Note 1 – NATURE OF OPERATIONS
Optec International, Inc. (Formerly Green Meadow Products, Inc. "the Company", "Optec", "we", "us" or "our") was incorporated under the laws of the State of Wyoming on June 22, 2012.
The Company, subsequent to acquiring the licensing rights for the Optimized Fuel Maximizer, the Company’s focus is on the expansion of the sales & marketing of the Optimized Fuel Maximizer, concentrating primarily in the North America region, followed by expansion into other geographic areas subsequent to locating and contracting with large distributors that already operate in the automotive aftermarket arena. In addition the Company is focused on aiding the manufacturer in obtaining additional certifications from the California Air Resources Board (CARB) which, upon receiving should aid in the sales of the Optimized Fuel Maximizer units not only in California but nationally and internationally as well.
On June 4, 2018 the Company entered into an Exclusive Licensing Agreement with Optimized Fuel Technologies for the right to exclusively distribute and sell the Optimized Fuel Maximizer internationally, with the exception of the United States and Canada. Consideration of $501,500 was paid for the licensing right in the form of one million five hundred thousand (1,500,000) shares of the Company’s common shares valued at $.001 per share which were authorized to be issued to Optimized Fuel Technologies; in addition to five hundred thousand dollars ($500,000) to be paid over the course of 24 months from the date herein; of which the Company has paid $109,000.
On June 20, 2018 the Company entered into an Exclusive Licensing Agreement Addendum with Optimized Fuel Technologies for the right to exclusively sell the Optimized Fuel Maximizer worldwide. On June 4, 2018, the Company had entered into an Exclusive Licensing Agreement with Optimized Fuel Technologies for the right to exclusively sell the Optimized Fuel Maximizer internationally, with the exception of the United States and Canada; this agreement extends exclusive marketing right to include North America and Canada. Consideration of $1,000 was paid for the licensing rights under the addendum in the form of one million (1,000,000) shares of the Company’s common shares valued at $.001 per share which were authorized to be issued to Optimized Fuel Technologies. (
For further information on Optec Products acquired-www.optecmpg.com
)
On August 8, 2018 Optimized Fuel Technologies, a related party, entered into a contract with a company that desired to purchase the Optimized Fuel Maximizer on a manufacturer direct basis As the Company owns the exclusive licensing rights to sales of the Optimized Fuel Maximizer; per the Royalty agreement dated August 27, 2018 the Company agreed to the acceptance of royalty revenue generated by sales which are made on a manufacturer direct basis.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Company's year-end is June 30.
ESTIMATES
The preparation of the financial statement 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 revenues and expenses during the period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of June 30, 2018 or 2017.
CUSTOMER AND PURCHASE CONCENTRATION
During the years ended June 30, 2018 and 2017, the following customers represented the Company’s sales:
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
$
|
|
|
|
%
|
|
|
$
|
|
|
|
%
|
|
Total licensing revenue
|
|
|
4,500
|
|
|
|
5
|
|
|
|
12,200
|
|
|
|
50.4
|
|
Total product revenue *
|
|
|
86,300
|
|
|
|
94.7
|
|
|
|
12,000
|
|
|
|
49.6
|
|
Total Consulting Income
|
|
|
305
|
|
|
|
.3
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
91,105
|
|
|
|
100
|
|
|
|
24,200
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer A
|
|
|
4,500
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
Customer B
|
|
|
31,600
|
|
|
|
34.7
|
|
|
|
7,100
|
|
|
|
29.4
|
|
Customer C
|
|
|
53,500
|
|
|
|
58.7
|
|
|
|
5,100
|
|
|
|
21.0
|
|
Customer D
|
|
|
560
|
|
|
|
.6
|
|
|
|
-
|
|
|
|
-
|
|
Customer E
|
|
|
640
|
|
|
|
.7
|
|
|
|
-
|
|
|
|
-
|
|
Customer F
|
|
|
305
|
|
|
|
.3
|
|
|
|
-
|
|
|
|
-
|
|
Concentration total
|
|
|
91,105
|
|
|
|
100
|
|
|
|
12,200
|
|
|
|
50.4
|
|
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
During the years ended June 30, 2018 and 2017, the following vendors represented more than 10% of the Company’s Purchases:
|
Year ended June 30, 2018
|
|
Year ended June 30, 2017
|
|
|
$
|
|
|
|
%
|
|
$
|
|
|
|
%
|
|
Product-Optec*
|
|
|
58,360
|
|
|
|
100
|
|
|
|
7,000
|
|
|
|
100
|
|
Total Purchases
|
|
|
58,360
|
|
|
|
100
|
|
|
|
7,000
|
|
|
|
100
|
|
*100% represents product purchased from Optimized Fuel Technologies, a related party.
