Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business
EMS Find, Inc. (“EMSF,” “the "Company," "we," "our," or "us") was incorporated in the State of Nevada on March 22, 2011, under the name of Lightcollar, Inc. On March 20, 2015, the Company amended its articles of incorporation and changed its name from Lightcollar, Inc. to EMS Find, Inc. On May 30, 2017, Integrated Ventures, Inc. (“INTV,” a Nevada corporation, was formed as a wholly owned subsidiary of EMSF. Pursuant to an Agreement and Plan of Merger dated May 30, 2017, INTV was merged into EMSF, with the Company being the surviving corporation and changing its name to Integrated Ventures, Inc. Our corporate office is located in Bucks County, Pennsylvania.
The Company is focused on acquiring, launching and operating companies, primarily in the technology, mobile applications and healthcare transportation sectors.
The Company is in the process of developing and acquiring a diverse portfolio of digital currency assets and block chain technologies, and recently completed a significant purchase of digital asset mining equipment. Upon timely delivery and full deployment of the equipment, including installation and setup, the Company, through a newly formed wholly owned subsidiary, BitcoLab, Inc., will focus on growing its capacity in the digital asset mining sector.
On August 21, 2017, the Board of Directors of the Company approved a 1-for-50 reverse split of the Company’s common shares, which through approval of FINRA was effective September 21, 2017. The reverse split has been given retroactive effect in the condensed financial statements for all periods presented.
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. The results of operations for the interim period ended September 30, 2017 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2018. In the opinion of the Company's management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company's results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Company's Annual Report on Form 10-K for the year ended June 30, 2017 filed on September 14, 2017 and Management's Discussion and Analysis of Financial Condition and Results of Operations.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company maintains cash balances in non-interest-bearing accounts that currently do not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The Company had cash balances of $90,193 and $15,691 as of September 30, 2017 and June 30, 2017, respectively.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
Marketable Securities
The marketable security investments of the Company include common shares of Viva Entertainment Group, Inc. (“Viva Entertainment”) received in the conversion of a convertible note receivable from Viva Entertainment. These marketable securities are included in current assets in the balance sheet, are classified as trading securities, and reported at fair value based on quoted market prices. Changes in the fair value of the investments during the period are recorded as unrealized gains or losses in other income (expense) in the statements of operations. Realized gains on the sale of marketable securities are included in other income (expense) in the statements of operations.
Property and Equipment
Property and equipment is stated at cost, and at September 30, 2017, consists of computer and other equipment purchased for digital currency mining operations. The equipment will be depreciated when placed into service using the straight-line method over its estimated service life. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property and equipment are recorded upon disposal.
Accounting for Derivatives
The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.
We estimate the fair value of the derivatives associated with our convertible notes payable using the Black-Scholes pricing model. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, and, in the case of our convertible notes payable, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, "Accounting for the Impairment or Disposal of Long-Lived Assets". This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options, warrants and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options and warrants at the grant date by using the Black-Scholes option-pricing model.
The Company accounts for non-employee share-based awards based upon ASC 505-50, "Equity-Based Payments to Non-Employees." ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete. Generally, our awards do not entail performance commitments. When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.
Revenue Recognition
Revenue is recognized when: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) collectability is reasonably assured — generally when products are shipped to the customer and services are rendered, except in situations in which title passes upon receipt of the products by the customer. In this case, revenues are recognized upon services rendered.
Income Taxes
The Company adopted the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of September 30, 2017, tax years 2015 and 2016 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years.
The Company adopted ASC 740-10, “Definition of Settlement in FASB Interpretation No. 48,” (“ASC 740-10”), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying financial statements.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
Income (Loss) Per Share
Basic net income or loss per share is calculated by dividing net income or loss by the weighted average number of common shares outstanding for the period. Diluted income or loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as “in-the-money” stock options and warrants, convertible debt and convertible preferred stock, were exercised or converted into common stock. Equivalent shares are not utilized when the effect is anti-dilutive.
