Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
1. Nature of Operations and Going Concern
Telco Cuba Inc., (Formerly CaerVision Global, Inc. fka American Mineral Group Minerals Inc.) (the "Company") was incorporated in the State of Nevada on August 10, 2007. In the fiscal year ended November 30, 2014 and 2013, the Company was engaged in the exploration, development, and acquisition of mineral properties. As a subsequent event to these financial statements herein, on June 12, 2015, the Company consummated a share exchange agreement with Amgentech Inc./Telco Cuba, Inc., a Florida corporation, whereby the Company issued 75,000,000 shares of common stock previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech Inc./Telco Cuba, Inc. Amgentech Inc./Telco Cuba, Inc. will be the surviving entity and focus on opportunities in the Cuban telecommunications market.
The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern; accordingly, they do not give effect to adjustment that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying financial statements. As shown in the accompanying financial statements, the Company incurred a net loss of $347,190 for the year ended November 30, 2014, and has an accumulated deficit of $14,824,879. Management plans to raise cash from public or private debt or equity financing, on an as needed basis and in the longer term, to generate revenues from the acquisition, exploration and development of mineral interests, if found. The Company's ability to continue as a going concern is dependent upon achieving profitable operations and/or upon obtaining additional financing. The outcome of these matters cannot be predicted at this time.
2. Significant Accounting Policies
a) Accounting Principles
The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.
b) Basic and Diluted Loss Per Share
Basic and diluted loss per share is based on the weighted average number of shares outstanding. Potential common shares includable in the computation of fully diluted per share results are not presented in the financial statements as their effect would be anti-dilutive.
c) Fair Value Measurements
Valuation Hierarchy
ASC 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Companys own assumptions used to measure assets and liabilities at fair value. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The following tables provides the assets and liabilities carried at fair value measured on a recurring and non-recurring basis as of November 30, 2014 and November 30, 2013:
| | | | | | | | | | | | |
| | | | | Fair Value Measurements at November 30, 2014 | |
| | | | | Quoted prices | | | Significant | | | | |
| | Total Carrying | | | in active | | | other | | | Significant | |
| | Value at | | | markets | | | observable | | | unobservable | |
| | November 30, 2014 | | | (Level 1) | | | inputs (Level 2) | | | inputs (Level 3) | |
| | | | | | | | | | | | |
Derivative liabilities | $ | 192,123 | | $ | - | | $ | - | | $ | 192,123 | |
| | | | | | | | | | | | |
| | | | | Fair Value Measurements at November 30, 2013 | |
| | | | | Quoted prices | | | Significant | | | | |
| | Total Carrying | | | in active | | | other | | | Significant | |
| | Value at | | | markets | | | observable | | | unobservable | |
| | November 30, 2013 | | | (Level 1) | | | inputs (Level 2) | | | inputs (Level 3) | |
| | | | | | | | | | | | |
Derivative liabilities | $ | 192,123 | | $ | - | | $ | - | | $ | 192,123 | |
The derivative liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical quoted market prices for the Companys common stock, and are classified within Level 3 of the valuation hierarchy.
The following is a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
| | | | | |
| November 30, 2014 | | November 30, 2013 |
Beginning balance | $ | 192,123 | | $ | 200,535 |
Derivative liabilities recorded | | - | | | - |
Derivative liabilities converted | | - | | | - |
Unrealized gain attributable to the change in liabilities still held | | - | | | (8,412) |
Ending balance | $ | 192,123 | | $ | 192,123 |
The fair value of the derivative liability at November 30, 2014 and November 30, 2013, totaling $192,123 and $192,123, respectively, was calculated using the Black-Scholes Option Pricing model under the assumptions detailed in Note 8. Gains and losses (realized and unrealized) included in earnings (to change in fair value of derivative liability) for the years ended November 30, 2013 and 2012, are reported in other expenses as follows:
| | | | | |
| November 30, 2014 | | November 30, 2013 |
(Gain) Loss on derivative liabilities recorded during the period | $ | - | | $ | - |
Debt discount attributable to derivative liabilities recorded | | - | | | - |
Derivative liabilities converted during the period | | - | | | - |
Unrealized gain attributable to the change in liabilities still held | | - | | | 8,412 |
Net unrealized (gain) loss included in earnings | $ | - | | $ | 8,412 |
The Company did not have any Level 1 or Level 2 assets or liabilities as of November 30, 2014 and 2013, and had Level 3 liabilities consisting of notes payable. The carrying amount of the notes payable at November 30, 2014 and 2013, approximate their respective fair value based on the Companys incremental borrowing rate.