INVENTORY
Inventory is recorded at lower of cost or market; cost is computed on a first-in first-out basis. We currently have inventory of $85,000 consisting of Optimized Fuel Maximizer units.
FINANCIAL INSTRUMENTS
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Accounting Standards Codification ("ASC") 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs which reflect a reporting entity's own assumptions about the assumptions that market participants would use for pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
The recorded amounts of financial instruments, comprising cash, accounts payable and income tax payable, approximate their market values as of June 30, 2018 due to the short term maturities of these financial instruments.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
WEBSITE DEVELOPMENT COSTS
Under ASC350-50,
Website Development Costs,
costs and expenses incurred during the planning and operating stages of the Company's website are expensed as incurred. Under ASC 350-50, costs incurred in the website application and infrastructure development stages are capitalized by the Company and amortized to expense over the website's estimated useful life or period of benefit which is estimated to be 5 years. The website for the pet products has been fully amortized as of June 30, 2018.
OTHER INTANGIBLE ASSETS
Under ASC 350-50-1, costs incurred in the acquisition of an intangible asset are capitalized by the Company. As of June 30, 2018 and 2017, our intangible assets are related to the acquisition of the Licensing rights for the Optimized Fuel Maximizer which is being amortized to expense over the licensing rights estimated useful life or period of benefit which is estimated to be 10 years using straight-line method; annual amortization will be approximately $50,250 per year. In addition the purchase of our Green Meadow PR formula for natural pain relief for animals is being amortized to expense over the formula's estimated useful life or period of benefit which is estimated to be 10 years using straight-line method.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the recoverability of long-lived assets and intangible assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. At year ended June 30, 2018 there is no impairment of long-lived assets or intangible assets.
INCOME TAXES
We account for income taxes in accordance with FASB ASC 740, Income Taxes which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
REVENUE RECOGNITION
The Company recognizes revenue in accordance with Accounting Standards Codification No. 605, "Revenue Recognition" ("ASC-605") ASC-605 requires that 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 has not been 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.
The Company's revenues have been generated primarily through the sales of the Optimized Fuel Maximizer units and sublicense and distribution agreements related to our PawPal product and our pain relief products. The terms of these agreements generally consist solely of upfront, nonrefundable payments for licensing and distribution rights. Revenues from non-refundable licensing and distribution fees are recognized upon receipt of the payment if the license has stand-alone value and we do not have ongoing involvement or obligations.
For the years ended June 30, 2018 and 2017, all sales and license payments met the above criteria or in the case of one contract, the only continuing involvement was to sell our products to the distributor at pricing that is consistent with market transactions, thereby allowing for the recognition of revenue for the licensing and distribution arrangements upon receipt.
When non-refundable license fees do not meet this criteria, the license revenues are recognized over the expected period of performance. We periodically review for any expected period of substantial involvement under the agreements that provide for non-refundable up-front payments and license fees. If ever applicable, we will adjust the amortization periods when appropriate to reflect changes in assumptions relating to the duration of our expected involvement.
TRADE RECEIVABLES
Trade Receivables are the amount of billed or unbilled claims or other similar items subject to uncertainty concerning their determination or ultimate realization under contracts that are expected to be collected in the next rolling twelve months following the latest balance sheet presented. Our policies on receivables varies per customer, but in no case do we allow for a receivable to be outstanding for more than 12 months. As of June 30, 2018, we had no open receivable. In the year ended June 30, 2018 we expensed $85,100 to bad debt as uncollectable receivables.
ADVERTISING COSTS
The Company's policy regarding advertising is to expense advertising when incurred. The Company incurred advertising and marketing expense of $7,745 during the year ended June 30, 2018 and $5,075 in the year ended June 30, 2017.
NET INCOME (LOSS) PER SHARE OF COMMON STOCK
The Company computes net income (loss) per share in accordance with ASC 105, "Earnings per Share" which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. At year ended June 30, 2018, 177,821 shares, (128,521 from convertible notes and 49,300 from warrants), were potentially dilutive common shares and at year ended June 30, 2017 there were no diluted shares.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of its operations.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
Note 3 – GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.
