Notes
to the Consolidated Financial Statements
Note
1. General Organization and Business
On
March 7, 2017, our Board approved and filed an Amended & Restated Articles of Incorporation with the Secretary of State of
Wyoming whereby: the aggregate number of shares of all classes of capital stock which this Corporation shall have authority to
issue is 1,000,000,000 shares, of which 40,000,000 shares shall be shares of preferred stock, par value of $.001 per share as
described herein (“Preferred Stock”), and 960,000,000 shares shall be shares of common stock, par value of $.001 per
share (“Common Stock”).
The
Preferred Stock . Notwithstanding the designation of the class of Series A Preferred stock designated in Article XII, Series B
Preferred stock designated in Article XIII, the designations, preferences, limitations, restrictions, and relative rights of any
additional classes of Preferred Stock, and variations in the relative rights and preferences as between different series shall
be established in accordance with the Wyoming Business Corporation Act by the board of directors of the Corporation (“Board
of Directors”). Except for such voting powers with respect to the election of directors or other matters as may be stated
in the resolutions of the Board of Directors creating any series of Preferred Stock, the holders of any such series shall have
no voting power.
On
May 8, 2017, the Board approved and filed an Amended & Restated Articles of Incorporation with the Secretary of State of Wyoming
to: (i) increase our authorized common stock to 5,000,000,000 shares,
of
which 40,000,000 shares shall be shares of preferred stock, par value of $.001 per share as described herein (“Preferred
Stock”), and 4,960,000,000 shares shall be shares of common stock, par value of $.001 per share (“Common Stock”).
VinCompass
Corp. (Formerly known as Tiger Jiujiang Mining, Inc.), entered into a Share Exchange Agreement with VinCompass, whereby VinCompass
Corp. exchanged 60.0% of its outstanding shares of common stock for 100% of the outstanding shares of VinCompass common stock.
As of the closing date, VinCompass will operate as a wholly owned subsidiary of VinCompass Corp.
As
of January 14, 2016, VinCompass Corp had 400,000,000 and 2,000,000 shares of common stock and preferred stock authorized, respectively,
of which 17,500,000 and 1,000,000 were issued and outstanding, respectively. As a result of the Share Exchange Agreement, each
outstanding share of VinCompass common stock shall be transferred, conveyed and delivered to VinCompass Corp. in exchange for
26,000000 newly-issued shares of common stock of VinCompass Corp. The 1,000,000 shares of preferred stock are held by VinCompass
management as of closing date.
The
Merger will be accounted for as a “reverse merger” and recapitalization since, immediately following the completion
of the transaction, the holders of VinCompass’s stock will have effective control of VinCompass Corp. In addition, VinCompass
will have control of the combined entity through control of the Board by designating all board seats to be held by the existing
board of VinCompass Corp. Additionally, all of VinCompass’s officers and senior executive positions will continue on as
management of the combined entity after consummation of the Merger. For accounting purposes, VinCompass will be deemed to be the
accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of VinCompass
Corp. Accordingly, VinCompass assets, liabilities and results of operations will become the historical financial statements of
the registrant, and VinCompass’s assets, liabilities and results of operations will be consolidated with VinCompass Corp
effective as of the date of the closing of the Merger. No step-up in basis or intangible assets or goodwill will be recorded in
this transaction. VinCompass received $2,202 cash and assumed $114,327 liabilities upon execution of the reverse merger.
On
December 14, 2015, FINRA approved the Corporate Name Change, Symbol Change, and the Forward Split took effect on December 15,
2015 for Tiger Jiujiang Mining Corp. The Forward Split shares are payable upon surrender of certificates to the Company’s
transfer agent. Accordingly, the Company’s symbol will change to TIGYD to reflect the Forward Split and Symbol Change and
twenty (20) business days thereafter, the “D” will be removed and the symbol will change to VCPS.
Note
2. Significant Accounting Policies
Basis
of Presentation and Fiscal Year
These
financial statements have been presented by the Company in accordance with accounting principles generally accepted in the United
States and are expressed in U.S. dollars. The Company’s fiscal year-end is February 28.
