8. FINANCIAL STATEMENTS.
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
BUSINESS AND BASIS OF PRESENTATION
International Endeavors Corporation. ("IEC") was incorporated under the laws of the State of Nevada on May 7, 2014.
IEC was formed for the purpose of developing and leasing land for recreational vehicle use, acquisition of land and/or vineyards for vineyard development, production of grapes for wine, and private labeling of wine for wine distribution.
The Company is in the development stage as defined under Statement on Financial Accounting Standards Accounting Standards Codification FASB ASC 915-205 "Development-Stage Entities."
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of the years ended December 31, 2016 and December 31, 2015.
ESTIMATES
The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts. Accordingly, actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2016 and 2015.
ACCOUNTS RECEIVABLE
Trade receivables are carried at original invoice amount. We recognize revenue from sales or services rendered when the following four criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Receivables past due for more than 120 days are considered delinquent. Management determines uncollectible accounts by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history, and current economic conditions and by using historical experience applied to an aging of accounts. Recoveries of trade receivables previously written off are recorded when received. Management has determined that the allowance for doubtful account should be $0.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
We have adopted Accounting Standards Codification regarding Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments. The carrying amounts of cash, accounts payable, accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.
FEDERAL INCOME TAXES
Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with Accounting Standards Codification regarding Accounting for Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carryforwards. 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. Deferred taxes are provided for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.
NET INCOME PER SHARE OF COMMON STOCK
We have adopted Accounting Standards Codification regarding Earnings per Share, which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. We do not have a complex capital structure requiring the computation of diluted earnings per share.
INTERNAL WEBSITE DEVELOPMENT COSTS
Under ASC350-50,
Website Development Costs
, costs and expenses incurred during the planning and operating stages of the Company's website are expensed as incurred. Under ASC 350-50, costs incurred in the website application and infrastructure development stages are capitalized by the Company and amortized to expense over the website's estimated useful life or period of benefit. The Company's website asset was computed using a useful life of the asset of five years. At December 31, 2016 the Company's web site was written off as the result of an impairment loss.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.
DEVELOPMENT STAGE ENTERPRISE
The Company's financial statements are prepared pursuant to the provisions of Topic 26, "Accounting for Development Stage Enterprises," as it devotes substantially all of its efforts to acquiring, developing, producing and distributing media as well as marketing commercial videos and developing APPs for distribution that will eventually provide sufficient net profits to sustain the Company's existence. Until such interests are engaged in major commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the development stage.
REVENUE RECOGNITION
The Company recognizes revenue in accordance with Accounting Standards Codification No. 605, "Revenue Recognition" ("ASC-605"), ASC-605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.The Company's revenues have been generated through lease agreements for our RV property and wine tours.
The terms of these lease agreements generally consist solely of upfront payments which are refundable should the lessee choose to terminate the lease within 10 (ten) days of signing the lease agreement. After 10 (ten) days the lease payment becomes non-refundable. Revenues from leasing fees are recognized upon the client's completion of the lease agreement.
For the years ended December 31, 2016 and 2015, all payments met the above criteria thereby allowing for the recognition of revenue for the lease arrangements upon the signing of the lease agreement and for the wine tours upon acceptance of payment for the tour. When non-refundable payments do not meet this criteria, the revenues are recognized over the expected period of performance. We periodically review for any expected period of substantial involvement under the agreements that provide for non-refundable up-front payments. If ever applicable, we will adjust the amortization periods when appropriate to reflect changes in assumptions relating to the duration of our expected involvement.
STOCK BASED COMPENSATION
The Company recognizes stock-based compensation in accordance with ASC Topic 718 "Stock Compensation", which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values. For non-employee stock-based compensation, we have adopted ASC Topic 505 "Equity-Based Payments to Non-Employees", which requires stock-based compensation related to non-employees to be accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC Topic 718.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-10, "Development Stage Entities". The amendments in this update remove the definition of a development stage entity from the Master Glossary of the ASC thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company. As a result the Company has elected not to present inception numbers in accordance with ASU-2014-10.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. Thesereclassifications had no effect on previously reported results of operations. In addition, certain prior year amounts from the restated amounts have been reclassifiedfor consistency with the current period presentation.