As of September 30, 2017, common stock equivalent shares which may dilute future earnings per share include 2,581,621 common shares issuable upon conversion of convertible notes payable, 615,710 common shares issuable upon exercise of warrants, and 15,000,000 common shares upon conversion of Series B Preferred Stock. As of September 30, 2017, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share; therefore, basic net loss per share is the same as diluted net loss per share.
Fair Value of Financial Instruments
Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2017 and June 30, 2017, the amounts reported for cash, note receivable, accrued interest receivable, note payable, accounts payable, due to related party and accrued expenses approximate fair value because of their short maturities.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
|
·
|
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
|
|
|
|
|
·
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
|
|
|
·
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
Our marketable securities are measured at fair value on a recurring basis and estimated as follows:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
$
|
112,901
|
|
|
$
|
112,901
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
112,901
|
|
|
$
|
112,901
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
$
|
253,998
|
|
|
$
|
253,998
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
|
|
$
|
253,998
|
|
|
$
|
253,998
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Our derivative liabilities are measured at fair value on a recurring basis and estimated as follows:
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
226,731
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
226,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities measured at fair value
|
|
$
|
226,731
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
226,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
1,208,414
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,208,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities measured at fair value
|
|
$
|
1,208,414
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,208,414
|
|
During the three months ended September 30, 2017, the Company had the following activity in its derivative liability:
Derivative liability at June 30, 2017
|
|
$
|
226,731
|
|
Addition to liability for new debt issued
|
|
|
47,617
|
|
Change in fair value
|
|
|
71,835
|
|
|
|
|
|
|
Derivative liability at September 30, 2017
|
|
$
|
346,183
|
|
Recently Issued Accounting Pronouncements
In July 2017, the FASB issued Accounting Standards Update ("ASU") 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception." Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, "Distinguishing Liabilities from Equity," because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.
Reclassifications
Certain amounts in the condensed financial statements for the three months ended September 30, 2016 have been reclassified to conform to the presentation for the three months ended September 30, 2017.
2. GOING CONCERN
The Company has not generated any revenues, has recurring net losses, a working capital deficiency as of September 30, 2017 of $339,100, and used net cash in operations of $145,661 and $90,371 for the three months ended September 30, 2017 and 2016, respectively. In addition, as of September 30, 2017, the Company had an accumulated deficit of $5,053,478. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of management's plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements.
There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company's current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.
3. NOTE RECEIVABLE AND MARKETABLE SECURITIES
On April 6, 2016, the Company completed the sale of its subsidiary, Viva Entertainment, to Black River Petroleum Corp., a Nevada publicly-traded company (“Black River”), at a closing where, in exchange for all sale of all of the outstanding shares of Viva Entertainment, Black River issued to the Company its 10% (15% default rate) promissory note in the principal amount of $100,000, due December 31, 2016 (the “Viva Note”). The Company gave no effect to the Viva Note in its financial statements, pending collection of the note and completion of the transaction. We discontinued consolidation of the accounts of Viva Entertainment effective April 6, 2016.
On February 27, 2017, the Viva Note was in default and no repayments to the Company had been made. On that date, the parties entered into an addendum to the Viva Note, establishing the principal amount at $100,000 and accrued interest at $6,000. Terms of the Viva Note were also amended to allow the Company to convert the unpaid principal and interest into common shares of Viva Entertainment using a Variable Conversion Price equal to 50% of the lowest one day Trading Price for the Viva Entertainment common stock during the twenty Trading Day period ending on the last complete Trading Day prior to the Conversion Date. Effective February 27, 2017, the Company recognized a gain of $106,000 on the April 6, 2016 sale of its investment in Viva Entertainment and recorded a note receivable of $100,000 and accrued interest receivable of $3,000.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
On April 4, 2017, the Company and Global Opportunity Group LLC (“Global”), a lender, entered into a Purchase, Exchange and Escrow Agreement whereby the Company assigned $50,000 principal and $3,000 accrued interest of the Viva Note to Global in extinguishment of a convertible promissory note payable to Global dated March 28, 2017 with a principal balance of $18,150 and accrued interest payable of $35. The Company recognized a gain on extinguishment of debt of $34,815.