As at June 30, 2018, the Company had yet to establish a proven, reliable, recurring source of revenue to fund its ongoing operating costs and with insufficient funds to fully implement its proposed business plan.
This raises substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is contemplating conducting an offering of its debt or equity securities to obtain additional operating capital. The Company is dependent upon its ability, and will continue to attempt, to secure equity and/or debt financing. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.
Note 4 – LOANS RECEIVABLE
On November 1, 2017 the board of Directors approved a revolving loan receivable with a three year maximum term and a limit of $250,000 to Optimized Fuel Technologies, a related party and the manufacturer of the Fuel Maximizer units we sell. The loan is intended to have various advances at a 0% interest rate for the first 90 days with the interest rate subject to adjustment thereafter. $109,000 loan was made to facilitate the additional CARB (California Air Resources board) certifications, Patents expanded, and other certifications needed, which are required for both domestic and international markets. $109,000 was paid in full as an other receivable to Optimized Fuel Technologies, a related party, which was credited against a $500,000 note payable for licensing rights.
Note 5 - CONVERTIBLE LOANS
At June 30, 2018 and 2017, convertible loans consisted of the following:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
November 7, 2017 Note
|
|
$
|
29,167
|
|
|
$
|
-
|
|
April 30, 2018 Note
|
|
|
112,500
|
|
|
|
-
|
|
June 15, 2018 Note
|
|
|
200,000
|
|
|
|
-
|
|
Total convertible notes payable
|
|
|
341,667
|
|
|
|
-
|
|
Less: Unamortized debt discount
|
|
|
(279,087
|
)
|
|
|
-
|
|
Total convertible notes
|
|
|
48,580
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Less: current portion of convertible notes
|
|
|
48,580
|
|
|
|
-
|
|
Long-term convertible notes
|
|
$
|
-
|
|
|
$
|
-
|
|
During the year ended June 30, 2018 and 2017, the Company recognized amortization of debt discount, included in interest expense, of $276,413 and $0, and interest expense of $103,484 and $0 respectively.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
Promissory Notes - Issued in fiscal year 2018
During the year ended June 30, 2018, the Company issued a total of $555,500 promissory notes (“Notes”) with the following terms:
|
·
|
Terms ranging from 8 months to 9 months.
|
|
·
|
Annual interest rates of 10%to 12%.
|
|
·
|
Convertible at the option of the holders at issuance or 180 days from issuance.
|
|
·
|
Conversion prices are typically based on the discounted (45% or 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion.
|
Certain notes allow the Company to redeem the notes at rates ranging from 135% to 150% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, the note includes original issue discounts totaling to $59,500 and the Company received cash of $482,000.
The Company identified conversion features embedded within certain notes and warrants issued during the year ended June 30, 2018. The Company has determined that the conversion feature of the Notes represents an embedded derivative since the conversion price is variable and the Notes include a reset provision which could cause adjustments upon conversion. Accordingly, the Notes are not considered to be conventional debt and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. On issuance, the warrants are exercisable into 20,161 and 14,300 shares of common stock, for a period of five years from issuance, at a price of $3.45 and $7 per share, respectively. As a result of the reset features for 20,161 warrant, at June 30, 2018, the warrants increased by 14,839 and the total warrants exercisable into 35,000 shares of common stock at $1.25 per share
which are potentially dilutive for loss per share disclosure, but the dilution is immaterial
. The reset feature of warrants associated with this convertible note was effective at the time that a separate convertible note with lower exercise price was issued. We accounted for the issuance of the Warrants as a derivative.
