The Company’s policy is to expense advertising costs when they are incurred.
In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. The Company’s convertible debt is considered anti-dilutive due to the Company’s net loss for the twelve months ended February 29, 2016 and 2015. As a result, the Company did not have any potentially dilutive common shares for those periods. For the three months ended October 31, 2014 and 2013, potentially issuable shares as a result of conversions of convertible notes payable have been excluded from the calculation. At February 29, 2016, the Company had 433,478,445 potentially issuable shares upon the conversion of convertible notes payable and interest. Based on our stock price on February 29, 2016, the value of these shares if exercised would be $184,243,230.
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.
|
|
|
|
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 February 29, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.
Reclassifications
Certain reclassifications have been made to the prior year financial statements to conform with the current year presentation.
Commitments and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. See Note 14 for a discussion of the Company’s commitments and contingencies.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recently Issued Accounting Pronouncements
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
In April 2015, the FASB issued ASU No. 2015-03,
Simplifying the Presentation of Debt Issuance Costs
. To simplify presentation of debt issuance costs, the amendments in ASU No. 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company is required to adopt the provisions of ASU 2015-03 beginning with the fiscal year ending February 28, 2017. The Company has chosen to adopt this ASU during the year ended February 29, 2016. As a result, we reclassified debt issuance costs of $2,000 from current assets to current liabilities.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which modifies the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from all leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, which is the year ending February 29, 2020 for the Company. Early application is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on their financial position and results of operations.
Note 4. Disposal of Crawford Mobile Installation Corp.
The Company has defaulted on the $90,000 promissory note to John Crawford that was signed on March 25, 2011. Per the terms of the note, upon default the Company is to provide Mr. Crawford with 100% of the shares that it holds in Crawford Mobile Installation Corp (“CMIC”). On September 1, 2014, the Company notified Mr. Crawford that it was in default on the note, triggering the transfer of CMIC to Mr. Crawford. As a result of the notice of default on the note payable to Mr. Crawford and effective August 31, 2014, the Company determined that assets related to discontinued operations were impaired. The Company wrote down assets related to discontinued operations to their net realizable value and recognized a loss of $6,425. On September 1, 2014, all of the assets and liabilities of CMIC reverted to Mr. Crawford. We recognized no additional gain or loss on this transaction on September 1, 2014.
- 20 -
The Company recognizes CMIC as a discontinued operation, in accordance with ASU 2014-08
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
.
There were no assets and liabilities of discontinued operations as of February 29, 2016 and February 28, 2015.
Income and Expenses of Discontinued Operations
|
|
|
|
|
Year ended
February 28,
2015
|
|
|
|
|
Revenue
|
$
|
50,027
|
|
Cost of goods sold
|
|
28,677
|
|
Gross profit
|
|
21,350
|
|
|
|
|
|
General and administrative expenses
|
|
43,259
|
|
|
|
|
|
Loss due to CMIC
|
$
|
(21,909
|
)
|
|
|
|
|
Total loss on CMIC in consolidated statements of operations
|
|
(21,909
|
)
|
Note 5. Advances
During the years ended February 29, 2016 and February 28, 2015, the Company received unsecured advances totaling $523,642 and $392,922, respectively. These advances are non-interest bearing and payable on demand. Vista View Ventures, Inc. provided $522,048 and $392,922 of these advances for years ended February 29, 2016 and February 28, 2015, respectively. As discussed in note 6, the advances were paid from Vista View Ventures Inc. to KMDA and then by KMDA to the Company on behalf of Vista View Ventures, Inc. These advances are typically converted to convertible notes on a quarterly basis.
During the years ended February 29, 2016 and February 28, 2015, we refinanced $522,048 and $522,959, respectively, of non-interest bearing advances into convertible notes. See Note 7.
At February 29, 2016 and February 28, 2015, we did not owe Vista View Ventures Inc. anything for advances provided to us.
