The accompanying notes are an integral part of these unaudited financial statements.
The accompanying notes are an integral part of these unaudited financial statements.
The accompanying notes are an integral part of these unaudited financial statements.
Notes to the Unaudited Financial Statements
1.
Nature of Operations and Continuance of Business
The unaudited interim financial statements included herein have been prepared by Net Savings Link, Inc. ("NSL" or the "Company") in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. We suggest that these interim financial statements be read in conjunction with the audited financial statements and notes thereto included in our Form 10-K for the year ended November 30, 2013, as filed with the SEC. We believe that all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein and that the disclosures made are adequate to make the information not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year as reported in Form 10-K have been omitted.
2.
Going Concern
NSL's financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, NSL has generated minimal revenue and accumulated significant losses since inception. As of May 31, 2014, company has accumulated deficit of $4,969,792 and a working capital deficit of $653,843. All of these items raise substantial doubt about its ability to continue as a going concern. Management's plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the NSL's ability to continue as a going concern are as follows:
In order to fund the start-up of operations during the year ended November 30, 2012, NSL entered into several financing transactions in 2012 and 2013 and continues to try to raise funds in 2014. The continuation of NSL as a going concern is dependent upon its ability to generating profitable operations that produce positive cash flows. If NSL is not successful, it may be forced to raise additional debt or equity financing.
There can be no assurance that NSL will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of NSL to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
3.
Related Party Transactions
During the period ended May 31, 2014, the President and CEO and Vice President and director of the Company, elected to contribute a total of $413,755 in back due wages to additional paid-in capital. As of May 31, 2014 and November 30, 2013, the Company owed $0 and $317,755, respectively, to the President and CEO and Vice President and director of the Company for back due wages.
NET SAVINGS LINK, INC.
Notes to the Unaudited Financial Statements
4.
Convertible Promissory Notes Payable
During the six months ended May 31, 2014, the holder of two Convertible Promissory Notes elected to convert a total of $25,815 in principal and $2,000 in interest into 63,671,719 shares of the Company's common stock at an average conversion price of $0.0004 per share.
During February 2014, NSL issued an Unsecured Convertible Promissory Note for $23,700 (the "February 2014 Convertible Promissory Note"). The February 2014 Convertible Promissory Note is unsecured, due nine months from the date of issuance, accrues interest at 8% per annum and is convertible into shares of NSL's common stock at any time at the option of the holder at a discount from market of 50% of the fair market value of one share of NSL's common stock based on the lowest bid during the thirty days prior to the conversion date.
During April 2014, NSL issued an Unsecured Convertible Promissory Note for $5,000 (the "April 2014 Convertible Promissory Note"). The April 2014 Convertible Promissory Note is unsecured, due nine months from the date of issuance, accrues interest at 8% per annum and is convertible into shares of NSL's common stock at any time at the option of the holder at a discount from market of 35% of the fair market value of one share of NSL's common stock based on the average of the three lowest bid prices during the thirty days prior to the conversion date.
5.
Derivative Liabilities
NSL analyzed the conversion options embedded in the Convertible Promissory Notes for derivative accounting consideration under ASC 815,
Derivatives and Hedging
, and determined that the instruments embedded in the above referenced convertible promissory notes should be classified as liabilities and recorded at fair value due to their being no explicit limit to the number of shares to be delivered upon settlement of the conversion options. Additionally, the above referenced convertible promissory notes contain dilutive issuance clauses. Under these clauses, based on future issuances of NSL's common stock or other convertible instruments, the conversion price of the above referenced convertible promissory notes can be adjusted downward. Because the number of shares to be issued upon settlement of the above referenced convertible promissory notes cannot be determined under this instrument, NSL cannot determine whether it will have sufficient authorized shares at a given date to settle any other future share instruments.
During the six months ended May 31, 2014, two Convertible Promissory Notes became convertible into shares of the Company's common stock. The fair value of the conversion options was determined to be $309,807 using a Black-Scholes option-pricing model. Upon the date the Convertible Promissory Notes became convertible, $57,500 was recorded as debt discount and $252,307 was recorded as day one loss on derivative liability.
During the six months ended May 31, 2014, $25,815 in principal amounts of Convertible Promissory Notes were converted into common stock (see Notes 4 and 6), $54,819 in related derivative liability was extinguished through a charge to paid-in capital and $137,606 was recorded as a net loss on mark-to-market of the conversion options and warrants.
