The accompanying notes are an integral part of these consolidated financial statements.
F-5
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QuickLink to Financial Statements
|
|
Garb Oil & Power Corporation and Subsidiaries
|
|
Consolidated Statements of Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
(no par value)
|
|
Subscription
|
Accumulated
|
Total Stockholders'
|
|
|
Shares
|
Amount
|
|
Receivable
|
Deficit
|
Deficit
|
|
Balance, December 31, 2013
|
37,965,215,153
|
$
|
(15,713,804)
|
$
|
-
|
$
|
(15,741,437)
|
$
|
(31,455,241)
|
|
Common shares issued for services
|
960,000,000
|
|
106,000
|
|
-
|
|
-
|
|
106,000
|
|
Common shares issued for cash
|
4,063,188,182
|
|
133,896
|
|
-
|
|
-
|
|
133,896
|
|
Common shares issued upon conversion of notes payable and accrued interest
|
4,596,071,428
|
|
459,606
|
|
-
|
|
-
|
|
459,606
|
|
Class B preferred shares exchanged for Common shares
|
1,750,000,000
|
|
1,750,000
|
|
-
|
|
-
|
|
1,750,000
|
|
Common shares exchanged for Class B preferred shares
|
(1,836,896,307)
|
|
(459,225)
|
|
-
|
|
-
|
|
(459,225)
|
|
Subscription receivable
|
-
|
|
-
|
|
(403,815)
|
|
-
|
|
(403,815)
|
|
Net loss for the year ended December 31, 2014
|
-
|
|
-
|
|
-
|
|
(3,658,707)
|
|
(3,658,707)
|
|
Balance, December 31, 2014
|
47,497,578,456
|
|
(13,723,527)
|
|
(403,815)
|
|
(19,400,144)
|
|
(33,527,486)
|
|
Subscription receivable write-off
|
-
|
|
-
|
|
403,815
|
|
-
|
|
403,815
|
|
Net loss for the year ended December 31, 2015
|
-
|
|
-
|
|
-
|
|
(3,656,116)
|
|
(3,656,116)
|
|
Balance, December 31, 2015
|
47,497,578,456
|
$
|
(13,723,527)
|
$
|
-
|
$
|
(23,056,259)
|
$
|
(36,779,787)
|
The accompanying notes are an integral part of these consolidated financial statements.
F-6
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QuickLink to Financial Statements
|
|
Garb Oil & Power Corporation and Subsidiaries
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2015
|
|
2014
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
$
|
(3,656,116)
|
|
$
|
(3,658,707)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Depreciation expense
|
|
29,592
|
|
|
10,843
|
|
Common stock issued for services
|
|
-
|
|
|
106,000
|
|
Loss on write-off of subscription receivable
|
|
403,815
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
-
|
|
|
320,617
|
|
Amortization of debt discount
|
|
77,170
|
|
|
59,429
|
|
Loss on derivative liability valuation
|
|
1,550,620
|
|
|
2,159,980
|
|
Accretion of present value of capital lease
|
|
85,691
|
|
|
30,926
|
|
Loan fees
|
|
443,250
|
|
|
77,250
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
523,125
|
|
|
382,392
|
|
Accrued interest
|
|
324,299
|
|
|
259,169
|
|
Related party payable
|
|
8,173
|
|
|
(338)
|
|
Related party accrued interest
|
|
67,648
|
|
|
-
|
|
Wages and payroll taxes payable
|
|
133,000
|
|
|
90,514
|
|
Net cash used in operating activities
|
|
(9,733)
|
|
|
(161,925)
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from notes payable
|
|
5,040
|
|
|
99,250
|
|
Proceeds from notes payable – related parties
|
|
4,500
|
|
|
25,000
|
|
Payments on notes payable
|
|
-
|
|
|
(20,000)
|
|
Cash received on issuances of common stock
|
|
-
|
|
|
64,868
|
|
Payments on capital lease
|
|
-
|
|
|
(7,000)
|
|
Net cash provided by financing activities
|
|
9,540
|
|
|
162,118
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
(193)
|
|
|
193
|
|
Cash at beginning of period
|
|
196
|
|
|
3
|
|
Cash at end of period
|
$
|
3
|
|
$
|
196
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
Interest
|
$
|
-
|
|
$
|
-
|
|
Income taxes
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
Common shares issued for debt and accrued interest
|
$
|
-
|
|
$
|
138,990
|
|
Debt discount
|
$
|
10,040
|
|
$
|
124,250
|
|
Purchase of property, plant and equipment financed by capital lease
|
$
|
-
|
|
$
|
1,268,645
|
|
Adjustment to net present value for capital lease
|
$
|
85,913
|
|
$
|
-
|
|
Accounts payable reclassified to note principal
|
$
|
-
|
|
$
|
25,000
|
|
Wages payable reclassified to note payable
|
$
|
-
|
|
$
|
38,990
|
|
Accrued interest reclassified to note principal
|
$
|
16,814
|
|
$
|
21,469
|
|
Class B preferred shares exchanged for Common shares
|
$
|
-
|
|
$
|
1,290,774
|
|
Common shares for subscription receivable
|
$
|
-
|
|
$
|
69,028
|
|
Preferred shares for subscription receivable
|
$
|
-
|
|
$
|
334,787
|
The accompanying notes are an integral part of these consolidated financial statements.
F-7
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Garb Oil & Power Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Note 1 – Organization and Summary of Significant Accounting Principles
a. Organization To Date
Garb Oil & Power Corporation (the “Company” or “Garb”) was incorporated in the State of Utah in 1972 under the name Autumn Day, Inc. The Company changed its name to Energy Corporation International in 1978 and to Garb-Oil Corporation of America in 1981, which marked the start of the Company’s development state in the energy and recycling industries. The Company changed its name to Garb Oil & Power Corporation in 1985 and then to Garb Corporation in May 2013. In February 2014, the Company changed its name back to Garb Oil & Power Corporation.
The Company has a long history in the fast growing industry of waste recycling and specifically related to waste-to-energy, upon which the Company is building. Garb is organized to utilize both next-generation machines and new technologies to vertically integrate into the waste refinement, recycling and energy industries. The current revised company emphasis (effective August 21, 2013) is in profitable new and “green” solutions for waste-to-energy, alternate energy sources, gas drilling, fuel enhancements, improving energy usage efficiency and utilizing recycled material in producing both useful and desirable products manufactured in its own plants. The Company’s use of its first industrial manufacturing property and equipment will be to manufacture wood pellets to be used as an alternate power fuel and for farm and agricultural applications. In addition, this manufacturing facility will utilize power saving technology including the use of recycled materials as fuel that will result in lower operating costs. Also, excess electricity will be generated that may be sold back to the power company, thereby generating an additional source of revenue.
Effective August 21, 2013, all of the Company’s former executive officers and directors resigned. Also effective August 21, 2013, following the resignation of the Company’s former management, Ms. Tammy Taylor was appointed as the Company’s Chief Executive Officer, President and Principal Financial Officer, and Ms. M. Aimee Coleman was appointed as the Company’s Corporate Secretary and Principal Accounting Officer. Ms. Taylor was also appointed as the Company’s sole director.
b. Principles of Consolidation and Company Subsidiaries
The consolidated financial statements contained in this annual filing include the accounts of Garb and Garb Global Services, Inc. (“Garb Global”). All intercompany accounts and transactions have been eliminated in consolidation.
Garb Global Services, Inc.
On January 24, 2014 the Company signed a letter of intent (the “LOI”) and a collaborative effort agreement (the “CE Agreement”) with Shredderhotline.com Company (“Shredderhotline”) and Dan Scott Burda, Shredderhotline’s President/Owner. The LOI included a stock purchase equal to 10% of each stock classes’ authorized shares at the time of execution in exchange for $448,683 in total cash and other assets to the Company. The cash portion was $44,868. The shares by stock class issued February 4, 2014 was two restricted shares of the Company’s Class A preferred stock, 441,930 restricted shares of the Company’s Class B preferred stock and 3,796,521,515 restricted shares of the Company’s common stock. In general, the CE Agreement was a long-term collaboration with the intent of the Company receiving over time all of Shredderhotline’s assets including complete customers database, shredder patents and recycle plant designs. In addition, the CE Agreement provided that the two ranking executive officers of both companies’ would collaborate on future sales and operations within a newly formed wholly owned subsidiary of the Company, Garb Global Services, Inc. (“Garb Global”). On November 18, 2014, the Company and Shredderhotline mutually determined that their business interests had diverged and the Company and Shredderhotline released one another from their rights and obligations under the LOI and CE Agreement both dated January 24, 2014.Garb Global continues as a wholly owned operating subsidiary of the Company, but had no operations or activity during the year ended December 31, 2015 or 2014.
c. Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
d. Basis of Presentation - Going Concern
F-8
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The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. As shown in the consolidated financial statements, during the years ended December 31, 2015 and 2014, the Company has incurred a net loss of $3,656,116 and $3,658,707, respectively, and as of December 31, 2015, the Company’s accumulated deficit was $23,056,260. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate consistent cash flows to meet its obligations on a timely basis, to obtain additional financing as may be required, and its ability to continue its implementation of operations. Management is continuing its efforts to obtain the necessary financing as may be required to generate sufficient cash flows for current and future operations. Management is pursuing avenues of generating cash or revenues during the next twelve months. The Company is also attempting to interest purchasers, or potential purchasers, of shredders, recycling equipment and new tires, and establishing manufacturing plants. The Company also continues to pursue financing to build and operate its own waste refinement and recycling industrial manufacturing plants.
