The accompanying notes are an integral part of the consolidated financial statements
F-5
Global Boatworks Holdings, Inc.
Consolidated Statements of Cash Flows
Year ended December 31,
|
|
|
|
|
2016
|
|
2015
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net loss
|
$
(1,281,483)
|
|
$
(316,558)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
Initial fair value of derivative
|
223,096
|
|
-
|
Change in fair value of derivative
|
98,089
|
|
-
|
Amortization of stock settled debt premium
|
34,467
|
|
-
|
Issuance of redeemable preferred stock for services
|
1,000
|
|
-
|
Amortization of architectural plans
|
1,368
|
|
-
|
Amortization of common stock issued for prepaid services
|
150,970
|
|
60,000
|
Amortization of debt discounts
|
442,407
|
|
12,498
|
Amortization of prepaid loan fee and interest
|
8,903
|
|
8,352
|
Changes in operating assets and liabilities:
|
|
|
|
(Increase) decrease in Luxuria construction in progress
|
(359,338)
|
|
(2,163)
|
(Increase) decrease in prepaid expenses
|
(18,500)
|
|
(17,187)
|
Increase (decrease) in accounts payable and accrued expenses
|
117,381
|
|
15,002
|
Increase (decrease) in accrued interest expense
|
1,972
|
|
1,973
|
|
|
|
|
Net cash used in operating activities
|
(579,668)
|
|
(238,083)
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
Purchase of property and equipment
|
-
|
|
(10,100)
|
Loan to stockholder
|
(50,000)
|
|
-
|
|
|
|
|
Net cash used in investing activities
|
(50,000)
|
|
(10,100)
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Proceeds from sale of common stock
|
119,500
|
|
157,000
|
Proceeds from cash advance on credit card
|
3,500
|
|
-
|
Proceeds from officer loan
|
200
|
|
-
|
Commissions paid on third party loan
|
(22,500)
|
|
-
|
Proceeds from third party loan
|
492,000
|
|
135,000
|
|
|
|
|
Net cash provided by financing activities
|
592,700
|
|
292,000
|
|
|
|
|
Net increase (decrease) in cash
|
(36,968)
|
|
43,817
|
|
|
|
|
CASH,
beginning of year
|
47,479
|
|
3,662
|
|
|
|
|
CASH,
end of year
|
$
10,511
|
|
$
47,479
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
Interest paid in cash
|
$
13,362
|
|
$
176
|
Income tax paid in cash
|
$
-
|
|
$
-
|
|
|
|
|
Non-Cash Investing and Financing Activities:
|
|
|
|
Common stock issued for prepaid services
|
$
656,477
|
|
$
60,000
|
Common stock issued for loan discount
|
$
10,000
|
|
$
25,000
|
Common stock issued to settle debt
|
$
51,700
|
|
$
-
|
Common stock issued to acquire construction in process
|
$
70,000
|
|
$
-
|
Modification of note to convertible note
|
$
51,700
|
|
$
-
|
Initial derivative value recorded as a discount
|
$
459,500
|
|
$
-
|
Reclassification of premium upon conversion
|
$
34,467
|
|
$
-
|
Debt issued for prepaid interest and loan fees
|
$
-
|
|
$
16,700
|
The accompanying notes are an integral part of the consolidated financial statements
F-6
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(1) NATURE OF OPERATIONS
Global Boatworks Holdings, Inc., (the Company, Global Boatworks), was formed on May 11, 2015, under the laws of the State of Florida. At formation the Company acquired 100% of the membership interests of Global Boatworks, LLC, (LLC) which was formed on June 16, 2014, under the laws of the State of Florida. The Companys business activities to date have primarily consisted of the formation and implementation of a business plan for building luxury floating vessels on a barge bottom, the rental activities relating to the existing vessel, Miss Leah, and the construction of the new vessel, Luxuria I. On September 25, 2014, effective the close of business September 24, 2014, the Company acquired a luxury floating vessel from Financial Innovators Corp., (Predecessor or Financial Innovators), and operates it as a rental property, based in Boston harbor.
The accompanying consolidated financial statements include the activities of Global Boatworks Holdings, Inc. and Global Boatworks, LLC, its wholly owned subsidiary.
(2) PRINCIPLES OF CONSOLIDATION, USE OF ESTIMATES
AND GOING CONCERN
a) Principles of Consolidation
The comparative figures shown throughout these consolidated financial statements are the historical results of Global Boatworks Holdings, Inc. inclusive of its wholly owned subsidiary Global Boatworks, LLC. The Company has retroactively restated amounts within certain components of Stockholders' Deficit on the accompanying consolidated financial statements and footnotes to account for the acquisition and reorganization of Global Boatworks, LLC. All intercompany balances and transactions have been eliminated.
b) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Significant estimates in the accompanying consolidated financial statements involved the valuation of construction in progress, depreciable life of the floating vessel, valuation of long lived assets, valuation of derivatives, valuation of common and preferred stock issued as compensation and valuation allowance on deferred income tax assets.
c) Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. It is managements opinion that the Companys financial position and operating results raise substantial doubt about the Companys ability to continue as a going concern, as reflected by the accumulated deficit and stockholders deficit of $1,604,911 and $515,517 at December 31, 2016. In addition the Company had a net loss of $1,281,483 and used cash of $579,668 in operating activities in 2016. The Company is expected to have increasing costs and expenses as a result of becoming a publicly held company and constructing new vessels without immediate increases in revenues as they continue to implement their plan of operations. The ability of the Company to continue as a going concern is dependent upon increasing operations, developing sales and obtaining additional capital and financing. The Company is seeking to raise sufficient equity capital to enable it to pay off existing debt. It is also attempting to sell the Miss Leah and the first luxury floating vessel it currently owns. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
F-7
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Cash and cash equivalents
The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. We had no financial instruments that qualified as cash equivalents at December 31, 2016 or 2015.
