Notes to the Financial Statements
December 31, 2016 and 2015
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
a. Organization
and Description of Business
Vican Resources, Inc. (the “Company”)
was incorporated under the laws of the State of Nevada on September 5, 2002 under the name of “Tremont Fair, Inc.”
From July 2009 until May 2011, the Company operated as a real estate services firm, seeking to capitalize on the real estate opportunities
resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating,
stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas. On May 26, 2011,
the Company changed its name to Vican Resources, Inc. and changed its business model when it sold the real estate services division
and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and
other commodities (hereafter, “Vican Trading”). Upon the acquisition of Vican Trading, there was an implied option
for either party to rescind the original acquisition. During the year that option was exercised and on December 20, 2011, the
Company again changed its business when it unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct,
Inc., a Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic
patients (hereafter, “Med Ex Florida”). On March 22, 2012, the Company again changed its business to become an oil
& gas exploration, development, and distribution company when we unwound the purchase of the assets of Med Ex Florida and
acquired three separate working interests in two oil & gas wells located in Jefferson County, Mississippi. In consideration
of the assignments the Company is to pay all costs and expenses associated with the development of the working interests. To date
there have been no costs incurred or required.
b. Accounting Method
The Company’s financial
statements are prepared using the accrual method of accounting. The Company has elected a December 31 year end.
c. Cash and Cash Equivalents
Cash Equivalents include short-term,
highly liquid investments with maturities of three months or less at the time of acquisition.
d. Estimates
The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
e. Advertising
The Company follows the policy
of charging the costs of advertising to expense as incurred. Advertising expense is included in selling, general and administrative
expenses in the statements of operations. Advertising expense for the years ended December 31, 2016 and 2015 was $-0-.
VICAN RESOURCES, INC.
Notes to the Financial Statements
December 31, 2016 and 2015
f. Basic and Diluted Net Loss Per Share
The Company follows ASC Topic
260 to account for the earnings per share. Basic earnings per common share (“EPS”) calculations are determined by dividing
net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share
calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents
outstanding.
g. Income
Taxes
The Company utilizes the liability
method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the
differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets
is recorded, when it is more likely than not that such tax benefits will not be realized.
h. Recent
Accounting Pronouncements
We have reviewed accounting
pronouncements issued during the past two years and have adopted any that are applicable to our company. We have determined that
none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2016
and 2015.
i. Financial
Instruments
On January 1, 2008, the Company
adopted FASB ASC 820-10-50, “
Fair Value Measurements.
” This guidance defines fair value, establishes a three-level
valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The
three levels are defined as follows:
- Level 1 inputs to the valuation
methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
- Level 2 inputs to the valuation
methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the
asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
- Level 3 inputs to valuation methodology
are unobservable and significant to the fair value measurement.
The carrying amounts reported
in the balance sheets for current liabilities each qualify as financial instruments and are a reasonable estimate of fair value
because of the short period of time between the origination of such instruments and their expected realization and their current
market rate of interest.
VICAN RESOURCES, INC.
Notes to the Financial Statements
December 31, 2016 and 2015
NOTE 2 - ACCOUNTS PAYABLE
AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following:
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|
|
|
|
|
|
December 31,
|
|
|
2016
|
|
2015
|
Kenneth I. Denos, P.C. – legal services
|
|
$
|
292,500
|
|
|
$
|
202,500
|
|
Chene C. Gardner & Associates, Inc.- accounting services
|
|
|
195,000
|
|
|
|
135,000
|
|
Rent
|
|
|
19,500
|
|
|
|
13,500
|
|
Other vendors
|
|
|
50,981
|
|
|
|
29,457
|
|
Accrued interest on notes payable to related parties
|
|
|
284,211
|
|
|
|
196,578
|
|
Total
|
|
$
|
842,192
|
|
|
$
|
577,035
|
|
Kenneth I. Denos, P.C. was the
majority common stockholder of the Company and is controlled by Kenneth I. Denos, director of the Company from December 20, 2011
to May 27, 2014. Under a verbal agreement commencing January 2012, Kenneth I. Denos, P.C. has provided legal services to the Company
for accrued compensation of $7,500 per month.
