NOTES TO UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Bioethics, Ltd. (“the Company”) was organized under the laws of the State of Nevada on July 26, 1990. The Company was organized to provide a vehicle for participating in potentially profitable business ventures which may become available through the personal contacts, and at the complete discretion, of the Company’s officers and directors. The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the nine months ended September 30, 2019 and 2018 have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2018 audited financial statements. The results of operations for the nine months ended September 30, 2019 are not necessarily indicative of the operating results for the full year.
NOTE 2 - RELATED PARTY TRANSACTIONS
Management Compensation - During the nine months ended September 30, 2019 and 2018, the Company did not pay any compensation to its officers and directors.
Beginning August 2017, the Company entered into an oral agreement to pay the Company’s sole director $500 per month as payment for use of his personal residence as the Company’s office and mailing address. The Company has recorded rent expense of $4,500 during each of the nine months ended September 30, 2019 and 2018, which is included in the general and administrative expenses on the statements of operations. The amount payable at December 31, 2018 was $1,500. During the nine months ended September 30, 2019, the Company paid $5,500, resulting in $500 payable at September 30, 2019.
In December 2014, the Company borrowed $25,000 from the majority shareholder pursuant to an unsecured promissory note, which was due on demand and accrued interest at 12% per annum, or $750 per quarter. On March 9, 2018 the Company paid the outstanding principal amount of $25,000 and accrued interest of $8,250.
On March 8, 2018 the Company entered into a promissory note with a newly-affiliated party in the amount of $43,250. The note is payable on demand and carries interest at 10% per annum. Interest expense for the three and nine months ended September 30, 2019 was $872 and $2,588, respectively, resulting in accrued interest of $5,413 and $2,825 at September 30, 2019 and December 31, 2018, respectively.
On December 12, 2017, the Company entered into a promissory note with its sole officer and director in the amount of $107,000. On various dates during 2018, the officer advanced the Company an additional $5,670, resulting in the total note principal balance of $112,670 at December 31, 2018. During the nine months ended September 30, 2019, the Company paid a total of $14,686 of the principal balance resulting in the total note principal balance of $97,984 at September 30, 2019. The cumulative note balance is uncollateralized, due on demand, and carries interest at 12% per annum. Interest expense on the note for the three and nine months ended September 30, 2019 was $2,964 and $9,431, respectively, of which the Company repaid $15,314 during the nine months ended September 30, 2019, resulting in accrued interest totaling $2,962 and $8,845 at September 30, 2019 and December 31, 2018, respectively.
NOTE 3 – EQUITY TRANSACTIONS
On March 9, 2018, the Company repurchased 105,000,000 shares of its outstanding common stock (the “Control Shares”) held by Bradly Petersen (“Mr. Petersen”), for cash of $10,000. As a result of this transaction, Mr. Petersen no longer holds any interest in the Company, and the Control shares were immediately cancelled so that there were 11,000,000 issued and outstanding shares of Common Stock at September 30, 2019 and December 31, 2018.
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BIOETHICS, LTD.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018
NOTE 4 - NOTES PAYABLE
On June 14, 2016, the Company issued a promissory note in the principal amount of $35,000 to an unaffiliated lender. The Note is due on demand at any time after its original maturity date of June 14, 2017, and carries an interest rate of 8% per annum. Interest expense for the three and nine months ended September 30, 2019 totaled $706 and $2,094, respectively, resulting in accrued interest at September 30, 2019 and December 31, 2018 of $9,228 and $7,134, respectively. Principal balance on the note at September 30, 2019 and December 31, 2018 was $35,000.
On August 15, 2018, the Company issued a promissory note in the principal amount of $10,000 to an unaffiliated lender. The Note was due on November 15, 2018 and is now due on demand. The Note carries an interest rate of 12% per annum. Interest expense for the three and nine months ended September 30, 2019 totaled $303 and $898, respectively, of which the Company repaid $750 during the nine months ended September 30, 2019, resulting in accrued interest at September 30, 2019 and December 31, 2018 of $602 and $454, respectively. Principal balance on the note at September 30, 2019 and December 31, 2018 was $10,000.
On November 15, 2018, the Company issued a promissory note in the principal amount of $20,000 to an unaffiliated lender. The Note was due on February 15, 2019 and is now due on demand. The Note carries an interest rate of 12% per annum. Interest expense for the three and nine months ended September 30, 2019 totaled $605 and $1,795, respectively, of which the Company repaid $894 during the nine months ended September 30, 2019, resulting in accrued interest at September 30, 2019 and December 31, 2018 of $1,203 and $302, respectively. Principal balance on the note at September 30, 2019 and December 31, 2018 was $20,000.
On December 31, 2018, the Company issued a promissory note in the principal amount of $30,000 to an unaffiliated lender. The Note is due on December 31, 2019, and carries an interest rate of 12% per annum. Interest expense for the three and nine months ended September 30, 2019 totaled $907 and $2,692, respectively, of which the Company repaid $887 during the nine months ended September 30, 2019, resulting in accrued interest at September 30, 2019 and December 31, 2018 of $1,805 and $-0-, respectively. Principal balance on the note at September 30, 2019 and December 31, 2018 was $30,000.
On January 23, 2019, the Company issued a promissory note in the principal amount of $50,000 to an unaffiliated lender. The Note is due on January 23, 2020, and carries an interest rate of 12% per annum. Interest expense for the three and nine months ended September 30, 2019 totaled $1,512 and $4,110, respectively, of which the Company repaid $1,101 during the nine months ended September 30, 2019, resulting in accrued interest at September 30, 2019 of $3,009. Principal balance on the note at September 30, 2019 and December 31, 2018 was $50,000 and $-0-, respectively.
