Notes to Financial Statements
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
ECARD INC. (the “Company”), formerly
known as The Enviromart Companies, Inc. until October 23, 2017, and formerly known as Environmental Science and Technologies, Inc.
until October 19, 2017, was incorporated under the laws of the State of Delaware on June 18, 2012. On June 21, 2013, the Company
completed an acquisition of intangible assets comprised of intellectual property and trademarks from its former Chief Executive
Officer. In conjunction with the acquisition of the intangible assets, the Company commenced operations.
As of January 2, 2015, the Company’s
business was operated through its wholly-owned subsidiary, EnviroPack Technologies, Inc. Effective on or about January 15, 2015,
the Company changed its name to The Enviromart Companies, and the Company’s wholly-owned subsidiary, EnviroPack Technologies,
Inc., changed its name to Enviromart Industries, Inc. The Company’s other wholly owned subsidiaries are currently inactive.
On February 16, 2016, The Rushcap Group, Inc.
(“Rushcap”), an affiliate of Mark Shefts (then a significant shareholder), notified us that, effective March 31, 2016,
it was discontinuing its funding of our wholly owned subsidiary under the Inventory Financing Agreement dated June 19, 2015.
On March 21, 2016, the Company entered into
a Stock Purchase and Sale Agreement with Michael R. Rosa, founder and a significant shareholder, and Enviromart Industries, Inc.,
its sole operating subsidiary, pursuant to which the Company agreed to transfer to Mr. Rosa all the issued and outstanding capital
stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating
subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock then owned by him, which
shares were returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. agreed
to assume and discharge any and all of the Company’s liabilities existing as the closing date, of which there was none, as
all of the Company’s operations had been conducted through Enviromart Industries, Inc. (its then sole operating subsidiary).
The Company accounted for the transaction as a “split-off” per the guidance of ASC 845-10-30-12.
The above described purchase and sale transaction
closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written
consent on May 4, 2016. As a result of the completion of the purchase and sale transaction, the Company’s operating business
has been discontinued.
On October 5, 2017, the Company entered into
a Stock Purchase Agreement (the “SPA”) with Eastone Equities, LLC, a New York limited liability company (the “Purchaser”)
and certain selling stockholders, pursuant to which the Purchaser acquired 44,566,412 shares of common stock of the Company from
Sellers for an aggregate purchase price of $295,000. The transaction contemplated in the SPA closed on October 9, 2017. The Shares
represent approximately 90% of issued and outstanding common stocks of the Company. The transaction has resulted in a change in
control of the Company.
On October 23, 2017, the Company, with the
unanimous approval of its board of directors by written consent in lieu of a meeting, filed another Certificate of Amendment (the
“Second Certificate of Amendment”) with the Secretary of State of Delaware. As a result of the Second Certificate of
Amendment, the Company changed its name to “ECARD INC.”, effective as of October 23, 2017.
Accordingly, the Company now has only minimal
assets and liabilities, did not have any substantial business operations; accordingly, there were no significant revenues or positive
cash flows the year ended December 31, 2017. Management’s efforts are focused on seeking out a new and profitable operating
business with strong growth potential. From and after the sale, unless and until the Company completes an acquisition, its expenses
are expected to consist solely of legal, accounting and compliance costs, including those related to complying with reporting obligations
under the Securities and Exchange act of 1934.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements in
conformity with U.S. GAAP 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 expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, Enviromart Industries, Inc. (f/k/a EnviroPack Technologies, Inc.),
which was consolidated through March 31, 2016 and the results of its operations are shown as discontinued operations. All inter-company
accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid debt
instruments with original maturities of three months or less when acquired to be cash equivalents.
Concentration of Risk
Deposits made at financial institutions
in the United States are subject to federally depository insurance maximum; deposits in excess of the amount are subject to concentrations
of credit risk of the financial institution; however, Management believe that financial institutions located in the US are unlikely
to become insolvent.
