NOTES
TO UNAUDITED FINANCIAL STATEMENTS
(Unaudited)
|
1.
|
BASIS
OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Business
Activity:
Vet Online Supply Inc. (the Company) is a Florida corporation incorporated on May 31, 2014. We
are currently a US based reseller of premium veterinary supplies. The goal of Vet Online Supply is to replace our
current business model of sourcing our products through Concord Veterinary Supply; and launching our own brand label products
for the CBD and enhancement pet care supplies markets. Our headquarters are located at 6500 Live Oak Drive, Kelseyville CA 95451.
Recently the Company has expanded its products to include its own cannabis product line for pets, in addition to its legacy veterinarian
supplies line. These new products are designed to help with arthritis, compromised immune systems, stress responses, aggression
and digestive issues and have may also be useful in treating acute ailments like sprains and strains, torn ligaments, bone breaks
and even during post-operative care to reduce swelling, pain and stiffness.
During
August 2015, the Company filed amended articles with the Florida Secretary of State to:
-
|
Set
a series of preferred stock, each one share being convertible into one share of common stock and with no voting rights;
|
-
|
Set
par value for each of the preferred and common stock at $0.001 per share.
|
On
July 25, 2016, the Company filed a Certificate of Amendment with the State of Florida to increase the authorized Common Stock,
par value $0.001, to 8,000,000,000 common shares, and to effectuate a forward split of 150 shares for each 1 share of the
Companys issued Common Stock (Forward Split). The effective date of the Forward Split is July 28, 2016. On
March 28, 2017, the Company filed an amendment to its articles of incorporation reducing the number of authorized common shares
from 8,000,000,000 to 1,000,000,000, par value $0.001, and designating 20,000 shares of its authorized preferred stock, par value
$0.001 as Series B Voting Preferred Stock. The Series B Voting Preferred Stock shall have the right to vote the shares
on any matter requiring shareholder approval on the basis of 4 times the votes of all the issued and outstanding shares of common
stock, as well as any issued and outstanding preferred stock.
All
share and per share data contained in these financial statements reflects the retroactive application of the aforementioned forward
share split.
To
date, our activities have been limited to formation, the raising of equity capital, and the initial stages of implementation of
our business plan. Recently we have expanded our product line and retained various consultants to assist in generating corporate
growth. While we have operated our veterinary supply business for several years, we are actively seeking to substantially increase
revenues with additional marketing efforts in fiscal 2017.
Unaudited
Interim Financial Statements
The
interim unaudited financial statements should be read in conjunction with those audited financial statements included in Form
10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring
adjustments, have been made. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2017.
Financial
Statement Presentation
The
audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in
the United States of America (U.S. GAAP).
Fiscal
year end
The
Company has selected December 31 as its fiscal year end.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future
periods may be based upon amounts that differ from these estimates.
Cash
Equivalents
The
Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.
Revenue
recognition and related allowances
Revenue
from the sale of goods is recognized when the risks and rewards of ownership have been transferred to the customer, which is usually
when title passes. Revenue is measured at the fair value of the consideration received, net of trade discounts and sales taxes.
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are
provided based on historical experience and managements evaluation of outstanding accounts receivable. Management evaluates past
due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts
at September 30, 2017 and December 31, 2016 is $0.
Inventories
The
Company is a reseller of premium veterinary supply products and cannabis based supplements and as such will not maintain inventory.
All items are directly drop shipped to customers when ordered and no inventory is held on hand as a result.
Warranty
The
Company is a reseller of products which are shipped to our customers directly from the manufacturer and as a result, there are
no costs that may be incurred by the Company under the terms of the limited warranty provided by the manufacturers directly to
the purchasers. We do not provide any provisions for obligations which may arise under manufacturers warranties and therefore
at no time incur any warranty liabilities.
Advertising
and Marketing Costs
Advertising
and marketing costs are expensed as incurred and were $0 during the nine-month period ended September 30, 2017 and 2016.
Fair
Value Measurements
FASB
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy
which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:
Level
1
– Quoted prices in active markets for identical assets or liabilities.
Level
2
– Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other
inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level
3
– Unobservable inputs that are supported by little or no market activity and that are financial instruments whose
values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments
for which the determination of fair value requires significant judgment or estimation.
If
the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization
is based on the lowest level of input that is significant to the fair value measurement of the instrument.
