Independent Film Development Corporation (“IFLM”)
was incorporated in the State of Nevada on September 14, 2007. The Company’s current plan of operations consists of three
parts:
To operate the Company’s newly acquired
hospitality asset, C2C Restaurant Group, Inc. (“C2C”). The first restaurant to fall under C2C, Chef Eddie G’s
Kitchen, was opened in December 2015 in Manhattan’s East Harlem neighborhood in New York City.
The development of content creation/distribution
projects, both in the form of original theatrical material as well as related and/or derivative programming related to the operations
of C2C. IFLM will pursue those projects that align with the company’s strategic vision.
The acquisition of real estate assets which
present value creation potential due to the complexity or illiquidity of their existing ownership and/or capital structure. In
such situations, IFLM will seek to actively work through the complexities, gain control of the asset, actively manage, recapitalize
and thereby create value.
In preparing financial statements in conformity
with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of
expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future
periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions.
These estimates and assumptions include valuing equity securities in share-based payment arrangements, estimating the fair value
of equity instruments recorded as derivative liabilities, and estimating the useful lives of amortizable assets and whether impairment
charges may apply.
The consolidated financial statements include
the accounts of Independent Film Development Corporation and its wholly-owned subsidiary C2C Restaurant Group, Inc. All significant
intercompany accounts and transactions have been eliminated.
Certain reclassifications have been made to the prior year
financial information to conform to the presentation used in the financial statements for the six months ended March 31, 2016.
The Company follows paragraph 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition, which has four basic criteria that must be met before revenue
is recognized: 1) existence of persuasive evidence that an arrangement exists; 2) delivery has occurred or services have been rendered;
3) the seller’s price to the buyer is fixed and determinable; and 4) collection is reasonably assured. The Company’s
revenue is recognized when payment is tendered at the time of sale. The Company presents sales net of sales-related taxes.
The Company follows paragraph 825-10-50-10
of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37
of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial
instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted
in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency
and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy
which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value
hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described
below:
Level 1: Quoted market prices available in active markets for
identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other
than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting
date.
Level 3: Pricing inputs that are generally observable inputs
and not corroborated by market data.
The carrying amount of the Company’s
financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the
short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based
upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements
at March 31, 2016.
The following table presents assets and liabilities
that are measured and recognized at fair value as of March 31, 2016 and September 30, 2015 on a recurring basis:
The Company records the fair value of its derivative
financial instruments in accordance with ASC815,
Derivatives and Hedging
. The fair value of the derivatives was calculated
using a multi-nomial lattice model performed by an independent qualified business valuator. The fair value of the derivative liability
is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations
Derivative financial instruments should be
recorded as liabilities in the balance sheet and measured at fair value. For purposes of the Company’s financial statements
fair value was used as the basis for formulating an analysis which has been defined by the Financial Accounting Standards Board
(“FASB”) as “the amount for which an asset (or liability) could be exchanged in a current transaction between
knowledgeable, unrelated willing parties when neither party is acting under compulsion”. The FASB has provided guidance that
its definition of fair value is consistent with the definition of fair market value in IRS Rev. Rule 59-60. In determining the
fair value of the derivatives it was assumed that the Company’s business would be conducted as a going concern. These derivative
liabilities will need to be marked-to-market each quarter with the change in fair value recorded in the income statement.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might
have a material impact on its financial position or results of operations.
On September 21, 2015, the Company entered
into a share purchase agreement, by and among the Company, C2C Restaurant Group, Inc., a New York corporation and a restaurant
holding company (“C2C”), and the shareholders of C2C, pursuant to which the Company purchased all of the outstanding
common stock of C2C in exchange for 20,000 shares of our Series F preferred stock, par value $0.0001 per. Based upon an independent
third party valuation the purchase was fair valued in two parts. First, a value of $5,600 was capitalized as a trade name for Chef
Eddie G's Kitchen. Second the Company recorded goodwill in the amount of $117,754. The location for C2C’s first restaurant,
Chef Eddie G's Kitchen, opened in December on Park Avenue in Manhattan, New York.
Goodwill represents the excess of purchase
price over the underlying net assets of businesses acquired. The Company complies with ASC 350,
Goodwill and Other Indefinite
Lived Intangible Assets
, requiring that a test for impairment be performed at least annually. As of September 30, 2015 the
Company performed the required impairment analysis which resulted in the impairment of both the goodwill and trade name valuation
amounts in their entirety. The Company recorded impairment expense of $122,354.