The following table summarizes the derivative liabilities included in the balance sheet at May 31, 2014:
Derivative liabilities November 30, 2013
|
|
$
|
90,699
|
|
Addition of new derivative
|
|
|
57,500
|
|
Reclassification of derivative liability to additional paid-in capital due to
promissory note conversions
|
|
|
(54,819
|
)
|
Losses on change in fair value
|
|
|
389,913
|
|
Balance at May 31, 2014
|
|
$
|
483,293
|
|
The following table summarizes the loss on derivative liabilities included in the income statement for the six months ended May 31, 2014:
Excess of fair value of conversion option derivative liabilities over the related
notes payable
|
|
$
|
252,307
|
|
Losses on change in fair value
|
|
|
137,606
|
|
Loss on derivative liabilities
|
|
$
|
389,913
|
|
NSL valued its derivatives liabilities using the Black-Scholes option-pricing model. Assumptions used during the six months ended May 31, 2014 include (1) risk-free interest rates between 0.04% to 1.53%, (2) lives of between 0 and 4.8 years, (3) expected volatility of between 172% to 2,583%, (4) zero expected dividends, (5) conversion prices as set forth in the related instruments, and (6) the common stock price of the underlying share on the valuation dates.
6.
Common Stock
On December 11, 2013, the Company issued 4,695,652 shares of common stock for $2,560 of debt, or $0.00055 per share.
On December 17, 2013, the Company issued 4,696,970 shares of common stock for $1,550 of debt, or $0.00033 per share.
On December 23, 2013, the Company issued 4,696,970 shares of common stock for $1,550 of debt, or $0.00033 per share.
On December 30, 2013, the Company issued 4,696,970 shares of common stock for $1,550 of debt, or $0.00033 per share.
On January 15, 2014, the Company issued 3,809,091 shares of common stock for $2,190 of debt and $2,000 of accrued interest, or $0.0011 per share.
On January 23, 2014, the Company issued 4,693,878 shares of common stock for $2,300 of debt, or $0.00049 per share.
On January 28, 2014, the Company issued 4,693,878 shares of common stock for $2,300 of debt, or $0.00049 per share.
On February 3, 2014, the Company issued 4,707,317 shares of common stock for $1,930 of debt, or $0.00041 per share.
On February 5, 2014, the Company issued 4,708,333 shares of common stock for $1,695 of debt, or $0.00036 per share.
NET SAVINGS LINK, INC.
Notes to the Unaudited Financial Statements
On February 11, 2014, the Company issued 4,709,677 shares of common stock for $1,460 of debt, or $0.00031 per share.
On February 14, 2014, the Company issued 4,689,655 shares of common stock for $1,360 of debt, or $0.00029 per share.
On February 20, 2014, the Company issued 4,689,655 shares of common stock for $1,360 of debt, or $0.00029 per share.
On May 13, 2014, the Company issued 8,183,673 shares of common stock for $4,010 of debt, or $0.0005 per share.
7.
Financial Instruments
ASC 820,
Fair Value Measurements
(ASC 820) and ASC 825,
Financial Instruments
(ASC 825)
,
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 -
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 -
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
- Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
NSL's financial instruments consist principally of cash, accounts payable, and accrued liabilities. Pursuant to ASC 820 and 825, the fair value of cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The following table sets forth by level with the fair value hierarchy the Company's financial assets and liabilities measured at fair value on May 31, 2014:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
483,293
|
|
|
$
|
483,293
|
|
NET SAVINGS LINK, INC.
Notes to the Unaudited Financial Statements
The following table sets forth by level with the fair value hierarchy the Company's financial assets and liabilities measured at fair value on November 30, 2013:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
90,699
|
|
|
$
|
90,699
|
|
8. Subsequent Event
•
|
On June 2, 2014, the Company entered into a $21,500 convertible note agreement with Asher Enterprises, Inc with an annual interest rate of 8% and due on March 4, 2015.
|
•
|
On June 2, 2014, the Company granted Asher Enterprises, Inc 86 million warrant at an exercise price per share equal to $0.00025.
|
•
|
On June 16, 2014 and June 19, 2014, Asher Enterprises, Inc converted an amount of $1,970 and $2,622 of convertible debt into 8,567,391 and 7,711,765 number of common stock.
|
•
|
On June 18, 2014, the Company entered into an agreement with Global Distribution Inc. a New York corporation ("GDI"); David Saltrelli and Peter Schuster, holders of all of the issued and outstanding shares of Series A preferred stock; and, Steven Baritz, the sole shareholder of GDI, wherein Steven Baritz acquired all of the issued and outstanding shares of Series A preferred stock (1,500,000 shares) from David Saltrelli and Peter Schuster in exchange for Baritz transferring all of the issued and outstanding shares of common stock of GDI to us. Each share of Series A preferred stock has 1,000 votes. The aforementioned shares of Series A preferred stock represented approximately 66.18% of our voting power. Upon completion of the aforementioned transaction, the David Saltrelli and Peter Schuster, will continue to own 7,200,000 shares of our common stock and in the event of any action which causes a reduction in said shares, the Company will issue additional shares of common stock to David Saltrelli and Peter Schuster in order to maintain their ownership in 7,200,000 shares of the common stock.
|
•
|
On June 18, 2014, Steven Baritz was appointed to the board of directors and appointed president, principal executive officer, secretary, treasurer, principal financial officer, and principal accounting officer. Thereafter, David Saltrelli, Peter Schuster, and Jon Wallen resigned as officers and directors. The Company has not entered into any compensation arrangements with Mr. Baritz with respect to his employment with the Company.
|