The following unaudited interim financial statements of Evergreen-Agra Global Investments, Inc. (sometimes referred to as “we”, “us” or “our Company”) are included in this quarterly report on Form 10-Q:
Notes to Financial Statements
For The Three and Nine Months Ended September 30, 2017 and 2016
(Unaudited)
NOTE 1. NATURE OF OPERATIONS
Description of Business and History
Evergreen-Agra Global Investments, Inc. (hereinafter referred to as the “Company”) was incorporated on June 13, 2008 by filing Articles of Incorporation under the Nevada Secretary of State. The Company was incorporated under the name AMF Capital Group, Inc. In June 2009, the Company changed its name to Blackrock Resources, Inc. In January 2010, the Company changed its name to Artepharm Global Corp. Effective July 20, 2011, the Company changed its name to Sharprock Resources Inc. Effective October 23, 2013 the Company changed its name to Evergreen-Agra, Inc. Effective June 23, 2017, the Company changed its name to Evergreen-Agra Global Investments, Inc. During the Company’s quarter ended September 30, 2011, the Company shifted its focus from mineral exploration to organic veterinary medical products. In the quarter ended December 31, 2013, the Company shifted its focus to medical marijuana coincident with its acquisition of Evergreen Systems effective November 19, 2013. In May 2017, the Company announced plans to register the Company as a closed ended fund to invest in public companies within the cannabis sector. The Company re-registered the corporation in the State of Delaware on September 27, 2017.
NOTE 2. GOING CONCERN UNCERTAINTY
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At September 30, 2017, the Company had negative working capital of $1,155,762. Further, the Company has had no revenues since the change in control transaction on November 19, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations. Management has plans to seek additional capital through a private placement of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
The accompanying unaudited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they may not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation. Operating results for the three and nine months periods ended September 30, 2017 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2017. The notes to the financial statements should be read in conjunction with the notes to the financial statements contained in the Company’s Form 10-K for the year ended December 31, 2016.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are expressed in U.S. dollars.
Use of Estimates
In preparing the financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less when acquired to be cash equivalents. We had cash and cash equivalents of $4,735 and $0 at September 30, 2017 and December 31, 2016, respectively. .
Equipment
Equipment is stated at historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally ranging from three to five years.
Stock-Based Compensation
Stock-based compensation is accounted for at estimated fair value in accordance with Accounting Standards Codification 718, “Compensation – Stock Compensation.”
Income Taxes
The Company accounts for income taxes under the provisions issued by the FASB which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company computes tax assets benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these consolidated financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
Income (Loss) Per Common Share
The Company reports net income (loss) per share in accordance with provisions of the FASB. The provisions require dual presentation of basic and diluted income (loss) per share. Basic net income (loss) per share excludes the impact of common stock equivalents. Diluted net income (loss) per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. For the periods presented, there were no common stock equivalents outstanding.
Fair Value of Financial Instruments
Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of September 30, 2017 and December 31, 2016. The Company’s financial instruments consist of cash, accounts payable, and short term loan payable. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.
Reclassification
Certain 2016 expense amounts have been reclassified to conform to the current year’s presentation.
Recent Accounting Pronouncements
Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.
NOTE 4. ACCOUNTS PAYABLE
Accounts payable at September 30, 2017 and December 31, 2016 consists of:
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September 30,
2017
|
|
|
December 31,
2016
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|
Former law firms
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|
$
|
486,731
|
|
|
$
|
478,545
|
|
Former audit firms
|
|
|
7,625
|
|
|
|
7,625
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|
Other service providers
|
|
|
97,887
|
|
|
|
88,572
|
|
Total
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|
$
|
592,243
|
|
|
$
|
574,742
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|
At September 30, 2017, $155,922 of the total $592,243 accounts payable is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the September 30, 2017 exchange rate of $0.79942.
At December 31, 2016, $145,273 of the total $574,742 accounts payable is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the December 31, 2016 exchange rate of $0.74482.
The above accounts payable represent amounts primarily recorded in the records of Sharprock Resources, Inc. prior to the change in control transaction on November 19, 2013. Current management of the Company disputes these recorded liabilities.
NOTE 5. ACCOUNTS PAYABLE – RELATED PARTIES
Accounts payable – related parties at September 30, 2017 and December 31, 2016 consists of:
Herminder Rai, chief financial officer of the Company from April 12, 2012 to September 21, 2013 and director of the Company from May 8, 2012 to March 11, 2014
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61,579
|
|
|
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57,482
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|
|
|
|
|
|
|
|
|
|
Sam Sangha, brother of Harpreet Sangha
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124,452
|
|
|
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115,951
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|
|
|
|
|
|
|
|
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|
Rene Hamouth, chief executive officer of the Company from September 1, 2013 to July 17, 2014, director of the Company from September 1, 2013, and Chairman of the Board of Directors of the Company from July 17, 2014
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40,619
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|
|
|
12,956
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|
|
|
|
|
|
|
|
|
|
Craig Alford, director of the Company from October 14, 2011 to September 1, 2013
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|
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251,807
|
|
|
|
234,609
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|
Total
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|
$
|
533,336
|
|
|
$
|
472,643
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|
At September 30, 2017, $484,189 of the total $533,336 accounts payable – related parties is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the September 30, 2017 exchange rate of $0.79942.
At December 31, 2016, $451,118 of the total $472,643 accounts payable – related parties is denominated in Canadian Dollars. These accounts payable were translated to United States Dollars using the December 31, 2016 exchange rate of $0.74482.