There is no assurance that the Company will be able to obtain additional cash flow from operations or to obtain additional financing. If these are not available to the Company, the Company may not be able to continue operations. While management remains confident that transactions will proceed, no assurances can be expressed as to the Company’s continuing viability in the absence of revenues. Current funding has come from operations and sales and the Company is currently in negotiations with several investment sources for equity investment in the company, which if successful, will satisfy long-term operations and capital expenditures. There are no guarantees that such negotiations will be successful.
e. Property and Equipment
Property and equipment is recorded at cost and is depreciated using the straight-line method based on the expected lives of the assets (see Note 2 – Property and Equipment). Leases determined to be capital leases are classified as being owned by the Company and recorded in accordance with ASC 840-30-30 where an asset and liability are recorded at the present value of the minimum lease terms. (Also see Note 10 – Capital Lease.)
The Company records impairment losses when indicators of impairment are present and undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. No impairment loss was recorded during the years ended December 31, 2015 and 2014.
f. Revenue Recognition To Date
Revenue is recognized when the following criteria are met: 1. persuasive evidence of an arrangement exists, which is generally in the form of a signed contract which specifies a fixed price, 2. the sales amount is determinable, 3. when title is transferred, which is when goods shipped to the customer has been received and accepted or services have been rendered, and 4. collection is reasonably assured. The Company engages in product sales.
g. Accounts Receivable/Allowance for Bad Debt
As of December 31, 2015 and December 31, 2014 the Company's receivables include $249,051 related to cash received by former management without supportive cash receipts and $350,000 of accounts receivable derived from sales of products and services to customers operating as recyclers and tire wholesalers. Amounts that have been invoiced are recorded in accounts receivable when revenue recognition criteria have been met. The Company's allowance for doubtful accounts is based on its historical bad debt experience and on current management's evaluation of its ability to collect individual outstanding balances. The Company had an allowance for doubtful accounts of $599,051 as of December 31, 2015 and December 31, 2014.
h. Advertising Costs
The Company expenses all advertising costs as incurred. The Company recorded $0 advertising expense for the years ended December 31, 2015 and 2014.
F-9
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i. Basic Income (Loss) Per Share
The following is an illustration of the reconciliation of the numerators and denominators of the basic loss per share calculation:
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2015
|
|
2014
|
|
Comprehensive loss (numerator)
|
$
|
(3,656,116)
|
$
|
(3,658,707)
|
|
Weighted average shares outstanding (denominator)
|
|
47,497,578,456
|
|
43,188,026,388
|
|
Basic loss per share
|
$
|
(0.00)
|
$
|
(0.00)
|
For the year ended December 31, 2015 and 2014, the Company had no common stock equivalents that are excluded from the computation of diluted earnings per share as their effect is anti-dilutive due to net losses.
j. Financial Instruments
Cash equivalents include highly liquid short-term investments with original maturities of three months or less, readily convertible to known amounts of cash. The amounts reported as cash, prepaid expenses, trade accounts payable and notes payable to related parties are considered to be reasonable approximations of their fair values. The fair value estimates presented herein were based on available market information for the year ended December 31, 2015. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. The reported fair values do not take into consideration potential expenses that would be incurred in an actual settlement.
k. Stock-Based Compensation
The Company records expense associated with the fair value of stock-based compensation. For fully vested stock and restricted stock grants the Company calculates the stock based compensation expense based upon estimated fair value on the date of grant. For stock options, the Company uses the Black-Scholes option valuation model to calculate stock based compensation at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate.
l. Concentration of Credit and Other Risks
The Company maintains cash in federally insured bank accounts. At times these amounts exceed insured limits. The Company does not anticipate any losses from these deposits.
The Company had no customers or sales for the year ended December 31, 2015. Sales recorded in 2014 were from a single customer.
m. Derivative Liability
The Company has embedded conversion options in its convertible notes payable, with conversion rates that prevent calculating the number of shares into which the notes could eventually be converted into. The Company values these conversion features using the Black Scholes option valuation model. The resulting derivative liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability valuation in the statement of operations. (Also see Note 7 – Derivative Liability and Note 9 – Derivative Liability – Related Party.)
n. Fair Value of Financial Instruments
The Company's financial instruments include accounts receivable, accounts payable and accrued expenses, related party payable, notes payable, related party notes payable and derivative liabilities. The principal balance of accounts receivable, accounts payable and accrued expenses, related party payable, notes payable and related party notes payable approximate fair value because current interest rates and terms available to the Company for similar instruments are substantially the same. Derivative liabilities are recorded at fair value.
The Company uses a framework for measuring fair value with a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
F-10
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Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
The fair value hierarchy for recurring fair value measurements is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
Fair Value Measurements at December 31, 2015
|
|
|
|
as of
|
|
Using Fair Value Hierarchy
|
|
|
|
December 31, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
$
|
3,787,124
|
|
$
|
-
|
|
$
|
-
|
|
$
|
3,787,124
|
|
Derivative liability – related party
|
$
|
57,766
|
|
$
|
-
|
|
$
|
-
|
|
$
|
57,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
Fair Value Measurements at December 31, 2014
|
|
|
|
as of
|
|
Using Fair Value Hierarchy
|
|
|
|
December 31, 2014
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
$
|
2,250,243
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2,250,243
|
|
Derivative liability – related party
|
$
|
33,987
|
|
$
|
-
|
|
$
|
-
|
|
$
|
33,987
|
(Also see Note 7 – Derivative Liability and Note 9 – Derivative Liability – Related Party)
o. Income Taxes
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
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. 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 is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statement of income.
p. Recent Accounting Standards
The Company does not expect the adoption of any recently issued accounting pronouncement to have a significant impact on its financial position, results of operations or cash flows.
q. Reclassifications
Certain reclassifications have been made to the 2014 financial statements in order for them to conform to 2015 presentation. Such reclassifications have no impact on the Company's financial position or results of operations.
F-11
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Note 2 – Property And Equipment
The major classes of property and equipment as of December 31, 2015 and 2014 are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Estimated Service Lives in Years
|
|
Property
|
$
|
1,182,732
|
|
$
|
1,268,645
|
|
39
|
|
Total property and equipment
|
|
1,182,732
|
|
|
1,268,645
|
|
|
|
Less accumulated depreciation
|
|
(40,435)
|
|
|
(10,843)
|
|
|
|
Property and equipment, net
|
$
|
1,142,297
|
|
$
|
1,257,802
|
|
|
Depreciation expense for the years ended December 31, 2015 and 2014 was $29,592 and $10,843, respectively.
Leases determined to be capital leases are classified as being owned by the Company and recorded in accordance with ASC 840-30-30 where an asset and liability are recorded at the present value of the minimum lease terms. The value of property decreased $85,913 to $1,182,732 as of December 31, 2015 from a balance of $1,268,645 as of December 31, 2014 due to a revised net present value calculation in accordance with ASC 840-30-35. The revised calculation took into account the purchase closing date being extended until September 30, 2016 and an additional $100,000 being added to the purchase price, for a total purchase price of $1,485,000. (Also see Note 10 – Capital Lease.)
Note 3 – Related Party Transactions
During the years ended December 31, 2015 and 2014, the Company accrued $133,000 and $137,500 in salaries to managers and directors of the Company.
During the year ended December 31, 2015, the Company did not approve or issue shares of stock to related parties.
In March 2014, the Company approved the issuance of 266,666,667 shares of Common Stock to Kindness Wave, Inc. for cash of $20,000. Tammy Taylor is a director of Kindness Wave, Inc.
In March 2014, Corporate Business Advisors, Inc. converted 700,000 shares of Class B Preferred Stock to 1,750,000,000 shares of Common Stock using a conversion rate of $2.50.
Related party payable consisted of the following at December 31, 2015 and 2014:
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Accounts payable to a related parties, due on demand, no interest, unsecured to:
|
|
|
|
|
|
|
Tammy Taylor, Chief Executive Officer
|
$
|
11,993
|
|
$
|
3,820
|
|
Corporate Business Advisors, Inc.
|
|
127
|
|
|
127
|
|
|
|
|
|
|
|
|
Total
|
$
|
12,120
|
|
$
|
3,947
|
For related party notes payable balances at December 31, 2015 and 2014, see Note 8 – Notes Payable - Related Party.
Related party accrued interest was $62,346 and $173 at December 31, 2015 and 2014, respectively.
