Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Note
1 – Business Organization and Nature of Operations
Balance
Labs, Inc. (“Balance Labs” or the “Company”) was incorporated on June 5, 2014 under the laws of the State of
Delaware. Balance Labs is a consulting firm that provides business development and consulting services to start up and development stage
businesses. The Company offers services to help businesses in various industries improve and fine tune their business models, sales and
marketing plans and internal operations as well as make introductions to professional services such as business plan writing, accounting
firms and legal service providers.
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include
all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements
include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited
condensed consolidated financial position of Balance Labs as of March 31, 2022, and the unaudited condensed consolidated results of its
operations and cash flows for the three months ended March 31, 2022. The unaudited condensed consolidated results of operations for the
three months ended March 31, 2022, are not necessarily indicative of the operating results for the full year. It is recommended that
these unaudited condensed consolidated financial statements be read in conjunction with the audited financial statements and related
disclosures of the Company for the year ended December 31, 2021 which was filed with the Securities and Exchange Commission on March
31, 2022.
Note
2 – Going Concern
The
unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company
used $13,661 of
cash in operating activities during the three months ended March 31, 2022 and currently has $213,897
in cash as of March 31, 2022. Additionally, at
March 31, 2022, the Company had an accumulated deficit of $4,427,138
and a working capital deficit of $3,595,066.
There
is substantial doubt about the Company to continue as a going concern. The Company without additional sources of debt or equity capital
would potentially need to cease operations. Management plans to raise additional capital within the next twelve months that is expected
to sustain its operations for the next year. No assurance can be given that any future financing will be available or, if available,
that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain
restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case of equity financing.
In addition, the Company expects to begin a marketing campaign to market and sell its services. There can be no assurance that such a
plan will successful.
The
accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
Note
3 – Summary of Significant Accounting Policies
Cash
and Cash Equivalents
The
Company considers all highly liquid temporary cash investments with an original maturity of 90 days or less to be cash equivalents. At
March 31, 2022 and December 31, 2021, the Company has $2,000 and $2,000 in cash equivalents, respectively.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Use
of Estimates
The
preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted
in the United States of America (“GAAP”) requires management 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 and the reported
amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to stock-based compensation, depreciable
lives of fixed assets and deferred tax assets. Actual results could materially differ from those estimates.
Accounts
Receivable
Accounts
receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts by specific
customer identification. If market conditions decline, actual collections may not meet expectations and may result in decreased cash
flow and increased bad debt expense. Once collection efforts by the Company and its collection agency are exhausted, the determination
for charging off uncollectible receivables is made.
Joint
Venture
The
Company uses the equity method to account for their financial interest in the following company:
Schedule
of Equity Method Investments
| | |
| | |
| |
| | |
March
31, | | |
| |
| | |
2022
(Unaudited) | | |
December
31,
2021 | |
| | |
| | |
| |
| iGrow
Systems Inc. (a) | |
$ | - | | |
$ | - | |
| Total | |
$ | - | | |
$ | - | |
The
Company is a 43.15% owner of iGrow Systems Inc., as of March 31, 2022 and December 31, 2021 respectively.
The
Company has a non-controlling interest in iGrow Systems, Inc., a Limited Partnership Corporation formed to develop a rapid plant growing
device. Some of the members participate in the project which is under the general management of the members.
