The accompanying notes are an integral
part of these unaudited condensed consolidated interim financial statements
The accompanying
notes are an integral part of these unaudited condensed consolidated interim financial statements
The accompanying
notes are an integral part of these unaudited condensed consolidated interim financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 1 – NATURE OF BUSINESS
The accompanying unaudited condensed consolidated
interim financial statements of InCapta, Inc. a Nevada corporation (“Company”), have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects
all adjustments (consisting of normal recurring accruals and adjustments) that are, in the opinion of management, necessary to
fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present
in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United
States of America (“US GAAP”) were omitted pursuant to such rules and regulations. These consolidated financial statements
should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s
Annual Report on Form 10-K filed with the SEC. The results for the three months ended March 31, 2017, are not necessarily indicative
of the results to be expected for the year ending December 31, 2017.
The Company has redirected its efforts
toward the cloud television market and has launched two cloud television networks, World Drone Recreation Aviators (wdra.tv and
wdra.club) and Leading Edge Radio Network (leadingedgeradio.tv). Each network develops its own channel(s) content and works with
the Company to ensure that their viewers receive it. The Company continues development of its online movie channel which will feature
video on demand and a 24 hour a day streaming internet TV station providing limited free content and a subscriber based business
model along with potential revenue generating video on demand programming. The online news and video news bureau in association
with Leading Edge Radio Network is advancing on schedule and completion is expected by year-end. Leading Edge Radio TV continues
developing a venue for new and experienced radio and TV broadcasters to host their own programs via Internet TV and radio through
Mancuso Martin Productions. Leading Edge Radio Network and Mancuso Martin Productions continue strategic partnership opportunities
involving radio, Internet TV and movies with the Company. The Company has also entered into discussions with Mancuso Martin Productions
for screenplay properties through its production division that include seven screenplays featuring suspense thrillers, horror,
comedy, romance and sports themed movies. The Company has entered into preliminary discussions for the creation of a professional
line of golf balls and golf equipment in order to facilitate long term objectives of the design of a professional line of golf
balls, gloves, golf shoes and apparel which will be sold direct to consumer through a proprietary marketing program, eliminating
the need for brick and mortar retailing and keeping the Company overhead low.
All common stock share numbers reflect
a 3,000 to 1 reverse split of the common stock effective on April 27, 2015, and a 19,000 to 1 reverse split of the common stock
effective on August 8, 2016.
On September 3, 2015, the Company completed
an acquisition agreement (“Acquisition Agreement”) under which the Company acquired all of the equity interests of
Stimulating Software, LLC, a Florida limited liability company, the acquisition of all the common stock of Inner Four, Inc., a
Florida corporation, and all of the common and preferred stock of Play Celebrity Games, Inc., a Delaware corporation.
Effective on October 21, 2015, the Company
filed a Certificate of Amendment with the Nevada Secretary of State to change its name from “TBC Global News Network, Inc.”
to “InCapta, Inc.”
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES
The summary of significant accounting policies
of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes
are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial
statements.
Use of Estimates.
The preparation of financial statements
in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial
reporting process, actual results could differ significantly from those estimates.
Revenue Recognition.
The Company recognizes revenue using four
sources: Media consulting, to online television clients, monthly fees for online cloud television networks, website store revenue
sharing and revenue sharing of membership fees with clients.
Cash and Cash Equivalents.
The Company maintains cash balances in
non-interest-bearing accounts that currently do not exceed federally insured limits. For the purpose of the statements of cash
flows, all highly liquid investments with an original maturity of year or less are considered to be cash equivalents. As of March
31, 2017 and December 31, 2016, there were no cash equivalents except cash of $29,690 and $1,497, respectively.
Prepaid Expenses.
Prepaid expenses consist of payment for
consulting fees in advance.
Stock Subscription Receivable.
