SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Sangui Biotech International, Inc. (
the Company
) was incorporated in Colorado in 1995. Since 2003 when a comprehensive restructuring of the group was completed, all operations have been carried out by Sangui BioTech GmbH, its ninety percent owned subsidiary which is headquartered in Witten, Germany. Sangui Biotech International, Inc., (
the Parent Company
) acts as a holding company whose purpose it is to secure financing and access to the capital markets.
SanguiBioTech GmbH is engaged in the development of technologies aimed at improved supply of oxygen to the human body such as wound management products in particular a wound spray based on natural hemoglobin, wound dressings based on Chitosan (a natural polymer), artificial oxygen carriers (external applications of hemoglobin, blood substitutes and blood additives) and cosmetics. The cosmetics products are currently being sold via the Company
s internet shop, yielding a small amount of revenues. Otherwise, the Company does not produce nor market its products. It has adopted the strategy to license its technologies to industry partners in exchange for royalties. In the pursuit of this strategy, the Company established a joint venture company in December 2010 for the purposes of marketing and selling the wound spray product in Germany and of preparing its market entry in several other European countries and Mexico. As consideration for the license, the Company is paid royalties on all sales of this product and is entitled to a 25 percent share of all future profits of the joint venture. Effective December 31, 2016 the Company sold its 25% share of the joint venture to its co-partner.
Going Concern
The Company incurred a net loss attributable to common stockholders of $422,271and used cash in operating activities of 384,757 for the year ended June 30, 2016. These and other conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company expects to continue to incur significant capital expenses in pursuing its business plan to market its products and expand its product line; however, obtaining additional financing through stock offerings or other feasible financing alternatives may be difficult or even impossible. In order for the Company to continue operating at its existing levels, it will require significant additional funds over the next twelve months. Therefore, the Company is dependent on funds raised through equity or debt offerings. The Company plans to continue to raise necessary capital through both notes payable, as well as stock sales.
Additional financing may not be available on terms favorable to the Company or at all. If these funds are not available the Company may not be able to execute its business plan or take advantage of business opportunities. The Company
s ability to obtain such additional financing and to achieve its operating goals is uncertain. In the event that the Company does not obtain additional capital or is not able to increase cash flow through the increase of sales, there is a substantial doubt of its being able to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Principles of Consolidation
The consolidated financial statements include the accounts of Sangui BioTech International, Inc. and its ninety percent owned foreign subsidiary, Sangui BioTech GmbH. All intercompany accounts and transactions have been eliminated in consolidation.
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 respective reporting period. As future events and their effects cannot be determined with precision, actual results could differ from those estimates. Significant estimates made by management are, among others, the realization of receivables, inventories, long-lived assets, and valuation allowance on deferred tax assets.
F-6
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Risks and Uncertainties
The Company's line of future pharmaceutical and cosmetic products (artificial oxygen carriers or blood substitute and additives) as well as other medical products being developed by Sangui BitTech GmbH, are deemed as medical devices or biologics, and as such are governed by the Federal Food and Drug and Cosmetics Act and by the regulations of state agencies and various foreign government agencies. The pharmaceutical products will be subject to stringent regulatory requirements because they are in vivo products for humans. The Company and its subsidiaries have limited experience in obtaining regulatory clearance on these types of products. Therefore, the Company could be subject to risks of delays in obtaining or failing to obtain regulatory clearance.
Financial Instruments
Pursuant to ASC 820,
Fair Value Measurements and Disclosures
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument
s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The following table summarizes the derivative liability activity for the period June 30, 2015 through June 30, 2016:
Description:
Derivative Liability
Fair value at June 30, 2015
$ -
Change due to Issuances
(74,650)
Change in Fair Value
52,707
Change due to conversion
21,943
Fair value at June 30, 2016
$
-
F-7
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments (Continued)
The Company
s financial instruments consist principally of cash, accounts and notes receivable, accounts payable and accrued liabilities, notes payable and amounts due to related parties. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Foreign Currency Translation
The functional currency of the Company
s Sangui GmbH subsidiary is the local currency, the Euro. Accordingly, assets and liabilities of the subsidiary are translated into U.S. dollars at period-end exchange rates. Revenues and expenses are translated at the average exchange rates in effect for the period. The resulting translation gains or losses are recorded as a component of accumulated other comprehensive income in the consolidated statement of stockholders
equity. For the years ended June 30, 2016 and 2015, the Company recognized a loss on translation adjustment in the amount of $46,800 and a gain of $39,373, respectively. There were no gains or losses resulting from foreign currency transactions as of June 30, 2016 and 2015.
The exchange rates used to calculate values and results of operations for the years ended June 30, 2016 and 2015, were as follows:
|
|
| |
|
Year-end Rates
|
|
Average Period Rates
|
June 30, 2016
|
0.90219
|
|
0.90122
|
June 30, 2015
|
0.9014
|
|
0.8312
|
During the years ended June 30, 2016 and 2015, the Company has transacted the majority of its business activities in Germany, and the transactions have been primarily consummated in the Euro currency. Due to the fact that the Company
s functional currency is the Euro and its reporting currency is the U.S. dollar, the Company must recognize the effects of variations in foreign currency exchange rates as gains and losses as a component of other comprehensive income (loss), pursuant to ASC 830
Foreign Currency Translation.