Summary
information on the joint venture at March 31, 2022 and December 31, 2021 is as follows:
Schedule
of Joint Venture of Financial Information
| | |
March
31, | | |
| |
| | |
2022
(Unaudited) | | |
December
31, 2021 | |
| | |
| | |
| |
| Total
Assets | |
$ | - | | |
$ | - | |
| Total
Liabilities | |
| 241,092 | | |
| 239,671 | |
| Shareholders’
Deficit | |
| (241,092 | ) | |
| (239,671 | ) |
| | |
March
31, | | |
March
31, | |
| | |
2022
(Unaudited) | | |
2021
(Unaudited) | |
| | |
| | |
| |
| Income | |
| - | | |
| - | |
| Expenses | |
| 1,421 | | |
| 48,681 | |
| Net
Income (Loss) | |
$ | (1,421 | ) | |
$ | (48,681 | ) |
The
Company’s portion of the net loss for the three months ended March 31, 2022 was $613,
which exceeded its investment in the joint venture
by $102,451
as of March 31, 2022 which is recorded as accumulated
losses of unconsolidated investees in excess of investment on the condensed consolidated balance sheets.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Revenue
Recognition
The
Company accounts for its revenues under FASB ASC 606, which is a comprehensive new revenue recognition model that requires revenue to
be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected
to be received in exchange for those goods or services. The Company considers revenue realized or realizable and earned when all the
five following criteria are met: (1) Identify the Contract with a Customer, (2) Identify the Performance Obligations in the Contract,
(3) Determine the Transaction Price, (4) Allocate the Transaction Price to the Performance Obligations in the Contract, and (5) Recognize
Revenue When (or As) the Entity Satisfies a Performance Obligation.
The
Company recognizes consulting income when the services are performed, which occurs at a point in time. Additionally, at the time services
are performed, the Company has satisfied its single performance obligation.
Income
Taxes
The
Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded
in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between
the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted
tax rates in effect for the years in which the temporary differences are expected to reverse.
The
Company adopted the provisions of Accounting Standards Codification (“ASC”) Topic 740-10, which prescribes a recognition
threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return.
Management
has evaluated and concluded that there are no material tax positions requiring recognition in the Company’s unaudited condensed
consolidated financial statements as of March 31, 2022. The Company does not expect any significant changes in its unrecognized tax benefits
within twelve months of the reporting date. The Company’s, 2019, 2020, and 2021 tax returns remain open for audit for Federal and
State taxing authorities.
The
Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and
administrative expenses in the statement of operations.
Marketable
Securities
The
Company accounts for marketable and available-for-sale securities under ASU 2016-01, “Financial Instruments – Overall: Recognition
and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires equity investments (except those accounted
for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes
in fair value recognized in net income.
The
Company accounts for its investment in Bang Holdings, Corp as available-for-sale securities, therefore, the unrealized (gain) loss on
the available-for-sale securities has been recorded in other income (expenses) on the consolidated statements of operations.
The
Company accounts for its investment in EZFill Holdings, Inc. as available-for-sale securities pursuant to the S-1 Registration Statement
declared effective on September 14, 2021, therefore, the unrealized (gain) loss on the available-for-sale securities during the three
months ended March 31, 2022 and 2021, has been recorded in Other Income (Expense) on the consolidated statement of operations.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Investments
– Related Parties
When
the fair value of an investment is indeterminable, the Company accounts for its investments that are under 20% of the total equity outstanding
using the cost method. For investments in which the Company holds between 20-50% equity and is non-controlling are accounted for using
the equity method. For any investments in which the Company holds over 50% of the outstanding stock, the Company consolidates those entities
into their consolidated financial statements herein.
The
Company holds two investments on its consolidated Balance Sheet as of March 31, 2022 and December 31, 2021.
During
the year ended December 31, 2021, our investment in Bang Holdings Corp., was fully impaired due to the Company being delisted from OTC
Pink Sheets and not having a liquid trading market at that time. The Company recorded an impairment expense of $195,000.
On
November 9, 2018, the Company acquired a non-controlling interest in iGrow Systems Inc. This investment is recorded on our consolidated
balance sheet using the equity method as of March 31, 2022 and December 31, 2021.
On
November 18, 2020, the Company executed a two (2) year, consulting agreement for various corporate services with EZFill Holdings, Inc.,
a related party. In connection with this agreement, and with the effectiveness of the Company’s Form S-1 registration statement,
the Company was entitled to compensation as follows:
●
1,000,000 shares of common stock for past services provided through the effective date of consulting agreement,
●
$200,000, upon completion of IP which was completed on September 14, 2021,
●
During the first year of the agreement, $25,000 per month, with the 1st payment due 30 days after the completion of the Company’s
IPO,
●
During the second year of the agreement, $22,500 per month; and
●
On each anniversary of the agreement, 500,000 shares of common stock.