Income Taxes
Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. 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 recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
Basic and Diluted Earnings (Loss) Per Share
Basic earnings per share is based on the weighted
average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares
outstanding and dilutive common stock equivalents. Basic earnings per share is computed by dividing net income/loss available to
common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Weighted
average number of shares used to calculate basic and diluted loss per share is considered the same as the effect of dilutive shares
is anti-dilutive for all periods presented. There were no potentially dilutive or anti-dilutive securities during the periods ended
December 31, 2017, and 2016.
Revenue Recognition
Revenue is recognized across all segments of
the business when there is persuasive evidence of an arrangement, delivery has occurred, price has been fixed or is determinable,
and collectability is reasonably assured. Revenue is recognized at the time title passes and risk of loss is transferred to customers.
The Company did not earn revenues during the year ended December 31, 2017.
Discontinued Operations
Per the guidance at ASU 2014-10, the Company
has presented discontinued operations related to the transfer of the former operating subsidiary (see Note 7) in the period in
which either the discontinued operation has been disposed of or classified as held for sale.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
Stock-Based Compensation
The Company expenses all stock-based payments
to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted
for estimated forfeitures.
Recently Issued Financial Accounting Standards
In January 2017, the Financial Accounting Standard
Board (“FASB”) issued guidance, which simplifies the accounting for goodwill impairment. The updated guidance eliminates
Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment
charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over
its fair value.
In August 2017, the FASB issued guidance, which
amends the existing accounting standards for derivatives and hedging. The amendment improves the financial reporting of hedging
relationships to better represent the economic results of an entity’s risk management activities in its financial statements
and made certain targeted improvements to simplify the application of the hedge accounting guidance in current U.S. GAAP.
In January 2017, the FASB issued guidance,
which amended the existing accounting standards for business combinations. The amendments clarify the definition of a business
with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions
(or disposals) of assets or businesses.
In November 2016, the FASB issued guidance,
which addresses the presentation of restricted cash in the statement of cash flows. The guidance requires entities to present
the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows.
As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash
equivalents in the statement of cash flows.
In October 2016, the FASB issued guidance,
which amends the existing accounting for Intra-Entity Transfers of Assets Other Than Inventory. The guidance requires an entity
to recognize the income tax consequences of intra-entity transfers, other than inventory, when the transfer occurs. It also requires
modified retrospective transition with a cumulative catch-up adjustment to opening retained earnings in the period of adoption.
In August 2016, the FASB issued guidance, which
amends the existing accounting standards for the classification of certain cash receipts and cash payments on the statement of
cash flows.
In June 2016, the FASB issued guidance, which
requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected,
not based on incurred losses. Further, credit losses on available-for-sale debt securities should be recorded through an allowance
for credit losses limited to the amount by which fair value is below amortized cost.
In February 2016, the FASB issued guidance,
which amends the existing accounting standards for leases. Consistent with current guidance, the recognition, measurement, and
presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. Under the
new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than twelve months.
In January 2016, the FASB issued guidance,
which amends the existing accounting standards for the recognition and measurement of financial assets and financial liabilities.
The guidance primarily addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.
The Company is currently assessing the financial
impact of the above recently issued accounting pronouncements.
NOTE 3. GOING CONCERN
During the year ended December 31, 2017, the
Company has been unable to generate cash flows sufficient to support its operations and has been dependent on capital contributions
prior controlling shareholders, and related party advances from the current controlling shareholder. In addition, the Company has
experienced recurring net losses, and has an accumulated deficit of $1,112,168, and working capital deficit of $47,344 as of December
31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying
financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or
the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
There can be no assurance that sufficient funds
required during the next year or thereafter will be generated from any future operations or that funds will be available from external
sources such as debt or equity financings or other potential sources. If the Company is unable to raise capital from external
sources when required, there would be a material adverse effect on its business. Furthermore, there can be no assurance that
any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive
effect on the Company’s existing stockholders. Management is now seeking an operating company with which to merge or acquire.
In the foreseeable future, the Company will rely on related parties such as its controlling shareholder, to provide advances to
funds general corporate purposes and any potential acquisitions of profitable investments. There is no assurance, however, that
the Company will achieve its objectives or goals.
