Notes to the
Financial Statements
June 30, 2017
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
PREMIER PRODUCTS
GROUP, INC. (the Company”) has prepared the accompanying financial statements without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results
of operations, and cash flows for all periods presented herein, have been made.
Certain information
and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2016 audited
financial statements included in the Company’s Annual Report on Form 10-K, as filed with the United States Securities and
Exchange Commission (the “SEC”) on October 29, 2018. The results of operations for the period ended June 30, 2017
are not necessarily indicative of the operating results for the full year.
NOTE 2 – GOING CONCERN
The Company’s
financial statements are prepared using generally accepted accounting principles in the United States of America applicable to
a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company has a working capital deficit and has not yet established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern.
These factors
raise substantial doubt regarding the Company’s ability 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 consummates a business
combination. 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. Management’s plan
is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet
its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans.
The ability
of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in
the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SIGNIFICANT ACCOUNTING
POLICIES
Use of
Estimates
The 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 reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Income
Taxes
The Company
accounts for income taxes in accordance with ASC Topic No. 740, “Accounting for Income Taxes.” This statement requires
an asset and liability approach for accounting for income taxes. The Company adopted the provisions of ASC Topic No. 740, “Accounting
for Income Taxes,” on January 1, 2007. As a result of the implementation of ASC Topic No. 740, the Company recognized no
liability for unrecognized tax liabilities. The Company has no tax positions at December 31, 2016 and 2015 for which the ultimate
deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
Interest
Accruals
The Company
recognizes interest accrued related to unrecognized tax liabilities in interest expense and penalties in operating expenses. During
the years ended December 31, 2016 and 2015, the Company recognized interest accruals of $35,081 and $10,186, respectively.
Loss Per
Share
The computation
of loss per share is based on the weighted average number of shares outstanding during the period presented in accordance with
ASC Topic No. 260, “Earnings Per Share.”
Cash and
Cash Equivalents
The Company
considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
PREMIER
PRODUCTS GROUP, INC.
Notes to the
Financial Statements
June 30, 2017
(Unaudited)
Recently
Issued Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s
management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
FASB ASU
2018-03 “Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”
–
In August 2018, the FASB issued ASU 2018-13. ASU 2018-13 removes certain disclosures, modifies certain disclosures
and adds additional disclosures. The ASU is effective for annual periods, including interim periods within those annual periods,
beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the effect that this update will have
on its financial statements and related disclosures.
FASB ASU
2016-15 “Statement of Cash Flows (Topic 230)” –
In August 2016, the FASB issued 2016-15. Stakeholders indicated
that there is a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement
of cash flows. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in
practice. This ASU is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those
fiscal years. Early adoption is permitted. Adoption of this ASU will not have a significant impact on our statement of cash flows.
Management
has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have
a significant impact on our consolidated financial statements and related disclosures.
Fair Value of Financial Instruments
The Company’s
financial instruments consist principally of cash, amounts due to a related party, accounts payable and accrued expenses, and
derivative liabilities. ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, establish a framework
for measuring fair value, establish a fair value hierarchy based on the quality of inputs used to measure fair value, and enhance
disclosure requirements for fair value measurements.
The Company
utilizes various types of financing to fund its business needs, including warrants not indexed to the Company’s stock. The
Company is required to record its derivative instruments at their fair value. Changes in the fair value of derivatives are recognized
in earnings in accordance with ASC 815.
The fair value
of the derivative instruments are determined based on “Level 3” inputs, which consist of inputs that are both unobservable
and significant to the overall fair value measurement. We believe that the recorded values of all of our other financial instruments
approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
The Company
has categorized its financial instruments, based on the priority of inputs to the valuation technique, into a three-level fair
value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
Financial
assets and liabilities recorded on the balance sheet are categorized based on the inputs to the valuation techniques as follows:
Level
1 Financial assets and liabilities for which values are based on unadjusted quoted prices for identical assets or liabilities
in an active market that management has the ability to access.
Level
2 Financial assets and liabilities for which values are based on quoted prices in markets that are not active or model inputs
that are observable either directly or indirectly for substantially the full term of the asset or liability (commodity derivatives
and interest rate swaps).
Level
3 Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both
unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about
the assumptions a market participant would use in pricing the asset or liability.
PREMIER
PRODUCTS GROUP, INC.