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
2. Significant Accounting Policies (continued)
c) Fair Value Measurements (continued)
Cash and cash equivalents include money market securities that are considered to be highly liquid and easily tradable as of November 30, 2014 and 2013, respectively. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.
In addition, FASB ASC 825-10-25 Fair Value Option was effective at the time of adoption. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.
d) Income Taxes
Income taxes are accounted for in accordance with the provisions of FASB ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
e) Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.
f) Revenue Recognition
The Companies follow the guidance of the FASB ASC 605-10-S99 Revenue Recognition Overall SEC Materials. The Companies record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Revenues consist primarily of product sales.
As at November 30, 2014, the Company had no revenues to report.
f) Estimates
The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those reported.
g) Accounts receivable and concentration of credit risk
The Company currently has no accounts receivable, no customers, and therefore, does not currently foresee a concentrated credit risk associated with trade receivables. If and when the Company commences operations that generate revenue, the Company will evaluate the receivable in light of the collectability in the normal course of business.
h) Reclassifications
Certain prior year financial statement balances have been reclassified to conform to the current year presentation. These reclassifications had no effect on the recorded net loss.
i) Recently Adopted Accounting Pronouncements
Management does not believe that any recently issued but not yet effective accounting pronouncements if currently adopted would have a material effect on the accompanying financial statements.
3. Mineral Property
In August 2009, the Company entered into an agreement to acquire the mineral rights to 331 unpatented lode mining claims known as the Conglomerate Mesa, located in Inyo County, California. In March 2011, the Company added an additional 217 unpatented lode mining claims. In fiscal year 2012, the Company determined that the effort and cost of developing these claims required more resources that could be more effectively used on other opportunities, and abandoned the Conglomerate Mesa project.
In February 2013, the Company acquired a 28% Working Interest in the Grand Chenier oil and gas prospect in Louisiana. The property contains an estimate 9.0 million barrels of oil and was in production until approximately 2009 when the then operator failed to manage the interests and certain repairs were not made leading to the cessation of production. The Company believes that with approximately $2.0 million in capital, the field can be returned to production and additional wells within the prospect can then be brought online increasing production to a profitable level.
In November 2014, the Company surrendered the Grand Chenier prospect back to its orginal owners in exchange for the cancellation of the notes and stock to be issued.
4. Capital Stock
a) Authorized
Authorized capital stock consists of:
500,000,000 common shares with a par value of $0.001 per share; and
1,000,000 preferred shares with a par value of $0.001 per share
b) Share Issuances
In December 2012, the Company issued 78,333,333 common shares in connection with the conversion of $4,700 of convertible debentures and accrued interest. The conversions had an average price of $0.00006 per share.
In January 2013, the Company issued 78,333,333 common shares in connection with the conversion of $4,700 of convertible debentures and accrued interest. The conversions had an average price of $0.00006 per share.
In January 2013, the Company issued 85,000,000 common shares in connection with the conversion of $2,125 of convertible debentures and accrued interest. The conversions had an average price of $0.00003 per share.
There were no share issuances in the fiscal year ended November 30, 2014
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
5. Income Taxes
A reconciliation of income taxes at statutory rates with the reported income taxes is as follows:
| | | | |
Period ended November 30, | | 2014 | | 2013 |
Income tax benefit at Federal statutory rate of 35% | $ | 195,300 | $ | 199,400 |
State Income tax benefit, net of Federal effect | | 28,000 | | 28,500 |
Permanent differences (primarily stock-based compensation) | | - | | - |
Change in valuation allowance | | (223,300) | | (227,900) |
| $ | - | $ | - |
The significant components of the Company's deferred income tax assets are as follows:
| | | | |
As at November 30 | | 2014 | | 2013 |
| | | | |
Net Operating losses | $ | 2,794,400 | $ | 2,574,400 |
Loss on mineral rights | | 2,838,000 | | 2,838,000 |
Valuation allowance | | (5,632,400) | | (5,412,400) |
| $ | - | $ | - |
At November 30, 2014 the Company has available net operating losses of approximately $2,794,400 which may be carried forward to apply against future taxable income. These losses will expire in 2034. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization.
Derivative Liabilities
In June 2008, the FASB finalized ASC 815, Determining Whether an Instrument (or Embedded Feature) is indexed to an Entitys Own Stock. Under ASC 815, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has determined that it needs to account for 15 convertible debentures (see note 3h) issued for its shares of common stock, as derivative liabilities, and apply the provisions of ASC 815. The instruments have a ratchet provision that adjust either the exercise price and/or quantity of the shares as the conversion price equals to 60% of the "market price" at the time of conversion, which "market price" will be calculated as the average of the three lowest "trading prices" for the Company's common stock during the ten day trading period prior to the date the conversion note is sent to the Company.
