The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
Golden Eagle International, Inc. ("Golden Eagle") was incorporated in Colorado on July 21, 1988. From late 2008 through June 2009, Golden Eagle was engaged in contract gold milling operations in the state of Nevada in the United States. Golden Eagle has not had any business operations since it disposed of its wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia) in the first quarter of fiscal 2010. Prior to that time, Golden Eagle had been involved in the business of minerals exploration and (prior to 2005) mining and milling operations in Bolivia through that subsidiary. More recently, Golden Eagle has been a non-operating corporation seeking to sell its remaining milling plant and equipment and/or merge with an operating company.
Advantego Technologies, Inc. ("Advantego") was incorporated in California on July 29, 2016.
Advantego develops software products and related services which are designed to enable an organization to rapidly and cost-effectively create a comprehensive promotional and marketing campaign using social media marketing, customer relationship management, and lead generation.
On October 27, 2016, Golden Eagle acquired 100% of the issued and outstanding common stock of Advantego in exchange for 127,915,000 shares of Golden Eagle common stock, thus making Advantego Golden Eagle's wholly-owned subsidiary.
The stock exchange was deemed a reverse merger, as the management and operations of Advantego will continue, and Advantego's management received in the aggregate a majority ownership in Golden Eagle as a result of the stock exchange. As such, the accompanying post-reverse merger consolidated financial statements represent the operations of Advantego (the surviving operating entity and accounting acquirer) consolidated with the operations of Golden Eagle (the SEC registrant and legal acquirer) as of December 31, 2016 and for the three and nine months ended September 30, 2017. The comparative financial statements pre-reverse merger for the period of July 29, 2016 (Advantego's inception) through September 30, 2016 reflect only the operations of Advantego. The equity section of the consolidated financial statements presents the historical activity of Golden Eagle, with a recapitalization to reconcile the beginning $0 balances upon Advantego's inception. Concurrently with the reverse merger, the newly-consolidated company effected a quasi-reorganization thereby eliminating Golden Eagle's accumulated losses through the merger date against additional paid-in capital. Upon regulatory approval, Golden Eagle (the SEC registrant) will change its name to Advantego Corporation to reflect the continuation of Advantego as the operating entity.
The accompanying financial statements represent the consolidated operations of Golden Eagle and Advantego, collectively "the Company," "we," "us," as the consolidated entity, with all intercompany transactions eliminated.
The financial statements as of December 31, 2016, for the three and nine months ended September 30, 2017, and for the period of July 29, 2016 (Advantego's inception) through September 30, 2016, have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
The Company has not yet achieved profitable operations, has accumulated losses of $616,194, since Advantego's inception through September 30, 2017, and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company's ability to continue as a going concern.
Following the reverse merger with Advantego Technologies we have entered into a new line of business and we can offer no assurances that we will be able to obtain adequate financing to implement our business plan and remain a going concern.
Note B – Summary of Significant Accounting Policies
Revenue Recognition
In May 2017, the Company launched the online directory and digital signage components of its ongoing licensing services it provides to third parties. The Company recognizes revenue when (1) persuasive evidence of an arrangement exists; (2) the services have been provided; (3) the price for the services is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) is based on the Company's judgment regarding fixed nature of the price for the services and the collectability of amounts charged to the Company's customers.
During the period of May through September 2017, the Company entered into various licensing arrangements to be recognized as revenue over the life of the licensing agreements ranging from one to twelve months. The Company recognized $5,990 and $9,420 in revenues during the three and nine months ended September 30, 2017, respectively, and at September 30, 2017, $7,773 was deferred to future periods. At September 30, 2017, the Company was owed $6,365 for these services and had determined no allowance for doubtful accounts was necessary.
Fair Value of Financial Instruments
The Company accounts for fair value measurements in accordance with accounting standard ASC 820-10-50, "Fair Value Measurements." This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.
The Company's financial instruments consist of cash, accounts payable, and notes payable. The carrying amount of cash and accounts payable approximates fair value because of the short-term nature of these items. The carrying amount of notes payable approximates fair value as the individual borrowings bear interest at market interest rates and are also short-term in nature.
Use of Estimates
Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements.
Concentration of Credit Risk
From time to time our cash balances, held at a major financial institution, exceed the federally insured limits of $250,000. Our management believes that the financial institution is financially sound and the risk of loss is low.
Cash and Cash Equivalents
For the statement of cash flows, any liquid investments with a maturity of three months or less at the time of acquisition are considered to be cash equivalents.
Income (Loss) Per Share
The computation of basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each year.