For related party derivative liability balances at December 31, 2015 and 2014, see Note 9 – Derivative Liability - Related Party.
Note 4 – Income Taxes
The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes (“Topic 740”), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. At the adoption date of January 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of
F-12
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income taxes in the statements of operation in the provision for income taxes. As of December 31, 2015, the Company had no accrued interest or penalties related to uncertain tax positions.
The Company files income tax returns in the U.S. federal jurisdiction and in the state of Utah. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Net deferred tax liabilities consist of the following components as of December 31, 2015 and 2014.
|
|
|
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
Deferred tax assets:
|
|
|
|
|
|
|
NOL carryover
|
$
|
3,943,900
|
|
$
|
3,200,900
|
|
Allowance for doubtful accounts
|
|
233,600
|
|
|
233,600
|
|
Accrued wages
|
|
149,600
|
|
|
91,800
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
Depreciation
|
|
3,300
|
|
|
1,300
|
|
Valuation allowance
|
|
(4,330,400)
|
|
|
(3,527,600)
|
|
Net deferred tax liability
|
$
|
-
|
|
$
|
-
|
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates to pretax income from continuing operations for the years ended December 31, 2015 and 2014 due to the following:
|
|
|
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
Book income (loss)
|
$
|
(1,425,900)
|
|
$
|
(1,426,900)
|
|
Allowance for doubtful accounts
|
|
-
|
|
|
-
|
|
Accrued wages
|
|
51,900
|
|
|
15,200
|
|
Non-deductible meals and entertainment
|
|
-
|
|
|
100
|
|
Other non-deductible expenses
|
|
604,700
|
|
|
1,008,800
|
|
Valuation allowance
|
|
769,300
|
|
|
402,800
|
|
Income tax provision
|
$
|
-
|
|
$
|
-
|
At December 31, 2015, the Company had net operating loss carry forwards of approximately $10,112,000 that may be offset against future taxable income from the year 2016 through 2035. No tax benefit has been reported in the December 31, 2015 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Since a change in ownership has occurred during the year ended December 31, 2013, net operating loss carry forwards may be limited as to use in future years.
Note 5 – Commitments To Date
The Company has employment agreements with its current officers installed during August 2013. The Company’s current Chief Executive Officer, Tammy Taylor’s starting salary was $120,000 per year and the Company’s current Corporate Secretary, M. Aimee Coleman’s started part time at $250 per week, with hours over 10 hours a week at the hourly rate of $25 per hour. Company officers' salaries are determined by the Board and neither officer's salaries have increased from their respective starting salary. Both current officers agreed to allow unpaid salaries to accrue and be paid as operations’ cash flows improve. The terms of employment for the length of employment service of both agreements are open ended, at will for both parties, except for agreement violations’ remedies as specified.
F-13
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As of December 31, 2015 and 2014 the Company had accrued a total of $387,971 and $ 254,971 in wages and payroll taxes payable related to officer compensation. The following table is the information pertaining to the accrued wages for both the Company’s current and former officers for the fiscal years ended December 31, 2015 and December 31, 2014.
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|
|
|
|
|
|
|
Accrued wages by Name and Principal Position:
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Tammy Taylor
(1)
Current Chief Executive Officer
|
|
$
|
271,000
|
|
$
|
151,000
|
|
M Aimee Coleman
(1)
Current Corporate Secretary
|
|
|
30,500
|
|
|
17,500
|
|
Matt Shepard
(2)
Former Executive Vice President
|
|
|
70,000
|
|
|
70,000
|
|
Bill Anderson
(2)
Former Secretary
|
|
|
12,000
|
|
|
12,000
|
|
Total accrued wages
|
|
$
|
383,500
|
|
$
|
250,500
|
(1)
Mss. Taylor and Coleman have been the Company’s current executive officers in their respective capacity since August 21, 2013.
(2)
Mesrrs. Shepard and Anderson ceased to serve in his respective capacity as of June 11, 2010.
Note 6 – Notes Payable
Both secured and unsecured notes payable balance net of discounts as of December 31, 2015 and December 31, 2014 were $1,960,965, net of debt discounts of $414 and $1,454,062, net of debt discounts of $48,189, respectively.
January 1, 2003 Note
A $68,493 unsecured promissory note was entered into on January 1, 2003, is due on demand and plus interest of 12%. The balance of the Note as of December 31, 2015 and December 31, 2014 was $68,493, net of debt discounts of $0.
January 1, 2003 Note
A $165,000 unsecured promissory note was entered into on January 1, 2003, is due on demand and plus interest of 12%. The balance of the Note as of December 31, 2015 and December 31, 2014 was $165,000, net of debt discounts of $0.
January 21, 2003 Note
A $20,000 unsecured promissory note was entered into on January 21, 2003, is due on demand and plus interest of 10%. The balance of the Note as of December 31, 2015 and December 31, 2014 was $20,000, net of debt discounts of $0.
June 24, 2006 Note
A $53,000 promissory note was entered into on June 24, 2006 secured by sales contract and officer guarantee, is due on demand, plus interest of 12% and plus a $5,000 default interest penalty per week. During the year ended December 31, 2013, the Company and the note holder entered into a debt settlement agreement on this note and the January 3, 2002 Note that resulted in forgiveness of the June 24, 2006 Note principal over $35,000 and all accrued interest. During the year ended December 31, 2014, the Company paid $20,000 cash payments toward the June 24, 2006 Note that was settled as a principal only note. The balance of the Note as of December 31, 2015 and December 31, 2014 was $15,000, net of debt discounts of $0.
July 5, 2006 Note
A $2,250 unsecured promissory note was entered into on July 5, 2006, was due September 5, 2006, plus interest of 5% per month and is in default. The balance of the Note as of December 31, 2015 and December 31, 2014 was $2,250, net of debt discounts of $0.
July 5, 2006 Note
A $2,750 unsecured promissory note was entered into on July 5, 2006, was due September 5, 2006, plus interest of 5% per month and is in default. The balance of the Note as of December 31, 2015 and December 31, 2014 was $2,750, net of debt discounts of $0.
F-14
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October 11, 2007 Note
A $129,327 unsecured promissory note was entered into on October 11, 2007, is due on demand, plus interest of 18% from October 7, 2005 through January 6, 2006 then $500 per week through April 1, 2009, then $5,000 per month. During the year ended December 31, 2012, the Company issued a total of 15,250,000,000 shares of common stock at an average conversion price of $.000001, or $15,250 as repayment to the original debt holder for principal and accrued interest. During the year ended December 31, 2013 the original debt holder assigned $6,000 worth of note’s accrued interest. During the year ended December 31, 2012 the original debt holder assigned $49,000 worth of note’s principal and accrued interest. The balance of the October 11, 2007 Note owed to the original debt holder as of December 31, 2015 and December 31, 2014 was $327, net of debt discounts of $0.
During the year ended December 31, 2012, the Company issued a total of 6,350,000,000 shares of common stock at an average conversion price of $.000006, or $35,750, as repayment for a portion of the year ended December 31, 2012 Assigned October 11, 2007 Note. The Assigned October 11, 2007 Notes balances total $13,250 as of December 31, 2015 and December 31, 2014, net of debt discounts of $0.
December 31, 2009 Note
A $6,000 unsecured promissory note was entered into on December 31, 2009, is due on demand and plus interest of 36%. The balance of the Note as of December 31, 2015 and December 31, 2014 was $6,000, net of debt discounts of $0.
December 31, 2009 Note
A $7,500 unsecured promissory note was entered into on December 31, 2009, is due on demand and plus interest of 10%. The balance of the Note as of December 31, 2015 and December 31, 2014 was $7,500, net of debt discounts of $0.
December 31, 2009 Note
A $3,000 unsecured promissory note was entered into on December 31, 2009, is due on demand and plus interest of 36%. The balance of the Note as of December 31, 2015 and December 31, 2014 was $3,000, net of debt discounts of $0.
June 23, 2010 Note
On June 23, 2010 the Company converted $43,217 of accounts payable into an unsecured promissory note. The note bears interest at 6% per annum and is due on demand. The balance of the June 22, 2010 Note as of December 31, 2015 and December 31, 2014 was $43,217, net of debt discounts of $0.
June 29, 2010 Note
On June 29, 2010 the Company issued an unsecured promissory note to a professional services provider for $300,000 related to consulting services rendered. The note bears interest at 18% per annum and has a maturity date of July 1, 2010. The note agreement contains a 10% penalty clause if the Company fails to make payment at the maturity date. On July 2, 2010 the Company was in default of the note and recorded penalties of $30,296 to interest expense. During the year ended December 31, 2011, the professional services provider (“Assignor”) entered into $309,250 worth of certain assignment of debt agreements with several investors (“Assignees”) pursuant to which the Assignor granted, transferred and set over until the Assignees its right, title and interest in the June 29, 2010 Note including, without limitation, all rights, interest terms, benefits and advantages of the Assignor to be derived here from and burdens, obligations and liabilities to be derived thereunder. The balance of the June 29, 2010 Note owed to the professional services provider as of December 31, 2015 and December 31, 2014 was $21,046, net of debt discounts of $0.