On
December 2, 2020, the Company received 1,000,000 shares from EZFill Holdings, Inc, a related party, for past services, with each share
valued at $1 each based on a recent cash price of the related party. At the time of receiving these shares, EZFill Holdings, Inc. was
not a publicly traded company.
On
September 14, 2021, the S-1 Registration Statement for EZFill Holdings, Inc. was declared effective by the U.S. Securities and Exchange
Commission. As a result of becoming a publicly traded company, our investment is now recorded at fair value as available-for-sale securities
on March 31, 2022, with the gains and losses being recorded through other income (expense) on the consolidated statements of operations.
In September 2021, EZFill Holdings, Inc. approved a one for 3.763243 reverse stock split. As a result, the Company’s shares were
adjusted to 265,728 shares.
On
November 18, 2021, on the anniversary of the agreement, the Company received 132,864 (post reverse split adjusted) shares of common stock
having a fair value of $352,090 ($2.65/share), based on the closing trading price.
At
March 31, 2022, the fair value of the investment in EZFill Holdings, Inc. was $418,522 ($1.05/share).
All
of the Company’s revenues were earned from EZFill Holdings, Inc, a related party, totalling $67,500
and $0
for the three months ended March 31, 2022 and
2021, respectively.
Investments
The
Company owned a majority interest in Descrypto Holdings, Inc. formerly known as Krypto Ventures, and KryptoBank Co. On July 29, 2021,
the Company exchanged 52,500,000
shares of common stock in Krypto Ventures, Inc.
for 119,584,736
shares of common stock in Descrypto Holdings,
Inc. (“Descrypto”) (formerly W Technologies Inc.), an unrelated party in a Share Exchange Agreement. On November 18, 2021,
the Company entered into a redemption agreement (the “November Redemption Agreement”) pursuant to which the Company agreed
to sell, and Descrypto agreed to purchase, an aggregate of 83,709,315
shares of Descrypto’s Common Stock owned
by the Company for total proceeds of $84.
No proceeds were received from this redemption by the Company.
Following
the November Redemption Agreement, the Company owned 35,875,421 shares of Descrypto’s Common Stock.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
On
February 18, 2022, the Company entered into a redemption agreement (the “February Redemption Agreement”) pursuant to which
the Company agreed to sell, and Descrypto agreed to purchase, an aggregate of 28,700,337 shares of Descrypto’s Common Stock owned
by the Company. Following the February Redemption Agreement, the Company owned 7,175,084 shares of Descrypto’s Common Stock for
total proceeds of $287.
In
addition, on April 1, 2022, the full principal balance of note receivable of $25,000
and $2,217
of interest receivable were fully converted by
Descrypto Holdings, Inc. in exchange of 68,045 shares
of Common Stock of Descrypto Holdings, Inc. (See Note 10).
As
of March 31, 2022, the investment in Descrypto has a fair value of $0,
due to the stock being illiquid, and it is recorded on our consolidated balance sheet using the equity method. In connection with the
November redemption agreement, the Company’s investment, initially accounted for under the equity method, decreased below 20%,
as a result, this investment is now valued using the cost method.
On
January 29, 2021, the Company received 20%
ownership of Pharmacy No, 27, Ltd, a company based in Israel, as part of a Note Receivable from a third party (see Note 6). As
of March 31, 2022, the investment has a fair value of $13,271
and it is recorded on our consolidated balance
sheet using the equity method. During the three months ended March 31, 2022, the Company recorded $5,541
of unrealized loss from this investment.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents and marketable
securities. As of March 31, 2022 and December 31, 2021, the carrying value of marketable securities was $418,522 and $550,057, respectively.
The securities are included in the Investment at Fair Value – Related Party on the consolidated balance sheets, which consist of
common shares held in one (1) investment which currently is trading on the Over-the-Counter Bulletin Board (OTCBB). On September 14,
2021, the S-1 Registration Statement for EZFill Holdings, Inc., a related party, was declared effective by Securities and Exchange Commission.
As of March 31, 2022 and December 31, 2021, the Company has classified this as Level 1 asset on the fair value hierarchy because the
investment is valued based on quoted market price using observable inputs.