b) Construction in progress
Costs to construct vessels are capitalized during the construction phase. Upon completion of a vessel the Company will either sell the vessel or place it in service as a rental property. If the vessel is to be leased, the construction costs are transferred to property and equipment and depreciated over its useful life.
c) Property and equipment
All property and equipment are recorded at cost and depreciated over their estimated useful lives, using the straight-line method. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.
d) Impairment of long-lived assets
A long-lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying value amount may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the long-lived assets exceeds its fair value.
e)
Financial instruments and Fair value measurements
ASC 825-10 Financial Instruments, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
ASC 825 also requires disclosures of the fair value of financial instruments. The carrying value of the Companys current financial instruments, which include cash and cash equivalents, accounts payable and accrued liabilities approximates their fair values because of the short-term maturities of these instruments.
FASB ASC 820 Fair Value Measurement clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:
F-8
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
e)
Financial instruments and Fair value measurements
(continued)
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following is the Companys assets and liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2016 and 2015, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3):
|
|
|
|
|
|
|
2016
|
|
2015
|
Level 3 Embedded Derivative Liability
|
$
|
780,685
|
|
$
|
-
|
Changes in Level 3 assets measured at fair value for the year ended December 31, 2016 were as follows:
|
|
|
Balance, December 31, 2015
|
$
|
-
|
Initial valuation
|
|
682,596
|
Change in fair value
|
|
98,089
|
Balance, December 31, 2016
|
$
|
780,685
|
f) Revenue recognition
Rental Revenue
Revenue is recognized when earned, generally starting when the rental customer takes temporary possession of the floating vessel and through their contracted stay. Revenue is recognized on a gross basis in accordance with ASC 605-45. Cost of Revenue includes the marina dockage fees and fees charged by the web site Homeaway, where the floating vessel is advertised for rent.
Sale Revenue
Revenue is recognized when earned, generally at closing of the sale of a vessel. Revenue is recognized on a gross basis in accordance with ASC 605-45. Cost of Revenue includes the capitalized cost of constructing a vessel.
g)
Stock compensation for services rendered
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the shorter of period the employee or director is required to perform the services in exchange for the award or the vesting period. The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
F-9
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g)
Stock compensation for services rendered
(continued)
Pursuant to ASC 505-50, for share-based payments to non-employees, compensation expense is determined at the measurement date. The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.
h)
Income Taxes
The LLC and the predecessor company, (Financial Innovators), are pass through entities for income tax purposes, therefore there is no income tax provision or liability for these entities through the Companys incorporation date of May 11, 2015. As a result of the reorganization the Company became a taxable entity on May 11, 2015. Upon becoming a taxable entity, the Company began to use the asset and liability method of ASC 740 to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.
The Company follows the provisions of ASC 740-10, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.
The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
As of December 31, 2016, the tax years 2016, 2015 and 2014 for the LLC and 2016 and 2015 for the corporation remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
i) Convertible Notes With Fixed Rate Conversion Features
The Company may issue convertible notes, which are convertible into common shares at a fixed discount to the price of the common stock at the time of conversion. The Company measures the fair value of the note at the time of issuance at the fixed monetary value of the payable and records any premium as interest expense on the issuance date.
F-10
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
j) Debt issue costs
The Company accounts for debt issuance cost paid to lenders, or third parties. The costs associated with the issuance of debt are recorded as debt discount and amortized over the life of the underlying debt instrument.
k) Net income (loss) per share
Basic loss per share excludes dilution and is computed by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the Company. Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless consideration of such dilutive potential shares would result in anti-dilution. There were 16,511,370 and zero common stock equivalents for the years ended December 31, 2016 or 2015, respectively.
l) Derivatives
The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a convertible note containing an embedded derivative instrument, the instrument is marked to fair value at the conversion date and that fair value is reclassified to equity. The shares issued upon conversion of the note are recorded at their fair value with gain or loss recognition as applicable.
Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.
m)
Recent accounting pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time based on when control of goods and services transfer to a customer. As a result, we do not expect significant changes in the presentation of our financial statements. This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and entities are permitted to apply either prospectively or retrospectively; early adoption is permitted.
In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet.
F-11
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
m)
Recent accounting pronouncements
(continued)
As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. This ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and entities are permitted to apply either prospectively or retrospectively; early adoption is permitted. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on the Companys financial position, results of operations and cash flows.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The new standard principally affects accounting standards for equity investments, financial liabilities where the fair value option has been elected, and the presentation and disclosure requirements for financial instruments. Upon the effective date of the new standards, all equity investments in unconsolidated entities, other than those accounted for using the equity method of accounting, will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification and therefore, no changes in fair value will be reported in other comprehensive income for equity securities with readily determinable fair values. The new guidance on the classification and measurement will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and early adoption is permitted. The Company is in the process of evaluating the impact of the adoption of ASU 2016-01 on the Companys financial position, results of operations and cash flows.
In February 2016, the FASB issued ASU 2016-02, Leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. The ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of ASU 2016-02 will have on the Companys consolidated financial statements.
(4) CONSTRUCTION IN PROGRESS
Construction in progress represents the capitalized construction of its Luxuria floating vessel(s) being constructed for sale or to be placed in rental service. At December 31, 2016 and 2015, the Company has capitalized the $431,501 and $2,163 expended in the construction of its first Luxuria floating vessel.
