These financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions
to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating
results for the interim period ended September 30, 2017 are not necessarily indicative of the results that can be expected for
the full year.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(UNAUDITED)
1. ORGANIZATION AND LINE BUSINESS
The Company was originally incorporated under
the laws of the state of Nevada on February 25, 2013. The Company is devoting substantially all of its present efforts to establish
a new business, and has had no revenues from operations to date.
On April 4, 2017, the Company entered into
a license agreement (the “License Agreement”) with Pharma GP ApS. (“Pharma GP”) and acquired an exclusive
license to sell certain cosmetic products or ingredients covered by United States Patent No. US 8,637,075 in the territory of the
United States.
As a result of the License Agreement, the Company
is currently marketing a line of skin care products on its website at www.vilacto.com. These products include, lotions, skin care
creams and gels, lip balms, foot creams and oils, and similar items.
The Company also entered into a Stock Purchase
Agreement (the “Purchase Agreement”) with Pharma GP and its sole shareholder, 9 Heroes APS, a Denmark corporation (together,
“Seller”). In accordance with the terms of the Purchase Agreement, the Company agreed to purchase all of the outstanding
shares of Pharma GP for the purchase price (the “Purchase Price”) of $6,000,000, payable as $3,000,000 in cash and
the balance in shares of our common stock.
The closing of the above transactions was expected
to occur by May 31, 2017, but will likely not occur until the Company is able to successfully raise capital for the Purchase Price.
2. BASIS OF PRESENTATION AND GOING CONCERN
The accompanying unaudited interim financial
statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements
and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In
the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim period presented have been reflected herein. The results of operations for
the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period,
as reported in the Form 10-K, have been omitted.
Going concern
– The accompanying
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred cumulative net losses of $242,688 since its inception
and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise
additional capital through future issuances of common stock is unknown. The obtainment of additional financing, the successful
development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable
operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raises substantial
doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include
any adjustments that may result from the outcome of these aforementioned uncertainties.
3. SUMMARY OF SIGNIFICANT POLICIES
This summary of significant accounting policies
of Vilacto Bio Inc. is presented to assist in understanding the Company’s financial statements. The financial statements
and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally
accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
VILACTO BIO INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(UNAUDITED)
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, disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review
the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion
type contracts, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable
in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions
or conditions.
Revenue Recognition
– The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin
No. 101, “Revenue Recognition in Financial Statements” and No. 104, “Revenue Recognition”. In all cases,
revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is
performed and collectability is reasonably assured. For the years ended March 31, 2017 and 2016 the Company reported revenues of
$0 and $0, respectively. For the six months ended September 30, 2017 and 2016 the Company reported revenues of $0 and $0, respectively.
Accounts Receivable
– Accounts
receivable is comprised of uncollateralized customer obligations due under normal trade terms. The Company performs ongoing credit
evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit risk
of specific customers, historical trends, and other information. The carrying amount of accounts receivable is reviewed periodically
for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate
of the amounts that will not be collected is recorded. Accounts receivable are presented net of an allowance for doubtful accounts
of $0 and $0 at September 30, 2017, and March 31, 2017, respectively.
Cash and cash equivalents
– For
purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term instruments with original
maturities of three months or less to be cash equivalents. There was $2,228 and $22,020 in cash and cash equivalents as of September
30, 2017 and March 31, 2017, respectively.
Concentration Risk
At times throughout
the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of September 30, 2017, the
cash balance in excess of the FDIC limits was $0. The Company has not experienced any losses in such accounts and believes it is
not exposed to any significant credit risk in these accounts.
Fair Value of Financial Instruments
– The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective
fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.
As required by the Fair Value Measurements
and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2)
inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable
inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
VILACTO BIO INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(UNAUDITED)
The three levels of the fair value hierarchy
are described below:
Level 1: Unadjusted quoted prices
in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets
that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset
or liability;
Level 3: Prices or valuation techniques
that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market
activity).
Stock-based compensation
– The
Company follows the guidelines in FASB Codification Topic ASC 718-10 “
Compensation-Stock Compensation,
” which
provides investors and other users of financial statements with more complete and neutral financial information, by requiring that
the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost will be
measured based on the fair value of the equity or liability instruments issued. ASC 718-10 covers a wide range of share-based compensation
arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights and employee
share purchase plans. As of September 30, 2017, the Company has not implemented an employee stock based compensation plan.