The
following table provides a summary of the fair value of our derivative liabilities as of June 30, 2017 and December 31, 2016:
|
|
Input
|
|
|
September 30, 2017
|
|
|
December 2016
|
|
|
|
Level
|
|
|
Fair Value
|
|
|
Fair Value
|
|
Derivative Liability
|
|
3
|
|
|
$
|
508,532
|
|
|
$
|
-
|
|
Total Financial Liabilities
|
|
|
|
|
|
$
|
508,532
|
|
|
$
|
-
|
|
Income
taxes
The
Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires the asset and liability
approach for financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. 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. A
valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all the deferred
tax assets will not be realized.
Basic
and Diluted Loss Per Share
In
accordance with ASC Topic 280 – Earnings Per Share, the basic loss per common share is computed by dividing
net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares
were dilutive.
New
Accounting Pronouncements
The
Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and
does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.
The
Company has experienced net losses to date, and it has not generated sufficient revenue from operations to meet our operational
overhead. We will need additional working capital to service debt and for ongoing operations, which raises substantial doubt about
our ability to continue as a going concern. Management of the Company is preparing a strategy to meet operational shortfalls which
may include equity funding, short term or long-term financing or debt financing, to enable the Company to reach profitable
operations. Historically, the Companys sole officer and director has provided short term loans to meet working capital shortfalls.
We have recently entered into financing agreements with various third parties to meet our capital needs in fiscal 2017.
The
accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying
amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
|
3.
|
RESELLER
AGREEMENT AND PROMISSORY NOTE
|
On
June 1, 2014 the Company entered into a Reseller Agreement with Concord Veterinary Supplies Inc., (Concord), where
under Concord has authorized the non-exclusive right to Vet Online Supply, Inc. to market, promote, advertise, sell, distribute
and deliver, veterinary products carried by Concord Veterinary Supply, which are listed on www.concord-surgical.com, for a one-time
fee of $50,000. The fee payable has been secured by an interest free convertible promissory note (the Note) due within
ninety (90) days of the Company getting notice of effect from its S-1 Registration Statement as filed with the Securities and
Exchange Commission, which occurred December 22, 2015. At any time prior to maturity of the Note, Concord Veterinary Supply may
elect to convert the debt amount into shares of the common stock of the Company at a fixed price of $0.000667 per share.
There
is no beneficial conversion feature resulting from the conversion price compared to market price.
On
April 11, 2017 Concord Veterinary Supply agreed to cancel its outstanding promissory note in the amount of $50,000 for no further
consideration. The Company recorded a gain on debt forgiveness of $50,000.
|
4.
|
CONVERTIBLE
NOTES PAYABLE
|
|
(a)
|
Convertible
Note due on December 30, 2017
|
On
March 15, 2017,
the Company entered into
a convertible loan agreement with an investor. The Company received net proceeds of $35,000 from total loan proceeds of $38,000,
which bears interest at 12% per annum and is due on December 30, 2017. Legal fees of $3,000 were paid in respect of the note and
deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity.
Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock
of the Company at a conversion price of a 42% discount to the average lowest two (2) trading prices for the previous fifteen (15)
trading days to the date of conversion.
During
the nine months ending September 30, 2017, the note holder converted $8,000 in principal into 987,654 shares of the Companys
common stock.
|
(b)
|
Convertible
Note due on April 25, 2018
|
On
April 25, 2017,
the Company entered into
a convertible loan agreement with an investor. The Company received net proceeds of $50,000 from total loan proceeds of $55,000,
which bears interest at 8% per annum and is due on April 25, 2018. Legal fees of $5,000 were paid in respect of the note and deducted
from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion
of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company
at a conversion price of a 42% discount to the average lowest three (3) trading prices for the previous twenty (20) trading days
to the date of conversion.
|
(c)
|
Convertible
Note due on May 1, 2018
|
On
May 1, 2017,
the Company entered into a
convertible loan agreement with an investor. The Company received net proceeds of $40,000 from total loan proceeds of $45,000,
which bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $2,300 and legal fees of $2,700 were
paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and
shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender
into shares of common stock of the Company at a conversion price of a 42% discount to the average three (3) lowest closing price
for the previous twenty (20) trading days preceding the date of conversion.
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(d)
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Convertible
Note due on May 8, 2018
|
On
May 8, 2017,
the Company entered into a
convertible loan agreement with an investor. The Company received net proceeds of $30,000 from total loan proceeds of $36,000,
which bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $4,500 and legal fees of $1,500 were
paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and
shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender
into shares of common stock of the Company at a conversion price of a 45% discount to the lowest trading price for the previous
twenty (20) trading days to the date of conversion.