These common shares of Viva Entertainment were initially recorded at their cost basis, as determined by the principal balance of the Viva Note and accrued interest converted, and are classified as trading securities in the Company’s financial statements, and subsequently reported at fair value based on quoted market prices. Changes in the fair value of the marketable securities are recorded as unrealized gains or losses in other (income) expense in the statements of operations. Realized gains on the sale of marketable securities are included in other (income) expense in the statements of operations.
Pursuant to multiple conversions during April 2017 through June 2017, the Company converted $33,128 principal of the Viva Note and $2,205 accrued interest payable into a total of 173,809,000 common shares of Viva Entertainment. As of June 30, 2017, the Viva Note had a principal balance of $16,872 and accrued interest of $1,519 outstanding.
On July 20, 2017, the Company converted $16,850 principal of the Viva Note into a total of 84,250,000 common shares of Viva Entertainment.
During July 2017, the Company sold a total of 170,250,000 common shares of Viva Entertainment, with net proceeds of $551,800, and recorded a realized gain on sale of marketable securities of $281,223 for the three months ended September 30, 2017.
In July and August 2017, the Company advanced a total of $49,880 cash to Viva Entertainment pursuant to a new convertible note receivable dated July 5, 2017 (the “July 2017 Viva Note”). On August 1, 2017, the Company converted the remaining principal balance of the Viva Note of $22, the principal balance of the July 2017 Viva Note of $49,880 and accrued interest receivable of $98, for a total of $50,000, into 55,555,555 common shares of Viva Entertainment.
As of September 30, 2017, the Company held a total of 55,555,555 common shares of Viva Entertainment, recorded at market value of $112,901. The Company recorded total unrealized gains on marketable securities of $61,111 during the three months ended September 30, 2017. As of June 30, 2017, the Company held a total of 86,000,000 common shares of Viva Entertainment, recorded at market value of $253,998.
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at September 30, 2017:
Computer and related equipment
|
|
$
|
280,816
|
|
Leasehold improvements
|
|
|
941
|
|
|
|
|
|
|
Total
|
|
$
|
281,757
|
|
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
5. RELATED PARTY TRANSACTIONS
On July 29, 2017, the Board of Directors of the Company established annual compensation for Steve Rubakh of $125,000 per year, effective July 1, 2017. In addition, Steve Rubakh will receive 30,000 shares of Series B Preferred Stock on a quarterly basis. For the three months ended September 30, 2017, the Company authorized the issuance of 30,000 shares of Series B preferred stock, and stock-based compensation valued at $9,000 was recorded.
On August 31, 2017, Steve Rubakh converted accrued compensation of $15,625 into 347,222 common shares of the Company.
As of September 30, 2017 and June 30, 2017, amounts due to related party totaled $5,022 and $20,216, respectively.
6. CONVERTIBLE NOTES PAYABLE
Notes payable, all classified as current, consist of the following:
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
Original
|
|
|
|
|
|
|
|
|
|
|
|
Original
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
Issue
|
|
|
|
|
|
|
|
|
Debt
|
|
|
Issue
|
|
|
|
|
|
|
Principal
|
|
|
Discount
|
|
|
Discount
|
|
|
Net
|
|
|
Principal
|
|
|
Discount
|
|
|
Discount
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LG Capital Funding, LLC
|
|
$
|
125,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Notes Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Opportunity Group, LLC
|
|
$
|
16,500
|
|
|
$
|
(12,306
|
)
|
|
$
|
-
|
|
|
$
|
4,194
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Global Opportunity Group, LLC
|
|
|
20,000
|
|
|
|
(15,061
|
)
|
|
|
-
|
|
|
|
4,939
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
A1 Solar Corp.