Chene C. Gardner & Associates
Inc. is controlled by Chene C. Gardner, Chief Financial Officer of the Company from May 31, 2011 to May 27, 2014 and sole officer
and director of the Company from August 18, 2014 to April 5, 2017. Under a verbal agreement commencing June 2011, Chene C. Gardner
& Associates, Inc. has provided accounting services to the Company for accrued compensation of $5,000 per month.
NOTE 3 - ADVANCES FROM
RELATED PARTIES
Advances from related parties, which are all non-interest bearing and due on demand, consist of the following:
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|
|
|
|
December 31,
|
|
|
2016
|
|
2015
|
Cumbria Capital, L.P.
|
|
$
|
37,278
|
|
|
$
|
37,278
|
|
Kenneth I. Denos, P.C.
|
|
|
26,861
|
|
|
|
22,861
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|
John D. Thomas, P.C.
|
|
|
16,471
|
|
|
|
14,640
|
|
Total
|
|
$
|
80,610
|
|
|
$
|
74,779
|
|
Cumbria Capital, L.P. is a Texas
limited partnership controlled by Cyrus Boga, director of the Company from December 15, 2011 to May 27, 2014. Through its ownership
of 100 shares of the Series A Preferred Stock (10,000,000 votes per share), Cumbria Capital, L.P. had voting control of the Company.
John D. Thomas, P.C. is controlled
by John D. Thomas, former director of the Company.
VICAN RESOURCES, INC.
Notes to the Financial Statements
December 31, 2016 and 2015
NOTE 4 - NOTES PAYABLE TO
RELATED PARTIES
Notes payable to related parties consist of the following:
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|
|
December 31,
|
|
|
2016
|
|
2015
|
Kenneth I. Denos, P.C., interest at 10%, due March 29, 2014 (in default)
|
|
$
|
402,500
|
|
|
$
|
402,500
|
|
Kenneth I. Denos, P.C., interest at 10%, due March 29, 2014 (in default)
|
|
|
311,973
|
|
|
|
311,973
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|
Chene C. Gardner & Associates, Inc., interest at 10%, due March 29, 2014 (in default)
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140,000
|
|
|
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140,000
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|
Due other entities affiliated with Kenneth I. Denos, P.C., interest at 10%, due March 29, 2014 (in default)
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19,471
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|
|
|
19,471
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Total
|
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$
|
873,944
|
|
|
$
|
873,944
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|
NOTE 5 - COMMON AND PREFERRED STOCK
TRANSACTIONS
All common share issuances were
recorded at market value on the date of issuance.
On September 24, 2013, the Company
converted a certain promissory note, in the original principal amount of $400,000 held by Cumbria Capital, L.P. (“Cumbria”),
into 100 shares of Series A Preferred Stock. Cumbria is a Texas limited partnership owned and controlled by Cyrus Boga, a director
of the Company from December 15, 2011 to May 27, 2014. Although the Preferred Stock carries no dividend, distribution, or liquidation
rights, and is not convertible into common stock, each share of Series A Preferred Stock carries 10,000,000 votes per share and
is entitled to vote with the Company’s common stockholders on all matters upon which common stockholders may vote. As a result,
Cumbria holds a controlling voting interest in the Company and Mr. Boga may unilaterally determine the election of the Board and
other substantive matters requiring approval of the Company’s stockholders.