Notes to the
Financial Statements
June 30, 2017
(Unaudited)
When the inputs
used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is
categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company
conducts a review of fair value hierarchy classifications on a quarterly basis. Changes in the observability of valuation inputs
may result in a reclassification for certain financial assets or liabilities.
|
|
|
Balance
|
|
Balance forward, January 1, 2016
|
|
$
|
(681
|
)
|
|
Total gains (losses) included in earnings, FY 2016
|
|
|
(11,810
|
)
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
|
$
|
(12,491
|
)
|
|
Total gains (losses) included in earnings, three months ended March, 31, 2017
|
|
|
—
|
|
|
|
|
|
|
|
|
Ending balance, June 30, 2017
|
|
$
|
(12,491
|
)
|
NOTE 4
– RELATED PARTY TRANSACTIONS
Management Compensation
For the three
months ended June 30, 2017, the Company paid its CEO, President, and CFO an aggregate of $0 as compensation.
For the three
months ended June 30, 2016, the Company paid its CEO/President/CFO an aggregate of $10,500 as compensation of which $10,878 of
accrued compensation remained unpaid at June 30, 2017.
Office
Space
Effective
January 12, 2016, the Company subleased approximately 200 square feet of executive office space in Silver Spring MD at a rate
of $250 per month on a month-to-month basis. The lease was terminated in 2016.
NOTE 5 – ADVANCES AND
NOTES PAYABLE TO RELATED PARTIES
Advances and
notes payable to related parties at June 30, 2017 and 2016 had an outstanding balance of $0 and $0, respectively.
During the
quarter ended June 30, 2016, the prior CEO, Richard Johnson, converted $273,774 in Accounts Payable to himself, and other payables
he was responsible for, into a note payable. Following this event and Mr. Johnson’s departure, the Company took over control
of the note and subsequently retired the debt in the amount of $273,774, resulting in a gain on discharge of debt on the Statement
of Operations.
PREMIER
PRODUCTS GROUP, INC.
Notes to the
Financial Statements
June 30, 2017
(Unaudited)
NOTE 6
– NOTES PAYABLE AND DERIVATIVE LIABILITY
Notes Payable
At the period
ended June 30, 2017, the Company had third party notes payable and accrued interest in the amount of $294,883 compared to $337,109
in the prior fiscal year. The notes included notes to four unaffiliated parties at interest rates of between 6% and 8% per year.
The notes expire during the 2016 fiscal year and are not secured by collateral of the Company. Several of these notes are in default
and the Company is in communication with the holders to resolve these outstanding issues. The notes are convertible into common
stock, at the election of the holder, at discounts of between 40% and 50%. Two additional notes, totaling $11,250 are convertible
into common stock of the Company at $0.001. Additionally, the Company is carrying $225,200 in notes payable contingent liability
representing three (3) prior notes that are either in dispute or the Company is unable to substantiate.
Derivative
Liability
The Company
entered into an agreement, which has been accounted for as a derivative. The Company has recorded a loss contingency associated
with this agreement because it is both probable that a liability had been incurred and the amount of the loss can reasonably be
estimated. The main factors that will affect the fair value of the derivative are the number of the Company’s shares outstanding
post acquisition or post offering and the resulting market capitalization.
ASC Topic
815 (“ASC 815”) requires that all derivative financial instruments be recorded on the balance sheet at fair value.
Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily
available, fair values are determined using market based pricing models incorporating readily observable market data and requiring
judgment and estimates.
PREMIER
PRODUCTS GROUP, INC.
Notes to the
Financial Statements
June 30, 2017
(Unaudited)
The Company
issued warrants and has evaluated the terms and conditions of the conversion features contained in the warrants to determine whether
they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company determined that the
conversion features contained in the warrants represent freestanding derivative instruments that meet the requirements for liability
classification under ASC 815. As a result, the fair value of the derivative financial instruments in the warrants is reflected
in the Company’s balance sheet as a liability. The fair value of the derivative financial instruments of the warrants was
measured at the inception date of the warrants and each subsequent balance sheet date. Any changes in the fair value of the derivative
financial instruments are recorded as non-operating, non-cash income, or expense at each balance sheet date.
