NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2015 and 2014
Note 1 Overview and Description of the Company
ABCO Energy, Inc. was organized on July 29, 2004 and operated until July 1, 2011 as Energy Conservation Technologies, Inc. (ENYC). On July 1, 2011 ENYC entered into a share exchange agreement (SEA) with ABCO Energy and acquired all of the assets of ABCO. ENYC changed its name to ABCO Energy, Inc. on October 31, 2011. As a result of the SEA, the outstanding shares of ENYC as of June 30, 2011 were restated in a one for twenty three (1 for 23) reverse division prior to the exchange to approximately 9% of the post-exchange outstanding common shares.
The Company now has 500,000,000 common shares authorized and no preferred shares are currently authorized or issued as of the date of this report.
The Company is in the Photo Voltaic (PV) solar systems industry and is an electrical product and services supplier. The Company plans to build out a network of operations in major cities in the USA in order to establish a national base of PV suppliers, lighting suppliers and electrical service operations centers. This combination of services, solar and electric, provides the company with a solid base in the standard electrical services business and a solid base in the growth markets of solar systems industry.
OVERVIEW
As of December 31, 2015, we operated in 3 locations in Arizona. The Company plan is to expand to more locations in North America in the next year as funding becomes available. We believe that the solar and energy efficiency business functions better if the employees are local individuals working and selling in their own community. Our customers have indicated a preference for dealing with local firms and we will continue our focus on company-owned integrated product and services offices. Once a local firm is established, growth tends to come from experience, quality and name recognition. We remain committed to high quality operations.
DESCRIPTION OF PRODUCTS
ABCO sells and installs Solar Photovoltaic electric systems that allow the customer to produce their own power on their residence or business property. These products, installed by our crews, are purchased from both USA and offshore manufacturers. We have available and utilize many suppliers of US manufactured solar products from such companies as Sunpower, UpSolar, Mage, Siliken Solar, Westinghouse Solar, Schuco and various Chinese suppliers. In addition, we purchase from a number of local and regional distributors whose products are readily available and selected for markets and price. ABCO offers solar leasing and long term financing programs from UP solar, Sunpower, Suncap and AEFC that are offered to ABCO customers and other marketing and installation organizations.
ABCO also sells and installs energy efficient lighting products, solar powered street lights and lighting accessories. ABCO contracts directly with manufacturers to purchase its lighting products which are sold to residential and commercial customers.
ABCO has Arizona statewide approval as a registered electrical services and solar products installer. Our license is ROC 258378 electrical and we are fully licensed to offer commercial and residential electrical services and solar.
The ABCO subsidiary, Alternative Energy Finance Corporation, (AEFC) a Wyoming Company provides funding for leases of photovoltaic systems. AEFC financed its owned leases from its own cash and now arranges financing with funds provided by other lessors. AEFC has not completed any new leases since 2011, but intends to do so as cash becomes available.
Note 2 Summary of significant accounting policies
Critical Accounting Policies and Use of Estimates
These financial statements consist of the consolidated financial positions and results of operations of both the parent, ABCO Energy, Inc. and the subsidiary companies. In the opinion of Management, all adjustments necessary for a fair statement of results for the fiscal years presented have been included. These financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) generally accepted in the United States of America.
GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, inventories, adequacy of allowances for doubtful accounts, valuation of long-lived assets, income taxes, equity-based compensation, litigation and warranties. The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events.
The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent for other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from those estimates.
Cash and Cash Equivalents
There are only cash accounts included in our cash equivalents in these statements. For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of three months or less to be cash equivalents. There are no short term cash equivalents reported in these financial statements.
Property and Equipment
Property and equipment are to be stated at cost less accumulated depreciation. Depreciation is recorded on the straight-line basis according to IRS guidelines over the estimated useful lives of the assets, which range from three to ten years. Maintenance and repairs are charged to operations as incurred.