On September 24, 2013, the
Company converted 1,825,000 shares of our Series C Preferred Stock (“Series C Conversion”), which amount
represented all of the issued and outstanding shares of Series C Preferred Stock, into 1,825,000,000 shares of our Class A
common stock. As a result of this conversion, there are no shares of Series C Preferred Stock outstanding. Immediately
following the Series C Conversion, the Board of Directors of the Company approved the Plan of Share Exchange (the
"Plan"). The Plan provided for the conversion of 1,914,840,019 shares of Class A common stock, which amount
represented all of the outstanding shares of common stock of the Company, into 1,943,634 shares of Class B common stock. As a
result, the Company has no shares of Class A Common stock outstanding, and 1,943,634 shares of Class B common stock
outstanding.
Certificates representing the shares
of Class B common stock will not be distributed until the Company’s Registration Statement has been declared effective by
the U.S. Securities and Exchange Commission.
VICAN RESOURCES, INC.
Notes to the Financial Statements
December 31, 2016 and 2015
During the process of converting
our Series C Preferred Stock into Class A common stock and subsequently exchanging all of our Class A common stock into Class B
common stock, we temporarily exceeded the number of authorized shares of our common stock, even though certificates for the 1,825,000,000
shares of Class A common stock were not actually distributed. Since the Share Exchange immediately followed the conversion of our
Series C Preferred Stock, we now have a sufficient number of our common shares authorized for issuance.
NOTE 6 - OPTIONS AND WARRANTS
The Company
has adopted FASB ASC 718, “Share-Based Payments” (“ASC 718”) to account for its stock options. The Company
estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The assumptions
used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our
experience. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated at the date
of grant based on our historical experience and future expectations. No stock options or warrants were issued or outstanding during
2016 or 2015.
NOTE 7 - INCOME TAXES
The Financial Accounting Standards
Board (FASB) has issued FASB ASC 740-10. FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements. This standard requires a company to determine whether it is more likely than not
that a tax position will be sustained will be sustained upon examination based upon the technical merits of the position. If
the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the
financial statements. As a result of the implementation of this standard, the Company performed a review of its material
tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.
Deferred taxes are provided
on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
At December 31, 2016 the
Company had net operating loss carryforwards of approximately $3,700,000 that may be offset against future taxable income
through 2036. No tax benefits have been reported in the financial statements, because the potential tax benefits of the net
operating loss carry forwards are offset by a valuation allowance of the same amount.
Due to the change in
ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting
purposes are subject to annual limitations. Should a significant change in ownership occur, net operating loss carryforwards
may be limited as to use in the future.
VICAN RESOURCES, INC.
Notes to the Financial Statements
December 31, 2016 and 2015
Net deferred
tax assets consist of the following components as of December 31, 2016 and 2015:
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2016
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2015
|
Deferred tax assets:
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|
|
|
|
|
|
NOL Carryover
|
|
$
|
1,401,704
|
|
|
$
|
1,309,568
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|
Valuation allowance
|
|
|
(1,401,704
|
)
|
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|
(1,309,568
|
)
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|
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Net deferred tax asset
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$
|
—
|
|
|
$
|
—
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|
The income tax provision (benefit)
differs from the amount of income tax determined by applying the U.S. federal income tax rate of 34% to pretax income for the years
ended December 31, 2016 and 2015 due to the following:
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|
2016
|
|
2015
|
Expected tax at 34%
|
|
$
|
(92,136
|
)
|
|
$
|
(93,170
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)
|
Change in valuation allowance
|
|
|
92,136
|
|
|
|
93,170
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|
Provision for (benefit from) income taxes
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|
$
|
—
|
|
|
$
|
—
|
|
A reconciliation of the
beginning and ending amount of unrecognized tax benefits is as follows:
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|
Year ended December 31,
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2016
|
|
|
|
2015
|
|
Beginning balance
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions based on tax positions related to current year
|
|
|
—
|
|
|
|
—
|
|
Additions for tax positions of prior years
|
|
|
—
|
|
|
|
—
|
|
Reductions for tax positions of prior years
|
|
|
—
|
|
|
|
—
|
|
Reductions in benefit due to income tax expense
|
|
|
—
|
|
|
|
—
|
|
Ending balance
|
|
$
|
—
|
|
|
$
|
—
|
|
At December 31, 2016, the
Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate.