NOTE 4: ACCRUED INTEREST AND PENALTIES
Following is a summary of the Company’s accrued penalties
and interest as of:
|
|
March 31,
2016
|
|
September 30,
2015
|
Neil Linder – accrued penalties and interest (refer to Note 5)
|
|
$
|
336,275
|
|
|
$
|
328,531
|
|
Other convertible debt – accrued interest (refer to Note 5)
|
|
|
22,155
|
|
|
|
17,965
|
|
Loans payable – accrued interest (refer to Note 6)
|
|
|
6,039
|
|
|
|
5,378
|
|
|
|
$
|
364,469
|
|
|
$
|
351,874
|
|
NOTE 5: CONVERTIBLE NOTES PAYABLE
On April 9, 2012, the Company entered into
a $100,000 convertible debenture with Neil Linder. The debenture accrued interest of 12% and matured on April 9, 2013. Mr. Linder
has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to the lesser
of fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding
the conversion date, or fifty percent (50%) of the closing bid price of the Common Stock on the date of issuance as quoted by Bloomberg,
LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99%
of the outstanding shares of the Company’s common stock. Based on the initial valuation the Company has recorded a debt discount
of $49,532, $15,994 of which was amortized in the fiscal year ended September 30, 2012 with the remaining $33,538 amortized the
fiscal year ended September 30, 2013. During the fiscal year ending September 30, 2013, $13,950 of the $100,000 debenture was converted
into 821 shares of common stock. This conversion was converted within the terms of the agreement. On March 30, 2015, $4,000 of
accrued interest was converted into 1,600 shares of common stock. In addition, as a consequence of the triggering of the default
provision of the debenture the interest on the debenture has been instated at a rate of 18%, a $1,000 per business day penalty
was being imposed for failure to execute a conversion in a timely manner, and an additional accrual of $112,509 was accounted for
as a result of a provision requiring additional funds due in the event that a “default payment” is made by the Company.
As of September 30, 2015 $86,050 of the principal face value of the Debenture remains outstanding along with $285,509 of accrued
penalties and interest. As of March 31, 2016, $86,050 of the principal face value of the Debenture remains outstanding along with
$336,275 of accrued penalties and interest. This note is currently in default.
On April 28, 2014, the Company issued a
Convertible Promissory Note to KBM Worldwide, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per
annum but was increased to 22% on the maturity date, is unsecured and matured on January 30, 2015. The Note is convertible
into common stock in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the
average of the lowest three trading prices in the 10-day trading price prior to the conversion date. As a result of the
conversion feature the Company has recorded a debt discount of $37,500, all of which has been amortized to interest expense
as of September 30, 2015. The discount was determined by calculating the intrinsic value of the loan based on the stock price
on the date of the loan of $0.015 and the conversion price of $0.00406. The intrinsic value was $101,047; however, the
discount is limited to the amount of the loan. On September 30, 2015, $22,970 of principal was converted into 49,937,783
shares of common stock. During the six months ended March 31, 2016, $10,485 of principle was converted into 99,250,000 shares
of common stock. On March 31, 2016, the fair value of the derivative was calculated using a multi-nomial lattice model. As of
September 30, 2015, there is $14,530 of principal and $7,629 of accrued interest due on this note. As of March 31, 2016,
there is $4,045 of principal and $8,074 of accrued interest due on this note. This note is currently past due.
On June 25, 2014, the Company issued a Convertible
Promissory Note to LG Capital Funding, LLC, in the amount of $47,500. The note bears interest at a rate of 8% per annum, is unsecured
and matures on June 25, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable
conversion price equal to a 42% discount of the lowest trading price in the 20-day trading price prior to the conversion date.
As a result of the conversion feature the Company has recorded a debt discount of $47,500, all of which has been amortized to interest
expense as of September 30, 2015. The discount was determined by calculating the intrinsic value of the loan based on the stock
price on the date of the loan of $0.011 and the conversion price of $0.0035. The intrinsic value was $102,644; however, the discount
is limited to the amount of the loan. On April 16, 2015, $1,500 of principal and $97 of interest was converted into 3,060,000 shares
of common stock. On May 28, 2015, $8,000 of principal and $591 of interest was converted into 29,624 shares of common stock. On
August 25, 2015, $5,000 of principal and $468 of interest was converted into 897,857 shares of common stock. During the six months
ended March 31, 2016, $5,600 of principle and $592 of interest was converted into 56,892,715 shares of common stock. Due to the
conversion within the terms of the agreement, no gain or loss was recognized. On March 31, 2016, the fair value of the derivative
was calculated using a multi-nomial lattice model. As of September 30, 2015, there is $33,000 of principal and $4,088 of accrued
interest on this note. As of March 31, 2016, there is $27,400 of principal and $5,735 of accrued interest due on this note. This
note is currently past due.
On July 17, 2014, the Company issued a Convertible
Promissory Note to KBM Worldwide, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per annum, is unsecured
and matures on April 21, 2015. The Note is convertible into common stock in whole or in part 180 days after funding at a variable
conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to
the conversion date. As a result of the conversion feature the Company has recorded a debt discount of $37,500, all of which has
been amortized to interest expense as of September 30, 2015. The discount was determined by calculating the intrinsic value of
the loan based on the stock price on the date of the loan of $0.0114 and the conversion price of $0.00518. The intrinsic value
was $45,008; however, the discount is limited to the amount of the loan. On March 31, 2016, the fair value of the derivative was
calculated using a multi-nomial lattice model. As of September 30, 2015, there is $37,500 of principal and $6,249 of accrued interest
on this note. As of March 31, 2016, there is $37,500 of principal and $10,374 of accrued interest due on this note. This note is
currently past due.