As a result, the instruments need to be accounted for as derivative liabilities. In accordance with ASC 815, these convertible debentures have been re-characterized as derivative liabilities. ASC 815, Accounting for Derivative Instruments and Hedging Activities (ASC 815) requires that the fair value of these liabilities be re-measured at the end of every reporting period with the change in fair value reported in the statement of operations.
The fair value of the derivative liabilities was measured using the Black-Scholes option pricing model and the following assumptions:
| | | | | |
| November 30, | | November 30, | | Date of |
| 2014 | | 2013 | | issuance |
| | | | | |
$32,500 Debenture: | | | | | |
Discount Rate Bond Equivalent Yield | 0.30% | | 0.30% | | 0.30% |
Annual rate of dividends | - | | - | | - |
Volatility | 347.18% | | 196.41% | | 319.58% |
Weighted Average life (months) | 0 | | 0 | | 9 |
| | | | | |
$40,000 Debenture: | | | | | |
Discount Rate Bond Equivalent Yield | 0.30% | | 0.30% | | 0.30% |
Annual rate of dividends | - | | - | | - |
Volatility | 347.18% | | 196.41% | | 319.58% |
Weighted Average life (months) | 0 | | 0 | | 9 |
| | | | | |
$35,000 Debenture: | | | | | |
Discount Rate Bond Equivalent Yield | 0.30% | | 0.30% | | 0.30% |
Annual rate of dividends | - | | - | | - |
Volatility | 347.18% | | 196.41% | | 262.42% |
Weighted Average life (months) | 0 | | 0 | | 9 |
| | | | | |
$174,530 Debenture: | | | | | |
Discount Rate Bond Equivalent Yield | 0.30% | | 0.30% | | 0.30% |
Annual rate of dividends | - | | - | | - |
Volatility | 347.18% | | 196.41% | | 262.42% |
Weighted Average life (months) | 0 | | 0 | | 6 |
| | | | | |
Fair Value | $ 192,123 | | $ 192,123 | | |
There were no new convertible debentures issued during the fiscal years ended November 30, 2014 and 2013.
At November 30, 2014, the Company reevaluated the derivative liability based on the fair value assumptions for the convertible debt that it had entered into in previous years. As of November 30, 2014, the derivative liability remained the same during the year then ended due to the conversion threshold being equivalent at this reporting date as compared to the previous fiscal year end.
Notes Payable
For the years ended November 30, 2014 and 2013, the Company borrowed $200 and $21,888, respectively, from a non-affiliated accredited investor. The Notes carry interest at a rate of 15% per year and are due on demand.
The Company raised $0 and $359 in demand notes to from its CFO during the fiscal years ended November 30, 2014 and 2013, respectively.
Between December 2011 and November 2012, the Company borrowed $108,700 from a non-affiliated accredited investor. The Notes carry interest at a rate of 15% per year and are due on demand.
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
Related party transactions
Due to Officers
From time to time, our former CEO, Mal Bains loaned money to the Company. At November 30, 2014 and 2013 the balance owed was $17,476 and $18,796 respectively. The balance does not bear interest and is due on demand.
Our CEO and CFO have from time to time loaned money to the Company. At November 30, 2014 and 2013, they had a balance owed to them of $1,384 and $1,384 respectively. The balances do not bear interest and are due on demand.
Employment Contracts with Officers
In September 2010, the Company entered into five year Employment Contracts with its three officers (See Note 12). As of November 30, 2014 and 2013, the Company had an accrued payroll liability balance of $1,319,194 and $938,415.
Commitments and Contingencies
In August, 2009, trading in the Companys stock was temporarily suspended in British Columbia, Canada by the British Columbia Securities Commission (BCSC). The temporary suspension was the result of what the BCSC termed suspicious trading activity due to a significant increase in the share price of the Companys stock price. Various shareholders, and the former CEO and President, Malkeet Bains have been interviewed and several have been either charged with or accepted please in connection with violations of Canadian securities laws.
The Cease Trade Order is still in effect regarding trading in British Columbia, Canada only, and specifically affects the residents thereof.
The case outlined above does not involve the Company or any of its current officers or directors.
A consulting agreement between American Mineral Group and Internet Marketing Solutions, Inc. (IMS) provides that IMS will receive a Consulting Fee of ten percent (10%) of the gross value of the project received by American Mineral Group including cash, stock and stock purchase warrants.