Principles
of Consolidation Policy
The
consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP,
and include the accounts of VinCompass Corp, its wholly-owned subsidiaries and other entities in which VinCompass Corp has a controlling
financial interest. All significant intercompany accounts and transactions have been eliminated in consolidation.
Basic
and Diluted Loss per Share
The
Company computes net loss per share in accordance with ASC 260, “Earnings per Share”, which requires presentation
of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic loss per share is
computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding
during the year. Diluted EPS gives effect to all dilutive potential common shares outstanding during the year including stock
options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted
EPS, the average stock price for the year is used in determining the number of shares assumed to be purchased from the exercise
of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
Cash
and Cash Equivalents
The
Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
The
Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk related to cash
and cash equivalents.
Income
Taxes
The
Company accounts for income taxes pursuant to the provisions of ASC 740, Income Taxes, whereby deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of
existing assets and liabilities and their respective tax bases and the future tax benefits derived from operating loss and tax
credit carryforwards. The Company provides a valuation allowance on its deferred tax assets when it is more likely than not that
such deferred tax assets will not be realized.
The
Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income
taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority
would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold,
the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of February
28, 2017, and February 29, 2016.
Related
Parties
A
party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls,
is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its
management, members of the immediate families of principal owners of the Company and its management and other parties with which
the Company may deal if one party controls or can significantly influence the management or operating policies of the other to
an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which
can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest
in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties
might be prevented from fully pursuing its own separate interests is also a related party.
Stock-based Compensation
We account for equity-based transactions
with nonemployees under the provisions of ASC Topic No. 505-50,
Equity-Based Payments to Non-Employees
(“ASC 505-50”).
ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock
issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments,
other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value
of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.
We account for employee stock-based compensation
in accordance with the guidance of FASB ASC Topic 718,
Compensation—Stock Compensation,
which requires all share-based
payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their
fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional
paid-in capital over the period during which services are rendered.
Fair value of financial instruments
The Company follows Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) 825-10-50-10,
Financial Instruments—Overall—Disclosure,
for disclosures about fair value of our financial instruments and ASC 820-10-35-37,
Fair Value Measurement—Overall—Subsequent
Measure—Fair Value Hierarchy,
to measure the fair value of our financial instruments. ASC 820-10-35-37 establishes a
framework for measuring fair value GAAP and expands disclosures about fair value measurements. To increase consistency and comparability
in fair value measurements and related disclosures, ASC 820-10-35-37 establishes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
The three levels of fair value hierarchy defined by ASC 820-10-35-37 are described below:
Level 1: Quoted market prices available
in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted
prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally
observable inputs and not corroborated by market data.
The carrying amount of the Company’s
financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of
the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments
based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements
at February 28, 2017.
|
|
Fair value measured at
February 28, 2017
|
|
|
|
Fair value at
February 28, 2017
|
|
|
Quoted prices in
active markets
(Level 1)
|
|
|
Significant other
observable
inputs
(Level 2)
|
|
|
Significant
unobservable
inputs
(Level 3)
|
|
Derivative liabilities
|
|
$
|
112,461
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
112,461
|
|
Derivative Financial Instruments
Derivative liabilities are recognized in
the balance sheets at fair value based on the criteria specified in Financial Accounting Standards Board (
“FASB”
)
Accounting Standards Codification (
“ASC”
) Topic 815-15
– Derivatives and Hedging – Embedded
Derivatives
(
“ASC 815-15”
). Pursuant to ASC Topic 815-15 an evaluation of the embedded conversion feature
of convertible debt is evaluated to determine if the bifurcated debt conversion feature is required to be classified as a derivative
liability. Since the terms of the embedded conversion features of the Company’s convertible debt provides for the issuance
of shares of common stock at the election of the holders and the number of shares is subject to adjustment for a decline in the
price of the Company’s common stock, the Company determined that the embedded conversion option met the criteria of a derivative
liability. The estimated fair value of the embedded conversion feature of debt classified as derivative liabilities are determined
using the Black-Scholes option pricing model. The model utilizes Level 3 unobservable inputs to calculate the fair value of the
derivative liabilities at each reporting period. The Company determined that using an alternative valuation model such as a Binomial-Lattice
model would result in minimal differences. The fair value of the embedded conversion feature of debt classified as derivative
liabilities are adjusted for changes in fair value at each reporting period, and the corresponding non-cash gain or loss is recorded
as other income or expense in the statement of operations. As of February 28, 2017, the embedded conversion feature of $112,461
of convertible notes payable was classified as a derivative liability. Each reporting period the embedded conversion feature is
re-valued and adjusted through the caption “change in fair value of derivative liabilities” on the statements of operations.
