The accompanying notes are an integral part
of these financial statements.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE A – BUSINESS
ACTIVITY
AppSoft Technologies (the “Company”)
was organized under the laws of the State of Nevada March 24, 2015. The Company’s fiscal year end is December
31
st
. The Company develops, publishes and markets mobile software applications for smartphones and tablet devices (“Apps”).
We currently own a portfolio comprising over 400 Apps titles including games designed to appeal to a broad cross section of consumers
and legal-related Apps that provide compilations of federal and state laws and regulations across a variety of legal disciplines
and digests of court decisions rendered by federal courts. Consumers download our Apps through direct-to-consumer digital storefronts,
such as the Apple App Store and Google Play Store.
We currently generate revenue from sales, or
downloads, of our Apps and from advertisements published on our ad supported game titles.
NOTE B – GOING CONCERN
The accompanying financial statements have
been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the
normal course of business. As reflected in the accompanying financial statements, the Company has a deficit accumulated
of $334,008 and cash used in operations of $200,924 at December 31, 2016.
The Company’s ability to continue as
a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing
to meet its obligations and repay its liabilities arising from normal business operations when they come due. These circumstances
raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements
do not include any adjustments that might arise because of this uncertainty.
NOTE C – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation- The financial statements
included herein were prepared under Generally Accepted Accounting Principles (GAAP).
All adjustments have been made which in the
opinion of management are necessary for presentation.
Interim filings should be read in conjunction
with the Company’s annual report as of December 31, 2016.
Cash and Cash Equivalents- For purposes of
the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash
equivalents.
Management’s 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 and disclosures of contingent assets
and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business.
Revenue Recognition- The Company applies paragraph
605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when
it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized
or realizable and earned when all the following criteria are met:
|
(i)
|
persuasive evidence of an arrangement exists,
|
|
(ii)
|
the services have been rendered and all required milestones
achieved,
|
|
(iii)
|
the sales price is fixed or determinable, and
|
|
(iv)
|
collectability is reasonably assured.
|
Comprehensive Income (Loss) - The Company reports
Comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification
which establishes standards for the reporting and display of comprehensive income and its components in the financial statements.
There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.
APPSOFT TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES—CONT’D
Net Income per Common Share- Net loss per common
share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share
is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted
net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding
shares of common stock during each period. There were no potentially dilutive shares outstanding as of December 31,
2016 or December 31, 2015
Deferred Taxes- The Company accounts for income
taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax
assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will
not be realized. 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 the statements of operations in the period that includes the enactment
date.
Fair Value of Financial Instruments- The carrying
amounts reported in the balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term
maturity of these instruments.
Accounts
Receivable- Accounts deemed uncollectible are written off in the year they become uncollectible. As of December 31, 2016 and
2015, the balance in Accounts Receivable was $0.
Impairment of Long-Lived Assets- The Company
evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards
Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment
of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered to
be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values.
The Company adopted the statement on inception. No impairments of these types of assets were recognized during the periods ended
December 31, 2016 or December 31, 2015.
Stock-Based Compensation- The Company accounts
for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting
Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost
of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with
limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange
for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments
for which employees do not render the requisite service.