Warrants
The assumptions used to calculate the derivative liability associated with warrants as of June 30, 2018:
|
|
St George Warrants
|
|
|
Auctus Warrants
|
|
Company’s stock price
|
|
$
|
9.05
|
|
|
$
|
9.05
|
|
Exercise price of the warrant
|
|
$
|
1.25
|
|
|
|
7.00
|
|
The number of periods to exercise the warrants
|
|
4.29 years
|
|
|
4.96 years
|
|
Risk free rate
|
|
|
2.73
|
%
|
|
|
2.73
|
%
|
Volatility
|
|
|
4.21
|
%
|
|
|
4.21
|
%
|
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
A summary of activity during the year ended June 30, 2018 regarding warrants issued follows:
|
|
Warrants Outstanding
|
|
|
|
|
|
Weighted Average
|
|
|
|
Shares
|
|
Exercise Price
|
|
|
|
|
|
|
|
Outstanding, June 30, 2017
|
|
|
-
|
|
|
$
|
-
|
|
Granted
|
|
|
34,461
|
|
|
|
4.92
|
|
Reset feature
|
|
|
14,839
|
|
|
|
1.25
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Forfeited/canceled
|
|
|
-
|
|
|
|
-
|
|
Outstanding, June 30, 2018
|
|
|
49,300
|
|
|
$
|
2.92
|
|
The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2018:
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
Number of
|
|
|
Weighted Average Remaining
Contractual life
|
|
Weighted Average
|
|
|
Number of
|
|
Weighted Average
|
|
Shares
|
|
|
(in years)
|
|
Exercise Price
|
|
|
Shares
|
|
Exercise Price
|
|
|
35,000
|
|
|
|
4.36
|
|
|
$
|
1.25
|
|
|
|
35,000
|
|
|
$
|
1.25
|
|
|
14,300
|
|
|
|
4.96
|
|
|
$
|
7.00
|
|
|
|
14,300
|
|
|
$
|
7.00
|
|
|
49,300
|
|
|
|
4.53
|
|
|
$
|
2.92
|
|
|
|
49,300
|
|
|
$
|
2.92
|
|
Note 6 - DERIVATIVE LIABILITIES
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
Fair Value Assumptions Used in Accounting for Derivative Liabilities.
ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of June 30, 2018. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
At June 30, 2018, the estimated fair values of the liabilities measured on a recurring basis are as follows:
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
Expected term
|
|
0.02 - 5.00 years
|
|
|
|
-
|
|
Expected average volatility
|
|
|
12% - 487
|
%
|
|
|
-
|
|
Expected dividend yield
|
|
|
-
|
|
|
|
-
|
|
Risk-free interest rate
|
|
|
1.37% - 2.81
|
%
|
|
|
-
|
|
The following table summarizes the changes in the derivative liabilities during the year ended June 30, 2018:
Fair Value Measurements Using Significant Observable Inputs (Level 3)
|
|
|
|
|
|
Balance - June 30, 2017
|
|
$
|
-
|
|
|
|
|
|
|
Addition of new derivatives recognized as debt discounts
|
|
|
496,000
|
|
Addition of new derivatives recognized as loss on derivatives
|
|
|
825,755
|
|
Gain on change in fair value of the derivative
|
|
|
(56,361
|
)
|
Balance – June 30, 2018
|
|
$
|
1,265,394
|
|
The aggregate loss on derivatives during the years ended June 30, 2018 and 2017 was $769,394 and $0, respectively.
Note 7 –LICENSING AND SERVICE AGREEMENTS
On June 4, 2018 the Company entered into an Exclusive Licensing Agreement with Optimized Fuel Technologies, a related party, for the right to exclusively sell the Optimized Fuel Maximizer internationally, with the exception of the United States and Canada. Consideration of $1,500 was paid for the licensing right in the form of one million five hundred thousand (1,500,000) shares of the Company’s common shares valued at $.001 per share which were authorized to be issued to Optimized Fuel Technologies; in addition to five hundred thousand dollars ($500,000) to be paid over the course of 24 months from the date herein; of which the Company has paid $109,000.
On June 20, 2018 the Company entered into an Exclusive Licensing Agreement Addendum with Optimized Fuel Technologies, a related party, for the right to exclusively sell the Optimized Fuel Maximizer worldwide. On June 4, 2018, the Company had entered into an Exclusive Licensing Agreement with Optimized Fuel Technologies for the right to exclusively sell the Optimized Fuel Maximizer internationally, with the exception of the United States and Canada; this agreement extends exclusive marketing right to include North America and Canada. Consideration of $1,000 was paid for the licensing rights under the addendum in the form of one million (1,000,000) shares of the Company’s common shares valued at $.001 per share which were authorized to be issued to Optimized Fuel Technologies.
