|
1.
|
BASIS
OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Organization
and Description of Business
Vet
Online Supply Inc. (the Company) is a Florida corporation incorporated on May 31, 2014. We are currently a manufacturer
of holistic hemp-based pet products that include treats, drops and oral sprays for treatment of pain, stress and anxiety. The
company has ended its product distribution and contract with Concord Veterinary Products, and expanding the manufacturing, sales
and distribution of its own brand holistic products for the US and Abroad. 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
affect
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.
All
share and per share data contained in these financial statements reflects the retroactive application of the aforementioned forward
share split.
On
August 28, 2017 the Board of Directors accepted the resignation of Mr. Edward Aruda as the Chief Executive Officer, President,
Secretary and Treasurer. The resignations of Mr. Aruda were not due to any disagreements with the Company on any matter
relating to its operations, policies or practices.
On
August 28, 2017 the Board of Directors appointed Mr. Daniel Rushford as the Chief Executive Officer, President, Secretary, Treasurer,
and a Member of the Board of Directors.
On
November 9, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 1,000,000,000
to 3,000,000,000 with a par value of $0.001.
On
December 14, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 3,000,000,000
to 10,000,000,000 with a par value of $0.001.
To
date, our activities have been limited to formation, the raising of equity capital, and the initial stages of implementation of
our business plan. We filed a Form S-1 Registration Statement with the U.S. Securities and Exchange Commission, received a notice
of effect and trade on the OTC Markets, PINK under the symbol VTNL. We are continuing to explore additional sources of capital.
We anticipate incurring operating losses as we continue to implement our business plan.
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.
As of December 31, 2017, the Company received one customer order for $202,184.00 in merchandise. The order is expected to ship
during the second quarter of 2018, at which time the Company will recognize the revenue on its income statement. Revenue received
through PayPal is recognized at the time the funds are deposited in the account.
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 December 31, 2017 and December 31, 2016 is $0.
Inventories
The
Company is a reseller of premium veterinary supply products and as such will not maintain inventory as 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 year period ended December 31, 2017 ($0 – December 31,
2016).
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly
transaction between market participants at the measurement date and in the principal or most advantageous market for that asset
or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset
or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration
of non-performance risk including our own credit risk.
In
addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value
hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which
inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three
levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.
These
levels are:
Level
1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level
2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments
in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the
market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level
3 - inputs are generally unobservable and typically reflect managements estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include
option pricing models, discounted cash flow models, and similar techniques.
Financial
assets and liabilities measured at fair value on a recurring basis:
|
|
Input
Level
|
|
|
December
31, 2017
Fair
Value
|
|
|
December
31, 2016
Fair
Value
|
|
Derivative Liability
|
|
|
3
|
|
|
$
|
625,214
|
|
|
$
|
—
|
|
Total Financial Liabilities
|
|
|
|
|
|
$
|
625,214
|
|
|
$
|
—
|
|
In
managements opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value
as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current
market. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, exchange
or credit risks arising from these financial instruments. As of December 31, 2017 and 2016, the balances reported for cash, accounts
receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because of their short maturities.
Income
taxes
The
Company has adopted SFAS No. 109 – Accounting for Income Taxes. ASC Topic 740 requires the use of the asset
and liability method of accounting for income taxes. Under the asset and liability method of ASC Topic 740, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to temporary 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.
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.
Recent
Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including
requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset
and corresponding lease liability, measured at the present value of the lease payments. The amendments in this ASU are effective
for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is
permitted. The Company is in the process of assessing the impact on its consolidated financial statements.
In
July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives
and Hedging (Topic 815). Among other provisions, this ASU requires that when determining whether certain financial instruments
should be classified as liabilities or equity instruments, an entity should not consider the down round feature. The ASU also
recharacterizes as a scope exception the indefinite deferral available to private companies with mandatorily redeemable financial
instrument and certain noncontrolling interests, which does not have an accounting effect but addresses navigational concerns
within the FASB Accounting Standards Codification. The provisions of the ASU related to down rounds are effective for public business
entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is
permitted. The Company is in the process of assessing the impact on its consolidated financial statements.
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 2018.
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.