The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents as detailed in the following chart. For the three and nine months ended September 30, 2017, the inclusion of these shares on the consolidated statement of operations would have resulted in a weighted average shares fully diluted number that was anti-dilutive, and as such they are excluded. No common stock equivalents were present during the period of July 29, 2016 (Advantego's inception) through September 30, 2016.
Fully diluted shares for the three and the nine months ended September 30, 2017 are as follows:
|
|
|
Three Months
|
|
|
Nine Months
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
September 30, 2017
|
|
|
September 30, 2017
|
|
|
Basic weighted average shares outstanding
|
|
|
159,883,328
|
|
|
|
159,883,328
|
|
|
Warrants
|
|
|
6,000,000
|
|
|
|
6,000,000
|
|
|
Convertible debt
|
|
|
5,124,480
|
|
|
|
4,757,081
|
|
|
Series B preferred stock
|
|
|
120,000
|
|
|
|
120,000
|
|
|
Total
|
|
|
171,127,808
|
|
|
|
170,760,409
|
|
Income Taxes
Income taxes are accounted for under the liability method. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statements and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled.
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment.
Effect of New Accounting Pronouncements
There are no recent accounting pronouncements that are expected to have a material impact on our financial position, results of operations or cash flows.
Note C – Convertible Notes Payable
Convertible Notes Payable - Related Parties
We have related party debt obligations outstanding at September 30, 2017 and December 31, 2016 as follows:
|
|
|
As of September 30, 2017
|
|
|
As of December 31, 2016
|
|
|
Note Description
|
|
Principal
|
|
|
Accrued Interest
|
|
|
Principal
|
|
|
Accrued Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast Capital, LLC (a)
|
|
$
|
30,112
|
|
|
$
|
20,337
|
|
|
$
|
30,112
|
|
|
$
|
19,211
|
|
|
Avcon Services, Inc. (b)
|
|
|
30,500
|
|
|
|
3,055
|
|
|
|
30,500
|
|
|
|
1,914
|
|
|
Frank Grey (c)
|
|
|
12,500
|
|
|
|
176
|
|
|
|
-
|
|
|
|
-
|
|
|
Totals
|
|
$
|
73,112
|
|
|
$
|
23,568
|
|
|
$
|
60,612
|
|
|
$
|
21,125
|
|
|
Less debt discount
|
|
|
(4,893
|
)
|
|
|
|
|
|
|
(6,022
|
)
|
|
|
|
|
|
Net Convertible Notes Payable - Related Parties
|
|
$
|
68,219
|
|
|
|
|
|
|
$
|
54,590
|
|
|
|
|
|
|
(a)
|
Gulf Coast Capital, LLC is a company owned by Mark Bogani, our former CEO. The note is dated September 30, 2016 and represents the consolidation of various smaller notes payable previously outstanding totaling $145,112 plus $15,471 in accrued interest. Interest continues to accrue at the rate of 5%, with principal and interest being due on demand and convertible into our common stock at the option of the lender at a fixed rate of $.025 per share. Upon the note's inception, there was a beneficial conversion feature totaling $29,022 that is being amortized ratably over the five-year conversion period (with acceleration if converted) and netted against the principal balance as a debt discount. On December 30, 2016, Gulf Coast Capital converted $115,000 of the note into 4,600,000 shares of the Company's Common Stock, resulting in an unpaid principal balance of $30,112 at September 30, 2017 and December 31, 2016. Debt discount amortization totaled $376 and $1,129 for the three and nine months ended September 30, 2017, respectively, resulting in an unamortized debt discount of $4,893 and $6,022 at September 30, 2017 and December 31, 2016, respectively. Interest expense totaled $379 and $1,126 for the three and nine months ended September 30, 2017, respectively, resulting in accrued interest of $20,337 and $19,211 at September 30, 2017 and December 31, 2016, respectively. The net balance of the note was $25,219 and $24,090 on September 30, 2017 and December 31, 2016, respectively.
|
|
|
|
|
(b)
|
Avcon Services, Inc. is a company owned by Tracy Madsen, our former CFO. The note represents amounts due for CFO services during the period of June 2014 through September 2015, is dated December 31, 2015, carries an interest rate of 5%, and is due on demand. The note and accrued interest, or any portion thereof, are convertible at the option of Avcon, into the Company's common stock at a fixed rate of $.025 per share at any time through December 31, 2020. Interest expense for the three and nine months ended September 30, 2017 was $385 and $1,141, respectively, resulting in $3,055 and $1,914 in accrued interest as of September 30, 2017 and December 31, 2016, respectively.
