalents. At
December 31, 2013 and 2012, the Company had $33,335 and $338 cash, respectively.
FRESH
PROMISE FOODS INC., INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH
FLOWS REPORTING
The
Company follows ASC 230, Statement of Cash Flows, 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 ASC 230, Statement of Cash Flows, to report net cash flow
from operating activities by adjusting net loss 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.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
The
Company’s financial instruments are carried at the approximate fair value due either to length of maturity or interest rates
that approximate prevailing market rates unless otherwise disclosed in these consolidated financial statements.
USE
OF ESTIMATES
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
FAIR
VALUE MEASUREMENTS
The
Company has adopted the guidance under ASC Topic 820 for financial instruments measured on a fair value on a recurring basis.
ASC Topic 820 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest
priority to unobservable data and requires disclosures for assets and liabilities measured at fair value based on their level
in the hierarchy. Further authoritative accounting guidance (ASU No. 2009-05) under ASC Topic 820, provides clarification that
in circumstances in which a quoted price in an active market for the identical liabilities is not available, a reporting entity
is required to measure fair value using one or more of the techniques provided for in this update.
The
standard describes a fair value hierarchy based on three levels of input, of which the first two are considered observable and
the last unobservable, that may be used to measure fair value, which are the following:
Level
1 – Quoted prices in active markets for identical assets and liabilities.
Level
2 – Input other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the asset or liabilities.
Level
3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of
the assets or liabilities.
Our
assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers
factors specific to the asset or liability.
The
Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities
from Equity” and ASC 815, “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value
at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to
fair value of derivatives. The effects of interactions between embedded derivatives are calculated and accounted for in arriving
at the over all fair value of the financial instruments. In addition, the fair value of free standing derivative instruments such
as warrant and option derivatives are valued using the Black-Scholes model.
FRESH
PROMISE FOODS INC., INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
FAIR
VALUE MEASUREMENT (CONTINUED)
The
Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair value as
their fair value were determined by using the Black-Scholes option-pricing model based on various assumptions. The Company’s
derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value
being recorded in results of operations as adjustments to fair value of derivatives.
The
following table sets forth the liabilities at December 31, 2013, which is recorded on the balance sheet at fair value on a recurring
basis by level within the fair value hierarchy. As required, these are classified based on the lowest level of input that is significant
to the fair value measurement:
|
|
|
|
|
Fair
Value Measurements at Reporting Date Using
|
|
|
|
|
|
Quoted
prices in
|
|
Significant
Other
|
|
|
Significant
|
|
|
|
|
|
|
Active
Markets for
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
Identical
Assets
|
|
Inputs
|
|
|
Inputs
|
|
Description
|
|
12/31/2013
|
|
|
(Level
l)
|
|
(Level
2)
|
|
|
(Level
3)
|
|
Convertible promissory notes with embedded conversion
option
|
|
$
|
156,549
|
|
|
-0-
|
|
|
-0-
|
|
|
$
|
156,549
|
|
Total
|
|
$
|
156,549
|
|
|
-0-
|
|
|
-0-
|
|
|
$
|
156,549
|
|
The
following table sets forth a summary of change in fair value of our derivative liabilities for the year ended December 31, 2013:
Beginning balance
|
|
$
|
-
|
|
Change in fair value of embedded conversion features
of convertible promissory notes and warrants included in earnings
|
|
$
|
(359,743
|
)
|
Embedded
conversion option
&
warrant liability recorded in connection with the issuance of convertible promissory notes
|
|
$
|
835,896
|
|
Change in fair value of embedded conversion features of
convertible promissory notes due to conversion
|
|
$
|
(319,604
|
)
|
Ending balance
|
|
$
|
156,549
|
|
FRESH
PROMISE FOODS INC., INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
INVENTORIES
Inventories
previously consisted of natural and organic food products, wrappers and boxes, and were stated at the lower of cost or market.
Cost was determined on the average cost method. Inventories are reviewed and reconciled periodically. As of December 31, 2013
and 2012, the company maintained no inventory.
ACCOUNTS
RECEIVABLE
The
Company’s receivables had consisted of billings to customers for products invoiced and shipped and one temporary cash advance
to a related party. The Company charges off receivables if they determine that the amount is no longer collectible. The allowance
for doubtful accounts was zero at December 31, 2013 and 2012. Bad debt expense related to customer receivables for the year ended
December 31, 2013 and December 31, 2012 was zero and $462 respectively.
PROPERTY
AND EQUIPMENT
Currently
the company has no capital assets. Previously assets were depreciated over their estimated useful lives, three to seven years
using the straight-line method of depreciation for book purposes.