On
March 22, 2018, the Company terminated all contracts with Concord Veterinary Supply for the purchase and distribution of veterinary
products.
|
4.
|
CONVERTIBLE
NOTES PAYABLE
|
As
of December 31, 2017, notes payable were comprised of the following:
|
|
Original
|
|
|
Original
|
|
Due
|
|
Interest
|
|
Conversion
|
|
December 31,
|
|
|
|
Note Amount
|
|
|
Note Date
|
|
Date
|
|
Rate
|
|
Rate
|
|
2017
|
|
APG Capital
|
|
|
31,500
|
|
|
11/20/2017
|
|
11/20/2018
|
|
12%
|
|
Variable
|
|
$
|
31,500
|
|
Auctus Fund #1
|
|
|
64,000
|
|
|
6/16/2017
|
|
3/16/2018
|
|
8%
|
|
Variable
|
|
|
59,109
|
|
Crown Bridge Partners #1
|
|
|
36,000
|
|
|
5/8/2017
|
|
5/8/2018
|
|
8%
|
|
Variable
|
|
|
—
|
|
Crown Bridge Partners #2
|
|
|
25,500
|
|
|
6/19/2017
|
|
6/19/2018
|
|
2%
|
|
Variable
|
|
|
25,500
|
|
EMA Financial #1
|
|
|
45,000
|
|
|
5/1/2017
|
|
5/1/2018
|
|
8%
|
|
Variable
|
|
|
3,402
|
|
EMA Financial #2
|
|
|
50,000
|
|
|
12/15/2017
|
|
12/15/2018
|
|
12%
|
|
Variable
|
|
|
50,000
|
|
Essex Global Investments
|
|
|
55,000
|
|
|
4/25/2017
|
|
4/25/2018
|
|
8%
|
|
Variable
|
|
|
—
|
|
LG Capital Funding #1
|
|
|
50,000
|
|
|
5/25/2017
|
|
5/25/2018
|
|
8%
|
|
Variable
|
|
|
17,500
|
|
LG Capital Funding #2
|
|
|
44,200
|
|
|
8/10/2017
|
|
4/10/2018
|
|
8%
|
|
Variable
|
|
|
44,200
|
|
Power Up Lending #1
|
|
|
38,000
|
|
|
3/15/2017
|
|
12/30/2017
|
|
12%
|
|
Variable
|
|
|
—
|
|
Power Up Lending #2
|
|
|
28,000
|
|
|
5/22/2017
|
|
2/28/2018
|
|
12%
|
|
Variable
|
|
|
—
|
|
Power Up Lending #3
|
|
|
45,000
|
|
|
11/20/2017
|
|
8/30/2018
|
|
12%
|
|
Variable
|
|
|
45,000
|
|
Power Up Lending #4
|
|
|
28,000
|
|
|
12/20/2017
|
|
9/30/2018
|
|
12%
|
|
Variable
|
|
|
28,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
304,211
|
|
Debt discount
|
|
|
|
|
(208,149
|
)
|
Financing costs/Original issue discount
|
|
|
|
|
(30,837
|
)
|
Notes payable, net of discount
|
|
|
|
$
|
65,225
|
|
During
the years ending December 31, 2017 and 2016, the Company received proceeds from new convertible notes of $540,200 and $0, respectively.
During the year ending December 31, 2017, the Company recorded no payments on their convertible notes and conversions of $247,822
of convertible note principal and interest. The Company recorded loan fees on new convertible notes of $80,925, which increased
the debt discounts recorded on the convertible notes during the year ending December 31, 2017. All of the Companys convertible
notes have a conversion rate that is variable, and therefore, the Company has accounted for their conversion features as derivative
instruments (see Note 6). As a result of recording derivative liabilities at note inception, the Company increased the debt discount
recorded on their convertible notes by $508,480 during the year ended December 31, 2017. The Company also recorded amortization
of $376,770 on their convertible note debt discounts and loan fees. As of December 31, 2017, the convertible notes payable are
convertible into 738,908,771 shares of the Companys common stock.
During
the years ended December 31, 2017 and 2016, the Company recorded interest expense of $18,066 and $0, respectively, on its convertible
notes payable. During the year ended December 31,2017, the Company recorded conversions of $11,833 of convertible note interest.
