ITEM 1. FINANCIAL STATEMENTS.
|
|
|
MICHAEL JAMES ENTERPRISES, INC.
|
(formerly
BullsnBears.com, Inc.)
|
Condensed Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
|
June 30, 2016
|
December 31, 2015
|
ASSETS
|
|
|
CURRENT ASSETS
|
|
|
Cash
|
$
-
|
$
300
|
Due from related party
|
200,000
|
-
|
Total Current Assets
|
200,000
|
300
|
|
|
|
Property and equipment, net
|
3,548
|
4,850
|
Intangible asset, net of accumulated amortization of $36,250 and $6,250
|
0
|
0
|
TOTAL ASSETS
|
$
203,548
|
$
5,150
|
|
|
|
LIABILITIES AND STOCKHOLDERS
’
EQUITY (DEFICIT)
|
|
|
CURRENT LIABILITIES
|
|
|
Bank Overdraft
|
641
|
4,298
|
Accounts payable and accrued expenses
|
260,271
|
39,051
|
Accounts payable
–
related party
|
444,400
|
444,400
|
Note payable
–
related party
|
238,667
|
214,458
|
Convertible notes payable - related party
|
21,716
|
21,716
|
Convertible notes payable
|
460,512
|
377,500
|
Derivative Liability (net)
|
491,336
|
-
|
Accrued interest payable
|
95,843
|
67,938
|
Accrued interest payable - related party
|
32,707
|
24,953
|
Total Current Liabilities
|
2,046,093
|
1,194,314
|
|
|
|
Long-term Liabilities
|
|
|
Convertible notes payable, net
|
-
|
|
Total long-term liabilities
|
-
|
-
|
|
|
|
|
|
|
Total Liabilities
|
2,046,093
|
1,194,314
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
Preferred stock; $0.0001 par value, 20,000,000 shares authorized, 4,000 shares issued or outstanding
|
1
|
1
|
Common stock; $0.0001 par value, 100,000,000 shares authorized, 14,658,270 issued and outstanding, respectively
|
1,466
|
1,296
|
Additional paid-in capital
|
1,670,295
|
1,345,764
|
Accumulated deficit
|
(3,514,307)
|
(2,536,225)
|
Total Stockholders' Equity (Deficit)
|
(1,842,545)
|
(1,189,164)
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$
203,548
|
$
5,150
|
The accompanying notes are an integral part of these unaudited Condensed Consolidated financial statements.
|
|
|
|
|
MICHAEL JAMES ENTERPRISES, INC.
|
(formerly
BullsnBears.com, Inc.)
|
Condensed Consolidated Statements of Operations
|
(Unaudited)
|
|
For the
three months ended
June 30,
|
For the
six months ended
June 30,
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
REVENUES
|
$
-
|
$
10,000
|
$
-
|
$
12,610
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
Cost of Sales
|
-
|
-
|
-
|
-
|
Depreciation and amortization expense
|
651
|
9,344
|
1,302
|
18,688
|
Shares to be issued for financing fee
|
-
|
-
|
-
|
-
|
Shares to be issued for Consulting
|
324,700
|
-
|
324,700
|
-
|
General and administrative
|
93,247
|
47,468
|
122,072
|
95,043
|
|
|
|
|
|
Total Operating Expenses
|
418,598
|
56,812
|
448,074
|
113,731
|
|
|
|
|
|
OPERATING LOSS
|
(418,598)
|
(46,812)
|
(448,074)
|
(101,121)
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Gain on conversion of interest
|
-
|
12,160
|
-
|
17,296
|
Loss on derivative liability
|
175,711
|
|
(326,336)
|
|
Interest expense
|
(80,442)
|
(12,265)
|
(203,673)
|
(29,922)
|
|
|
|
|
|
Total Other Income (Expense)
|
95,269
|
(105)
|
(530,009)
|
(12,626)
|
|
|
|
|
|
NET LOSS
|
$
(323,329)
|
$
(46,917)
|
$
(978,083)
|
$
(113,747)
|
|
|
|
|
|
BASIC NET LOSS PER COMMON SHARE
|
$
(0.02)
|
$
(0.00)
|
$
(0.07)
|
$
(0.01)
|
|
|
|
|
|
BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
13,222,015
|
12,500,007
|
13,090,143
|
12,384,165
|
The accompanying notes are an integral part of these unaudited Condensed Consolidated financial statements.
|
|
|
MICHAEL JAMES ENTERPRISES, INC.
|
(Formerly BullsnBears.com, Inc.)