Principles
of Consolidation
The
consolidated financial statements include the Company and its wholly owned corporate subsidiaries, Balance Labs LLC., from October 12,
2015, Balance AgroTech Co., from July 11, 2016, Advanced Auto Tech Co., from May 10, 2016, Balance Cannabis Co., from May 13, 2016, and
Balance Medical Marijuana Co from December 22, 2015, and our former 51% majority owned subsidiary Descrypto Holdings, Inc. formerly known
as Krypto Ventures, Inc, and KryptoBank Co., from December 28, 2017, which was deconsolidated on July 29, 2021; however, all results
of operations for KryptoBank have been included through the date of deconsolidation. All intercompany transactions are eliminated. The
Company’s four subsidiaries, Balance AgroTech Co., Advanced AutoTech Co., Balance Cannabis Co., and Balance Medical Marijuana Co.
are dormant.
The
Company has a non-controlling interest of 43.15% in iGrow Systems Inc., which is not included in this consolidation for the three months
ended March 31, 2022 and 2021, respectively.
Net
Income (Loss) Per Common Share
Basic
and diluted income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares
and warrants from convertible debentures outstanding during the periods. The effect of 40,000
warrants and 3,583,119
shares issuable from convertible notes payable
for the three months ended March 31, 2022 and 640,000
warrants and 3,279,236
shares issuable from convertible notes payable
for the three months ended March 31, 2021, respectively, were excluded from the computation of diluted weighted average shares outstanding
as they would be anti-dilutive. These common stock equivalents may be dilutive in the future.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Stock-Based
Compensation
The
Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For
employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally
re-measured on vesting dates and financial reporting dates until the service period is complete. The fair value amount is then recognized
over the period during which services are required to be provided in exchange for the award, usually the vesting period. Awards granted
to directors are treated on the same basis as awards granted to employees.
The
Company has computed the fair value of warrants granted using the Black-Scholes option pricing model. The expected term used for warrants
is the contractual life. Since the Company’s stock has not been publicly traded for a sufficiently long period, the Company is
utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected
life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined
from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument
being valued.
Fair
Value of Financial Instruments
The
Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash,
accounts payable, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities.
We
adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). This standard defines fair value, provides
guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but
rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to
measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market
prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity
of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value into three broad levels. The following is a brief description of those three levels:
| ● |
Level
1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| |
|
| ● |
Level
2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets
or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
| |
|
| ● |
Level
3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by
us, which reflect those that a market participant would use. |
The
following table presents certain assets of the Company’s measured and recorded at fair value on the Company’s balance sheet
on a recurring basis and their level within the fair value hierarchy as of March 31, 2022.
Schedule
of Fair Value of Assets on Recurring Basis
| | |
Total | | |
(Level
1) | | |
(Level
2) | | |
(Level
3) | |
| Fair-value
– equity securities | |
$ | 418,522 | | |
$ | 418,522 | | |
$ | - | | |
$ | - | |
| Total
fair - value – equity securities | |
$ | 418,522 | | |
$ | 418,522 | | |
$ | - | | |
$ | - | |
The
following table presents certain assets of the Company’s measured and recorded at fair value on the Company’s balance sheet
on a recurring basis and their level within the fair value hierarchy as of December 31, 2021.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
| | |
Total | | |
(Level
1) | | |
(Level
2) | | |
(Level
3) | |
| Fair-value
– equity securities | |
$ | 550,057 | | |
$ | 550,057 | | |
$ | - | | |
$ | - | |
| Total
fair – value – equity securities | |
$ | 550,057 | | |
$ | 550,057 | | |
$ | - | | |
$ | - | |
The
Company accounts for its investment in EzFill Holdings, Inc. (“EzFill”) as available-for-sale securities. As of March 31,
2022 and December 31, 2021, the Company classified its EzFill investment of $418,522
and $550,057,
respectively, of available-for-sale securities,
to Level 1 assets on the fair value hierarchy because the investment is valued based on quoted market price using observable inputs.
Business
Segments
The
Company operates in one segment and therefore segment information is not presented.