(5) PROPERTY AND EQUIPMENT
Property and Equipment consists of the following at December 31,
|
|
|
|
|
2016
|
|
2015
|
Miss Leah floating vessel
|
$
-
|
|
$
-
|
Architectural plans
|
12,766
|
|
12,766
|
Less: accumulated depreciation and amortization
|
(1,368)
|
|
-
|
|
|
|
|
Total PP&E
|
$
11,398
|
|
$
12,766
|
F-12
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(5) PROPERTY AND EQUIPMENT (continued)
On September 25, 2014, the Company acquired the Miss Leah, a two story luxury floating vessel in the Cape Cod architectural style built on a barge platform. The Miss Leah is based at a marina in Boston harbor. It is rented out primarily through a third party rental management company on a short term vacation type basis. The Miss Leah was built in 2004 by the founder of the Company and subsequently sold in 2006 to his brother who established the Predecessors rental business. Due to the related party relationship between the Company and the Predecessor the luxury floating vessel was recorded on the Companys books at its original cost basis of $0 based on its fully depreciated value at the transfer date.
The Company capitalized the costs of developing the architectural plans for the Luxuria model floating vessel and has begun amortizing the costs over their estimated useful life of seven years, beginning April 1, 2016. Amortization expense for the year ended December 31, 2016, was $1,368.
(6) RENTAL PROPERTY AND RELATED NOTE PAYABLE
On September 25, 2014, the Company acquired the Miss Leah, a two story luxury floating vessel in the Cape Cod architectural style built on a barge platform. The Miss Leah is based at a marina in Boston harbor. It is rented out primarily through a third party rental management company on a short term vacation type basis. The Miss Leah was built in 2004 by the founder of the Company and subsequently sold in 2006 to his brother who established the Predecessors rental business.
The terms of this acquisition are for a payable to the related party Predecessor in the amount of $100,000, carrying interest at 2% per annum from the effective date of the transfer date of September 25, 2014 with all principal and interest due on the maturity date of June 20, 2022, which was memorialized in the form of a promissory note in June 2015, effective September 25, 2014. Due to the related party relationship between the Company and the Predecessor the luxury floating vessel was recorded on the Companys books at its original cost basis of $0 based on its fully depreciated value at the transfer date. Accordingly, the Company charged additional paid-in capital as a distribution for $100,000. Outstanding principal and interest totaled $104,482 at December 31, 2016.
(7) SHORT TERM LOAN AND SHORT TERM CONVERTIBLE NOTE
a) Short term note
On July 9, 2015, the company entered into a loan agreement in the amount of $151,700 with a shareholder. The company issued 250,000 common shares to the shareholder as consideration for providing us the loan. The shares were valued at $25,000, or $0.10 per share (based on the recent private placement sales) was recorded as a discount and is being amortized at a rate of $2,083 per month over the life of the loan. The note bears interest at the rate of 10%. Prepaid interest in the amount of $15,000 and a loan fee of $1,700 were deducted from the proceeds of the loan. These were amortized each month at the rate of $1,250 and $142 over the life of the loan, respectively. We were obligated to pay the principal and interest due on July 9, 2016. The loan was secured by the Miss Leah, our company owned vessel. The Company paid $6,000 in interest to the holder during the third quarter 2016.
The note holder sold $51,700 of this note to a third party in August 2016, and the Company modified the new $51,700 note to add a conversion feature at a conversion rate of 60% of the trading price of the
F-13
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(7) SHORT TERM LOAN AND SHORT TERM CONVERTIBLE NOTE (continued)
a) Short term note
(continued)
Companys common stock. This note is considered stock settled debt and accordingly the Company recorded a premium on the debt of $34,467 as a charge to interest expense on the modification date. This third party converted $51,700 of this in exchange for 1,574,740 shares in August and the fourth quarter 2016, and the premium was reclassified to additional paid in capital.
The $100,000 remaining balance of the original note was renegotiated into a new note on December 5, 2016 which matures on July 15, 2017. This new note carries interest at a rate of 16.8% which is payable in cash monthly. The Company paid $4,200 in interest during the fourth quarter 2016. The note balance at December 31, 2016, is $100,000.
b) Short term convertible note
Short term convertible debt was as follows at December 31, 2016:
|
|
Convertible note
|
$
610,000
|
Less: unamortized debt discounts
|
(180,094)
|
|
|
Total convertible note, net
|
$
429,906
|
On August 11, 2016, pursuant to a securities purchase agreement and a secured convertible promissory note for $610,000, the Company drew $305,000 and received $227,500 in cash under this six month secured convertible promissory note. This note is secured by all the assets of the Company, inclusive of the Miss Leah and the Luxuria 1, and the member interests of its wholly owned LLC. This note is structured in two parts, first the initial $305,000 as drawn and a subsequent $305,000 which can be drawn at the Companys option in amount/s determined by the Company. This note does not carry a stated interest rate, but carries an Original Issue Discount (OID) that totals $100,000 and is proportional to the total amount borrowed. An OID of $50,000 was recorded as a discount to the note for the initial draw and is being amortized over the six month life of the note. In addition, the Company is required to pay $10,000 of the lenders legal fees (pro rata to the draws) and $22,500 of brokerage commission which was withheld from the initial $305,000 draw, both of which were also recorded as debt discounts and are being amortized over the six month life of the note. Also, the Company is required to issue 100,000 shares of restricted common stock which was valued at $0.10 per share based on recent stock sales and recorded as a discount to the note and is being amortized over the six month life of the note. This note requires a $200,000 partial prepayment if and when the Company sells the Miss Leah. The note is personally guaranteed by the Companys CEO, Robert Rowe. In event of default the note carries an interest rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law.