To calculate this other comprehensive income and loss, the Company utilizes the
current method,
whereby assets and liabilities of the German subsidiary are translated from Euro into U.S. dollars at the exchange rate at the balance sheet date.
All equity items, other than retained earnings, are specifically identified where possible and exchange rates on transaction dates are implemented. Profit and loss accounts are translated using an average rate for the period. During the years ended June 30, 2016 and 2015, the Company recognized other comprehensive loss of $46,800 and a gain of $39,373, respectively. Such other comprehensive income and losses had no effect on liquidity.
Pursuant to ASC 830-20-35,
Foreign Currency Matters
, the Company accounts for the translation of transactions denominated in foreign currencies in the Parent Company
s books as transaction gains (losses) recognized in General & Administrative expenses.
Cash and Cash Equivalents
The Company considers highly liquid investments with insignificant interest rate risk and original maturities to the Company of three months or less to be cash equivalents. The Company maintains its cash in uninsured bank accounts in Germany. Cash and cash equivalents include time deposits for which the Company has no requirements for compensating balances. The Company has not experienced any losses in its uninsured bank accounts. The Company had no cash equivalents outstanding as of June 30, 2016 and 2015.
F-8
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Derivative Liabilities
The Company accounts for derivative instruments in accordance with ASC Topic 815,
Derivatives and Hedging
and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company
s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at June 30, 2016 and 2015, the Company had a $0 and $0 derivative liability, respectively.
Property and Equipment
Property and equipment are recorded at cost and are depreciated or amortized using the straight-line method over the expected useful lives, which range from three to five years. Leasehold improvements are amortized using the straight-line method over the lesser of the estimated useful lives of the assets or the related lease terms. Depreciation expense for the years ended June 30, 2016 and 2015 was $-0- and $0, respectively. Expenditures for normal maintenance and routine repairs are charged to expense, and significant improvements are capitalized. The cost and related accumulated depreciation of assets are removed from the accounts upon retirement or other disposition; any resulting gain or loss is reflected in the statement of operations.
Impairment of Long-Lived Assets
Long-lived assets, including property and equipment and certain identifiable intangibles to be held and used are reviewed by the management of the Company for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. On a regular basis and at least annually, the Company evaluates whether events and circumstances have occurred that indicate possible impairment and relies on a number of factors, including business plans, economic projections, and anticipated future cash flows. Measurement of the amount of impairment, if any, is based upon the difference between the asset
s carrying value and estimated fair value. As of June 30, 2016 and 2015, management of the Company believes that no impairment has been indicated. There can be no assurance, however, that market conditions will not change or demand for the Company's products will continue which could result in impairment of long-lived assets in the future.
Revenue Recognition
The Company derives revenue primarily from licensing fees on sales of its wound spray product as well as from the sale of its cosmetics products.
The wound spray technology is licensed to an entity, in which the Company held a 25 percent equity interest, as a Joint Venture (See Note 2). Effective December 31, 2015 the Company sold its 25 % share of the joint venture to its co-partner. The Company presently is entitled to royalties on net sales of the wound spray product. Licensing fees are invoiced on a quarterly basis and are recognized as revenue during the quarter that the sales were reported by the licensee.
F-9
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company
s product sales (amounting to less than 10% of total revenues in the current year) are generated via online orders, with credit card payment. The Company recognizes revenues when: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed and determinable, (iii) title and risk of loss have transferred, and (iv) collectability is reasonably assured
generally when products are shipped to the customer, except in situations in which title passes upon receipt of the products by the customer. In this case, revenues are recognized upon notification that customer receipt has occurred. The Company does not have customer acceptance provisions, but it does provide its customers a limited right of return. The Company accrues an estimated amount for sales returns and allowances at the time of sale, based on its ability to estimate sales returns and allowances using historical information. Shipping and handling fees are included as part of net sales. The related freight costs and supplies associated with shipping products to customers are included as a component of cost of goods sold.
Trade Accounts Receivable
Accounts receivable are reflected at estimated net realizable value, do not bear interest and generally require collateral. The Company maintains an allowance for doubtful accounts based upon a variety of factors. The Company reviews all open accounts and provides specific reserves for customer collection issues when it believes a loss is probable.. The reserve estimate includes consideration of such factors as the length of time receivables are past due, the financial condition of the customer, and historical experience. The Company also records a reserve for all customers, excluding those that have been specifically reserved for, based upon evaluation of historical losses which exceeded the specific reserves the Company had established. For the years ended June 30, 2016 and 2015, the Company recognized bad debt expense in the amounts of $0 and $1,144, respectively.
Inventory
Inventory is stated at the lower of cost (computed on a first-in, first-out basis) or market value. Provisions to value the inventory at the lower of the actual cost to purchase or manufacture the inventory, or the current estimated market value of the inventory, are based upon assumptions about future demand and market conditions. The Company also performs evaluations of inventory and records a provision or impairment for estimated excess and obsolete items based upon demand, and any other known factors at the time. As of June 30, 2016 and 2015, all inventory balances had been reserved against in full.
