NOTES
TO UNAUDITED FINANCIAL STATEMENTS
(Unaudited)
|
1.
|
BASIS
OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Organization
and Description of Business
Vet
Online Supply Inc. (the Company) is a Florida corporation incorporated on May 31, 2014. The Company engages in the
online sale of its own holistic product line for pets, as well as targeting the larger Big-Box Pet retail suppliers, and during
the first quarter of 2018, discontinued its legacy veterinarian supplies lines. The company discontinued its legacy line of products
to increase margins and profitability with its own brand-name holistic products. These new holistic pet products are designed
to help with arthritis, compromised immune systems, stress responses, aggression and digestive issues and may also be useful in
treating acute ailments like sprains and strains, torn ligaments, bone breaks and even during post-operative care to reduce swelling,
pain and stiffness. The Companys web-based eCommerce platform with our products is on our website,
www.vetonlinesupplies.com
.
The website gives our potential clients the ability to purchase quality pet products by placing their order any time of day at
their convenience.
Distribution
channels include its existing online retail sales platform and fulfillment, and direct sales through its global manufacturing
sales representative network. Although selling pet products online is not entirely new to the company, we anticipate that this
medium will continue to grow as our brand continues to achieve recognition. We believe that by providing high quality holistic
pet products at competitive prices and to customers online, Vet Online Supply hopes to become a go-to solution for
pet owners everywhere. In addition, online vs. catalogue has the benefit of, among other things, search tools and accounts that
remember previous purchases, and expedited ordering.
During
August 2015 the Company filed amended articles with the Florida Secretary of State to:
-
|
Set
a series of preferred stock, each one share being convertible into one share of common stock and with no voting rights;
|
|
|
-
|
Set
par value for each of the preferred and common stock at $0.001 per share.
|
On
July 25, 2016, the Company filed a Certificate of Amendment with the State of Florida to increase the authorized Common Stock,
par value $0.001, to 8,000,000,000 common shares, and to
affect
a forward split of 150 shares for each 1 share of the Companys issued Common Stock (Forward Split).
The
effective date of the Forward Split is July 28, 2016.
All
share and per share data contained in these financial statements reflects the retroactive application of the aforementioned forward
share split.
On
August 28, 2017 the Board of Directors accepted the resignation of Mr. Edward Aruda as the Chief Executive Officer, President,
Secretary and Treasurer. The resignations of Mr. Aruda were not due to any disagreements with the Company on any matter
relating to its operations, policies or practices.
On
August 28, 2017 the Board of Directors appointed Mr. Daniel Rushford as the Chief Executive Officer, President, Secretary, Treasurer,
and a Member of the Board of Directors.
On
November 9, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 1,000,000,000
to 3,000,000,000 with a par value of $0.001.
On
December 13, 2017, the Company received a customer order for $202,184.00 in merchandise. The order is expected to ship during
the second quarter of 2018, at which time the Company will recognize the revenue on its income statement.
On
December 14, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 3,000,000,000
to 10,000,000,000 with a par value of $0.001.
On
February 6, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 10,000,000,000
to 15,000,000,000 with a par value of $0.001.
On
February 7, 2018, the Company received a customer order for $529,790.00 in merchandise. The order is expected to ship in the third
quarter of 2018 at which time the Company will recognize the revenue on its income statement.
On
February 22, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 15,000,000,000
to 25,000,000,000 with a par value of $0.001.
On
February 23, 2018, the Company entered into an Exclusive Agreement for Distribution with a west coast distributor, whereby the
distributor will exclusively distribute on the west coast for the companys CDB Products. The distributor has committed
to and submitted a purchase order for $3,000,000 of product at negotiable prices for a period of 24 months for distribution.
On
March 15, 2018, the Company announced that its Board of Directors has determined that it is in the best interests of the Corporation
to initiate a program to reacquire certain shares of stock from its stockholders, and to thereafter retire said shares as non-voting
Treasury stock. The Corporation has approved a Share Repurchase Program (the Program) to accomplish this. The Corporation
hereby will make an offer of redemption to its shareholders in accordance with the terms of the Program. The specific timing,
price and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations.
The Program does not obligate the Company to acquire any particular amount of stock, and the Program may be suspended or discontinued
at any time at the Companys discretion.
On
April 3, 2018, the Company agreed to enter in to a 12-month exclusive agreement with a west coast distributor, whereas the distributor
has agreed to purchase $6,500,000 of Oral Pet Sprays from Vet Online Supply Inc. during the next 12 months. The Company is allowing
the distributor an exclusive agreement to purchase and place our CBD Pet products in California marijuana dispensaries through
April 3, 2019.
On
April 30, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 25,000,000,000
to 50,000,000,000 with a par value of $0.001.
The
company is in process of hiring up to 200 manufacturing sales representatives, whereas 100 sales representatives will be allocated
and managed by the National Sales Rep, and the remaining 100 sales representatives will be allocated for Europe. In consideration
of services performed, the Company will pay a commission of 25% of gross proceeds to be paid in cash and 10% of gross proceeds
to be paid in restricted common stock. In addition, the Company agreed to pay a fee of $25,000 in the form of restricted common
stock upon signing of the Agreement on August 1, 2018.
On
October 25, 2018, the Companys Board of Directors authorized the creation of 2,000,000 shares of Series A Preferred Stock
with a par value of $0.001, and on October 30, 2018 a Certificate of Designation was filed with the Florida Secretary of State.
Upon written notice to the Corporation, the holder of Series A Preferred stock may convert their shares into ten (10) shares of
fully paid and nonassessable shares of Common Stock of the Corporation. The holders shall have no voting rights on corporate matters,
unless and until they convert their Series A shares into Common Shares, at which time they will have the same voting rights as
all Common Shareholders have; their consent shall not be required for taking any corporate action.