On March 19, 2015, the Company executed a convertible
promissory note for $7,500 with John D Thomas in exchange for legal services. The note is unsecured, accrued interest at 10% and
is due on demand. The Note is convertible into common stock at $.00001 per share. As a result of the conversion feature the Company
has recorded a debt discount of $7,500 all of which has been amortized to interest expense as of March 31, 2016. As of September
30, 2015, there is $7,500 of principal and $401 of accrued interest on this note. As of March 31, 2016 there is $7,500 of principal
and $77 of accrued interest due on this note.
On May 18, 2015, the Company executed a convertible
promissory note for $16,700 with Syndicate Consulting, Inc. The note is unsecured, accrued interest at 10% and is due on demand.
The Note is convertible into common stock at $.00005 per share. As a result of the conversion feature the Company has recorded
a debt discount of $16,700 all of which has been amortized to interest expense as of March 31, 2016. The discount was determined
by calculating the intrinsic value of the loan based on the stock price on the date of the loan of $0.0007 and the conversion price
of $0.00005. The intrinsic value was limited to the amount of the loan. As of September 30, 2015, there is $16,700 of principal
and $935 of accrued interest on this note. As of March 31, 2016 there is $16,700 of principal and $1,917 of accrued interest due
on this note.
On May 20, 2015, the Company executed a
convertible promissory note for $5,925 with Syndicate Consulting, Inc. The note is unsecured, accrued interest at 10% and is
due on demand. The Note is convertible into common stock at $.00005 per share. As a result of the conversion feature the
Company has recorded a debt discount of $5,925 all of which has been amortized to interest expense as of March 31, 2016. The
discount was determined by calculating the intrinsic value of the loan based on the stock price on the date of the loan of
$0.0003 and the conversion price of $0.00005. The intrinsic value was limited to the amount of the loan. On August 18, 2015,
Syndicate loaned the Company an additional $7,140. As of September 30, 2015, there is $7,140 of principal and $147 of accrued
interest on this note. As of March 31, 2016 there is $5,925 of principal and $300 of accrued interest due on this note. This
loan is due on demand.
On July 5, 2015, the Company executed a convertible
note with a director for conversion of $40,000 of accrued salary. As a result of the conversion feature the Company has recorded
a debt discount of $40,000 all of which has been amortized to interest expense as of September 30, 2015. On July 30, 2015, the
note was converted into 22,000 shares of Series B preferred stock. As the conversion occurred within the terms of the note agreement,
no gain or loss was recognized.
On February 17, 2016, the Company issued a
Convertible Promissory Note to T McNeil Advisors, LLC, in the amount of $217,500 for services to be rendered over a minimum three-month
period. The note bears interest at a rate of 8% per annum, is unsecured and matures on February 17, 2017. The Note is convertible
into common stock in whole or in part at any time at a variable conversion price equal to a 55% of the lowest trading price in
the 20-day trading price prior to the conversion date. As a result of the conversion feature the Company has recorded a debt discount
of $111,998, to be amortized to interest expense. On March 31, 2016, $9,405 was amortized to interest expense and the fair value
of the derivative was calculated using a multi-nomial lattice model. As of March 31, 2016, there is $217,500 of principal and $2,050
of accrued interest due on this note. As the note was issued for services it was booked to prepaid assets to be amortized over
the service period. As of March 31, 2016, $116,000 was expensed.
On March 1, 2016, the Company issued a Convertible
Promissory Note to LG Capital Funding, LLC, in the amount of $39,375. The note bears interest at a rate of 8% per annum, is unsecured
and matures on February 24, 2017. The Note is convertible into common stock in whole or in part at any time at a variable conversion
price equal to a 50% discount of the lowest trading price in the 20-day trading price prior to the conversion date. As a result
of the conversion feature the Company has recorded a debt discount of $39,375, to been amortized to interest expense. As of March
31, 2016, $777 of the debt discount was amortized to interest expense and the fair value of the derivative was calculated using
a multi-nomial lattice model. As of March 31, 2016, there is $39,375 of principal and $250 of accrued interest due on this note.
On March 1, 2016, the Company issued a Convertible
Promissory Note to Cerberus Finance Group, LTD, in the amount of $39,375. The note bears interest at a rate of 8% per annum, is
unsecured and matures on March 1, 2017. The Note is convertible into common stock in whole or in part at any time at a variable
conversion price equal to a 50% discount of the lowest trading price in the 20-day trading price prior to the conversion date.
As a result of the conversion feature the Company has recorded a debt discount of $39,375, to been amortized to interest expense.
As of March 31, 2016, $3,236 of the debt discount was amortized to interest expense the fair value of the derivative was calculated
using a multi-nomial lattice model. As of March 31, 2016, there is $39,375 of principal and $250 of accrued interest due on this
note.
