NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
1. Summary
of Significant Accounting Policies
Basis
of Presentation and Organization
Modern
Mobility Aids, Inc. (the “Company,” “we,” “us” or “our”) is a Nevada corporation in the
development stage. The Company was incorporated under the laws of the State of Nevada on December 19, 2007
(“Inception”) under the name Glider Inc. with a business plan to sell and distribute products for mobility
challenged individuals. The Company changed its name to Modern Mobility Aids, Inc. on April 22, 2010 with an initial plan to
distribute products for mobility challenged individuals.
The
Company has abandoned its historic business of distributing products for mobility challenged individuals which has generated little
operating revenue and has had limited operations to date and is now focused on exploiting the dynamic opportunities presented
in the medical marijuana arena by the regulatory reforms rolled out in Canada. We plan to acquire or invest in multiple licensed
producers in Canada and the U.S. The Company will require financing to make such acquisitions. There can be no assurance it can
secure such financing or that it will be able to make such acquisitions even if financing is available. Moreover, even if it acquires
business assets or a business, there can be no assurance that the acquisitions will be successfully accomplished and that our
operations thereafter will be profitable.
Unaudited
Financial Statements
The
accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial
statements. In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary
in order to make the financial statements not misleading. Operating results for the three and six month periods ended December
31, 2013 are not necessarily indicative of the results that may be expected for the year ended June 30, 2014. For more complete
financial information, these unaudited financial statements should be read in conjunction with the audited financial statements
for the year ended June 30, 2013 included in our Form 10-K filed with the SEC.
Principles
of Consolidation
The
Company's consolidated financial statements for the three and six month periods ended December 31, 2013, include the
accounts of its two wholly owned subsidiaries, Modern Mobility Aids, Inc. and MDRM Group (Canada) Ltd., both Ontario,
Canada based companies. Modern Mobility Aids, Inc. was incorporated on September 2, 2009 and MDRM Group (Canada) Ltd. was
incorporated on July 14, 2011. All significant intercompany balances and transactions have been eliminated on
consolidation.
MODERN
MOBILITY AIDS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
Development
Stage Company
The
Company is a development stage company in accordance with Financial Accounting Standards Codification (“ASC”) 915
"Development Stage Entities". Among the disclosures required as a development stage company are that our financial statements
are identified as those of a development stage company, and that the statements of operations, stockholders' deficit and cash
flows disclose activity since the date of our Inception (December 19, 2007) as a development stage company.
Cash
and Cash Equivalents
For
purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to
withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less
to be cash and cash equivalents.
Revenue
Recognition
The
Company is in the development stage and has realized minimal revenues from operations. The Company recognizes revenues when the
sale and/or distribution of products is complete, risk of loss and title to the products have transferred to the customer, there
is persuasive evidence of an agreement, acceptance has been approved by its customer, the fee is fixed or determinable based on
the completion of stated terms and conditions, and collection of any related receivable is probable. Net revenues are comprised
of gross revenues less expected returns, trade discounts, and customer allowances that include costs associated with off-invoice
markdowns and other price reductions, as well as trade promotions and coupons. These incentive costs are recognized at the later
of the date on which the Company recognized the related revenue or the date on which the Company offers the incentive.
Loss
per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of
shares of common stock outstanding during the periods. Diluted loss per share is computed similar to basic loss per 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. There were no potentially dilutive debt or equity
instruments issued or outstanding during the three and six month periods ended December 31, 2013 and 2012.
Income
Taxes
The
Company accounts for income taxes pursuant to SFAS No. 109,
“Accounting for Income Taxes”
(“SFAS No.
109”). Under SFAS No. 109, now encompassed under ASC 740,
deferred tax assets and liabilities
are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial
reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification
of the assets and liabilities generating the differences.
MODERN
MOBILITY AIDS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
Income
Taxes Continued
The
Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based
upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial
position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence
of sufficient taxable income within the carry-forward period under the Federal tax laws.
Changes
in circumstances, such as the Company generating taxable income, could cause a change in judgment about the reliability of the
related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable
judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts Modern
Mobility Aids could realize in a current market exchange. As of December 31, 2013, the carrying value of the Company’s financial
instruments comprising accounts payable and accruals, due to related parties and loan from shareholders approximated fair value
due to the short-term nature and maturity of these instruments.
Deferred
Offering Costs
The
Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At
the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated,
deferred offering costs are charged to operations during the period in which the offering is terminated.
Impairment
of Long-lived Assets
Capital
assets are reviewed for impairment in accordance with SFAS No. 144,
“Accounting for the Impairment of Disposal of Long-lived
Assets,”
which was adopted effective January 1, 2002. Under SFAS No. 144,
now encompassed
under ASC 350,
these assets are tested for recoverability whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable. An impairment charge is recognized for the amount, if any, which
the carrying value of the asset exceeds the fair value. During the three and six month periods ended December 31, 2013, and 2012,
the Company did not own any long-lived assets.