At February 29, 2016 and February 28, 2015, we owed a third party. $1,594 and $0, respectively, for advances provided to us.
Note 6. Related Party Transactions
Our officers and are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. We have not formulated a policy for the resolution of such conflicts.
During the years ended February 29, 2016 and February 28, 2015, we paid Robert Wilson $108,461 and $130,000, respectively, for his services as CEO.
Conversion of Related Party Convertible Note
On April 1, 2015, Panama iPhone Corp. (formerly Masclo Investment Corporation), a significant shareholder of the Company, converted $100,000 of principal and accrued interest on the convertible note dated January 31, 2015 into 1,000,000 shares of common stock. As of February 29, 2016, the remaining principal balance on the convertible note was $66,889.
On June 25, 2015, Panama iPhone Corp. converted $68,447 of principal and accrued interest on the convertible note dated January 31, 2015 into 684,467 shares of common stock. As of February 29, 2016, there was remaining principal balance or accrued interest on the convertible note.
- 21 -
Services Provided by KM Delaney & Assoc.
During the year ended February 29, 2016 and 2015, KM Delaney & Associates (“KMDA”), a service provider to the Company, has provide office space and certain administrative functions to us under a management services agreement. The services provide include a furnished executive suite, use of office equipment and supplies, accounting and bookkeeping services, treasury and cash management services, financial reporting, and other support staffing requirements. The management services agreement calls for monthly payments of $18,000 during calendar year 2015 and $17,550 during calendar 2016. As part of the services provided to the Company, KMDA receives the advances from the lender (See note 4) and disburses those funds to us. During the years ended February 29, 2016 and 2015, KMDA billed us $202,354 and $187,111, respectively, for those services. As of February 29, 2016 and February 28, 2015, we owed KMDA $198,568 and $217,589, respectively. These amounts are included in accounts payable on the balance sheet.
Lease of Delivery Van
In December 2015, we leased a delivery van from an individual. The lessor is a relative of the owner of KMDA. The lease calls for monthly payments of $350 for a period of three years. The lease cost includes the operating cost and insurance on the van. We determined that the lease should be accounted for as a capital lease. We recorded the van as a fixed asset based on the present value of the future lease payments of $11,766. We immediately impaired the value of the van by comparing the present value of the future lease payments to the fair market value of the van and recognized impairment of $7,845.
Note 7. Convertible Notes Payable
Convertible notes payable consist of the following as of February 29, 2016 and February 28, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
|
|
Maturity
|
|
Interest Rate
|
|
Conversion
Rate per Share
|
|
Balance
February 29,
2016
|
|
Balance
February 28,
2015
|
|
February 28, 2011
|
|
February 27, 2013
|
|
7%
|
|
$0.015
|
|
$
|
32,600
|
|
$
|
32,600
|
|
January 31, 2013
|
|
February 28, 2016
|
|
10%
|
|
$0.01
|
|
|
120,562
|
|
|
138,395
|
|
May 31, 2013
|
|
November 30,2016
|
|
10%
|
|
$0.01
|
|
|
261,595
|
|
|
261,595
|
|
November 30, 2013
|
|
November 30, 2017
|
|
10%
|
|