A summary of outstanding convertible notes
as of September 30, 2015 and March 31, 2016 is as follows:
Note Holder
|
Issue Date
|
Maturity Date
|
Stated Interest Rate
|
Principal Balance 9/30/2015
|
Changes
|
Principal Balance 3/31/2016
|
Notes in default
|
|
|
|
|
|
|
Neil Linder
|
4/9/2012
|
4/9/2013
|
18%
|
$ 86,050
|
-
|
$ 86,050
|
Jabro Funding Corp
|
4/28/2014
|
1/30/2015
|
22%
|
14,530
|
(10,485)
(1)
|
4,045
|
LG Capital Funding
|
6/25/2014
|
6/25/2015
|
16%
|
33,000
|
(5,600)
(2)
|
27,400
|
Jabro Funding Corp
|
7/17/2014
|
4/21/2015
|
22%
|
37,500
|
-
|
37,500
|
Total
|
|
|
|
171,080
|
|
154,995
|
Less debt discount
|
|
|
|
(2,650)
|
|
-
|
Total
|
|
|
|
$ 168,430
|
|
$ 154,995
|
Notes not in default
|
|
|
|
|
|
|
John D Thomas
|
3/19/2015
|
Demand
|
10%
|
$ 7,500
|
-
|
$ 7,500
|
Syndicate Consulting, Inc.
|
5/18/2015
|
Demand
|
10%
|
16,700
|
-
|
16,700
|
Syndicate Consulting, Inc.
|
5/20/2015
|
Demand
|
10%
|
5,925
|
-
|
5,925
|
Syndicate Consulting, Inc.
|
8/18/2015
|
Demand
|
0%
|
4,490
|
2,650
(3)
|
7,140
|
T McNeil Advisors, LLC
|
2/17/2016
|
2/17/2017
|
8%
|
-
|
-
|
217,500
|
LG Capital Funding
|
3/1/2016
|
2/24/2017
|
8%
|
-
|
-
|
39,375
|
Cerberus Finance Group, LTD
|
3/1/2016
|
3/1/2017
|
8%
|
-
|
-
|
39,375
|
Total
|
|
|
|
34,615
|
|
333,515
|
Less debt discount
|
|
|
|
(24,987)
|
|
(180,896)
|
Total
|
|
|
|
$ 9,628
|
|
$ 152,619
|
|
|
|
|
|
|
|
|
(1)
|
$10,485 converted to common stock
|
|
(2)
|
$5,600 converted to common stock
|
A summary of the activity of the derivative liability for the notes
above is as follows:
Balance at September 30, 2014
|
|
$
|
183,648
|
|
Decrease in derivative due to payment/conversion of debt
|
|
|
(259,649
|
)
|
Increase to derivative due to debt discount
|
|
|
75,125
|
|
Increase to derivative due to new issuances
|
|
|
1,778,224
|
|
Derivative (gain) due to mark to market adjustment
|
|
|
(1,650,146
|
)
|
Balance at September 30, 2015
|
|
|
127,203
|
|
Decrease in derivative due to conversion of debt
|
|
|
(16,843
|
)
|
Increase to derivative due to new issuances
|
|
|
246,746
|
|
Derivative gain due to mark to market adjustment
|
|
|
(4,511
|
)
|
Balance at March 31, 2016
|
|
$
|
352,595
|
|
|
|
|
|
|
NOTE 6: LOANS PAYABLE – RELATED PARTY
AND THIRD PARTY
Third Party
On September 25, 2015, the Company executed
a promissory note with a shareholder for $30,000. The $30,000 was previously credited to additional paid in capital; however, was
changed to a promissory note as a result of a mutual agreement between the parties. The note is unsecured, accrues interest at
8% and matures March 25, 2016. As of March 31, 2015, $30,000 of principle and $1,240 of interest remain outstanding. This note
is in default.
As of March 31, 2016 and September 30,
2015, the Company owed a total of $9,244 and $9,243, respectively to various third parties. All amounts are due on demand. As
of March 31, 2015, $9,244 of principle and $3,820 of interest remain outstanding.
On January 15, 2016, the Company executed a
promissory note with a third party for $15,000. The note is unsecured, bears interest at 10% and is due within eighteen months.
In connection with and for consideration of loaning the funds to the Company. The Company issued 2,000 shares of Series B preferred
stock. The shares were fair valued at $20,000, which was credited to additional paid in capital and debited to debt discount. As
of March 31, 2016, $8,921 of the debt discount was amortized to interest expense. As of March 31, 2015, $15,000 of principle and
$312 of interest remain outstanding.
Related Party
On May 8, 2015, the Company executed a promissory
note for $4,000 with Pat Ritchie, the mother of CEO, Jeff Ritchie. The loan is unsecured, accrues interest at 10% and is due within
one year. As of March 31, 2015, $4,000 of principle and $359 of interest remain outstanding.
As of March 31, 2016 and September
30, 2015, the Company owed a total of $8,687 and $8,687, respectively to a former officer for advances made to the Company to
pay for general operating expenses. The advances are unsecured, accrue no interest and are due on demand.
On November 3, 2015 and November 24, 2015,
the Company executed a promissory note for $4,100 and $4,000, respectively with the sister of CEO, Jeff Ritchie. The loans are
unsecured, accrue interest at 10% and are due within one year. As of March 31, 2015, $8,100 of principle and $308 of interest remain
outstanding.