Note
3. Going Concern
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
The
Company had accumulated deficits of $2,997,369 at February 28, 2017 and $2,056,125 at February 29, 2016. It had net losses
of $941,244 and $493,557 and for the years February 28, 2017 and February 29, 2016, respectively. These factors raise substantial
doubt about the Company’s ability to continue as a going concern.
While
the Company is attempting to increase operations and generate revenues, the Company’s cash position may not be significant
enough to support the Company’s daily operations. The Company will continue to pursue additional equity and/or debt financing
while managing cash flows from operations in an effort to provide funds to meet its obligations on a timely basis and to support
future business development. There is no assurance that these efforts will be successful. Management believes that the actions
presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the
Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues
and in its ability to raise the additional funds, there can be no assurances to that effect. The ability of the Company to continue
as a going concern is dependent upon the Company’s ability to further implement its business plans and generate additional
revenues.
The
financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may result
should the Company be unable to continue as a going concern.
Note
4. Common Stock
During
the year ended February 28, 2017, the Company issue 93,000 shares for conversion of notes payable and accrued interest, totaled
$4,108. Furthermore, during the year, the Company issued 79,500 shares to third parties for cash investment of $93,430
in the Company. During the year 3,254,979 shares were issued in lieu of compensation of $130,765.
As
a result of the Reverse Merger, As of January 14, 2016, VinCompass Corp had 400,000,000 and 2,000,000 shares of common stock and
preferred stock authorized, respectively, of which 17,500,000 and 1,000,000 were issued and outstanding, respectively. As a result
of the Share Exchange Agreement, each outstanding share of VinCompass common stock shall be transferred, conveyed and delivered
to VinCompass Corp. in exchange for 26,000000 newly issued shares of common stock of VinCompass Corp.
During
the year ended February 28, 2016, the Company issue 133,267 shares for settlement of notes payable and accrued interest,
totaled $106,614. The fair value of the shares is determined to be $133,267, using $1.00 per share, which is the previous common
stock sold for cash price, resulting in a loss of $26,653 reflected in the Statement of Operations.
Furthermore,
during the year ended February 28, 2016, the Company issued 68,750 shares to third parties for cash investment of $55,000
in the Company. These transactions took place at $0.80
Note
5. Related Party Transactions
As
of February 28, 2017, the amounts due to the majority shareholder and a director totaled $157,583, and bear no interest and with
no stated repayment terms; the Company recorded no imputed interest on these borrowings. There were borrowings from related party
of $96,663 and payment of $55,240, (Balance of $116,160 as of February 29, 2016).
As
of February 28, 2017, the Company accrued payroll expense of $216,000 ($96,000 as at February 29, 2016) and accrued rental and
operating expenses of $131,698 ($74,959 as at February 29, 2016) due to the Company’s CEO.
Note
6. Income Taxes
The
Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences
of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.
During
the years ended February 28, 2017 and February 29, 2016, the Company incurred net losses, and therefore, had no tax liability.
The net deferred asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward
is approximately$872,980 and $466,904, respectively as of February 28, 2017 and February 29, 2016 and will expire in years 2020
through 2036.
Deferred
tax assets consist of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred
tax assets because of the uncertainty regarding its ability to be realized.