On August 8, 2018 Optimized Fuel Technologies, a related party, entered into a contract with a company that desired to purchase the Optimized Fuel Maximizer on a manufacturer direct basis As the Company owns the exclusive licensing rights to sales of the Optimized Fuel Maximizer; per the Royalty agreement dated August 27, 2018 the Company agreed to the acceptance of royalty revenue generated by sales which are made on a manufacturer direct basis.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
Note 8 - INCOME TAXES
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented at 25% income tax rate are as follows:
Changes in the cumulative net deferred tax assets consist of the following:
|
June 30, 2018
|
|
June 30, 2017
|
|
|
|
|
|
|
Net operating loss carry forward
|
|
$
|
60,237
|
|
|
$
|
8,942
|
|
Valuation allowance
|
|
|
(60,327
|
)
|
|
|
(8,942
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
A reconciliation of income taxes computed at the statutory rate of 25% is as follows:
|
June 30, 2018
|
|
June 30, 2017
|
|
|
|
|
|
|
Tax Benefit at statutory rate
|
|
$
|
52,637
|
|
|
$
|
753
|
|
Change in Valuation allowance
|
|
|
(52,637
|
)
|
|
|
(753
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
During the years ended June 30, 2018 and the year ended June 30, 2017, we recognized no tax credits.
Note 9 - COMMON STOCK
The Company is authorized to issue seventy five million shares of common stock with $0.001 par value.
The Company authorized a share split on June 1, 2015 whereby seven shares (7) of the Company’s common shares were issued for every one (1) share issued and outstanding resulting in 52,944,500 shares of common stock issued and outstanding at June 30, 2015. All numbers for shares of common stock disclosed as issued and outstanding in these financial statements have been retrospectively restated to reflect the impact of this forward split.
On October 4, 2017, 49,700,000 shares of common stock were retired resulting from the resignation of Stan Windhorn as an officer and director and options to purchase 1,000,000 shares of common stock at $5.00 were issued.
85,000 shares were issued to shareholders pursuant to a private offering at $2.00 per share. On April 24, 2018, five thousand (5,000) shares were issued to Morris. On May 29, 2018 fifty thousand (50,000) shares of common stock were authorized to be issued to Fang Zhang. On June 7, 2018 twenty five thousand (25,000) shares of common stock were authorized to be issued to Kurt & Ellen Baum. On June 12, 2018 five thousand (5,000) shares of common stock were authorized to be issued to Ron Jensen.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
On October 4, 2017 four million (4,000,000) shares were authorized to be issued to Marcus Pawson as Vice President of International Sales for services valued at $4,000 ($.001 per share). On June 20, 2018 two million (2,000,000) shares were issued to Marcus Pawson for services valued at $2,000 ($.001 per share).
On October 4, 2017 we entered into an Executive Employment Agreement with Peter Sollenne, CEO, whereby compensation shall be at the rate of $3,000 per month plus a signing bonus of $12,000 which was paid in the form of 12,000,000 shares of restricted common shares of the Company at ($.001per share). On June 20, 2018, 6,000,000 shares were cancelled and an additional 238 shares were issued.
On February 15, 2018 two hundred nine (209) shares were issued to Don Kingman for services rendered.
On June 4, 2018 One million five hundred thousand (1,500,000) shares of common stock authorized and issued to Optemized Fuel Technologies for International Exclusive Licensing.
On June 20, 2018 one million (1,000,000) shares of common stock were authorized to be issued to Optemized Fuel Technologies for North America Licensing.
As of June 30, 2018, there were 17,829,947 shares of common stock issued and outstanding. As of June 30, 2017, there were 52,944,500 shares of common stock issued and outstanding.
No shares of common stock were issued during the twelve months ended June 30, 2017
Note 10 – RELATED PARTY TRANSACTIONS
On October 4, 2017 we entered into an Executive employment Agreement with Peter Sollenne, CEO, whereby compensation shall be at the rate of $3,000 per month plus a signing bonus of $12,000 which was paid in the form of 12,000,000 shares of restricted common shares of the Company at ($.001 per share). On June 20, 2018 6,000,000 shares were returned for cancellation and an additional 238 shares were issued.
On October 4, 2017 four million (4,000,000) shares were authorized to be issued to Marcus Pawson as Vice President of International Sales for services valued at $4,000 ($.001 per share). On June 20, 2018 two million (2,000,000) shares were issued to Marcus Pawson for services valued at $2,000 ($.001 per share).
On November 1, 2017 the board of Directors approved a revolving loan receivable with a three year maximum term and a limit of $250,000 to Optimized Fuel Technologies, a related party and the manufacturer of the Fuel Maximizer units we sell. The loan is intended to have various advances at a 0% interest rate for the first 90 days with the interest rate subject to adjustment thereafter. $109,000 loan was made to facilitate the additional CARB (California Air Resources board) certifications, Patents expanded, and other certifications needed, which are required for both domestic and international markets. $109,000 was paid in full as an other receivable to Optimized Fuel Technologies, a related party, which was credited against a $500,000 note payable for licensing rights.