During the six months ended March 31, 2016,
Edward Gallagher, owner/operator of C2C restaurant Group, Inc. advanced the Company $82,231 to pay for expenses related to the
setup and opening of the restaurant. The advance is unsecured, non-interest bearing and due on demand. As of March 31, 2016, $82,231
remains outstanding.
A summary of the related party loans as of
September 30, 2015 and March 31, 2016 is as follows.
Note Holder
|
Issue Date
|
Maturity Date
|
Stated Interest Rate
|
Principal Balance 9/30/2015
|
Changes
|
Principal Balance 3/31/2016
|
Related Party Loans
|
|
|
|
|
|
|
Pat Ritchie
|
5/8/2015
|
5/8/2016
|
10%
|
$ 4,000
|
-
|
$ 4,000
|
Former Officer
|
n/a
|
demand
|
0%
|
8,687
|
-
|
8,687
|
Other Related Party
|
11/3/2015
|
11/3/2016
|
10%
|
-
|
-
|
4,100
|
Other Related Party
|
11/24/2015
|
11/24/2016
|
10%
|
-
|
-
|
4,000
|
Edward Gallagher
|
n/a
|
demand
|
0%
|
-
|
-
|
82,231
|
Total
|
|
|
|
$ 12,687
|
|
$ 103,018
|
|
|
|
|
|
|
|
Third Party Loans
|
|
|
|
|
|
|
Loan #1 (in default)
|
9/25/2015
|
3/25/2016
|
8%
|
$ 30,000
|
-
|
$ 30,000
|
Loan #2
|
various
|
demand
|
0%
|
8,493
|
751
|
9,244
|
Loan #3
|
1/15/2016
|
7/15/2017
|
10%
|
-
|
$ 15,000
|
15,000
|
Total
|
|
|
|
38,493
|
|
54,244
|
Debt Discount
|
|
|
|
-
|
|
(8,995)
|
Total
|
|
|
|
$ 38,493
|
|
$ 45,249
|
NOTE 7: COMMON STOCK TRANSACTIONS
Fiscal year 2015
On October 29, 2014, the Company issued 1,820
shares of common stock to Asher Enterprises, Inc. in conversion of $5,915 of principal due to them. Due to the conversion within
the terms of the agreement, no gain or loss was recognized.
On November 11, 2014, the Company issued
1,820 shares of common stock to Asher Enterprises, Inc. for conversion of $5,915 of principal due to them. Due to the
conversion within the terms of the agreement, no gain or loss was recognized.
On November 12, 2014, the Company issued 2,800
shares of common stock to a service provider in conversion of $35,000 of accounts payable for services rendered in a prior period.
The shares were valued based on the closing price of the common stock on the date of grant.
On November 25, 2014, the Company sold 1,200
shares of common stock for total proceeds of $3,000.
Effective February 11, 2015, the Company restated
its Articles of Incorporation in which it changed the par value of the Company’s common stock from $0.0001 to $0.00001 and
increased the authorized shares of common stock to 2,000,000,000. The value of the common stock and additional paid in capital
accounts have been retroactively adjusted for the change in par value.
On March 2, 2015, the Company issued 400 shares
of common stock to Rachel Boulds, the former CFO for services. The shares were valued based on the closing price of the common
stock on the date of grant for a total non-cash expense of $2,000.
On March 2, 2015, the Company issued 600,000
shares of common stock to Jeff Ritchie, Interim CEO for conversion of $15,000 of accrued salary. The shares were valued based on
the closing price of the common stock on the date of grant which resulted in a loss on conversion of $2,985,000. June 4, 2015.
Mr. Ritchie returned 40,000 shares to the Company. The Company credited loss on conversion of debt $200,000 due to the return of
shares which resulted in a net issuance of 560,000 shares and a net loss on conversion of $2,785,000.
On March 2, 2015, the Company issued 25,000
shares of common stock to DTS Partners, LLC, for conversion of $2,500 of principal due to them. The shares were valued based on
the closing price of the common stock on the date of conversion which resulted in a loss on conversion of $122,500.
On March 30, 2015, the Company issued 1,600
shares of common stock to Neil Linder, for conversion of $4,000 of accrued interest due to him. Due to the conversion within the
terms of the agreement, no gain or loss was recognized.
On April 16, 2015, the Company issued 1,224
shares of common stock to LG Capital Funding in conversion of $1,500 of principal and $97 of interest due to them. Due to the conversion
within the terms of the agreement, no gain or loss was recognized.
On May 13, 2015, the Company issued 25,000
shares of common stock to DTS Partners, LLC for conversion of $2,500 of principal due to them. The shares were valued based on
the closing price of the common stock on the date of conversion which resulted in a loss on conversion of $28,750.
On May 20, 2015, the Company issued 34,852
shares of common stock to Jabro Funding Corp in conversion of $23,525 of principal due to them. Due to the conversion within the
terms of the agreement, no gain or loss was recognized.
On May 21, 2015, the Company issued 26,667
shares of common stock to JT Sands Corp. for conversion of $2,000 of principal due to them. The shares were valued based on the
closing price of the common stock on the date of conversion which resulted in a loss on conversion of $18,000.