NET
INCOME (LOSS) PER COMMON SHARE
Net
income (loss) per share is calculated in accordance with FASB ASC 260, “Earnings Per Share.” The weighted-average
number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or
loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive
potential common shares are additional common shares assumed to be exercised.
Basic
net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at December 31,
2013 and 2012. Diluted earnings per share is calculated by dividing the Company’s net loss available to common shareholders
by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding
is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. At December 31, 2013 and 2012, the
Company had convertible notes and warrants outstanding that could be converted into approximately 91,935,386 common shares based
up the closing bid price of the company’s common stock at December 31, 2013.
FRESH
PROMISE FOODS INC., INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE
RECOGNITION
The
Company derives revenue from the sale of its products. The Company follows 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.
SHARE-BASED
EXPENSE
ASC
718,
Compensation – Stock Compensation
, prescribes accounting and reporting standards for all share-based payment
transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue
shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based
payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements
based on their fair values. That expense is recognized over the period during which an employee is required to provide services
in exchange for the award, known as the requisite service period (usually the vesting period).
The
Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC
505-50,
Equity – Based Payments to Non-Employees.
Measurement of share-based payment transactions with non-employees
is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments
issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance
completion date.
Share-based
expense for the years ended December 31, 2013 and 2012 totaled $29,570 and $3,062,015, respectively.
RECENT
ACCOUNTING PRONOUNCEMENTS
Except
for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered
standards, the
FASB Accounting Standards Codification™
(“ASC”) is the sole source of authoritative GAAP
literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases
and believes any effect will not have a material impact on the Company’s present or future financial statements.
INCOME TAXES
The Company accounts for income taxes
pursuant to the provisions of ASC 740-10, “Accounting for Income Taxes,” which requires, among other things, an asset
and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and
the tax bases of assets and liabilities
A valuation allowance is provided to
offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not
be realized.
The Company follows the provisions
of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain
that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty
about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the
guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based
on all available evidence, management believes it is more likely than not that the position will be sustained upon examination,
including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other
positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit
that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the
benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability
for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable
to the taxing authorities upon examination. The Company believes its tax positions will be highly certain of being upheld upon
examination. As such, the Company has not recorded a liability for uncertain tax benefits.
The Company has adopted ASC 740-10-25
Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled
for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled
upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than
not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. Management
has not filed tax returns for the year ended December 31, 2013.
Tax
returns for tax years 2012, 2011, and 2010 remain subject to IRS examination under the three year statute of limitations.
NOTE
4 – PROPERTY AND EQUIPMENT
Property
and equipment is recorded at cost. The Company depreciates the equipment using the straight-line method over the useful lives
of the equipment. The useful lives are estimated to be between 3 and 7 years. Depreciation expense was $200 and $483 for the years
ended December 31, 2013 and 2012, respectively. The Company determined that the office equipment located at its previous office
location in Jacksonville, Florida was impaired and not worth relocating to the new office. An expense for this equipment was recorded
of $628 for the year ended December 31, 2013. Property and equipment consisted of the following at December 31, 2013 and December
31, 2012:
|
|
12/31/2013
|
|
|
12/31/2012
|
|
Furniture and fixtures
|
|
$
|
1,192
|
|
|
$
|
1,192
|
|
Office equipment
|
|
|
649
|
|
|
|
649
|
|
Total property and equipment
|
|
|
1,841
|
|
|
|
1,841
|
|
Less: Accumulated depreciation
|
|
|
(1,013
|
)
|
|
|
(1,013
|
)
|
Property and equipment, net.
|
|
$
|
828
|
|
|
$
|
828
|
|
Impairment expense
|
|
|
(828
|
)
|
|
|
-
|
|
Property and equipment, net.
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
FRESH
PROMISE FOODS INC., INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE
5 – STOCK PAYABLE
On
April 26, 2012, The Company entered into an agreement with Ironridge Global to settle $284,917 in accounts payable (which includes
the balance of the Note Payable for the acquisition of Fresh P
ROMISE
F
OODS
Inc. by Anthus Life Corp., outstanding legal fees, filing fees, packaging costs and certain manufacturing costs), in exchange
for unregistered shares of common stock. Pursuant to an order approving stipulation for settlement of claims between Ironridge
and the Company, Ironridge is entitled to receive 1 million common shares plus that number of shares with an aggregate value equal
to $332,748, divided by 70% of the following: the volume weighted average price of the issuer’s common stock over that number
of consecutive trading days following the date of receipt required for the aggregate trading volume to exceed $1.75 million, not
to exceed the arithmetic average of the individual daily volume weighted average prices of any five trading days during such period.