The Company
valued the conversion features in its warrants using the Black-Scholes model. The Black-Scholes model values the embedded derivatives
based on a risk-free rate of return of 0.0131%, grant dates at June 30, 2017 and December 31, 2016, the term of the warrant extending
3 years from the date of a “reverse merger”, conversion of warrant shares is equal to 0.005% of the then outstanding
common stock of the company, the conversion price is $0.001, current stock prices on the measurement date ranging from $0.0017
to $0.0980, and the computed measure of the Company’s stock volatility, ranging from 220% to 580%.
Included in
the June 30, 2017 and December 31, 2016 financial statements is a derivative liability in the amount of $12,491 and $12,491, respectively,
to account for this transaction. It is revalued quarterly henceforth and adjusted as a gain or loss to the consolidated statements
of operations depending on its value at that time.
Included in
our Consolidated Statements of Operations for the three months ended June 30, 2017 and year-end December 31, 2016 are $0 and $(11,810)
in change of fair value of derivative in non-cash charges pertaining to the derivative liability as it pertains to the gain (loss)
on derivative liability and debt discount, respectively.
NOTE 7
– ACCOUNTS PAYABLE AND ACCRUED EXPENSES
For the three
months ended June 30, 2017, the Company recorded accounts payable and accrued expenses in the amount of $199,573, compared to
the year ended December 31, 2016 of $366,359. The accounts payable and accrued expenses include $199,573 in legal and professional
fees.
NOTE 8 – COMMITMENTS AND
CONTINGENCIES
Contingent Liabilities
The Company
recorded contingent liabilities for the three months ended June 30, 2017 in the amount of $402,483. The contingent liability includes
$177,283 for settlement of an arbitration plus accrued interest. Additional contingent liabilities has been accounted for in the
amount of $150,200 and $75,000 for notes payable. These notes date back to the purchase of the mineral properties with a related
party. The Company believes that these notes are to be discharged, however, until additional research and agreements have been
reached, the Company is treating the amount as a contingent liability.
Legal proceedings
In March 2014,
the Company entered into a settlement agreement with a third party. A dispute arose with respect to the Company’s performance
under such settlement agreement and, in accordance with the terms of such agreement, such party moved for arbitration to resolve
such dispute. The matter has been closed as of September 2016, with the Company recording a legal liability in the amount of $125,000,
plus $52,283 in accrued penalties and fees, to account for liability they have incurred.
On February
24, 2015, the Company was named a defendant in a complaint filed by John Michael Coombs in the Third Judicial District Court in
and For Salt Lake County, State of Utah, alleging, among other things, Breach of Contract, in connection with a Warrant Agreement
issued by the Company to Mr. Coombs in 2010. Management has informed Mr. Coombs that it fully intends to honor the Warrant Agreement
and is in discussions to settle this matter.
NOTE 9
– CAPITAL STOCK
The Company
has authorized 500,000,000 number of shares of common stock with a par value of $0.00001. At June 30, 2017, the Company had 220,211,936
shares issued and outstanding.
The Company
has authorized 51 shares of preferred stock (Series B) with a par value of $0.001. At June 30, 2017, the Company had 51 shares
issued and outstanding.
PREMIER
PRODUCTS GROUP, INC.
Notes to the
Financial Statements
June 30, 2017
(Unaudited)
During the
six months ended June 30, 2017, a total of 25,708,840 shares of common stock for issued the retirement of $93,854 in debt and
accrued interest. The Company recognized a combined loss of $149,234 on the conversions.
During
the six months ended June 30, 2017, 1,000,000 shares of common stock of the Company, valued at $13,400, was issued in settlement
of $144,000 in accrued payables.
On September
18, 2016, the Company entered into a definitive letter of intent to acquire Satic, Inc. (“Satic USA”)
www.saticusa.com
, an American manufacturer of a proprietary line of trademarked clean power solar products and other patented energy saving
products and lighting. Terms of the letter of intent have not been finalized pending due diligence. The previously announced acquisition
of GEAR Sports Nutrition has been terminated. Concurrent with the termination of the GEAR transaction, 225 million shares of the
Company’s common stock was returned to treasury, reducing the outstanding shares by over 50%; effective October 2016.
NOTE 11
– SUBSEQUENT EVENTS
On January
4, 2018, due to SATIC and the Company’s inability to complete due diligence and acceptable closing terms, the parties mutually
agreed to rescind and cancel the February 13, 2017 acquisition and stock purchase agreement, with the closing never having taken
place (Form 8-K file on January 10, 2018). With the cancellation, all officer and director positions were rescinded back to Mr.