ASSET ACQUISITION
In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business." ASU 2017-01 changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. If substantially all of the fair value is concentrated in a single asset or a group of similar assets, the acquired set is not a business. If this is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. Determining whether a set constitutes a business is critical because the accounting for a business combination differs significantly from that of an asset acquisition. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. ASU 2017-01 will be applied prospectively to any transactions occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued or made available for issuance. We adopted ASU 2017-01 for our acquisition of property located at 23446 Highway 79, Winchester, Ca. (see Note 3 to the financial statements).
Note 2 - Uncertainty, 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 not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. As of December 31, 2016 the Company had an accumulated deficit of $401,628 and as of December 31, 2015 the Company had an accumulated deficit of $279,298. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is contemplating conducting an offering of its debt or equity securities to obtain additional operating capital. The Company is dependent upon its ability, and will continue to attempt, to secure equity and/or debt financing. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.
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. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Note 3- Assets
The Company acquired land October 10, 2014 in the wine country of Temecula, California at 46454 De Portola Road, Temecula, California for the price of $108,258. Since the acquisition $11,800 was paid for the development of the land for the purpose of leasing to Recreational Vehicles. As of July 22, 2016 the above Land and improvement was sold for the amount of $75,000 creating a loss of after escrow fees of $(45,111).
The company opened escrow on May 25, 2016 with a $5,000 non-refundable deposit for a 28 acre parcel of land at 37448 Hwy 79 Warner springs, CA 92086. The Company extended escrow through 2 payments of $10,000 totaling $20,000 which w
ere
non-refundable. An additional $40,000 was paid into escrow on September 30, 2016. In October of 2016 the 28 acres of land for which the company had paid $65,000 into escrow fell out of escrow as the interest rate on the anticipated loan was not within the company's expectations. On October
14
of 2016 $39,500 was refunded to the Company and $25,500 was a non- refundable fee which was initially required to extend the escrow.
On October 4, 2016 we entered into escrow for a property located at23446 Hwy 79 Warner Springs, CA 92086
with a deposit of
$1,000.
We made a down payment on the property of $144,403 on October 21, 2016and
assumed a note for the acquisition from FlemmingHolgerson for $306,945 with terms of principal plus 6% payments in the amount of $2,364.22 to be made monthly until March 14, 2019 at which time a balloon payment in the amount of $282,533 is due.
Total cost for the property was $45
0
,3
94 (inclusive of fees associated with the purchase). The property currently generates monthly rental income in the amount of $1,205. An additional gross amount of $29,135 was paid for land improvement costs.
Detailed Valuation for the property
|
|
$ Amount
|
|
Building Valuation
|
|
|
148,500
|
|
Restaurant and equipment
|
|
|
18,809
|
|
Furniture and fixtures
|
|
|
8,525
|
|
Land Valuation
|
|
|
274,560
|
|
Accumulated Depreciation(Building and equipment)
|
|
|
964
|
|
On November 8, 2016 we entered into escrow for the acquisition of 13.85 acres which consisted of parcel number 112-030-21-00 in San Diego County, Ca 92086 for $99,742 (inclusive of associated purchase fees), with a deposit of $1,000. Terms of the acquisition were $29,319 which was paid on December 7, 2016 as a down payment and a first loan in the amount of $70,000. The note is payable as interest only with monthly payments of $291.67 per month, including 5% interest per annum, due and payable three years from close of escrow or sooner with no prepayment penalty and a balloon payment due on December 15, 2019.
Deposits
There were two deposits for properties for a total of $2,000 in 2016 as follows:
On December 23, 2016 a deposit in the amount of $1,000 was paid on a property located at 45525 CA-79 Unit 286 Riverside CA 92536.On January 24th of 2017 the company closed escrow on the property for an original escrow amount of $24,057 IEC was refunded $454 from escrow on January 31, 2017 leaving a total property acquisition cost $23,603. There are no notes on this property.
On November 15, 2016 we entered into escrow for the purchase of 222 acres located in Warner Springs, CA consisting of four parcels of land: Parcel numbers 114-030-29-00 and 114-050-20-00 and 114-050-21-00 and 114-050-22-00, for a total purchase price of $425,000 with a deposit of $1,000 on November 17, 2016. A first loan of 274,000 was to be assumed and a second loan of 150,000 was to be through conventional financing. Escrow was scheduled to be closed 21 days from the date of entering escrow; however, due to cultural findings of Indian artifacts on the property escrow was cancelled on May 5, 2017 and the Company's deposit of $1,000 was refunded.