In
addition, the Company paid an additional $3,000 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
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(e)
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Convertible
Note due on February 28, 2018
|
On
May 22, 2017,
the Company entered into a
convertible loan agreement with an investor. The Company received net proceeds of $25,000 from total loan proceeds of $28,000,
which bears interest at 12% per annum and is due on February 28, 2018. Legal fees of $3,000 were paid in respect of the note and
deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity.
Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock
of the Company at a conversion price of a 42% discount to the average lowest two (2) trading prices for the previous fifteen (15)
trading days to the date of conversion.
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(f)
|
Convertible
Note due on May 25, 2018
|
On
May 25, 2017,
the Company entered into a
convertible loan agreement with an investor. The Company received net proceeds of $47,500 from total loan proceeds of $50,000,
which bears interest at 8% per annum and is due on May 25, 2018. Legal fees of $2,500 were paid in respect of the note and deducted
from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion
of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company
at a conversion price of a 42% discount to the lowest closing price in the previous twenty (20) trading days to the date of conversion.
In
addition, the Company paid an additional $4,750 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
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(g)
|
Convertible
Note due on March 16, 2018
|
On
June 16, 2017,
the Company entered into
a convertible loan agreement with an investor. The Company received net proceeds of $47,250 from total loan proceeds of $64,000,
which bears interest at 8% per annum and is due on March 16, 2018. Original issue discount of $9,000 and legal fees of $7,750
were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date
and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the
lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest trading price for the
previous thirty (30) trading days to the date of conversion.
In
addition, the Company paid an additional $4,725 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
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(h)
|
Convertible
Note due on June 19, 2018
|
On
June 16, 2017,
the Company entered into
a convertible loan agreement with an investor in the form of a back-end note. The Company received net proceeds of $20,000 from
total loan proceeds of $25,500, which bears interest at 2% per annum and is due on June 16, 2018. Original issue discount of $4,000
and legal fees of $1,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue
from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any
time at the option of the lender into shares of common stock of the Company at a conversion price of a 45% discount to the lowest
trading price for the previous twenty (20) trading days to the date of conversion.
In
addition, the Company paid an additional $2,000 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
|
(i)
|
Convertible
Note due on April 10, 2018
|
On
August 10, 2017,
the Company entered into
a convertible loan agreement with an investor. The Company received net proceeds of $42,000 from total loan proceeds of $44,200,
which bears interest at 8% per annum and is due on April 10, 2018. Legal fees of $2,200 were paid in respect of the note and deducted
from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion
of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company
at a conversion price of a 42% discount to the lowest closing price in the previous twenty (20) trading days to the date of conversion.
|
5.
|
DERIVATIVE
LIABILITIES
|
The
following table represents the Companys derivative liability activity for the embedded conversion features for the nine
months ended September 30, 2017:
|
|
September 30,
|
|
|
|
2017
|
|
Balance, beginning of period
|
|
$
|
-
|
|
Initial recognition of derivative liability
|
|
|
422,906
|
|
Conversion of derivative instruments to Common Stock
|
|
|
(9,642
|
)
|
Mark-to-Market adjustment to fair value
|
|
|
95,267
|
|
Balance, end of period
|
|
$
|
508,531
|
|
During
the nine months ended September 30, 2017 the Company recorded derivative liabilities for embedded conversion features related
to convertible notes payable of $44,906, reduced derivative liabilities by $9,642 for convertible notes converted into common
stock, and performed a final mark-to-market adjustment for the derivative liability related to the convertible notes and the carrying
amount of the derivative liability related to the conversion feature and recognized a loss on the derivative liability valuation
of $95,267.
The
Company uses the Black-Scholes option pricing model to estimate fair value for those instruments convertible into common shares
at inception, at conversion or extinguishment date, and at each reporting date. During the nine months ended September 30, 2017,
the company used the following assumptions in their Black-Scholes model: (1) risk free interest rate 1.06% - 1.20%, (2) term of
0.25 years – 0.72 years, (3) expected stock volatility of 184% - 291%, (4) expected dividend rate of 0%, (5) common stock
price of $0.0011 - $0.0014, and (6) exercise price of $0.00605 - $0.00754.