During the year ended December 31, 2012, the Company issued a total of 324,285,714 shares of common stock at an average conversion price of $.00012, or $39,000, as repayment for several of the year ended December 31, 2011 Assigned June 29, 2010 Note. The Assigned June 29, 2010 Notes balances as of December 31, 2015 and December 31, 2014 was $57,000, net of debt discounts of $0.
December 29, 2010 Note
On December 29, 2010 the Company issued an unsecured promissory note to a professional services provider for $50,000 related to consulting services rendered. The note bears interest at 18% per annum and has a maturity date of December 31, 2010. The note agreement contains a 10% penalty clause if the Company fails to make payment at the maturity date. On December 31, 2010 the
F-15
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Company was in default of the Note and recorded penalties of $5,049 to interest expense. The balance of the December 29, 2010 Note as of December 31, 2015 and December 31, 2014 was $55,049, net of debt discounts of $0.
September 22, 2011 Note
On September 22, 2011 the Company issued an unsecured convertible note in the principal amount of $20,000 in exchange for $20,000 in cash consideration. The note bears interest at 8% per annum, has a maturity date of September 22, 2012 and has a 24% default interest rate should the note go into default. On September 23, 2012 the Company defaulted on the note and the note interest per annum increased to 24%. The balance of the September 22, 2011 Note as of December 31, 2015 and December 31, 2014 was $20,000, both net of debt discounts of $0.
October 1, 2011 Note
On October 1, 2011 the Company issued an unsecured promissory note to a professional services provider for $40,700 related to consulting services rendered. The note bears interest at 10% per annum and has a maturity date of April 1, 2012. On April 2, 2012 the Company defaulted on the note. The balance of the October 1, 2011 Note as of December 31, 2015 and December 31, 2014 was $40,700, both net of debt discounts of $0.
November 2, 2011 Note
On November 2, 2011 the Company issued an unsecured convertible note in the principal amount of $33,000 in exchange for $33,000 in cash consideration. The note bears interest at 8% per annum, has a maturity date of November 2, 2012 and has a 24% default interest rate should the note go into default. On November 3, 2012 the Company defaulted on the note and the note interest per annum increased to 24%. The balance of the November 2, 2011 Note as of December 31, 2015 and December 31, 2014 was $33,000, both net of debt discounts of $0.
December 30, 2011 Note 3
On December 30, 2011 the Company issued an unsecured promissory note in the principal amount of $22,000 in exchange for $22,000 in cash consideration. The note bears interest at 10% per annum and has a maturity date of June 30, 2012. On July 1, 2012 the Company defaulted on the note. The balance of the December 30, 2011 Note 3 as of December 31, 2015 and December 31, 2014 was $22,000, both net of debt discounts of $0.
March 7, 2012 Note
On March 7, 2012 the Company borrowed $10,000 pursuant to an unsecured convertible note. The note bears interest at 7% per annum and has a maturity date of January 24, 2013. The note agreement contains a change in the interest rate to 20% default interest rate should the note go into default. On January 25, 2013 the Company defaulted on the note and the note interest per annum increased to 20%. The balance of the March 7, 2012 Note as of December 31, 2015 and December 31, 2014 was $10,000, net of debt discounts of $0.
May 16, 2012 Note
On May 16, 2012 the Company borrowed $20,000 pursuant to an unsecured convertible note. The note bears interest at 15% per annum, has a maturity date of February 16, 2013, and unpaid accrued interest is added to the note’s principal balance at the end of each quarter. The note agreement contains a change in the interest rate to $500 per day default interest rate (or the highest rate allowed by law) should the note go into default. On February 17, 2013 the Company defaulted on the note and the note interest increased to $500 per day. The balance of the May 16, 2012 Note as of December 31, 2015 was $33,486 including added accrued interest to date of $13,486 and December 31, 2014 was $28,901 including added accrued interest to date of $8,901, both net of debt discounts of $0.
May 23, 2012 Note
On May 23, 2012 the Company borrowed $15,000 pursuant to an unsecured convertible note. The note bears interest at 15% per annum, has a maturity date of May 23, 2013, and unpaid accrued interest is added to the note’s principal balance at the end of each quarter. The note agreement contains a change in the interest rate to $500 per day default interest rate (or the highest rate allowed by law) should the note go into default. On May 24, 2013 the Company defaulted on the note and the note interest increased to $500 per day. The balance of the May 23, 2012 Note as of December 31, 2015 was $25,115 including added accrued interest to date of $10,115 and December 31, 2014 was $21,676 including added accrued interest to date of $6,676, both net of debt discounts of $0.
F-16
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June 16, 2012 Note
On June 16, 2012 the Company issued a $700,000 unsecured convertible note in exchange for consolidating and paying in full the unsecured notes’ outstanding principal and accrued interest that are identified below. The principal total of the notes consolidated into the June 16, 2012 Note was $544,787 with the Company recognizing the additional $155,213 principal as consulting services expense. The note bears interest at 6% per annum and has a maturity date of June 16, 2014. The note agreement contains a change in the interest rate to 24% default interest rate should the note go into default. On June 17, 2014 the Company defaulted on the note and the note interest per annum increased to 24%. During the year ended December 31, 2014, the Company issued a total of 1,428,571,429 shares of common stock at an average conversion price of $0.0007, or $100,000 as partial repayment of the June 16, 2012 Note. The balance of the June 16, 2012 Note as of December 31, 2015 and December 31, 2014 was $600,000, net of debt discounts of $0.
Notes consolidated into the June 16, 2012 Note
June 29, 2010 Note for consulting services, an assignee – $19,000 remaining assigned principal plus accrued interest
June 29, 2010 Note for consulting services, an assignee – $12,500 remaining assigned principal plus accrued interest
October 15, 2010 Note 1 for consulting services, an assignee – $25,000 assigned principal plus accrued interest
October 15, 2010 Note 2 for consulting services, an assignee – $25,000 assigned principal plus accrued interest
December 14, 2010 Note for cash received – $3,902 remaining principal plus accrued interest
January 24, 2011 Note for consulting services – $615 principal plus accrued interest
February 2, 2011 Note for consulting services – $500 principal plus accrued interest
February 24, 2011 Note for consulting services, an assignee – $16,000 remaining assigned principal plus accrued interest
April 1, 2011 Note 1 for consulting services – $1,336 principal plus accrued interest
April 1, 2011 Note 2 for consulting services, an assignee – $50,000 assigned principal plus accrued interest
May 12, 2011 Note for consulting services – $100,000 principal plus accrued interest
July 1, 2011 Note 1 for consulting services, an assignee – $10,500 assigned principal plus accrued interest
July 1, 2011 Note 2 for consulting services, an assignee – $30,000 assigned principal plus accrued interest
October 7, 2011 Note for cash received – $25,000 principal plus accrued interest
December 13, 2011 Note for consulting services – $7,000 principal plus accrued interest
January 13, 2012 Note for cash received – $25,000 principal plus accrued interest
February 15, 2012 Note for consulting services, an assignee – $22,500 assigned principal plus accrued interest
February 20, 2012 Note for consulting services, an assignee – $40,000 assigned principal plus accrued interest
July 2, 2012 Note
On July 2, 2012 the Company borrowed $15,000 pursuant to an unsecured convertible note. The note bears interest at 15% per annum, has a maturity date of July 2, 2013, and unpaid accrued interest is added to the note’s principal balance at the end of each quarter. The note agreement contains a change in the interest rate to $500 per day default interest rate (or the highest rate allowed by law) should the note go into default. The balance of the July 2, 2012 Note as of December 31, 2015 was $24,207 including added accrued interest to date of $9,207 and December 31, 2014 was $20,892 including added accrued interest to date of $5,892, both net of debt discounts of $0.
March 12, 2013 Note
On March 12, 2013 the Company borrowed $14,000 pursuant to an unsecured convertible note. The note bears interest at 10% per annum, has a maturity date of March 12, 2014, and accrues liquidating damages of $250 per day added to the principal balance of the note that may be settled to some lower amount at the time of payment in full. The note agreement contains a change in the interest rate to 20% default interest rate should the note go into default. On March 13, 2014 the Company defaulted on the note and the note interest per annum increased to 20%. The balance of the March 12, 2013 Note as of December 31, 2015 was $178,500 including $164,500 of accrued liquidating damages to date and December 31, 2014 was $87,250 including $73,250 of accrued liquidating damages to date, both net of debt discounts of $0.
April 17, 2013 Note
On April 17, 2013 the Company borrowed $3,000 pursuant to an unsecured promissory note. The note bears interest at 10% per annum and has a maturity date of June 15, 2013. On June 16, 2013 the Company defaulted on the note. The balance of the April 17, 2013 Note as of December 31, 2015 and December 31, 2014 was $3,000, net of debt discounts of $0.