Depreciation Policy
The Company values its investment in property and equipment at cost less accumulated depreciation. Our depreciation policy is to compute primarily by the straight line method over the estimated useful lives of the assets ranging from three to fifteen years. The Company's land improvement asset was computed using a useful life of the asset of fifteen years. As such the land improvement for the property 46454 De Portola Road, Temecula, California asset was depreciated $779 as of December 31, 2016. The 23446 property building depreciation was at 37.5 years and was $660, the restaurant and equipment was at 5 years and was $304. Computer equipment was 5 years and was $490.
The Company's website was considered impaired and was written off as an impairment loss of $30,863.
Assets 2016
|
Amount
|
|
Assets 2015
|
Amount
|
|
|
|
|
|
Building
|
148,500
|
|
|
|
Restaurant Equipment
|
27,334
|
|
|
|
Land
|
373,560
|
|
Land
|
108,258
|
Land Improvement
|
29,135
|
|
Land Improvement
|
11,800
|
Computer Equipment
|
4,900
|
|
Website
|
37,500
|
Accumulated Depreciation
|
(1,454)
|
|
|
(779)
|
Accumulated Amortization
|
|
|
|
(6,637)
|
Total 2016 Investments
|
581,975
|
|
Total 2015 Investments
|
150,142
|
Note 4- Advertising and Marketing
The Company expenses advertising and market development costs as incurred. Total advertising and marketing costs recorded in advertising and marketing expenses were $4,990 and $53,978 for the years ended December 31, 2016 and 2015, respectively.
Note 5– Related Party Transactions
Restricted shares in the amount of 7,586,000 shares were issued in lieu of cash of which 4,086,000 shares were issued to Nate Engel at a par value of $.001 per share and 3,500,000 shares were issued to Mary Davis at par value of $.001 per share on May 27, 2014.
The company entered into a promissory note agreement with Christopher Hayden on October 18, 2016 who is a shareholder for the total of $100,000. The non-convertiblenote is due and payable on October 18, 2017 with an interest rate of 8% per annum.
The company entered into a promissory 0%note agreement with Nate Engel October 24, 2016 who is a shareholder and President of the company for the total of $10,000. The sum of $10,000.00 is due and payable on the 24
th
day of April, 2017. This note may be converted to common stock of the company based on a price of sixty five (65%) percent of the lowest trading price of the previous 5 trading days before request. The Note may never be converted to an amount greater than 9.9% of the issued and outstanding common shares or a control position. The note was amended and extended to October 24, 2017.
The company entered into a promissory note agreement with James White October 27, 2016 who is a shareholder for the total of $10,000. The sum of $10,000.00 is due and payable on the 27
th
day of April, 2017. This note may be converted to common stock of the company based on a price of sixty five (65%) percent of the lowest trading price of the previous 5 trading days before request. The Note may never be converted to an amount greater than 9.9% of the issued and outstanding common shares or a control position. The note was amended and extended to October 24, 2017.
The company entered into a promissory note agreement with Stephen Hayden December 4, 2016 who is a shareholder for the total of $35,000at 0 percent interest, due and payable on June 4, 2017. The note is convertible to common stock of the company based on a price of sixty five (65%) percent of the lowest trading price of the previous 5 trading days before request.The Note may never be converted to an amount greater than 9.9% of the issued and outstanding common shares or a control position.
The company entered into a promissory note agreement with Christopher Hayden on December 30, 2016 who is a shareholder for the total of $20,000 at 0 percent interest, due and payable on June 30, 2017. The note may be converted to common stock of the company based on a price of sixty five (65%) percent of the lowest trading price of the previous 5 trading days before request. The Note may never be converted to an amount greater than 9.9% of the issued and outstanding common shares or a control position.
Note 6 – Convertible Promissory Notes, Related Parties
On October 24, 2016, the Company executed a convertible promissory note for $10,000 with Nate Engel
as consideration for $10,000 he loaned to the Company. This convertible promissory note in unsecured, bears no interest and is due on April 24, 2017. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $6,731 based on the Black Scholes Merton pricing model and a corresponding debt discount of $6,731 to
be amortized utilizing the interest method of accretion over the term of the note.
As of December 31, 2016, the Company fair valued the derivative at $6,484 resulting in a gain on the change in the fair value of $247. In addition, $2,515 of the debt discount has been amortized to interest expense. The note was amended and extended to October 24, 2017.