As
of the years ended February 28, 2017 and February 29, 2016, deferred tax assets consisted of the following:
|
|
2/28/2017
|
|
2/29/2016
|
Tax
benefit at U.S. statutory rate
|
|
|
(418,666
|
)
|
|
$
|
163,416
|
|
Valuation
allowance
|
|
|
(418,666
|
)
|
|
|
(163,416
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Note
7. Convertible notes.
The
following table summarized the convertible notes as of February 28, 2017:
Note
#
|
|
Loan
date
|
|
Maturity
Date
|
|
Convertible
Date
|
|
Interest
|
|
Loan
Principal
|
|
Original
Issue Discount
|
|
Derivative
discount
|
|
Discount
Amortization
|
|
Net
Balance end Feb 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
7/7/2016
|
|
7/7/2017
|
|
1/7/2017
|
|
|
10
|
%
|
|
|
29,482
|
|
|
|
(3,500
|
)
|
|
|
(30,000
|
)
|
|
|
11,176
|
|
|
|
7,158
|
|
|
2
|
|
|
8/15/2016
|
|
8/15/2017
|
|
2/15/2017
|
|
|
10
|
%
|
|
|
33,500
|
|
|
|
(3,500
|
)
|
|
|
(30,000
|
)
|
|
|
4,044
|
|
|
|
4,044
|
|
|
3
|
|
|
9/28/2016
|
|
9/28/2017
|
|
3/28/2017
|
|
|
10
|
%
|
|
|
73,500
|
|
|
|
(8,500
|
)
|
|
|
|
|
|
|
3,563
|
|
|
|
68,563
|
|
|
4
|
|
|
10/20/2016
|
|
10/20/2019
|
|
4/20/2017
|
|
|
0
|
%
|
|
|
60,000
|
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
1,196
|
|
|
|
51,196
|
|
|
5
|
|
|
10/28/2016
|
|
7/28/2017
|
|
4/28/2017
|
|
|
10
|
%
|
|
|
78,780
|
|
|
|
(8,780
|
)
|
|
|
|
|
|
|
3,956
|
|
|
|
73,956
|
|
|
6
|
|
|
2/22/2017
|
|
11/30/2017
|
|
11/1/2017
|
|
|
10
|
%
|
|
|
58,000
|
|
|
|
(3,000
|
)
|
|
|
|
|
|
|
64
|
|
|
|
55,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
333,262
|
|
|
|
(37,280
|
)
|
|
|
(60,000
|
)
|
|
|
23,999
|
|
|
|
259,981
|
|
These
notes become convertible six months after the dates of agreement at variable conversion prices.
The
Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to
determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative
at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment
under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration
of any beneficial conversion features.
On
July 7, 2016, the Company issued a Convertible Promissory Note. The principal amount of the loan is $33,500 with an original issue
discount of $3,500. The note bears interest at a rate of 10% per annum, is unsecured and becomes due and payable with accrued
interest on July 7, 2017. Note provider has the option to convert the note plus accrued interest into shares of the Company’s
common stock after six months, at a price of 58% (42% discount) of the average of the lowest three trading prices for the previous
20 days prior to the conversion date. On January 7, 2017, the company bifurcated the conversion feature and accounted for it as
a derivative liability. The Company recorded the derivative liability at its fair value of $41,473 based on the Black Scholes
Merton pricing model, a corresponding debt discount of $30,000 to be amortized utilizing the interest method of accretion over
the remaining term of the note and a loss on the issuance of convertible debt of $11,473. On January 20, 2017, the Company converted
$4,018 of principal into 93,000 shares of common stock. The fair value of the derivative liability associated with the converted
principal is determined to be $4,733, and is re-classed from liability to equity. As of February 28, 2017, the Company fair valued
the derivative at $48,943 resulting in a loss on the change in the fair value of $12,203. In addition, total of $11,176 of the
debt discount has been amortized to interest expense. As of February 28, 2017 there is $29,482 of principal due on this note.