F-17
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April 27, 2013 Note
On April 27, 2013 the Company borrowed $700 pursuant to an unsecured promissory note. The note bears interest at 10% per annum and has a maturity date of August 25, 2013. On August 26, 2013 the Company defaulted on the note. The balance of the April 27, 2013 Note as of December 31, 2015 and December 31, 2014 was $700, net of debt discounts of $0.
May 19, 2014 Note
On May 19, 2014 the Company entered into a $60,000 unsecured convertible note for $50,000 cash to be borrowed during the year ended December 31, 2014 plus a total of $10,000 in loan fees the Company recorded as an administrative expense as cash was borrowed. The note bears interest at 8% per annum and has a maturity date 12 months after cash is borrowed. The note agreement contains a change in the interest rate to 20% default interest rate should the note go into default and required 300,000,000 shares of Company’s common stock to be reserved, but was canceled on October 8, 2014. Also if the note should go into default, the note accrues liquidating damages of $1,000 per day added to the principal balance of the note that may be settled to some lower amount at the time of payment in full. During the year ended December 31, 2014 the Company borrowed $50,000 cash and incurred $10,000 in loan fees. $12,000 of the note has a maturity date of May 19, 2015, $6,000 of the note has a maturity date of July 3, 2015, and $42,000 of the note has a maturity date of September 18, 2015.
On May 20, 2015 the Company defaulted on the note and the entire note interest per annum increased to 20%. The balance of the May 19, 2014 Note as of December 31, 2015 was $286,000 including $226,000 of accrued liquidating damages to date, net of debt discounts of $0 and December 31, 2014 was $22,339, net of debt discounts of $37,661.
June 3, 2014 Note
On June 3, 2014 the Company entered into a $6,250 unsecured convertible note for a $5,000 cash loan plus $1,250 in documentation fees the Company recorded as an administrative expense. The note bears interest at 0% per annum and has a maturity date of June 3, 2015. The note agreement contains a change in the interest rate to 10% default interest rate should the note go into default, interest accruing from the June 3, 2014 Note date. On June 4, 2015 the Company defaulted on the note and the note interest per annum increased to 10% accruing from the June 3, 2014 Note date. The balance of the June 3, 2014 Note as of December 31, 2015 was $6,250, net of debt discounts of $0 and December 31, 2014 was $3,613, net of debt discounts of $2,637.
August 13, 2014 Note
On August 13, 2014 the Company borrowed $33,000 pursuant to a discounted unsecured convertible note amount of $46,500 when the note matures. The $13,500 discount will be an administrative expense once the note matures. The note bears interest at 0% per annum, has a maturity date of February 13, 2015 and has a 12% default interest rate should the note go into default. The note agreement required 3,000,000,000 shares of Company’s common stock to be reserved, but was canceled on September 23, 2014. On February 14, 2015 the Company defaulted on the note and the note interest per annum increased to 12%. The balance of the August 13, 2014 Note as of December 31, 2015 was $46,500, net of debt discounts of $0 and December 31, 2014 was $25,109, net of debt discounts of $7,891.
September 10, 2014 Note
On September 10, 2014 the Company entered into a $29,000 unsecured convertible note for $25,000 cash borrowed during the nine months ended June 30, 2012 plus $4,000 in loan fees the Company recorded as an administrative expense. The note bears interest at 8% per annum, has a maturity date of September 10, 2015, and accrues liquidating damages of $1,000 per day added to the principal balance of the note that may be settled to some lower amount at the time of payment in full. The note agreement contains a change in the interest rate to 20% default interest rate should the note go into default. On September 11, 2015 the Company defaulted on the note and the note interest per annum increased to 20%. The balance of the September 10, 2014 Note as of December 31, 2015 was $141,000 including $112,000 of accrued liquidating damages to date and December 31, 2014 was $29,000, both net of debt discounts of $0.
January 30, 2015 Note 1
On January 30, 2015 the Company borrowed $4,200 pursuant to a discounted unsecured convertible note amount of $5,040. The Company recorded the $840 discount at inception of the note. The note bears interest at 8% per annum and has a maturity date of January 30, 2016. The note agreement contains a change in the interest rate to 20% default interest rate or the highest allowed by law should the note go into default and requires the Company to reserve 100,000,000 shares of the Company’s common stock. The balance of the January 30, 2015 Note 1 as of December 31, 2015 was $4,626, net of debt discounts of $414.
F-18
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Note 7 - Derivative Liability
The Company’s derivative liability consists of the embedded conversion feature of its convertible notes payable. As the notes payable have conversion rates that prevent calculating the number of shares into which they can convert, the conversion feature has been separated from the underlying notes and valued as a derivative liability.
Prior to 2014, it was believed that previous management could cause the counterparties to overlook this conversion feature, and settle for the value of the notes themselves. So they estimated the fair value of the derivative liability was zero. In 2014, new management reassessed the nature of the notes payable and determined that a possibility exists that the conversion feature could be utilized by holders of the notes. As a result, the Company estimated the fair value of the derivative liability as of December 31, 2015 was $3,787,124 and December 31, 2014 was $2,250,243.
Following is a table showing activity in the derivative liability account.
|
|
|
|
Balance January 1, 2014
|
$
|
-
|
|
Additions
|
|
-
|
|
Deletions
|
|
-
|
|
Change in derivative liability
|
|
2,250,243
|
|
Balance December 31, 2014
|
|
2,250,243
|
|
Additions
|
|
5,040
|
|
Deletions
|
|
-
|
|
Change in derivative liability
|
|
1,531,841
|
|
Balance December 31, 2015
|
$
|
3,787,124
|
The derivative liability was valued using the Black Scholes option valuation model with the following inputs.
|
|
|
|
Expected life in years
|
|
1.00
|
|
Stock price volatility
|
|
202.0%
|
|
Discount rate
|
|
0.575%
|
|
Expected dividends
|
|
None
|
Note 8 - Notes Payable - Related Party
Unsecured related party notes payable balance net of discounts as of December 30, 2015 was $185,475, net of debt discounts of $0 and December 31, 2014 was $155,645, net of debt discounts of $19,355.
September 26, 2013 Note
On September 26, 2013 the Company issued an unsecured promissory note to Corporate Business Advisors, Inc. for $150,000 as part of a non-cash select assets and liabilities purchase agreement. The note bears no interest and has a maturity date of August 31, 2014. On September 1, 2014 the Company defaulted on the note. On May 18, 2015, the Company issued a second unsecured promissory note to Corporate Business Advisors, Inc. in regard to the defaulted September 26, 2013 Note which increased the note interest to 18% on all unpaid principal balances since the original note's balance was created and continues until the note principal balance is paid in full. The balance of the September 26, 2013 Note as of December 31, 2015 and December 31, 2014 was $150,000, net of debt discounts of $0.
December 17, 2014 Note
On December 17, 2014 the Company entered into a $25,000 unsecured convertible note with Corporate Business Advisors, Inc. for $24,500 in total cash loans to date plus $500 in documentation fees the Company recorded as an administrative expense. The note bears interest at 18% per annum, has a maturity date of February 17, 2015, and has a 24% default compound interest rate should the note remain in default after a five day grace period. On February 22, 2015 the Company remained defaulted on the note and the note interest increased to 24% compound interest. The balance of the December 17, 2014 Note as of December 31, 2015 was $30,475 including added accrued interest to date of $5,475, net of debt discounts of $0 and December 31, 2014 was $5,645, net of debt discounts of $19,355.
F-19
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January 30, 2015 Note 2
On January 30, 2015 the Company borrowed $4,500 pursuant to a discounted unsecured convertible note amount of $5,000. The Company recorded the $500 discount at inception of the note. The note bears interest at 18% per annum and has a maturity date of March 16, 2015. The note agreement contains a change in the interest rate to 24% default interest rate or the highest allowed by law should the note go into default. On March 17, 2015 the Company defaulted on the note and the note interest per annum increased to 24%. The balance of the January 30, 2015 Note 2 as of December 31, 2015 was $5,000, net of debt discounts of $0.
Note 9 - Derivative Liability – Related Party
The Company’s derivative liability – related party consists of the embedded conversion feature of its convertible notes payable to a related party. As the notes payable to a related party have conversion rates that prevent calculating the number of shares into which they can convert, the conversion feature has been separated from the underlying notes and valued as a derivative liability – related party. During the year ended 2014, the Company entered into one convertible note payable to a related party. The estimated fair value of derivative liability – related party at December 31, 2015 was $57,766.