To
date, our activities have been limited to formation, the raising of equity capital, and the initial stages of implementation of
our business plan. We filed a Form S-1 Registration Statement with the U.S. Securities and Exchange Commission, received a notice
of effect and trade on the OTC Markets, PINK under the symbol VTNL. We are continuing to explore additional sources of capital.
We anticipate incurring operating losses as we continue to implement our business plan.
Financial
Statement Presentation
The
audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in
the United States of America (U.S. GAAP).
Fiscal
year end
The
Company has selected December 31 as its fiscal year end.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future
periods may be based upon amounts that differ from these estimates.
Cash
Equivalents
The
Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.
Revenue
Recognition and Related Allowances
The
Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) as amended, as of
January 1, 2018 with no material impact. The Company primarily generates net revenue through product sales to distributors and
to retail customers on its website. Revenue is recognized upon transfer of control of promised products to customers which is
generally upon shipment in an amount that reflects the consideration we expect to receive in exchange for those products or services.
Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to
governmental authorities.
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are
provided based on historical experience and managements evaluation of outstanding accounts receivable. Management evaluates
past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts
at September 30, 2018 and December 31, 2017 is $0.
Inventories
The
Company is a manufacturer of premium CBD infused holistic pet products and as such will maintain inventory on site. The company
directly drops ships to customers when ordered. The Company has wholesale distributors that purchase products in bulk inventory.
Warranty
The
Company is a manufacturer of products which are shipped to our customers directly from the company and as a result, there are
costs that may be incurred by the Company under the terms of the limited warranty provided by the company directly to the purchasers.
We provide provisions for obligations which may arise under manufacturers warranties and therefore incur liabilities. We
warranty the product for packaging and shipping.
Advertising
and Marketing Costs
The
company provides website online marketing of its products, as well as wholesalers who market the product. The company also utilises
various public press releases to provide public information about its product line and future products under development. Advertising
and marketing costs are expensed as incurred and were $0 during the nine months ended September 30, 2018 ($0 – September
30, 2017).
Fair
Value of Financial Instruments
Fair
value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly
transaction between market participants at the measurement date and in the principal or most advantageous market for that asset
or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset
or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration
of non-performance risk including our own credit risk.
In
addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value
hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which
inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three
levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.
These
levels are:
Level
1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level
2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments
in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the
market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level
3 - inputs are generally unobservable and typically reflect managements estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include
option pricing models, discounted cash flow models, and similar techniques.
Financial
assets and liabilities measured at fair value on a recurring basis:
|
|
Input
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
|
|
Level
|
|
Fair Value
|
|
|
Fair Value
|
|
Derivative Liability
|
|
3
|
|
$
|
1,813,764
|
|
|
$
|
625,214
|
|
Total Financial Liabilities
|
|
|
|
$
|
1,813,764
|
|
|
$
|
625,214
|
|
In
managements opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value
as the interest rates and other features of these instruments approximate those obtainable for similar instruments in the current
market. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, exchange
or credit risks arising from these financial instruments. As of September 30, 2018 and December 31, 2017, the balances reported
for cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate the fair value because
of their short maturities.
Income
taxes
The
Company has adopted SFAS No. 109 – Accounting for Income Taxes. ASC Topic 740 requires the use of the asset
and liability method of accounting for income taxes. Under the asset and liability method of ASC Topic 740, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled.
Basic
and Diluted Loss Per Share
In
accordance with ASC Topic 280 – Earnings Per Share, the basic loss per common share is computed by dividing
net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares
were dilutive.
Recent
Accounting Pronouncements
In
May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606)
, which replaces existing revenue
recognition guidance. The updated guidance requires companies to recognize revenue in a way that depicts the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing
and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the standard on January 1,
2018, using a modified retrospective approach, with the cumulative effect of initially applying the standard recognized in retained
earnings at the date of adoption.
While
the Company does not expect the adoption of this standard to have a material impact on the Companys net
Revenues
in the Consolidated Statements of Income, the Company anticipates revenues for certain wholesale transactions and substantially
all digital commerce sales will be recognized upon shipment rather than upon delivery to the customer.
Additionally,
provisions for post-invoice sales discounts, returns and miscellaneous claims will be recognized as accrued liabilities rather
than as reductions to
Accounts receivable, net
; and the estimated cost of inventory associated with the provision for sales
returns will be recorded within
Prepaid expenses and other current assets
on the Balance Sheets. The Company continues
to evaluate the impact of this new standard, including on accounting policies, disclosures, internal control over financial reporting
and its contracts with customers.
In
February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including
requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset
and corresponding lease liability, measured at the present value of the lease payments. The amendments in this ASU are effective
for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is
permitted. The Company is in the process of assessing the impact on its consolidated financial statements.
In
July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives
and Hedging (Topic 815). Among other provisions, this ASU requires that when determining whether certain financial instruments
should be classified as liabilities or equity instruments, an entity should not consider the down round feature. The ASU also
recharacterizes as a scope exception the indefinite deferral available to private companies with mandatorily redeemable financial
instrument and certain noncontrolling interests, which does not have an accounting effect but addresses navigational concerns
within the FASB Accounting Standards Codification. The provisions of the ASU related to down rounds are effective for public business
entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is
permitted. The Company is in the process of assessing the impact on its consolidated financial statements.
The
Company has experienced net losses to date, and it has not generated sufficient revenue from operations to meet our operational
overhead. We will need additional working capital to service debt and for ongoing operations, which raises substantial doubt about
our ability to continue as a going concern. Management of the Company is preparing a strategy to meet operational shortfalls which
may include equity funding, short term or long-term financing or debt financing, to enable the Company to reach profitable
operations. Historically, the Companys sole officer and director has provided short term loans to meet working capital shortfalls.
We have recently entered into financing agreements with various third parties to meet our capital needs in fiscal 2018.