Non-Employee Stock Based Compensation
– The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10,
at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily
determinable, using the measurement date guidelines enumerated in ASC 505-50. The Company may issue compensatory shares for services
including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative
consulting services.
Earnings (loss) per share
– The
Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s (“FASB”)
Accounting Standards Codification (“ASC”) 260-10 “
Earnings Per Share,
” which provides for calculation
of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed
by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period.
Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation
of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their
effect is anti-dilutive.
Long-lived Assets
– In accordance
with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property,
Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for
the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected
undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess
of the carrying amount of the asset over its estimated fair value.
Indefinite Lived Intangibles and Goodwill
Assets
The Company accounts
for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,”
where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed
based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted,
up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities
assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified
intangible assets acquired less liabilities assumed is recognized as goodwill.
VILACTO BIO INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(UNAUDITED)
The Company tests
for indefinite lived intangibles and goodwill impairment in the fourth quarter of each year and whenever events or circumstances
indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies,
the Company performed a qualitative assessment of indefinite lived intangibles and goodwill at September 30, 2017, and determined
there was no impairment of indefinite lived intangibles and goodwill.
Business Combinations
The Company allocates
the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based
on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable
assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions,
especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited
to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective,
useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable,
but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement
period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities
assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are
recorded to earnings.
Inventory
–
Substantially all inventory consists of finished goods and are valued based upon first-in first-out ("FIFO") cost, not
in excess of market. The determination of whether the carrying amount of inventory requires a write-down is based on an evaluation
of inventory.
Income taxes
–
The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “
Income Taxes
”,
which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date.
Segment Reporting
–
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated
regularly by the chief operating decision maker, or decision making group, in deciding the method to allocate resources and assess
performance. The Company currently has one reportable segment for financial reporting purposes, which represents the Company's
core business.
Recently Issued Accounting Pronouncements
–The
Company has evaluated the all recent accounting pronouncements through ASU 2017-12, and believes that none of them will have a
material effect on the Company's financial position, results of operations or cash flows.
4. INVENTORY
Inventory consist of the following as of September
30, 2017 and March 31, 2017:
|
|
September 30, 2017
|
|
March 31, 2017
|
Raw materials
|
|
$
|
—
|
|
|
$
|
—
|
Finished Goods
|
|
|
133,284
|
|
|
|
—
|
Total
|
|
$
|
133284
|
|
|
$
|
—
|
VILACTO BIO INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(UNAUDITED)
5. LOANS PAYABLE
On March 5, 2017, the Company executed a $22,500
promissory note with an investor which bears interest at a rate of 5% per annum and is due within two business days of demand notice.
During the six months ending September 30, 2017 the Company recorded interest of $564.
On May 17, 2017, the Company executed a $22,500
promissory note with an investor which bears interest at a rate of 5% per annum and is due within two business days of demand notice.
During the six months ending September 30, 2017 the Company recorded interest of $419.
On July 5, 2017, the Company executed a $20,000
promissory note with an investor which bears interest at a rate of 5% per annum and is due within two business days of demand notice.
During the six months ending September 30, 2017 the Company recorded interest of $238.
6. STOCKHOLDERS’ EQUITY
On March 6, 2017, our board of directors resolved
to increase the number of authorized shares of our common stock, par value $0.001, from 75,000,000 shares to 1,125,000,000 shares.
Correspondingly, our board of directors affirmed a forward split of 15 for 1 in which each shareholder will be issued 15 common
shares in exchange for 1 common share of their currently issued common stock. In accordance with ASC 505-20 all stock-related information
presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the number of shares
resulting from this action.
Prior to approval of the forward split, we
had a total of 6,000,000 issued and outstanding common shares, par value $0.001. On the effective date of the forward split, we
had a total of 90,000,000 issued and outstanding common shares, par value $0.001.
Overview
The Company is authorized to issue 1,125,000,000
shares of $0.001 par value common stock. All common stock shares have equal voting rights, are non-assessable and have one vote
per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose
to do so, elect all of the directors of the Company.
As of September 30, 2017, there were 90,000,000
shares of common stock issued and outstanding.