Fair Value for Financial Assets and Financial
Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair
value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”)
to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring
fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about
fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph
820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value
into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair
value hierarchy defined by Paragraph 820-10-35-37 are described below:
|
Level 1
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
Level 2
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
Level 3
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
The carrying amounts of the Company’s
financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity
of these instruments. The Company’s note payable approximates the fair value of such instrument based upon management’s
best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2016 or
December 31, 2016
APPSOFT TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE C – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES—CONT’D
The Company does not have any assets or liabilities
measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments
for assets and liabilities measured at fair value at April 30, 2015, nor gains or losses are reported in the statement of operations
that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting
date for the periods ended December 31, 2016 or December 31, 2015.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09,
Revenue
from Contracts with Customers
(
Topic 606
). The new guidance requires an entity to recognize the revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods and services. The new guidance supersedes the revenue requirements in Revenue
Recognition (
Topic 605
) and most industry-specific guidance throughout the Industry Topics of the Codification. The
new guidance does not apply to lease contracts within the scope of Leases (
Topic 840
). In August 2015, the FASB issued
ASU 2015-14,
Revenue from Contracts with Customers (Topic 606)
, which delayed the effective date of the new guidance by
one year, which will result in the new guidance being effective for fiscal years, and interim periods within those years, beginning
after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted, but can be no earlier than the original
public entity effective date of fiscal years, and interim periods within those years, beginning after December 15, 2016. The
Company is evaluating the impact of adopting the new guidance on its financial statements, but does not expect the adoption to
have a material impact on its financial statements.
In August 2014, the FASB issued ASU 2014-15,
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
, that requires management to
evaluate whether there are conditions and events that raise substantial doubt about an entity’s ability to continue as a
going concern. Until now, the requirement to perform a going concern evaluation existed only in auditing standards. The new guidance
requires management to evaluate relevant conditions, events and certain management plans that are known or reasonably knowable
as of the evaluation date when determining whether substantial doubt about an entity’s ability to continue as a going concern
exists. Management will be required to make this evaluation for both annual and interim reporting periods. The standard states
substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered
in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within
one year after the date that the financial statements are issued. The guidance is effective for annual periods ending after December
15, 2016 and for annual periods and interim periods thereafter. Early adoption is permitted. The Company does not expect there
to be a material impact from adopting this new guidance.
In January 2015, the FASB issued ASU 2015-01,
Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items
, that eliminates the concept
of extraordinary items from GAAP. The objective of the new guidance is to simplify the income statement presentation requirements
of GAAP. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept
of extraordinary items from consideration. The guidance is effective for annual periods, including interim periods within that
period, beginning after December 15, 2015. The Company did not experience a material impact from adopting this new guidance.
In February 2015, the FASB issued ASU 2015-02,
Consolidation
, that provides amendments to the consolidation analysis. The amendments in this new guidance affect reporting
entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to
reevaluation under the revised consolidation model. The guidance is effective for annual periods, including interim periods within
that period, beginning after December 15, 2015. The Company did not experience a material impact from adopting this new guidance.
APPSOFT TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE C – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES—CONT’D
Recently Issued Accounting Pronouncements
– Cont’d
In April 2015, the FASB issued ASU 2015-03,
Simplifying the Presentation of Debt Issuance Costs
, as amended in August 2015 by ASU 2015-15,
Presentation and Subsequent
Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,
that requires that debt issuance costs be presented
in the balance sheet as a direct deduction from the carrying amount of a debt liability, consistent with debt discounts or premiums.
The FASB will permit debt issuance costs related to line-of-credit arrangements to be deferred and presented as an asset and subsequently
amortized over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit
arrangement. The recognition and measurement guidance for debt issuance costs will not be affected by the new guidance. The guidance
requires retrospective application and is effective for annual periods, including interim periods within that period, beginning
after December 15, 2015. The Company does not expect there to be a material impact from adopting this new guidance.
In February 2016, the FASB issued ASU 2016-02,
Leases
, amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases
on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition
approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition
relief. The guidance will be effective in the first quarter of 2019 and allows for early adoption. The Company is assessing whether
the new standard will have a material effect on its financial position or results of operations.
In August 2016, the FASB issued ASU 2016-15,
Statement
of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)
,
that clarifies how certain cash receipts and cash payments should be classified on the statement of cash flows. This ASU addresses
eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is effective
for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted.
The Company does not expect there to be a material impact from adopting this new guidance.
NOTE D – SEGMENT
REPORTING
The Company follows the guidance set forth
by section 280-10 of the FASB Accounting Standards Codification for reporting and disclosure on operating segments of the Company.