As of December 31, 2017, the accrued interest balance was $6,233.
As
of December 31, 2017, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive
acquisitions and activities.
|
5.
|
DERIVATIVE
LIABILITIES
|
The
following table represents the Companys derivative liability activity for the embedded conversion features for the years
ending December 31, 2017 and 2016:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
$
|
—
|
|
|
$
|
—
|
|
Initial recognition of derivative liability
|
|
|
1,086,498
|
|
|
|
—
|
|
Conversion of derivative instruments to Common Stock
|
|
|
(644,469
|
)
|
|
|
—
|
|
Mark-to-Market adjustment to fair value
|
|
|
183,185
|
|
|
|
—
|
|
Balance, end of period
|
|
$
|
625,214
|
|
|
$
|
—
|
|
During
the years ended December 31, 2017 and 2016, the Company recorded derivative liabilities for embedded conversion features related
to convertible notes payable of $1,086,498 and $0, respectively.
During
the years ended December 31, 2017 and 2016, in conjunction with convertible notes payable principal and accrued interest being
converted into common stock of the Company, derivative liabilities were reduced by $644,469 and $0, respectively.
For
the years ended December 31, 2017 and 2016, the Company 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 $183,185 and $0, respectively.
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 year ended December 31, 2017 the company
used the following assumptions in their Black-Scholes model: (1) risk free interest rate 1.05% - 1.74%, (2) term of 0.13 years
– 5 years, (3) expected stock volatility of 184.75% - 757.49%, (4) expected dividend rate of 0%, (5) common stock price
of $0.0009 - $0.0183, and (6) exercise price of $0.000122 - $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.
|
6.
|
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.
On
November 9, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 1,000,000,000
to 3,000,000,000 with a par value of $0.001.
On
December 14, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 3,000,000,000
to 10,000,000,000 with a par value of $0.001.
Series
B Voting Preferred Shares issued during the year ended December 31, 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 certificate for 20,000 shares of Series B Voting Preferred Stock to Edward Aruda was returned to the Company.
On January 12, 2018, the certificate was cancelled and on March 1, 2018, 1,000 shares of Series B Voting Preferred Stock were
issued to Daniel Rushford.
As
of December 31, 2017, and December 31, 2016, 1,000 and 0 preferred shares were issued and outstanding, respectively.
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.
Common
Shares issued during the year ended December 31, 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 10 (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
October 15, 2017, the Board of Directors of the Company approved the issuance of 20,000,000 restricted common shares with a value
of $200,000 at a price of $.01 to Robert Sullivan, pursuant to the Agreement dated October 2, 2017. The shares were issued on
November 13, 2017 and were valued at $220,000 or $0.011 per share, based on the fair market value on the date of the issuance,
and $20,000 was recorded as a loss on settlement of debt on the statement of operations.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Samuel Berry to satisfy consulting fees of $50,000, pursuant his agreement dated June 19, 2017. The shares were
issued on November 13, 2017 and were valued at $1,200,000, or $0.016 per share based on the market value on the date of issuance,
and $1,150,000 was recorded as a loss on settlement of debt on the statement of operations.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Matthew Scott to satisfy accrued fees of $50,000, pursuant his agreement dated April 1, 2017. The shares were issued
on November 13, 2017 and were valued at $1,2000,000, or $0.016 per share based on the market value on the date of issuance, and
$1,150,000 was recorded as a loss on settlement of debt of the statement of operations.
During
the year ended December 31, 2017, the holders of convertible notes converted a total of $247,822 of principal and interest into
278,798,173 shares of common stock. The common stock was valued at $898,016 based on the market price of the Companys stock
on the date of conversion. The issuance extinguished $644,469 worth of derivative liabilities, and $143,452 was recorded as additional
paid in capital.
As
of December 31, 2017 and December 31, 2016, there were 669,209,173 and 192,000,000 shares issued and outstanding, respectively.
Warrants
On
June 19, 2017, the Company executed a Common Stock Purchase Warrant for 850,000 shares. The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price of $0.03 per share for a term of five years. If the market price
of one share of common stock is greater than the Exercise Price, the holder may elect to receive warrant shares pursuant to cashless
exercise.