On October 5, 2016, the Company drew an additional $122,000 and received $92,000 in cash under this six month secured convertible promissory note. An OID of $20,000 was recorded as a discount to the note for the second draw and is being amortized over the remaining life of the note. Brokerage commission of $8,000 and $2,000 of the legal costs, were paid from this draw and recorded as debt discounts and are being amortized over the remaining life of the note. On November 3, 2016, the Company drew an additional $183,000 and received $150,000 in cash under this six month secured convertible promissory note. An OID of $30,000 and $3,000 of legal costs were recorded as discounts to the note for the third draw and are being amortized over the remaining life of the note.
F-14
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(7) SHORT TERM LOAN AND SHORT TERM CONVERTIBLE NOTE (continued)
b) Short term convertible note
(continued)
The total note is convertible into common stock upon an event of default as follows:
Lender has the right at any time following an Event of Default, at its election, to convert (each instance of conversion is referred to herein as a Conversion) all or any part of the Conversion Eligible Outstanding Balance into shares (Conversion Shares) of fully paid and non-assessable common stock, $0.0001 par value per share (Common Stock), of Company as per the following conversion formula: the number of Conversion Shares equals the amount being converted (the Conversion Amount) divided by the Conversion Price (as defined below).
Subject to the adjustments set forth herein, the conversion price (the Conversion Price) for each Conversion shall be equal to 60% (the Conversion Factor) multiplied by the lowest Closing Bid Price in the twenty (20) Trading Days immediately preceding the applicable Conversion. Additionally, if at any time after the Effective Date, the Conversion Shares are not DTC Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future Conversions. Finally, in addition to the Default Effect, if any Major Default occurs after the Effective Date (other than an Event of Default for failure to pay the Conversion Eligible Outstanding Balance on the Maturity Date), the Conversion Factor shall automatically be reduced for all future Conversions by an additional 5% for each of the first three (3) Major Defaults that occur after the Effective Date (for the avoidance of doubt, each occurrence of any Major Default shall be deemed to be a separate occurrence for purposes of the foregoing reductions in Conversion Factor, even if the same Major Default occurs three (3) separate times). For example, the first time the Conversion Shares are not DTC Eligible, the Conversion Factor for future Conversions thereafter will be reduced from 60% to 55% for purposes of this example. If, thereafter, there are three (3) separate occurrences of a Major Default pursuant to Section 4.1(a), then for purposes of this example the Conversion Factor would be reduced by 5% for the first such occurrence, and so on for each of the second and third occurrences of such Major Default.
Due to the variable conversion terms and certain default provisions, the embedded conversion option has been bifurcated and recorded as a derivative liability at an initial fair value of $378,624 with $217,500 recorded as a debt discount and $161,124 as a derivative expense. The October 5, 2016 draw resulted in an initial fair value of $113,616 with $92,000 recorded as a debt discount and $21,616 as a derivative expense. The November 3, 2016 draw resulted in an initial fair value of $190,356 with $150,000 recorded as a debt discount and $40,356 as a derivative expense. The valuation method utilized was the Black-Scholes model with the following range of assumptions: Expected life in years 0.5 to 0.10; conversion price range of $0.21 to $0.036; Bond equivalent yield rate between 0.29% and 0.63% and volatility ranging from 240% to 277%.
(8) COMMITMENTS AND CONTINGENCIES
a) Common Stock
At December 31, 2016, the Company has the obligation to issue 1,100,000 shares of common stock on January 1, 2017; 1,000,000 shares on July 1, 2017 and 1,000,000 shares on January 1, 2018, under a new three year consulting agreement entered into on December 9, 2016. These shares will be valued at the market price for shares at the date they are earned.
F-15
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016 and 2015
(8) COMMITMENTS AND CONTINGENCIES (continued)
b) Leases
We occupy dockage space pursuant to an agreement with Safe Harbor Marina Bay, LLC dated January 29, 2016. We pay annual rents of approximately $14,000. The agreement automatically renews on November 15th of each year. We occupy approximately four hundred (400) square feet of office space without charge at the residence of Robert Rowe our Chief Executive Officer, President, Treasurer and Director, and Leah Rowe, our Secretary.
c) Material Contracts and Agreements
On November 1, 2016, the Company entered into a three year employment agreement with its CEO, Robert Rowe. This agreement calls for him to be paid $20,000 per month in cash and for the Company to issue him 10,000,000 shares of restricted common stock. These shares were issued and valued at the market price on the grant date, $0.0577 per share, for a total of $577,700, which was recorded as prepaid officer compensation and will be amortized over the one year vesting period.
On December 9, 2016, we entered into an agreement (the Agreement) with Oceanside Equities, Inc., (Oceanside), a Florida corporation that provides consulting services. Oceanside agreed to provide us with services from December 9, 2016 until December 8, 2019, in exchange for a one time fee of $20,000 in cash; $16,000 per month accrued and payable in either cash or shares of restricted common stock at the Companys election and three million one hundred thousand (3,100,000) shares of our restricted common stock, issued 1,100,000 on January 1, 2017, 1,000,000 issued on July 1, 2017 and 1,000,000 issued on January 1, 2018. We will value these shares at the market price on the date they are earned which will be recognized over the term of the contract at the rate of 172,222 shares per month.
d) Investment Banking Agreement
In February 2016 the Company entered into a two year investment banking agreement to raise capital. Pursuant to this agreement the Company is obligated to pay a cash success fee between 6% and 10%, depending on the amount raised as well as issue common stock in the amount of 4% of the amount raised.