Ironridge
is prohibited from receiving any shares of common stock that would cause it to be deemed to beneficially own more than 9.99% of
the Company’s total outstanding shares at any one time. Ironridge received an initial issuance of 97,150 shares, and may
be required to return or be entitled to receive shares, based on the calculation summarized in the prior paragraph. For purposes
of calculating the percent of class, the initial issuance to Ironridge was based upon a total of 875,491 shares of common stock
outstanding immediately prior to the issuance of shares to Ironridge, such that 97,150 shares issued would represent approximately
9.99% of the outstanding common stock after such issuance. For the years ended December 31, 2013 and 2012, Ironridge received
17,800,000 and additional 5,357,150 shares respectively, which were recorded at $234,200 and $354,103 respectively. For the same
periods the company recorded losses on these transactions of $109,600 and $316,602 respectively. At December 31, 2013 and 2012,
the balance of shares due Ironridge Global was 24,378,310 and 42,178,310 respectively, which was recorded at values of $170,648
and $295,318 respectively. Carrying value of amounts due under this agreement are computed by multiplying the percentage of total
shares due issued to Ironridge times the initial value of the obligation recorded in 2012. In connection with the transaction,
Ironridge agreed not to hold any short position in the issuer’s common stock, and not to engage in or affect, directly or
indirectly, any short sale until at least 180 days after the end of the calculation period.
FRESH PROMISE
FOODS INC., INC.
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE 6 – NOTES AND CONVERTIBLE
NOTES PAYABLE
Convertible notes payable consist of the following at December
31, 2013 and 2012:
All
common share data in this table have been adjusted for the reverse stock split.
|
|
Balance
Due at
|
|
|
|
12/31/2013
|
|
|
12/31/2012
|
|
On December 10, 2011 the Company executed a promissory
note for $6,000. The note is non-interest bearing and is secured by common stock of the Company. The note was
convertible into common stock at the par value of the common stock. The note holder has forgiven this indebtedness.
|
|
$
|
-
|
|
|
$
|
6,000
|
|
|
|
|
|
|
|
|
|
|
On January 16, 2012 the Company executed a promissory note for
$50,000. The note bears interest at 10% and is secured by common stock of the Company. The note is convertible
into common stock of the Company at $0.05 per share. In 2012, $30,000 of the note was converted to 2,639,327 shares
of common stock of the Company. In 2013 the note maturity date was extended to September 30, 2014. Due to the features of
other notes, the Company could not determine if sufficient shares in the Company stock would be available to fullfill all
conversion obligations. Accordingly a derivative liability was recorded for this note using the Black Scholes Method to value
the derivative liability with the following assumptions: Risk Free Interest rate of .0013, volatility of 597%, and an assumed
dividend rate of 0 %.
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
On August 15, 2012 the Company executed a promissory note for
$32,500. The note bears interest at 8% and is secured by common stock of the Company. The note can be converted to common
stock at a discount of 45% off the conversion price. The conversion price is the average of the lowest 3 day trading price
during a 30 days period prior to conversion, unless the Company sells or issues stock at a price lower than the conversion
price. Should this occur the conversion price is reduced to that lower price.
The Company had recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability
with the following assumptions: Risk Free Interest rate of .0012, volatility of 286%, and an assumed dividend rate of 0 %.
The note was converted into 4,888,889 shares of common stock in 2013.
|
|
$
|
-
|
|
|
$
|
32,500
|
|
|
|
|
|
|
|
|
|
|
On October 5, 2012 the Company executed a promissory note for
$32,500. The note bears interest at 8% and is secured by common stock of the Company. The note can be converted to common
stock at a discount of 45% off the conversion price. The conversion price is the average of the lowest 3 day trading price
during a a 30 days period prior to conversion, unless the Company sells or issues stock at a price lower than the conversion
price. Should this occur the conversion price is reduced to that lower price.
The Company had recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability
with the following assumptions: Risk Free Interest rate of .006, volatility of 276%, and an assumed dividend rate of 0 %.
The note was converted into 5,388,537 shares of common stock in 2013.
|
|
$
|
-
|
|
|
$
|
32,500
|
|
FRESH PROMISE
FOODS INC., INC.
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE 6 – NOTES AND CONVERTIBLE NOTES PAYABLE (CONTINUED)
On February 6, 2013 the Company executed a promissory
note for $10,500. The note bears interest at 8% and is secured by common stock of the Company. The note can be converted to
common stock at a discount of 60% off the conversion price. The conversion price is the lowest trading price during a 90 day
period prior to conversion unless the Company sells or issues stock at a price lower than the conversion price.
Should this occur the conversion price is reduced to that lower price. The Company had recorded a derivative liability for
this note using the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest
rate of .001, volatility of 276%, and an assumed dividend rate of 0 %. The note was converted into 1,677,060 shares of common
stock in 2013.
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On March 5, 2013 the Company executed a promissory note for $45,000.
