NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017
Note
1 – Nature of Operations
Organization
The
Go Eco Group, Inc. (formally Liberated Energy, Inc) (the “Company”), formerly known as Mega World Food Holdings Company
is a Nevada corporation formed on September 14, 2010.
On
January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation, a privately
held corporation formed under the laws of the State of Delaware on July 1, 2010, acquired 24,500,000 non-registered shares of
the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of the
Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented wind and solar powered turbine technology
for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind Power
Corporation returned to treasury its 24,500,000 shares it acquired from the Company’s shareholders. As a result of this
transaction, the Company had on January 19, 2013, 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed
its name from Mega World Food Holding Company to The Go Eco Group, Inc. and underwent a 24 for 1 stock split, whereby the Company’s
outstanding shares increased from 3,000,000 to 72,000,000.
On
January 19, 2013, the Company disposed of its wholly-owned subsidiary, Mega World Food Limited (HK). Mega World Food Limited (HK)
was incorporated on June 24, 2010 and was in the business of selling frozen vegetables in all areas of the world except China.
From inception, Mega World Food Limited (HK) only incurred setting up, formation or organization activities. Upon disposal, the
Company ceased these operations and accordingly, the Company’s financial statements have been prepared with the net assets,
results of operations, and cash flows of this business displayed separately as “discontinued operations.”
On
February 4, 2015, the Company increased their number of authorized preferred shares from 10,000,000 to 100,000,000 and authorized
common shares from 250,000,000 to 900,000,000.
On
December 31, 2015, the Company amended the preferred shares voting rights increasing the voting of each preferred share from 100
to 10,000 votes on any action voted on by the common stock holders
On
July 6, 2016, the Company adopted a 1-for-3,500 reverse split of the Company’s common stock that as of June 30, 2016, was
not yet effective.
On
September 14, 2016, the Company entered into an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company
was to acquire all outstanding ECGLLC membership interest for a 20% non-dilutive interest of the outstanding shares of the Company
with the first closing of the agreement. On March 6, 2017, the Company terminated the agreements with Ron Knori and EcoCab based
upon breach of contract, fraud, fraudulent inducement, fraud in the factum, negligent misrepresentation, misrepresentation, contractual
interference, breach of fiduciary duty, negligence, and conversion, all of which were perpetrated by Ron Knori, individually,
and in his capacity as manager of EcoCab.
On
January 27, 2017, the Company reduced the authorized shares of common stock from 10,000,000,000 to 2,000,000,000 and changed the
name from The Go Eco Group, Inc to The Go Eco Group.
On
August 15, 2017, we entered into an agreement (the “Agreement”) with Medsite Services, Inc., a Nevada corporation
(“MDST”) wherein we agreed to acquire from MDST, all of MDST’s right, title and interest in and to Integro Health
Systems, Inc., a Nevada corporation (“Integro”). MDST has represented to us that it owns 100% of the outstanding securities
of Integro and Integro is a wholly owned subsidiary corporation of MDST. We closed this transaction on August 28, 2017 and accordingly,
Integro became wholly owned by us. In consideration of the foregoing, we issued 1,170,005 restricted shares of our Series B Preferred
Stock to certain shareholders of MDST as disclosed in the Agreement. As part of the consideration for the foregoing transaction,
we and our president, Brian Conway cancelled 9,000,000 shares of our Series A Preferred Stock owned by Mr. Conway and amend the
Series A Preferred Stock designation to reflect each share of Series A Preferred Stock has 10,000 votes per share and votes with
the common on certain matters. The amended designation of the Series A Preferred Stock has been filed with the Nevada Secretary
of State. Likewise, the designation for the Series B Preferred Stock has been filed with the Nevada Secretary of State.
On
December 21, 2017 the company formed a joint venture with Bravatek Solutions, Inc a Colorado corporation. Under the terms of the
agreement the Company will own 65% of the joint venture and contribute $100 plus a nonexclusive license of the intellectual property
necessary to develop the Light Guard System with Bravatek contributing $25,000 plus the sale of software to the JV for $65,000.