e) Common Stock Subscription Agreement
In the last quarter of 2014, as memorialized in May 2015, the Company received a stock subscription agreement from a now former officer and director of the Company for 1,500,000 shares of common stock in exchange for $250,000 in cash or cash equivalents, such as labor and materials for the construction of the barge bottom, or $0.167 per share. Through June 30, 2016 this former officer and director has paid $55,000 and received 330,000 shares, respectively. In August 2016, the Company issued 425,000 shares of our restricted common stock to this former officer and director in exchange for the construction of the barge bottom for Luxuria I, delivered in February, valued at $70,000, based on a negotiated agreement.
f) Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2016, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
F-16
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016 and 2015
(9) STOCKHOLDERS DEFICIT
At December 31, 2016 and 2015, the Company has 90,000,000 shares of par value $0.0001 common stock authorized and 21,333,629 and 6,720,000 shares issued and outstanding, respectively. At December 31, 2016 and 2015, the Company has 10,000,000 shares of par value $0.0001 preferred stock authorized and 1,000,000 and zero Redeemable Series A preferred shares issued and outstanding, respectively. The only rights and privileges of these Series A shares is super voting rights, 1,000 votes for each preferred share and the right to redeem the shares for $1,000.
In the first quarter of 2015 the Company issued 100,000 shares of the Companys common stock in payment of $10,000, (or $0.10 per share based on the recent private placement) of prepaid legal fees, due when the Company filed a Form S-1 with the U.S. Securities and Exchange Commission. These shares were expensed in 2015.
In the first quarter of 2015 the Company issued 500,000 shares of the Companys common stock in exchange for prepaid services, valued at $50,000, or $0.10 per share based on the recent private placement, were amortized at the rate of $4,167 per month. This $50,000 was fully expensed in 2015. This consulting contract also calls for the issuance of an additional 500,000 shares in June 2016 in exchange for a second year of such prepaid services.
(See below)
In the first quarter of 2015 the Company received $87,000 in cash in exchange for 870,000 shares of the Companys common stock or $0.10 per share. In the second quarter of 2015 the Company received $16,000 in cash in exchange for 160,000 shares of the Companys common stock or $0.10 per share. In July 2015 the Company received $50,000 in cash toward the existing October 2014 $250,000 subscription agreement in exchange for 300,000 shares of common stock. (See Note 8e) In late July 2015 the Company received $4,000 in cash in exchange for 40,000 shares of the Companys common stock or $0.10 per share. In late July 2015 the Company issued 250,000 shares, valued at $25,000 based on its recent private placement, as a incentive to an existing shareholder who loaned the Company $151,700. (See Note 7a)
Effective February 16, 2016, we entered into an agreement (the Agreement) with StockVest, Inc., a Florida corporation that provides investor relations and public relations services. The agreement was amended on March 1, 2016. As amended StockVest agreed to provide us with services from March 12, 2016 until June 12, 2016, in exchange for $500 and one hundred fifty thousand (150,000) shares of our restricted common stock. We valued these shares at the price of $.10 per share, based on the most recent sale of common stock by the Company, or an aggregate of $15,000 upon issuance, which was recognized over the life of the contract.
In June 2016, the Company issued 250,000 shares of our restricted common stock to a related party consultant and principal stockholder in exchange for $25,000 of cash.
In June 2016 the Company issued 500,000 shares of the Companys common stock to a related party consultant and principal stockholder in exchange for one year of prepaid services, valued at $50,000, or $0.10 per share based on the recent private placement, to be amortized at the rate of $4,167 per month. This was the second issuance as was required under this two year consulting agreement.
(See above)
In June 2016 the Company issued 1,000,000 shares of redeemable Series A preferred stock to the Companys founder and CEO. The Company recorded these shares at their redemption value of $1,000 which approximates fair value.
In August 2016 the Company issued 100,000 shares of our restricted common stock as a loan fee recorded as a discount valued at the price of $10,000 or $0.10 per share based on recent stock sales on a new short-term loan, which is being amortized over the life of the loan (See note 7b).
F-17
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(9) STOCKHOLDERS DEFICIT (continued)
In August 2016, the Company issued 200,000 shares of our restricted common stock to a related party consultant and principal stockholder in exchange for $20,000 of cash.
In August 2016, the Company issued 425,000 shares of our restricted common stock to a former officer and director in exchange for the construction of the barge bottom for Luxuria I, delivered in February, valued at $70,000. (See note 8 e)
In August 2016, the Company issued 600,000 shares of our restricted common stock in exchange for $36,000 of cash.
In September 2016, the Company issued 42,000 shares of our common stock upon conversion of $4,032 of debt. (See note 7 a) Related premium of $2,688 was reclassified to additional paid in capital.
In October and November 2016, the Company issued 1,532,740 shares of our common stock upon conversion of $47,668 of debt. (See note 7 a) Related premium of $31,779 was reclassified to additional paid in capital.
In October 2016, the Company issued 600,000 shares of our restricted common stock in exchange for $36,000 of cash.
In November 2016, the Company issued 10,000,000 shares of restricted common stock to the CEO for future services valued at $577,700, or $0.0577 per share, the trading price of the shares on the grant date. The $577,700 was recorded as prepaid officer compensation and is being amortized over the one year vesting period.
In December 2016, the Company is obligated to issue 41,667 shares of our restricted common stock in exchange for $2,500 of cash.
In December 2016, the Company recorded the issuance of 172,222 shares of our restricted common stock to be issued on January 1, 2017, as these shares were earned in 2016. They were valued at $13,778.