Revenue Recognition
The Company generates revenue from sales of solar products, LED lighting, installation services and leasing fees. During the last fiscal year the company had product sales as follows:
Sales Product and Services Description
|
|
2015
|
|
|
2014
|
|
Solar PV residential and commercial sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solar thermal residential -commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABCO LED & energy efficient lighting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company recognizes product revenue, net of sales discounts, returns and allowances, in accordance Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB No. 104”) and ASC 605. These statements establish that revenue can be recognized when persuasive evidence of an arrangement exists, delivery has occurred and all significant contractual obligations have been satisfied, the fee is fixed or determinable, and collection is considered probable.
Our revenue recognition is recorded on the percentage of completion method for sales and installation revenue and on the accrual basis for fees and interest income. We recognize and record income when the customer has a legal obligation to pay. All of our revenue streams are acknowledged by written contracts for any of the revenue we record. There are no differences between major classes of customers or customized orders. We record discounts, product returns, rebates and other related accounting issues in the normal business manner and experience very small number of adjustments to our written contractual sales. There are no post-delivery obligations because warranties are maintained by our suppliers. Our lease fees are earned by providing services to contractors for financing of solar systems. Normally we will acquire the promissory note (lease) on a leased system that will provide cash flow for up to 20 years. Interest is recorded on the books when earned on amortized leases.
Accounts Receivable and work-in-progress
The Company recognizes revenue upon delivery of product to customers and does not make bill-and-hold sales. Contracts spanning reporting periods are recorded on the percentage of completion method, based on the ratio of total costs to total estimated costs by project, for recognition of revenue and expenses. Accounts receivable includes fully completed and partially completed projects and partially billed statements for completed work and product delivery.
Inventory
The Company records inventory of construction supplies at cost using the first in first out method.
Income Taxes
The company has net operating loss carryforwards as of December 31, 2015 totaling approximately $1,950,745. A deferred tax benefit of approximately $663,000 has been offset by a valuation allowance of the same amount as its realization is not assured.
Due to the current uncertainty of realizing the benefits of the tax NOL carry-forward, a valuation allowance equal to the tax benefits for the deferred taxes has not been established. The full realization of the tax benefit associated with the carry-forward depends predominately upon the Company's ability to generate taxable income during future periods, which is not assured.
The NOL carryforward expires according to the following schedule:
Year Ending
December 31:
|
|
Amount
|
|
2035
|
|
$
|
|
|
2034
|
|
$
|
635,517
|
|
2033
|
|
$
|
622,474
|
|
2032
|
|
$
|
164,119
|
|
2031
|
|
$
|
182,908
|
|
2030
|
|
$
|
|
|
Fair Values of Financial Instruments
ASC 825 requires the Corporation to disclose estimated fair value for its financial instruments. Fair value estimates, methods, and assumptions are set forth as follows for the Corporation’s financial instruments. The carrying amounts of cash, receivables, other current assets, payables, accrued expenses and notes payable are reported at cost but approximate fair value because of the short maturity of those instruments.
Stock-Based Compensation
The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.
Effects of Recently Issued Accounting Pronouncements
The Company has reviewed all recently issued accounting pronouncements noting that they do not affect the financial statements.
Per Share Computations
Basic net earnings per share are computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares and the dilutive potential common shares outstanding during the period.
Reclassification
Certain reclassifications have been made to conform to prior periods’ data to the current presentation. These reclassifications had no effect on reported income.
Note 3 Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. The Company incurred a net loss of $214,823, net cash flow used in operations of $269,448 and accumulated net losses from inception through the period ended December 31, 2015 of $2,016,843. In addition, the Company's development activities since inception have been financially sustained through capital contributions from shareholders.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Note 4 Warranties of the Company
ABCO Energy provides a five and ten year workmanship warranties for installed systems that cover labor and installation matters only. All installed products are warranted by the manufacturer. In the last four years of operations, all claims on workmanship have been handled expeditiously and inexpensively by the company. Management does not consider the warranty as a significant or material risk.