On
January 23, 2018, the Company created a wholly owned subsidiary, BitWhisper, LLC, in the state of Nevada. The purpose of the subsidiary
is to be a special purpose vehicle for exploring operations in crypto-currency mining. The Company has no intentions of offering
crypto-currencies, whether as security tokens or utility tokens, to the public.
On
February 5, 2018, Go Eco Group, a Nevada corporation (the “Company”) entered into a Mutual Rescission and Release
with Medsites Services, LLC whereby the parties agreed to mutually rescind the Stock Exchange Agreement between the parties and
releasing each party from any liabilities for damages, claims or causes of action arising from the Stock Exchange Agreement. Per
the terms of the Mutual Release and Rescission, Medsites Services, LLC agreed to pay a “break-off” fee of $40,000.00
to be paid in payments over sixty (60) days from the execution of the Mutual Release and Rescission.
On
February 28, 2018 the Company changed its name to Liberated Solutions, Inc.
On
August 23, 2018, the Company entered into a stock purchase agreement (the “Agreement”) with Peppermint Jim, LLC (“Peppermint
Jim”) whereby the Company shall acquire 51 units (representing 51% of Peppermint Jim) in exchange for the issuance of $250,000
worth of Series B preferred stock of the Company (the “Series B Preferred Shares”). Under the terms of the Agreement
the closing of the transaction shall occur on or before August 31, 2018, where the Series B Preferred Shares shall be issued in
exchange for the 51 units of Peppermint Jim.
On
September 26, 2018 the Company increased their authorized shares to 6,000,000,000 shares of common stock with a par value of $0.0001
per share.
Subsequent
to September 30, 2018 all of the open agreements referred to above were terminated.
Note
2 – Summary of Significant Accounting Policies
Basis
of Accounting
The
Company maintains its books and records on the accrual basis of accounting. The accompanying financial statements have been prepared
on that basis, in which revenues and gains are recognized when earned and expenses and losses are recognized when incurred.
Use
of Estimates
The
presentation of financial statements in conformity with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash
and Cash Equivalents
For
the purpose of the statement of cash flows, cash and cash equivalents include all cash balances, which are not subject to withdrawal
restrictions or penalties, and highly liquid investments and debt instruments with a maturity of three months or less from the
date of purchase.
Fair
Value of Financial Instruments
Our
short-term financial instruments, including cash, other assets and accounts payable and accrued expenses consist primarily of
instruments without extended maturities, the fair value of which, based on management’s estimates, reasonably approximate
their book value. The fair value of our notes and advances payable is based on management estimates and reasonably approximates
their book value based on their current maturity.
Net
Loss per Common Share
The
Company computes per share amounts in accordance with Statement of Financial Accounting Standards (SFAS) ASC 260, Earnings per
Share (EPS). ASC 260 requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the income (loss) available
to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the
weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.
Property,
Equipment, and Intangible Assets
Property
and equipment are carried at cost, less accumulated depreciation. Additions are capitalized and maintenance and repairs are charged
to expense as incurred. Intangible assets consist of acquired customer and vendor databases and are carried at cost, less accumulated
amortization.
Depreciation
and amortization is provided principally on the straight-line basis method over the estimated useful lives of the assets.
Stock-Based
Compensation
The
Company accounts for stock-based compensation to employees and non-employees in accordance with ASC 718 requiring employee equity
awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based
on the fair value of the award and is recognized as expense over the requisite employee service period. The Company accounts for
stock-based compensation to other than employees in accordance with FASB ASC 505-50. Equity instruments issued to other than employees
are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments
and is recognized as expense over the service period. The Company estimates the fair value of share-based payments using the Black-Scholes
option-pricing model for common stock options and the closing price of the company’s common stock for common share issuances.
Revenue
and Cost Recognition
It
is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 605 “Revenue
Recognition”. Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured.
Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices
of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company
will defer any revenue for which the product was not delivered or is subject to refund until such time that the Company and the
customer jointly determine that the product has been delivered or no refund will be required.
