NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1)
Nature of Business
The
Condensed Consolidated Financial Statements include the accounts of World Health Energy Holdings, Inc. (“WHEH”) and
its wholly owned subsidiaries, World Health Energy, Inc. (“WHE”) and FSC Solutions, Inc. (FSC), an online software
solutions trading company.
WHE’s
corporate offices are located in New York City, New York. World Health Energy’s primary focus is the production of algae
using their proprietary GB3000 growth system. The system quickly and efficiently grows algae for the production of biofuels and
food protein. Though the Company has been successful in demonstrating the effectiveness of the GB3000 system on a small-scale
the company has not yet been able to raise the necessary capital to implement their technologies on a commercial scale. The Company
continues to pursue all available options for raising the necessary capital in addition to exploring alternative revenue sources.
FSC’s
financial broker service companies will be www.onlinetrade.trade & www.stocks-4you.com. They will be competing with E Trade,
www.etrade.com, and Ameritrade, www.tdamerirade.com.
The
online software trading Company, www.fsc.trade, is looking to compete in the financial software market and expects to generate
revenues in the second half of 2016. The Company will provide cutting edge complete software solutions for financial institutions,
banks and traders.
(2)
Basis of Presentation and Consolidation
The
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America (“GAAP”) on the accrual basis of accounting. All significant intercompany accounts and
transactions have been eliminated in consolidation. The interim financial statements reflect all adjustments, which are, in the
opinion of management, necessary in order to make the financial statements not misleading.
(3)
Significant Accounting Policies
a)
Use of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ materially from those estimates.
b)
Loss per share
The
Company has adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)
260-10-50,
Earnings Per Share
, which provides for the calculation of “basic” and “diluted” earnings
per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common shareholders
by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of
securities that could share in the earnings of an entity. Basic and diluted losses per share were the same at the reporting dates
as there were no common stock equivalents outstanding at March 31, 2016 or December 31, 2015.
c)
Cash and Cash Equivalents
The
Company considers all highly-liquid investments with a maturity of three months or less when purchased to be cash equivalents.
There were no cash equivalents as of March 31, 2016 or December 31, 2015.
d)
Property & Equipment and Depreciation
Property
and equipment is stated at cost and was depreciated using the straight line method over the estimated useful lives of the respective
assets of three years. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that extend
the useful life of the assets are capitalized. When office equipment is sold or otherwise disposed of, the cost and related accumulated
depreciation are eliminated from the accounts and any resulting gain or loss is recognized in operations. As of March 31, 2016
and December 31, 2015 property and equipment was valued at $118,127 and had depreciation of $4,353. As the software was not yet
in operation during the period, no amortization has been applied to the initial cost. Usage of the software began in April, 2016,
and amortization will be applied from the second quarter.
e)
Revenue Recognition
The
Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin Topic
13, Revenue Recognition and FASB ASC 605-15-25,
Revenue Recognition
. In all cases, revenue is recognized only when the
price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably
assured. The Company did not report any revenues during the three month periods ended March 31, 2016 or 2015.
f)
Income Taxes
Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax
benefits, such as net operating loss carry forwards, is required to the extent that realization of such benefits is more likely
than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.
In
the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s
assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits
indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more
likely than not that some or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred
tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax
planning strategies.
The
Company’s income tax returns are subject to examination by tax authorities. Generally, the statute of limitations related
to the Company’s federal and state income tax return is three years from the date of filing. The state impact of any federal
changes for prior years remains subject to examination for a period up to five years after formal notification to the states.
Management
has evaluated tax positions in accordance with FASB ASC 740,
Income Taxes
, and has not identified any significant tax positions,
other than those disclosed.
g)
Recently Issued Accounting Pronouncements
The
Company reviewed all recent accounting pronouncements issued by the Financial Accounting Standards Board (including its Emerging
Issues Task Force), the AICPA and the SEC and they did not or are not believed by management to have a material impact on the
Company’s present or future financial statements.
h)
Subsequent Events
In
accordance with FASB ASC 855,
Subsequent Events
, the Company evaluated subsequent events through May 23, 2015, the date
the financial statements were available for issue.
(4)
Going Concern
The
accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. The Company’s financial position and operating results raise substantial doubt about the Company’s ability
to continue as a going concern, as reflected by the net losses of $25,937,365 accumulated through March 31, 2016. The condensed
consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern. Management is presently seeking to raise permanent equity capital in the capital markets to eliminate negative
working capital and provide working capital. Failure to raise equity capital or secure some other form of long-term debt arrangement
will cause the Company to further increase its negative working capital deficit and could result in the Company having to curtail
or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate
revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it
will generate profits and cash flows from operations.
(5)
Income Taxes
The
items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes
for the three months ended March 31, 2016 and 2015 are as follows:
|
Income tax at federal statutory
rate
|
|
|
(34.00
|
)%
|
|
State tax, net
of federal effect
|
|
|
(3.96
|
)%
|
|
|
|
|
37.96
|
%
|
|
Valuation allowance
|
|
|
(37.96
|
)%
|
|
Effective rate
|
|
|
0.00
|
%
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
As
of March 31, 2016 and December 31, 2015, the Company’s only significant deferred income tax asset was a cumulative estimated
net tax operating loss of approximately $26 million that is available to offset future taxable income, if any, in future periods,
subject to expiration and other limitations imposed by the Internal Revenue Service. Management has considered the Company’s
operating losses incurred to date and believes that a full valuation allowance against the deferred tax assets is required as
of March 31, 2016 and December 31, 2015.