|
|
|
11,117
|
|
|
|
(10,660
|
)
|
|
|
|
|
|
|
457
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
River North Equity, LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,660
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,660
|
|
Global Opportunity Group, LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,700
|
|
|
|
(2,878
|
)
|
|
|
(722
|
)
|
|
|
15,100
|
|
EMA Financial, LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,916
|
|
|
|
(2,394
|
)
|
|
|
-
|
|
|
|
6,522
|
|
GPL Ventures, LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
(613
|
)
|
|
|
-
|
|
|
|
9,387
|
|
Global Opportunity Group, LLC
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
(6,247
|
)
|
|
|
(625
|
)
|
|
|
3,128
|
|
Howard Schraub
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,500
|
|
|
|
(12,250
|
)
|
|
|
-
|
|
|
|
4,250
|
|
Howard Schraub
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
(15,233
|
)
|
|
|
-
|
|
|
|
4,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
47,617
|
|
|
$
|
(38,027
|
)
|
|
$
|
-
|
|
|
$
|
9,590
|
|
|
$
|
88,776
|
|
|
$
|
(39,615
|
)
|
|
$
|
(1,347
|
)
|
|
$
|
47,814
|
|
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
Note Payable
On October 22, 2015, the Company entered into a Securities Purchase Agreement ("Purchase Agreement"), dated as of October 22, 2015, with LG Capital Funding, LLC ("LG"), pursuant to which the Company sold LG a convertible note in the principal amount of $125,000 (the first of four such Convertible Notes each in the principal amount of $125,000 provided for under the Purchase Agreement), bearing interest at the rate of 8% per annum (the "Convertible Note"). Each of the Convertible Notes issuable under the Purchase Agreement provides for a 15% original issue discount ("OID"), such that the purchase price for each Convertible Note is $106,250, and at each closing LG is entitled to be paid $6,000 for legal and other expenses. The Convertible Note provides LG the right to convert the outstanding balance, including accrued and unpaid interest, of such Convertible Note into shares of the Company's common stock at a price ("Conversion Price") for each share of common stock equal to 80% of the lowest trading price of the common stock as reported on the National Quotations Bureau for the OTCQB exchange on which the Company's shares are traded or any exchange upon which the common stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent. The Convertible Note was payable, along with interest thereon, on October 22, 2016 and was in default. The convertible note had an OID of 15%, which was recorded at $18,750 and which has been fully amortized. The Company recorded a debt discount of $44,643, which has also been fully amortized.
On October 14, 2016, the Supreme Court of the State of New York County of Kings, in regards to LG Capital Funding, LLC v. EMS Find, Inc., issued a judgment against EMS Find, Inc. in favor of LG Capital Funding, LLC, in the amount of $135,202, which includes principal and interest (calculated as of September 29, 2016), in regards to the convertible promissory note dated October 22, 2015. The judgment includes an Information Subpoena with Restraining Notice, which addressed the EMS Find, Inc. bank account at TD Bank. As of the date of this filing, $1,304 was garnished. As a result of the judgment, the conversion feature of the note was eliminated and therefore, the associated derivative liability was extinguished. As of September 30, 2017, the debt has been recorded as a note payable of $125,000, a current liability in the balance sheet, and $23,998 of interest has been accrued.
Convertible Notes Payable
On July 25, 2016, the Company entered into an equity purchase agreement with River North Equity, LLC (“River North”) for up to $2,000,000. On July 25, 2016, the Company entered into a convertible promissory note with River North for $33,333. The convertible promissory note had a maturity date of March 29, 2017 and bears interest at 10%. The convertible promissory note provided for an OID of $3,333, a deduction of $4,000 for River North’s legal fees, and a debt discount of $33,333. The conversion price is the lower of 65% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. On February 1, 2017, River North converted $2,036 principal and $1,744 accrued interest into 52,878 common shares of the Company. On April 20, 2017, the Company and River North entered into a Settlement Agreement & Mutual Release with respect to this note, resulting in penalties of $17,955 added to the note principal to bring the principal balance to $49,252 and requiring a principal payment of $30,000, which payment was financed by the issuance of a new convertible promissory to Global. On June 2, 2017, River North converted $14,592 principal into 172,685 common shares of the Company, resulting in a principal balance of $4,660 as of June 30, 2017. As of June 30, 2017, the OID and the debt discount had been fully amortized and there was accrued interest payable of $1,236. The Company recorded a derivative liability of $12,535 as of June 30, 2017. On July 5, 2017, River North converted the remaining principal of $4,660 into 183,068 common shares of the Company and the accrued interest payable balance of $1,236 was written off. The note has been repaid in full and no related derivative liability was recorded as of September 30, 2017.