Income
Taxes
The
Company utilizes ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this
method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of
assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect taxable income. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes primarily relate to the recognition of debt costs and
stock based compensation expense. The adoption of ASC 740-10 did not have a material impact on the Company’s results of
operations or financial condition.
RECLASSIFICATION
OF PRIOR YEAR BALANCES
Certain
items from the year ended September 30, 2017 have been reclassified to conform with the current year financial statement presentation.
Note
3 – Going Concern Matters
As
shown in the accompanying financial statements, the Company has a net loss of $1,021,128 for the year ended September 30, 2018.
As of September 30, 2018, the Company reported an accumulated deficit of $3,886,928. The Company’s ability to generate continued
positive cash flows is dependent on the ability to grow its operating entity as well as the ability to raise additional capital.
Management is following strategic plans to accomplish these objectives, but success is not guaranteed. These factors raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
NOTE
4 – FAIR VALUE MEASUREMENTS
As
defined in (Financial Accounting Standards Board 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.
|
|
|
|
|
|
Management has determined
based on note conversion history that the conversion value is equal or less than par value of the shares used for conversion
thus determining that the fair value of the notes is equal to their face value.
|
NOTE
5 – RELATED PARTY TRANSACTIONS
On
February 4, 2015, the Company issued to an officer and director of the Company 10,000,000 shares with a value of $10,000 of series
A preferred stock for service. Each share has 10 votes on all matters of the Company in which the shareholders can vote.
During
the year ended September 30, 2018 the Company paid the CEO $147,900 and reimbursed certain expenses.
NOTE
6 – EQUITY
Common
During
the year ended September 30, 2017 the Company issued 5,880,000 shares of commons stock with a value of $844,165 for services.
During
the year ended September 30, 2017 the Company issued 6,699,471 shares of common stock with a value of $145,619 for convertible
debt.
During
the year ended September 30, 2018 the Company issued 34,920,000 shares of commons stock with a value of $357,255 for services.
During
the year ended September 30, 2018 the Company issued 546,633,241 shares of common stock with a value of $911,559 for convertible
debt.
During
the year ended September 30, 2018 the Company issued 34,967,577 shares of common stock with a value of $40,074 for the conversion
of warrants to common stock.
Preferred
On
February 2, 2015, the Company issued 10,000,000 shares of Series A Preferred Stock to an officer and director of the Company.
Each share of series A preferred has 10,000 votes for all shareholder matters compared to 1 vote for each share of common stock.
On
August 15, 2017 the Company’s Board of Directors adopted a resolution authorizing 10,000,000 shares of Series B, no-par
value, preferred stock. The Company has not amended its articles of incorporation to reflect this resolution and none of the Series
B preferred shares have been issued.
NOTE
7 – CONVERTIBLE NOTES
LG
Capital Funding
On
July 13, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC (“LG Capital”), to replace the $41,400
convertible note issued to Eastmore Capital The note matures on July 13, 2016. The note is convertible by the holder at a discount
of 55% of the lowest trading price of the Company’s stock for the 15 days prior to the conversion
On
August 11, 2015, LG Capital’s lawsuit claims the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC (“LG
Capital”) for a principle amount of $27,500 with an interest rate of 8% per annum. The note matures on August 11, 2016.
The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s stock for the 15
days prior to the conversion. Per the Company the note was not funded but the Company has accrued the note and interest, totaling
$31,843.
On
September 8, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC (“LG Capital”) for a principle
amount of $27,000 with an interest rate of 8% per annum. The note matures on September 8, 2016. The note is convertible by the
holder at a discount of 55% of the lowest trading price of the Company’s stock for the 15 days prior to the conversion.
On
March 14, 2016, the Company issued a Convertible Note to LG Capital Funding, LP for a principle amount of $18,000 with an interest
rate of 12% per annum. The note matures on March 14, 2017. The note is convertible by the holder at a discount of 45% of the lowest
trading price of the Company’s stock for the 20 days prior to the conversion.