(6)
Related Parties
As
of March 31, 2016 and December 31, 2015, the Company had $0 and $1,623, respectively, included in Due to affiliates in the accompanying
condensed consolidated balance sheets that is due to a stockholder. The amount was non-interest bearing and due upon demand.
As
of March 31, 2016 and December 31, 2015, the Company had $59,157 included in Due to affiliates in the accompanying condensed consolidated
balance sheets that is due to a stockholder for amounts paid to certain vendors for services rendered. The amounts are non-interest
bearing and due upon demand.
As
of March 31, 2016 and December 31, 2015, the Company had $211,609 and $177,133, respectively, included in Due to affiliates in
the accompanying condensed consolidated balance sheets that is due to a stockholder and consultant of the Company for services
rendered as a business advisor and for amounts paid to certain vendors for services rendered. The amounts are non-interest bearing
and due upon demand.
As
of March 31, 2016 and December 31, 2015, the Company had $64,000 included in Due to affiliates in the accompanying condensed consolidated
balance sheets that is due to a stockholder and consultant of the Company for services rendered as the previous Chief Executive
Officer of the Company. The amounts are non-interest bearing and due upon demand.
As
of March 31, 2016 and December 31, 2015, the Company had $117,598 included in Due to affiliates in the accompanying condensed
consolidated balance sheets that is due to a stockholder for amounts paid to certain vendors for services rendered. The amount
is non-interest bearing and due upon demand.
As
of March 31, 2016 and December 31, 2015, the Company had $45,504 and $7,027, respectively, included in Due to affiliates in the
accompanying condensed consolidated balance sheets that is due to a stockholder and consultant of the Company for amounts paid
to certain vendors for services rendered. The amounts are non-interest bearing and due upon demand.
As
of March 31, 2016 and December 31, 2015, the Company had $31,544 and $7,067, respectively, included in Due to affiliates in the
accompanying condensed consolidated balance sheets that is due to a stockholder and consultant of the Company for amounts paid
to certain vendors for services rendered. The amounts are non-interest bearing and due upon demand.
As
of March 31, 2016 and December 31, 2015, the Company had $155,485 included in Due to affiliates in the accompanying condensed
consolidated balance sheets that is due to creditors of FSC, a business acquired by the Company during the year (see Note 9).
The amounts are non-interest bearing and due upon demand.
(7)
Convertible Note Payable
During
2015, the Company entered into a convertible note payable with a third party for $21,474. The note is non-interest bearing and
is convertible to common stock at $0.0001 per share (or the comparable rate following any share split or reverse split) on the
conversion date. During 2015 the note holder became the CEO and is now a related party. The note is expected to be converted in
the 2
nd
Quarter of 2016.
(8)
Commitments & Contingencies
During
the normal course of business, the Company may be exposed to litigation. In the event the Company were to become aware of potential
litigation, it would evaluate the merits of the case in accordance with ASC 450-20-50,
Contingencies
. The Company evaluates
its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company
determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As
of March 31, 2016, the Company is not aware of any contingent liabilities that should be reflected in the accompanying condensed
consolidated financial statements.
(9)
Business Acquisitions
On
June 26, 2015, WHEH entered into a Stock Purchase Agreement (the “Agreement”) with FSC. FSC is the owner of a proprietary
trading platform and accompanying software. The Agreement was effective as of July 1, 2015. Pursuant to the terms of the Agreement,
WHEH acquired all of the capital stock of FSC. In consideration, WHEH issued 70 Billion common shares at closing with the possibility
of the issuance of an additional 130 billion common shares upon FSC meeting certain milestones as outlined in the Agreement. WHEH
intends to employ FSC’s software and trading platform to enter the on-line trading industry. The acquisition was valued
at the book value of FSC at the date of acquisition.
The
following table summarizes the assets acquired and liabilities assumed at the acquisition date:
|
Consideration Cash
|
|
$
|
-
|
|
|
Common Stock in WHEH (70 billion shares
at no value)
|
|
|
-
|
|
|
Contingent Common Stock in WHEH (up
to 130 billion shares at no value)
|
|
|
-
|
|
|
|
|
|
|
|
|
Recognized amounts
of identifiable financial assets acquired and liabilities assumed
|
|
|
|
|
|
Financial Assets including
cash at bank
|
|
$
|
41,711
|
|
|
Software
|
|
|
113,774
|
|
|
Liabilities including
due to affiliates
|
|
|
(155,485
|
)
|
|
TOTAL
identifiable net liabilities
|
|
|
-
|
|
|
Acquisition-related costs (included
in selling, general and administrative expenses in WHEH’s income statement for the period ending September 30, 2015
|
|
$
|
1,500
|
|
(10)
Subsequent Events
On
March 13, 2016, FSC entered into a Stock Purchase Agreement (the “
Agreement
”) with Natalie Stock, Ltd. for
the purchase of all of the outstanding shares of Amid Financial Centre, Ltd. (“Amid”), a Mauritius Company that operates
as a broker-dealer.
Pursuant
to the terms of the Agreement, FSC will acquire all of the capital stock of FSC. In consideration, WHEH will pay cash and other
consideration to Natalie Stock, Ltd. WHEH intends to integrate FSC’s software and trading platform and Amid’s broker-dealer
operations.
The
Agreement contains customary representations, warranties and covenants by Natalie and FSC. The Closing of the Agreement is subject
to customary closing conditions.
Eli
Gal Levy, a director of WHEH and FSC, is the owner of Natalie Stock, Ltd.
During
the first quarter of 2016, an initial deposit of $20,000 was made as part of the agreement.