Sales Tax Collected from Customers
As a part of the Company
s normal course of business, sales taxes are collected from customers. Sales taxes collected are remitted, in a timely manner, to the appropriate governmental tax authority on behalf of the customer. The Company
s policy is to present revenue and costs net of sales taxes.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce deferred income tax assets when it is more likely than not that such deferred tax assets will not be realized.
The Company has a foreign subsidiary formed or acquired to conduct or support its business outside the United States. The Company provides for income taxes, net of applicable foreign tax credits, on temporary differences in its investment in foreign subsidiaries which are not considered to be permanently invested outside of the United States.
F-10
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company adopted ASC 740 which defines the threshold for recognizing the benefits of tax return positions in the financial statements as
more-likely-than-not
to be sustained by the taxing authority. A tax position that meets the
more-likely-than-not
criterion shall be measured at the largest amount of benefit that is more than 50 percent likely of being realized upon ultimate settlement. ASC 740 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. ASC 740 applies to all tax positions accounted for under ASC 740. Estimated interest and penalties related to the underpayment of income taxes are recorded as a component of provision for income taxes in the consolidated statements of operations. For the years ended June 30, 2016 and 2015, the Company did not recognize any such interest or penalties, nor were any interest fees or penalties accrued as of June 30, 2016 and 2016.
Research and Development
Research and development costs are charged to operations as they are incurred. Legal fees and other direct costs incurred in obtaining and protecting patents are also expensed as incurred, due to the uncertainty with respect to future cash flows resulting from the patents. Research and development costs totaled $37,780 and $204,987 during the fiscal years ended June 30, 2016 and 2015, respectively.
Research and development costs are charged to operations as they are incurred. Legal fees and other direct costs incurred in obtaining and protecting patents are expensed as incurred. Research and development costs totaled $37,780 and $204,987 during the fiscal years ended June 30, 2016 and 2015, respectively
Basic and Diluted Loss per Common Share
Basic loss per common share excludes dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period of computation. Diluted loss per share gives effect to all potential dilutive common shares outstanding during the period of compensation. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an antidilutive effect on earnings. As of June 30, 2016 and 2015, the Company had no potentially dilutive securities that would affect the loss per share if they were to be included in the loss per share.
Comprehensive Loss
Total comprehensive loss represents the net change in stockholders' equity during a period from sources other than transactions with stockholders and as such, includes net loss. For the Company, the components of other comprehensive loss are the changes in the cumulative foreign currency translation adjustments.
Segments of an Enterprise and Related Information
The Company adopted ASC 280, "Disclosures about Segments of an Enterprise and Related Information." ASC 280 establishes standards for the way public companies report information about segments of their business in their annual financial statements and requires them to report selected segment information in their quarterly reports issued to stockholders. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports revenues and its major customers, if any. As of June 30, 2016 and 2015, the Company has one business segment, which is includes the manufacturing and sales of its wound treatment and cosmetic products as well as the licensing of business partners to do the same.
Non-controlling Interests
On June 11, 2008, the Company
s wholly-owned German subsidiary, Sangui Biotech GmbH (
GmbH
) issued 11,400 shares of its previously unissued common stock for cash proceeds of $1,140,759. These shares amount to 10 percent of the GmbH
s total outstanding common stock, which totaled 113,800 shares of as June 30, 2016 and 2015,
F-11
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
respectively. The Company accounts for these non-controlling interests pursuant to ASC 810 whereby gains or losses in a subsidiary with a non-controlling interest are allocated to the non-controlling interest based on the ownership percentage of the non-controlling interest, even if that allocation results in a deficit non-controlling interest balance.
F-11
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company
s financial position, or statements.
Financial Statement Reclassifications
The Company has reclassified certain prior-year account balances in order to comply with current-period classifications and increase comparability.
NOTE 2
INVESTMENT IN JOINT VENTURE
During December 2010, the Company
s subsidiary Sangui BioTech GmbH established a joint venture company with SanderStrothmann GmbH, under the name of SastoMed GmbH (
the Joint Venture
). The Company owned 25 percent of the Joint Venture and accounted for its interest in the Joint Venture using the equity method of accounting. The Company invested $8,508 in the Joint Venture during the year ended June 30, 2011. The Company has written the investment down to $0 for its share of the Joint Venture
s losses, amounting to $112,819 during the calendar year ending December 31, 2014.
The Company has entered into an agreement which is cancellable by either party, with 14 days written notice. The agreement includes payments to its joint venture partner (SastoMed GmbH) by the Company of $7,760 per month for research and development consulting services. The agreement was terminated September 30, 2016. The balance owing under this agreement recorded in accounts payable and accrued expenses, is approximately $20,000 as of June 30, 2016.
On June 9, 2015, the Company entered into a note payable with the Joint Venture for $38,154. The note payable accrues interest at 4% annum and is due June 30, 2017.