The note bears interest at 8 % and is unsecured. The loan matures March 5, 2014 If agreed to by the Company, the note
may be amended to allow it to be converted into common stock of the Company at a discount rate to be determined.
|
|
$
|
45,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On March 13, 2013 the Company executed three promissory notes
for services provided totaling $109,500. The notes are payable upon demand. The notes do not earn interest but default
interest will be accrued at 12 % if the Company fails to pay upon demand by the note holder. The notes can be
converted into common stock of the company at the average five day closing bid price multiplied by three. Note Amount Converted
/ (Average price x 3)
|
|
$
|
109,500
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On April 6, 2013 the
Company executed a promissory note for $27,500. The note bears interest at 8% and
is secured by common stock of the Company. The note can be converted to common stock
at a discount of 60% off the conversion price. The conversion price is the lowest trading
price during a 90 day period prior to conversion unless the Company sells or issues
stock at a price lower than the conversion price. Should this occur the conversion
price is reduced to that lower price. The Company had recorded a derivative liability
for this note using the Black Scholes Method to value the derivative liability with the
following assumptions: Risk Free Interest rate of .0012, volatility of 276%, and an assumed
dividend rate of 0 %.
A portion of the note
was repaid by a cash payment of $10,250. The remaining portion of the note was converted
to 3,988,570 shares of common stock of Company in 2013.
|
|
$
|
-
|
|
|
$
|
-
|
|
FRESH PROMISE
FOODS INC., INC.
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE 6 – NOTES AND CONVERTIBLE NOTES PAYABLE (CONTINUED)
On May
06, 2013 the Company executed a promissory note for $22,500. The note bears interest
at 8% and is secured by common stock of the Company. The note can be converted to common
stock at a discount of 45% off the conversion price. The conversion price is the average
of the lowest 3 day trading price during a a 10 days period prior to conversion,
unless the Company sells or issues stock at a price lower than the conversion price.
Should this occur the conversion price is reduced to that lower price.
The Company
had recorded a derivative liability for this note using the Black Scholes Method to value
the derivative liability with the following assumptions: Risk Free Interest rate of .0011,
volatility of 482%, and an assumed dividend rate of 0 %.
The note
was converted into 3,840,961 shares of common stock in 2013.
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On June 04, 2013 the
Company executed a promissory note for $15,000. The note bears interest at 8% and is
secured by common stock of the Company. The note can be converted to common stock at
a discount of 30% off the conversion price. The conversion price is the average of the
lowest 3 day trading price during a a 10 days period prior to conversion,
unless the Company sells or issues stock at a price lower than the conversion price.
Should this occur the conversion price is reduced to that lower price.
The Company had recorded
a derivative liability for this note using the Black Scholes Method to value the derivative
liability with the following assumptions: Risk Free Interest rate of .0014, volatility
of 517%, and an assumed dividend rate of 0 %.
|
|
$
|
15,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On June 21, 2013 a
third party purchased a portion of a convertible note of the Company previously issued
to another party. The note had a value of $22,800 and was convertible into to common
stock of the Company. The note can be converted to common stock at a discount of 45%
off the conversion price. The conversion price is the average of the lowest 3 day trading
price during a a 10 days period prior to conversion, unless the Company sells
or issues stock at a price lower than the conversion price. Should this occur the conversion
price is reduced to that lower price.
The Company had recorded
a derivative liability for this note using the Black Scholes Method to value the derivative
liability with the following assumptions: Risk Free Interest rate of .0012, volatility
of 323%, and an assumed dividend rate of 0 %.
The note was converted
into 4,185,380 shares of common stock in 2013.
|
|
$
|
-
|
|
|
$
|
22,800
|
|
FRESH PROMISE
FOODS INC., INC.
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE 6 – NOTES AND CONVERTIBLE NOTES PAYABLE (CONTINUED)
On July
23, 2013 the Company executed a promissory note for $15,500. The note bears interest
at 8% and is secured by common stock of the Company. The note can be converted to common
stock at a discount of 45% off the conversion price. The conversion price is the average
of the lowest 10 day trading price during a a 10 days period prior to conversion,
unless the Company sells or issues stock at a price lower than the conversion price.
Should this occur the conversion price is reduced to that lower price.
