The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 AND 2016
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Creative Waste Solutions, Inc. (formally Silverstar Resources, Inc.) (the "Company") was incorporated under the laws of the State of Nevada on December 5, 2003. On June 23, 2016, the Company’s Board of Directors approved of a change of name from Silverstar Resources, Inc. to Creative Waste Solutions Inc. The Company operates in the waste management industry.
On March 10, 2015, the Company formed 1030029 Ltd, an Alberta numbered company as a wholly owned subsidiary to meet the requirements of holding working interest of Alberta producing oil and gas properties.
On April 7, 2016, the Company entered into a membership purchase agreement with Creative Waste Solutions, LLC, a Florida limited liability corporation (“Creative”) whereby the Company purchased 100% of the membership interest for $25,000 (see Note 12).
On May 22, 2016, the Company entered into a stock purchase agreement with Florida based, Integrated Waste Transportation Services, Inc. ("Integrated"). Pursuant to the agreement, the Company acquired 100% of the outstanding equity of Integrated in exchange for $300,000 and 50,000 Shares of common stock of the Company (see Note 12).
On August 26, 2016, the Company purchased certain assets of Easy Disposal, Inc. (“Easy”), for an aggregate amount of $396,500 which includes 50,000 shares of common stock of the Company, valued at $2.19 per share and the remainder in cash (see Note 12).
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 at the date of the balance sheet. Actual results could differ from those estimates.
Presentation
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 (SEC), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s September 30, 2017 Annual Report 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 periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended September 30, 2017 as reported on Form 10-K, have been omitted.
Principles of Consolidation
The consolidated financial statements of the Company include the Company and its wholly-owned subsidiaries, 1030029 Ltd., Creative and Integrated. The operations of Creative and Integrated have only been consolidated since their respective dates of acquisition of April 7, 2016 and May 22, 2016. All material intercompany balances and transactions have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable
The Company grants credit to customers under credit terms that it believes are customary in the industry and does not require collateral to support customer receivables. The Company evaluates its provision for an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. At December 31, 2017 and September 30, 2017, the Company’s allowance for doubtful accounts was $0.
Revenue Recognition
The Company recognizes revenue from waste removal services it provides to its customers. The Company’s revenue recognition policies comply with FASB ASC Topic 605. Revenue is recognized at the time the waste removal services is completed, when a formal arrangement exists, the price is fixed or determinable, the service is completed, no other significant obligations of the Company exist and collectability is reasonably assured.
Equipment
Equipment are carried at the cost of acquisition and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance is expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets.
Stock-Based Compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, “
Compensation – Stock Compensation
.” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. There were no options outstanding during the periods presented.
Related Parties
The Company follows ASC 850,
Related Party Disclosures
, for the identification of related parties and disclosure of related party transactions.
Long-lived Assets
The Company assesses long-lived assets, including intangible assets, for impairment in accordance with the provisions of FASB ASC 360 Property,
Plant and Equipment
. A long-lived asset (or group of assets) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long lived asset is not recoverable if it exceeds the sum of the undiscounted net cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated fair value. For purposes of these tests, long-lived assets must be grouped with other assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. During the three months ended December 31, 2017 and 2016, the Company did not sustain any impairment loss.
Goodwill
Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. The Company recorded goodwill of $149,500 related to its August 2016 acquisition of Easy. As of December 31, 2017 and September 30, 2017, the Company performed the required impairment review and concluded that the goodwill was not impaired.
Basic and Diluted Earnings Per Share
Earnings per share is calculated in accordance with ASC Topic 260,
Earnings Per Share
. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible instruments were converted. The Company had outstanding convertible notes during the three months ended December 31, 2017 and 2016, however, the Company had an operating loss during the three months ended December 31, 2016, accordingly, the potential convertible shares were not considered in the EPS calculation for that period due to their anti-dilutive effect.
Income Taxes
Income taxes are provided in accordance with ASC Topic 740
Accounting for Income Taxes
. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.
Reclassifications
Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the previously reported net loss or stockholders’ deficit.
Recently Issued Accounting Pronouncements
No new accounting pronouncements were issued during the three months ended December 31, 2017 that would have a material effect on the Company’s consolidated financial statements.
NOTE 3 - GOING CONCERN
As shown in the accompanying financial statements, the Company has an accumulated deficit of $4,092,252 as of December 31, 2017 and incurred a loss from operations of $51,110 for the three months then ended. Unless the Company is able to attain profitability and increases in stockholders’ equity, these conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company continues to review its expense structure in an attempt to reduce operating costs. The Company’s expenses are planned to decrease, which would result in an improvement to its results of operations.