Effective December 31, 2016 the company sold its interest in the SastoMed joint venture for Euro 6,250, resulting in a gain reported in Other Income of $6,936. The sale of the joint venture terminated the relationship with SastoMed. Accordingly the note payable of $38,154 which was previously recorded as a related party note payable, is now reclassified as non-related party note payable.
NOTE 3
PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30, 2016 and 2015:
|
|
|
|
| |
|
June 30,
|
|
2016
|
|
2015
|
Technical and laboratory equipment
|
$
|
641,326
|
|
$
|
641,326
|
Leasehold improvements
|
|
285,189
|
|
|
285,189
|
Office equipment and furniture
|
|
311,371
|
|
|
311,371
|
Total property and equipment
|
|
1,237,886
|
|
|
1,237,886
|
Less accumulated depreciation and amortization
|
|
(1,237,886)
|
|
|
(1,237,886)
|
Total property and equipment, net
|
$
|
-
|
|
$
|
-
|
F-12
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 4
RELATED PARTY TRANSACTIONS
The Company has an agreement with the Company's former President and CEO, pursuant to which, he is entitled to three percent royalties based upon the gross revenues earned from the sale of any product of his invention. No royalties were outstanding, paid or earned in fiscal years 2016 and 2015.
As of June 30, 2016 and 2015, the Company has recorded $8,445 and $121,637, respectively, in accounts payable to related parties for services performed by Company officers and directors.
Related Party Loans Payable
On March 6, 2015, the Company entered into a note payable with a family member of a Company Director for $108,500. On May 31, 2016 the note payable and accrued interest were transferred to the Company Director. The note payable accrues interest at 5 percent per annum, is due on March 31, 2017 and is unsecured. The balance of this note is $110,940, (translated into US dollars as of June 30, 2016).
NOTE 5
STOCKHOLDERS' EQUITY
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock. The authorized preferred shares are non-voting and the Board of Directors has not designated any liquidation value or dividend rates. During the financial years ended June 30, 2016 and 2015 no shares of preferred stock were issued or outstanding.
Common Stock
The Company is authorized to issue 250,000,000 shares of common stock with no par value. The holders of the Company's common stock are entitled to one vote for each share held of record on all matters to be voted on by those stockholders.
Common Stock Issuances
During the year ended June 30, 2015 the Company issued 752,800 shares of common stock for services at an average of $0.07 per share for a total cost of $52,422. In addition, the Company issued 5,050,000 shares of common stock for cash at an average of $0.06 per share, yielding total cash proceeds of $319,503. The shares issued for services were valued at the trading price of the common stock on the date the shares were issued.
During the year ended June 30, 2016 the Company issued 15,061,000 shares of common stock for cash at an average of $0.03 per share, yielding total cash proceeds of $431,456. In addition, the company issued 1,975,030 shares of common stock for the conversion of an interest-bearing payable ($23,700) and 190,228 shares of common stock for interest ($3.275) on the payable.
On May 11, 2015, the Company entered into an equity purchase agreement (the
EPA
) with an unrelated investor (
the Investor
). The EPA is a put option contract wherein, at the Company
s sole discretion, up to $5,000,000 of common stock may be sold to the Investor for a period of 3 years ending May 2018. A note payable was entered into as consideration to the Investor for execution of the EPA (see Note 9).
On August 14, 2015, the company issued 43,189 shares of common stock to the investor in pursuit of the EPA yielding total cash proceeds of $1,500 which was received by the company on September 15, 2015.
F-13
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 5
STOCKHOLDERS' EQUITY (CONTINUED)
Treasury Stock
During the year ended June 30, 2012, the Company repurchased 53,756 shares of its common stock for cash. During the year ended June 30, 2013, the Company received 1,000,000 shares of its common stock as a partial redemption of a loan to a non-related third party. The treasury stock was valued using the Treasury Method at $339,387. This value was based on the trading price of the Company
s common stock on the date of acquisition. In addition, during the year ended June 30, 2016, 1 million treasury shares were sold for 20,000 Euros.
Stock Options
From time to time, the Company may issue stock options pursuant to various agreements and other contemporary agreements. At June 30, 2016 and 2015, and during the years ended June 30, 2016 and 2015, no options were issued or outstanding.
NOTE 6 - INCOME TAX PROVISION
The Company
s provision for income taxes was $-0- and $-0- for the years ended June 30, 2016 and 2015 respectively, since the Company incurred net operating losses through June 30, 2016.