The Company
had recorded a derivative liability for this note using the Black Scholes Method to value
the derivative liability with the following assumptions: Risk Free Interest rate of .0012,
volatility of 580%, and an assumed dividend rate of 0 %.
|
|
$
|
15,500
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On September 11, 2013 the Company executed a promissory note for
$15,000 as payment to a service provider. The note is convertible into common stock of the Company at a discount of
35% off the average one day bid price the day prior to conversion. Due to the discount feature we have recorded a liability
of $8,077, or put premium, as part of the carrying value of this note. The note is convertible at any time prior to maturity
and bears interest at 6% per annum.
|
|
$
|
23,077
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On September 26, 2013 the Company executed a promissory note for
$75,000. The note bears interest at 6 % and is secured by common stock of the Company. The loan matures March 26, 2014. On
September 30, 2013 the note was converted into 3,846,154 shares of common stock at a discount of 35% off the average bid price
the day prior to conversion. Due to this feature we recorded a liability of $40,835. The note also provided for the purchase
of 4,000,000 shares of common stock by execution of a warrant agreement. The agreement expires two years from the date
of this note. Under this agreement shares can be purchased for $0.02 unless the Company sells stock at a price below that
level. Should this occur, the warrant purchase price shall be reduced to the lowest selling price. The Company has recorded
a derivative liability due to this provision. The Company used the Black Scholes Method to value the derivative liability
with the following assumptions: Risk Free Interest Rate of .0012, volatility of 596%, and an assumed dividend rate of 0%.
|
|
$
|
-
|
|
|
$
|
-
|
|
FRESH PROMISE
FOODS INC., INC.
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2013
NOTE 6 – NOTES AND CONVERTIBLE NOTES PAYABLE (CONTINUED)
On October 21, 2013 the Company executed a promissory
note for $7,500. The note bears interest at 6% and is secured by common stock of the Company. The loan matures April 21, 2014.
On November 19, 2013 the note was converted into 923,077 shares of common stock of the Company. The note was convertible at
the lower of a discount of 35% off the prior day’s closing bid price or $0.01. The note also provided for purchase of
400,000 shares by execution of a warrant agreement. The agreement expires two years from the date of the note. Under this
agreement shares can be purchased for $0.02 unless the Company sells stock at a price below that level. Should this occur,
the warrant purchase price shall be reduced to the lower selling price. The Company has recorded a derivative liability due
to this provision. The Company used the Black Scholes Method to value the derivative liability with the following assumptions:
Risk Free Interest rate of .001, volatility of 598%, and an assumed dividend rate of 0 %.
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On October 29, 2013 the Company executed a promissory note for
$2,500. The note bears interest at 6% and is secured by common stock of the Company. The loan matures April 29, 2014. The
note is convertible at the lower of a discount of 35% off the prior day’s closing bid price or $0.01. The note also
provided for purchase of 133,334 shares by execution of a warrant agreement. The agreement expires two years from the date
of the note. Under this agreement shares can be purchased for $0.02 unless the Company sells stock at a price below that level.
Should this occur, the warrant purchase price shall be reduced to the lower selling price. The Company has recorded a derivative
liability due to this provision. The Company used the Black Scholes Method to value the derivative liability with the
following assumptions: Risk Free Interest rate of .0011, volatility of 599%, and an assumed dividend rate of 0 %.
|
|
$
|
2,500
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On December 12, 2013
the Company executed a promissory note for $53,000. The note bears interest at 8 % and
is secured by common stock of the Company. The note can be converted into common stock
180 days after issuance. The note can be converted to common stock at a discount of 45%
off the conversion price. The conversion price is the average of the lowest 3 day trading
price during a a 10 days period prior to conversion, unless the Company sells
or issues stock at a price lower than the conversion price. Should this occur the conversion
price is reduced to that lower price.
The Company had recorded
a derivative liability for this note using the Black Scholes Method to value the derivative
liability with the following assumptions: Risk Free Interest rate of .0012, volatility
of 586%, and an assumed dividend rate of 0 %.
|
|
$
|
53,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Unamortized debt discount on derivative liabilities
|
|
$
|
(54,962
|
)
|
|
$
|
(5,787
|
)
|
|
|
|
|
|
|
|
|
|
Total convertible notes outstanding, net of unamortized
discounts
|
|
$
|
228,615
|
|
|
$
|
108,013
|
|
FRESH PROMISE FOODS INC., INC.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2013
NOTE 7 –RELATED PARTY TRANSACTIONS
During the year ended December
31, 2012, the Company issued 2,000,000,000 shares of common stock and 1 share of convertible preferred B stock to an officer and
director that has been classified as stock based compensation during the year ended December 31, 2012. The Company also recorded
consulting expense paid to this director of $50,000 for the year ended December 31, 2012. In 2013 the 2,000,000,000 shares (20,000,000
post-reverse split) were transferred to Joseph Canouse and subsequently cancelled.
During the year ended December
31, 2012, the Company issued 35,000 shares of convertible preferred C stock for services rendered to related parties.
At the time of his appointment Mr.
Canouse received the 1 share of convertible Preferred B stock previously issued to a director. Also, during the year ended December
31, 2013, the Company issued 1 additional shares of convertible preferred B stock to Mr. Quirk when he joined the Company. The
stock has no par value and is not traded publicly.