NOTE 4. RELATED PARTY TRANSACTIONS
On March 21, 2016, the Company entered into a Stock Purchase
and Sale Agreement with Michael R. Rosa, founder and then a significant shareholder, and Enviromart Industries, Inc., its sole
operating subsidiary, pursuant to which the Company agreed to transfer to Mr. Rosa all the issued and outstanding capital stock
of Enviromart Industries, Inc.
In consideration for the transfer of the operating subsidiary
to Mr. Rosa, he surrendered to us all 13,657,500 shares which he controlled, which shares were returned to the status of authorized
and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc. have assumed and discharged any and all of the Company’s
liabilities existing as the closing date, of which there were none, as all of the Company’s operations had been conducted
through Enviromart Industries, Inc. (its sole operating subsidiary).
The above described purchase and sale transaction closed on
July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written consent on
May 4, 2016. As a result of the completion of the purchase and sale transaction, the Company’s operating business has been
discontinued, and it is focusing on seeking to acquire an operating business with strong growth potential. The Company accounted
for this transaction as a “split-off” per the guidance at ASC 845-10-30-12 and recognized a gain of $1,328,175 on the
difference between the fair value of the consideration received and the book value of the net assets of the subsidiary.
On July 19, 2016, the Company issued 5,000,000 shares valued
at $30,000 to a related party in consideration for his agreement to fund the Company’s audit and accounting fees and to provide
office space for the Company.
During the year ended December 31, 2017, the
Company’s previous controlling shareholder paid expenses on behalf of the Company in the amount of $32,527. This amount has
been credited additional paid-in capital as contribution paid shareholder.
During the year ended December 31, 2017, the
Company’s current controlling shareholder paid expenses on behalf of the Company in the amount of $47,344. This amount has
been recorded as amount due to related party. The balance is unsecured, non-interest bearing, and due on demand with no specified
repayment schedule.
NOTE 5. STOCKHOLDERS’ EQUITY
Private Offering
During January, 2016, the Company issued 2,000,000 shares to
accredited investors related to their stock purchase agreements dated December 31, 2015. These shares were sold at $0.0057 per
share for proceeds of $11,400 and were originally reported as common stock to be issued at December 31, 2015.
On January 31, 2016, the Company agreed to sell 100,000 units,
with each unit consisting of one share of our common stock and a warrant to purchase ½ shares of common stock at a price
of $0.25, to an accredited investor for gross proceeds of $10,000 (a per unit price of $.10). As of March 31, 2016, the Company
granted this accredited investor 100,000 warrants related to his unit purchase transactions. Under the terms of the Stock Purchase
and Sale Agreement, these warrants were terminated.
On June 6, 2016, the Company sold an aggregate of 2,100,000
shares of our common stock to a related party accredited investor for gross proceeds of $12,500 (a per share price of $0.006).
On May 9, 2017, the Company issued 200,000
shares of common stock related to stock purchase agreements dated December 31, 2015 and January 31, 2016.
Stock-Based Compensation
On June 6, 2016, the Company issued 1,000,000 shares to a third
party as settlement of liabilities valued at $8,500. There shares were valued at $0.006 per share or $5,605, resulting in a gain
on settlement of $2,895.
On July 19, 2016, the Company issued 5,000,000 shares valued
at $30,000 to an individual, who became a significant stockholder as a result of this transaction, in consideration for legal services.
On July 19, 2016, the Company issued 5,000,000 shares valued
at $30,000 to a related party in consideration for his agreement to fund the Company’s audit and accounting fees and to provide
office space for the Company.
Cancellation of Shares
On October 6, 2017, two shareholders submitted
three certificates for cancellation. The shares cancelled shares totaled 550,000.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Except as disclosed herein, we are not a party
to any pending legal proceeding. To the knowledge of our management, except as disclosed herein, no federal, state or local governmental
agency is presently contemplating any proceeding against us.
NOTE 7. DISCONTINUED OPERATIONS
On February 16, 2016, The Rushcap Group, Inc.
(“Rushcap”), an affiliate of Mark Shefts (a significant shareholder), notified us that, effective March 31, 2016, it
was discontinuing its funding of our wholly owned subsidiary under the Inventory Financing Agreement dated June 19, 2015. Rushcap
reserved the right to discontinue the funding prior to March 31, 2016, if it so determined. The discontinuation of funding was
expected to have a material adverse effect on our business, financial condition and results of operation, as we did not believe
that we would be able to timely secure funding to replace the discontinued Inventory Financing.