Income tax expense for the years ended June 30, 2016 and 2015 differed from the amounts computed by applying the U.S. federal income tax rate of 34 percent as follows:
|
|
|
|
| |
|
June 30,
|
|
June 30,
|
|
2016
|
|
2015
|
Income tax benefit at U.S. federal statutory rates
|
$
|
(143,572)
|
|
$
|
(239,599)
|
Effect of:
|
|
|
|
|
|
Common stock issued for services
|
|
-
|
|
|
17,823
|
Debt issued for financing costs
|
|
-
|
|
|
17,000
|
Change in derivative liability
|
|
9,539
|
|
|
-
|
Loss on sale of asset
|
|
2,358
|
|
|
-
|
Increase (decrease) in valuation allowance
|
|
131,675
|
|
|
204,776
|
Provision for income taxes
|
$
|
-
|
|
$
|
-
|
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at June 30, 2016 and 2015 are presented below:
|
|
|
|
| |
|
June 30,
|
|
June 30,
|
|
2016
|
|
2015
|
Deferred tax assets
|
|
|
|
|
|
Net operating losses
|
$
|
(12,438,182)
|
|
$
|
(12,294,620)
|
Common stock issued for services
|
|
210,918
|
|
|
210,918
|
Debt issued for financing costs
|
|
17,000
|
|
|
17,000
|
Impairment of related party receivables
|
|
436,399
|
|
|
436,399
|
Change in derivative liability
|
|
9,539
|
|
|
-
|
|
|
2,358
|
|
|
-
|
Increase (decrease) in valuation allowance
|
|
11,761,978
|
|
|
11,630,303
|
Net deferred taxes
|
$
|
-
|
|
$
|
-
|
As of June 30, 2016, the Company had net operating loss carryforwards of approximately $12.4 million which is available to offset future taxable federal, state and foreign income. The federal and state carryforward amounts expire in varying amounts between 2016 and 2035. The foreign net operating loss carryforwards do not have an expiration period.
F-14
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 6 - INCOME TAX PROVISION (CONTINUED)
The Company has evaluated its uncertain tax positions and determined that any required adjustments for unrecognized tax benefits would not have a material impact on the Company
s balance sheet, income statement, or statement of cash flows.
The Company
s tax filings for 2011 through 2015 remain subject to examination by tax authorities for federal income tax purposes and by other major taxing jurisdictions to which we are subject. The Company has identified potential penalties for the late filing of reports to taxing authorities. The Company believes that it is more likely than not the penalties will be waived and accordingly has not accrued the penalties in the financial statements.
NOTE 7
COMMITMENTS AND CONTINGENCIES
Indemnities and Guarantees
During the normal course of business, the Company has made certain indemnities and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities include certain agreements with the Company's officers, under which the Company may be required to indemnify such person for liabilities arising out of their employment relationship. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. The majority of these indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make significant payments for these obligations. The Company has recorded a reserve for indemnities and guarantees of $-0- as of June 30, 2016 and 2015.
Leases
The Company leases office facilities from an unrelated third party at $4,110 per month. The office lease contract is maintained on a month-to-month basis.
The Company also leases an automobile under an operating lease. The lease provides for a lease payment of $742 per month beginning August 2015 expiring August 2018.
NOTE 8
STOCK-BASED COMPENSATION
The Company has applied the disclosure provisions of ASC 718 for the years ended June 30, 2016 and 2015. There were no common shares or stock options outstanding, issued or granted to employees during these reporting periods.
On April 28, 2004, the Company adopted the 2004 Employee Stock Incentive Plan (
the Plan
). Under the terms of this plan the Board was authorized to issue up to 1,000,000 shares of common stock to certain eligible employees of the Company or its subsidiaries. All of these shares were issued pursuant to the plan prior to June 30, 2007. On September 22, 2008 the Company adopted the 2008 Amended and Restated Long-Term Equity Incentive Plan, whereby the Board was authorized to issue up to 10,000,000 shares of common stock (including incentive stock options) to certain eligible employees, directors, and/or consultants of the Company or its subsidiaries. During the years ended June 30, 2016 and 2015, respectively, the Company issued no shares pursuant to this Plan. All shares available under the 2008 Long-Term Equity Incentive Plan had been issued as of June 30, 2016.
NOTE 9
NOTE PAYABLE
On May 11, 2015, the Company entered into an unsecured note payable for $50,000 (related to the EPA previously disclosed in note 5) due on November 30, 2015 with interest accruing at 10% annually. During the year end June 30, 2016 the investor converted $23,700 of the note into 1,975,030 shares. The remaining amount of $26,300 was paid back in March 2016.
F-15
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
NOTE 10
SUBSEQUENT EVENTS
Subsequent to the year ended June 30, 2016, the Company issued 9,149,000 shares of common stock for cash at $0.012 per share to three unrelated investors, yielding total cash proceeds of $109,870. Additionally, the Company issued 444,000 shares of common stock for services at an average of $0.014 per share for a total cost of $6,083.
F-16
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the date of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC
s rules and forms.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC
s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management
s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of the internal control over financial reporting as of June 30, 2016, using the criteria established in
Internal Control
Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Based on the evaluation of the effectiveness of the internal controls over financial reporting as of June 30, 2016, management has concluded that our internal controls over financial reporting were not effective as of the end of the period covered by this report.
As a result of management
s assessment, management has determined that there is a material weakness due to the lack of segregation of duties. In order to address and resolve this weakness we will endeavor to locate and appoint additional qualified personnel to the board of directors and pertinent officer positions as our financial means allow. To date, our limited financial resources have not allowed us to hire the additional personnel necessary to address this material weakness.