We
account for common stock purchase warrants as derivative liabilities and debt issuance costs on the balance sheet at fair value,
and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet
date subsequent to the initial issuance of the warrant.
|
7.
|
RELATED
PARTY TRANSACTIONS
|
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 year ending December 31, 2017 as stock- based compensation as part of consulting expenses.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Matthew Scott to satisfy accrued fees of $50,000, pursuant his agreement dated April 1, 2017. The shares were issued
on November 13, 2017 and were valued at $1,2000,000, or $0.016 per share based on the market value on the date of issuance, and
$1,150,000 was recorded as a loss on settlement of debt of the statement of operations.
During
the year ended December 31, 2017, the Company accrued consulting fees of $75,000, paid $15,000 in cash and $50,000 in stock, leaving
$10,000
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.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Samuel Berry to satisfy consulting fees of $50,000, pursuant his agreement dated June 19, 2017. The shares were
issued on November 13, 2017 and were valued at $1,200,000, or $0.0016 per share based on the market value on the date of issuance,
and $1,150,000 was recorded as a loss on settlement of debt on the statement of operations.
During
the year ended December 31, 2017, the Company accrued consulting fees of $50,000, leaving a balance due of $0.
Daniel
Rushford, President, CEO, Secretary, Treasurer and Director
On
August 28, 2017, 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 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.
On
November 13, 2017, the Company issued 25,000,000 restricted common shares for $25,000 in share-based compensation that were valued
at $95,000, or $0.0038 per share based on the market value on the date of issuance, and $70,000 was recorded as a loss on settlement
of debt.
During
the year ended December 31, 2017, the Company accrued and paid wages of $8,000. In addition, Mr. Rushford advanced the Company
$182 which was recorded on the Companys balance sheet as an advance from related party.
Mr.
Edward Aruda, Former President, CEO, Secretary, Treasurer and Director
On
May 1, 2015, Mr. Edward Aruda was appointed to serve as President, CEO and Director of the Company to manage the affairs of the
Company for a one (1) year period (the Term) under a management agreement beginning on the Effective Date, and thereafter
the Term may be renewable for six months unless and until such time as either Mr. Aruda or the Company shall give written notice
to the other at least 30 days prior to the expiration of the then current Term that no such automatic extension shall occur. In
exchange, a signing bonus in the amount of $75,000 payable by way of 7,500,000,000 shares of the Companys common stock
was issued as fully paid and non-assessable to Mr. Aruda effective as of the date of the agreement.
On
December 31, 2015, the Company issued a Promissory Note in the principal amount of $7,736 to Mr. Aruda, to evidence various funds
previously advanced by Mr. Aruda to the Company during the year ended December 31, 2015 in order to settle certain accounts as
they came due. The Promissory Note accrued interest at 10% per annum and was due and payable on December 1, 2016.
On
March 31, 2016, June 30, 2016 and December 31, 2016, the Company issued further Promissory Notes in the principal amounts of $2,771,
$5,240 and $4,200, respectively, to Mr. Aruda, to evidence various funds advanced by Mr. Aruda to the Company in order to settle
certain accounts as they came due. The Promissory Notes bear interest at 10% per annum and are due and payable March 31,
2017, June 30, 2017 and December 31, 2017, respectively.
During
the year ending December 31, 2017, Mr. Aruda advanced an additional $5,700 to the Company.
During
the years ending December 31, 2017 and 2016, the Company repaid $6,700 and $10,700, respectively, to Mr. Aruda in respect of funds
previously advanced, including $193 in accrued interest.
On
December 2, 2016, Mr. 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.
On
June 1, 2017, the Company approved a salary of $5,000 per month, retroactive as of January 1, 2017, for Mr. Aruda.
During
the years ended December 31, 2017 and 2016, Mr. Aruda invoiced $40,000 ($5,000 per month from January – August 2017) and
$0, respectively as consulting fees. The Company paid $18,000 and $0 in cash during the years ending December 31, 2017 and 2016,
respectively.
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 Mr. Aruda resigned from the positions of Chief Executive Officer, President, Secretary, and Treasurer. Mr. Aruda
returned the certificate for 20,000 shares of Series B Voting Preferred Stock to the Company and on January 12, 2018, the certificate
was cancelled.