The
accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying
amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
|
3.
|
RESELLER
AGREEMENT AND PROMISSORY NOTE
|
On
June 1, 2014 the Company entered into a Reseller Agreement with Concord Veterinary Supplies Inc., (Concord), where
under Concord has authorized the non-exclusive right to Vet Online Supply, Inc. to market, promote, advertise, sell, distribute
and deliver, veterinary products carried by Concord Veterinary Supply, which are listed on www.concord-surgical.com, for a one-time
fee of $50,000. The fee payable has been secured by an interest free convertible promissory note (the Note) due within
ninety (90) days of the Company getting notice of effect from its S-1 Registration Statement as filed with the Securities and
Exchange Commission, which occurred December 22, 2015. At any time prior to maturity of the Note, Concord Veterinary Supply may
elect to convert the debt amount into shares of the common stock of the Company at a fixed price of $0.000667 per share.
There
is no beneficial conversion feature resulting from the conversion price compared to market price.
On
April 11, 2017 Concord Veterinary Supply agreed to cancel its outstanding promissory note in the amount of $50,000 for no further
consideration. The Company recorded a gain on debt forgiveness of $50,000.
On
March 22, 2018, the Company terminated all contracts with Concord Veterinary Supply for the purchase and distribution of veterinary
products.
|
4.
|
CONVERTIBLE
NOTES PAYABLE
|
As
of September 30, 2018 and December 31, 2017, notes payable were comprised of the following:
|
|
Original
|
|
Original
|
|
Due
|
|
Interest
|
|
Conversion
|
|
September 30,
|
|
|
December 31,
|
|
|
|
Note Amount
|
|
Note Date
|
|
Date
|
|
Rate
|
|
Rate
|
|
2018
|
|
|
2017
|
|
APG Capital #1
|
|
31,500
|
|
11/20/2017
|
|
11/20/2018
|
|
12%
|
|
Variable
|
|
$
|
—
|
|
|
$
|
31,500
|
|
APG Capital #2
|
|
31,500
|
|
6/25/2018
|
|
6/25/2019
|
|
12%
|
|
Variable
|
|
|
31,500
|
|
|
|
—
|
|
Auctus Fund #1
|
|
64,000
|
|
6/16/2017
|
|
3/16/2018
|
|
8%
|
|
Variable
|
|
|
—
|
|
|
|
59,109
|
|
Auctus Fund #2
|
|
84,000
|
|
1/10/2018
|
|
10/10/2018
|
|
8%
|
|
Variable
|
|
|
76,724
|
|
|
|
—
|
|
Auctus Fund #3
|
|
175,000
|
|
2/6/2018
|
|
11/6/2018
|
|
8%
|
|
Variable
|
|
|
175,000
|
|
|
|
—
|
|
Auctus Fund #4
|
|
90,000
|
|
3/6/2018
|
|
12/6/2018
|
|
12%
|
|
Variable
|
|
|
90,000
|
|
|
|
—
|
|
Auctus Fund #5
|
|
100,000
|
|
6/14/2018
|
|
3/14/2019
|
|
12%
|
|
Variable
|
|
|
100,000
|
|
|
|
—
|
|
Auctus Fund #6
|
|
75,000
|
|
8/13/2018
|
|
5/13/2019
|
|
12%
|
|
Variable
|
|
|
75,000
|
|
|
|
—
|
|
Crown Bridge Partners
|
|
25,500
|
|
6/19/2017
|
|
6/19/2018
|
|
2%
|
|
Variable
|
|
|
—
|
|
|
|
25,500
|
|
EMA Financial #1
|
|
45,000
|
|
5/1/2017
|
|
5/1/2018
|
|
8%
|
|
Variable
|
|
|
14,965
|
|
|
|
3,402
|
|
EMA Financial #2
|
|
50,000
|
|
12/15/2017
|
|
12/15/2018
|
|
12%
|
|
Variable
|
|
|
26,670
|
|
|
|
50,000
|
|
EMA Financial #3
|
|
100,000
|
|
3/5/2018
|
|
3/5/2019
|
|
8%
|
|
Variable
|
|
|
100,000
|
|
|
|
—
|
|
Emerging Corp Capital
|
|
83,333
|
|
2/12/2018
|
|
2/11/2019
|
|
8%
|
|
Variable
|
|
|
74,933
|
|
|
|
—
|
|
LG Capital Funding #1
|
|
50,000
|
|
5/25/2017
|
|
5/25/2018
|
|
8%
|
|
Variable
|
|
|
—
|
|
|
|
17,500
|
|
LG Capital Funding #2
|
|
44,200
|
|
8/10/2017
|
|
4/10/2018
|
|
8%
|
|
Variable
|
|
|
—
|
|
|
|
44,200
|
|
Power Up Lending #3
|
|
45,000
|
|
11/20/2017
|
|
8/30/2018
|
|
12%
|
|
Variable
|
|
|
—
|
|
|
|
45,000
|
|
Power Up Lending #4
|
|
28,000
|
|
12/20/2017
|
|
9/30/2018
|
|
12%
|
|
Variable
|
|
|
—
|
|
|
|
28,000
|
|
Power Up Lending #5
|
|
33,000
|
|
2/28/2018
|
|
11/5/2018
|
|
12%
|
|
Variable
|
|
|
—
|
|
|
|
—
|
|
Power Up Lending #6
|
|
33,000
|
|
4/12/2018
|
|
1/30/2019
|
|
12%
|
|
Variable
|
|
|
33,000
|
|
|
|
—
|
|
Power Up Lending #7
|
|
33,000
|
|
5/3/2018
|
|
2/15/2019
|
|
12%
|
|
Variable
|
|
|
33,000
|
|
|
|
—
|
|
Power Up Lending #8
|
|
33,000
|
|
6/25/2018
|
|
4/15/2019
|
|
12%
|
|
Variable
|
|
|
33,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
863,792
|
|
|
|
304,211
|
|
Debt discount
|
|
|
|
|
|
|
|
|
|
|
|
|
(337,435
|
)
|
|
|
(208,149
|
)
|
Financing costs./Original issue discount
|
|
|
|
|
|
(43,488
|
)
|
|
|
(30,837
|
)
|
Notes payable, net of discount
|
|
|
$
|
482,869
|
|
|
$
|
65,225
|
|
During
the nine months ending September 30, 2018, the Company received proceeds from new convertible notes of $774,500. The Company recorded
no payments on their convertible notes, and conversions of $390,478 of convertible note principal. The Company recorded penalties
of $47,727, of which $32,762 was converted into the Companys common stock. The Company recorded loan fees on new convertible
notes of $127,833, which increased the debt discounts recorded on the convertible notes during the nine months ending September
30, 2018. All of the Companys convertible notes have a conversion rate that is variable, and therefore, the Company has
accounted for their conversion features as derivative instruments (see Note 5). As a result of recording derivative liabilities
at note inception, the Company increased the debt discount recorded on their convertible notes by $991,083 during the nine months
ended September 30, 2018. The Company also recorded amortization of $861,796 on their convertible note debt discounts and $115,182
on loan fees. As of September 30, 2018, the convertible notes payable are convertible into 4,238,835,112 shares of the Companys
common stock.