Additionally, as a result of management
s assessment, management has determined that there is a significant deficiency with regard to the lack of a backup process for electronic financial information. There is no stored backup offsite or in a media safe, and as such, there are no regularly run test restorations of said financial information. In order to address and resolve this deficiency we are currently
36
researching the options available given our financial means to have a regularly scheduled and dependable offsite backup of our Company records.
Lastly, the Company has not instituted specific anti-fraud controls. While management found no evidence of fraudulent activity, the chief accounting officer has access to both accounting records and corporate assets, principally the operating bank account. Management believes this exposure to potential fraudulent activity is not significant either to the operations of the company or to the financial reporting; however, management is in the process of instituting controls specifically designed to address this material weakness, so as to prevent and detect
on a timely basis
any potential loss due to fraudulent activity.
This Annual Report does not include an attestation report of the company's 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 the company to provide only management's report in this annual report.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter (our fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The term
internal control over financial reporting
is defined as a process designed by, or under the supervision of, the registrant
s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant
s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
(a) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;
(b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and
(c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant
s assets that could have a material effect on the financial statements.
ITEM 9B.
OTHER INFORMATION
None.
37
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Identity of directors and executive officers
The following table sets forth the names and ages of the current directors and executive officers of Sangui BioTech International, Inc., their principal offices and positions and the date each such person became a director or executive officer. Our executive officers are elected annually by the Board of Directors. Our directors serve one-year terms or until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. There are no family relationships between any of the directors and executive officers. In addition, there was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected as an executive officer.
The directors as of June 30, 2016 were as follows:
|
|
| |
Name
|
Age
|
Position with the Company
|
Director Since
|
Hubertus Schmelz
|
60
|
Non-Executive Director
|
Dec 18, 2008
|
|
|
|
|
Thomas Striepe
|
54
|
CEO
|
Feb 7, 2005
|
None of the Directors are related to one another. None of the independent Directors has a business or professional relationship with SGBI and/or the other Directors and substantial shareholders of SGBI, except as follows:
Since January 2004, the subsidiary of the Company has an agreement with Hubertus Schmelz under which the latter serves as a Managing Director on an hourly basis.
The day-to-day operations of SGBI are entrusted to the Executive Directors of SGBI.
The business and working experience of the Directors and key Executive Officers of SGBI as of June 30, 2016, are set out below:
THOMAS STRIEPE, is Vice President Accounting and Controlling at Treukonzept Finance GmbH, Hamburg, Germany, a financial services company. Prior to joining Treukonezpt Finance GmbH in 2004, he held management positions in the accounting departments of several German and international corporations. He holds an MBA of Hamburg University.
.
38
HUBERTUS SCHMELZ, is the General Manager of SanguiBioTech GmbH. He was appointed to this position effective December 16, 2003. Prior to joining Sangui he acted as a legal and business consultant. During the last decade prior to 2000 he was entrusted with numerous business development projects by the German Treuhandanstalt in restructuring the economy of Eastern Germany. After having studied law he acted as legal counsel in several positions.
There are no arrangements or understandings between any of the directors or executive officers, or any other person or person pursuant to which they were selected as directors and/or officers.
Significant Employees
All but one individuals serving as scientific or administrative staff have been engaged on the basis of consulting agreements. They include non-disclosure and exclusivity sections and secure the ongoing cooperation. Key personnel the expertise and abilities of which would be difficult to replace includes Dr. Harald Poetzschke.
Directorships
No Director of the Company or person nominated or chosen to become a Director holds any other directorship in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any other company registered as an investment company under the Investment Company Act of 1940.
Family Relationships
There are no family relationships between any of the directors, officers or employees of the Company.
Involvement in Certain Legal Proceedings
During the past ten years, no present director, executive officer or person nominated to become a director or an executive officer of the Company has been or filed:
1.
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2.
Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.
Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i.
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or
39
insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii.
Engaging in any type of business practice; or
iii.
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
4.
Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
5.
Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6.
Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7.
Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i.
Any Federal or State securities or commodities law or regulation; or
ii.
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii.
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8.
Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Promoters and Control Persons
None.
40
Audit Committee and Audit Committee Financial Expert
The Company has no separately designated standing audit committee or another committee performing similar functions. The Board of Directors acts as the audit committee. None of the directors qualifies as an Audit Committee Financial Expert.
Material Changes to the Method by Which the Shareholders May Recommend Nominees to the Board of Directors
None.
Section 16 (a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers, directors and persons who own more than ten percent of the Company's Common Stock, to file initial reports of beneficial ownership on Form 3, changes in beneficial ownership on Form 4 and an annual statement of beneficial ownership on Form 5, with the SEC. Such executive officers, directors and greater than ten percent shareholders are required by SEC rules to furnish the Company with copies of all such forms that they have filed.
Based solely upon a review of copies of the reports filed, we believe that during the year ended June 30, 2016, all executive officers, directors and persons who own more than ten percent of the Company's Common Stock are in compliance with such regulations.
Code of Ethics
As of the date of this report the Company has not adopted a code of ethics.
Audit Committee and Audit Committee Financial Expert
Our board of directors is comprised of two directors, none of which is an outside independent director, and as of the date hereof we have not established an audit committee. Accordingly, our board of directors presently performs the functions that would customarily be undertaken by an audit committee.