Advertising
and Promotion
The
Company expenses all advertising and promotion costs as incurred. The Company did not incur any advertising or promotion costs
during the three and six month periods ended December 31, 2013, and 2012.
MODERN
MOBILITY AIDS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
Common
Stock Registration Expenses
The
Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual
arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration
costs and expenses are reflected in the accompanying financial statements as general and administrative expenses, and are expensed
as incurred.
Stock-Based
Compensation
Stock-based
compensation is accounted for at fair value in accordance with ASC 718,”Compensation – Stock Compensation”,
when applicable. To date, the Company has not adopted a stock option plan and has not granted any stock options. As of December
31, 2013 the Company has not issued any stock-based payments to its employees.
Estimates
The
accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles
in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events,
the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful
judgment. Actual results may vary from these estimates.
Reclassifications
Certain
reclassifications have been made to the prior period financial statements to conform to the 2014 presentation. The reclassifications
had no effect on net loss, total assets, or total stockholders’ deficit.
Recently
Issued Accounting Pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption
of any such pronouncements may be expected to cause a material impact on our financial condition or the results of its operations.
2.
Going Concern
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
State of America, which contemplate continuation of the Company as a going concern. The Company has not established a source of
revenues sufficient to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of
December 31, 2013, and June 30, 2013, the Company had a working capital deficit of $(559,635), and $(519,773), respectively.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying
financial statements do not include any adjustments or classifications that may result from the possible inability of the Company
to continue as a going concern.
MODERN
MOBILITY AIDS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
The
Company has abandoned its historic business of distributing products for mobility challenged individuals which has generated little
operating revenue and has had limited operations to date and is now focused on exploiting the dynamic opportunities presented
in the medical marijuana arena by the regulatory reforms rolled out in Canada. We plan to acquire or invest in multiple licensed
producers in Canada and the U.S. The Company will require financing to make such acquisitions. There can be no assurance it can
secure such financing or that it will be able to make such acquisitions even if financing is available. Moreover, even if it acquires
business assets or a business, there can be no assurance that the acquisitions will be successfully accomplished and that our
operations thereafter will be profitable.
While
management of the Company believes that the Company will be successful in its planned operating activities under its new business
plan and capital formation activities, there can be no assurance that it will be successful in implementation of its new business
plan or the formation of sufficient capital such that it will generate adequate revenues to earn a profit or sustain its operations.
3.
Due to Related Parties
In
support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that
the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing.
There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid
in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
As
of December 31, 2013 there was a balance to related parties in the amount of $25,171 for services provided to the Company.
In
November 2013, the Company paid $19,093 to a Company owned by Mr. Karatella for services rendered to and expenses incurred
on behalf of the Company during 2011 and 2012 and in November 2013, paid directly to Mr. Karatella $4,773 for services rendered
to the Company during 2011 and 2012 for expenses incurred on behalf of the Company.
4.
Shareholder Loans
In
support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that
the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing.
There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid
in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
As
of December 31, 2013, the shareholder loan consisted of $363,275 principal and accrued interest of $Nil. The loan payable is
payable on demand, unsecured and bears no interest. The loan shall be payable on demand within five (5) days from the date of
request. In the event payment is not timely made, interest will accrue on the unpaid balance at the rate of 15% per annum, compounded
monthly, from and after the date of such failure to pay.
MODERN
MOBILITY AIDS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
5.
Capital Stock
The total
number of common shares authorized that may be issued by the Company is 200,000,000 shares with a par value of $0.001 per share,
and 1,000,000 shares of preferred stock at par value of $0.001 per share.
Preferred
Stock
No shares
of preferred stock were issued and outstanding during the three and six months ended December 31, 2013 and 2012.
Common
Stock
During
the year ended June 30, 2010, the Company issued 130,000,000 (post forward split) shares of common stock at $0.00005 per share
to its Directors for total proceeds of $6,500.
During
the year ended June 30, 2011 the Company sold 65,480,000 (post forward split) common shares at $0.000625 per share for total proceeds
of $58,767.
On
August 18, 2011, the Company implemented a 20 for 1 forward stock split whereby each shareholder of record received an additional
19 shares of common stock for every 1 share held of record. The total number of common stock issued and outstanding since December
19, 2007 (Inception) have been restated for this forward stock split.
On
November 22, 2013, Mohamed K. Karatella, formerly the Company’s President, Chief Financial Officer, Treasurer, Principal
Accounting Officer and the owner of 66.5% of its outstanding common stock agreed to contribute 120,000,000 shares of the Company’s
common stock to the Company to be cancelled. Mr. Karatella did not receive any compensation in connection with this transfer.