On
December 12, 2017, the Company and Mr. Aruda, entered into a Settlement and Release Agreement. Pursuant to the terms of the Settlement
and Release Agreement, Mr. Aruda and the Company agreed to cancel the outstanding amounts owed to Mr. Aruda of $22,000 in unpaid
fees and $9,035 in note payable principal and interest in exchange for a settlement payment of $3,000 and a vehicle with a net
carrying amount of $16,275. This resulted in a gain on settlement of debt of $14,760 which was recorded to the statement of operations.
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
$4,864,606 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 $1,653,966 at December 31, 2017.
All
tax years since inception are open to examination by the Internal Revenue Service.
|
9.
|
COMMITMENTS
AND CONTINGENCIES
|
|
(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.
|
(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.
The
15,000 shares were not issued as of December 31, 2017, and $825 was recorded on the balance sheet as liabilities for unissued
shares.
|
(4).
|
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 year period ended December 31, 2017. At December 31, 2017, the shares remained unissued.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Matthew Scott to satisfy accrued fees of $50,000, pursuant his agreement dated April 1, 2017. The shares were issued
on November 13, 2017 and were valued at $1,2000,000, or $0.016 per share based on the market value on the date of issuance, and
$1,150,000 was recorded as a loss on settlement of debt of the statement of operations.
During
the year ended December 31, 2017, the Company accrued consulting fees of $75,000, paid $15,000 in cash and $50,000 in stock, leaving
$10,000
on the Companys balance sheets as account payable – related parties.
|
(5).
|
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.
|
(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 year ending December 31, 2017. At December 31, 2017, the shares
remained unissued.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Samuel Berry to satisfy consulting fees of $50,000, pursuant his agreement dated June 19, 2017. The shares were
issued on November 13, 2017 and were valued at $1,200,000, or $0.0016 per share based on the market value on the date of issuance,
and $1,150,000 was recorded as a loss on settlement of debt on the statement of operations.
During
the year ended December 31, 2017, the Company paid $50,000 for consulting fees.
During
the year ended December 31, 2017, the Company accrued consulting fees of $50,000 all of which was paid in stock, leaving a balance
due of $0.
On
August 28, 2017, 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 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.
On
November 13, 2017, the Company issued 25,000,000 restricted common shares for $25,000 in share-based compensation that were valued
at $95,000, or $0.0038 per share based on the market value on the date of issuance, and $70,000 was recorded as a loss on settlement
of debt.
During
the year ended December 31, 2017, the Company accrued and paid wages of $8,000.
|
(8).
|
Consultant
Agreement
|
On
October 2, 2017 the Company entered into a consulting agreement with Jump Television Studios, LLC, to provide market intelligence
and facilitate introductions with the investment banking community. The Company has agreement to pay a fee of $30,000, and 20,000,000
shares of restricted common stock with a value of $200,000, issued to Robert Sullivan.
The
shares were issued on November 13, 2017 and were valued at $220,000, or $0.011 per share, based on the fair market value on the
date of the issuance, and $20,000 was recorded as a loss on settlement of debt.
During
the year ending December 31, 2017, the Company paid of $3,500 in consulting fees.
On
March 7, 2018, the Company entered into a Settlement and Release Agreement with Jump Television Studios, LLC, pursuant to the
Consulting Agreement dated October 2, 2017, whereby the Company will pay a settlement fee of $4,000 for all considerations due
up to March 7, 2018.
|
(9).
|
Consultant
Agreement
|
On
November 15, 2017 the Company entered into a consulting agreement with an advisor, to advise the Company on corporate structure,
mergers and acquisitions and corporate finance. The advisor will be compensated $10,000 a month for a period of three months.
During
the year ending December 31, 2017, the Company paid of $10,000 to the advisor in respect of this agreement.
|
10.