41
ITEM 11.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to our Officers for all services rendered in all capacities to us for the fiscal periods indicated.
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
|
Stock
|
|
Option
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
(1)
|
|
Bonus ($)
|
|
Awards ($)
|
|
Awards ($)
|
|
($)
|
Dr. Joachim Fleing
(2)
Chief Financial Officer
|
|
2016
2015
|
|
11,441
41,181
|
|
-
-
|
|
-
-
|
|
-
-
|
|
11,441
41,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Striepe
Chief Executive Officer
|
|
2016
2015
|
|
0
0
|
|
-
-
|
|
-
-
|
|
-
-
|
|
0
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hubertus Schmelz
(3)
|
|
2016
2015
|
|
0
144,370
|
|
-
-
|
|
-
-
|
|
-
-
|
|
0
144,370
|
(1)
All figures are expressed in United States Dollars (
USD
); for the German management personnel, the EURO or DM was converted to USD using the average exchange rate of the period July 1 through June 30 for each year.
(2)
Dr. Joachim Fleing stepped down from his positions as a Director and Officer of the Company on October 27, 2015. Compensation for Dr. Fleing resulted from a communications service agreement, and a remuneration agreement. See Item 13, below.
(3)
Hubertus Schmelz serves as the Chief Executive Officer of the Company
s 90% owned subsidiary, Sangui Biotech, GMBH.
Narrative Disclosure to Summary Compensation Table
There are no other employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiary, any change in control, or a change in the person
s responsibilities following a change in control of the Company.
There are no agreements or understandings for any executive officer to resign at the request of another person. None of our executive officers acts or will act on behalf of or at the direction of any other person.
Outstanding Equity Awards at Fiscal Year-End Table and Narrative
The Company had no outstanding equity awards at fiscal year-end.
42
Compensation of Directors
The table below summarizes all compensation awarded to, earned by, or paid to our Directors for all services rendered in all capacities to us for the fiscal periods indicated.
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
or Paid
|
|
Stock
|
|
Option
|
|
|
Name
|
|
in Cash ($)
|
|
Awards ($)
|
|
Awards ($)
|
|
Total ($)
|
Thomas Striepe
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Hubertus Schmelz
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Joachim Fleing
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Narrative to Director Compensation Table
Directors serve in this position without compensation and there are no standard or other arrangements for their compensation. There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any Director that would result in payments to such person because of his or her resignation with the Company, or its subsidiary, in the event of any change in control of the Company. There are no agreements or understandings for any Director to resign at the request of another person. None of our Directors or executive officers acts or will act on behalf of or at the direction of any other person.
Other Contracts
None.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance under Equity Compensation Plans
No securities have been authorized for issuance as part of any Equity Compensation Plan.
2004 Stock Incentive Plan
On April 28, 2004, the Company adopted the 2004 Employee Stock Incentive Plan. Under the terms of this plan the Board was authorized to issue up to 1,000,000 shares of common stock to certain eligible employees of the company or its subsidiary. All 1,000,000 shares of common stock were issued under the plan in Sangui
s 2005 and 2006 financial years.
2008 Amended and Restated Long-Term Equity Incentive Plan
On October 22, 2008, the Company adopted the 2008 Amended and Restated Long-Term Equity Incentive Plan, whereby the Board was authorized to issue up to 10,000,000 shares of common stock (including incentive stock options) to certain eligible employees, directors, and consultants of the Company or its subsidiaries. All shares available under the 2008 Long-Term Equity Incentive Plan had been issued by June 30, 2013.
43
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of June 30, 2016, certain information concerning ownership of shares of Common Stock by any person who is the beneficial owner of more than 5% of the issued and outstanding Common Stock of the Company.
|
|
| |
|
|
|
|
Title of
Class
|
Name and
Address of
Beneficial
Owner
|
Amount and
Nature of
Beneficial
Owner
|
Percent of
Class
|
|
|
|
|
Common Stock
|
Wolfgang Jensen
Am Berge 9
21376 Eyendorf
Germany
|
11,608,273
|
7.0%
|
|
|
|
|
Common Stock
|
Hubertus Schmelz
Alfred Herrhausen Street 44
58455 Witten
Germany
|
14,277,601
|
8.6%
|
|
|
|
|
Common Stock
|
SanderStrothmann GmbH
Brüsseler Straße 2
49124 Georgsmarienhütte
Germany
|
8,406,837
|
5.1%
|
44
Security Ownership of Management
The following table sets forth, as of June 30, 2016, certain information concerning ownership of shares of Common Stock by each director of the Company and by all executive officers and directors of the Company as a group:
|
|
| |
|
|
|
|
Title of
Class
|
Name and
Address of
Beneficial
Owner
|
Amount and
Nature of
Beneficial
Owner
(1)
|
Percent of
Class
|
|
|
|
|
Common Stock
|
Thomas Striepe
Alfred Herrhausen Street 44
58455 Witten
Germany
|
1,350,000
|
0.8%
|
|
|
|
|
Common Stock
|
Hubertus Schmelz
Alfred Herrhausen Street 44
58455 Witten
Germany
|
14,277,601
|
8.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
All Officers and Directors as a Group (2 persons)
|
15,627,601
|
9.4%
|
Percentages are calculated on the basis of 165,372,503 shares issued on June 30, 2016.