Advertising,
Marketing and Promotional Costs
Advertising,
marketing, and promotional expenses are expensed as incurred and are included in selling, general and administrative expenses on the
accompanying consolidated statement of operations. For the three months ended March 31, 2022 and March 31, 2021, advertising, marketing,
and promotion expense was $48 and $1,956, respectively.
Property
and equipment
Property
and equipment consist of furniture and office equipment and is stated at cost less accumulated depreciation. Depreciation is determined
by using the straight-line method for furniture and office equipment, over the estimated useful lives of the related assets, generally
three to five years.
Expenditures
for repairs and maintenance of equipment are charged to expense as incurred. Major replacements and betterments are capitalized and depreciated
over the remaining useful lives of the related assets.
Property
and equipment as of March 31, 2022 and December 31, 2021 consisted of the following:
Schedule
of Property and Equipment
| | |
March
31,
2022
(Unaudited) | | |
December
31,
2021 | |
| Website | |
$ | 1,336 | | |
$ | 1,336 | |
| Computer
equipment & Software | |
| 5,358 | | |
| 5,358 | |
| Furniture | |
| 4,622 | | |
| 4,622 | |
| Total | |
| 11,316 | | |
| 11,316 | |
| Less
Accumulated Depreciation | |
| (11,316 | ) | |
| (11,316 | ) |
| Property
and Equipment, net | |
$ | - | | |
$ | - | |
Depreciation
expense for the three months ended March 31, 2022 and 2021 totalled $0
and $40,
respectively.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Recently
Issued Accounting Pronouncements
Changes
to accounting principles are established by the FASB in the form of ASUs to the FASB’s Codification. We consider the applicability
and impact of all ASUs on our financial position, results of operations, stockholders’ deficit, cash flows, or presentation
thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates
(“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements
issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the
Company.
In
August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”),
as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or
improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes
from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component,
unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium.
As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and
will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method
when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current
accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning
after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the
fiscal year. The Company adopted the guidance under ASU 2020-06 on January 1, 2022. The adoption of this guidance and had no material
impact on the Company’s financial statements.
Note
4 – Revision of Prior Year Immaterial Misstatement
During
the quarter ended March 31, 2022, the Company identified a certain error in recording its majority interest for Krypto Ventures, Inc.
during the year ended December 31, 2021. This error resulted in decreasing its non-controlling interest and retained earnings by $66,650.
The
Company assessed the materiality of this error considering both qualitative and quantitative factors and determined that for both the
respective quarters and fiscal year ended December 31, 2021, the error was immaterial. The Company has decided to correct this error
as revisions to our previously issued financial statements and will adjust the Form 10-K when filed in succeeding periods of this fiscal
year.
The
table below present the impact of the revision in the Company’s condensed consolidated financial statements.
Schedule
Of Revision in Financial Statements
| | |
As Previously | | |
Adjustment | | |
As Revised | |
| | |
December 31, 2021 | |
| | |
As Previously Reported | | |
Adjustment | | |
As Revised | |
| | |
| | |
| | |
| |
| Consolidated Balance Sheet / Statement of Changes in Stockholders’ Equity | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Accumulated deficit | |
$ | (4,138,526 | ) | |
$ | (66,650 | ) | |
$ | (4,205,176 | ) |
| Non-controlling interest | |
$ | (66,650 | ) | |
$ | 66,650 | | |
$ | - | |
| Total Stockholders’ Deficit | |
$ | (3,392,961 | ) | |
$ | - | | |
$ | (3,392,961 | ) |
| Total Liabilities and Stockholders’ Deficit | |
$ | 1,014,551 | | |
$ | - | | |
$ | 1,014,551 | |
| | |
| | | |
| | | |
| | |