Note 5 Accounts Receivable and Work in Process
Accounts receivable as of December 31, 2015 and 2014, consists of the following:
Description
|
|
2015
|
|
|
2014
|
|
Completed contracts
|
|
$
|
39,100
|
|
|
$
|
164,706
|
|
Contracts in progress
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
39,100
|
|
|
$
|
164,706
|
|
Work in process consists of costs recorded and revenue earned on projects recognized on the percentage of completion method for work performed on contracts in progress at December 31, 2015 and 2014. The company records contracts for future payments based on contractual agreements entered into at the inception of construction contracts. Amounts are payable from customers based on milestones established in each contract. Amounts are billed in advance and unearned profits are netted against the billed amounts such that accounts receivable reflect current amounts due from customers on completed projects and amounts earned on projects in process are reflected in the balance sheet as costs and estimated earnings in excess of billings on contracts in progress. Work in progress as of December 31, 2015 and 2014 consists of the following:
Description
|
|
2015
|
|
|
2014
|
|
Costs incurred on uncompleted contracts
|
|
$
|
1,519,570
|
|
|
$
|
-
|
|
Estimated earnings
|
|
|
290,037
|
|
|
|
-
|
|
|
|
|
1,809,607
|
|
|
|
-
|
|
Less billings to date
|
|
|
1,557,268
|
|
|
|
-
|
|
Total
|
|
$
|
252,339
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Reflected in the balance sheet as:
|
|
|
|
|
|
|
|
|
Costs and estimated earnings in excess of billings on contracts in process
|
|
$
|
252,339
|
|
|
$
|
-
|
|
Billings in excess of costs and estimated earnings on contracts in process
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
252,339
|
|
|
$
|
-
|
|
Note 6 I
nventory
Inventory of construction supplies not yet charged to specific projects was $51,255 and $49,245 as of December 31, 2015 and 2014, respectively.
Note 7 Security deposits and Long Term Commitments
The Company has paid security deposits on the three rented spaces it occupies for offices and warehouse which total $4,945 on December 31, 2015 and $7,235 on December 31, 2014.
ABCO leases a 1,200 square foot office and warehouse in an industrial park in Phoenix Arizona for a monthly rental of $1,254 which expires on February 28, 2016. The aggregate total rent due on this lease through expiration is $2,508.
There is no lease on the Williams, Arizona property because this office is located in the office of a Director and no lease has been established.
On May 1, 2014 the Company rented office and warehouse space at 2100 N. Wilmot #211, Tucson, Arizona 85712. This facility consists of 2,400 square feet and the two year lease with monthly rent of $1,894 and it is expiring on April 30, 2016. ABCO has a forward commitment of $7,576.
Note 8 Alternative Energy Finance Corporation (AEFC)
AEFC is a wholly owned subsidiary of ABCO Energy. AEFC provides funding for leases of photovoltaic systems. AEFC finances its leases from cash payments from its own cash or from single payments or long term leases from lessees. Long term leases recorded on the consolidated financial statements were $12,689 and $13,293 at December 31, 2015 and December 31, 2014 respectively.
During October, 2014 one of the AEFC leases defaulted and AEFC repossessed the solar system with a balance due totaling $7,577 in unpaid lease principal. AEFC sold the full system after removal and installation for $12,000 during the last quarter of 2014.
Note 9 Property and equipment
The Company has acquired all of its office and field work equipment with cash payments and financial institution loans. During the year ended December 31, 2015 the company acquired lease hold improvements, office equipment, boom truck, trailer and auto for the sum of $859 and 27,679 in 2014. The total fixed assets consist of vehicles, office furniture, tools and various equipment items and the totals are as follows:
Asset
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expenses for the years ended December 31, 2015 and 2014 was $16,148 and $13,538 respectively.
Note 10 Notes Payable Office
rs and Related Party Transactions
Officer loans are demand notes totaling $69,944 and $60,000, respectively, as of December 31, 2015 and December 31, 2014. These notes provide for interest at 12% per annum and are unsecured. Notes payable to the Directors resulted in interest charges of $7,979 and $7,222 for the periods ended December 31, 2015 and December 31, 2014, respectively.
Note 11 Long Term Debt
During the year ended December 31, 2014 the company financed a truck acquisition with loans from Ascentium Capital, a Texas based financial entity. The following table describes the purpose and terms of the loans.