NOTE 4 - EQUIPMENT
Equipment at December 31, 2017 consisted of the following:
Equipment
|
|
$
|
92,200
|
|
|
|
|
92,200
|
|
Less accumulated depreciation
|
|
|
(24,000
|
)
|
Equipment, net
|
|
$
|
68,200
|
|
Depreciation expense for the three months ended December 31, 2017 and 2016 was $4,500 and $4,500, respectively.
NOTE 5 – INTANGIBLE ASSETS
Intangible assets at December 31, 2017 consisted of the following:
Customer lists
|
|
$
|
375,000
|
|
Licenses
|
|
|
150,000
|
|
|
|
|
525,000
|
|
Less accumulated amortization
|
|
|
(298,958
|
)
|
Intangible assets, net
|
|
$
|
226,042
|
|
The customer lists are being amortized over 24 months and the licenses are not being amortized.
Amortization expense for the three months ended December 31, 2017 and 2016 was $46,875 and $46,875, respectively.
Future amortization of intangible assets is as follows:
Year ending September 30,
|
|
|
|
2018
|
|
|
76,042
|
|
|
|
$
|
76,042
|
|
NOTE 6 - ASSET HELD FOR SALE
On April 14, 2015, the Company acquired the working interest of two producing oil and gas properties in Alberta Canada for US $80,000. The Company has determined that the asset does not fit the future plans of the Company. Under the guidelines of ASC 360
Newly Acquired Asset Classified as Held for Sale
, the Company is actively seeking to dispose of the asset through a sale. During the year ended September 30, 2015, the Company determined that this asset had become impaired and took a charge to earnings of $80,000 (see Note 15).
NOTE 7 – CONVERTIBLE DEBENTURES - RELATED PARTY
On January 15, 2015, the Company amended the convertible debenture with the principal of $75,754 of a related party so that the debenture became anti-dilutive with a conversion price set at $0.35 regardless of any forward or reverse splits in the Company's common stock.
On February 23, 2015, a shareholder holding a debenture with a principal balance of $75,754 and other advances to the Company of $149,142 of which $24,328 was borrowed during September 30, 2015 and $124,814 was the outstanding balance at September 30, 2014 made demand for payment of the total amounts owed including interest. The Company was not able to pay the outstanding balances. The Company and shareholder came to an agreement that the shareholder could convert his $75,754 convertible note payable and interest at $0.15 and the advances of $149,142 plus further advances up to $150,000 at a 15% discount to the closing price as of date of the agreement or $0.15 per share. The shareholder agreed to advance an additional $50,000 to the Company to acquire assets for the Company. The $50,000 is not convertible and is accounted for as advances due to related party see Note 10.
The change in terms of the $75,754 convertible note created derivative liability and required the Company to record fair value at the inception of the derivative and for each subsequent reporting period. The fair value of the embedded derivatives at December 31, 2017 was determined using the Black Scholes based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 100%, (3) weighted average risk-free interest rate of 1.29%, (4) expected life of one year, and (5) estimated fair value of the Company's common stock is $0.85. The fair value calculated as of December 31, 2017 was $671,452. During the three months ended December 31, 2017 the decrease in fair value of $2,012,694 resulted in a other income gain reflected in the statement of operations. During the three months ended December 31, 2016 the increase in fair value of $128,076 resulted in a other expense loss reflected in the statement of operations.
The addition of a conversion feature for the advances of $149,142 created a beneficial conversion feature as of September 30, 2015 of $149,142. Due to the advances having no terms and being due on demand, this amount was expensed as interest expense for the year ended September 30, 2015.
As of December 31, 2017 and September 30, 2017, the amount due under the convertible debentures to related parties was $224,896 and $224,896, respectively.
NOTE 8 - NOTES PAYABLE
On June 2, 2014, the Company issued a long term note payable for $81,989 to an entity for advances on work completed on the Company’s Ahbau Lake mining property in British Columbia, Canada. The note is unsecured, and bears interest at 10% per year and matures in one year at which time all principal and interest is due and payable. On April 6, 2017 the outstanding balance of $81,989 plus accrued interest of $23,242 was converted to 152,509 shares of the Company’s common stock.
On April 2, 2015, the Company issued a $60,000 one-year note bearing interest of 9% as part of the acquisition of the working interest in the Alberta oil and gas property. On April 6, 2017 the outstanding balance of $60,000 plus accrued interest of $8,107 was converted to 98,705 shares of the Company’s common stock.
On December 29, 2015, the Company issued a $17,500 note payable bearing interest of 6% to an unrelated party. The proceeds of the note were used for working capital.