During the year ended December 31,
2016, the holder of 6,500,000 stock options exercised those options and the Company recorded a receivable in the amount of
$975,000. The remaining balance of $848,760 is recorded as a stock subscription receivable and is presented in the
accompanying financial statements as a contra-equity account. During the three months ended March 31, 2017, the Company
determined that the remaining balance of $848,670 was not collectible and wrote off the entire balance to additional paid in
capital as this is deemed to be a capital transaction.
Income Taxes.
The Company accounts for income taxes in
accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” ASC Topic 740 requires
a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for
deductible temporary differences, 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 bases. 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 laws and
rates on the date of enactment.
Under ASC Topic 740, a tax position is
recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax
benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.
Impairment of Long-Lived Assets.
In accordance with ASC Topic 360, “Accounting
for the Impairment or Disposal of Long-Lived Assets,” long-lived assets such as property and equipment and intangible assets
subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset group may not be recoverable. Recoverability of assets groups to be held and used is measured by a comparison of the
carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the
carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by
which the carrying amount of an asset group exceeds fair value of the asset group. No impairment charge was taken during the three
months ended March 31, 2017 or 2016.
Net Loss Per Share.
Basic net loss per share is computed by
dividing net loss by the weighted-average number of outstanding shares of common stock during the period. Diluted net loss per
share is computed by dividing the weighted-average number of outstanding shares of common stock, including any potential common
shares outstanding during the period, when the potential shares are dilutive. Potential common shares consist primarily of incremental
shares issuable upon the assumed exercise of stock options and warrants to purchase common stock using the treasury stock method.
The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded
if their effect is anti-dilutive. During the three months ended March 31, 2017 and 2016, there were $421,594 and $151,367, respectively,
of convertible debentures that were convertible into 9,842,118 and 862 shares of common shares that excluded since to their effect
is anti-dilutive as a result of the net losses incurred during the periods.
Stock-Based Compensation.
Options granted to consultants, independent
representatives and other non-employees are accounted for using the fair value method as prescribed by ASC Topic 718, “Share-Based
Payment.”
Derivative Financial Instruments.
The Company evaluates all of its agreements
to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial
instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then
re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based
derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option-pricing model to value the derivative
instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument
liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative
instrument could be required within 12 months of the balance sheet date. As of March 31, 2017 and December 31, 2016, the Company’s
only derivative financial instrument were embedded conversion feature associated with convertible debentures due to certain provisions
that allow for a change in the conversion price and a warrant that to contains certain provisions that allow for a change in the
exercise price if securities are issued at a price per share below the exercise price.
Fair Value Measurements.
ASC Topic 820, “Fair Value Measurements
and Disclosure,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable
inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three
levels of the fair value hierarchy are described below:
●
|
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
|
●
|
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
●
|
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
|
Fair value estimates discussed herein are
based upon certain market assumptions and pertinent information available to management as of March 31, 2017 and December 31, 2016.
The Company uses Level 2 inputs for its
valuation methodology for its derivative liability as its fair value was determined by using the Black-Scholes-Merton pricing model
based on various assumptions. The Company’s derivative liability is adjusted to reflect fair value at each period end, with
any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives.
At March 31, 2017 and December 31, 2016,
the Company identified the following liability that is required to be presented on the balance sheet at fair value:
|
|
Fair Value
|
|
|
Fair Value Measurements at
|
|
|
|
As of
|
|
|
March 31, 2017
|
|
Description
|
|
March 31, 2017
|
|
|
Using Fair
Value Hierarchy
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative liability - conversion feature
|
|
$
|
768,987
|
|
|
|
--
|
|
|
|
768,987
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
768,987
|
|
|
|
--
|
|
|
|
768,987
|
|
|
|
--
|
|
|
|
Fair Value
|
|
|
Fair Value Measurements at
|
|
|
|
As of
|
|
|
December 31, 2016
|
|
Description
|
|
December 31, 2016
|
|
|
Using Fair
Value Hierarchy
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative liability - conversion feature
|
|
$
|
1,559,428
|
|
|
|
--
|
|
|
|
1,559,428
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,559,428
|
|
|
|
--
|
|
|
|
1,559,428
|
|
|
|
--
|
|
Recent Pronouncements.