On
May 26, 2016, the Company issued a Convertible Note to LG Capital Funding, LP for a principle amount of $17,000 with an interest
rate of 12% per annum. The note matures on March 14, 2017. The note is convertible by the holder at a discount of 50% of the lowest
trading price of the Company’s stock for the 20 days prior to the conversion. Net proceeds to the Company are $15,000 after
deduction of legal fees of $2,000. As of September 30, 2018, the outstanding balance of the note was $17,000 in principal plus
interest of $428 for a total of $17,428.
On
September 15, 2017, LG Capital, LLC filed a lawsuit against the Company. The filing alleges that the Company has defaulted on
several unpaid loans from LG Capital to the Company with the total claim against the Company of $297,160 The Company negotiated
in good faith with LG Capital to settle the debt but to no avail. After reviewing the claim filed by LG Capital, it is the opinion
of Company Management that the Company’s outstanding liability to LG Capital has been fully recognized and accounted for
in the financial statements of the Company. (See Note 9- Legal).
Carebourn
Capital
On
September 7, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $197,363,70 less legal
fees of $8,000 with an interest rate of 12% per annum. The note was scheduled to mature on September 7, 2017 but was extended
in 2018 at a principal amount of $172,671. The note is convertible by the holder at a discount of 50% of the average of the lowest
three trading prices of the Company’s stock for the 20 days prior to the conversion.
On
October 3, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $237,475 less an original
discount of $30,975 plus transaction fees of $6,500 for a net advanced of $200,000. The note bears an interest rate of 12% per
annum. The note was scheduled to mature on October 3, 2017. The note is convertible by the holder at a discount of 45% of the
average of the lowest three trading prices of the Company’s stock for the 20 days prior to the conversion. On September
15, 2016 $85,000 was returned to Carebourn reducing the principal balance to $115,114 as of that date, however, the note was extended
on April 17, 2018 at a principal amount of $230,790. An additional 10% discount applies if the common stock is only eligible for
X clearing deposit.
On
December 13, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $98,325 less an original
discount of $12,825 for a net advanced of $80,000. The note bears an interest rate of 12% per annum. The note matures on December
13, 2018. The note is convertible by the holder at a discount of 45% of the average of the lowest three trading prices of the
Company’s stock for the 15 days prior to the conversion. The note was extended on April 17, 2018 at a principal amount of
$116,888. Additional discounts of up to 15% apply if the common stock is not deliverable via DWAC and if only eligible for X clearing
deposit.
Due
to the default status of the Carebourn Capital notes payable, interest was accrued at an annual interest rate of 22%. The total
principal balance owed on the notes at September 30, 2018 is $153,860 plus accrued interest of $16,389.
Power
Up Lending
On
January 4, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $35,000 with an
interest rate of 8% per annum with a default interest rate of 22%. The note matures on October 15, 2018. The note is convertible
by the holder at a discount of 50% of the average of the lowest three trading prices of the Company’s stock for the 10 days
prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On
February 15, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with
an interest rate of 8% per annum with a default interest rate of 22%. The note matures on November 30, 2018. The note is convertible
by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days
prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On
March 9, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on December 30, 2018. The note is convertible by the
holder at a discount of 42% of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion.
The note is convertible to common stock 180 days following the date of the note.
On
March 22, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with an
interest rate of 8% per annum with a default interest rate of 22%. The note matures on December 30, 2018. The note is convertible
by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days
prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On
May 14, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on February 28, 2019. The note is convertible by the
holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior
to the conversion. The note is convertible to common stock 180 days following the date of the note.
As
of September 30, 2018, the Company owed Power Up lending $155,090 in principal and $5,676 of accrued interest.
Crown
Bridge Partners
On
August 21, 2017, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $40,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on August 21, 2018. The note is convertible by the
holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
On
January 5, 2018 the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $20,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on January 5, 2019. The note is convertible by the
holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
On
February 16, 2018, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $20,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on February 16, 2019. The note is convertible by the
holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
On
April 2, 2018, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $40,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on April 2, 2019. The note is convertible by the holder
at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
The
above notes are subject to an additional discounts as follows: (a) 10% discount if the conversion price is equal to or less than
$0.025 per share (b) 10% discount if the shares are not deliverable via DWAC (c) 10% discount if the conversion price is equal
to or less than $0.01.