During
the nine months ending September 30, 2017, the Company received proceeds from new convertible notes of $322,275. The Company recorded
no payments on their convertible notes, and conversions of $8,000 of convertible note principal. The Company recorded loan fees
on new convertible notes of $63,425, which increased the debt discounts recorded on the convertible notes during the nine months
ending September 30, 2017. The Companys convertible notes have a conversion rate that is variable, and therefore, the Company
has accounted for their conversion features as derivative instruments (see Note 5). As a result of recording derivative liabilities
at note inception, the Company increased the debt discount recorded on their convertible notes by $353,980 during the nine months
ended September 30, 2017. The Company also recorded amortization of $159,410 on their convertible note debt discounts and $24,733
on loan fees.
During
the nine months ended September 30, 2018 and 2017, the Company recorded interest expense of $52,495 and $11,757, respectively,
on its convertible notes payable. During the nine months ended September 30,2018, the Company recorded conversions of $15,852
of convertible note interest. As of September 30, 2018, the accrued interest balance was $42,876.
As
of September 30, 2018, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive
acquisitions and activities.
|
5.
|
DERIVATIVE
LIABILITIES
|
The
following table represents the Companys derivative liability activity for the embedded conversion features for the years
ending September 30, 2018 and December 31, 2017:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
$
|
625,214
|
|
|
$
|
—
|
|
Initial recognition of derivative liability
|
|
|
5,049,659
|
|
|
|
1,086,498
|
|
Conversion of derivative instruments to Common Stock
|
|
|
(1,733,419
|
)
|
|
|
(644,469
|
)
|
Mark-to-Market adjustment to fair value
|
|
|
(2,127,690
|
)
|
|
|
183,185
|
|
Balance, end of period
|
|
$
|
1,813,764
|
|
|
$
|
625,214
|
|
During
the nine months ended September 30, 2018, the Company recorded derivative liabilities for embedded conversion features related
to convertible notes payable of $5,049,659.
During
the nine months ended September 30, 2018, in conjunction with convertible notes payable principal and accrued interest being converted
into common stock of the Company, derivative liabilities were reduced by $1,733,419.
For
the nine months ended September 30, 2018, the Company performed a final mark-to-market adjustment for the derivative liability
related to the convertible notes and the carrying amount of the derivative liability related to the conversion feature and recognized
a gain on the derivative liability valuation of $2,127,690.
The
Company uses the Black-Scholes option pricing model to estimate fair value for those instruments convertible into common shares
at inception, at conversion or extinguishment date, and at each reporting date. During the nine months ended September 30, 2018,
the company used the following assumptions in their Black-Scholes model: (1) risk free interest rate 1.32% - 2.94%, (2) term of
0.11 years – 4.87 years, (3) expected stock volatility of -456.68% - 426.93%, (4) expected dividend rate of 0%, (5) common
stock price of $0.0005 - $0.0047, and (6) exercise price of $0.00017 - $0.001.
These
instruments were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or
any net investment in a foreign operation. The instruments do not qualify for hedge accounting, and as such, all future changes
in the fair value will be recognized in earnings until such time as the instruments are exercised, converted or expire.
On
March 28, 2017, the Company filed an amendment to its articles of incorporation designating 20,000 shares of its authorized preferred
stock, par value $0.001 as Series B Voting Preferred Stock. The Series B Voting Preferred Stock shall have the right to vote the
shares on any matter requiring shareholder approval on the basis of 4 times the votes of all the issued and outstanding shares
of common stock, as well as any issued and outstanding preferred stock.
On
April 7, 2017, the Company issued 20,000 shares of Series B Voting Preferred Stock to Edward Aruda.
The
Company obtained a third-party valuation of the preferred stock to determine the fair value as at the date of issue. The report
results provided for a value of $
21,000 as stock-based compensation as part of consulting expenses.
On
August 28, 2017 the certificate for 20,000 shares of Series B Voting Preferred Stock to Edward Aruda was returned to the Company.
On January 12, 2018, the certificate was cancelled and on March 1, 2018, 1,000 shares of Series B Voting Preferred Stock were
issued to Daniel Rushford.
As
of September 30, 2018, 2,000,000 Series A Preferred shares and 10,000,000 Series B Preferred shares were authorized, of which
0 Series A shares were issued and outstanding, (0 shares as of December 31, 2017) and 1,000 Series B shares were issued and outstanding
(1,000 shares as of December 31, 2017).
During
the year ended December 31, 2016, the Company has received proceeds totaling $35,500 from various parties subscribing for a total
of 53,250,000 shares at $0.000667 per share under our Form S-1 registration statement. 53,250,000 shares of the Companys common
stock were issued in respect of these subscriptions.
On
July 25, 2016, 1,500,000,000 shares of treasury stock were returned.
On
December 2, 2016, our sole officer and director, Mr. Edward Aruda, returned 7,361,250,000 shares of the Companys common stock
for no consideration. Mr. Aruda was originally issued 7,500,000,000 shares as a signing bonus in fiscal 2015.