Stock purchase agreement
On April 19, 2017, we entered into a Stock
Purchase Agreement (the “Agreement”) with Pharma GP APS, a Denmark corporation (“Pharma GP”) and its sole
shareholder, 9 Heroes APS, a Denmark corporation. In accordance with the terms of the Agreement, we agreed to purchase all of the
outstanding shares of Pharma GP for the purchase price (the “Purchase Price”) of $6,000,000.00, payable as $3,000,000.00
in cash and the balance in shares of our common stock.
The closing of the above transactions is expected
to occur when the company has sufficient funds to do so. The Agreement is conditioned on our paying the Purchase Price, obtaining
financing in the amount of $4,000,000.00 for operational expenses, and receiving audited financial statements from Pharma GP, among
other conditions as contained in the Agreement.
We currently do not have the money on hand
to pay the Purchase Price, and we must obtain additional financing to meet the conditions to close the transaction.
VILACTO BIO INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(UNAUDITED)
The Agreement includes customary representations,
warranties and covenants among the parties to each other as of specific dates.
The foregoing description of the Agreement
is qualified in its entirety by reference to the full text of the Agreement, which is included as an exhibit our Current Report
on Form 8-K filed on April 20, 2017 and is incorporated by reference herein.
Pharma GP is a manufacturer of skincare products
with distribution in several countries. The company’s body and facial creams are designed for moisturizing, skin regeneration,
wound healing and a variety of skin issues, such as dry and cracked skin, among other things.
In addition, Pharma GP owns patents, trademarks
and production facilities for an ingredient designed to be used in pharmaceuticals and medical devices for treating a wide range
of issues. Pharma GP currently has skincare products that are available over the counter. However, the company intends to develop,
market and sell pharmaceutical skincare products to treat various ailments using its patented technology. Currently, the company
has no government approved products, but with the financing, we intend to purchase Pharma GP and focus on those clinical applications.
We expect to have more information on the status of the Closing of the Agreement and our new business direction in future filings.
7. RELATED PARY TRANSACTIONS
On February 21, 2017, Dana Gallovicova, our
former CEO agreed to transfer her 75,000,000 shares of common stock in the Company to Gert Andersen pursuant to a Stock Purchase
Agreement. Ms. Gallovicova received proceeds of $100,000. The source of the consideration paid to Ms. Gallovicova was the existing
funds of the purchaser.
Ms. Gallovicova also assigned all of the outstanding
debt owed to her by the Company to Mr. Andersen for $32,608. In connection with the debt assignment, Ms. Gallovicova agreed to
release the Company from any and all claims. In connection with the assumption of the aforementioned debt the Company executed
a promissory note with Mr. Anderson which bears interest at a rate of 10% per annum. During the six months ending September 30,
2017 the Company recorded interest of $1,635.
In connection with the sale of her controlling
interest in the company, on February 24, 2017, Ms. Gallovicova appointed Mr. Andersen as our new Director, President, CEO, Secretary
and Treasurer and then resigned from all officer and director positions. There were no other arrangements or understandings between
Ms. Gallovicova and Mr. Andersen with respect to election of directors or other matters.
As of September
30, 2017, Gert Anderson, the President and CEO of the Company advanced $38,570
to
the Company to pay expenses on behalf of the Company. The advances bear no interest, are unsecured, and due on demand.
During the
six months ended September 30, 2017, the Company purchased $133,284 in inventory from Pharma GP APS, which it intends to sell
via its online stores. Our Chief Executive Officer and President is also the Chief executive officer of Pharma GP
APS.
VILACTO BIO INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(UNAUDITED)
8. ROYALTY AGREEMENT
License agreement
On April 4, 2017, we entered into a license
agreement (the “License Agreement”) with Pharma GP APS. (“Pharma GP”) and acquired an exclusive license
to sell certain cosmetic products or ingredients covered by United States Patent No. US 8,637,075 in the territory of the United
States.
For the license, we agreed to pay to GP a royalty
of eight percent (8%) on the selling price (irrespective of any taxes, custom duties, costs of insurance, transportation costs
or other costs) for all licensed product we sell in the United States (if in excess of the agreed minimum royalty), or pay the
agreed minimum royalty of $10,000 per month.
Under the License Agreement, we have the ability
to sublicense to third parties under the royalty arrangement described above.
9. SUBSEQUENT EVENT
On October 6, 2017, the Company executed a
$65,000 promissory note with an investor which bears interest at a rate of 5% per annum and is due within two business days of
demand notice.