Clifford Pope as Interim-CEO and sole director of the Company. The actions taken by the Company were confirmed on January 8, 2018
by holders of 51% voting control of the Company.
As filed on
Form 8-K with the Securities Exchange Commission on March, 1, 2018, the Company completed a Holding Company Reorganization, whereby
On February 22, 2018, the issuer (having been renamed, immediately prior to this Holding Company Reorganization, from “Premier
Products Group, Inc.” to “Valley High Mining Company”) completed a corporate reorganization (the “Holding
Company Reorganization”) pursuant to which Valley High Mining Company, as previously constituted (the “Predecessor”)
became a direct, wholly-owned subsidiary of a newly formed Delaware corporation, Premier Products Group, Inc. (the “Holding
Company”), which became the successor issuer. In other words, the Holding Company is now the public entity. The Holding
Company Reorganization was effected by a merger conducted pursuant to Section 251(g) of the Delaware General Corporation
Law (the “DGCL”), which provides for the formation of a holding company without a vote of the stockholders of the
constituent corporations.
In accordance
with Section 251(g) of the DGCL, Premier Services, Inc. (“Merger Sub”), another newly formed Delaware corporation
and, prior to the Holding Company Reorganization, was an indirect, wholly owned subsidiary of the Predecessor, merged with and
into the Predecessor, with the Predecessor surviving the merger as a direct, wholly owned subsidiary of the Holding Company (the
“Merger”). The Merger was completed pursuant to the terms of an Agreement and Plan of Merger among the Predecessor,
the Holding Company and Merger Sub, dated February 22, 2018 (the “Merger Agreement”).
As of the
effective time of the Merger and in connection with the Holding Company Reorganization, all duly authorized outstanding shares
of common stock and preferred stock of the Predecessor were automatically converted into identical shares of common stock or preferred
stock, as applicable, of the Holding Company on a one-for-one basis, and the Predecessor’s existing stockholders and other
holders of equity instruments, became stockholders and holders of equity instruments, as applicable, of the Holding Company in
the same amounts and percentages as they were in the Predecessor prior to the Holding Company Reorganization.
The executive
officers and board of directors of the Holding Company are the same as those of the Predecessor in effect immediately prior to
the Holding Company Reorganization.
For purposes
of Rule 12g-3(a), the Holding Company is the successor issuer to the Predecessor, now as the sole shareholder of the Predecessor.
Accordingly, upon consummation of the Merger, the Holding Company’s common stock was deemed to be registered under Section 12(b)
of the Securities Exchange Act of 1934, as amended, pursuant to Rule 12g-3(a) promulgated thereunder.
On February
22, 2018, the Predecessor changed its name and then re-domiciled from Wyoming to Delaware. Immediately following such re-domiciliation,
the Holding Company adopted a certificate of incorporation (the “Certificate”) and bylaws (the “Bylaws”)
that are, in all material respects, identical to the certificate of incorporation and bylaws of the Predecessor immediately prior
to the Holding Company Reorganization, with the possible exception of certain amendments that are permissible under Section 251(g)(4)
of the DGCL. The Holding Company has the same authorized capital stock and the designations, rights, powers and preferences of
such capital stock, and the qualifications, limitations and restrictions thereof are the same as that of the Predecessor’s
capital stock immediately prior to the Holding Company Reorganization.
The common
stock of the Holding Company trades on OTCMarkets under the symbol “PMPG” under which the common stock of the Predecessor
was previously listed and traded. As a result of the Holding Company Reorganization, the common stock of the Predecessor will
no longer be publicly traded.
On September
17, 2018, the Company filed Form 15 in an effort to temporarily suspend its duty to file reports under Sections 13 and 15(d) of
the Securities Exchange Act of 1934. Due to the Company’s number of shareholders exceeding the limit of 300 shareholders
for the form to be effective (the company has 1,204 shareholders of record), the Company filed a Form 15/A Cancellation Notice
on September 28, 2018 and will continue with its reporting obligations.
On January
5, 2018, the Company issued a press release announcing it had executed a non-binding letter of intent that it was to acquire a
crypto mining company. The two parties were unable to clear satisfactory due diligence and close in a timely manner and
the agreement was cancelled.