On October 27, 2016, the Company executed a convertible promissory note for $10,000 with James White
as consideration for $10,000 he loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on April 27, 2017. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $6,733 based on the Black Scholes Merton pricing model and a corresponding debt discount of $6,733 to
be amortized utilizing the interest method of accretion over the term of the note.
As of December 31, 2016, the Company fair valued the derivative at $6,341 resulting in a gain on the change in the fair value of $392. In addition, $2,405 of the debt discount has been amortized to interest expense. The note was amended and extended to October 27, 2017.
On December 4, 2016, the Company executed a convertible promissory note for $35,000 with Stephen Hayden
as consideration for $35,000 he loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on June4, 2017. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $24,489 based on the Black Scholes Merton pricing model and a corresponding debt discount of $24,489 to
be amortized utilizing the interest method of accretion over the term of the note.
As of December 31, 2016, the Company fair valued the derivative at $23,038 resulting in a gain on the change in the fair value of $1,451. In addition, $3,633 of the debt discount has been amortized to interest expense.
On December 30, 2016, the Company executed a convertible promissory note for $20,000 with Christopher Hayden
as consideration for $20,000 he loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on June 30, 2017. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $13,690 based on the Black Scholes Merton pricing model and a corresponding debt discount of $13,690 to
be amortized utilizing the interest method of accretion over the term of the note.
A summary of outstanding convertible notes as of December 31, 2016, is as follows:
Note Holder
|
Issue Date
|
Maturity Date
|
|
Stated Interest Rate
|
|
|
Principal Balance 12/31/2016
|
|
Christopher Hayden
|
10/18/2016
|
10/18/2017
|
|
|
8
|
%
|
|
$
|
100,000
|
|
Nate Engel
|
10/24/2016
|
4/24/2017
|
|
|
0
|
%
|
|
|
10,000
|
|
James White
|
10/27/2016
|
4/27/2017
|
|
|
0
|
%
|
|
|
10,000
|
|
Stephen Hayden
|
12/4/2016
|
7/04/2017
|
|
|
0
|
%
|
|
|
35,000
|
|
Christopher Hayden
|
12/30/2016
|
6/30/2017
|
|
|
0
|
%
|
|
|
20,000
|
|
Total
|
|
|
|
|
|
|
|
|
175,000
|
|
Less debt discount
|
|
|
|
|
|
|
|
|
(43,090
|
)
|
Total
|
|
|
|
|
|
|
|
$
|
131,910
|
|
A summary of the activity of the derivative liability for the notes above is as follows:
Balance at December 31, 2015
|
|
$
|
-
|
|
Increase to derivative due to new issuances
|
|
|
51,643
|
|
Derivative (gain) due to mark to market adjustment
|
|
|
(2,089
|
)
|
Balance at December 31, 2016
|
|
$
|
49,554
|
|
Note 7-Notes Long Term
|
|
Holgerson*
|
|
|
Steven Reed*
|
|
|
Total
|
|
2017
|
|
|
7,270
|
|
|
|
|
|
|
7,270
|
|
2018
|
|
|
10,972
|
|
|
|
|
|
|
10,972
|
|
2019
|
|
|
283,975
|
|
|
|
70,000
|
|
|
|
353,975
|
|
2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Thereafter
|
|
|
302,217
|
|
|
|
70,000
|
|
|
|
372,217
|
|
*The long term notes payments are principal only payments.
Note 8– Common Stock
In 2014 the Company authorized the issuance of 7,286,000 founder shares at par value. 3,786,000 shares were issued to Nate Engel and 3,500,000 shares were issued at par value to Mary Davis. In addition 300,000 shares were issued to Nate Engel for $300.
On June 10, 2014 the Company issued 550,000 shares at $.02 per share to Essence, Inc., which were issued for marketing services relating to the procurement of customers for wine tour events and RV space rentals.
On June 12, 2014 the Company issued 250,000 shares at $.02 per share to Hannah Grabowski, which were issued for marketing services relating to the procurement of customers for wine tour events and RV space rentals.
On July 10, 2014 the Company issued 400,000 shares at $.05 per share to Steve Hayden, which were issued for services relating to locating land for development, vineyards, and RV vacation rental sites as well as aiding in the planning of land development for both vineyards and RV vacation rental sites.
On July 7, 2014 the Company issued 560,000 shares at $.05 per share to JJSA Investments, Inc., which were issued for services relating to locating land for development of vineyards, and planning for development of land acquisition for vineyards.