In light of the discontinuation of funding,
our Board of Directors spent approximately one month assessing the operating company’s current business and funding prospects,
including whether to transfer the operating subsidiary to Michael R. Rosa, our founder and a significant shareholder, in accordance
with that certain Agreement between the Company, Mr. Rosa and Mr. Shefts, dated July 14, 2014 (“Break-up Agreement”).
The Break-up Agreement was disclosed in the Company’s Current Report on Form 8-K filed July 18, 2014, which is incorporated
herein by this reference.
Our Board of Directors concluded that the discontinuation
of funding would have a material adverse effect on our business, financial condition and results of operation, as it did not believe
that it would be able to timely secure funding to replace the discontinued Inventory Financing.
ECARD INC.
(fka:The Enviromart Comanies, Inc.)
Notes to Financial Statements
On March 17, 2016, our Board of Directors approved
the sale of our sole operating subsidiary, Enviromart Industries, Inc., to Michael R. Rosa, our founder and a significant shareholder,
as contemplated by the Break-up Agreement.
On March 21, 2016, we entered into a Stock
Purchase and Sale Agreement with Michael R. Rosa and Enviromart Industries, Inc., our sole operating subsidiary, pursuant to which
we transferred to Mr. Rosa all the issued and outstanding capital stock of Enviromart Industries, Inc.
In consideration for the transfer of the operating
subsidiary to Mr. Rosa, he surrendered to us all 13,657,500 shares of the Company’s common stock then owned by him, which
shares have been returned to the status of authorized and unissued shares. In addition, Mr. Rosa and Enviromart Industries, Inc.
agreed to assume and discharge any and all of the Company’s liabilities existing as the closing date, of which there were
none, as all of the Company’s operations had been conducted through Enviromart Industries, Inc. (its then sole operating
subsidiary).
The above described purchase and sale transaction
closed on July 21, 2016, effective April 1, 2016, and was approved by a majority of the Company’s shareholders by written
consent on May 4, 2016.
As a result of the completion of the purchase
and sale transaction, the Company’s operating business has been discontinued, and it is focusing on seeking to acquire an
operating business with strong growth potential.
The loss from discontinued operations presented
in the statement of operations for the year December 31, 2016 consisted of the following:
|
|
Year Ended
|
|
|
|
December 31,
2016
|
|
Revenue
|
|
$
|
538,629
|
|
Cost of goods sold
|
|
|
339,914
|
|
Gross profit
|
|
|
198,715
|
|
Operating Expenses
|
|
|
(263,066
|
)
|
Other Expenses
|
|
|
(31,172
|
)
|
Loss from Discontinued Operations
|
|
$
|
(95,523
|
)
|
As a result of this transaction, the Company has recorded a
gain on disposition of discontinued operations of $1,328,175. The Company considers this transaction to be a tax-free reorganization
and accordingly there is no provision for income taxes.
NOTE 8. INCOME TAXES
The Company is subject to U.S. federal and
New Jersey income tax laws. The company incurred operating loses in 2017 and 2016. In 2016, the Company had previously recorded
deferred tax assets based on net operating losses; however, the Company provided 100% valuation allowance against those assets.
In 2017, the Company continued to incur net operating losses; however, at the time of this report, management has not determined
when it would generate taxable profits; accordingly, management has not recognized additional deferred tax assets for the year
ended December 31, 2017.
The Company recorded and paid annual minimum
state franchise tax which has been expensed to its result of operations for the year ended December 31, 2017.
On December 22, 2017, the United States enacted
the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company has considered
the accounting impact of the effects of the Act during the year ended December 31, 2017 including a reduction in the corporate
tax rate from 34% to 21% among other changes.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluates subsequent events that have occurred after
the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized,
or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the
estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with
respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.
The Company has evaluated subsequent events through the date the
financial statements were issued and up to the time of filing with the Securities and Exchange Commission and has determined that
were no material subsequent events that came to management’s attention that required disclosure.