On May 1, 2018 the Company entered an office lease to sublet warehouse and office space from Optimized Fuel Technologies. The term of the lease is for 13 months at a monthly rent of $2,500 per month.
On June 4, 2018 One million five hundred thousand (1,500,000) shares of common stock authorized and issued to Optemized Fuel Technologies for International Exclusive Licensing and on June 20, 2018 one million (1,000,000) shares of common stock were authorized to be issued to Optemized Fuel Technologies for North America Licensing, in addition to five hundred thousand dollars ($500,000) to be paid over the course of 24 months from the date herein; of which the Company has paid $109,000.
On August 8, 2018 Optimized Fuel Technologies, a related party, entered into a contract with a company that desired to purchase the Optimized Fuel Maximizer on a manufacturer direct basis. As the Company owns the exclusive licensing rights to sales of the Optimized Fuel Maximizer; per the Royalty agreement dated August 27, 2018 the Company agreed to the acceptance of royalty revenue generated by sales which were made on a manufacturer direct basis.
OPTEC INTERNATIONAL, INC.
(FORMERLY GREEN MEADOW PRODUCTS, INC.)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
Note 11 – COMMITMENTS AND CONTINGENCIES
We have a twelve month lease for office space at 2721 Loker Avenue West, Carlsbad, CA 92010 for $2,500 per month with Optimized Fuel Technologies, a related party. During the years ended June 30, 2018 total rent expense paid was $5,000 and no rent was paid in 2017.
We pay our CEO a salary of $3,000 per month. During the year ended June 30, 2018 total salary paid was $24,000 and no salary was paid in 2017.
Note 12 – SUBSEQUENT EVENTS
Management has reviewed events between June 30, 2018 to the date that the financials were issued, and other than the following there were no other significant events identified for disclosure.
On August 31, 2018 a note payable to Optimized Fuel Technologies was paid off in the amount of $391,000.
On July 9, 2018 a note payable was issued to Peak One Opportunity Fund in the amount of $110,000 with an interest rate of 0% and maturity date of April 9, 2019.
On July 16, 2018 a note payable was issued to Auctus Funds in the amount of $115,000 with an interest rate of 12% and maturity date of April 16, 2019.
On August 2, 2018 a note payable was issued to Carebourn Capital in the amount of $319,000 with an interest rate of 12% and maturity date of August 2, 2019.
On August 15, 2018 a note payable was issued to Power Up Lending in the amount of $73,000 with an interest rate of 12% and maturity date of May 30, 2019.
On September 7, 2018 a convertible promissory note was issued to BHP Capital NY, Inc in the amount of $84,000 with an interest rate of 12% and maturity date of June 7, 2019. A warrant for common stock was issued for 14,000 shares.
On September 7, 2018 a convertible promissory note was issued to Jefferson St Capital, LLC in the amount of $36,750 with an interest rate of 12% and maturity date of June 7, 2019. A warrant for common stock was issued for 6,125 shares.
On September 10, 2018 a convertible promissory note was issued to Crown Bridge Partners LLC in the amount of $55,000 with an interest rate of 10% and maturity date of September 10, 2019. A warrant for common stock was issued for 7,333 shares.
On September 19, 2018 a convertible promissory note was issued to Morningview Financial LLC in the amount of $100,000 with an interest rate of 10% and maturity date of September 18, 2019. A warrant for common stock was issued for 17,857 shares.
On August 8, 2018 Optimized Fuel Technologies, a related party, entered into a contract with a company that desired to purchase the Optec Fuel Maximizer on a manufacturer direct basis. As the Company owns the exclusive licensing rights to sales of the Optec Fuel Maximizer; per the Royalty agreement dated August 27, 2018, the Company agreed to the acceptance of royalty revenue generated by sales on a manufacturer direct basis. The Company will receive a royalty for each unit sold and collected. Although the Company’s revenues will be less per the contract, it’s gross profit is anticipated to be higher as it will not have to be subjected to inventory, quality control, freight and staffing for distribution.
Subsequent to year end, the Company has made advances to Optimized Fuel Technologies, a related party, in the total amount of $225,900 pursuant to their revolving loan receivable agreement.