In January 2017, the Financial Accounting
Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) No. 2017-01, “Business Combinations
(Topic 805) Clarifying the Definition of a Business.” The amendments in this update clarify the definition of a business
with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions
or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals,
goodwill, and consolidation. The guidance is effective for interim and annual periods beginning after December 15, 2017 and
should be applied prospectively on or after the effective date. The Company is in the process of evaluating the impact of this
accounting standard update.
In November 2016, the FASB issued ASU No.
2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”, which requires restricted cash to be presented with
cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance
sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU No. 2016-18 is effective
for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is in the process
of evaluating the impact of this accounting standard update on its financial statements.
In October 2016, the FASB issued ASU No.
2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory,” which requires the
recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs.
ASU No. 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted.
The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In August 2016, the FASB issued ASU No.
2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments.”
ASU No. 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash payments are classified in the
statements of cash flows, with the objective of reducing diversity in practice. ASU No. 2016-15 is effective for interim and annual
periods beginning after December 15, 2017, with early adoption permitted. The Company is in the process of evaluating the
impact of this accounting standard update on its statements of cash flows.
In March 2016, the FASB issued ASU No.
2016-09, “Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting.” ASU No. 2016-09,
which amends several aspects of accounting for employee share-based payment transactions including the accounting for income taxes,
forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows. ASU No. 2016-09 is
effective for fiscal years beginning after December 15, 2016 and interim periods within annual periods beginning after December 15,
2016, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update
on its financial statements.
In February 2016, the FASB issued ASU No.
2016-02, “Leases (Topic 842).” ASU No. 2016-02 requires lessees to recognize lease assets and lease liabilities
on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning
after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted.
The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In August 2014, the FASB issued ASU No.
2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” which provides
guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU No. 2014-15
requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one
year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events
raise substantial doubt about the entity's ability to continue as a going concern. ASU No. 2014-15 is effective for annual
periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is
currently evaluating the impact of the adoption of ASU No. 2014-15 on the Company's financial statements and disclosures.
In May 2014, the FASB issued ASU No. 2014-09,
“Revenue from Contracts with Customers.” ASU No. 2014-09 is a comprehensive revenue recognition standard that
will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach
for determining revenue recognition. ASU No. 2014-09 will require that companies recognize revenue based on the value of
transferred goods or services as they occur in the contract. This ASU also will require additional disclosure about the nature,
amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes
in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 is effective for
interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting
periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the
standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process
of evaluating the impact of ASU No. 2014-09 on the Company's financial statements and disclosures.
NOTE 3 – CONVERTIBLE NOTES PAYABLE,
INCLUDING RELATED PARTY
Convertible notes payable at March 31,
2017 and December 31, 2016 consist of the following:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Convertible notes to stockholder due on various dates through August 24, 2016; interest at 4%; convertible in shares of common stock at 90% of the Company’s stock price at date of conversion. (in default at December 31, 2016)
|
|
$
|
59,599
|
|
|
$
|
59,599
|
|
|
|
|
|
|
|
|
|
|
Convertible note to investor due on September 22, 2017; interest at 10%; included an original issue discount of $7,245; convertible in shares of common stock at 50% of the Company’s stock price at date of conversion.
|
|
|
30,500
|
|
|
|
56,750
|
|
|
|
|
|
|
|
|
|
|
Convertible note to investor due on July 3, 2017; interest at 10%; convertible in shares of common stock at 50% of the Company’s stock price at date of conversion.
|
|
|
58,745
|
|
|
|
58,745
|
|
|
|
|
|
|
|
|
|
|
Convertible note to investor due on January 11, 2017; interest at 12%; convertible in shares of common stock at 50% of the Company’s stock price at date of conversion.