Following is a table showing activity in the derivative liability – related party account.
|
|
|
|
Balance January 1, 2014
|
$
|
-
|
|
Additions
|
|
-
|
|
Deletions
|
|
-
|
|
Change in derivative liability
|
|
33,987
|
|
Balance December 31, 2014
|
|
33,987
|
|
Additions
|
|
5,000
|
|
Deletions
|
|
-
|
|
Change in derivative liability
|
|
18,779
|
|
Balance December 31, 2015
|
$
|
57,766
|
The derivative liability – related party was valued using the Black Scholes option valuation model with the following inputs.
|
|
|
|
Expected life in years
|
|
1.00
|
|
Stock price volatility
|
|
202.0%
|
|
Discount rate
|
|
0.575%
|
|
Expected dividends
|
|
None
|
Note 10 – Capital Lease
On September 1, 2014, the Company entered into a lease to own lease agreement for an office and warehouse’s 16,838 square foot portion of the property’s total 55,785 square foot space. The lease is considered a capital lease, therefore the building asset and an offsetting note payable has been recorded on the Company’s books. Lease payments are $7,000 per month with $5,000 per month being applied to the $1,385,000 purchase price. On January 5, 2016, the Company entered into an unsecured promissory note for the unpaid rents and utilities for $109,500. The promissory note carries 0% interest and is due on January 5, 2017. On February 9, 2016, the Company entered into a new lease to own lease agreement for the same property to extend the term dates beyond the original agreement including extensions and to add an additional $100,000 due at closing as a hold over fee. In addition, the unpaid rents and utilities promissory note was accelerated to be due on June 30, 2016. These agreements that were entered into subsequent to the balance sheet date required retroactive reporting as of the balance sheet date. The balance of the February 9, 2016 capital lease agreement as of September 30, 2015 was $1,292,349. The balance of the September 1, 2014 capital lease agreement as of December 31, 2014 was $1,292,571.
The Company's capital lease mentioned above is classified as being owned by the Company and recorded in accordance with ASC 840-30 where an asset and liability are recorded at the present value of the minimum lease terms. The amendments to the lease described above resulted in an $84,913 adjustment to the net present value of the capital lease during the year ending December 31, 2015 in accordance with ASC 840-30-35.
F-20
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Following is a table showing the activity in the Capital Lease Payable account for the years ended December 31, 2015 and 2014.
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|
|
|
Balance January 1, 2014
|
$
|
-
|
|
Net present value at inception
|
|
1,268,645
|
|
Payments on capital lease
|
|
(7,000)
|
|
Accretion of present value of capital lease
|
|
30,926
|
|
Balance December 31, 2014
|
|
1,292,571
|
|
Adjustment to net present value of capital lease
|
|
(85,913)
|
|
Accretion of present value of capital lease
|
|
85,691
|
|
Balance December 31, 2015
|
$
|
1,292,349
|
Note 11 – Equity
On May 20, 2013 and on June 12, 2014 the Company filed amendments with the Utah Secretary of State amending Article IV of the Corporation Articles of Incorporation such that the Authorized capital stock of the Company is as stated below.
Authorized capital stock consists of:
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|
50,000,000,000 common shares with no par value;
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1,000,000 preferred Class A shares with a par value of $0.0001 per share; and
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|
10,000,000 preferred Class B shares with a par value of $2.50 per share.
|
Changes in par values have been retroactively reported in the Company's financial statements.
A summary of the pertinent rights and privileges of the classes of preferred stock are as follows:
Class A Preferred Stock
Conversion Rights
-Each outstanding share of Class A Preferred Stock shall be convertible, at the option of the holder into shares of Common Stock equal to (i) four times the total number of shares of Common Stock which are issued and outstanding at the time of such conversion
plus
(ii) the total number of shares of Class B Preferred Stock which are issued and outstanding at the time of such conversion
minus
(iii) the number of other shares of Class A Preferred Stock issued and outstanding immediately prior to the time of such conversions.
Voting Rights
-The total aggregate issued shares of Class A Preferred Stock shall have aggregate right to a number of votes equal to (i) four times the total number of shares of Common Stock which are issued and outstanding at the time of voting,
plus
(ii) the total number of shares of Class B Stock which are issued and outstanding at the time of voting
minus
(iii) the number of shares of Class A Preferred Stock issued and outstanding at the time of voting.
Class B Preferred Stock
On May 20, 2013 and on June 12, 2014 the Company filed amendments with the Utah Secretary of State amending Article IV of the Corporation Articles of Incorporation such that the Authorized capital stock of the Company is as stated below for Class B Preferred Stock. The change in Class B Preferred Stock’s par value to $2.50 has been retroactively reported in the Company's financial statements.
Dividends
-Class B shareholders shall be entitled to receive dividends, when, as and if declared by the Board of Directors.
Conversion Rights
-Each share of Class B Preferred Stock shall be convertible into the number of shares of Common Stock equal to the Class B Preferred Stock, $2.50 par value, to the proportional calculation of converting to common stock based on the total par value of the Class B Preferred Stock being converted, divided by the average closing price per share of the Company’s common stock over the preceding 10 trading days.
Voting Rights
-Each share of Class B Preferred Stock shall have ten votes.
F-21
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Common Stock
Common Shares Issued for Services
During the year ended December 31, 2015, the Company did not issue common stock as payment for services.
During the year ended December 31, 2014, the Company issued a total of 960,000,000 shares of common stock at an average per share purchase price of $0.00011, or $106,000. The Company issued these shares as payment for various outside services received including investor relations, consulting and marketing related services and recorded the value in general and administrative expenses during the year ended December 31, 2014.
Common Shares Issued for Cash
During the year ended December 31, 2015, the Company did not issue common stock as payment for cash.
During the year ended December 31, 2014, the Company issued a total of 4,063,188,182 shares of common stock for cash at an average price of $0.00003 or $133,896 in the aggregate and was valued at the purchase price according to the respective stock purchase agreement.
Common Shares Issued for Debt and Accrued Interest
During the year ended December 31, 2015, the Company did not issue common stock as payment for debt and accrued interest.
During the year ended December 31, 2014, the Company issued a total of 4,596,071,428 shares of common stock at an average price of $0.0001 or $459,606 in the aggregate, as discussed in Note 6 – Notes Payable.
Common Stock converted to Class B Preferred Stock
During the year ended December 31, 2015, the Company did not issue Class B Preferred stock as conversion for common stock.
During the year ended December 31, 2014, 1,836,896,307 shares of Common Stock were converted to 183,690 shares of Class B Preferred Stock at the conversion rate of $0.00025.
Class A Preferred Stock
Class A Preferred Shares Issued for Cash
During the year ended December 31, 2015, the Company did not issue Class A Preferred stock as payment for cash.
During the year ended December 31, 2014, the Company issued a total of 2 shares of Class A Preferred stock for cash at an average price of $1,670 or $3,340 in the aggregate and was valued at the purchase price according to the respective stock purchase agreement.
Class B Preferred Stock
Class B Preferred Shares Issued for Cash
During the year ended December 31, 2015, the Company did not issue Class B Preferred stock as payment for cash.
During the year ended December 31, 2014, the Company issued a total of 441,930 shares of Class B Preferred stock for cash at an average price of $0.75 or $331,448 in the aggregate and was valued at the purchase price according to the respective stock purchase agreement.
Class B Preferred Stock converted to Common Stock
During the year ended December 31, 2015, the Company did not issue common stock as conversion for Class B Preferred stock.
During the year ended December 31, 2014, 700,000 shares of Class B Preferred Stock were converted to 1,750,000,000 shares of Common Stock at the conversion rate of $2.50.
F-22
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Subscription Receivable
In January 2014, the Company approved the issuance of 3,796,521,515 shares of Common Stock, 2 shares of Class A Preferred Stock, and 441,930 shares of Class B Preferred Stock to Shredderhotline.com Company for $448,683 in total cash and other assets to the Company. The terms of the sale was $44,868 cash and the remaining $403,815 as other assets to be transferred to the Company, recognized as Subscription Receivable on the Company’s books. The balance of Subscription Receivable as of December 31, 2014 was $403,815. During the year ended December 31, 2015, $403,815 of Subscription Receivable was written off to expense. The balance of Subscription Receivable as of December 31, 2015 was $0. (Also see Note 1a.)
Note 12 – Stock Options/Stock-Based Compensation and Warrants
During the years ended December 31, 2015 and 2014 no options or warrants were issued by the Company and no expense was recognized related to any outstanding options or warrants.
Changes in stock options for the years ended December 31, 2015 and 2014 consisted of the following:
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|
|
|
|
|
|
|
|
|
Number of
shares
|
|
Weighted Average Exercise Price
|
|
Remaining Contractual Term (in years)
|
|
Intrinsic
Value
|
|
Beginning balance January 1, 2014
|
100,500,000
|
|
$
|
0.01
|
|
0.84
|
|
$
|
-
|
|
Granted
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
-
|
|
|
|
|
|
|
|
|
|
Forfeited/expired
|
100,000,000
|
|
$
|
0.45
|
|
|
|
|
|
|
Outstanding at December 31, 2014
|
500,000
|
|
$
|
0.45
|
|
0.04
|
|
$
|
-
|
|
Granted
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
-
|
|
|
|
|
|
|
|
|
|
Forfeited/expired
|
(500,000)
|
|
$
|
0.45
|
|
|
|
|
|
|
Outstanding at December 31, 2015
|
-
|
|
$
|
-
|
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2014
|
500,000
|
|
$
|
0.45
|
|
0.04
|
|
$
|
-
|
|
Exercisable at December 31, 2015
|
-
|
|
$
|
-
|
|
-
|
|
$
|
-
|
Note 13 – Subsequent Events
The Company has evaluated subsequent events pursuant to ASC Topic 855 from the balance sheet date through the date of this filing and determined that the following subsequent events have occurred.