It also requires segment disclosures about products and services, geographic areas, and major customers. The Company determined
that it did not have any separately reportable operating segments as of December 31, 2016 or December 31, 2015
APPSOFT TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE E – CAPITAL STOCK
The Company is authorized to issue 1,000,000,000
Common Shares at $.0001 par value per share.
In March 2015, the Company issued the following
shares:
2,000,000 shares were issued
to Seth Ingram, Chief Operating Officer and Treasurer, for $200.
2,000,000 shares were issued
to Brian Kupchik, President, CEO and Secretary, for $200.
The $400 paid for the issuance of the
shares was originally booked as a Stock Subscription Receivable and has been subsequently paid in full.
In October 2015, the Company issued the following
shares for services:
110,000 shares were issued on October
1, 2015 in exchange for legal and consulting services. The shares were issued at par with a zero value for the services.
In March 2016, the Company issued the following
shares:
181,600 shares were purchased under
a public offering for $.50 per share for a total of $90,800.
In April 2016, the Company issued the following
shares:
70,900 shares were purchased
under the public offering for $.50 per share for a total of $35,450.
In June 2016, the Company issued the following
shares:
80,000 shares valued at $.50 per
share (total value is $40,000) as a part of the acquisition of Guuf gaming platform. Total platform purchase price was $60,000.
1,600,000 shares were cancelled as
a part of the resignation of the Chief Operating Officer and Treasurer, Seth Ingram. The shares were originally issued at par.
165,000 shares were issued to 3 different
consultants at par for a total of $16.
In July and August 2016, the Company issued
the following shares:
55,000 shares issued to 2 different
consultants at par for a total of $5.50.
106,000 shares purchased at $.50
per share for a total of $53,000 in a private offering. Each security consists of one share of common stock and two common stock
purchase warrants, one of which entitles the holder to purchase one share of common stock at an exercise price of $0.25 per share
and one of which entitles the holder to purchase one share of common stock at an exercise price of $0.50 per share, in each case
at any time until the expiration of three years from the date of issuance. The stock purchase warrants (warrants) have been valued
using the Black Scholes Model. The “warrants” with an exercise price of $.25 have been valued at $.27 per share for
total of $28,620 and the “warrants” with an exercise price of $.50 have been valued at $.13 per share for a total of
$13,780. The total value of the warrants issued is $42,400. The Black Scholes valuation was based on the following assumptions:
a 3-year term, 40% volatility, and 3-year Treasury bill interest rate of .99%.
In October 2016, the Company issued the following
shares:
15,000 shares issued to 2 different
consultants at par for a total of $1.50.
Total issued and outstanding shares as of December
31, 2016 were 3,183,500 and as of December 31, 2015 were 4,110,000
APPSOFT TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE E – CAPITAL STOCK
CONT’D
The Company is authorized to issue 10,000,000 Series A Cumulative,
Convertible Preferred Shares (Preferred Stock) at $.0001 par value per share. During the period from inception (March
24, 2015) through September 30, 2016, the Company issued 2,000,000 shares of preferred stock at $.05 per share to Ventureo, LLC
in exchange for $50,000 in cash and Phone Apps with a fair market value of $50,000 for a total of $100,000. The shares of “Preferred
Stock” are convertible, at the option of the holder, into shares of common stock at a conversion price of $0.005 per share.
The holder of the “Preferred Stock” may not convert any portion of the “Preferred Stock” if, after giving
effect to such conversion, the holder would beneficially own in excess of 4.99%, except that the holder may, by written notice
to the Company, increase or decrease this percentage up to a maximum of 9.99%, provided that any such increase will not be effective
until the 61
st
day after such notice is delivered to the Company. Upon a liquidation event, the Company shall first
pay to the holders of the “Preferred Stock” an amount per share equal to the Original Issue Price (i.e., $$0.05 per
share of Series A Preferred Stock), plus all accrued and unpaid dividends on each share of Series A Preferred Stock (the “Series
A Preference Amount”). After full payment of the liquidation preference amount to the holders of the “Preferred Stock”,
the Company will then distribute the remaining assets to holders of common stock, other junior preferred shares (if any) and the
“Preferred Stock” on an as-if-converted-basis.