On
January 5, 2018, February 14, 2018 and March 31, 2018 the Company issued three warrants totaling 4,160,000 warrants to Crown Bridge
Partners as part of the $80,000 of the loans advanced in January, February and March of 2018 as noted above. The warrants are
exercisable by the holder within five years of the issuance date at $0.25 per warrant for the January and February 2018 warrants
and at $0.01 for the March 2018 warrant. The warrants may be converted by the holder as a cashless warrant. The warrants and the
convertible notes were fair valued on date of issuance using the Black Scholes valuation method.
The
following assumptions were used in estimating the value of the warrants issued in January, February and March 2018
Risk free interest rate
|
|
|
.10
|
%
|
Expected life in years
|
|
|
5 years
|
|
Dividend yield
|
|
|
0
|
%
|
Expected volatility
|
|
|
399-401
|
%
|
The
fair value of the warrants determined to be 25% of the total value of the warrants and convertible debt. Based on the valuation
$20,000 of the convertible debt was deducted from the note value and allocated to paid in capital.
During
the year ended September 30, 2018 the cashless warrants were converted into 34,967,577 shares of common stock with a value of
$40,074.
As
of September 30, 2018, the Company owed Crown Bridge Partners $53,754 in principal and approximately $3,639 in accrued interest.
More
Capital
More
Capital purchased an outstanding note of the Company from Carbourn Capital. During the period from January 18, 2018 through March
19,2018 the note was converted to 5,688,175 shares of common stock with a value of $21,219 for principal and interest. As of September
30, 2018 the balance on the note is zero.
On
January 15, 2018, the Company issued a Convertible Note to More Capital, LLC for a principal amount of $18,975 with an interest
rate of 10% per annum. The note matures on July 15, 2018. The note is convertible by the holder at a discount of 50% of the average
of lowest three trading price of the Company’s stock for the 20 days prior to the conversion. As of September 30, 2018,
Moore Capital LLC the Company owes principal of $18,975 plus interest of $1,419 for a total of $20,394.
Management
has reviewed the terms of the convertible instruments to determine their fair value. After reviewing the characteristic and the
value of the conversion, management has determined based on note conversion history that the conversion value is equal or less
than par value of the shares used for conversion thus determining that the fair value of the notes is equal to their face value.
Note
8 – Income Taxes
The
Company follows Accounting Standards Codification 740, Accounting for Income Taxes.
The
Company had a net loss of $1,021,138 for the year ended September 30, 2018 and $1,464,122 for the same period in 2017. As of September
30, 2018, the Company’s net operating loss carry forward was approximately $2,119,728 that will begin to expire in the year
2035.
The
Company’s deferred tax assets consisted of the following as of September 30, 2018, and 2017:
|
|
2018
|
|
|
2017
|
|
Total deferred tax asset
|
|
|
445,143
|
|
|
|
214,439
|
|
Less: Valuation allowance
|
|
|
(445,143
|
)
|
|
|
(214,439
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
In
assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled
reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment.
As a result, management determined it was more likely than not the deferred tax assets would not be realized as of September 30,
2018.
A
reconciliation of income taxes at the federal statutory rate to amounts provided for the years ended September 30, 2018 and 2017
is as follows:
|
|
2018
|
|
|
2017
|
|
U.S. federal statutory rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Net operating loss
|
|
|
(21
|
)%
|
|
|
(21
|
)%
|
Based
on the recent change in corporation tax rates the Company calculated the deferred tax asset for the year ended September 30, 2018
and 2017 at 21%.