|
Condensed Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
For the
Six Months ended
June 30,
|
|
2016
|
2015
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net loss
|
$
(978,083)
|
$
(113,747)
|
Items to reconcile net loss to net cash used in operating activities:
|
|
|
Depreciation and amortization
|
1,302
|
18,688
|
Loss on derivative liability
|
326,336
|
-
|
Amortization of debt discount
|
83,012
|
|
Gain on conversion of Interest
|
-
|
(17,296)
|
Shares to be issued for financing fee
|
65,000
|
-
|
Shares issued for consulting
|
324,700
|
|
Changes in operating assets and liabilities
|
|
|
Increase in other assets
|
|
(3)
|
Increase in accounts payable and accrued liabilities
|
125,470
|
29,365
|
Increase in accounts payable and accrued liabilities - related party
|
7,754
|
67,150
|
Net Cash Used in Operating Activities
|
(44,509)
|
(15,843)
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds from bridge notes payable
|
|
17,500
|
Proceeds (payments) from convertible bridge notes payable
|
220,000
|
|
Proceeds (payments) from convertible notes payable, related party
|
(200,000)
|
2,015
|
Proceeds from notes payable, related party
|
24,209
|
4,455
|
Payments on notes and convertible notes payable, related party
|
-
|
(6,086)
|
Net Cash Provided by Financing Activities
|
44,209
|
15,869
|
|
|
|
INCREASE IN CASH
|
(300)
|
26
|
|
|
|
CASH AT BEGINNING OF PERIOD
|
300
|
-
|
|
|
|
CASH AT END OF PERIOD
|
$
-
|
$
26
|
|
|
|
Supplemental Information:
|
|
|
Interest Paid
|
$
-
|
$
-
|
Taxes
|
$
-
|
$
-
|
|
|
|
The accompanying notes are an integral part of these unaudited Condensed Consolidated financial statements.
6
MICHAEL JAMES ENTERPRISES, INC.
(formerly BullsnBears.com, Inc.)
Notes to the Condensed Consolidated Unaudited Financial Statements
1.
Nature of Operations and Continuance of Business
The unaudited interim condensed consolidated financial statements included herein have been prepared by Michael James Enterprises, Inc. (formerly BullsnBears.com, Inc.) (the
“
Company
”
) in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the
“
SEC
”
). We suggest that these interim financial statements be read in conjunction with the audited financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2015, as filed with the SEC. We believe that all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein and that the disclosures made are adequate to make the information not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year as reported in Form 10-K have been omitted.
On December 31, 2015, the Company formed a new wholly-owned corporation, BullsnBears Holdings, Inc., for the purpose of holding the Company
’
s intellectual property assets.
The financial statements presented are those of Michael James Enterprises, Inc. (formerly BullsnBears.com, Inc.) (the Company) (formerly Spicy Gourmet Manufacturing, Inc.), a Delaware corporation. The Company was incorporated on December 30, 2010, under the laws of the State of Delaware. During November 2012, The Company changed its name from Spicy Gourmet Manufacturing, Inc. to BullsnBears.com, Inc. and changed its name to Michael James Enterprises, Inc.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the period from inception through June 30, 2016, the Company has generated minimal revenues and has an accumulated deficit of $3,514,307. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, its ability to generate profits from the Company
’
s future operations, identify future investment opportunities and obtain the necessary debt or equity financing. These factors raise substantial doubt regarding the Company
’
s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
7
Principles of Consolidation
The accompanying financial statements reflect the consolidation of the individual financial statements of Michael James Enterprises, Inc. and BullsnBears Holdings, Inc. All significant intercompany accounts and transactions have been eliminated.
Basic and Diluted Loss Per Share
The Company presents both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method, and convertible securities, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. The Company had net losses as of June 30, 2016 and 2015, so the diluted EPS excluded all dilutive potential shares in the diluted EPS because their effect is anti-dilutive. As of June 30, 2016 and June 30, 2015 the Company had outstanding warrants to purchase 5,000,000 shares of common stock. The Company also had outstanding convertible note that could be converted into 535,716 shares and 650,716 shares as of June 30, 2016 and 2015, respectively.
Use of Estimates
The preparation of financial statements 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 from those estimates.
Fair Value of Financial Instruments
The carrying amount of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments. The fair value of the derivative liabilities have been valued using a Black Scholes valuation model.