On
March 28, 2017, the Company filed an amendment to its articles of incorporation reducing the number of authorized common shares
from 8,000,000,000 to 1,000,000,000, with a par value $0.001.
On
March 28, 2017, the Company approved the issuance of 1,920,000 shares of the Companys common stock for services provided by a
consultant, in the form of stock awards which shall vest as of the date of grant. The shares were valued at the fair market value
on the date of grant totaling $96,000, which amount has been expensed as stock-based compensation as part of consulting expenses.
On
May 16, 2017, the Company amended the terms of a consulting agreement so that $15,000 in services payable by shares of common
stock shall convert at $0.01 per share for a total of 1,500,000 common shares. The shares were issued as of the date of the amendment
and were valued at $82,500, or $0.055 per share based on the fair market value on the date of the agreement. The Company recorded
the additional $67,500 as stock-based compensation which is included in consulting fees.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 20,000,000 restricted common shares with a value
of $200,000 at a price of $.01 to Robert Sullivan, pursuant to the Agreement dated October 2, 2017. The shares were issued on
November 13, 2017 and were valued at $220,000 or $0.011 per share, based on the fair market value on the date of the issuance,
and $20,000 was recorded as a loss on settlement of debt on the statement of operations.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Samuel Berry to satisfy consulting fees of $50,000, pursuant his agreement dated June 19, 2017. The shares were
issued on November 13, 2017 and were valued at $1,200,000, or $0.016 per share based on the market value on the date the shares
were approved for issuance, and $1,150,000 was recorded as a loss on settlement of debt on the statement of operations.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Matthew Scott to satisfy accrued fees of $50,000, pursuant his agreement dated April 1, 2017. The shares were issued
on November 13, 2017 and were valued at $1,2000,000, or $0.016 per share based on the market value on the date the shares were
approved for issuance, and $1,150,000 was recorded as a loss on settlement of debt of the statement of operations.
On
November 9, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 1,000,000,000
to 3,000,000,000 with a par value of $0.001.
On
December 14, 2017, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 3,000,000,000
to 10,000,000,000 with a par value of $0.001.
During
the year ended December 31, 2017, the holders of convertible notes converted a total of $247,822 of principal and interest into
278,798,173 shares of common stock. The common stock was valued at $898,016 based on the market price of the Companys stock
on the date of conversion. The issuance extinguished $644,469 worth of derivative liabilities, and $143,452 was recorded as additional
paid in capital.
On
February 6, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 10,000,000,000
to 15,000,000,000 with a par value of $0.001.
On
February 22, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 15,000,000,000
to 25,000,000,000 with a par value of $0.001.
On
March 15, 2018, the Company announced that its Board of Directors has determined that it is in the best interests of the Corporation
to initiate a program to reacquire certain shares of stock from its stockholders, and to thereafter retire said shares as non-voting
Treasury stock. The Corporation has approved a Share Repurchase Program (the Program) to accomplish this. The Corporation
hereby will make an offer of redemption to its shareholders in accordance with the terms of the Program. The specific timing,
price and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations.
The Program does not obligate the Company to acquire any particular amount of stock, and the Program may be suspended or discontinued
at any time at the Companys discretion.
On
March 27, 2018, the Company approved the issuance of 21,743,756 shares of the Companys common stock for services provided by
a consultant, in the form of stock awards which shall vest as of the date of grant. The shares were valued at the fair market
value on the date of grant totaling $39,139, which has been expensed as stock-based compensation as part of consulting expenses.
On
April 30, 2018, the Company filed a Certificate of Amendment to increase the number of authorized common shares from 25,000,000,000
to 50,000,000,000 with a par value of $0.001.
During
the nine months ended September 30, 2018, the holders of convertible notes converted a total of $418,080 of principal, accrued
interest, note fees and penalties into 1,863,401,178 shares of common stock. The common stock was valued at $2,151,499 based on
the market price of the Companys stock on the date of conversion. The issuance extinguished $1,733,419 worth of derivative
liabilities, and $288,097 was recorded as additional paid in capital.
As
of September 30, 2018 and December 31, 2017 there were 2,753,877,552 and 669,209,173 shares issued and outstanding, respectively.
Warrants
On
June 19, 2017, the Company executed a Common Stock Purchase Warrant for 850,000 shares. The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price of $0.03 per share for a term of five years. If the market price
of one share of common stock is greater than the Exercise Price, the holder may elect to receive warrant shares pursuant to cashless
exercise.
On
June 14, 2018, the Company executed a Common Stock Purchase Warrant for 50,000,000 shares. The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share for a term of five years. If the market
price of one share of common stock is greater than the Exercise Price, the holder may elect to receive warrant shares pursuant
to cashless exercise.
On
August 13, 2018, the Company executed a Common Stock Purchase Warrant for 37,500,000 shares. The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share for a term of five years. If the market
price of one share of common stock is greater than the Exercise Price, the holder may elect to receive warrant shares pursuant
to cashless exercise.
We
account for common stock purchase warrants as derivative liabilities and debt issuance costs on the balance sheet at fair value,
and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet
date subsequent to the initial issuance of the warrant.
During
the nine months ended September 30, 2018, a warrant holder exercised the warrants and the Company issued 199,523,445 shares of
common stock through a cashless exercise of the warrants.
|
8.
|
RELATED
PARTY TRANSACTIONS
|
Mr.
Matthew C. Scott
, Director
On
April 1, 2017, the Company expanded its board of directors to include Matthew C. Scott. Concurrently, the Company entered
into a consulting agreement with Mr. Scott for a term of one year, whereby Mr. Scott shall receive an annual fee of $100,000 payable
in quarterly installments. Furthermore, effective April 1, 2017 the Company agreed to issue Mr. Scott 2,000,000 shares of restricted
common stock for his services as a director. The shares upon issue will be held by the Company for a term of six months and are
cancelable should Mr. Scott not serve in his capacity as director for a minimum term of six months.