NOTE 8 –STOCKHOLDERS’
EQUITY (DEFICIT)
The Company filed an amendment
to its Articles of Incorporation with the state of Nevada on July 23, 2012 to change the designation of its capital and preferred
stock, as follows. The authorized common stock of the Company consist of 4,000,000,000 shares with a par value $0.00001. The Company
also has 100,000,000 shares of par value $0.00001 Preferred A stock authorized, 10 shares of par value $0.00001 Preferred B stock
authorized, and 30,000,000 par value $0.00001 par value Preferred C stock authorized. The Company adjusted the par value and additional
paid in capital accounts on its balance sheet at September 30, 2012 for common and Preferred A stocks.
Series A Preferred stock
has been cancelled.
Series B Preferred
Each one share of Series
B Preferred has voting rights equal to four times the sum of all shares of common stock issued and outstanding at time of voting,
plus
all shares of Series C Preferred Stock issued and outstanding at time of voting,
divided by
the number of shares
of Series B Preferred Stock issued and outstanding at the time of voting.
By unanimous written consent
of the Board, the Board issued an aggregate of two (2) shares of Series B Preferred, to two individuals (the “
Series
B Stockholders
”). As a result of the voting rights granted to the Series B Preferred, the Series B Stockholders together
hold in the aggregate approximately 80% of the total voting power of all issued and outstanding voting capital of the Company.
Series C Preferred
Series C Preferred Stock
has voting rights of one vote per share owned. The Preferred C stock is convertible into common stock of the Company at the rate
of 0.10 per common share for each share of Preferred C stock. The holders of Series C Preferred stock are entitled to receive
any dividend declared by the Board of Directors.
During the year ended December
31, 2012, the Company issued 19,500 shares of restricted common stock to initial private placement investors in Anthus Life per
terms of their subscription agreements.
During the year ended December
31, 2012, the Company issued 36,500 shares of common stock and 9,000 shares of Convertible Preferred C stock to consultants for
services. The Company also issued 9,000 shares of Convertible Preferred C stock to a consultant for deferred services.
During the year ended December
31, 2012, he Company issued 26,500 shares of common stock to the former management per the acquisition agreement.
During the year ended December
31, 2012 the Company issued 20,000,000 shares of common stock, 35,000 shares of Convertible Preferred C stock and 1 share of Convertible
Preferred B stock to related parties that has been classified as stock based compensation during the year ended December 31, 2012.
On January 10, 2012, the Company retired
358,785 shares of common stock held in treasury at December 31, 2011.
During the year ended December 31,
2012, the Company converted five convertible notes payable from non-related parties along with the accrued interest for a total
of $93,443 into 4,113,547 shares of its common stock. The Company also issued 100,000 shares of common stock for $2,000 to a non-related
party.
During the year ended December 31,
2012, the Company issued 5,200 shares of preferred C stock for $13,000 in cash.
On April 26, 2012, the Company entered
into an agreement with Ironridge Global to settle $284,917 in accounts payable (which includes the balance of the Note Payable
for the acquisition of Stakool by Anthus Life Corp., outstanding legal fees, filing fees, packaging costs and certain manufacturing
costs), in exchange for unregistered shares of common stock. Ironridge received an initial issuance of 97,150 shares of the Company’s
common stock. During the year ended December 31, 2012 the Company issued an additional 5,260,000 shares of unrestricted common
stock to Ironridge.
On September 14, 2012, the Company
filed a Form S-8 with the Securities and Exchange Commission. The Form S-8 registered 4,000,000 shares of its common stock in
connection with the Company’s 2012 Incentive Stock Plan.
FRESH PROMISE FOODS INC., INC.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2013
NOTE 8 –STOCKHOLDERS’
EQUITY (DEFICIT) CONTINUED
During the month of October 2012, the
Company issued 282,980 shares of the Company’s Convertible Preferred C stock. The stock was issued as an addendum to the
subscription agreements associated with the open private placement investments made by various investors between fiscal year 2009
and 2011.
On October 5, 2012 the Company issued
3,750,000 shares of its common stock without restriction to various consultants for services. The Company registered the common
stock with the Securities and Exchange Commission on Form S-8 on September 14, 2012.
On October 10, 2012 the Company issued
500,000 shares of its common stock without restriction to Asher Enterprise, Inc. at a value of $15,000. The shares were issued
as principal reduction to a Promissory Note dated January 16, 2012 between the Company and a non-related party.
During the year ended December 31,
2012, the Company issued 150,000 shares of restricted common stock to initial private placement investors in Anthus Life per terms
of their subscription agreements.