Derivative Liabilities
Certain of the Company
’
s convertible notes payable described in Note 3 contain conversion features that qualify for embedded derivative classification. The Company accounts for the embedded derivative features in its convertible debentures in accordance FASB ASC 815-10-
Derivatives and Hedging,
which requires a periodic valuation of their fair value and a corresponding recognition of liabilities associated with such derivatives. The recognition of derivative liabilities related to the issuance of the convertible debt is applied first to the proceeds of such issuance as a debt discount, at the date of issuance, and the excess of derivative liabilities over the proceeds is recognized as a
“
Loss on Derivative Liability
”
in other expense. The fair value of these liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments.
New Accounting Pronouncements
8
In August 2014, the Financial Accounting Standards Board (
“
FASB
”
) issued Accounting Standards Update (
“
ASU
”
) 2014-15
“
Presentation of Financial Statements
—
Going Concern,
”
outlining management
’
s responsibility to evaluate whether there is substantial doubt about an entity
’
s ability to continue as a going concern, along with the required disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016 with early adoption permitted. The Company does not anticipate a material impact to our financial statements as a result of this change.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (
“
ASU 2015-03
”
). ASU 2015-03 changes the presentation of debt issuance costs in financial statements, by requiring them to be presented in the balance sheet as a direct deduction from the related debt liability, rather than as an asset. Amortization of the costs is reported as interest expense. There is no change to the current guidance on the recognition and measurement of debt issuance costs. For public business entities, ASU 2015-03 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect ASU 2015-03 to have a material impact on its consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01
“
Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,
”
which revises an entity
’
s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. ASU 2016-01 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017, with early adoption permitted under certain circumstances.
”
The Company is currently assessing the impact of ASU 2016-01 on its financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. Under Accounting Standards Update 2016-02, lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessee
’
s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee
’
s right to use or control the use of a specified asset for the lease term. The Company is currently evaluating the effect that the new guidance will have on its financial statements and related disclosures.
In March 2016, the FASB issued ASU No. 2016-09, Compensation
—
Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which includes multiple provisions intended to simplify various aspects of the accounting for share-based payments, including treatment of excess tax benefits and forfeitures, as well as consideration of minimum statutory tax withholding requirements. The ASU will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early application permitted in any interim or annual period. The Company is evaluating the future impact of this ASU on the consolidated financial statements.
Other relevant recently issued accounting updates are not expected to have a material impact on the Company
’
s consolidated financial statements.
9
NOTE 2 - RELATED PARTY TRANSACTIONS
Notes and Convertible Notes Payable
On October 31, 2012, the Company and a then officer and director of the Company entered into a one year, 10% Senior Convertible Note for office equipment totaling $20,955 and supplies totaling $761, or a total of $21,716. The principal amount of the Senior Convertible Note can be convertible, at the sole option of the holder and in whole or in part, into shares of common stock of the Company at a conversion price to be determined by the Board of Directors of the Company at or prior to the maturity date. No conversion rate has been established by the Board of Directors. The Senior Convertible Note and the payment of the principal thereof and interest thereon shall at all times and in all respects constitute the Senior Indebtedness of the Company and shall not be junior or subordinate in right of payment to any other indebtedness of the Company. Accrued interest on the Senior Convertible Note totaled $6,010 and $6,636 at December 31, 2015 and June 30, 2016 respectively.
From the year ended 2012 through the year ended December 31, 2015, the Company borrowed a total of $331,371 in unsecured short-term loans from a then officer and director of the Company and repaid a total of $116,913 with an interest rate of 6% per annum. During the three months ended June 30, 2016 the Company borrowed an additional $22,276. The outstanding balance as of December 31, 2015 and June 30, 2016 was $214,458 and 236,736 with accrued interest of $18,943 and $21,888 respectively. The notes are due on demand.
Consulting Expense
As of June 30, 2016 and December 31, 2015, the Company owed a former officer $444,440 and $444,440, respectively, for consulting expense which is included in accounts payable, related party.
The Company advanced $220,000 to a related party during the first quarter of 2016. $20,000 was paid thus bringing the balance due from related party to $200,000 at June 30, 2016.
NOTE 3 - CONVERTIBLE PROMISSORY NOTES PAYABLE
As of December 31, 2015 the Company had a total of nine convertible notes payable with an outstanding balance of $377,500. The interest rates varied from 10% to 20% and conversion rates ranging from $.20 to $1.00. The notes may be converted at any time and are all in default.
On February 4, 2016, the Company entered into a $121,000 10% Convertible Promissory Note with Tangiers Investment Group, LLC, a non-affiliate. The term is for one year, with an original issuance discount of $11,000 for due diligence and legal costs. The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 55% of the lowest trading price of the Company
’
s Common Stock during the 20 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.