The Series A Preferred Stock ranks senior to
the Company’s common stock and senior to any other shares of preferred stock the Company may issue in the future.
Ventureo. LLC also paid $408 in expense incurred
on behalf of AppSoft, Inc. and this amount is considered an additional capital contribution.
NOTE F – RELATED PARTY TRANSACTIONS
The Company has paid $15,000 in management fees (included in
the Outside Services Expense line item on the Statement of Operations) to Brian Kupchik, President and CEO, during 2016. Also,
a Due to Owner in the amount of $300 is included in the total Notes Payable amount in Note I below.
NOTE G – OTHER ASSET/PHONE APPS AND GAMING PLATFORM
Phone Apps
As a part of the Preferred Stock transaction
(refer to Note E above), the Company acquired Phone Apps valued at $50,000. These Phone Apps are generating Sales Revenue. The
Company will amortize the Phone Apps over 5 years. Management has determined that 5 years is a relatively short period. Monthly
amortization is $833.34. Accumulated Amortization as of December 31, 2016 is $17,500.
eSports Tournament Platform Assets
On June 10, 2016, AppSoft Technologies,
Inc. (the “Company”) acquired certain assets comprising an eSports tournament platform for competitive gamers from
Guuf LLC (“Guuf”). The Company acquired the assets for a total purchase price of $60,000 (refer to Note J below). On
October 1, 2016, the Company began amortizing the Phone Apps over 5 years. Management has determined that 5 years is a relatively
short period. Monthly amortization is $1,000. Accumulated Amortization as of December 31, 2016 is $3,000.
NOTE H – INCOME TAX
The Company provides for income taxes under
(now included under Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 requires the use of an
asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences
between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are
expected to reverse.
ASC 740 requires the reduction of deferred
tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all
the deferred tax assets will not be realized. For Federal income tax purposes, the Company has net operating loss carry forwards
that expire through 2030. The net operating loss as of December 31, 2016, is approximately $278,000 and as of December 31, 2015
is $56,000 approximately
APPSOFT TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE H – INCOME TAX—CONT’D
No tax benefit has been reported in the financial
statements because after evaluating our own potential tax uncertainties, the Company has determined that there are no material
uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited. The provision for
income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net
loss before provision for income taxes for the following reasons:
Deferred Tax Asset:
|
|
December 31, 2016
|
|
|
December 31, 2015
|
|
NOL Carry Forward
|
|
$
|
107,000
|
|
|
$
|
19,000
|
|
Valuation Allowances
|
|
$
|
(107,000
|
)
|
|
$
|
(19,000
|
)
|
Deferred Tax Asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company is not obligated to pay State
Income Taxes because it is a Nevada corporation.
NOTE I – NOTE PAYABLE
The Company issued a non-related party Note
Payable on September 11, 2015 in the amount of $2,000. This demand note bears interest at 2% per year. The Company issued a non-related
party Note Payable on December 10, 2015 in the amount of $2,000. On March 2, 2016, the $4,000 principal amount was paid. Total
remaining interest accrued but not paid for this notes is $44 as of December 31, 2016.