|
|
|
65,000
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
Convertible note to investor due on January 11, 2017; interest at 8%; convertible in shares of common stock at 58% of the Company’s stock price at date of conversion.
|
|
|
58,000
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
Convertible note to investor due on January 12, 2017; interest at 6%; convertible in shares of common stock at 55% of the Company’s stock price at date of conversion.
|
|
|
50,000
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
Convertible note to investor due on February 15, 2017; interest at 12%; convertible in shares of common stock at 58% of the Company’s stock price at date of conversion.
|
|
|
43,000
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
Convertible note to investor due on February 20, 2017; interest at 10%; convertible in shares of common stock at 50% of the Company’s stock price at date of conversion.
|
|
|
56,750
|
|
|
|
--
|
|
|
|
|
421,594
|
|
|
|
175,094
|
|
Less debt discount
|
|
|
(249,437
|
)
|
|
|
(80,796
|
)
|
Convertible notes, net of discount
|
|
$
|
172,157
|
|
|
$
|
94,298
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Convertible notes payable - related party
|
|
$
|
59,599
|
|
|
$
|
59,599
|
|
Less debt discount
|
|
|
--
|
|
|
|
--
|
|
Convertible notes - related party, net of discount
|
|
$
|
59,599
|
|
|
$
|
59,599
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable - unrelated parties
|
|
$
|
361,995
|
|
|
$
|
115,495
|
|
Less debt discount
|
|
|
(249,437
|
)
|
|
|
(80,796
|
)
|
Convertible notes - unrelated parties, net of discount
|
|
$
|
112,558
|
|
|
$
|
34,699
|
|
During the three months ended March 31,
2017, the Company issued convertible notes in the aggregate principal amount of $272,750, with original issue discounts of $19,250.
Due to the variable conversion price associated with these convertible notes, the Company has determined that the conversion feature
is considered derivative liabilities. The embedded conversion feature was initially calculated to be $703,848, which is recorded
as a derivative liability as of the date of issuance. The derivative liability was first recorded as a debt discount up to the
face amount of the convertible notes of $272,750, with the remainder being charge as a financing cost during the period. The debt
discount is being amortized over the terms of the convertible notes. The Company recognized interest expense of $104,109 during
the three months ended March 31, 2017 related to the amortization of the debt discount.
NOTE 4 – SHORT TERM NOTE
On March 17, 2015, the Company entered
into a promissory note with Peter Lambert for a loan of $25,000 that became due on June 15, 2015. The loan carries an interest
at the rate of $55 per day. On June 12, 2015, the parties amended this promissory note so that the loan was extended and will accrue
interest at $55 per day until this note is paid in full. As of March 31, 2017 and December 31, 2016, there was $41,134 and $36,184
interest accrued on the loan respectively.
NOTE 5 – DERIVATIVE LIABILITY
The convertible notes discussed in Note
3 have a conversion price that is variable based on a percentage of the Company’s stock price which results in this embedded
conversion feature being recorded as a derivative liability.
The fair value of the derivative liability
is recorded and shown separately under current liabilities. Changes in the fair value of the derivative liability is recorded in
the statement of operations under other income (expense).