(10) RELATED PARTIES
a) Rental property
On September 25, 2014, the Company acquired the Miss Leah, a luxury floating vessel built on a barge platform from the Predecessor which is owned by the founders brother. As part of this acquisition transaction the Company issued a promissory note in June 2015 to the Predecessor in the amount of $100,000, carrying an interest rate of 2% effective September 25, 2014, with a maturity date of June 20, 2022. The Company recorded the payable in September 2014 which was formalized with this promissory note in June 2015. At December 31, 2016 and 2015, the Company had accrued interest of $4,482 and $2,510, respectively.
b) Related party payable
In the last quarter 2014, the Predecessor continued to receive some of the revenue from and to pay some of the expenses related to the rental of the Miss Leah. The Company has established a payable to the Predecessor of $3,888 for the net differential resultant therefrom and recorded the related revenue and expenses in the Companys records.
F-18
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(10) RELATED PARTIES (continued)
c) Common stock subscription agreement
In the last quarter 2014 as memorialized in May 2015, the Company received a stock subscription agreement from a now former director of the Company for 1,500,000 shares of common stock in exchange for $250,000 in cash or cash equivalents, or $0.167 per share. In 2014 and 2015 this now former director contributed $5,000 and $50,000 and received 30,000 and 300,000 shares, respectively. In 2016 he constructed the barge bottom for the Luxuria I and received 425,000 shares valued at $70,000.
d) Expenses incurred to related parties during each period of operations presented is as follows:
|
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
Commissions - daughter of founder
|
$
2,640
|
|
$
3,197
|
Consulting on architectural plans - brother of founder
|
$
-
|
|
$
8,000
|
Professional fees - significant consultant/stockholder
|
$
55,335
|
|
$
93,000
|
e) Loan to significant consultant/stockholder
The Company extended a short term non-interest bearing loan of $50,000 to a significant consultant/stockholder. At December 31, 2016 this loan was still outstanding and matures April 30, 2017.
(11) - INCOME TAXES
There was no Federal or State Income Tax expense for the year ended December 31, 2016 and the period from May 11, 2015 to December 31, 2015, due to the Companys net loss. Prior to May 11, 2015 the Company was a Limited Liability Company, (LLC), taxed as a partnership and therefore all income or loss was passed through to the members.
The Company's effective income tax expense (benefit) differs from the expected tax expense for Federal income tax purposes, (computed by applying the United States Federal tax rate of 34% to loss before taxes) as follows:
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
Tax (benefit) on net loss before income tax
|
$
(435,704)
|
|
$
(107,630)
|
Effect of state taxes (net of federal benefit)
|
(46,518)
|
|
(11,491)
|
Pre-incorporation LLC net loss
|
-
|
|
21,435
|
Stock compensation
|
56,810
|
|
14,901
|
Debt premiums
|
12,970
|
|
-
|
Derivatives
|
120,862
|
|
-
|
Increase in valuation allowance
|
291,580
|
|
82,785
|
|
|
|
|
Income tax provision
|
$
-
|
|
$
-
|
F-19
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(11) - INCOME TAXES (continued)
The Company recognizes deferred tax assets and liabilities for the tax effects of differences between the financial statements and tax basis of assets and liabilities.
The components of net deferred tax assets and liabilities that have been presented in the Company's financial statements are as follows at December 31,:
|
|
|
|
Deferred income tax assets:
|
2016
|
|
2015
|
Net operating loss carryforward
|
$
374,365
|
|
$
80,000
|
Accrued wages
|
-
|
|
2,785
|
Total deferred tax assets
|
374,365
|
|
82,785
|
|
|
|
|
Valuation allowance
|
(374,365)
|
|
(82,785)
|
|
|
|
|
Net deferred taxes
|
$
-
|
|
$
-
|
The Company records a valuation allowance to reduce deferred tax assets, based on the weight of the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining the need for a valuation allowance, an assessment of all available evidence both positive and negative was required. The Company recorded a valuation allowance of $374,365 and $82,785 in 2016 and 2015, respectively.
At December 31, 2016, the Company has a net operating loss carryforward of $994,859 available to offset future net income expiring through 2036. The utilization of the net operating loss carryforward is dependent on the ability of the Company to generate sufficient taxable income during the carryforward period. In the event that a significant change in ownership of the Company occurs as a result of the issuance of common stock, the utilization of the NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently believe that such a change has occurred.
In accordance with the provisions of ASC 740: Income Taxes, the Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. At December 31, 2016, the Company has no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.
As of December 31, 2016, the tax years 2016, 2015 and 2014 for the LLC and 2016 and 2015 for the corporation remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
(12) CONCENTRATIONS OF RISK
The Company has only one revenue producing asset at this time, the Miss Leah floating vessel, and that asset is located in Boston Harbor. The rental season at this location is generally from March through October. The Company primarily utilizes one booking agent to schedule bookings from customers and collect the revenue. If required the Company believes it could obtain bookings through an alternative provider.
The Company maintains its cash in bank deposit accounts, which may, at times, may exceed federally insured limits. The Company had no cash balances in excess of FDIC insured limits at December 31, 2016 and 2015, respectively.