The above accounts payable represent amounts primarily recorded in the records of Sharprock Resources, Inc. prior to the change in control transaction on November 19, 2013. Current management of the Company disputes these recorded liabilities.
NOTE 6. SHORT TERM LOAN PAYABLE
On July 20, 2017, the Company borrowed $28,000 from an investor and agreed to pay back in $35,000 on August 31, 2017. The Company did not pay this short-term loan yet and the loan is in default.
NOTE 7. COMMON STOCK ISSUANCES
Issuances in 2016
On February 25, 2016, the Company issued 17,339,889 shares of its common stock to Matthew Rhoden pursuant to an Executive Agreement between the Company, Matt Rhoden (the “Executive”) and Rene Hamouth (the “Principal Shareholder”) dated January 4, 2016. The agreement provided for the employment of the Executive as Chief Executive Officer of the Company for a period of 5 years, unless sooner terminated by the Board of Directors. The agreement also provided for the Executive and Principal Stockholder to vote together on all matters presented to the shareholders for vote and for each to grant the other a right of first refusal on shares owned by each during the term of the agreement. The $866,994 estimated fair value of the 17,339,889 shares of Company common stock was charged to “Officer compensation” in the statement of operations for the three months ended March 31, 2016. The 17,339,889 shares of Company common stock were returned to the Company and cancelled on January 13, 2017 due to Mr. Rhoden’s resignation as chief executive officer and director at the Company on January 12, 2017.
On September 1, 2016, the Company sold 55,000 shares of its common stock at a price of $0.60 per share to an investor in a private placement. The $33,000 proceeds were paid to Rene Hamouth and recorded as a reduction in the Company’s liability to Mr. Hamouth (see Note 5).
Issuances in 2017
On January 13, 2017, the 17,339,889 shares of Company common stock issued to Matthew Rhoden on February 25, 2016 (see above) were returned to the Company and cancelled due to the resignation of Matthew Rhoden as chief executive officer and director of the Company on January 12, 2017.
On March 1, 2017, the Company issued 25,000 shares of its common stock to its law firm for services rendered. The $15,000 estimated fair value of the 25,000 shares of Company common stock was charged to “Professional fees” in the statement of operations for the three months ended March 31, 2017.
On March 7, 2017, the Company issued 250,000 shares of its common stock to Jonas LaForge in connection with contemplated transactions with Green – Era Consulting and Med – Care Advisors. The conditions for closing were not completed and the Company has requested Mr. LaForge return the 250,000 shares for cancellation. The $150,000 estimated fair value of the 250,000 shares of Company common stock was charged to “Stock-based costs related to terminated acquisitions” in the statement of operations for the three months ended March 31, 2017.
On May 23, 2017, the Company sold 83,334 shares of its common stock at a price of $0.60 per share to an investor in a private placement. The $50,000 proceeds were used to pay Company liabilities and expenses.
On June 27, 2017, the Company issued 105,000 shares of its common stock to Arthur Porcari for consulting services. The $63,000 estimated fair value of the 105,000 shares of Company common stock was charged to “Consulting fees” in the statement of operations for the three months ended June 30, 2017.
On August 9, 2017, the Company issued 350,000 shares of its common stock to Rene Hamouth, Chairman of the Board of Directors of the Company from July 17, 2014, for services rendered. The $210,000 estimated fair value of the 350,000 shares of Company’s common stock was charged to “Officer stock-based compensation” in the statement of operations for the three months ended September 30, 2017.
NOTE 8. INCOME TAXES
The Company has generated taxable losses for the periods presented. Accordingly, no provisions for income taxes have been recorded.
The Company’s effective tax rate differs from the United States Federal income tax rate as follows:
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
|
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2017
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2016
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2017
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2016
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|
|
|
|
|
|
|
|
|
|
|
|
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Corporate Federal income tax at 35%
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$
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(112,615
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)
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$
|
167
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|
|
$
|
(208,761
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)
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$
|
(338,507
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)
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Non-deductible officer stock-based compensation
|
|
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73,500
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|
|
|
-
|
|
|
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73,500
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|
|
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303,448
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|
Non-deductible stock-based consulting and professional fees
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|
|
-
|
|
|
|
-
|
|
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27,300
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|
|
|
-
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Non-deductible stock-based costs related to terminated acquisitions
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|
|
-
|
|
|
|
-
|
|
|
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52,500
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|
|
|
-
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Non-deductible (non-taxable) foreign exchange (gain) loss
|
|
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8,315
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|
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(2,723
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)
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15,454
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|
|
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11,486
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|
Change in valuation allowance
|
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30,800
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|
|
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2,556
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|
|
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40,007
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|
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23,573
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Provision for Income Taxes
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$
|
-
|
|
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$
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-
|
|
|
$
|
-
|
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$
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-
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|
At September 30, 2017, the Company has net operating loss carryforwards which expire from 2028 to 2037. The deferred tax asset relating to these net operating loss carryforwards has been fully reserved for at September 30, 2017 since management’s assessment has not yet determined it to be more likely than not that the net operating loss carryforwards will be realized.
Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
NOTE 9. LEASE COMMITMENT
The Company uses premises provided by its Chairman of the Board of Directors under a Lease Agreement effective January 1, 2017. The agreement has a term of one year and provides for rent of $3,000 per month. For the three and nine months ended September 30, 2017 and 2016, rent expense was $9,000, $27,000, $0 and $0, respectively.