The
Company recorded $140,000 in share-based compensation in respect of the 2,000,000 shares issuable based on the fair market value
on April 1, 2017, which has been recorded on the balance sheet as liabilities for unissued shares. Furthermore, a total of $140,000
has been expensed in the year ending December 31, 2017 as stock-based compensation as part of consulting expenses. As of the date
of this report, the shares have not been issued.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Matthew Scott to satisfy accrued fees of $50,000, pursuant his agreement dated April 1, 2017. The shares were issued
on November 13, 2017 and were valued at $1,2000,000, or $0.016 per share based on the market value on the date the shares were
approved for issuance, and $1,150,000 was recorded as a loss on settlement of debt of the statement of operations.
On
April 1, 2018, the Company agreed to renew the Consulting Agreement dated April 1, 2017 for one year.
During
the nine months ended September 30, 2018, the Company accrued consulting fees of $75,000 and paid $25,000 in cash, leaving $25,000
on the Companys balance sheets as account payable with respect to amounts due to Mr. Scott.
Mr.
Samuel Berry, Director
On
June 19, 2017, the Company entered into a Consulting Agreement with Mr. Samuel Berry. Mr. Berry will receive an annual salary
of $50,000, payable in quarterly installments at $12,500 per quarter.
On
June 19, 2017 the Board of Directors appointed Mr. Samuel Berry as Director. For accepting the position of Director, Mr. Berry
will receive 1,000,000 Shares of the Companys Common Stock, valued at $0.05 per share. Additionally, Mr. Berry will be paid $500
for each board meeting for which he is physically present.
The
Company recorded $50,000 in respect to the value of 1,000,000 unissued shares as liabilities for unissued shares and expensed
$50,000 as stock-based compensation as part of consulting expenses in the period ended June 30, 2017. As of the date of this report,
the shares have not been issued.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Samuel Berry to satisfy consulting fees of $50,000, pursuant his agreement dated June 19, 2017. The shares were
issued on November 13, 2017 and were valued at $1,200,000, or $0.016 per share based on the market value on the date the shares
were approved for issuance, and $1,150,000 was recorded as a loss on settlement of debt on the statement of operations.
On
June 19, 2018, the Company agreed to renew the Consulting Agreement dated June 19, 2017 for one year.
During
the nine months ended September 30, 2018, the Company accrued $16,667 in consulting fees, and paid additional fees of $2,500 for
attending five board meetings at $500 per meeting.
Daniel
Rushford, President, CEO, Secretary, Treasurer and Director
On
August 28, 2017, the Company entered into an Employment Agreement with Mr. Daniel Rushford with regard to being appointed as the
new Chief Executive Officer, President, Secretary, Treasurer and Member of the Board of Directors. Mr. Rushford will receive a
monthly salary of $2,000 to be paid at the end of each month. Unpaid amounts will accrue annual interest of 6%. In addition, Mr.
Rushford will receive 25,000,000 shares of restricted common stock and 1,000 Preferred Series B Shares upon signing of this agreement.
Further, at the end of the first 12 months the employee will receive $75,000 of restricted common shares of the company at fair
market value. The term of the Consulting Agreement is for two years; renewable upon mutual consent.
On
November 13, 2017, the Company issued 25,000,000 restricted common shares for $25,000 in share-based compensation that were valued
at $95,000, or $0.0038 per share based on the market value on the date of issuance, and $70,000 was recorded as a loss on settlement
of debt.
On
January 2, 2018, the Company approved an increase in salary to $3,000 per month.
During
the nine months ended September 30, 2018, the Company accrued wages of $27,000 and paid wages of $27,000. In addition, Mr. Rushford
advanced the Company $2,173, ($182 – December 31, 2017) and a payment of $2,255 was made by the Company to satisfy the funds
advanced.
Deferred
income taxes are determined using the liability method for the temporary differences between the financial reporting basis and
income tax basis of the Companys assets and liabilities. Deferred income taxes are measured based on the tax rates expected to
be in effect when the temporary differences are included in the Companys tax return. Deferred tax assets and liabilities are
recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts
of assets and liabilities and their respective tax bases.
Operating
loss carry-forwards generated during the period from May 25, 2014 (date of inception) through September 30, 2018 of approximately
$8,809,962 will begin to expire in 2034. The Company applies a statutory income tax rate of 21%. Accordingly, deferred tax assets
related to net operating loss carry-forwards total approximately $1,850,092 at September 30, 2018.
All
tax years since inception are open to examination by the Internal Revenue Service.
|
10.
|
COMMITMENTS
AND CONTINGENCIES
|
On
March 28, 2017, the Company entered into an investor relations agreement with a third party, whereby the third party will provide
advertising, promotional and marketing services for the Company between April 1, 2017 and July 1, 2017. In consideration of the
foregoing services performed by the third party, the Company will pay a fee of 1,920,000 restricted shares on or before April
1, 2017. In addition, the third party will remain the owner of at least 1% of the companys outstanding shares for a 1-year period.
On April 1, 2018, the Company shall issue additional shares as necessary to bring the total number of shares paid to the third
party to equal 1% of the outstanding shares of common stock as of 4/1/2018. In the event the Company does not issue the shares
as required under this provision, the Company will be subject to a penalty of $5,000 per month until the shares are issued.
1,920,000
shares were issued on March 28, 2017 and valued at the fair market value on the date of grant totaling $96,000, which amount has
been expensed as stock-based compensation as part of consulting expenses.
21,743,756
shares were issued on March 27, 2018 and valued at the fair market value on the date of grant totaling $39,139, which amount has
been expensed as stock-based compensation as part of consulting expenses.
In
respect to the investor relations agreement, 15,000 additional shares have been allocated for issuance effective May 16,
2017, and $825 has been expensed as stock-based compensation as part of consulting expenses due to 1,500,000 shares of common
stock issued to a consultant.