On May 28, 2015, the Company issued 29,624
shares of common stock to LG Capital Funding in conversion of $8,000 of principal and $591 of interest due to them. Due to the
conversion within the terms of the agreement, no gain or loss was recognized.
On June 2, 2015, the Company issued 40,000
shares of common stock to an individual for conversion of $1,000 of principal due to them. The shares were valued based on the
closing price of the common stock on the date of conversion which resulted in a loss on conversion of $19,000.
Effective July 1, 2015, the Company approved
a 2,500 for 1 reverse stock split. All shares throughout these financial statements and Form 10-Q have been retroactively restated
for the reverse.
On August 15, 2015, the Company issued 50,000,000
shares of common stock to Syndicate Consulting, Inc., for conversion of $2,500 of principal due to them. The shares were valued
based on the closing price of the common stock on the date of conversion which resulted in a loss on conversion of $1,247,500.
On August 15, 2015, the Company issued 10,000,000
shares of common stock to VanCal Partners, LLC, for conversion of $500 of principal due to them. Due to the conversion within the
terms of the agreement, no gain or loss was recognized.
On August 25, 2015, the Company issued 897,857
shares of common stock to LG Capital Funding in conversion of $5,000 of principal and $468 of interest due to them. Due to the
conversion within the terms of the agreement, no gain or loss was recognized.
On September 8, 2015, the Company issued 5,676,923
shares of common stock to Jabro Funding Corp in conversion of $13,060 of principal and $1,700 of interest due to them. Due to the
conversion within the terms of the agreement, no gain or loss was recognized.
On September 25, 2015, the Company authorized
10,000,000 shares of common stock to VanCal Partners, LLC, for conversion of $500 of principal due to them. Due to the conversion
within the terms of the agreement, no gain or loss was recognized. As of September 30, 2015, the shares have not yet been issued
by the transfer agent; therefore, the $500 has been credited to common stock payable.
On September 30, 2015, the Company authorized
49,934,783 shares of common stock to Jabro Funding Corp in conversion of $22,970 of principal due to them. Due to the conversion
within the terms of the agreement, no gain or loss was recognized. As of September 30, 2015, the shares have not yet been issued
by the transfer agent; therefore, the $22,970 has been credited to common stock payable.
Fiscal year 2016
On October 1, 2015, the transfer agent issued
49,934,783 shares of common stock to Jabro Funding Corp valued at $22,970. The shares had been issued for conversion of debt in
the prior year and credited to common stock payable.
On October 1, 2015, the Company issued 7,123,060
shares of common stock to LG Capital Funding in conversion of $3,000 of principal and $305 of interest due to them. Due to the
conversion within the terms of the agreement, no gain or loss was recognized.
On October 6, 2015, the transfer agent issued
10,000,000 shares of common stock to VanCal Partners, LLC valued at $500. The shares had been issued for conversion of debt in
the prior year and credited to common stock payable.
On October 13, 2015, the Company issued 40,000,000
shares of common stock to VanCal Partners, LLC in conversion of $2,000 of principal due to them. Due to the conversion within the
terms of the agreement, no gain or loss was recognized.
On October 14, 2015, the Company issued 49,333,333
shares of common stock to Jabro Funding Corp in conversion of $7,490 of principal due to them. Due to the conversion within the
terms of the agreement, no gain or loss was recognized.
On November 9, 2015, the Company issued 49,769,655
shares of common stock to LG Capital Funding in conversion of $2,600 of principal and $287 of interest due to them. Due to the
conversion within the terms of the agreement, no gain or loss was recognized.
On November 18, 2015, the Company issued 49,916,667
shares of common stock to Jabro Funding Corp in conversion of $2,995 of principal due to them. Due to the conversion within the
terms of the agreement, no gain or loss was recognized.
NOTE 8: PREFERRED STOCK
The Company is authorized to issue 15,000,010
preferred shares with a par value of $0.0001 per share.
Series A Preferred Stock
On June 17, 2013, the Board of Directors designated
a series of preferred stock titled Series A Preferred Stock consisting of 5,000,000 shares. There is currently no market for the
shares of Series A Preferred Stock and they cannot be converted into shares of common stock of the Company. The shares have super
voting rights of 100 common shares for every one share of Series A. The Preferred Series A do not contain any rights to dividends;
have no liquidation preference; are not to be amended without the holders approval.
On December 1, 2014, the Company issued 5,000,000
shares of Series A Preferred stock to Jeff Ritchie, CEO for services rendered. The company had a valuation completed, by an independent
third party, and as a result expensed the value of the Preferred A during the quarter at a value of $79,000.
Series B Preferred Stock
On March 26, 2015, the Board of Directors designated
a series of preferred stock titled Series B Preferred Stock consisting of 10,000,000 shares. There is currently no market for the
shares of Series B Preferred Stock. They can be converted into shares of common stock of the Company at par value ($.00001) and
are priced at $2.50 per share. The Series B have voting rights of 10 votes per share, are entitled to dividends if declared and
have liquidation preference to stock below it.
