LD Holdings, Inc.
Condensed Consolidated Balance Sheets
The attached notes are an integral part of these consolidated financial statements.
LD Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
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Three Months Ended
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March 31,
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2017
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2016
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|
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|
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Sales - related party
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$
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15,000
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$
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15,000
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Cost of Sales
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4,105
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2,737
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Gross Profit
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10,895
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12,263
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Selling, General &
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Administrative Expenses
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109,581
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107,695
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Operating Loss
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(98,686
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)
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(95,432
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)
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Other Income (Expense)
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Interest expense
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(66,637
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)
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(23,917
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)
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Total Other Income (Expense)
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(66,637
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)
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(23,917
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)
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Loss from continuing operations
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(165,323
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)
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(119,349
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)
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Net Loss
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$
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(165,323
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)
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$
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(119,349
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)
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Loss from continuing operations
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$
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(0.01
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)
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$
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-
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Loss from discontinued operations
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$
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-
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$
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-
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Loss per share, basic and diluted
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$
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(0.01
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)
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$
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-
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Weighted Average Common Shares Outstanding
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25,840,351
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25,840,351
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The attached notes are an integral part of these consolidated financial statements.
LD Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
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Three Months Ended
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March 31,
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2017
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2016
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Cash Flows From Operating Activities:
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Net Loss
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$
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(165,323
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)
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$
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(119,349
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)
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Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities
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Operating Activities:
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Depreciation
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-
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-
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Shares issued for services
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-
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-
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Amortization of debt discount-beneficial conversion features
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1,657
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854
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Changes in Operating Assets and Liabilities
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Prepaid Expense
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-
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3,912
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Accounts payable and accrued expenses
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40,000
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(10,255
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)
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Accrued interest payable
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9,348
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2,281
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Accrued interest payable - related parties
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51,538
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16,663
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Net Cash (Used) by Operating Activities
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(62,780
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)
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(105,894
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)
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Cash Flows From Financing Activities
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Proceeds from Notes Payable
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20,000
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2,500
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Proceeds from Common Stock Subscriptions
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-
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100,500
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Advances (repayments) from related party - Net
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40,819
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4,587
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Net Cash Provided by Financing Activities
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60,819
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107,587
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Net Increase/(Decrease) in Cash and Equivalents
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(1,961
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)
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1,693
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Cash and Equivalents at Beginning of Year
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7,336
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9,738
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Cash and Equivalents at End of Year
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$
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5,375
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$
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11,431
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Supplemental Disclosure of Cash Flow Information:
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Cash paid during the year for:
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Interest
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$
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5,750
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$
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4,119
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Income taxes
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$
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-
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$
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-
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|
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Non Cash Financing and Investing Activities
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Recognition of Settlement of Liabilities to be settled in stock
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$
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200,000
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$
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-
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The attached notes are an integral part of these consolidated financial statements.
LD Holdings, Inc.
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Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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1. Nature of Organization
LD Holdings, Inc. (the Company), formerly Leisure Direct, Inc., was formed on January 1, 2000 under the name of ePoolSpas.com, Inc. The formation was effected by the issuance of 1,750,000 shares of the Company's common stock for the intangible assets of the former operating companies, Olympic Pools, Inc. and Preferred Concrete Placement, Inc. The Company is located in Perrysburg, Ohio. The Company plans to acquire companies in a three (3) state area and then eventually roll out nationally. In October 2010, as part of a broader plan, the Company opened the first of a series of diners it plans to open in the Midwest.
It closed its diner in Monroe, Michigan at the end of August, 2011 and opened a new diner in Toledo, Ohio in October 2011. The diners catered to the baby boomer generation with a family orientation. In early 2014, the last of the diners closed.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").
The condensed balance sheet at December 31, 2016 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair presentation of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. These condensed financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. These condensed financial statements should be read in conjunction with the financial statements and additional information as contained in our Annual Report on Form 10-K for the year ended December 31, 2016.
Revenue Recognition
Revenue for consulting services is recognized at the time the service has been rendered.
Cash and Cash Equivalents
For the purpose of the Statements of Cash Flows, Cash Equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of the three (3) months or less.
Fair Value of Financial Instruments
The fair values of accounts payable and other short-term obligations approximate their carrying values because of the short-term maturity of these financial instruments.
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current period adjustments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
LD Holdings, Inc.
|
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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3. Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a loss of $165,323 during the three months ended March 31, 2017. Also, as of March 31, 2017, the Company had $5,375 in cash, and current liabilities exceeded its current assets by $5,709,472. These matters raise substantial doubt about the Company's ability to continue as a going concern.