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
During
the year ending December 31, 2017, the Company had the following non-cash investing and financing activities:
|
-
|
Issued
stock for debt increasing common stock by $426,789, increasing additional paid in capital by $563,480, reducing notes payable
by $235,987, reducing accrued interest by $11,833, reducing accounts payable related parties by $100,000, and reducing derivative
liability by $644,469.
|
|
-
|
Increased
debt discount and increased derivative liability by $534,830 to record derivative liabilities at the inception of new notes.
|
On
December 13, 2017, the Company received a customer order for $202,184.00 in merchandise. The order is expected to ship during
the second quarter of 2018, at which time the Company will recognize the revenue on its income statement.
On
January 10, 2018, the Company entered in a Convertible Promissory Note with Auctus Fund LLC in the amount of $84,000. The note
is unsecured, bears interest at 8% per annum, and matures on October 10, 2018.
On
January 12, 2018, 20,000 shares of Series B Voting Preferred Stock issued to Edward Aruda was cancelled.
On
January 24, 2018, the Company entered into a Consulting Agreement with BAS1. The Company has agreed to pay BAS1 a fee of $10,000
for a 30-day marketing awareness program.
On
February 6, 2018, the Company entered in a Convertible Promissory Note with Auctus Fund LLC in the amount of $175,000. The note
is unsecured, bears interest at 8% per annum, and matures on November 6, 2018.
On
February 6, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 10,000,000,000
to 15,000,000,000 with a par value of $0.001.
On
February 7, 2018, the Company received a customer order for $529,790.00 in merchandise. The order is expected to ship in the third
quarter of 2018 at which time the Company will recognize the revenue on its income statement.
On
February 12, 2018, the Company entered in a Convertible Promissory Note with Emerging Corporate Capital Financing in the amount
of $83,333. The note is unsecured, bears interest at 8% per annum, and matures on February 11, 2019.
On
February 22, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 15,000,000,000
to 25,000,000,000 with a par value of $0.001.
On
February 23, 2018, the Company entered into an Exclusive Agreement for Distribution with Gold Country Soap Co. (GCS),
whereby GCS will exclusively distribute all Pet CDB Products owned by the Company. Furthermore, GCS will purchase $3,000,000 of
product at negotiable prices for a period of 24 months for distribution.
On
February 28, 2018, the Company entered in a Convertible Promissory Note with Power Up Lending Group Ltd in the amount of $33,000.
The note is unsecured, bears interest at 12% per annum, and matures on November 5, 2018.
On
March 1, 2018, the Company entered into a Consulting Agreement with Meridian Ventures, LLC. The Company has agreed to pay Meridian
Ventures, LLC a retainer of $30,000 for services focused on implementation and maintenance of a strategic brand medial program.
On
March 1, 2018, 1,000 shares of Series B Voting Preferred Stock were issued to Daniel Rushford.
On
March 1, 2018, the Company executed a Consulting Agreement whereby the Consultant will receive a retainer of $50,000 per month
for three months to revise an online retail website, Private-Label product contract and distribution for veterinarian supplies
and holistic based pet products.
On
March 5, 2018, the Company entered in a Convertible Promissory Note with Auctus Fund LLC in the amount of $100,000. The note is
unsecured, bears interest at 8% per annum, and matures on March 5, 2019.
On
March 7, 2018, the Company entered into a Settlement and Release Agreement with Jump Television Studios, LLC, pursuant to the
Consulting Agreement dated October 2, 2017, whereby the Company will pay a settlement fee of $4,000 for all considerations due
up to March 7, 2018.
On
March 15, 2018, the Company announced that its Board of Directors has determined that it is in the best interests of the Corporation
to initiate a program to reacquire certain shares of stock from its stockholders, and to thereafter retire said shares as non-voting
Treasury stock. The Corporation has approved a Share Repurchase Program (the Program) to accomplish this. The Corporation
hereby will make an offer of redemption to its shareholders in accordance with the terms of the Program. The specific timing,
price and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations.
The Program does not obligate the Company to acquire any particular amount of stock, and the Program may be suspended or discontinued
at any time at the Companys discretion.
On
March 22, 2018, the Company terminated all contracts with Concord Veterinary Supply for the purchase and distribution of veterinary
products.
On
March 27, 2018, the Company issued to StockVest 21,743,756 shares of restricted common stock to fulfill and end a contract set
up by prior management. This issuance completes all obligations and ends the relationship with StockVest.