| Consolidated Statement of Operations | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Gain on deconsolidation of Krypto Ventures, Inc. | |
$ | 153,907 | | |
$ | (66,650 | ) | |
$ | 87,257 | |
| Total other expense | |
$ | (1,033,830 | ) | |
$ | (66,650 | ) | |
$ | (1,100,480 | ) |
| Net (Loss) Income | |
$ | (809,404 | ) | |
$ | (66,650 | ) | |
$ | (876,054 | ) |
| Net (Loss) Income attributable to the Company | |
$ | (796,696 | ) | |
$ | (66,650 | ) | |
$ | (863,346 | ) |
| Net (Loss) Income per share - basic | |
$ | (0.04 | ) | |
| | | |
$ | (0.04 | ) |
| Net (Loss) Income per share - diluted | |
$ | (0.04 | ) | |
| | | |
$ | (0.04 | ) |
| | |
| | | |
| | | |
| | |
| Consolidated Statement of Cash Flows | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | |
| Operating activities | |
| | | |
| | | |
| | |
| Net (Loss) Income - including non-controlling interest | |
$ | (809,404 | ) | |
$ | (66,650 | ) | |
$ | (876,054 | ) |
| Gain on deconsolidation of subsidiary (Krypto Ventures, Inc.) | |
$ | 153,907 | | |
$ | (66,650 | ) | |
$ | 87,257 | |
| Net cash used in operating activities | |
$ | (56,896 | ) | |
$ | - | | |
$ | (56,896 | ) |
Note
5 – Stockholders’ Equity
Authorized
Capital
The
Company is authorized to issue 500,000,000 shares of common stock, $0.0001 par value, and 50,000,000 shares of preferred stock, $0.0001
par value.
Non-Controlling
Interest
The
Company owned a majority interest in Krypto Ventures Inc, formerly known as KryptoBank Co. On July 29, 2021, the Company exchanged 52,500,000
shares of common stock in Krypto Ventures, Inc. for 119,584,736 shares of common stock in Descrypto Holdings, Inc. (“Descrypto”)
(formerly W Technologies Inc.), an unrelated party in a Share Exchange Agreement.
As a result, Krypto Ventures, Inc was deconsolidated and is no longer our subsidiary.
On
November 18, 2021, the Company entered into a redemption agreement (the “November Redemption Agreement”) pursuant to
which the Company agreed to sell, and Descrypto agreed to purchase, an aggregate of 83,709,315 shares
of Descrypto’s Common Stock owned by the Company for $84.
The Company has not received the proceed from this redemption. Following the November Redemption Agreement, the
Company owned 35,875,421 shares
of Descrypto’s Common Stock.
On
February 18, 2022, the Company entered into a redemption agreement (the “February Redemption Agreement”) pursuant to which
the Company agreed to sell, and Descrypto agreed to purchase, an aggregate of 28,700,337 shares of Descrypto’s Common Stock owned
by the Company for total proceeds of $287. Following the February Redemption Agreement, the Company owned 7,175,084 shares of Descrypto’s
Common Stock .
On
April 1, 2022, the note receivable and interest receivable totalling $27,218
were converted into 68,045
shares of common stock of Descrypto Holdings,
Inc. common stock (See Note 10).
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Warrants
During
2016, Balance Group LLC loaned the Company $120,000. In addition to paying interest at 10%, the Company issued 600,000 warrants at an
exercise price of $1.00 per share, which expired on September 30, 2021.
On
October 3, 2019, the Company received $40,000 from The Sammy Farkas Foundation in exchange for a promissory note which bears 12% interest
per annum and matured on October 10, 2020 or upon the Company raising $500,000 from outside investors, whichever occurs first. In conjunction
with The Sammy Farkas Foundation agreement the Company issued warrants to purchase 40,000 shares of the Company’s common stock
at an exercise price of $1.00 per share expiring on October 10, 2022.
The
following tables summarize warrants outstanding as of March 31, 2022 and 2021 and the related changes during the years are presented
below.
Summary
of Warrants Outstanding
| Number
of Warrants | |
Weighted
Average Exercise Price | |
| | |
| | |
| |
| Balance
at December 31, 2021 | |
| 40,000 | | |
$ | 1.00 | |
| Granted | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | |
| Expired | |
| - | | |
| - | |
| Balance
at March 31, 2022 (Unaudited) | |
| 40,000 | | |
$ | 1.00 | |
| Number
of Warrants | |
Weighted
Average Exercise Price | |
| | |
| | |
| |
| Balance
at December 31, 2020 | |
| 640,000 | | |
$ | 1.00 | |
| Granted | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | |
| Expired | |
| - | | |
| - | |
| Balance
at March 31, 2021 (Unaudited) | |
| 640,000 | | |
$ | 1.00 | |
As
of March 31, 2022 and March 31, 2021, the warrants had no intrinsic value.