$0.01
|
|
|
396,958
|
|
|
396,958
|
|
August 31, 2014
|
|
August 31, 2016
|
|
10%
|
|
$0.002
|
|
|
355,652
|
|
|
355,652
|
|
November 30, 2014
|
|
November 30, 2016
|
|
10%
|
|
$0.002
|
|
|
103,950
|
|
|
103,950
|
|
February 28, 2015
|
|
February 28, 2017
|
|
10%
|
|
$0.001
|
|
|
63,357
|
|
|
63,357
|
|
May 31, 2015
|
|
May 31, 2017
|
|
10%
|
|
$1.00
|
|
|
65,383
|
|
|
—
|
|
August 31, 2015
|
|
August 31, 2017
|
|
10%
|
|
$0.30
|
|
|
91,629
|
|
|
—
|
|
November 30, 2015
|
|
November 30, 2018
|
|
10%
|
|
$0.30
|
|
|
269,791
|
|
|
—
|
|
February 3, 2016
|
|
February 3, 2017
|
|
5%
|
|
49% discount
|
|
|
46,000
|
|
|
—
|
|
February 29, 2016
|
|
February 28, 2019
|
|
10%
|
|
60% discount
|
|
|
95,245
|
|
|
—
|
|
Total convertible notes payable
|
|
|
|
$
|
1,902,722
|
|
$
|
1,352,507
|
|
|
|
|
|
|
|
|
|
|
|
Less: short-term convertible notes payable
|
|
|
|
|
(46,000
|
)
|
|
—
|
|
Less: current portion of convertible notes payable
|
|
|
|
|
(937,716
|
)
|
|
(829,548
|
)
|
Less: discount on noncurrent convertible notes payable
|
|
|
|
|
(500,485
|
)
|
|
(500,339
|
)
|
Convertible notes payable, net of discount
|
|
|
|
$
|
418,521
|
|
$
|
22,620
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible notes payable
|
|
|
|
|
937,716
|
|
|
829,548
|
|
Less: discount on current portion of convertible notes payable
|
|
|
|
|
(422,298
|
)
|
|
(380,949
|
)
|
Current portion of convertible notes payable, net of discount
|
|
|
|
$
|
515,418
|
|
$
|
448,599
|
|
|
|
|
|
|
|
|
|
|
|
Short-term convertible notes
|
|
|
|
|
46,000
|
|
|
—
|
|
Less: discount on short-term convertible notes
|
|
|
|
|
(7,333
|
)
|
|
—
|
|
Short-term convertible notes, net of discount
|
|
|
|
$
|
38,667
|
|
$
|
—
|
|
All of the notes above are unsecured. The notes dated February 28, 2011 and January 31, 2013 are currently is in default and bear default interest at 18% per annum.
- 22 -
Convertible notes issued
During the year ended February 29, 2016, we refinanced $522,048 of non-interest bearing advances into a convertible note. All principal and accrued interest is payable on the maturity date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
|
|
Maturity
|
|
Interest Rate
|
|
Conversion
Rate per Share
|
|
Amount
of Note
|
|
Original Issue Discount
|
|
Beneficial Conversion Feature
|
|
May 31, 2015
|
|
May 31, 2017
|
|
10%
|
|
$
|
1.00
|
|
$
|
65,383
|
|
$
|
—
|
|
$
|
65,383
|
|
August 31, 2015
|
|
August 31, 2017
|
|
10%
|
|
|
0.30
|
|
|
91,629
|
|
|
—
|
|
|
91,629
|
|
November 30, 2015
|
|
November 30, 2018
|
|
10%
|
|
|
0.30
|
|
|
269,791
|
|
|
—
|
|
|
269,791
|
|
February 3, 2016
|
|
February 3, 2017
|
|
5%
|
|
|
49% discount (1)
|
|
|
46,000
|
|
|
6,000
|
|
|
—
|
|
February 29, 2016
|
|
February 28, 2019
|
|
10%
|
|
|
60% discount (2)
|
|
|
95,245
|
|
|
—
|
|
|
95,245
|
|
Total
|
|
|
|
|
|
|
|
|
$
|
568,048
|
|
$
|
6,000
|
|
$
|
522,048
|
|
__________
|
|
(1)
|
This note is convertible beginning six months after the date of issuance at 49% discount to the lowest trading price over the preceding 20 trading days
|
|
|
(2)
|
This note is convertible at a 60% discount to the volume weighted average closing price over the preceding five trading days, subject to the condition that the conversion price shall never be less than $0.01 per share.
|
During the year ended February 28, 2018, we refinanced $522,959 of non-interest bearing advances into a convertible note. All principal and accrued interest is payable on the maturity date.