On January 5, 2016, the Company entered into an unsecured promissory note for the unpaid rents and utilities for $109,500. The promissory note carries 0% interest and is due on January 5, 2017. On February 9, 2016, the Company entered into a new lease to own lease agreement for the same property to extend the term dates beyond the original agreement including extensions and to add an additional $100,000 due at closing as a hold over fee. In addition, the unpaid rents and utilities promissory note was accelerated to be due on June 30, 2016.
On April 20, 2016 the Company borrowed $20,000 pursuant to a discounted secured convertible note. The note bears interest at 12% per annum and has a maturity date of April 20, 2017. The note agreement contains a change in the interest rate to 24% default interest rate should the note go into default and requires the Company to reserve 500,000,000 shares of the Company’s common stock.
On April 20, 2016 the Company borrowed $20,000 pursuant to a discounted secured convertible note. The note bears interest at 12% per annum and has a maturity date of April 20, 2017. The note agreement contains a change in the interest rate to 24% default interest rate should the note go into default and requires the Company to reserve 500,000,000 shares of the Company’s common stock.
F-23
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our current management, including our Chief Executive Officer and Corporate Secretary as our Principal Accounting Officer (the “Certifying Officers”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2015. Based upon that evaluation, the Certifying Officers concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. We identified material weaknesses as discussed below in the report of management on internal control over financial reporting.
Report of Management on Internal Control over Financial Reporting.
Our current management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Our current internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Certifying Officers evaluated the effectiveness of the Company’s internal control over financial reporting and concluded that, as of the end of the period covered by this report, the Company’s internal control over financial reporting was not effective. Our internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in
Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission and has concluded that as of the end of the period covered by this report, our internal control over financial reporting was not effective.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to the Company’s annual or interim financial statements will not be prevented or detected. In connection with our evaluation of the effectiveness of our internal control over financial reporting, management identified the following material weaknesses:
·
We lacked the controls necessary to ensure timely filings of our SEC filings,
·
We lacked the controls necessary to ensure recorded amounts were accurately stated (resulting in multiple audit adjustments), and
·
We lacked sufficient segregation of duties.
We believe that our consolidated financial statements contained in this Annual Report on Form 10-K fairly present our financial position, results of operations and cash flows for the fiscal year ended December 31, 2015 in all material respects.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s Report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only Management’s Report in this Annual Report.
11
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Changes in Internal Control Over Financial Reporting.
There has been a change in our internal control over financial reporting during the year ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. The Company is utilizing an outside accountant to review monthly expenses to ensure all moneys used are for business expenditures only.
Item 9B. Other Information
In order for the Company to have effective and strong internal controls over financial reporting, we believe the Company needs to be able to financially support bringing in-house the accounting and financial reporting functions. Management will be bringing in-house the accounting and financial reporting functions once we have consistent revenues to justify adding additional employees. This will include the Company obtaining a full time Chief Financial Officer.
12
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following sets forth information about our current directors and officers of the Company.
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Name
|
|
Age
|
|
Position
|
|
Tammy Taylor
|
|
48
|
|
CEO, President, Director, (Principal Financial Officer)
|
|
M. Aimee Coleman
|
|
43
|
|
Corporate Secretary (Principal Accounting Officer)
|
The term of office of each director is one year or until his or her successor is elected at the Company’s annual meeting and qualified. The term of office for each officer of the Company is at the pleasure of the Board.
Tammy Taylor
has been our President and Chief Executive Officer since August 21, 2013. With over 25 years combined experience in the business, sales, real estate and human services industries and as a business owner for over 10 years, Ms. Taylor has gained a wealth of experience in all aspects of running a successful company. Ms. Taylor has the ability to be strategic, detailed and thorough when presented with any type of business challenge. Mr. Taylor has the ability to analyze an issue and then develop and implement successful solutions in the development of new businesses and markets. With her combined experience in a number of business industries, Ms. Taylor serves with passion and is driven to make any professional experience a success.Ms. Taylor has been a licensed real estate agent in Florida since 2005 and the President of Tammy Taylor, PA, a company she founded in 2008 that has been engaged in locating buyers and sellers of commercial and residential properties. Ms. Taylor founded Hope4UsNow, Inc. in 2012 and The Kindness Wave, Inc. in 2011 which operate online inspirational communities. Ms. Taylor served as a board member of the Pinellas Realtor Organization and the Florida Realtors Association from 2008 to 2010. She is also the former Chairman of the International Council for the Pinellas Realtor Organization in 2010 and has served on the Grievance, Government Relations and Political Action Committees 2008 to 2010. Ms. Taylor earned sales and service awards six consecutive years as a realtor since 2005, including top new real estate agent in Pinellas County, Florida. She has also been a spokesperson for the American Cancer Society. Ms. Taylor earned a B.A. in Business/Organizational Development from Rosemont College in 1988.
We believe that Ms. Taylor’s significant business, sales and management experience qualifies her to serve as a member of our board.
M. Aimee Coleman
has been our Corporate Secretary and Principal Accounting Officer since August 28, 2013. Ms. Coleman has over 25 years of accounting and office management experience. Her experience includes major accounting and business software applications, attention to back office operations that have provided major contributions to companies operations. She has proved to be instrumental in the accurate and timely efforts required to move companies forward as quickly as possible including her current position as bookkeeper at Brookridge Community Property Owners, Inc. where she has been employed since November 2008. In 1994, Ms. Coleman received an Associate in Arts and Sciences degree in Chemistry from Community College of the Finger Lakes.
Family Relationships
There are no family relationships among any of our officers and directors.
Conflicts of Interest
There are no conflicts of interest that are inherent in the relationships between our officers and directors.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past 10 years that resulted in a judgment, decree, or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons,” none of our directors, director nominees, or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.
13
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Corporate Governance
Our board has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committee performing a similar function. The functions of those committees are being undertaken by our board. Because we do not have any independent directors, our board believes that the establishment of committees of our board would not provide any benefits to our Company and could be considered more form than substance.
We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor have our officers and directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our officers and directors have not considered or adopted any of these policies as we have not received a recommendation from any stockholder for any candidate to serve on our board of directors.
Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our board will participate in the consideration of director nominees.
As with most small, early stage companies until such time as our Company further develops our business, achieves a stronger revenue base and has sufficient working capital to purchase directors’ and officers’ insurance, we do not have any immediate prospects to attract independent directors. When we are able to expand our board to include one or more independent directors, we intend to establish an audit committee of our board of directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include “independent” directors, nor are we required to establish or maintain an audit committee or other committee of our board.
Code of Ethics
The Company has adopted a written code of ethics applicable to its principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, which complies with the requirement to adopt such a code of ethics and is available on the Company’s website at www.garbreorg.com. We intend to post any amendments to the code, or any waivers of its requirements related to certain matters, on our website.
Board Oversight in Risk Management
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including liquidity risk, operational risk, strategic risk and reputation risk. Our Chief Executive Officer also serves as our sole director and therefore, we do not have a lead director. In the context of risk oversight, at the present stage of our operations, we believe that our selection of one person to serve in both positions provides the board with additional perspective which combines the operational experience of a member of management with the oversight focus of a member of the board. The business and operations of our company are managed by our board as a whole, including oversight of various risks that our company faces.
Section 16 Compliance
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% percent of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 2015 all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with.
Item 11. Executive Compensation
2015 Summary Compensation Table
The following table is the information pertaining to the total compensation for both the Company’s current and former executive officers for the fiscal years ended December 31, 2015 and December 31, 2014.
14
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|
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|
|
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|
|
Name and Principal Position
|
|
Fiscal Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
Total
($)
|
|
Tammy Taylor
(1)
|
|
2015
|
|
$
|
120,000
|
|
$
|
-
|
|
$
|
120,000
|
|
Current Chief Executive Officer
|
|
2014
|
|
$
|
120,000
|
|
|
-
|
|
$
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M Aimee Coleman
(1)
|
|
2015
|
|
$
|
13,000
|
|
$
|
-
|
|
$
|
13,000
|
|
Current Corporate Secretary
|
|
2014
|
|
$
|
13,000
|
|
$
|
-
|
|
$
|
13,000
|
(1)
Mss. Taylor and Coleman have been the Company’s current executive officers in their respective capacity since August 21, 2013.
All or substantially all of the listed salary amounts for current officers were being accrued rather than paid in cash.
The Company currently has two employment agreements with its officers or directors and has no retirement, profit sharing, pension or insurance plans, agreements or understanding covering them.