On October 6, 2016, the Company entered into a convertible promissory note with EMA for $33,000. The note matures on October 6, 2017 and bears interest at 12%. A debt discount of $33,000 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. Pursuant to multiple conversions in May and June 2017, EMA converted principal of $24,084 into 976,000 shares of the Company’s common stock, resulting in a principal balance of $8,916 as of June 30, 2017. As of June 30, 2017, $30,606 of the debt discount had been amortized, and there was accrued interest of $2,677. The Company recorded a derivative liability of $25,368 as of June 30, 2017. On July 5, 2017, July 7, 2017 and July 12, 2017, EMA converted the remaining principal of $8,916, accrued interest payable of $2,715 and penalties totaling $29,908 into a total of 830,776 common shares of the Company. The OID and the debt discount have been fully amortized. The note has been repaid in full and no related derivative liability was recorded as of September 30, 2017.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
On December 2, 2016, the Company entered into a convertible promissory note with Global for $18,700. The note matures on December 2, 2017 and bears interest at 12%. The convertible promissory note provided for an OID of $1,700; therefore, the net proceeds to the Company was $17,000. A debt discount of $18,700 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. As of June 30, 2017, $978 of the OID had been amortized, $15,822 of the debt discount had been amortized and there was accrued interest of $1,297. The Company recorded a derivative liability of $47,634 as of June 30, 2017. Additionally, the Company issued 1,650 five-year warrants for common stock with an exercise price of $7.50 per share, subject to certain adjustments, and a cashless exercise option. On July 13, 2017 and August 15, 2017, Global converted the entire principal of $18,700 and fees totaling $1,250 into a total of 567,867 common shares of the Company and the accrued interest payable balance of $1,541 was written off. The OID and the debt discount have been fully amortized. The note has been repaid in full and no related derivative liability was recorded as of September 30, 2017.
On December 13, 2016, the Company entered into a convertible promissory note with GPL for $10,000. The note matures on July 13, 2017 and bears interest at 12%. A debt discount of $10,000 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. As of June 30, 2017, $9,387 of the debt discount had been amortized, and there was accrued interest of $658. The Company recorded a derivative liability of $24,876 as of June 30, 2017. On July 6, 2017 and July 12, 2017, GPL converted the entire principal of $10,000 into a total of 400,000 common shares of the Company and the accrued interest payable balance of $687 was written off. The OID and the debt discount have been fully amortized. The note has been repaid in full and no related derivative liability was recorded as of September 30, 2017.
On February 13, 2017, the Company entered into a convertible promissory note with Global for $10,000. The note matures on February 13, 2018 and bears interest at 2%. The convertible promissory note provides for an OID of $1,000. Therefore, the net proceeds to the Company was $9,000. A debt discount of $10,000 was recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of June 30, 2017, $375 of the OID had been amortized, $3,753 of the debt discount had been amortized and there was accrued interest of $75. The Company has recorded a derivative liability of $22,661 as of June 30, 2017. Additionally, the Company issued 6,667 seven-year warrants for common stock with an exercise price of $0.50 per share, subject to certain adjustments, and a cashless exercise option. On September 15, 2017, Global sold the $10,000 note and $1,117 accrued interest payable to A1Solar. The OID and the debt discount have been fully amortized. The note has been repaid in full and no related derivative liability was recorded as of September 30, 2017.
On September 15, 2017, A1 Solar Corp (“A1 Solar”) purchased $10,000 principal and $1,117 accrued interest payable of the February 13, 2017 Global convertible promissory note. The $11,117 convertible replacement note matures on September 29, 2018 and bears interest at an annual rate of 12%. A debt discount of $11,117 and a derivative liability of $26,209 were recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of September 30, 2017, $457 of the debt discount had been amortized and there was accrued interest payable of $49. The Company has recorded a derivative liability of $72,482 as of September 30, 2017.