After the transaction, Mr. Karatella owned 10,000,000 shares, 13.25%, of 75,480,000 shares of common stock of the Company then
outstanding.
As
at December 31, 2013 there were 75,480,000 shares of common stock issued and outstanding.
As of December
31, 2013, the Company had not issued any shares nor granted any stock options under share-based compensation transactions.
6.
Income Taxes
The
provision (benefit) for income taxes for the six months ended December 31, 2013 and 2012, were as follows (assuming a 15 percent
effective tax rate):
MODERN
MOBILITY AIDS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
|
|
|
Six Months
Ended
|
|
|
|
|
December
31,
|
|
|
|
|
2013
|
|
2012
|
|
Current Tax Provision:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
|
|
|
|
|
|
|
Taxable
income
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Total
current tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Provision:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
|
|
|
|
|
|
|
Loss
carry forwards
|
|
$
|
4,363
|
|
|
$
|
1,328
|
|
|
Change
in valuation allowance
|
|
|
(4,363
|
)
|
|
|
(1,328
|
)
|
|
Total
deferred tax provision
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
The Company
had deferred income tax assets as of December 31, 2013 and June 30, 2013 as follows:
|
|
|
December
31,
|
|
June
30,
|
|
|
|
2013
|
|
2013
|
|
Loss
carryforwards
|
|
$
|
624,902
|
|
|
$
|
585,040
|
|
|
Less
- Valuation allowance
|
|
|
(624,902
|
)
|
|
|
(585,040
|
)
|
|
Total
net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
As of December
31, 2013, the Company had approximately $624,902 in tax loss carry forwards that can be utilized in future periods to reduce taxable
income, and begin to expire in the year 2028.
The
Company provided a valuation allowance equal to the deferred income tax assets for the six months ended December 31, 2013
because it is not presently known whether future taxable income will be sufficient to utilize the loss carry forwards.
7.
Subsequent Events
The
Company has entered into a Memorandum of Understanding and two agreements with two business in its targeted strategy to exploit
the dynamic opportunities presented in the medical marijuana arena by the regulatory reforms rolled out in Canada:
On
June 27, 2014 the Company entered into an agreement with DYMA INC., a company incorporated in the Province of Ontario that previously
operated a 6000 sq. ft facility under MMAR and is pending a license from Health Canada under MMPR. The Company purchased 308,000
shares of DYMA INC common stock at $0.75 per share representing approximately 14% of the DYMA INC's stock when a current offering
is fully subscribed. The highly experienced owners and management of DYMA INC. are actively assisting the MDMR in further assessing
and building-out other targeted acquisitions.
MODERN
MOBILITY AIDS, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER
19, 2007 (INCEPTION) TO DECEMBER 31, 2013
On
May 8, 2014, through a wholly-owned subsidiary formed in Ontario, Canada, we entered into an agreement to purchase 100% of a
private company in the final stage of obtaining their Medical Marijuana growers license. The company, located in the Province
of Ontario, owns a fully functional production facility, and is awaiting final inspection by Health Canada, the federal
department responsible for administering the healthcare system in Canada. The transaction includes real property and
related facilities. Under the terms of the agreement, the Company will pay CDN$2.5 million at Closing with an additional
CDN$2.5 million due at a deferred date. The Company will also issue a warrant to the sellers to purchase up to 1 million
shares of the Company shares at a 25% discount to market. The closing of the purchase is subject to receipt of a license from
Health Canada under MMPR.
On
March 28, 2014, through a wholly-owned subsidiary incorporated under the laws of Ontario, Canada, we entered into a Memorandum
of Understanding to purchase 67% of a private company with a pending application for a license from Health Canada under the recently
enacted Marijuana for Medical Purposes Regulation (“MMPR”). The facilities are located in the Province of Ontario.
In addition, the agreement provides that we will also acquire a 50% interest in a related private corporation which has received
a “ready to build” letter from Health Canada in conjunction with a pending application for a license to conduct research
on marijuana. The closing of this transaction is contingent on the issuance of the respective licenses by Health Canada.
The
Company is actively and aggressively pursuing various other opportunities within the medical marijuana sector. To this end, we
have entered into letters of intent to purchase controlling interests in two other private companies each in the final stages
of obtaining their Medical Marijuana growers license. The actual terms and conditions of these two proposed transactions will
be disclosed at such time as the Company has entered into definitive agreements on the matters.
In
accordance with ASC 855, Subsequent Events, the Company has evaluated events that occurred subsequent to the balance sheet date
through July 9, 2014 the date of available issuance of these unaudited financial statements. The Company determined that other
than as disclosed above, there were no material reportable subsequent events to be disclosed.