Lender
|
|
Date of
Loan
|
|
|
Original
Loan
|
|
|
Purpose
|
|
|
Interest
Rate
|
|
|
Term
|
|
|
Current
Portion
|
|
|
Long Term
Portion
|
|
|
|
|
|
|
$
|
14,975
|
|
|
|
|
|
|
9
|
%
|
|
|
|
|
$
|
4,048
|
|
|
$
|
5,292
|
|
This debt is collateralized by the truck title of the acquired vehicle. The loan is personally guaranteed by the officers of the Company.
During the year ended December 31, 2015 and 2014, ABCO borrowed working capital loans from lenders as described in the following table:
Lender
|
|
Date of
Loan
|
|
|
Original
Loan
|
|
|
Purpose
|
|
|
Interest Rate
|
|
|
Term
|
|
|
Current
Portion
|
|
|
Long Term
Portion
|
|
|
|
11-25-15
|
|
|
$
|
50,000
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
$
|
45,240
|
|
|
$
|
0
|
|
|
|
08-27-14
|
|
|
$
|
50,000
|
|
|
|
|
|
|
24
|
%
|
|
|
|
|
|
6,705
|
|
|
$
|
0
|
|
Private lender
|
|
Var 2015
|
|
|
$
|
59,833
|
|
|
Credit Line
|
|
|
|
12
|
%
|
|
Demand
|
|
|
|
59,833
|
|
|
$
|
0
|
|
Total due at 12-31-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
111,778
|
|
|
|
|
|
Note 12 Stockholder’s Equity and Deficit
In March 1, 2013 the Company began a third European private placement offering of restricted common stock to non USA citizens only. The offering consisted of up to 10,000,000 shares of common stock offered at the price of $0.33 USD per share. As of December 31, 2014, the Company had sold 9,043,773 shares.
During the fiscal year ended December 31, 2014 the Company sold 4,770,534 shares in this Regulation S offering to non-US investors. The total proceeds from the offering was $1,124,834, interest and other expenses totaled $52,568. Commission and expense reimbursements totaled $695,185. The Company recorded net proceeds totaling $377,081. There were no shares issued to pay interest in 2014, however cash payments on interest totaled $25,081.
During the fiscal year ended December 31, 2015 the Company sold 4,685,385 shares under this Regulation S offering to non-US investors. The total proceeds from the offering was $890,969, commission and expense reimbursements totaled $585,690. The Company recorded net proceeds totaling $305,279.
Stock subscriptions executed under this offering include a provision whereby ABCO agrees to pay a dividend (defined as interest) of from 6% to 12% of the total amount invested for a period of one year from receipt of the invested funds. This dividend (defined as interest) is allocated between the broker and the investor with amounts paid to the broker treated as a cost of the offering and netted against additional paid in capital and amounts paid to the investor treated as interest expense. Total amounts paid under this agreement and charged to additional paid-in capital for the years ended December 31, 2015 and 2014, amounted to $56,454 and $12,350, respectively. Total amounts paid under this agreement and charged to interest expense for the years ended December 31, 2015 and 2014, amounted to $13,242 and $2,987, respectively.
ABCO has evaluated these agreements under AS 480-10: Certain Financial Instruments with Characteristics of Both Liabilities and Equity and determined that the capital contributions made under these subscription agreement more closely resemble equity than liabilities as they can only be settled through the issuance of shares and although they have a stated cost associated with them which accrues in the same manner as interest, the cost is only incurred in the first twelve months after placement as is more closely associated with a cost of raising funds than interest expense.
Accrued but unpaid dividends (defined as interest) at December 31, 2015 and 2014 amounted to $45,151 and $42,722, respectively. This offering began on March 1, 2013 and consisted of up to 10,000,000 shares of common stock offered at the price of $0.33 USD per share. As of December 31, 2015, the Company had sold 9,456,219 shares.