These
instruments were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or
any net investment in a foreign operation. The instruments do not qualify for hedge accounting, and as such, all future changes
in the fair value will be recognized in earnings until such time as the instruments are exercised, converted or expire.
|
(1).
|
Engagement
Agreement
|
On
March 21, 2017, the Company entered a three-month engagement agreement with a consultant, where under the Company retains consultant
to advise it regarding certain legal, corporate and business operations, and more specifically with regard to public filings and
compliance with regard to the Company, and the consultant is to be compensated in the amount of $1,000 per month for the services
rendered. The contract expired on June 21, 2017 and was not renewed.
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(2).
|
Consultant
Agreement
|
On
March 17, 2017 the Company entered into a consulting agreement with a third party where under the consultant shall provide administrative
and business services for a period of three months from the date of the agreement, and the consultant shall be compensated in
the amount of $1,500 per month for the services rendered with a bonus of $15,000 payable in shares as of the date of the agreement.
The
stock bonus was not issued as of March 31, 2017, and $15,000 was recorded as stock-based compensation and included as consulting
fees.
On
May 16, 2017, the Company amended the terms of the agreement so that the $15,000 in services payable in stock shall convert at
$0.01 per share for a total of 1,500,000 common shares of stock to be issued. 1,500,000 common shares were issued as of the date
of is the amendment and were valued at $82,500, or $0.055 per share based on the fair market value on the date of the agreement.
The Company recorded the additional $67,500 as stock-based compensation which is included in consulting fees.
On
March 28, 2017, the Company entered into an investor relations agreement with a third party, whereby the third party will provide
advertising, promotional and marketing services for the Company between April 1, 2017 and July 1, 2017. In consideration of the
foregoing services performed by the third party, the Company will pay a fee of 1,920,000 restricted shares on or before April
1, 2017. In addition, the third party will remain the owner of at least 1% of the companys outstanding shares for a 1-year period.
On April 1, 2018, the Company shall issue additional shares as necessary to bring the total number of shares paid to the third
party to equal 1% of the outstanding shares of common stock as of 4/1/2018. In the event the Company does not issue the shares
as required under this provision, the Company will be subject to a penalty of $5,000 per month until the shares are issued.
1,920,000
shares were issued on March 28, 2017 and valued at the fair market value on the date of grant totaling $96,000, which amount has
been expensed as stock based compensation as part of consulting expenses.
In
respect to the investor relations agreement, 15,000 additional shares have been allocated for issuance effective May 16,
2017, and $825 has been expensed as stock based compensation as part of consulting expenses due to 1,500,000 shares of common
stock issued to a consultant (ref Note 5 – (2)).
The
15,000 shares were not issued as of June 30, 2017, and $825 was recorded on the balance sheet as liabilities for unissued shares.
|
(4).
|
Consultant
Agreement
|
On
April 6, 2017 the Company entered into a consulting agreement with an advisor, where under the advisor will provide access to
financing for the Companys business activities. In consideration of the foregoing services performed by the advisor, the Company
will pay a fee of 10% of net proceeds on each financing introduced.
During
the six months ended June 30, 2017, the Company paid of $14,475 to the advisor in respect of this agreement.
|
(5).
|
Consultant
Agreement
|
On
April 1, 2017, the Company expanded its board of directors to include Matthew C. Scott, to assist with development of our internet
marketing efforts with a goal of growing our business. Concurrently we entered into a consulting agreement with Mr. Scott for
a term of one year, where under Mr. Scott shall receive an annual fee of $100,000 payable in quarterly installments. Further effective
April 1, 2017 the Company agreed to issue Mr. Scott 2,000,000 shares of restricted common stock for his services as a director.
The shares upon issue will be held by the Company for a term of six months and are cancelable should Mr. Scott not serve in his
capacity as director for a minimum term of six months.
The
Company recorded $140,000 in respect to the 2,000,000 shares based on the fair market value on April 1, 2017, which has been recorded
on the balance sheet as liabilities for unissued shares, and expensed $140,000 as stock based compensation as part of consulting
expenses in the period ended September 30, 2017. At September 30, 2017, the shares remained unissued.
|
(6).
|
Consultant
Agreement
|
On
June 19, 2017, the Company entered into a Consulting Agreement with Mr. Samuel Berry with regard to marketing and distribution
of online retail sales for all products. Mr. Berry will receive an annual salary of $50,000, payable in quarterly payments
of $12,500 per quarter.