Changes in Control
To the best of the Company
s knowledge there are no present arrangements or pledges of the Company's securities, which may result in a change in control of the Company.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions with related persons
Except as otherwise disclosed below, no Director, substantial shareholder or Executive Officer of SGBI was or is an interested party in any transaction undertaken by SGBI or its subsidiary within the last two years.
The Company has an agreement with the Company's former President and CEO, pursuant to which he is entitled to three percent royalties of gross revenues earned with any product based on his inventions. No royalties were outstanding, paid or earned in fiscal years 2016 and 2015.
As of June 30, 2016 and 2015, the Company has recorded $8,445 and $121,637, respectively, in accounts payable to related parties for services performed by Company officers and directors.
45
Related Party Loans Payable
On March 6, 2015, the Company entered into a note payable with a family member of a Company Director for $108,500.
On May 31, 2016 the note payable and accrued interest were transferred to the Company Director.
The note payable accrues interest at 5 percent per annum, is due on March 31, 2017 and is unsecured. The balance of this note is $110,940
Consulting Contract with Joachim Fleing, PhD.
The Company signed a consulting contract with Joachim Fleing, PhD, covering certain investor relations services on July 17, 2002. When the latter was appointed a director of the company effective December 16, 2003, the Board of Directors unanimously agreed that this contract should persist. This agreement was cancelled effective February 24, 2012, and replaced by a remuneration agreement under which his services as an executive of the company will be remunerated on an hourly basis.
Dr. Joachim Fleing stepped down from his positions as a Director and Officer of the Company effective October 27, 2015.
Parents
Not applicable.
Promoters and Control Persons
Not applicable.
46
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Independent Registered Public Accountants
The Company
s independent accountants for the fiscal year ended June 30, 2015 and 2016 were Sadler, Gibb & Associates, LLC.
(a)
Audit Fees
. For the fiscal year ended 2015, the aggregate fees billed by Sadler, Gibb & Associates for services rendered for the audits of the annual financial statements and the review of the financial statements included in the quarterly reports on Form 10-Q or services provided in connection with the statutory and regulatory filings or engagements for those fiscal years were $19,000
|
| |
(in $)
|
2016
|
2015
|
Audit Fees
|
24,000
|
19,000
|
Audit related fees
|
-0-
|
-0-
|
Tax fees
|
-0-
|
-0-
|
Other fees
|
-0-
|
-0-
|
For the fiscal year ended 2016, the aggregate fees billed by Sadler, Gibb & Associates for services rendered for the audits of the annual financial statements and the review of the financial statements included in the quarterly reports on Form 10-Q or services provided in connection with the statutory and regulatory filings or engagements for those fiscal years were $24,000.
(b)
Audit-Related Fees
. For the fiscal year ended 2016 and 2015 fees billed by Sadler, Gibb & Associates were an aggregate $0 for any audit-related services other than as set forth in paragraph (a) above.
(c)
Tax Fees
. For the fiscal years ended 2016 and 2015 Sadler, Gibb & Associates did not bill any fees for tax compliance services. The auditors did not provide tax-planning advice for the fiscal years ended 2015 and 2014.
(d)
All Other Fees
. None.
47
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Index to Exhibits
| |
|
|
3.1
|
Articles of Incorporation of the Company
(1)
|
3.2
|
Bylaws of the Company
(1)
|
3.3
|
Amended and Restated Articles of Incorporation of the Company
(2)
|
3.4
|
Amended and Restated Bylaws of the Company
(2)
|
21.1
|
Subsidiaries of the Company
(3)
|
31.01
|
Certification of CEO Pursuant to Rule 13a-14(a) and 15d-14(a), filed herewith
|
31.02
|
Certification of CFO Pursuant to Rule 13a-14(a) and 15d-14(a), filed herewith
|
32.01
|
Certification Pursuant to Section 1350 of Title 18 of the United States Code, filed herewith
|
Notes:
(1)
Previously filed as an exhibit to the report on Form 8-K, filed on or about April 4, 2000, and incorporated herein by reference
(2)
Previously filed as an exhibit to the report on Form 10-Q, filed on February 25, 2009, and incorporated herein by reference
(3)
Previously filed as an exhibit to the report on Form 10-QSB for the period ended September 30, 2006, filed on June 10, 2008, and incorporated herein by reference
48
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.
SANGUI BIOTECH INTERNATIONAL, INC.
| |
/s/ Thomas Striepe
Thomas Striepe
Chief Executive Officer
Principal Executive Officer
Chief Financial Officer
Principal Financial Officer
|
October 12, 2016
|
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.
|
| |
Signatures
|
Title
|
Date
|
/s/ Thomas Striepe
Thomas Striepe
|
Director
|
October 12, 2016
|
|
|
|
/
s/ Hubertus Schmelz
Hubertus Schmelz
|
Director
|
October 12, 2016
|
49