On April 1, 2015, the Company declared a preferred
stock dividend of one share of Series B preferred stock for every 100,000 shares of common stock, resulting in the issuance of
16,768 (net of 30 shares canceled that were issued in error) of Series B preferred stock.
On June 11, 2015, the Company issued 40,500
shares of Series B preferred stock to officers in conversion of $101,246 of accrued compensation. The shares were valued based
on the closing price of the common stock on the date of conversion which resulted in no loss on conversion as the value of the
shares, which have no special voting rights, were the same as the $101,246 of accrued compensation.
On July 30, 2015, the Company authorized 22,000
shares of Series B preferred stock to a director in conversion of a $40,000 promissory note that was issued for conversion of accrued
salary. As of September 30, 2015, the shares had not yet been issued resulting in a $40,000 credit to preferred stock payable.
The shares were issued on March 7, 2016. Due to the conversion within the terms of the agreement, no gain or loss was recognized.
On September 14, 2015, the Company sold 2,000
shares of Series B preferred stock for total cash proceeds of $5,000. As of September 30, 2015, the shares had not yet been issued
resulting in a $5,000 credit to preferred stock payable. The shares were issued on March 7, 2016
On January 15, 2016, the Company issued 2,000
shares of Series B preferred stock as consideration for a loan to the Company. The shares were fair valued at $20,000, which was
credited to additional paid in capital and debited to debt discount. As of March 31, 2016, $8,921 of the debt discount was amortized
to interest expense.
Series AA Preferred Stock
On February 18, 2015, the Board of Directors
designated a series of preferred stock titled Series AA Preferred Stock consisting of 10 shares. The shares are convertible into
the number of shares of common stock equal to four times the sum of the total number of common stock issued and the total number
of Series B issued. The Preferred Series AA do not contain any rights to dividends; have no liquidation preference and are not
to be amended without the holders approval.
On June 30, 2015, the Company issued 10 shares
of Series AA preferred stock to its Jeff Ritchie, CEO. The company had a valuation completed resulting in non-cash compensation
expense of $88,676.
Series F Preferred Stock
On September 25, 2015, the Board of Directors
designated a series of preferred stock titled Series F Preferred Stock consisting of 20,000 shares. There is currently no market
for the shares of Series F Preferred Stock. They can be converted into shares of common stock of the Company at par value ($.00001)
and are priced at $2.50 per share. The Series F have voting rights of 1 vote per share, are entitled to dividends if declared and
have liquidation preference to stock below it.
On September 21, 2015, the Company entered
into a share purchase agreement, by and among the Company, C2C Restaurant Group, Inc., a New York corporation and a restaurant
holding company (“C2C”), and the shareholders of C2C, pursuant to which the Company purchased all of the outstanding
common stock of C2C in exchange for 20,000 shares of our Series F preferred stock, par value $0.0001. Based upon a third party
valuation the purchase was fair valued in two parts. First, a value of $5,600 was capitalized as a trade name for Chef Eddie G's
Kitchen. This will be amortized over fifteen years, and is shown net of $8 amortization expense as of September 30, 2015. Second
the Company recorded goodwill in the amount of $117,754. Refer to Note 3.
NOTE 9 – SEGMENT REPORTING
Segment Reporting
ASC Topic 280,
Segment Reporting
, requires
use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s
management organizes segments within the company for making operating decisions and assessing performance. The Company has one
reportable segments: C2C Restaurant Group, Inc. C2C currently has one restaurant open and operating in New York City.
The following tables summarize the Company’s
segment information for the six months ended March 31, 2016. There was no segment activity during the six months ended March 31,
2015.
|
|
Six Months Ended March 31,
2016
|
Sales
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
42,921
|
|
Corporate
|
|
|
—
|
|
|
|
$
|
42,921
|
|
Cost of sales
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
20,469
|
|
Corporate
|
|
|
—
|
|
|
|
$
|
20,469
|
|
Gross margin
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
22,452
|
|
Corporate
|
|
|
—
|
|
|
|
$
|
22,452
|
|
Operating expenses
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
120,960
|
|
Corporate
|
|
|
217,306
|
|
|
|
$
|
338,266
|
|
Loss from operations
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
(98,508
|
)
|
Corporate
|
|
|
(217,306
|
)
|
|
|
$
|
(315,814
|
)
|
Other expense
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
—
|
|
Corporate
|
|
|
(115,221
|
)
|
|
|
$
|
(115,221
|
)
|
Net income (loss)
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
(98,508
|
)
|
Corporate
|
|
|
(332,527
|
)
|
|
|
$
|
(431,035
|
)
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
March 31,
|
|
|
|
|
2016
|
|
Total Assets
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
25,592
|
|
Corporate
|
|
|
110,996
|
|
|
|
$
|
136,588
|
|
Total Liabilities
|
|
|
|
|
C2C Restaurant Group, Inc.
|
|
$
|
31,620
|
|
Corporate
|
|
|
2,026,967
|
|
|
|
$
|
2,058,587
|
|
NOTE 10 – RELATED PARTIES
Fiscal year 2015
Loans payable:
On May 8, 2015, the Company executed a promissory
note for $4,000 with Pat Ritchie, the mother of CEO, Jeff Ritchie. The loan is unsecured, accrues interest at 10% and is due within
one year.