F-20
Global Boatworks Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2016
and 2015
(13) SUBSEQUENT EVENTS
a) Short Term Debt
On January 5, 2017, pursuant to a securities purchase agreement and a secured promissory note for $830,000 available in five tranches, the Company drew $170,000 and received $150,000 in cash net of $15,000 OID and $5,000 legal fees under this nine month secured promissory note. This note is secured by all the assets of the Company, inclusive of the Luxuria I and the Luxuria II, the member interests of its wholly owned LLC and personally guaranteed by Robert Rowe, CEO of the Company. The lenders security interests are subordinate by law to the security interests of the August 11, 2016 lender. This note is structured in multiple parts, first the initial $170,000 as drawn and a subsequent $660,000 which can be drawn at the Companys option. This note does not carry a stated interest rate, (except it is 22% in event of default as defined in the promissory note), but carries an Original Issue Discount (OID) that totals $75,000 and is pro-rata on each tranche drawn. The OID will be amortized over the remaining life of the note from the date drawn. In addition, the Company is required to pay $5,000 of the lenders legal fees which was applied to the first tranche drawn which will also be recorded as debt discount and will be amortized over the nine month life of the note. The Company received the second tranche of $110,000 and received $100,000 in cash net of $10,000 OID under this note in March 2017.
This note requires a partial prepayment if and when the Company sells the Luxuria I and Luxuria II, upon the receipt of which the lender has agreed to release the security interest in the vessels. This prepayment is 10% of the profits on the Luxuria I and 33% of the profits on the Luxuria II. If the Company rents/leases either the Luxuria I or II, then the prepayment is 20% of the gross rental revenue.
b) Short Term Convertible Note
On February 2, 2017, the lender agreed to extend the maturity of the August 11, 2016 Note from February 11, 2017 to May 11, 2017, in exchange for additional interest of $18,300 due at maturity.
c) Common Stock Issuances
In January 2017, the Company issued 100,000 shares of common stock under a December 5, 2016, promissory note amendment, (see Note 7a), valued at $0.15 per share based on quoted trading price, or a total of $15,000.
In January 2017, the Company issued 1,100,000 shares of common stock under a December 1, 2016, consulting agreement, valued at measurement dates to be determined. This agreement obligates the Company to also issue 1,000,000 shares on July 1, 2017 and 1,000,000 shares on January 1, 2018.
In January 2017, the Company issued 200,000 vested shares of common stock under a January 18, 2017, consulting agreement, valued at $0.08 per share based on quoted trading price on agreement date, or a total of $16,000.
In January 2017, the Company issued 250,000 vested shares of common stock under a January 23, 2017, consulting agreement, valued at $0.135 per share based on quoted trading price on agreement date, or a total of $33,750. This agreement obligates the Company to also issue 250,000 shares on March 9, 2017
F-21
|
|
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
None.
|
|
|
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13(a)-15(b) under the Exchange Act, as the end of the period covered by this annual report on Form 10-K.
Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2016 our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2016.
Limitations of Effectiveness of Control and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
|
|
|
|
ITEM 9B.
|
OTHER INFORMATION
|
Not applicable.
25
ITEM III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the name, age, and position of our executive officers and directors. Executive officers are elected annually by our Board of Directors. Each executive officer holds his office until he resigns, is removed by the Board, or his successor is elected and qualified. Directors are elected annually by our shareholders at the annual meeting. Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.
|
|
|
|
|
|
Name
|
Age
|
Position
|
Robert Rowe
|
67
|
Chief Executive Officer, President, Treasurer Acting Chief Financial Officer and
Principal Accounting Officer and Director
|
Leah Rowe
|
57
|
Secretary
|
Robert Rowe, Chief Executive Officer, President, Treasurer,
Acting Chief Financial Officer and Principal Accounting Officer and Director
Since our inception on June 16, 2014 to present, Robert Rowe has been our Chief Executive Officer, President, Treasurer and Director. From June 2014 to present Mr. Rowe was the Manager of Global Boatworks, LLC. From January 2005 to present Mr. Rowe was an independent contractor and consultant for Rowe Construction in Pompano Beach, Florida. From January 1999 to January 2005 Mr. Rowe was an independent contractor and consultant for the Miles Group in Lynn, Massachusetts.
Mr. Rowe obtained a Bachelor of Science degree in Business Education from Salem State University in June of 1972.
Mr. Rowe spends approximately forty (40) hours each week on our business. As our Chief Executive Officer, President, Treasurer and Director, Mr. Rowe provides his experience in the boat manufacturing and sales.
Leah Rowe, Secretary
Since our inception on June 16, 2014 to present, Leah Rowe has been our Secretary. Ms. Rowe has no prior related work experience.
Mrs. Rowe obtained an Associates degree in Business Management from North Shore Community College in June of 1991.
Leah Rowe spends approximately fifteen (15) hours per week on our business. As our secretary, Ms Rowe provides her experience in business management.
Family Relationships
Robert Rowe our Chief Executive Officer, President, Treasurer and Director is the husband of Leah Rowe, our Secretary. Other than the foregoing, there are no family relationships among our directors and executive officers and shareholders.
26
Legal Proceedings
On February 21, 1997, Robert Rowe our Chief Executive Officer, President, Treasurer and Director was found guilty of bankruptcy fraud in violation of 18 US Code § 152. There have been no events under any bankruptcy act, no criminal proceedings, no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors, executive officers, promoters or control persons during the past ten (10) years.
Other than as set forth above, no officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
|
|
|
|
|
|
|
·
|
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two (2) years prior to that time,
|
|
|
|
|
|
|
|
·
|
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),
|
|
|
|
|
|
|
|
·
|
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,
|
|
|
|
|
|
|
|
·
|
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|
|
|
|
|
|
|
|
·
|
Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.
|
|
|
|
|
|
|
|
·
|
Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.
|
|
|
|
|
|
|
|
·
|
Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.
|
Code of Business Conduct and Ethics
We do not have any standing audit, nominating, and compensation committees of the board of directors, or committees performing similar functions. We do not currently have a Code of Ethics applicable to our principal executive, financial, or accounting officer. All Board actions have been taken by Written Action rather than formal meetings.