On
June 19, 2017 the Board of Directors appointed Mr. Samuel L. Berry as Director. For accepting the position of Director,
Mr. Berry will receive 1,000,000 shares of the Companys common stock, valued at $0.05 per share. Additionally, Mr.
Berry will be paid $500 for each board meeting for which he is physically present.
The
Company recorded $50,000 in respect to the value of 1,000,000 unissued shares as liabilities for unissued shares, and expensed
$50,000 as stock based compensation as part of consulting expenses in the nine months ended September 30, 2017.
On
August 28, 2017, Vet Online Supply Inc. (the Company) entered into an Employment Agreement with Mr. Daniel Rushford
with regard to being appointed as the new Chief Executive Officer, President, Secretary, Treasurer and Member of the Board of
Directors. Mr. Rushford will receive a monthly salary of $2,000.00 to be paid at the end of each month. Unpaid amounts will accrue
annual interest of 6%. In addition, Mr. Rushford will receive 25,000,000 shares of restricted common stock and 1,000 Preferred
Series B Shares upon signing of this agreement. Further, at the end of the first 12 months the employee will receive $75,000 of
restricted common shares of the company at fair market value. The term of the Consulting Agreement is for two years; renewable
upon mutual consent.
|
7.
|
COMMON
AND PREFERRED STOCK
|
On
March 28, 2017, the Company filed an amendment to its articles of incorporation reducing the number of authorized common shares
from 8,000,000,000 to 1,000,000,000, par value $0.001, and designating 20,000 shares of its authorized preferred stock, par value
$0.001 as Series B Voting Preferred Stock. The Series B Voting Preferred Stock shall have the right to vote the shares
on any matter requiring shareholder approval on the basis of 4 times the votes of all the issued and outstanding shares of common
stock, as well as any issued and outstanding preferred stock.
Series
B Voting Preferred Shares issued during the nine months ended September 30, 2017:
On
April 7, 2017, the Company issued 20,000 shares of Series B Voting Preferred Stock to Edward Aruda.
The
Company obtained a third-party valuation of the preferred stock to determine the fair value as at the date of issue. The
report results provided for a value of $
$21,000 as stock based compensation as part of consulting expenses.
On
August 28, 2017 the 20,000 shares of Series B Voting Preferred Stock to Edward Aruda was canceled and 1,000 shares of Series B
Voting Preferred Stock to Dan Rushford.
As
of September 30, 2017, and December 31, 2016, 1,000 and $0 preferred shares were issued and outstanding, respectively.
Common
Shares issued during the nine months ended September 30, 2017:
On
March 28, 2017, the Company approved the issuance of 1,920,000 shares of the Companys common stock for services provided by a
consultant, in the form of stock awards which shall vest as of the date of grant. The shares were valued at the fair
market value on the date of grant totaling $96,000, which amount has been expensed as stock based compensation as part of consulting
expenses.
On
May 16, 2017, the Company amended the terms of a consulting agreement (Note 5 (2)) so that $15,000 in services payable by shares
of common stock shall convert at $0.01 per share for a total of 1,500,000 common shares. The shares were issued as of the
date of the amendment and were valued at $82,500, or $0.055 per share based on the fair market value on the date of the agreement.
The Company recorded the additional $67,500 as stock-based compensation which is included in consulting fees.
On
September 18, 2017, the holder of a note converted $8,000 in principal into 987,354 shares of the Companys common stock.
Common
Shares issued during the year ended December 31, 2016:
During
the year ended December 31, 2016, the Company has received proceeds totaling $35,500 from various parties subscribing for a total
of 53,250,000 shares at $0.000667 per share under our Form S-1 registration statement. 53,250,000 shares of the Companys
common stock were issued in respect of these subscriptions.
On
July 25, 2016, 1,500,000,000 shares of treasury stock were returned.
On
December 2, 2016, our sole officer and director, Mr. Edward Aruda, returned 7,361,250,000 shares of the Companys common stock
for no consideration. Mr. Aruda was originally issued 7,500,000,000 shares as a signing bonus in fiscal 2015.
As
at September 30, 2017 and December 31, 2016, there were 196,407,654 and 192,000,000 shares issued and outstanding, respectively.
|
8.
|
RELATED
PARTY TRANSACTIONS
|
Mr.
Edward Aruda, President, CEO and Director
During
the nine months ended September 30, 2017, Mr. Aruda advanced $5,700 to the Company.