As of March 31, 2016, the Company owed a total
of $8,687 to a former officer for advances made to the Company to pay for general operating expenses. The advances are unsecured,
accrue no interest and are due on demand.
On November 3, 2015 and November 24, 2015,
the Company executed a promissory note for $4,100 and $4,000, respectively with the sister of CEO, Jeff Ritchie. The loans are
unsecured, accrue interest at 10% and are due within one year.
During the six months ended March 31, 2016,
Edward Gallagher, owner/operator of C2C restaurant Group, Inc. advanced the Company $82,231 to pay for expenses related to the
setup and opening of the restaurant. The advance is unsecured, non-interest bearing and due on demand. As of March 31, 2016, $82,231
remains outstanding.
Stock transactions:
On December 1, 2014, the Company issued 5,000,000
shares of Series A Preferred stock to Jeff Ritchie, CEO for services rendered. The company had a valuation completed, by an independent
third party, and as a result expensed the value of the Preferred A during the quarter at a value of $79,000.
On March 2, 2015, the Company issued 400 shares
of common stock to Rachel Boulds, the former CFO for services. The shares were valued based on the closing price of the common
stock on the date of grant for a total non-cash expense of $2,000.
On March 2, 2015, the Company issued 600,000
shares of common stock to Jeff Ritchie, Interim CEO for conversion of $15,000 of accrued salary. The shares were valued based on
the closing price of the common stock on the date of grant which resulted in a loss on conversion of $2,985,000. June 4, 2015.
Mr. Ritchie returned 40,000 shares to the Company. The Company credited loss on conversion of debt $200,000 due to the return of
shares which resulted in a net issuance of 560,000 shares.
On June 11, 2015, the Company issued 40,500
shares of Series B preferred stock to officers in conversion of $101,246 of accrued compensation. The shares were valued based
on the closing price of the common stock on the date of conversion which resulted in no loss on conversion as the value of the
shares, which have no special voting rights, were the same as the $101,246 of accrued compensation.
On June 30, 2015, the Company issued 10 shares
of Series AA preferred stock to its Jeff Ritchie, CEO. The company had a valuation completed resulting in non-cash compensation
expense of $88,676.
On July 5, 2015, the Company executed a convertible
note with a director for conversion of $40,000 of accrued salary. On July 30, 2015, the note was converted into 22,000 shares of
Series B preferred stock. As the conversion occurred within the terms of the note agreement, no gain or loss was recognized.
On July 30, 2015, the Company authorized 22,000
shares of Series B preferred stock to a director in conversion of a $40,000 promissory note that was issued for conversion of accrued
salary. As of September 30, 2015, the shares had not yet been issued resulting in a $40,000 credit to preferred stock payable.
The shares were issued on March 7, 2016. Due to the conversion within the terms of the agreement, no gain or loss was recognized.
Fiscal year 2016
Loans payable:
During the six months ended March 31, 2016,
Edward Gallagher, owner/operator of C2C restaurant Group, Inc. advanced the Company $82,231 to pay for expenses related to the
setup and opening of the restaurant. The advance is unsecured, non-interest bearing and due on demand.
NOTE 11: GOING CONCERN
The accompanying financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate
continuation of the Company as a going concern. The Company has generated minimal revenue and has an accumulated deficit of $12,483,759
and has funded its operations primarily through the issuance of short term debt and equity. This matter raises substantial doubt
about the Company's ability to continue as a going concern.
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 be necessary should the Company be unable to continue as a going concern. Accordingly, the Company’s ability to
accomplish its business strategy and to ultimately achieve profitable operations is dependent upon its ability to obtain additional
debt or equity financing. Management plans to take the following steps that it believes will be sufficient to provide the Company
with the ability to continue in existence.
Management intends to raise financing through
private equity financing or other means and interests that it deems necessary. There can be no assurance that the Company will
be successful in its endeavor.
NOTE 12: SUBSEQUENT EVENTS
The Company has performed an evaluation of
subsequent events in accordance with ASC Topic 855. The Company is not aware of any subsequent events which would require recognition
or disclosure in the financial statements except for the following.
On April 6, 2016, the Company issued a Convertible
Promissory Note to LG Capital Funding, LLC, in the amount of $19,688. The note bears interest at a rate of 8% per annum, is unsecured
and matures on April 6, 2017. The Note is convertible into common stock in whole or in part at any time after funding at a variable
conversion price equal to a 50% discount of the lowest trading price in the 20-day trading price prior to the conversion date.
On April 6, 2016, the Company issued a Convertible
Promissory Note to Cerberus Finance Group, LTD, in the amount of $39,375. The note bears interest at a rate of 8% per annum, is
unsecured and matures on April 6, 2017. The Note is convertible into common stock in whole or in part at any time after funding
at a variable conversion price equal to a 50% discount of the lowest trading price in the 20-day trading price prior to the conversion
date.