On August 10, 2014 the Company issued 200,000 shares at $.05 per share to Joe Spedafore, which were issued for services relating to locating land for development, vineyards, and RV vacation rental sites as well as aiding in the planning of land development for both vineyards and RV vacation rental sites.
On August 12, 2014 the company authorized the issuance of 500,000 shares to MMT, Inc. at a value of $.05 per share for the development of an APP.
On December 4, 2014, the Company issued 200,000 shares at $.10 per share to Roy Wilson Jr. for marketing services relating to procuring customers for RV space rental, wine touring events and aiding in sales presentations in the Las Vegas, Nevada area.
On November 20, 2014 the Company issued 45,000 shares at $.15 per share to Green Brook, Inc., which were issued for marketing services relating to the procurement of customers for wine tour events and RV space rentals.
At the year end December 31, 2014 the Company had issued shares to investors via a Private Offering of the company's shares as follows:
500,000 shares were issued at $.10 per share for $50,000.
1,419,337 shares were issued at $.15 per share for $ 212,900
At the year ended December 31, 2104 there were 12, 210,337 shares issued and outstanding.
At the year ended December 31, 2015 the company had issued 260,001 shares to three shareholders for $39,000 at a price of $.15 per share via a Private offering of the company's shares.
At December 31, 2016 and 2015 there were 12,470,338 shares issued and outstanding.
Note 9 – Income Taxes
We account for income taxes in accordance with FASB ASC 740,
Income Taxes
which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
As of December 31, 2016, December 31, 2015 the Company had net operating loss carry forwards of approximately $401,628 and 279,298 that may be available to reduce future years' taxable income in varying amounts through 2031. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The provision for Federal income tax consists of the following:
|
|
December 31, 2016
|
|
|
December 31, 2015
|
|
Federal income tax benefit attributable to:
|
|
|
|
|
|
|
Current Operations
|
|
$
|
18,349
|
|
|
$
|
10,807
|
|
Less: valuation allowance
|
|
|
(18,349
|
)
|
|
|
(10,807
|
)
|
Net provision for Federal income taxes
|
|
$
|
0
|
|
|
$
|
0
|
|
The cumulative tax effect at the expected rate of 15% of significant items comprising our net deferred tax amount is as follows:
|
December 31, 2016
|
|
December 31, 2015
|
|
Deferred tax asset attributable to:
|
|
|
|
|
15%
|
|
$
|
60,244
|
|
|
$
|
41,895
|
|
Less: valuation allowance
|
|
|
(60,244
|
)
|
|
|
(41,895
|
)
|
Net deferred tax asset
|
|
$
|
0
|
|
|
$
|
0
|
|
Note 10 – Restatement
The Company is restating its 10-K for December 31, 2016 which was originally filed on June 23, 2017 as it failed to disclose the early adoption of ASU 2017-01. (See Note 1 "Asset Acquisition "). As a result of the restatement none of the financial statement schedules have changed from the originally filed 10-K on June 23, 2017.
The financial statements have been revised to account for activity that had premature recognition of revenue. The resulting transactions affected the Company's Sales, Deferred Revenue and Accumulated deficit. In accordance with applicable Generally Accepted Accounting Principles (GAAP), the Company calculated and recognized adjustments accordingly.
On May 7, 2016, the Company filed with the Securities and Exchange Commission ("SEC") its reviewed financial statements for the quarter ended March 31, 2016. Following the discovery of various material errors the Company informed the SEC on May 23, 2016, that these financial statements could not be relied upon, and on June 15, 2016 filed its restated audited financial statements for the above mentioned periods.
The following table represents the effects of the subsequent and first restated statements as of December 31, 2015.
|
|
Restated Dec 31, 2015
|
|
|
Original Dec 31, 2015
|
|
|
|
$
|
|
|
|
$
|
|
|
Sales
|
|
|
98,943
|
|
|
|
68.943
|
|
Accumulated Deficit
|
|
|
(279,298
|
)
|
|
|
(279,298
|
)
|
Net Loss
|
|
|
(72,045
|
)
|
|
|
(102,045
|
)
|
Note 11 – Subsequent Events
Management has reviewed events between December 31, 2016 to the date that the financials were issued, June 7, 2017, and the following significant events were identified for disclosure:
On January 17
th
, of 2017 Christopher Hayden loaned the Company $60,000 and was issued a promissory note from the Company due and payable in one year with an interest rate of 0%. The sum of $60,000.00 shall be due and payable on July 17, 2017. This note may be converted to common stock of the company based on a price of sixty five (65%) percent of the lowest trading price of the previous 5 trading days before request. The Note may NEVER be converted to an amount greater than 9.9% of the issued and outstanding common shares or a control position.