On April 4, 2016, the Company issued a $29,000 note payable bearing interest of 10% to an unrelated party. The proceeds of the note were used for working capital.
On August 16, 2016, the Company issued a $17,000, 10% annual interest, demand note payable to a related party.
On August 26, 2016, the Company issued two notes payable to unrelated parties for $300,000 that bear interest at 10%. The proceeds of the note were used to purchase Easy.
On July 30, 2017, the Company issued a note payable on demand to an unrelated party for $50,000 that bears annual interest at 10%. The proceeds of the note were used to make a deposit for the planned purchase of a Florida Limited Liability Company as disclosed in Note 16.
NOTE 9 – ADVANCES - RELATED PARTIES
The Company received advances from two related parties totaling $76,546 and $76,546 as of December 31, 2017 and September 30, 2017, respectively. The advances are unsecured, do not have a term and carry no interest rate.
NOTE 10 – DERIVATIVE INSTRUMENTS
During the year ended September 30, 2016, the Company changed the conversion features on a convertible instrument that require liability classification under ASC 815. These instruments are measured at fair value at the end of each reporting period. (See Note 7).
As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
|
·
|
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities
|
|
|
|
|
·
|
Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
|
|
·
|
Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
|
The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of December 31, 2017 and 2016:
Recurring Fair Value Measures
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities at December 31, 2017
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
671,452
|
|
|
$
|
671,452
|
|
Derivative liabilities at December 31, 2016
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,635,353
|
|
|
$
|
1,635,353
|
|
The following table represents the change in the fair value of the derivative liabilities during the three months ended December 31, 2017 and 2016:
Fair value of derivatives, September 30, 2016
|
|
$
|
1,507,277
|
|
Change in fair value of derivative liability - loss
|
|
|
128,076
|
|
Fair value of derivatives, December 31, 2016
|
|
|
1,635,353
|
|
|
|
|
|
|
Fair value of derivatives, September 30, 2017
|
|
|
2,684,146
|
|
Change in fair value of derivative liability - gain
|
|
|
(2,012,694
|
)
|
Fair value of derivatives, December 31, 2017
|
|
$
|
671,452
|
|
NOTE 11 – EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is calculated using the weighted average number of shares of common stock outstanding during the applicable period. Basic weighted average common shares outstanding is computed using the weighted average shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares outstanding and if dilutive, potential common shares outstanding during the period. Potential common shares consist of the additional common shares issuable upon the conversion of convertible debentures. The effect on the number of common shares outstanding assuming conversion of the convertible debentures as of December 31, 2017 would result in an increase of approximately 1,945,997 shares. The Company incurred a net loss for the three months ended December 31, 2016, accordingly, none of the convertible shares were used to calculate EPS for that period due to their anti-dilutive effect.
NOTE 12 – ACQUISITIONS
On April 7, 2016, the Company entered into a membership purchase agreement with Creative Waste Solutions, LLC whereby the Company purchased 100% of the membership interest for $25,000.
On May 22, 2016, the Company entered into a stock purchase agreement with Integrated. Pursuant to the agreement, the Company acquired 100% of the outstanding equity of Integrated in exchange for $300,000 and 50,000 shares of common stock of the Company. The common stock was valued at $1.00 per shares which was the closing price of the Company’s common stock on May 22, 2016.
On August 26, 2016, the Company purchased certain assets of Easy for an aggregate amount of $396,500 which includes 50,000 shares of common stock of the Company and $287,000 in cash. The common stock was valued at $2.19 per shares, which was the closing price of the Company’s common stock on August 26, 2016.
The Company purchased Creative, Integrated and Easy to integrate itself in the waste management business in southeastern region of the United States.
The transactions are accounted for as business combinations in accordance with ASC 805. A summary of the purchase price allocations at fair value is below.
|
|
Creative
|
|
|
Integrated
|
|
|
Easy
|
|
|
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
90,000
|
|
Deposit
|
|
|
-
|
|
|
|
-
|
|
|
|
7,000
|
|
Customer list
|
|
|
25,000
|
|
|
|
350,000
|
|
|
|
-
|
|
License
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
Goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
149,500
|
|
Purchase price
|
|
$
|
25,000
|
|
|
$
|
350,000
|
|
|
$
|
396,500
|
|
The customer lists are being amortized over 24 months and licenses are not being amortized.
The unaudited pro forma information showing the operating results as if all the acquisitions took place on October 1, 2014 is not currently available.
NOTE 13 - EQUITY
During the three months ended December 31, 2017 and 2016, the Company did not issue any shares of common stock.