27
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities for the years ending December 31, 2016 and 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
|
|
Year Ended
|
|
Salary
|
|
Bonus
|
|
Stock Awards
|
|
Option Awards
|
|
Non-Equity Incentive Plan Compensation Earnings
|
|
Non-Qualified Deferred Compensation Earnings
|
|
All Other Compensation
|
|
Total
|
Position
|
|
Dec31
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Rowe, Chief Executive Officer, President, Treasurer, Acting Chief Financial Officer and Principal Accounting Officer , Director (2)(3)
|
|
2016
|
|
$114,800
|
|
0
|
|
578,700
|
|
0
|
|
0
|
|
0
|
|
0
|
|
$693,500
|
|
|
2015
|
|
81,600
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
$81,600
|
Michael Silveri (1) (4)
|
|
2015
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leah Rowe, Secretary
|
|
2016
|
|
$11,400
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
$11,400
|
|
|
2016
|
|
7,200
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
$7,200
|
(1)
On May 11, 2015, we entered into an agreement with Michael Silveri, our former Vice-President whereby he agreed to invest up to $250,000 at the per share price of $.167 per share. The agreement allows Mr. Silveri to purchase a total of 1,500,000 of our common shares including the 30,000 he purchased on October 16, 2014, at the price of $.167 or an aggregate of $250,000 at any time prior to August 1, 2016. On October 16, 2014, he purchased 30,000 and on July 8, 2015, he purchased 300,000 common at the price of $0.167 per share or an aggregate price of $5,000 and $50,000, respectively. As such, Mr. Silveri may purchase an additional 1,170,000 common shares at the price of $.167 per share at any time prior to August 1, 2016. On August 25, 2016 we issued 425,000 shares to Mr. Silveri pursuant to a Share Exchange Agreement and in satisfaction of expenses incurred by Mr. Silveri in constructing the vessel bottom for the Luxuria I. Mr. Silveri resigned all positions he held with us on November 18, 2015.
(2)
In June 2016, we issued 1,000,000 shares of Redeemable Series A preferred stock to Robert Rowe, our Chief Executive Officer, President, Treasurer and Director valued at their redemption value of $1,000 for services.
(3)
On November 1, 2016, we issued 10,000,000 common shares to Robert Rowe, our CEO. We valued these shares at $0.0577 per share or an aggregate of $577,700, for future services under a three year employment agreement.
(4)
Michael Silveri was an officer and director in 2015, but was not paid any compensation in 2015. He resigned in late 2015.
28
Employment Agreements with Management
On May 11, 2015, we entered into an agreement with Robert Rowe, our Chief Executive Officer, President, Treasurer and Director, to provide services to us. The agreement has a term of three (3) years and requires us to pay $1,700 per week to Mr. Rowe for his services as our Chief Executive Officer, President, Treasurer and Director. On November 1, 2016, this agreement was replaced with a new three (3) year employment agreement and requires us to pay $20,000 per month to Mr. Rowe for his services as our Chief Executive Officer, President, Treasurer and Director.
On May 11, 2015, we entered into an agreement with Leah Rowe, our Secretary, to provide services to us. The agreement has a term of three (3) years and requires us to pay $600 per month to Ms. Rowe for her services as our Secretary. On November 1, 2016, this agreement was replaced with a new three (3) year employment agreement and requires us to pay $2,400 per month to Ms. Rowe for her services as our Secretary.
Our Board of Directors determines the compensation paid to our executive officers, based upon the years of service to us, whether services are provided on a full time basis and the experience and level of skill required.
We may award our officers and directors shares of common stock as non-cash compensation as determined by the Board of Directors from time to time. The Board of Directors will base its decision to grant common stock as compensation on the level of skill required to perform the services rendered and time committed to providing services to us.
Outstanding Equity Awards at the End of the Fiscal Year
We do not have and have never had any equity compensation plans and therefore no equity awards are outstanding as of the date of this Form 10-K.
Director Compensation
Our directors do not receive any other compensation for serving on the board of directors.
Bonuses and Deferred Compensation
We do not have any bonus, deferred compensation or retirement plan. All decisions regarding compensation are determined by our board of directors.
Options and Stock Appreciation Rights
We do not currently have a stock option or other equity incentive plan. We may adopt one or more such programs in the future.
Payment of Post-Termination Compensation
We do not have change-in-control agreements with any of our directors or executive officers, and we are not obligated to pay severance or other enhanced benefits to executive officers upon termination of their employment.
Involvement in Certain Legal Proceedings
On February 21, 1997, Robert Rowe our Chief Executive Officer, President, Treasurer and Director was found guilty of bankruptcy fraud in violation of 18 US Code § 152. There have been no events under any bankruptcy act, no criminal proceedings, no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors, executive officers, promoters or control persons during the past ten (10) years.
29
Board of Directors
All directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of the board of directors.
Our directors are reimbursed for expenses incurred by them in connection with attending board meetings, but they do not receive any other compensation for serving on the board of directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 31, 2017, we had 22,789,740 common shares outstanding. The following table sets forth certain information regarding our shares of common stock beneficially owned as of March 31, 2017, for (i) each stockholder known to be the beneficial owner of five percent (5%) or more of our outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within sixty (60) days through an exercise of stock options or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owners spouse or children.
For purposes of this table, a person or group of persons is deemed to have beneficial ownership of any shares of common stock that such person has the right to acquire within sixty (60) days of the date of this Annual Report. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within sixty (60) days of the Closing Date is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.
Unless otherwise specified, the address of each of the persons set forth below is in care of the Company at 2637 Atlantic Blvd., #134, Pompano Beach, Florida 33062.