On January 24th of 2017 the company closed escrow on a property located at 45525 CA-79 Unit 286 Riverside CA 92536 for a total of $24,057.41 less escrow fees of $454 leaving a property total of $23,603. There are no notes on this property.
From January 1, 2017 through May 30, 2017 the Company sold 900,000 shares of common restricted stock for $90,000 and issued 400,000 shares for services for $40,000 for a total of 1,300,000 shares. At May 30, 2017 there were 13,770,338 shares issued and outstanding.
In January of 2017 the Company sold 200,000 shares of common restricted stock for $20,000.
On February 3, 2017 the Company paid $35,000 to Hill springs Farm for the buyout of the long term lease (lease period was through 2024) on the 23446 Property.
In
February
of 2017 the Company sold 85,000 shares of common restricted stock for $8,500.
In
March
of 2017 the Company sold 385,000 shares of common restricted stock for $38,500.
On March 1, 2017 the Company issued 400,000 shares to Avalon Partners, Inc. for $40,000 for services rendered to the Company.
In
April
of 2017 the Company sold 230,000 shares of common restricted stock for $23,000.
On May 5, 2017 the Company received a refund of its deposit in the amount of $1,000 for the acquisition of the 222 acre property due to the cancellation of escrow.
The company entered into a promissory 0%note agreement with Nate Engel October 24, 2016 who is a shareholder and President of the company for the total of $10,000. The sum of $10,000.00 is due and payable on the 24
th
day of April, 2017. This note may be converted to common stock of the company based on a price of sixty five (65%) percent of the lowest trading price of the previous 5 trading days before request. The Note may never be converted to an amount greater than 9.9% of the issued and outstanding common shares or a control position. The note was amended and extended to October 24, 2017.
The company entered into a promissory note agreement with James White October 27, 2016 who is a shareholder for the total of $10,000. The sum of $10,000.00 is due and payable on the 27
th
day of April, 2017. This note may be converted to common stock of the company based on a price of sixty five (65%) percent of the lowest trading price of the previous 5 trading days before request. The Note may never be converted to an amount greater than 9.9% of the issued and outstanding common shares or a control position. The note was amended and extended to October 27, 2017.
On December 4, 2016, the Company executed a convertible promissory note for $35,000 with Stephen Hayden as consideration for $35,000 he loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on June4, 2017. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $24,489 based on the Black Scholes Merton pricing model and a corresponding debt discount of $24,489 to be amortized utilizing the interest method of accretion over the term of the note. As of December 31, 2016, the Company fair valued the derivative at $23,038 resulting in a gain on the change in the fair value of $1,451. In addition, $3,633 of the debt discount has been amortized to interest expense. The note was amended and extended to June 4, 2018.
On December 30, 2016, the Company executed a convertible promissory note for $20,000 with Christopher Hayden as consideration for $20,000 he loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on June 30, 2017. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made. The company bifurcated the conversion feature and accounted for it as a derivative liability. The Company recorded the derivative liability at its fair value of $13,690 based on the Black Scholes Merton pricing model and a corresponding debt discount of
$13,690 to be amortized utilizing the interest method of accretion over the term of the note. The note was amended and extended to June 4, 2018.
On June 1, 2017, the Company executed a convertible promissory note for $7,400 with Nate Engel as consideration for $7,400 loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on June 1, 2018. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made.
On June 6, 2017, the Company executed a convertible promissory note for $2,000 with Essence, Inc. as consideration for $2,000 loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on June 6, 2018. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made.
On July 3, 2017, the Company executed a convertible promissory note for $5,000 with Stephen Hayden as consideration for $5,000 loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on June 3, 2018. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made.
On July 11, 2017, the Company executed a convertible promissory note for $10,000 with Jack McNutt as consideration for $10,000 loaned to the Company. This convertible promissory note is unsecured, bears no interest and is due on July 11, 2018. The note is convertible at any time into restricted shares of common stock at a conversion price equal to 65% of the lowest trading price of the previous five trading days before the request to convert is made.
On April 12, 2017 Nextera LLC purchased 100,000 shares for $10,000. On July 10, 2017 the shares were cancelled and Nextera LLC was refunded $10,000.