Note
6 – Note Receivable
On
September 30, 2021, Balance Labs Inc. made a loan to Four Acquisition, Ltd., an unrelated party in the principal amount of $22,000
which loan has an interest rate of 10%
per annum and a maturity date of September
30, 2022. For the three months ended March 31,
2022, the Company recorded $542
of interest income in relation to this note.
On
June 29, 2021, Balance Labs Inc. made a loan to Descrypto Holdings, Inc. formerly known as Krypto Ventures, Inc, and KryptoBank Co.,
a related party in the principal amount of $25,000
which loan has an interest rate of 12%
per annum and a maturity date of June 28, 2022. For the three months ended March 31, 2022, the Company recorded $740
of interest income in relation to this note.
On April 1, 2022, the note receivable and interest receivable totalling $27,218
were converted into 68,045
shares of common stock of Descrypto Holdings,
Inc. common stock (See Note 10).
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
On
January 29, 2021, Balance Labs Inc. made a loan to Four Acquisitions Ltd., an unrelated party in the principal amount of $119,000 which
has an interest rate of 10% per annum and a maturity date of January 28, 2022. Additionally, in connection with the loan, the Company
received a 20% interest in the recently acquired business and related assets of Four Acquisitions Ltd. Initially, this investment had
a purchase price of $43,000, which was recorded as a discount from the note which will be amortized over the life of the note. The note
is currently in default.
For
the three months ended March 31, 2022, the Company recorded $3,308 in accreted interest income in relation to this note. The remaining
discount as of March 31, 2022 is $0. For the three months ended March 31, 2022, the Company recorded $2,934 of interest
income in relation to this note.
Note
7 – Related Party Transactions
The
Company’s CEO earns $10,000 per month. The following compensation was recorded within general and administrative expenses –
related parties on the statements of operations: $30,000 and $30,000 for the three months ended March 31, 2022 and 2021, respectively.
As of March 31, 2022 and December 31, 2021, $881,659 and $851,659, respectively, of compensation was unpaid and was included in accounts
payable – related party on the consolidated balance sheet.
On
April 1, 2016, the Company received $500,000 from Newell Trading Group in exchange for a convertible debenture due April 2, 2017 bearing
interest at 10% and convertible into common stock at $.25 per share unless the note is paid by the Company prior to the election of the
holder to convert. The Company recognized a beneficial conversion feature expense of $500,000 that has been fully amortized. As of March
31, 2022, accrued interest on the note is $300,000. On October 3, 2019, Newell Trading Group assigned its rights and interests in its
$500,000 convertible debenture to the Sammy Farkas Foundation Inc., (the “Foundation”), a related party. The Foundation then
entered into an agreement with the Company to extend the maturity date of the convertible debenture to October 10, 2024 in exchange for
54,000 shares of the Company’s stock. The shares have a fair value of $56,700 which was recorded as a debt discount and was being
amortized over the life of the extension. On November 11, 2019, The Sammy Farkas Foundation transferred all the rights and interests
of the note to another party, 16th Avenue Associates. The terms remain the same and the transfer has no effect on the financial statements.
During the three months ended March 31, 2021 and 2022, the Company amortized $2,835 and $2,835, respectively of debt discount. As of
March 31, 2022, the remaining debt discount was $28,350.
On
September 30, 2016, Balance Group LLC loaned $120,000
as a convertible note payable to the Company
at an interest rate of 10%,
due on October 1, 2017. In addition, the Company issued 600,000
warrants at an exercise price of $1
which expired on September
30, 2021 (See Note 9). The note is currently
in default and has an accrued interest balance of $66,016.
During
2016, 2017, and 2019 Balance Group LLC loaned an additional $66,850 to the Company. The notes are in default and have an accrued interest
balance of $27,748.