On March 28, 2017, the Company entered into a convertible promissory note with Schraub for $16,500. The note matures on March 28, 2018 and bears interest at 10%. A debt discount of $16,500 was recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of June 30, 2017, $4,250 of the debt discount had been amortized and there was accrued interest of $425. The Company recorded a derivative liability of $42,814 as of June 30, 2017. Additionally, the Company issued 12,100 seven-year warrants for common stock with an exercise price of $0.50 per share, subject to certain adjustments, and a cashless exercise option. These warrants were surrendered to the Company and cancelled on May 8, 2017. On July 31, 2017, Schraub assigned the $16,500 note to Global. The debt discount has been fully amortized and $565 of accrued interest payable was written off. The note has been repaid in full and no related derivative liability was recorded as of September 30, 2017.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
On July 31, 2017, Global was assigned the $16,500 principal of the March 28, 2017 Schraub convertible promissory note. The note matures on March 28, 2018 and bears interest at 10%. A debt discount of $16,500 and a derivative liability of $114,489 were recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of September 30, 2017, $4,194 of the debt discount had been amortized and there was accrued interest payable of $276. The Company has recorded a derivative liability of $123,620 as of September 30, 2017.
On April 4, 2017, the Company entered into a convertible promissory note with Schraub for $20,000. The note matures on April 4, 2018 and bears interest at 10%. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of June 30, 2017, $4,767 of the debt discount had been amortized and there was accrued interest of $477. The Company recorded a derivative liability of $50,843 as of June 30, 2017. Additionally, the Company issued 15,000 seven-year warrants for common stock with an exercise price of $0.50 per share, subject to certain adjustments, and a cashless exercise option. These warrants were surrendered to the Company and cancelled on May 8, 2017. On July 31, 2017, Schraub assigned the $20,000 note to Global. The debt discount has been fully amortized and $647 of accrued interest payable was written off. The note has been repaid in full and no related derivative liability was recorded as of September 30, 2017.
On July 31, 2017, Global was assigned the $20,000 principal of the April 4, 2017 Schraub convertible promissory note. The note matures on April 4, 2018 and bears interest at 10%. A debt discount of $20,000 and a derivative liability of $140,711 were recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of September 30, 2017, $4,939 of the debt discount had been amortized and there was accrued interest payable of $334. The Company has recorded a derivative liability of $150,081 as of September 30, 2017.
On July 6, 2017, Schraub converted fees of $600 into 618,500 common shares of the Company.
As detailed above, during the three months ended September 30, 2017, a total of 1,994,081 shares of the Company’s common stock, valued at $353,258, were issued in conversion of $42,276 note principal, $2,715 accrued interest payable, $1,950 in fees, $29,908 in penalties and $276,409 loss on conversion of debt into common stock.
7. STOCKHOLDERS’ DEFICIT
Preferred Stock
Series A Preferred Stock
On March 10, 2015, the Company, with the approval of a majority vote of its Board of Directors, approved the filing of a Certificate of Designation establishing the designations, preferences, limitations and relative rights of the Company's Series A preferred stock (the "Series A Designation" and the "Series A Preferred Stock"). The terms of the Certificate of Designation of the Series A Preferred Stock, which was filed with the State of Nevada on March 12, 2015, include the right to vote in aggregate, on all shareholder matters equal to 1,000 votes per share of Series A Preferred Stock. The shares of Series A Preferred Stock are not convertible into shares of common stock.
The Company has 20,000,000 shares of Series A Preferred Stock authorized, with 500,000 shares issued and outstanding, which were issued in March 2015 in consideration for services on the Company’s Board of Directors.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
Series B Preferred Stock
On December 21, 2015, the Company filed a Certificate of Designation for its new Series B Convertible Preferred Stock with the State of Nevada following approval by the board of directors of the Company. Five Hundred (500,000) Thousand shares of the Company's authorized preferred stock are designated as the Series B Convertible Preferred Stock (the "Series B Preferred Stock"), par value of $0.001 per share and with a stated value of $0.001 per share (the "Stated Value"). Holders of Series B Preferred Stock shall be entitled to receive dividends, when and as declared by the Board of Directors out of funds legally available therefor. At any time and from time to time after the issuance of shares of the Series B Preferred Stock, each issued share of Series B Preferred Stock is convertible into One (100) Hundred shares of Common Stock ("Conversion Ratio"). The holders of the Series B Preferred Stock shall have the right to vote together with holders of Common Stock, on an as "converted basis", on any matter that the Company's shareholders may be entitled to vote on, either by written consent or by proxy. Upon any liquidation, dissolution or winding-up of the Company, the holders of the Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Series B Preferred Stock an amount equal to the Stated Value, and all other amounts in respect thereof then due and payable prior to any distribution or payment shall be made to the holders of any junior securities.