NOTE
9 – LEGAL
On
September 15, 2016, LG Capital, LLC filed a lawsuit against the Company in the County of Kings, in the Supreme Court of the State
of New York (index number 516298/2016). The filing alleges that the Company has defaulted on several unpaid loans from LG Capital
to the Company with the total owing and due including principal and interest of $297,160. The Company has not counter claimed
but believes that LG Capital unlawfully attempted to convert some of the loans to common stock of the Company has filed an injunction
against the Company transfer agent to block LG Capital from such a conversion. In addition, the Company negotiated in good faith
with LG Capital to settle the debt but to no avail. After reviewing the claim made by LG Capital, is the opinion of management
that the outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the Company.
(See Note 7-Convertible Notes).
On
August 28, 2018, the Trustee for the bankruptcy of EcoCab Portland, LLC (Case No. 17-31000-tmb7) received a judgment against the
Company for $179,496 plus interest at $0.0244% per annum. The judgement was filed in the US Bankruptcy Court for the District
of Oregon. The Trustee claims the Company unilaterally repaid its note and is claim preference by the Company over other creditors
of the same class for the payments. The Company agreed to settle the claim with a one-time payment of $40,000 which is
awaiting a decision by the trustee and confirmation of the bankruptcy court of any settlement.
NOTE
10 – COMMITMENTS AND CONTINGENCIES
On
October 11, 2016, the Company completed an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company
would have been required to acquire all of the outstanding ECGLLC membership interest for a 20% non-dilutive interest of the outstanding
shares of the Company with the first closing of the agreement.
On
March 6, 2017, the Company terminated the agreements with Ron Knori and EcoCab based upon breach of contract, fraud, fraudulent
inducement, fraud in the factum, negligent misrepresentation, misrepresentation, contractual interference, breach of fiduciary
duty, negligence, and conversion, all of which were perpetrated by Ron Knori, individually, and in his capacity as manager of
EcoCab. (See Note 8: Litigation)
NOTE
11 – IMPAIRMENT OF ASSET
The
Company had advanced Eco Cab $197,520 as part of the acquisition agreement dated October 11, 2016. As the closing has not occurred,
due to the failure of EcoCab meeting the agreement requirements, the Company has treated the advances as receivables due the Company.
During
year ended September 30, 2017 the Company received payments of $ 154,196 leaving a balance due the Company as of June 30, 2017
of $43,324. As of September 30, 2017 the Company determined the receivable was uncollectible and impaired the asset. (See Note
9: Litigation)
NOTE
12 – JOINT VENTURE AGREEMENT
On
December 21, 2017 the Company entered into a joint venture agreement to develop, market and sell products, services and technology
based on a web-enabled light guard system. The Company granted the joint venture an irrevocable royalty free non-exclusive license
to use all of the Company’s direct and/or licensed intellectual property necessary for the joint venture to develop and
sell the system. Under the terms of the agreement the Company would hold a 65% common membership interest for an initial capital
contribution of $100. The joint venture partner contributed $25,000 plus software developed to enhance the Company’s product
at a cost of $65,000 to the Joint Venture. The Joint Venture was terminated subsequent to September 30, 2018.
NOTE
13 – SUBSEQUENT EVENTS
On
October 17, 2018, the Company and Peppermint Jim, LLC (“Peppermint Jim”) mutually agreed to terminate and rescind
the stock purchase agreement entered into on August 23, 2018 (the “Agreement”) by and between the Company and Peppermint
Jim. Any shares transferred under the Agreement shall revert back to the respective parties.
Based
on the termination of the Joint Venture agreement referred to in Note 12 the Company reclassified the liability deposit for the
$25,000 in the JV to paid in capital.
On
November 19, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $25,000 with
an interest rate of 8% per annum with a default interest rate of 22%. The note matures on August 30, 2019. The note is convertible
by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days
prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On
December 26, 2018 the Company filed an amendment with the Secretary of State of Nevada increasing the authorized shares
to 6,000,000,000 from 2,000,000,000 shares of common stock with a par value of $0.001. The authorized shares of preferred shares
remained at 10,000,000 with a par value of $0.001
During
the period from October 1, 2018 through January 8, 2019 the Company issued 904,563,434 shares of common stock with a value of
$102,434 for convertible debt and accrued interest.