The
15,000 shares were not issued as of September 30, 2018, and $825 is recorded on the balance sheet as liabilities for unissued
shares.
|
(2).
|
Consultant
Agreement
|
On
April 1, 2017, the Company expanded its board of directors to include Matthew C. Scott, to assist with development of our internet
marketing efforts with a goal of growing our business. Concurrently we entered into a consulting agreement with Mr. Scott for
a term of one year, where under Mr. Scott shall receive an annual fee of $100,000 payable in quarterly installments. Further effective
April 1, 2017 the Company agreed to issue Mr. Scott 2,000,000 shares of restricted common stock for his services as a director.
The shares upon issue will be held by the Company for a term of six months and are cancelable should Mr. Scott not serve in his
capacity as director for a minimum term of six months.
The
Company recorded $140,000 in respect to the 2,000,000 shares based on the fair market value on April 1, 2017, which has been recorded
on the balance sheet as liabilities for unissued shares and expensed $140,000 as stock-based compensation as part of consulting
expenses in the year period ended December 31, 2017. At September 30, 2018, the shares remained unissued.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Matthew Scott to satisfy accrued fees of $50,000, pursuant his agreement dated April 1, 2017. The shares were issued
on November 13, 2017 and were valued at $1,200,000, or $0.016 per share based on the market value on the date the shares were
approved for issuance, and $1,150,000 was recorded as a loss on settlement of debt of the statement of operations.
On
April 1, 2018, the Company agreed to renew the consulting agreement for one year.
During
the nine months ended September 30, 2018, the Company accrued consulting fees of $75,000 and paid $25,000 in cash, leaving $25,000
on the Companys balance sheets as account payable with respect to amounts due to Mr. Scott.
|
(3).
|
Consultant
Agreement
|
On
April 6, 2017 the Company entered into a consulting agreement with an advisor, where under the advisor will provide access to
financing for the Companys business activities. In consideration of the foregoing services performed by the advisor, the Company
will pay a fee of 10% of net proceeds on each financing introduced.
During
the nine months ended September 30, 2018, the Company paid of $0 ($14,475 – December 31, 2017) to the advisor
in respect of this agreement.
|
(4).
|
Consultant
Agreement
|
On
June 19, 2017, the Company entered into a Consulting Agreement with Mr. Samuel Berry with regard to marketing and distribution
of online retail sales for all products. Mr. Berry will receive an annual salary of $50,000, payable in quarterly payments of
$12,500 per quarter.
On
June 19, 2017 the Board of Directors appointed Mr. Samuel L. Berry as Director. For accepting the position of Director, Mr. Berry
will receive 1,000,000 shares of the Companys common stock, valued at $0.05 per share. Additionally, Mr. Berry will be paid $500
for each board meeting for which he is physically present.
The
Company recorded $50,000 in respect to the value of 1,000,000 unissued shares as liabilities for unissued shares and expensed
$50,000 as stock-based compensation as part of consulting expenses year ending December 31, 2017. At September 30, 2018 the shares
remained unissued.
On
October 15, 2017, the Board of Directors of the Company approved the issuance of 75,000,000 restricted common shares at a price
of $0.00067 to Samuel Berry to satisfy consulting fees of $50,000, pursuant his agreement dated June 19, 2017. The shares were
issued on November 13, 2017 and were valued at $1,200,000, or $0.016 per share based on the market value on the date the shares
were approved for issuance, and $1,150,000 was recorded as a loss on settlement of debt on the statement of operations.
On
June 19, 2018, the Company agreed to renew the consulting agreement for one year.
During
the nine months ended September 30, 2018, the Company accrued consulting fees of $16,667 and paid additional fees of $2,500 for
attending five board meetings at $500 per meeting.
On
August 28, 2017, the Company entered into an Employment Agreement with Mr. Daniel Rushford with regard to being appointed as the
new Chief Executive Officer, President, Secretary, Treasurer and Member of the Board of Directors. Mr. Rushford will receive a
monthly salary of $2,000 to be paid at the end of each month. Unpaid amounts will accrue annual interest of 6%. In addition, Mr.
Rushford will receive 25,000,000 shares of restricted common stock and 1,000 Preferred Series B Shares upon signing of this agreement.
Further, at the end of the first 12 months the employee will receive $75,000 of restricted common shares of the company at fair
market value. The term of the Consulting Agreement is for two years; renewable upon mutual consent.
On
November 13, 2017, the Company issued 25,000,000 restricted common shares for $25,000 in share-based compensation that were valued
at $95,000, or $0.0038 per share based on the market value on the date of issuance, and $70,000 was recorded as a loss on settlement
of debt.
On
January 2, 2018, the Company approved an increase in salary to $3,000 per month.
During
the nine months ending September 30, 2018, the Company accrued wages of $27,000 and paid wages of $27,000.
|
(6).
|
Consultant
Agreement
|
On
October 2, 2017 the Company entered into a consulting agreement with Jump Television Studios, LLC, to provide market intelligence
and facilitate introductions with the investment banking community. The Company has agreed to pay a fee of $30,000, and 20,000,000
shares of restricted common stock with a value of $200,000, issued to Robert Sullivan.
The
shares were issued on November 13, 2017 and were valued at $220,000, or $0.011 per share, based on the fair market value on the
date of the issuance, and $20,000 was recorded as a loss on settlement of debt.
On
March 7, 2018, the Company entered into a Settlement and Release Agreement with Jump Television Studios, LLC, pursuant to the
Consulting Agreement dated October 2, 2017, whereby the Company paid a settlement fee of $4,000 for all considerations due up
to March 7, 2018.
|
(7).
|
Consultant
Agreement
|
On
November 15, 2017. the Company entered into a consulting agreement with an advisor, to advise the Company on corporate structure,
mergers and acquisitions and corporate finance. The advisor will be compensated $10,000 a month for a period of three months.