On September 15, 2015 the Company entered into a consulting contract with
Adamas Fund, LLC (AFL)
, a
Chicago based investment banking group providing for the issuance of a Regulation 144A bond offering that will be sold to QIBs (qualified institutional buyers) with a minimum raise of $5,000,000 USD on a best efforts basis. The bond will be sold by several broker dealers globally and will be used in the implementation of ABCO’s future growth plans and for future acquisitions. The ABCO bond will carry no interest for years 1-3 and a low annual coupon rate of 6.5% for years 4-10 with a 10 year maturity date. The bond may be convertible into common stock under certain circumstances. Rule 144A Securities Act of 1933 provides an exemption from the registration requirements of the Securities Act of 1933 for certain private transactions of minimum $100,000 units of restricted securities to qualified investors which generally are large institutional investors that own at least $100 million in investable assets. AFL will receive an aggregate advisory fee of $150,000 in connection with the issuance of the bonds. The first $75,000 was paid by the issuance of 375,000 shares of registered common stock on or about November 19, 2015. The remaining $75,000 will be paid upon delivery to the Company of the definitive form of the bonds in form and substance satisfactory to the Company. The Company, at its option, can pay in cash or in registered shares of common stock.
During November, 2015 the Company issued an aggregate of 775,000 shares to financial consulting entities for services relating to fund raising activities and to law firms for legal fees and expenses incurred for public share registrations and other business related activities. The total issuance was valued at $85,250 for fair market value as negotiated and that amount is charged to additional paid in capital.
On November 30, 2015, the Company entered into a Consultant Agreement [“CA”] with TEN Associates LLC (“Consultant”) which provides for Consultant to perform general corporate and business consulting services and other related activities as directed by the Company. In consideration for rendering such services, Consultant was to be paid a consulting fee consisting of any aggregate of 4,000,000 registered shares. The first 1,000,000 of such shares were issued to the Consultant on or about December 7, 2015. The Consultant immediately sold the shares to market contrary to the agreement between the parties. On January 15, 2016 this contract was cancelled for cause and demand was issued for the return of the shares. The remaining 3,000,000 of the shares were never issued and no shares have been recovered as of the date of this report.
During December, 2015 the Company sold 100,000 shares of its S1 offering to a foreign individual and the Company received $20,000 gross proceeds.
In March 18, 2014 a Company founder cancelled the original issue 6,000,000 shares to satisfy a requirement for FINRA approval of the Company name change and roll back of ENYC shares.
In September, 2014 the Company issued an aggregate of 1,100,000 shares to financial consulting entities for services relating to fund raising activities and to law firms for legal fees and expenses incurred for public share registrations and other business related activities. These shares were issued after the SEC order dated September 11, 2013 declaring effective the offering statement registered pursuant to Regulation A under section 3(b) of the Securities act of 1933, as amended. The shares were issued to legal consultants for assistance with the Form 10 and the 15c211 filing and for consultants who have assisted in the funding of the Company, as aforesaid. The total issuance was valued at $220,000 for fair market value as negotiated and that amount is charged to additional paid in capital.
Additional shares sold plus the cancellation resulted in the total number of common shares outstanding to be 30,621,065 and 23,695,680 as of December 31, 2015 and December 31, 2014 respectively.
Note 13 Subsequent Events
From January 1, 2016, through March 26, 2016, the Company sold an aggregate of 1,303,299 shares of restricted stock with prices ranging from $.010 to $.015 with gross proceeds of $190,201 and received an approximate of $ $66,682 of net proceeds from such sales. Commissions and expense reimbursements were paid to foreign agents for Regulation S offerings by the Company in the amount of $123,349. There were no cash payments for shareholder interest in 2016.
On January 15, 2016, the Company’s Board of Directors (the “Board”), after careful consideration, approved our 2016 Stock Option and Incentive Stock Plan (the “Plan”), pursuant to which the Company will reserve for issuance thereunder 10,000,000 shares of the Company’s authorized Common Stock.
The Plan enables the Board to provide equity-based incentives through grants of Awards to the Company’s present and future employees, directors, consultants and other third party service providers. Shares issued under the Plan through the settlement, assumption or substitution of outstanding Awards or obligations to grant future Awards as a condition of acquiring another entity will not reduce the maximum number of shares of Common Stock reserved for issuance under the Plan. In addition, the number of shares of Common Stock subject to the Plan, any number of shares subject to any numerical limit in the Equity Incentive Plan, and the number of shares and terms of any incentive award may be adjusted in the event of any change in our outstanding Common Stock by reason of any stock dividend, spin-off, split-up, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares or similar transaction.