During the year ended December 31,
2012 the Company retired 10,000,000 shares of its Preferred A stock, which accounted for all of the issued and outstanding Preferred
A Stock.
The Company filed an amendment
to its Articles of Incorporation with the state of Nevada on November 5, 2013 to change the designation of its capital and preferred
stock, as follows:
The authorized common stock
of the Company consist of 475,000,000 shares with a par value $0.00001. The Company also has 100,000,000 shares of par value $0.00001
Preferred C stock authorized and 10 shares of par value $0.00001 Preferred B stock authorized., and 30,000,000 par value $0.00001
par value Preferred C stock authorized. The Company adjusted the par value and additional paid in capital accounts on its balance
sheet at September 30, 2013 for common and Preferred A stocks.
During the year ended December
31, 2013, the Company issued 48,733,764 shares of common stock and cancelled 20,000,000 shares of common stock.
During the year ended December
31, 2013, the Company issued 2,256,982 shares of common stock to service providers, 28,676,129 shares of common stock in conjunction
with the conversion of promissory notes, 17,800,000 shares of common stock in to IronRidge Global under an agreement previous
described in this filing, and 653 shares of common stock in conjunction with the rounding of shares produced by the reverse stock
split previously described in this filing.
During the year ended December
31, 2013, the former CEO of the Company transferred 2 shares of Preferred Series B to Mr. Joseph C. Canouse when he assumed the
positions of President and CEO. Subsequently, when Mr. Kevin Quirk became CEO of the Company Mr. Canouse transferred 1 share of
the Preferred Series B stock to Mr. Quirk.
The Company also recorded
the cancellation of previous reported treasury stock with a book value of $208.
On September 26, 2013 the Company issued
a convertible note with an embedded warrant agreement. The agreement provides for the purchase of 4,000,000 shares of common stock
of the company at $0.02 per share. The warrant expires on September 26, 2015. The fair value of the warrant was estimated, at
the date of the grant at $140,000 using the Black-Sholes option –pricing model with the following assumptions: risk-free
interest rate of 0.01 %, volatility factor of 720%, and an expected life of two years.
FRESH PROMISE FOODS INC., INC.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2013
NOTE 8 –STOCKHOLDERS’
EQUITY (DEFICIT) CONTINUED
On October 21, 2013 the Company issued
a convertible note with an embedded warrant agreement. The agreement provides for the purchase of 400,000 shares of common stock
of the company at $0.02 per share. The warrant expires on October 21, 2015. The fair value of the warrant was estimated, at the
date of the grant at $5,600 using the Black-Sholes option –pricing model with the following assumptions: risk-free interest
rate of 0.01 %, volatility factor of 598%, and an expected life of two years.
On October 29, 2013 the Company issued
a convertible note with an embedded warrant agreement. The agreement provides for the purchase of 133,334 shares of common stock
of the company at $0.02 per share. The warrant expires on October 29, 2015. The fair value of the warrant was estimated, at the
date of the grant at $3,099 using the Black-Sholes option –pricing model with the following assumptions: risk-free interest
rate of 0.011 %, volatility factor of 599%, and an expected life of two years.
The following table sets forth common share purchase warrants
outstanding as of December 31, 2013:
|
|
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding warrants December 31, 2012
|
|
|
-0-
|
|
|
|
|
|
Warrant granted September 26, 2013
|
|
|
4,000,000
|
|
|
|
$
0 .02
|
|
Warrant granted October 21, 2013
|
|
|
400,000
|
|
|
|
$
0 .02
|
|
Warrant granted October 29, 2013
|
|
|
133,334
|
|
|
|
$
0 .02
|
|
Outstanding warrants December 31, 2013
|
|
|
4,533,334
|
|
|
|
$
0 .02
|
|
|
|
|
|
|
|
|
|
|
Common stock issuable upon exercise of warrants
|
|
|
4,533,334
|
|
|
|
$
0 .02
|
|
FRESH PROMISE FOODS INC., INC.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2012
NOTE 9 – INCOME TAXES
As
of December 31, 2013, the Company had net operating loss carry forwards of $7,608,511 that may be available to reduce future years’
taxable income through 2028. Future tax benefits which may arise as a result of these losses have been recognized in these consolidated
financial statements, as their realization is determined not likely to occur and accordingly, the Company has not recorded a valuation
allowance for the deferred tax asset relating to these tax loss carry-forwards
.