On March 23, 2016, the Company entered into a $60,500 10% Convertible Promissory Note with Vista Capital Investments, LLC. a non-affiliate. The term is for two years, with an original issuance discount of $5,500 for due diligence and legal costs. The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 55% of the lowest trading price of the Company
’
s Common Stock during the 20 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.
10
In connection with the note payable the Company is obligated to issue 200,000 that were valued at $120,000. Out of the full consideration $55,000 was recorded as debt discount and the remaining $65,000 was included in interest expense.
On March 24, 2016, the Company entered into a $60,500 10% Convertible Promissory Note with Tangiers Investment Group, LLC, a non-affiliate. The term is for one year, with an original issuance discount of $5,500 for due diligence and legal costs. The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 55% of the lowest trading price of the Company
’
s Common Stock during the 20 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.
Accrued interest on all outstanding non-related-party Notes was $79,917 at June 30, 2016 and $67,938 as for December 31, 2015.
|
|
Debt Discount
|
|
Balance as of December 31, 2015
|
$ -
|
Initial recognition of additional derivative liability
|
242,000
|
Amortization of Debt Discount
|
(22,678)
|
Balance as of March 31, 2016
|
219,322
|
Amortization of Debt Discount
|
$
(60,334)
|
Balance June 30, 2016
|
$
158,988
|
|
|
Balance of 2015 and Prior notes payable at December 31, 2015
|
$
377,500
|
Notes Payable recorded in 2016
|
242,000
|
Total Notes payable at June 30, 2016
|
619,500
|
Debt discount
|
(158,988)
|
Notes Payable, net
|
$
460,512
|
NOTE 4
–
DERIVATIVE LIABILITY
The Company issued financial instruments in the form of convertible notes with embedded conversion features. The convertible notes payable has conversion rates which are indexed to the market value of the Company
’
s common stock price.
Price protection clauses of the conversion features of the 2016 convertible notes (see Note 3) triggered derivative accounting under GAAP.
During the three months ending June 30, 2016, the company issued three convertible promissory notes totaling $242,000.
|
|
Derivative Liability
|
|
Balance as of December 31, 2015
|
$
-
|
Initial recognition of additional derivative liability
|
667,046
|
Balance as of March 31, 2016
|
667,046
|
Change in derivative liability
|
(175,712)
|
Balance June 30, 2016
|
$
491,334
|
The following table represents the Company
’
s derivative liability and debt discount activity for the embedded conversion features discussed above:
During the three months ended June 30, 2016 and 2015, the aggregate gain/(loss) on the derivative liability was $175,711 and $0 respectively, consisting of initial derivative expense and the change in the fair value of the derivative.
NOTE 5 - COMMON STOCK AND COMMON STOCK WARRANTS
Common Stock Warrants
In December, 2010, the Company issued a total of 5,000,000 Common Stock Purchase Warrants. Pursuant to an extension approved by the Board of Directors in June, 2015, all Warrants are exercisable at any time prior to November 19, 2017.
The following table summarizes the outstanding warrants and associated activity for the three months ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
Number of
|
Weighted
|
Weighted
|
|
|
Warrants
|
Average
|
Average
|
|
|
Outstanding
|
Price
|
Remaining
|
|
|
|
|
Contractual
|
|
|
|
|
Life
|
Balance, December 31, 2015
|
|
|
5,000,000
|
$
|
0.25
|
|
1.89
|
Granted
|
|
|
—
|
|
—
|
|
—
|
Exercised
|
|
|
—
|
|
—
|
|
—
|
Expired
|
|
|
—
|
|
—
|
|
—
|
Balance, June 30, 2016
|
|
|
5,000,000
|
$
|
0.25
|
|
1.39
|
12
NOTE 6
–
COMMITMENTS AND CONTINGENCIES
A lawsuit was filed against the Company on November 13, 2014, in the First Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida entitled Thinspace Technology, Inc. v. Michael James Enterprises, Inc. (formerly BullsnBears.com, Inc.) The complaint alleges that BullsnBears failed to provide certain services it was contractually committed to provide and seeks damages in excess of $15,000. The Company believes that this claim is without merit and is vigorously defending this action.
On September 1, 2015, the Company received notice of an Administrative Complaint filed by the State of Florida Office of Financial Regulation (OFR) concerning certain private placement investments received by the Company during the period from 2011 to 2013 and the applicability of the registration exemption provisions of the Florida Statutes to said investments. The Company vigorously disputes the legal basis for this Administrative Complaint and is presently conducting mitigating discussions with the OFR.