As
of September 30, 2017, and December 31, 2016, $10,940 and $9,440 is reflected on the Companys balance sheets as promissory notes
payable – related party in respect of amounts which remain payable to Mr. Aruda.
During
the nine months ended September 30, 2017, Mr. Aruda invoiced $30,000 ($5,000 per month) as consulting fees. The Company paid $18,000
in cash, leaving $12,000 on the Companys balance sheets as accounts payable – related parties.
On
April 7, 2017, the Company issued 20,000 shares of Series B Voting Preferred Stock to Edward Aruda.
The
Company obtained a third-party valuation of the preferred stock to determine the fair value as at the date of issue. The
report results provided for a value of $
$21,000 as stock based compensation as part of consulting expenses.
On
August 28, 2017 Edward Aruda resigned from the positions of Chief Executive Officer, President, Secretary, and Treasurer. Mr Aruda
will remain as Chairman of the Board of Directors and will supervise sales and marketing for the Company in the near future.
Mr.
Matthew C. Scott
, Director
On
April 1, 2017, the Company expanded its board of directors to include Matthew C. Scott. Concurrently, the Company entered
into a consulting agreement with Mr. Scott for a term of one year, whereby Mr. Scott shall receive an annual fee of $100,000 payable
in quarterly installments. Furthermore, effective April 1, 2017 the Company agreed to issue Mr. Scott 2,000,000 shares of restricted
common stock for his services as a director. The shares upon issue will be held by the Company for a term of six months and are
cancelable should Mr. Scott not serve in his capacity as director for a minimum term of six months.
The
Company recorded $140,000 in share based compensation in respect of the 2,000,000 shares issuable based on the fair market value
on April 1, 2017, which has been recorded on the balance sheet as liabilities for unissued shares. Furthermore, a total
of $140,000 has been expensed in the nine months ended September 30, 2017 as stock based compensation as part of consulting expenses.
During
the nine months ended September 30, 2017, the Company accrued consulting fees of $40,000, and paid $10,000 in cash, leaving $30,000
on the Companys balance sheets as account payable – related parties with respect
to amounts due to Mr. Scott.
Mr.
Samuel Berry, Director
On
June 19, 2017, the Company entered into a Consulting Agreement with Mr. Samuel Berry. Mr. Berry will receive an annual salary
of $50,000, payable in quarterly installments at $12,500 per quarter.
On
June 19, 2017 the Board of Directors appointed Mr. Samuel L. Berry as Director. For accepting the position of Director,
Mr. Berry will receive 1,000,000 Shares of the Companys Common Stock, valued at $0.05 per share. Additionally, Mr.
Berry will be paid $500 for each board meeting for which he is physically present.
The
Company recorded $50,000 in respect to the value of 1,000,000 unissued shares as liabilities for unissued shares, and expensed
$50,000 as stock based compensation as part of consulting expenses in the period ended June 30, 2017.
During
the nine months ended September 30, 2017, the Company accrued consulting fees of $16,667
on
the Companys balance sheets as account payable – related parties in respect of amounts payable to Mr. Berry.
Deferred
income taxes are determined using the liability method for the temporary differences between the financial reporting basis and
income tax basis of the Companys assets and liabilities. Deferred income taxes are measured based on the tax rates expected to
be in effect when the temporary differences are included in the Companys tax return. Deferred tax assets and liabilities are
recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts
of assets and liabilities and their respective tax bases.
Operating
loss carry-forwards generated during the period from May 25, 2014 (date of inception) through September 30, 2017 of approximately
$1,092,723 will begin to expire in 2034. The Company applies a statutory income tax rate of 34%. Accordingly,
deferred tax assets related to net operating loss carry-forwards total approximately $371,524 at September 30, 2017.
All
tax years since inception are open to examination by the Internal Revenue Service.
On
October 15, 2017, the Board of Directors of the Corporation approved the issuance of 20,000,000 restricted common shares in value
of $200,000 at a price of $.01 to Robert Sullavan pursuant the Agreement dated October 2, 2017; 75,000,000 restricted common shares
at a value of $50,000 to Samuel Berry at $12,500 per month for 4 months pursuant his agreement date June 19, 2017 at a price of
.00067; 75,000,000 restricted common shares at a value of $50,000 to Mathew Scott pursuant his agreement date April 1, 2017; and
25,000,000 restricted common shares at a value of $25,000 to Daniel Rushford at a price of $.01 pursuant his agreement dated August
28, 2017.