During
the nine months ending September 30, 2018, the Company paid of $25,000 to the advisor in respect of this agreement.
|
(8).
|
Consultant
Agreement
|
On
January 24, 2018, the Company entered into a Consulting Agreement with BAS1. The Company has agreed to pay BAS1 a fee of $10,000
for a 30-day marketing awareness program.
During
the nine months ending September 30, 2018, the Company paid of $7,500 to the advisor in respect to this agreement.
|
(9).
|
Distribution
Agreement
|
On
February 23, 2018, the Company entered into an Exclusive Agreement for Distribution with a west coast distributor, whereby the
distributor will exclusively distribute all Pet CDB Products owned by the Company. Furthermore, the distributor will purchase
$3,000,000 of product at negotiable prices for a period of 24 months for distribution.
On
April 3, 2018, the Company agreed to enter in to a 12-month exclusive agreement with a west coast distributor, whereas the distributor
has agreed to purchase $6.5M on Oral Pet Sprays from Vet Online Supply Inc. during the next 12 months. Vet Online Supply is allowing
you an exclusive agreement to purchase and place our CBD Pet products in California marijuana dispensaries through April 3, 2019.
|
(10).
|
Consultant
Agreement
|
On
March 1, 2018, the Company entered into a Consulting Agreement with Meridian Ventures, LLC. The Company has agreed to pay Meridian
Ventures, LLC a retainer of $30,000 for services focused on implementation and maintenance of a strategic brand medial program.
On
June 11, 2018, the Company entered into a Consulting Agreement with Meridian Ventures, LLC. The Company has agreed to pay Meridian
Ventures, LLC a retainer of $10,000 for services focused on implementation and maintenance of a strategic brand medial program.
During
the nine months ending September 30, 2018, the Company paid of $40,000 to the advisor in respect to these agreements.
|
(11).
|
Consultant
Agreement
|
On
March 1, 2018, the Company executed a Consulting Agreement whereby the Consultant will receive a retainer of $50,000 per month
for nine months to revise an online retail website, Private-Label product contract and distribution for veterinarian supplies
and holistic based pet products.
On
March 15, 2018, the Company agreed to engage in an additional contract with the consulting for $200,000.
During
the nine months ending September 30, 2018, the Company paid of $397,500 to the advisor in respect of these agreements.
|
(12).
|
Consultant
Agreement
|
On
May 1, 2018, the Company executed a Consulting Agreement whereby the Consultant will provide services and professional expertise
as an administrative advisor. The Consultant will receive a fee of $25,000 for a period of two months.
|
(13).
|
Consultant
Agreement
|
On
June 12, 2018, the Company entered into a Consulting Agreement with TEN Associates, LLC. The Company has agreed to pay TEN Associates
a fee of $4,000 for general corporate and business consulting services for the period on one month.
During
the nine months ending September 30, 2018, the Company paid of $4,000 to the advisor in respect to this agreement.
|
(14).
|
Consultant
Agreement
|
On
August 1, 2018, the Company entered into a National Sales Rep Agreement for a period of three years, to recruit and manage new
sales representatives. In consideration of services performed, the Company will pay a commission of 25% of gross proceeds to be
paid in cash, and 10% of gross proceeds to be paid in restricted common stock. The Company will also compensate for the recruitment
of sales representatives. In addition, the Company has agreed to pay a fee of $25,000 in the form of restricted common stock upon
signing of the Agreement.
The
Company recorded $25,000 in respect to the value of unissued shares as liabilities for unissued shares and expensed $25,000 as
stock-based compensation as part of consulting expenses. At September 30, 2018 the shares remained unissued.
|
11.
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
During
the nine months ending September 30, 2018, the Company had the following non-cash investing and financing activities:
|
●
|
Issued
stock for debt increasing common stock by $1,863,402, increasing additional paid in capital by $276,647, reducing notes payable
by $390,478, reducing accrued interest by $15,852, and reducing derivative liabilities by $1,733,419.
|
|
●
|
Increased
debt discount and increased derivative liability by $991,083 to record derivative liabilities at the inception of new notes.
|
|
●
|
Issued
warrant shares by cashless exercise increasing common stock by $199,523 and reducing additional paid in capital by $199.523.
|
On
October 1, 2018, the Company executed a Consulting Agreement whereby the Consultant will receive a fee of $350,000 to expand the
business product sales, marketing and new product development, develop new distribution channels, and the development of a new
subsidiary providing services in Cryptocurrency. This involves negotiating contracts, raising capital with new funding partners,
and establishing the criteria to expand the Companys business model. On October 25, 2018, the Company agreed to engage
in an additional contract with the consulting for $350,000.
On
October 10, 2018, the Company entered in a Convertible Promissory Note with EMA Financial, LLC in the amount of $25,000. The note
is unsecured, bears interest at 12% per annum, and matures on July 9, 2019.
On
October 11, 2018, the Company entered in a Convertible Promissory Note with Auctus Fund LLC in the amount of $25,000. The note
is unsecured, bears interest at 12% per annum, and matures on July 11, 2019.
On
October 11, 2018, the Company executed a Common Stock Purchase Warrant for 25,000,000 shares. The purchase price of one share
of Common Stock under this Warrant shall be equal to the Exercise Price of $0.001 per share for a term of five years. If the market
price of one share of common stock is greater than the Exercise Price, the holder may elect to receive warrant shares pursuant
to cashless exercise.
On
October 25, 2018, the Companys Board of Directors authorized the creation of 2,000,000 shares of Series A Preferred Stock
with a par value of $0.001, and on October 30, 2018 a Certificate of Designation was filed with the Florida Secretary of State.
Upon written notice to the Corporation, the holder of Series A Preferred stock may convert their shares into ten (10) shares of
fully paid and nonassessable shares of Common Stock of the Corporation. The holders shall have no voting rights on corporate matters,
unless and until they convert their Series A shares into Common Shares, at which time they will have the same voting rights as
all Common Shareholders have; their consent shall not be required for taking any corporate action.