Note 7
–
SUBSEQUENT EVENTS
On August 4, 2016 the Company entered into an asset purchase agreement with RP Capital Group, Ltd. acquiring all rights and ownership to, among other things, the proprietary and exclusive technology for the formulation of a therapeutic treatment for sleep apnea.
13
ITEM 2.
MANAGEMENT
’
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This Management
’
s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
Working Capital
|
|
|
|
Unaudited
|
|
|
June 30, 2016
|
December 31, 2015
|
Current Assets
|
$
200,000
|
$
300
|
Current Liabilities
|
2,046,093
|
1,194,314
|
Working Capital Deficit
|
(1,846,093)
|
(1,194,014)
|
Cash Flows
|
|
|
Six months ended
|
June 30,
|
|
2016
|
2015
|
|
|
|
Cash Flows Used in Operating Activities
|
(44,509)
|
(15,843)
|
Cash Flows Provided by Financing Activities
|
44,209
|
15,896
|
Net Increase (Decrease) in Cash During Period
|
(300)
|
26
|
14
Balance Sheet
At June 30, 2016, the Company had total assets of $203,548 compared with total assets of $5,150 as at December 31, 2015.
The Company had total liabilities of $2,046,093 at June 30, 2016 compared with $1,194,314 at December 31, 2015. The increase was due to the issuance of convertible notes
Income Statement
Revenues
Revenue decreased by $10,000 during the three months ended June 30, 2016 compared to the three months ended June 30, 2015. The Company had minimal revenues during both periods.
Revenue decreased by $12,610 during the six months ended June 30, 2016 compared to the six months ended June 30, 2015. The Company had minimal revenues during both periods.
Operating Expenses
During the three months ended June 30, 2016, the Company incurred operating expenses totaling $418,598 compared with $56,812 for the three months ended June 30, 2015.
During the six months ended June 30, 2016, the Company incurred operating expenses totaling $448,074 compared with $113,731 for the six months ended June 30, 2015.
Total Other Income (Expense)
During the three months ended June 30, 2016 the company recorded a Gain on derivative liability of $175,711.
During the six months ended June 30, 2016 the company recorded a loss on derivative liability of $326,336.
Interest expense increased to $80,442 for the three months ended June 30, 2016 compared to $12,265 for the three months ended June 30, 2015 mainly due to the financing fees incurred on the convertible notes.
Interest expense increased to $203,673 for the six months ended June 30, 2016 compared to $29,922 for the six months ended June 30, 2015 mainly due to the financing fees incurred on the convertible notes.
Net Loss
During the three months ended June 30, 2016, the Company realized net loss of ($323,329) compared with a net loss of ($46,917) for the three months ended June 30, 2015. The increase in net loss was primarily due to the shares issued for consulting of $324,700.
During the six months ended June 30, 2016, the Company realized net loss of ($978,083) compared with a net loss of ($113,747) for the six months ended June 30, 2015. The increase in net loss was primarily due to the shares issued for consulting of $324,700.
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Liquidity and Capital Resources
As of June 30, 2016, the Company had a bank overdraft of $651 and a working capital deficit of $1,846,093, compared with a cash balance of $300 and working capital deficit of $1,194,014 at December 31, 2015.
We do not have sufficient capital to pay our operating expenses. In addition, as of June 30, 2016, there was $360,000 of notes which have matured and have not converted into common shares. In addition, there are an additional $17,500 principal amount of Bridge notes with a default interest rate of 20% which mature during the next 12 months and $242,000 in convertible notes which mature over the next 2 years. These notes are unsecured. We do not have sufficient working capital to repay these obligations. In the absence of the note holders converting to common stock the Company will need to raise additional capital to satisfy these obligations. If we are unable to raise the additional capital necessary to pay our operating expenses and satisfy our obligations, we may be unable to continue as a going concern. In that event, investors could lose their entire investment in our company.
Cash Flows from Operating Activities
During the six months ended June 30, 2016, the Company used ($44,509) of cash from operating activities compared with use of ($15,843) of cash flow during the six months ended June 30, 2015.
Cash Flows from Financing Activities
During the six months ended June 30, 2016, the Company received $220,000 of which $200,000 was advanced to a related party, in addition we received $24,209 in advances from a related party for a net of $44,209 of cash flow from financing activities compared to $15,863 of cash flow from financing activities during the six months ended June 30, 2015.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Future Financings
We will continue to rely on the issuance of debt and equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
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