The provision for Federal income tax
consists of the following for the years 2013 and 2012:
|
|
2013
|
|
|
2012
|
|
Federal income tax benefit
attributable to:
|
|
|
|
|
|
|
|
|
Current
operations
|
|
$
|
179,636
|
|
|
$
|
1,830,894
|
|
Less:
Valuation allowance
|
|
$
|
(179,636
|
)
|
|
$
|
(1,830,894
|
)
|
|
|
|
|
|
|
|
|
|
Net provision for
Federal income taxes
|
|
|
-0-
|
|
|
|
-0-
|
|
A reconciliation of the federal statutory
rate of 34% to the Company’s effective tax rate is as follows:
|
|
2013
|
|
|
2012
|
|
Expected expense (benefit) (34%)
|
|
$
|
(217,289
|
)
|
|
$
|
(1,830,894
|
)
|
Permanent differences
|
|
|
41,466
|
|
|
|
|
|
Change in valuation allowance
|
|
|
175,823
|
|
|
|
1
,830,894
|
|
Accrued expense (benefit)
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
The
cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as
of December 31, 2013 and 2011:
|
|
2013
|
|
|
2012
|
|
Deferred
tax asset attributable to:
|
|
|
|
|
|
|
|
|
Net
operating loss carryover
|
|
$
|
2,549,239
|
|
|
$
|
2,369,603.00
|
|
Less:
valuation allowance
|
|
|
(2,549,239
|
)
|
|
|
(2,369,603.00
|
)
|
Net
deferred tax asset
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
The Company’s valuation allowance
increased by $175,823 in 2013. Tax net operating loss carryforwards may be limited pursuant to the IRS Section 382 in the event
of certain ownership changes.
FRESH PROMISE FOODS INC., INC.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
DECEMBER 31, 2012
NOTE 10 – SUBSEQUENT EVENTS
On January 2, 2014 the Company issued
500,000 shares of common stock to a service provider for services rendered. An expense of $2,950.00 was recorded for this transaction.
On January 16, 2014 the Company issued
2,664,000 shares of common stock in conjunction with the partial conversion of a of a promissory note dated June 4, 2013 for $4,000
face value plus accrued interest of $103. The conversion price of the stock issued in this transaction was $0.0015 as provided
by the note agreement..
On February 4, 2014 the Company issued
5,050,000 shares of common stock in conjunction with the partial conversion of a promissory note dated July 23, 2013 for $10,100
face value plus accrued interest of $66. The conversion price of the stock issued in this transaction was $0.002 as provided by
the note agreement..
On February 6, 2014 the Company issued
2,804,000 shares of common stock in conjunction with the partial conversion of a portion of a promissory note dated June 4, 2013
for $7,000 face value plus accrued interest of $560. The conversion price of the stock issued in this transaction was $0.0026
as provided by the note agreement..
On February 12, 2014 the Company issued
3,666,667 shares of common stock in conjunction with the partial conversion of a promissory note issued under a consulting agreement
with a former officer.
On February 13, 2014 the Company issued
3,010,000 shares of common stock in conjunction with the conversion of a portion of a promissory note dated July 23, 2013 for
$5,400 principal plus accrued interest of $620. The conversion price of the stock issued in this transaction was $0.002 as provided
by the note agreement..
On February 20, 2014 the
Company issued 2,543,235 shares of common stock in conjunction with the partial conversion of a portion of a promissory note dated
March 05, 2013 for $5,000 principal. The conversion price of the stock issued in this transaction was $0.0019 as provided by the
note agreement..
On February 28, 2014 the
Company issued 1,792,813 shares of common stock in conjunction with the partial conversion of a portion of a promissory note dated
June 4, 2013 for $4,000 principal. The conversion price of the stock issued in this transaction was $0.0022 as provided by the
note agreement..
On March 25, 2014 the Company
issued 8,000,000 shares of common stock in conjunction with the settlement agreement with Ironridge Global, previous discussed.
The stock was recorded at $56,000 but had a fair market value of $80,000. The Company recorded a loss on this issuance of $24,000.
We, together with certain
other parties (collectively, the “Defendants”), are currently involved in litigation against Kyle Gotshalk, Leonard
Gotshalk, Clinton Hall, LLC, Richard Maher and Patrick O’Loughlin (collectively, the “Plaintiffs”). On April
25, 2013, the Plaintiffs filed a complaint with the United States District Court for the District of Nevada alleging claims including
securities fraud and breach of contract. The Company believes these claims to be unfounded and the Company is prepared to file
an answer with the United States District Court for the District of Nevada, together with counterclaims against the Plaintiffs.
The Company is continuing to vigorously defend itself against this lawsuit and in March 2014 has retained an attorney in Nevada
to pursue the matter.
Except as set forth above,
we are not currently involved in any litigation that we believe could have a materially adverse effect on our financial condition
or results of operations. Except as set forth above, there is no action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive
officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our
subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as
such, in which an adverse decision could have a material adverse effect.
In accordance with ASC
855-10, the Company has analyzed its operations subsequent to December 31, 2013 to the date these consolidated financial statements
were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial
statements.