|
|
|
|
|
(c)
|
On June 29, 2017, the Company entered into an uncollateralized note payable with its CFO, Frank Grey, in the amount of $12,500. The note carries an interest rate of 6%, and matures on June 29, 2018. The note and accrued interest, or any portion thereof, is convertible at the option of the lender, into the Company's common stock at a fixed rate of $.025 per share. Accrued interest and interest expense as of and for the three months ended September 30, 2017 was $176.
|
Convertible Notes Payable
On September 22, 2016, the Company entered into an uncollateralized note payable with an unaffiliated investor in the amount of $50,000. The note carries an interest rate of 6% and matures on September 22, 2017. The note and accrued interest, or any portion thereof, are convertible at the option of the lender, into the Company's common stock at a fixed rate of $.025 per share. Upon the note's inception, there was a beneficial conversion feature totaling $10,000 that is being amortized ratably over one-year note maturity period (with acceleration if converted) netted against the principal balance as a debt discount. Debt discount amortization totaled $2,281 and $7,281 for the three and nine months ended September 30, 2017, respectively, resulting in an unamortized debt discount balance of $0 and $7,281 at September 30, 2017 and December 31, 2016, respectively. The net balance of the note was $50,000 and $42,719 on September 30, 2017 and December 31, 2016, respectively.
On January 12, 2017 and March 27, 2017, the Company entered into two uncollateralized notes payable with this unaffiliated investor, each in the amount of $25,000 for $50,000 total. The notes carry an interest rate of 6%, and mature on January 12, 2018 and March 27, 2017, respectively. The notes and accrued interest, or any portion thereof, are convertible at the option of the lender, into the Company's common stock at a fixed rate of $.025 per share. Total interest expense on these combined notes for the three and nine months ended September 30, 2017 was $1,513 and $4,414, respectively, resulting in $5,236 accrued interest outstanding as of September 30, 2017.
Note D – Stockholders' Equity
Common Stock
We are authorized to issue 2,000,000,000 shares of our $.0001 par value common stock, of which 159,883,328 were issued and outstanding at September 30, 2017.
During August and September 2016, we sold 4,000,000 shares of our common stock, with warrants to purchase an additional 6,000,000 shares of our common stock, to a group of private investors for $100,000. The warrants are exercisable at prices between $0.05 and $0.20 per share at any time between September 30, 2017 and September 30, 2019. Each series of warrants was valued using the Black-Scholes Options Pricing Model resulting in total warrant value of $85,833. The remaining proceeds of $14,167 were allocated to the common stock. Black-Scholes data inputs used to value the warrants are as follows:
|
Warrants
|
Stock
Price
|
Exercise
Price
|
Expected
Life (Yrs)
|
Risk-Free
Rate
|
Warrant
Value
|
Number of Warrants
|
Extended
Value
|
|
Series A
|
$.025
|
$.05
|
.75
|
.54%
|
$.010625
|
2,000,000
|
$21,249
|
|
Series B
|
$.025
|
$.10
|
1.75
|
.69%
|
$.014909
|
2,000,000
|
$29,817
|
|
Series C
|
$.025
|
$.20
|
2.75
|
.85%
|
$.017384
|
2,000,000
|
$34,767
|
|
Total
|
|
|
|
|
|
|
$85,833
|
Preferred stock
Our Articles of Incorporation provide that we may issue up to 10,000,000 shares of various series of preferred stock. Subject to the requirements of the Colorado Business Corporation Act, the Board of Directors may issue the preferred stock in series with rights and preferences as the Board of Directors may determine appropriate, without shareholder approval. As of December 31, 2016, 4,500,000 shares of our Series B Preferred Stock had been authorized for issuance, and 240,000 were issued and outstanding. These 240,000 Series B shares are convertible into 120,000 common shares.
Note E – Related Party Transactions
We incur various consulting, management, and software licensing expenses with our officers, directors, and companies owned by our officers and directors. During the three and nine months ended September 30, 2017, we incurred expenses with these parties totaling $108,506 and $366,012, respectively, and during the period of July 29, 2016 (Advantego's inception) through December 31, 2016, we incurred $8,965. We owed these parties $396,524 and $71,006 at September 30, 2017 and December 31, 2016, respectively.
An entity controlled by Mark Bogani, a former officer and Director, acts as our transfer agent. We incurred $1,532 and $5,412 in fees as during the three and nine months ended September 30, 2017, respectively. We owed the transfer agent $2,082 and $1,240 at September 30, 2017 and December 31, 2016, respectively.
We have various notes payable outstanding with related parties as detailed in Note C.
Note F – Subsequent Events
The Company has evaluated its subsequent events through the date of this report issuance and determined there are no events to disclose.