On
August 15, 2016, the Company issued a Convertible Promissory Note. The principal amount of the loan is $33,500 with an original
issue discount of $3,500. The note bears interest at a rate of 10% per annum, is unsecured and becomes due and payable with accrued
interest on August 15, 2017. Note provider has the option to convert the note plus accrued interest into shares of the Company’s
common stock after six months, at a price of 58% (42% discount) of the average of the lowest three trading prices for the previous
20 days prior to the conversion date. On February 15, 2017, the company bifurcated the conversion feature and accounted for it
as a derivative liability. The Company recorded the derivative liability at its fair value of $45,032 based on the Black Scholes
Merton pricing model, a corresponding debt discount of $30,000 to be amortized utilizing the interest method of accretion over
the remaining term of the note and a loss on the issuance of convertible debt of $15,032. As of February 28, 2017, the Company
fair valued the derivative at $63,518 resulting in a loss on the change in the fair value of $18,486. In addition, total of $4,044
of the debt discount has been amortized to interest expense. As of February 28, 2017 there is $33,500 of principal due on this
note.
A
summary of the activity of the derivative liability for the year ended February 28, 2017 is as follows:
Balance at
February 29, 2016
|
|
$
|
-
|
|
Addition
of derivative as a debt discount
|
|
|
60,000
|
|
Decrease to
derivative due to conversions
|
|
|
(4,733
|
)
|
Derivative
loss due to mark to market adjustment
|
|
|
57,194
|
|
Balance at
February 28, 2017
|
|
$
|
112,461
|
|
A
summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s
derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the year ended February 28, 2017 is
as follows:
Date
of valuation
|
|
February
28, 2017
|
|
Inception
|
|
|
|
|
|
Volatility (annual)
|
|
|
308%
- 315%
|
|
|
|
247%
- 255%
|
|
Risk-free rate
|
|
|
.61%
- .69%
|
|
|
|
.61%
- .67%
|
|
Years to maturity
|
|
|
.35
- .46
|
|
|
|
.5
|
|
Level
1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level
2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable
as of the reporting date.
Level
3: Pricing inputs that are generally observable inputs and not corroborated by market data.
The
carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate
their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value
of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar
financial arrangements at February 28, 2017.
|
|
Fair
value measured at February 28, 2017
|
|
|
|
|
Fair
value at
February 28, 2017
|
|
Quoted
prices in
active markets
(Level 1)
|
|
Significant
other
observable
inputs (Level 2)
|
|
Significant
unobservable
inputs (Level 3)
|
Derivative liabilities
|
|
$
|
112,461
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
112,461
|
|
Note
8. Subsequent Events.
On
March 7, 2017, the Board approved and filed an Amended & Restated Articles of Incorporation with the Secretary of State of
Wyoming whereby: the aggregate number of shares of all classes of capital stock which this Corporation shall have authority to
issue is 1,000,000,000 shares, of which 40,000,000 shares shall be shares of preferred stock, par value of $.001 per share as
described herein (“Preferred Stock”), and 960,000,000 shares shall be shares of common stock, par value of $.001 per
share (“Common Stock”).
Notwithstanding
the designation of the class of Series A Preferred stock designated in Article XII, Series B Preferred stock designated in Article
XIII, the designations, preferences, limitations, restrictions, and relative rights of any additional classes of Preferred Stock,
and variations in the relative rights and preferences as between different series shall be established in accordance with the
Wyoming Business Corporation Act by the board of directors of the Corporation (“Board of Directors”). Except for such
voting powers with respect to the election of directors or other matters as may be stated in the resolutions of the Board of Directors
creating any series of Preferred Stock, the holders of any such series shall have no voting power.
On
May 8, 2017, the Board approved and filed an Amended & Restated Articles of Incorporation with the Secretary of State of Wyoming
to: (i) increase our authorized common stock to 5,000,000,000 shares,
of
which 40,000,000 shares shall be shares of preferred stock, par value of $.001 per share as described herein (“Preferred
Stock”), and 4, 960,000,000 shares shall be shares of common stock, par value of $.001 per share (“Common Stock”).
Between
March 21, 2017 and May 22, 2017 the Company executed 4 Convertible Notes totaling $173,850.00. The notes bear an interest rate
of 10.0% per annum and are due between January 15, 2018 and April 5, 2018
The Company has also issued 97, 173, 404 shares from
Convertible Note conversions since the period ended February 28, 2017