Compensation of Directors
The Company’s directors received no compensation. Directors who are or were also employees (only Ms. Taylor) are not paid for board services in addition to their regular employee compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
A change in control of the Company occurred on August 21, 2013.
The following tables set forth certain information, as of May 9, 2016, with the respect of beneficial ownership of the Company’s outstanding common stock and preferred stock by (i) any holder of more than five (5%) percent, (ii) each of the Company’s executive officers and directors and (iii) the Company’s executive officers and directors as a group.
Unless otherwise indicated, the business address of each person listed is in care of Garb Oil & Power Corporation, 1185 Gooden Xing, Building C, Largo FL 33778. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of the Company’s stock owned by them.
Class A Preferred Stock
(1)
|
|
|
|
|
|
Name and Address of Stockholder
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percentage of
Preferred Classes
(1)
|
|
Tammy Taylor
(2)
|
|
2
(3)
|
|
8.3%
|
|
M. Aimee Coleman
(4)
|
|
1
|
|
4.2%
|
|
|
|
|
|
|
|
All executive officers and directors as a group (two persons)
|
|
3
|
|
12.5%
|
|
|
|
|
|
|
|
Corporate Business Advisors, Inc.
(5)
Rachelle Hoffmann,
President and Registered Agent
|
|
19
(1)
|
|
79.2%
|
|
Dan Scott Burda
|
|
2
|
|
8.3%
|
(1)
The voting rights of each share of the Class A Preferred Stock is equal to its percent of total outstanding Class A Preferred Shares times the product of four times the sum of all other outstanding classes of the Company’s stock (Class B Preferred Stock and Common Stock). As of May 9, 2016 there are 24 shares of Class A Preferred Stock outstanding with each share of Class A Preferred Stock holding 7,933,666,396 voting rights, a total of 190,407,993,496 votes in the aggregate.
(2)
Tammy Taylor is the Company’s Director, Chief Executive Officer and President and is the President of Hope4UsNow, Inc.
(3)
The number of shares owned by Ms. Taylor includes 2 shares of the Class A Preferred Stock currently outstanding and owned by Hope4UsNow, Inc. Ms. Taylor has voting and dispositive control over securities held by Hope4UsNow, Inc.
(4)
M. Aimee Coleman is the Corporate Secretary and Principal Accounting Officer.
(5)
Ms. Rachelle Hoffman who is the President of Corporate Business Advisors, Inc. has voting and dispositive control over securities held by Corporate Business Advisors, Inc.
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Class B Preferred Stock
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|
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Name and Address of Stockholder
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Amount and Nature of
Beneficial Ownership
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Percentage of
Preferred Classes
(1)
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Tammy Taylor
(2)
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0
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0%
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M. Aimee Coleman
(3)
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0
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0%
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All executive officers and directors as a group (two persons)
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0
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0%
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Corporate Business Advisors, Inc.
(4)
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3,600,000
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81.4%
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Dan Scott Burda
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441,930
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10.0%
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(1)
Each share of Class B Preferred Stock is entitled to 10 votes per share. As of May 9, 2016 there are 4,419,918 shares of Class B Preferred Stock outstanding with each share of Class B Preferred Stock holding 10 voting rights, a total of 44,199,180 votes.
(2)
Ms. Taylor is Director, Chief Executive Officer and President is the President of Hope4UsNow, Inc. Ms. Taylor has voting and dispositive control over securities held by Hope4UsNow, Inc.
(3)
Ms. Coleman is the Company’s Corporate Secretary and Principal Accounting Officer.
(4)
Ms. Rachelle Hoffman who is the President of Corporate Business Advisors, Inc. has voting and dispositive control over securities held by Corporate Business Advisors, Inc.
Common Stock
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Name and Address of Stockholder
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Amount and Nature of
Beneficial Ownership
|
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Percentage of
Common
(1)
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Tammy Taylor
(2)
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566,666,667
(2)
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1.2%
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M. Aimee Coleman
(3)
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600,000,000
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1.3%
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All executive officers and directors as a group (two persons)
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1,166,666,667
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2.5%
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Corporate Business Advisors, Inc.
(4)
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2,350,000,000
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4.9%
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Dan Scott Burda
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3,796,521,515
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8.0%
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(1)
Amounts based on 47,497,578,456 shares of Common Stock outstanding as of May 9, 2016.
(2)
Ms. Taylor is Director, Chief Executive Officer and President who is Managing Director of Hope4UsNow, Inc. that owns 300,000,000 Common shares. Ms. Taylor has voting and dispositive control over securities held by Hope4UsNow, Inc. She is also partial owner of The Kindness Wave, Inc. that purchased 266,666,667 Common shares.
(3)
Ms. Coleman is the Corporate Secretary and Principal Accounting Officer.
(4)
Ms. Rachelle Hoffman who is the President of Corporate Business Advisors, Inc. has voting and dispositive control over securities held by Corporate Business Advisors, Inc.
Item 13. Certain Relationships and Related Transactions, and Director Independence
On August 21, 2013, the Company executed an employment agreement with Tammy Taylor. Ms. Taylor’s starting base salary approved by the Board was $10,000 per month. To date the Board has not approved a change in Ms. Taylor’s starting salary amount. The terms of employment for the length of employment service included in Ms. Taylor’s employment agreement is open ended, at will for both parties, except for agreement violations’ remedies as specified.
On August 28, 2013, the Company executed an employment agreement with M Aimee Coleman. The Board approved Ms. Coleman starting part time at $250 per week, with hours over 10 hours a week at the hourly rate of $25 per hour. To date the Board has not approved a change to Ms. Coleman’s starting part time status or weekly wage amount. The terms of employment for the length of employment service included in Ms. Coleman’s employment agreement is open ended, at will for both parties, except for agreement violations’ remedies as specified.
Accounts payable to related parties was $12,120 and $3,947 as of the years ended December 31, 2015 and 2014, respectively.
Notes payable to related parties was $180,475 and $155,645 as of the years ended December 31, 2015 and 2014, respectively.
16
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Director Independence
We did not, during the fiscal year ended December 31, 2015, and currently, we do not, have any independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination.
The Company’s board of directors does not have a separately designated audit, nominating or compensation committee.
Item 14. Principal Accountant Fees and Services
The following table shows the fees that were billed for the audit and other services for the fiscal years ended December 31, 2015 and December 31, 2014.
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2015
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2014
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Audit Fees
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$
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32,750
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$
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32,700
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Audit-related Fees
|
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-
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-
|
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Tax Fees
|
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-
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|
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-
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All other fees
|
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-
|
|
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-
|
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Total Fees
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$
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32,750
|
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$
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32,700
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Audit Fees
– This category includes the audit of our annual financial statements, review of financial statements included in our quarterly reports and services that are normally provided by the independent registered public accounting firm in connection with engagements for those years and services that are normally provided by our independent registered public accounting firm in connection with statutory audits and Securities and Exchange Commission regulatory filings or engagements.
Audit-Related Fees
– This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”.
Tax Fees
– This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
Other Fees
– This category consists of fees for the audits on the financial statements of our client companies and all other miscellaneous items.
Pre-Approval Policies and Procedure for Audit and Permitted Non-Audit Services
The Company has not adopted any written pre-approval policies or procedures as described in paragraph (c)(7)(i) of Rule 2.01 of Regulation S-X.
17
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1)
Financial Statements
The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the “Index to Financial Statements” on page F-1 and included on pages F-2 through F-26.
(2)
Financial Statement Schedules
All other schedules are omitted as the required information is either inapplicable or it is presented in the consolidated financial statements and notes thereto.
(3)
Exhibits
The Exhibits required by Item 601 of Regulation S-K are listed in paragraph (b) below.
(b) Exhibits
The following exhibits are filed or furnished herewith or are incorporated herein by reference to exhibits previously filed with the SEC.
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|
|
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Exhibit No.
|
|
Description
|
|
Location
|
|
31.1
|
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Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Principal Financial Officer.
|
|
Filed herewith.
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Accounting Officer.
|
|
Filed herewith.
|
|
32.1
|
|
Certification of Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
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101.INS
|
|
XBRL Instance Document
|
|
Filed herewith.
|
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101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith.
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith.
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith.
|
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101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed herewith.
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith.
|
(c) None.
18
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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.
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GARB OIL & POWER CORPORATION
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Date: May 18, 2016
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By:
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/s/ Tammy Taylor
|
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|
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Tammy Taylor, Chief Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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Signature
|
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Title
|
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Date
|
|
|
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|
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/s/
Tammy Taylor
|
|
Chief Executive Officer and Director (principal executive officer and principal financial officer)
|
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May 18, 2016
|
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Tammy Taylor
|
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|
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|
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|
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/s/ M. Aimee Coleman
|
|
Corporate Secretary (principal accounting officer)
|
|
May 18, 2016
|
|
M. Aimee Coleman
|
|
|
|
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19