Employment Contracts
In September 2010, the Company entered into five year Employment Contracts with its three employees.
Below is a summary of the basic terms of the Agreements:
Base Salary for the CEO and CFO
$120,000 per year
Base Salary for Investor relations
$100,000 per year
The officers received stock grants in connection with the contracts of:
1,500,000 common shares
1,000,000 common shares
1,000,000 common shares
4% annual increases in Base Salary
Bonus provision if and when the Company reaches profitability
Other normal benefits provided such as health insurance as negotiated by the Company
As of November 30, 2014 and 2013, the Company had an accrued payroll liability balance of $1,319,194 and $938,415.
Subsequent Events
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than listed below, no material subsequent events exist.
On January 9, 2015, the outstanding shareholders of the Company voted to change the name of the Company from American Mineral Group, Inc. to CaerVision Global, Inc. in order to better reflect the planned change in the Companys future operations.
On January 26, 2015, the Company entered into a stock purchase definitive agreement with Vitall, Inc., a Delaware corporation, whereby the Company will issue 15,000,000 shares of common stock for 100% of the issued and outstanding capital of Vitall, Inc. On March 17, 2015, Vitall, Inc. terminated the merger agreement due to non-performance on the part of the Company. As a result, the name CaerVision Global, Inc. will be surrendered back to its original owner.
On June 12, 2015, the Company consummated a share exchange agreement with Amgentech Inc./Telco Cuba, Inc., a Florida corporation, whereby the Company issued 75,000,000 shares of common stock previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech Inc./Telco Cuba, Inc. Amgentech Inc./Telco Cuba, Inc. will be the surviving entity and focus on opportunities in the Cuban telecommunications market.
On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to change its name from CaerVision Global, Inc. to Telco Cuba, Inc.
On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to appoint William Sanchez to the position of CEO, CFO, President, Treasurer and Secretary. In the same amendment to our articles of incorporation, Erwin Vahlsing Jr., Thomas J Craft Jr. and Frederick J Puccillo Jr., resigned their positions as officers and directors of the Company.
The Company had the following issuances of stock subsequent to November 30, 2014;
In January 2015, the Company issued 791,176 common shares in connection with the conversion of $1,345 of convertible debentures and accrued interest. The conversions had an average price of $0.0017 per share.
In January 2015, the Company issued 791,593 common shares in connection with the conversion of $4,280 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In January 2015, the Company issued 831,481 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In January 2015, the Company issued 831,481 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In February 2015, the Company issued 832,075 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0053 per share.
In February 2015, the Company issued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and accrued interest. The conversions had an average price of $0.0040 per share.
In February 2015, the Company issued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and accrued interest. The conversions had an average price of $0.0040 per share.
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
Subsequent Events (continued)
In February 2015, the Company issued 2,560,000 common shares in connection with the conversion of 512 shares of Preferred B Shares.
In March 2015, the Company issued 831,633 common shares in connection with the conversion of $4,075 of convertible debentures and accrued interest. The conversions had an average price of $0.0049 per share.
In March 2015, the Company issued 832,075 common shares in connection with the conversion of $4,660 of convertible debentures and accrued interest. The conversions had an average price of $0.0056 per share.
In March 2015, the Company issued 328,182 common shares in connection with the conversion of $1,805 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 503,636 common shares in connection with the conversion of $4,575 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 2,545,000 common shares in connection with the conversion of 509 shares of Preferred B Shares.
In April 2015, the Company issued 3,395,000 common shares in connection with the conversion of 679 shares of Preferred B Shares.
In March 2015, the Company issued 3,730,000 common shares in connection with the conversion of 746 shares of Preferred B Shares.
In April 2015, the Company issued 2,067,073 common shares in connection with the conversion of $1,695 of convertible debentures and accrued interest. The conversions had an average price of $0.0008 per share.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| |
| CaerVision Global, Inc. |
Date: June 18, 2015
|
By: /s/ William Sanchez
|
William Sanchez, Chief Executive Officer and President |
Date: June 18, 2015
|
By: /s/ William Sanchez
|
William Sanchez, Chief Financial Officer, Secretary, and Treasurer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities indicated on the dates indicated.
| | |
Date | Signature | Title |
Date: June 18, 2015
|
/s/ William Sanchez
|
Director, and President
|
William Sanchez |
Date: June 18, 2015
|
/s/ William Sanchez
|
Director, Chief Financial Officer, Secretary, and Treasurer
|
William Sanchez |