The following demand Notes Payable were issued
in 2016, from an unrelated party and bear 2% interest per year:
Date Issued
|
|
Principal Amount
|
|
|
Accrued Interest
at December 31, 2016
|
|
June 2016
|
|
$
|
5,000
|
|
|
$
|
199.98
|
|
July 2016
|
|
$
|
6,500
|
|
|
$
|
238.65
|
|
October 2016
|
|
$
|
9,800
|
|
|
$
|
166.00
|
|
November 2016
|
|
$
|
18,328
|
|
|
$
|
190.72
|
|
December 2016
|
|
$
|
1,800
|
|
|
$
|
3.34
|
|
Totals
|
|
$
|
41,428
|
|
|
$
|
798.69
|
|
NOTE J – ASSET
ACQUISITIONS
Acquisition of eSports Tournament Platform
Assets
On September 10, 2016, AppSoft Technologies,
Inc. (the “Company”) acquired certain assets comprising an eSports tournament platform for competitive gamers from
Guuf LLC (“Guuf”). The Company acquired the assets for a total purchase price of $60,000 consisting of (i) $15,000
in cash, which has been paid, (ii) 80,000 shares of common stock valued at $0.50 per share (the price at which the Company sold
shares to its initial public offering completed in March 2016); (iii) $5,000 in cash payable due which is included in the Company’s
Accounts Payable; and (iv) the grant of a royalty equal to 5% of the first calendar year’s profits generated by the Company
from the assets, a royalty equal to 4% of year two profits and royalty equal to 3% of year three profits. As additional consideration
for the assets, the Company entered into consulting agreement with Nathan Cavanaugh, the sole member of Guuf, as described below.
The assets consist of the
following:
|
·
|
title to registered or unregistered trademarks and trade names;
|
|
·
|
web platform, files, source code and object code;
|
|
·
|
branding and marketing collateral;
|
|
·
|
prototyped design files of Guuf’s mobile application for iOS;
|
|
·
|
web development of new Guuf features, including free play modes and mobile gaming tournaments;
|
|
·
|
strategic development of Guuf’s user achievements list and ranking and leaderboard system
calculations; and
|
|
·
|
sourcing of development for new Guuf features including automated score reporting, API, mobile
application for iOS, user achievements, ranking and leaderboard systems, and live streaming.
|
APPSOFT TECHNOLOGIES
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2016
NOTE J – ASSET
ACQUISITIONS—CONT’D
Acquisition of Mobile App Assets
On June 10, 2016, the Company acquired by assignment
from Marc Seal certain concepts, artwork, story lines and related computer software in connection with a computer game titled “CryptoGene,”
for mobile application (the “Assigned Property”), including:
|
(i)
|
Complete “CryptoGene” intellectual property (Any active and applicable trademarks,
copyrights, patents, works, etc.)
|
|
(ii)
|
CryptoGene website (www.CryptoGene.com)
|
|
(iii)
|
CryptoGene software (Video Game for mobile and computer
platforms)
|
|
(iv)
|
CryptoGene: Origins (Work in Progress 50 Page Graphic Novel)
|
|
(v)
|
CryptoGene Short Story (Work in Progress 10 Page Graphic
Novel)
|
The assignment includes
all of Mr. Seal’s right and interest in and to the intellectual property, including any right to use or disseminate CryptoGene
as a mobile application or in any other medium (including all other audio-visual rights, print and allied and incidental rights),
all advertising, publication and promotion rights with respect to any part of CryptoGene or any adaptation or version thereof,
and all merchandising, commercial tie-in, publishing and exploitation rights.
NOTE K – FIXED ASSETS
In July 2016, the
Company purchased computer equipment for $2,079. The computer equipment will be depreciated over its estimated useful life of
5 years. Annual depreciation is $415.80. Depreciation expense for the twelve months ended December 31, 2016 was $208.
NOTE L – MATERIAL EVENT
Departure of Directors or Certain Officers; Election of Directors:
On June 10, 2016, Seth Ingram resigned as a
member of the board of directors. Mr. Ingram’s resignation was for personal reasons and not a result of a disagreement with
the Company on any matter relating to the Company’s operations, policies or practices. Upon his resignation, Mr. Ingram returned
to the Company for cancellation 1.6 million of the 2 million shares of common stock registered in his name.
NOTE M
– SUBSEQUENT EVENTS
The Company is taking the steps necessary to have its common
stock quoted for trading in the OTC Bulletin Board Market (“OTCBB”), an interdealer quotation service for over-the-counter,
or OTC, equity securities operated the Financial Regulatory Authority (“FINRA”), which permits to be eligible for quotation
on OTCBB any OTC equity security that is current in certain required regulatory filings.