On July 1, 2016, the Board of Directors of the Company agreed to compensate Steve Rubakh on a quarterly basis through the issuance of 30,000 shares of Series B Preferred Stock. For the three months ended September 30, 2017, the Company issued 30,000 shares of Series B preferred stock to Steve Rubakh valued at $9,000.
Common Stock
On August 21, 2017, the Board of Directors of the Company approved a 1-for-50 reverse split of the Company’s common shares. The reverse split has been given retroactive effect in the condensed financial statements for all periods presented.
During the three months ended September 30, 2017, the Company issued a total of 2,529,837 shares of its common stock.
On July 6, 2017, 188,240 shares of common stock were issued to Global in the cashless exercise of warrants. See Note 8.
On August 31, 2017, 347,222 shares of common stock valued at $15,625 were issued to Steve Rubakh for accrued compensation. See Note 5.
As detailed in Note 6, during the three months ended September 30, 2017, a total of 1,994,081 shares of the Company’s common stock, valued at $353,258, were issued in conversion of $42,276 note principal, $2,715 accrued interest payable, $1,950 in fees, $29,908 in penalties and $276,409 loss on conversion of debt into common stock.
On September 30, 2017, the Company increased the number of outstanding common shares by 114 shares due to rounding of shares in the reverse stock split.
During the three months ended September 30, 2016, the Company issued a total of 59,854 shares of its common stock.
On July 1, 2015, 6,000 shares of common stock and 1,200 issuable shares of common stock valued at $37,500 were issued to Steve Rubakh for accrued compensation.
During the three months ended September 30, 2017, the Company issued a total of 52,654 shares of common stock for debt converted of $115,773.
Integrated Ventures, Inc.
(formerly EMS Find, Inc.)
Notes to Condensed Financial Statements
Three Months Ended September 30, 2017
(Unaudited)
8. WARRANTS
The Company has granted warrants to non-employee lenders in connection with the issuance of certain convertible promissory notes, certain of which were subsequently surrendered to the Company and cancelled. See Note 6. Warrant activity for these warrants for the three months ended September 30, 2017 is as follows:
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted Average
Remaining
Contract Term
(Years)
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2017
|
|
|
12,817
|
|
|
$
|
4.33
|
|
|
|
5.25
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(502
|
)
|
|
$
|
7.50
|
|
|
|
|
|
|
|
|
|
Forfeited or expired
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable at September 30, 2017
|
|
|
12,315
|
|
|
$
|
4.20
|
|
|
|
5.04
|
|
|
$
|
-
|
|
The warrants were valued at the grant date using a Black-Scholes calculation. No stock-based compensation was recorded for warrants during the three months ended September 30, 2017.
9. COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of filing of this report, there were no pending or threatened lawsuits, except as stated below.
On October 14, 2016, the Supreme Court of the State of New York County of Kings, in regards to LG Capital Funding, LLC v. EMS Find, Inc., issued a judgment against EMS Find, Inc. in favor of LG Capital Funding, LLC, in the amount of $135,202, which includes principal and interest (calculated as of September 29, 2016), in regards to the convertible promissory note dated October 22, 2015. The judgment includes an Information Subpoena with Restraining Notice, which addressed the EMS Find, Inc. bank account at TD Bank. As of the date of this filing, $1,304 was garnished.
10. SUBSEQUENT EVENTS
Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:
Subsequent to September 30, 2017, the Company has issued a total of 545,936 shares of its common stock to two lenders in conversions of convertible promissory note principal totaling $10,209.