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has incurred losses since its inception totaling $823,350 and has no on-going operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans, additional sales of its common stock, or through a possible business combination. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
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BIOETHICS, LTD.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2019 and 2018
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share:
|
|
For the Three Months Ended
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For the Three Months Ended
|
For the Nine Months Ended
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For the Nine Months Ended
|
|
|
September 30, 2019
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September 30, 2018
|
September 30, 2019
|
September 30, 2018
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
|
|
|
applicable to common
|
|
|
|
|
|
stockholders (numerator)
|
$ (19,878)
|
$ (13,308)
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$ (64,112)
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$ (57,660)
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|
|
|
|
|
|
|
Weighted average number of
|
|
|
|
|
|
common shares outstanding
|
|
|
|
|
|
used in loss per share calculation
|
|
|
|
|
|
during the period denominator)
|
11,000,000
|
11,000,000
|
11,000,000
|
37,153,846
|
Dilutive loss per share was not presented, as the Company had no common share equivalents for all periods presented that would affect the computation of diluted loss per share. In addition, the Company has experienced continuing losses, so inclusion of any common share equivalents would result in an anti-dilutive effect.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined there are no events requiring disclosure.
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion in conjunction with our financial statements, which are included elsewhere in this report. The following information contains forward-looking statements. (See “Forward-Looking Statements” below and “Risk Factors” in our 2018 Form 10K.)
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements reflect the Company’s views with respect to future events based upon information available to it at this time. These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from these statements. These uncertainties and other factors include, but are not limited to the risk factors described in our Form 10K for the year ended December 31, 2018 under the caption “Item 1A. Risk Factors.” The words “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “targets,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, changes in assumptions, future events or otherwise.
General
The Company is a shell company that conducts no active business operations and is seeking business opportunities for acquisition or participation by the Company.
The Report of Independent Registered Public Accounting Firm on the Company’s December 31, 2018 audited financial statements addresses an uncertainty about the Company’s ability to continue as a going concern, indicating that the Company has incurred losses since its inception and has no on-going operations. The report further indicates that these factors raise substantial doubt about the Company’s ability to continue as a going concern. At September 30, 2019, the Company had a working capital deficit of $332,519 and an accumulated deficit since inception of $823,350. The Company incurred net losses of $64,112 and $57,660 for the nine months ended September 30, 2019 and 2018, respectively. The Company has not entered into any agreements or arrangements for the provision of additional debt or equity financing and there can be no assurance that it will be able to obtain the additional debt or equity capital required to continue its operations.
The Three and Nine Months ended September 30, 2019 compared to September 30, 2018
The Company did not conduct any operations during the three and nine month periods ended September 30, 2019 or 2018. At September 30, 2019, the Company had cash and total current assets in the amount of $14,258, compared to $31,698 at December 31, 2018. At September 30, 2019, the Company had total current liabilities of $346,777, compared to $300,320 at December 31, 2018. The Company had a working capital deficit of $332,519 at September 30, 2019 compared to $268,622 at December 31, 2018.
The Company did not generate revenues during the three and nine month periods ending September 30, 2019 or 2018. The Company incurred general and administrative expenses of $12,009 during the three months ended September 30, 2019, compared to $8,236 during the three months ended September 30, 2018. The Company incurred general and administrative expenses of $40,504 during the nine months ended September 30, 2019, compared to $43,673 during the nine months ended September 30, 2018. Such expenses consist primarily of legal and accounting fees as well as taxes and annual fees required to maintain the Company’s corporate status.
The Company incurred other expenses of $7,869 during the three months ended September 30, 2019 compared to $5,072 during the three months ended September 30, 2018. The Company incurred other expenses of $23,608 during the nine months ended September 30, 2019 compared to $13,987 during the nine months ended September 30, 2018. Total other income and expenses consist of interest expense related to the notes payable due from the Company. Increase in interest expense is due to the increase in debt issued over the last year (see Notes 2 and 4 to the accompanying financial statements).
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The Company incurred a net loss of $19,878 during the three months ended September 30, 2019, compared to a net loss of $13,308 during the three months ended September 30, 2018. The Company incurred a net loss of $64,112 during the nine months ended September 30, 2019, compared to a net loss of $57,660 during the nine months ended September 30, 2018. There was little change in net loss in 2019 as compared to 2018 due to the decreased professional fees related to the Company maintaining its status and filings with the Securities and Exchange Commission, which was offset by an increase in interest expense on the recently-issued debt.
The Company has never had substantial ongoing operations. As a result, since its inception on July 26, 1990, the Company had an accumulated deficit of $823,350 as of September 30, 2019.
Liquidity and Capital Resources
Net cash used by operating activities was $52,754 and $23,113 during the nine months ended September 30, 2019 and 2018, respectively.
Net cash provided by investing activities was $-0- during both the nine months ended September 30, 2019 and 2018.
Net cash provided by financing activities was $35,314 and $21,770 during the nine months ended September 30, 2019 and 2018, respectively.
Since the Company does not generate any revenues from operations, it is dependent on sales of securities, loans, or contributions from its stockholders in order to pay its operating costs. In addition, in the event the Company locates a suitable candidate for potential acquisition, the Company will require additional funds to pay the costs of negotiating and completing the acquisition of such candidate. The Company has not entered into any agreement or arrangement for the provision of any additional funding and no assurances can be given that such funding will be available to the Company on terms acceptable to it or at all.
The Company cannot presently foresee the cash requirements of any business opportunity which may ultimately be acquired by the Company. However, since it is likely that any business it acquires will be involved in active business operations, the Company anticipates that an acquisition will result in increased cash requirements as well as increases in the number of employees of the Company.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
Critical Accounting Policies
Due to the lack of current operations and limited business activities, the Company does not have any accounting policies that it believes are critical to facilitate an investor’s understanding of the Company’s financial and operating status.