NOTE 14– INCOME TAXES
The Company has losses carried forward for income tax purposes through December 31, 2017. There are no current or deferred tax expenses for the three months ended December 31, 2017 and 2016 due to the Company’s tax loss position. The Company had fully reserved for any benefits of these losses utilizing a statutory federal income tax rate of 34%, however, due to the recent tax law change the utilized rate is 21% to reflect benefits that may be realized at the new statutory rate. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
The deferred income tax asset for the three months ended December 31, 2017 and 2016 consists of the following:
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Deferred income tax asset attributed to:
|
|
|
|
|
|
|
Current operations
|
|
$
|
13,543
|
|
|
$
|
19,542
|
|
Less: Change in valuation allowance
|
|
|
(13,543
|
)
|
|
|
(19,542
|
)
|
Net refundable amount
|
|
$
|
-
|
|
|
$
|
-
|
|
The composition of the Company’s deferred tax assets as at December 31, 2017 and September 30, 2017 are as follows:
|
|
December 31,
2017
|
|
|
Sept. 30,
2017
|
|
|
|
|
|
|
|
|
Income tax operating loss carryforward
|
|
$
|
2,940,286
|
|
|
$
|
2,875,794
|
|
|
|
|
|
|
|
|
|
|
Statutory federal income tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Effective income rate
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
$
|
568,241
|
|
|
$
|
564,542
|
|
Amortization of intangible assets
|
|
|
49,219
|
|
|
|
39,375
|
|
Total deferred tax assets
|
|
|
617,460
|
|
|
|
603,917
|
|
Less: valuation allowance
|
|
|
(617,460
|
)
|
|
|
(603,917
|
)
|
Net deferred tax asset
|
|
|
-
|
|
|
|
-
|
|
The potential income tax benefit of these losses has been offset by a full valuation allowance.
As of December 31, 2017, the Company has an unused net operating loss carry-forward balance of approximately $2,940,000 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between 2025 and 2037.
The issuance of 2,532,054 shares of common stock during the year ended September 30, 2014 affected a change in control of the Company. Due to the change in control, the tax loss carryforward may only be used on a formula basis under IRS section 382 which will affect the benefit the Company can gain from the tax loss.
NOTE 15 – DISCONTINUED OPERATIONS
Prior to the business acquisitions referred to in Note 12, the Company operated in the oil and gas industry. The Company discontinued operating in the oil and gas industry and operates in the waste management industry. Accordingly, the financial statements for the year ended September 30, 2015 reflect a loss from discontinued operations from the oil and gas operations. The Company wrote-off an asset consisting of two oil and gas properties located in Alberta Canada in the September 30, 2015 fiscal year as disclosed in Note 6. The Company is actively seeking to dispose of the asset through a sale and will account for the disposition of this property as a discontinued operation.
NOTE 16
–
COMMITMENTS
AND CONTINGENCIES
Lease
The Company leases its operations facility located in Hollywood, FL under a long-term operating lease expiring in January 2018, with the option to renew for an additional five years. For the twelve months ended January 31, 2017 the base monthly rent was $4,650 plus sales tax. For the twelve months ended January 31, 2018 the base monthly rent is $4,850 plus sales tax. The lease was acquired with the acquisition of Easy. The Company exercised the five year renewal option at a base monthly rent of $6,000 plus sales tax. Rent expense was $15,423 and $14,787 for the three months ended December 31, 2017 and 2016, respectively.
As of December 31, 2017, future minimum annual payments, including sales tax, under operating lease agreements for fiscal year ending September 30 are as follows:
2018
|
|
$
|
55,925
|
|
2019
|
|
|
76,176
|
|
2020
|
|
|
76,176
|
|
2021
|
|
|
76,176
|
|
2022
|
|
|
76,176
|
|
2023
|
|
|
19,044
|
|
|
|
$
|
379,673
|
|
Membership Purchase Agreement:
On August 2, 2017, the Company entered into a “Membership Purchase Agreement” with a Florida based Limited Liability Company (LLC). Pursuant to the agreement, the Company will acquire 100% of the membership interests of the LLC for a $2,600,000 purchase price. The acquisition is contingent on the Company’s raising of the funds needed to consummate the transaction. The Company made a non-refundable deposit of $50,000, an additional $943,371 is required at closing (net of closing credits) and the seller will provide $1,600,000 of financing. The closing date has been extended to March 8, 2018, at which time the Company will have to make another $25,000 non-refundable deposit in order to obtain an additional extension.
NOTE 17- SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were issued and has determined that there are no material subsequent events that would require an adjustment to the financial statements. The following subsequent event is the sole disclosure that is required.
On February 16, 2018 the Company obtained an extension until March 8, 2018 on the closing date of the proposed LLC acquisition disclosed in Note 16.