On January 20, 2016 the Company borrowed $150,000 from WebBank for the purpose of working capital. The loan required that the Company payoff the loan made on November 25, 2015 from Orchard Street Financing. The balance of the Orchard Street loan at date of payoff was $44,523 and the Company received the balance of the proceeds in the amount of 105,479. The daily payments on the WebBank loan will be $645.10. The loan has a twelve month maturity and the total interest charges will be $31,000, or approximately 21%.
On March 11, 2016, the Company entered into a Professional Relations and Consulting Agreement [“CA”] with Acorn Management Partners LLC (“Consultant”) which provides for Consultant to perform general corporate and business consulting services and other related activities as directed by the Company, including, but not limited to, the distribution of Company information/news releases on a daily basis, using social media to create a full awareness of the Company and its business, and the preparation of research reports for industry analysts. The CA has a seven month term expiring on September 11, 2016. The term may be extended by a new written mutual agreement on terms to be agreed upon.
In consideration for rendering such services, Consultant will be paid a consulting fee consisting of monthly cash payments totaling $441,250 beginning with a first payment of $40,000 due March 31, 2016, $83,000 due April 29, 2016 and $78,000 due on each of May 30
th
, June 30
th
, July 29
th
and August 30, of 2016. In addition, Consultant will receive as of (i) March 11, 2016, 500,000 freely tradeable shares of the Company common stock, without any transfer restrictions whatsoever thereon; and (ii) 750,000 restricted shares of common stock on May 30, 2016 and on August 30, 2016. All shares issuable under the CA are deemed to have been fully earned by Consultant as of the date of the CA, March 11, 2016.
The Consultant was also granted limited registration rights under certain circumstances. The CA is renewable for additional one year terms upon the written notice from one party to the other. The terms of any such renewed CA shall be agreed to in writing between the parties.
Concurrently with the execution of the CA, the Company entered into an Agreement dated March 11, 2016 with Equisolve, Inc. for the design and development of a new Company Website and for the monthly maintenance thereof. The term is for one year with automatic renewal for one year period unless cancelled 60-days in advance of the end of the then current year. The fee to design the Website is $12,500, of which $6,250 was paid on signing the CA.
On March 23, 2016, the Company issued a two year $250,000 convertible promissory note to JMJ Financial, a Nevada sole proprietorship which bears interest at the rate of 12% per annum on the principal sum of the outstanding (“JMJ Note”). The JMJ Note is payable in installments of a minimum of $25,000 per drawdown. The Company drew down $25,000 on March 23, 2016. Under the terms of the JMJ Note; the current balance is now $31,111, which includes an original issue interest of $2,777.00, plus interest at the rate of 12% per annum. The JMJ Note is convertible at any time into shares of common stock at a conversion price equal to 60% of the lowest trade price in the 25 trading days previous to the conversion date.
On March 25, 2016, the Company received net proceeds of $35,000 after expenses, for a one (1) year $40,000 face amount of 8% Convertible Note in favor of EMA Financial, LLC (“EMA Note”). The EMA Note is convertible at any time into common stock at a conversion price equal to the lower of (i) the closing sale price on the day immediately preceding the date of funding and (ii) 50% of the lowest closing sale price for the 25 consecutive trading days immediately preceding the conversion date.
OUTSTANDING OPTION AWARDS
The following table sets forth certain information regarding Option Awards as of March 31, 2016 for each executive officer of the Company who received such awards and all officers and directors as a group. None were outstanding as of the fiscal year ended December 31, 2015(1)(2)
Name
|
|
Number of securities underlying unexercised option exercisable
|
|
|
Option Exercise Price
|
|
|
Option Expiration Date
|
|
Charles O’Dowd
|
|
|
5,000,000
|
|
|
$
|
0.01
|
|
|
|
|
All Officers and Directors as a Group
|
|
|
5,000,000
|
|
|
$
|
0.01
|
|
|
January 1, 2021
|
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(1)
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No Stock Awards have been issued into the Equity Incentive Plan.
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(2)
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An aggregate of 200,000 Option Awards have been issued to 3 employees and one consultant of the Company at an exercise price of $0.01 per share expiring on 1/21/21.
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