The Company uses a weighted average Black-Scholes-Merton
option-pricing model with the following assumptions to measure the fair value of derivative liability at March 31, 2017:
Stock price
|
|
|
|
|
|
$
|
0.085
|
|
Risk free rate
|
|
|
|
|
|
|
0.85
|
%
|
Volatility
|
|
|
|
|
|
|
670
|
%
|
Conversion price
|
|
|
|
|
|
$
|
0.038–0.077
|
|
Dividend rate
|
|
|
|
|
|
|
0
|
%
|
Term (years)
|
|
|
|
|
|
|
0.01 to 0.89
|
|
The following table represents the Company’s
derivative liability activity for the period ended March 31, 2017:
Derivative liability balance, December 31, 2016
|
|
$
|
1,559,428
|
|
|
|
|
|
|
Issuance of derivative liability during the period ended March 31, 2017
|
|
|
703,848
|
|
|
|
|
|
|
Underlying security converted into common stock
|
|
|
(52,342
|
)
|
|
|
|
|
|
Change in derivative liability during the period ended March 31, 2017
|
|
|
(1,441,947
|
)
|
|
|
|
|
|
Derivative liability balance, March 31, 2017
|
|
$
|
768,987
|
|
NOTE 6 – RELATED PARTY TRANSACTIONS
At March 31, 2017 and December 31, 2016,
the Company’s CEO, Mr. Fleming, has a balance of $19,624 and $40,320, respectively, owed to him under “due to officers”
for the transfer of assets, consulting fees and various out of pocket expenses.
On February 5, 2016, the Company issued
1,184 restricted shares of common stock in connection with the September 3, 2015 acquisition agreement to Team AJ, LLC.
As various times between August 5, 2015
and December 31, 2016, Mr. Acunto loaned the Company a total of $64,589 (which is set forth in convertible note payable). These
notes bear interest at the rate of 4% per annum; $2,510 in interest has been accrued on these notes as of December 31, 2016. During
the year ended December 31, 2016, $4,990 of these loans were repaid. The principal amount outstanding at March 31, 2017 and December
31, 2016 was $59,559.
On August 9, 2016, the Company issued 100,000,000
restricted shares of common stock to Mr. Fleming, the Company’s President, for services rendered and to be rendered to the
Company.
Starting January1, 2017, Mr. Fleming is
accruing a consulting fee of $10,000 a month under a written agreement with the Company
NOTE 7 – GOING CONCERN
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. The Company’s liabilities significantly exceed
its assets, certain notes payable are in default and the Company has generated minimal revenue. This raises substantial doubt about
the Company's ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company
to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
The Company’s activities to date
have been supported by debt and equity financing. It has sustained losses in all previous reporting periods with an accumulated
deficit of $136,800,300 as of March 31, 2017. Management continues to seek funding from its shareholders and other qualified investors
to pursue its business plan. In the alternative, the Company may be amenable to a sale, merger or other acquisition in the event
such transaction is deemed by management to be in the best interests of the shareholders.
NOTE 8 – COMMON STOCK
Anne Morrison was granted an option from
the Company on August 8, 2016 under the Company’s 2016 Stock and Option Plan in payment for consulting services rendered
by her to the Company. The Company’s board of directors approved this compensation (by unanimous written consent) on August
8, 2016. This option was exercised at $0.15 per share. The Company received $126,240 over a period of eight months as result of
the exercise of this option. During the three months ended March 31, 2017, the Company determined that the remaining balance of
$848,670 was not collectible and wrote off the entire balance to additional paid in capital as this is deemed to be a capital transaction.
On April 27, 2015, the Company completed
a 3,000 to 1 reverse split of its issued and outstanding shares of common stock and on August 8, 2016 completed a 19,000 to 1 reverse
split of its issued and outstanding shares of common stock. All shares and per share information in the accompanying financial
statements has been retroactively restated to reflect these two reverse stock splits.
During the three months ended March 31,
2017, the Company issued restricted shares of its common stock as follows: 584,251 (net of 415,749 shares canceled due to excess
shares issued in 2016 related to a debt conversion) shares of common stock for the conversion of $26,250 in debt.
During the three months ended March 31,
2017, the Company issued shares of its common stock as follows:
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15,000,000 shares of common stock to consultants
as compensation for services valued at $1,800,000. The value was based on the market price of the Company’s common stock
at the date of issuance; and
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584,251 (net of 415,749 shares canceled
due to excess shares issued in 2016 related to a debt conversion) shares of common stock for the conversion of $26,250 in debt.
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