The Company did not have
any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase
or decrease within the next 12 months.
The Company includes interest
and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income
taxes. As of December 31, 2016 and 2015, the Company had no accrued interest or penalties related to uncertain tax positions.
All tax years remain subject
to examination by major taxing jurisdictions.
VICAN RESOURCES, INC.
Notes to the Financial Statements
December 31, 2016 and 2015
NOTE 8 - GOING CONCERN
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The Company has sustained significant net losses which have resulted
in an accumulated deficit at December 31, 2016 of $3,721,469, has negative working capital, and negative cash flows from operations,
all of which raise substantial doubt regarding the Company’s ability to continue as a going concern.
The Company believes these conditions
have resulted from the inherent risks associated with small companies. Such risks include, but are not limited to, the ability
to (i) generate revenues and sales of its products and services at levels sufficient to cover its costs and provide a return for
investors, (ii) attract additional capital in order to finance growth, (iii) further develop and successfully market commercial
products and services, and (iv) successfully compete with other comparable companies having financial, production and marketing
resources significantly greater than those of the Company.
On April 5, 2017 (see Note 9), there
was a change in control of the Company. We expect to be dependent on additional debt and equity financing to develop our new business
but we cannot assure you that any such financings will be available or will otherwise be made on terms acceptable to us, or that
our present shareholders might suffer substantial dilution as a result.
The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
NOTE 9
- SUBSEQUENT EVENTS
On April 5, 2017, Ian Jenkins
acquired 1,830,000 shares of common stock of the Company, representing approximately 94.2% of the issued and outstanding shares
of common stock from the previous majority shareholders of the Company. Mr. Jenkins also acquired 100 shares of Series A Preferred
Stock, representing all of the issued and outstanding shares of Series A Preferred Stock of the Company. Consequently, Mr. Jenkins
unilaterally controls the election of the Company’s Board of Directors, all matters upon which shareholder approval is required,
and ultimately, the direction of the Company.
On April 11, 2017, the Company
issued a Convertible Promissory Note (“Note”) to an accredited investor. The Note has an aggregate principal amount
of $500,000, matures one year from the date of issuance (the “Maturity Date”), and bears an interest rate of 8% per
annum. The holder may convert the Note at any time up to the Maturity Date into shares of the Company’s common stock at a
conversion price equal to $1.00 per share. The Company may prepay the Note prior to the Maturity Date and/or the date of conversion
without penalty upon receiving the written consent of the holder.
On April 11, 2017, the Company
executed a Share Exchange Agreement with Unprescribed, LLC (“Unprescribed”) and the members of Unprescribed, including
Ian Jenkins, Chief Executive Officer and majority shareholder, Dr. Gregory Mongean and Christopher Dean (the “Members). Pursuant
to the Share Exchange Agreement, the Company agreed to exchange the outstanding membership interests of Unprescribed held by the
Members for an aggregate of 25,000,000 shares of common
VICAN RESOURCES, INC.
Notes to the Financial Statements
December 31, 2016 and 2015
stock of the Company. Ian Jenkins,
the holder of 1,830,000 shares of common stock and 100 shares of Series A Preferred Stock, agreed to cancel such shares as of and
at the Closing. Other than Mr. Jenkins, shareholders of the Company’s common stock hold approximately 109,907 shares, which
will remain unchanged by the Share Exchange Agreement. In addition, at the Closing, the holders of an aggregate of approximately
$1,357,000 of outstanding convertible notes issued by the Company have agreed to limit conversion of such debt to a maximum of
8,500,000 shares of common stock and the remaining debt will be cancelled.
The Share Exchange Agreement
is subject to completion of certain conditions precedent to closing, including Unprescribed’s delivery of audited financial
statements for the years ended December 31, 2015 and 2016.