Management's plans include raising additional funding from debt and equity transactions that will be used to acquire point of sale outlets that should in turn increase sales. Also, the implementation of strong cost management practices and an increased focus on business development should result in the elimination of the operating losses suffered and improvement of cash flows; however, any results of the Company's plans cannot be assumed. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
4. Commitments and contingencies
The Company leases its office space from a related party, through common management and ownership, on a month-to-month basis. Rent expense was $7,500 and $7,500 for the three months ended March 31, 2017 and 2016, respectively.
A judgment creditor has obtained an order to issue corporation unissued shares. There are no unissued shares to issue at March 31, 2017. The Company believes it is contrary to law and will be reversed on appeal. The Company has accrued an amount of $200,000 in prior years toward this obligation and does not believe it will incur further exposure beyond this.
5. Stockholders' Impairment
During the first quarter of 2016 the Company issued 1,000,000 common stock subscriptions for $ 0.10 per share. The total amount received for the subscriptions was $100,000.
During the first quarter of 2017 the Company settled the liabilities to be settled in stock at $0.10 per share for a total of $200,000 recorded as Additional Paid in Capital.
6. Convertible Notes
In the first quarter of 2017, the Company issued a total of $20,000 in a new class of promissory notes payable. The notes bear interest at 10% per year, computed annually and payable quarterly. The 2017 note matures December 31, 2019. The notes are convertible and have a conversion price of $0.15 per share.
In the first quarter of 2016 and for the year ended December 31, 2015, the Company issued a total of $2,500 and $245,000, respectively, in promissory notes payable. The notes bear interest at 10% per year, compounded annually and payable quarterly. The 2016 note matures December 31, 2018. The other notes mature on December 31, 2017. The Company may prepay the notes upon written notice to the holders. The notes are convertible at any time by the holder at a conversion price of $0.25 per share. Based on this fixed conversion ratio on the respective commitment dates, the Company recognized a debt discount of $8,373 for the beneficial conversion feature underlying these notes during 2015. Any accrued interest may also be converted at the fixed conversion price; therefore it represents a contingent beneficial feature. A total of $1,657 of the debt discount was amortized to interest expense during the three months ended March 31, 2017.
A total of $6,550 of interest was accrued under these notes during the three months ended March 31, 2017.
7. Recent Issued and Newly Adopted Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, "Revenue from Contracts with Customers" which requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB voted to delay the effective date of ASU 2014-09 by one year to the first quarter of 2018 to provide companies sufficient time to implement the standards. Early adoption will be permitted, but not before the first quarter of 2017. Adoption can occur using one of two prescribed transition methods. In March and April 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)" and ASU 2016-10, "Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing" which provide supplemental adoption guidance and clarification to ASC 2014-09, ASU 2016-08 and ASU 2016-10 must be adopted concurrently with the adoption of ASU 2014-09. The Company is currently evaluating the impact of these new standards.
LD Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
7. Recent Issued and Newly Adopted Accounting Pronouncements (continued)
In June 2014, the FASB issued ASU No. 2014-12 Compensation – Stock Compensation (Topic 718), Accounting for Share-Based Payments. When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation – Stock Compensation. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. Early adoption is permitted. The Company adopted the provision of this standard, but it did not have a material effect on its results of operations.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to continue as a Going Concern. The amendments require management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on the Company's financial position or results of operations.
ASU 2015-03 and ASU 2015-15 – In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU No. 2015-03. The amendments of ASU No. 2015-03 were issued to reduce complexity in the balance sheet presentation of debt issuance costs. ASU No. 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this standard. Additionally, in August 2015, the FASB issued ASU No. 2015-15, Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, or ASU 2015-15, as ASU No. 2015-03 did not specifically address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU No. 2015-15 allows an entity to defer issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The guidance in ASU No. 2015-03 and ASU No. 2015-15 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The Company adopted this standard at January 1, 2016, but it did not have a material effect on the accompanying financial statements.
In February 2016, the FASB issued ASU No. 2016-02, "Leases". The standard requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. ASU 2016-02 is effective for fiscal years beginning December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of the new standard.
In March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-based Payment Accounting". ASU 2016-09 simplifies several aspects of the accounting for employee share-based transactions for both public and nonpublic entities, including for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning December 15, 2018. Early adoption is permitted. The Company is currently evaluating the standard and the impact on its consolidated financial statements and footnote disclosures.
We have reviewed all FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reporting financial position or results of operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
Management does not believe these would have been a material effect on the accompanying consolidated financial statements had any other yet effective accounting standards been adopted in the current period.
8. Subsequent Event
In accordance with ASC 865-10, the Company has analyzed its operations subsequent to March 31, 2017 to the date these financial statements were issued, and has determined that it does not have any other material subsequent events to disclose in these financial statements.
9. Related Party
A related party, Capital First Management, Inc., is funding the Company with loans of $2,238,490 as of March 31, 2017.