On
June 27, 2021, the Company received $50,000 from the CEO in exchange for a convertible promissory note with a face value of $53,192 which
bears 12% interest per annum and matures on June 27, 2022 or upon the Company raising $250,000 from investors, whichever occurs first.
The difference between the amount received and the face value of $3,192 was recorded as a discount and is being amortized over the life
of the note. Additionally, the note comes with a beneficial conversion feature of $3,799 which was also recorded as a discount and is
being amortized over the life of the note. For the three months ended March 31, 2022, the Company recorded $1,723 of amortization of
debt discount. As of March 31, 2022, the remaining discount on the note is $1,705 and the Company has accrued interest of $4,827.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
As
of March 31, 2022, the CEO and companies controlled by the CEO have loaned the Company a total of $1,673,558 in addition to the convertible
notes discussed above. The loans carry an interest rate of 8% and mature one year and one day from the date of the loan. The Company
accrued interest of $378,251 on the loans. $1,513,899 of these loans are in default as of March 31, 2022.
On
July 27, 2016, the Company signed a sublease (the “Master Lease”) with an entity partially owned by a related party to sub-lease
approximately 2200 square feet located at 1691 Michigan Ave, Miami Beach, Florida 33139, beginning August 1, 2016 and ending December
31, 2019 at a monthly base rental of $7,741 per month until July 31, 2017, $7,973 per month from August 1, 2017 to July 31, 2018, and
$8,212 from August 1, 2018 to the sublease termination date. In addition to base rent, the Company will have to pay 50% of the CAM charges
as additional rent. On or about January 15, 2017, the Company was made aware that the Master Lease for the office space was in default.
Consequently, the Company ceased payments. On or about March 31, 2017, the Company was served with an eviction notice as the Master Lease
was still in default. The Company has partially settled the claim under the sublease and has $16,725 accrued on its books to cover any
further claims. Beginning October 2020, the Company is leasing a virtual office with a new landlord: Spaces, paying only $99.75 per month.
The lease was terminated on October 2021. Rent expense for the three months ended March 31, 2022 and 2021, was $0 and $299, respectively.
On
October 3, 2019, the Company received $40,000 from The Foundation in exchange for a promissory note which bears 12% interest per annum
and matured on October 10, 2020 or upon the Company raising $500,000 from outside investors, whichever occurs first. The promissory note
is currently in default, and as of March 31, 2022, accrued interest on the note is $14,821. The promissory note comes with a warrant
to purchase 40,000 shares of the Company’s stock with an exercise price of $1.00 per share and expires on October 10, 2022. The
warrants have a relative fair value of $8,283, which was recorded as a debt discount and has been fully amortized.
On
December 2, 2020, the Company received 1,000,000
shares from EZFill Holdings Inc., a related
party, in exchange for consulting services provided in the past and as part of an agreement between both parties. The shares are valued
at $1
each. The shares received have not been
registered for resale and must be sold pursuant to an exemption from the registration requirements of the Securities and Exchange Commission.
Each share valued at $1
each based on a recent cash price of the
related party. The investment is reflected on the consolidated balance sheet as an investment in a related party. On September 14, 2021,
the S-1 Registration Statement for EZFill Holdings, Inc. was declared effective by Securities and Exchange Commission. This investment
is recorded at fair value as available-for-sale securities as of March 31, 2022 and December 31, 2021, with the gains and losses being
recorded through other income (expense) on the consolidated income statement for the three months then ended.
For
the three months ended March 31, 2022 and 2021, the Company generated $67,500 and $0, respectively in revenue – related party.
As
of March 31, 2022 and December 31, 2021, there was $45,000 and $22,500, respectively, of accounts receivable- related party.
Note
8 – Commitments and Contingencies
Litigation,
Claims and Assessments
In
the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course
of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of management,
the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position
or results of operations.
Consulting
Fees
The
Company will continue to accrue its CEO $10,000 per month as compensation on a month-to-month basis. It will be recorded in general and
administrative expenses-related parties on the consolidated statement of operations.
BALANCE
LABS, INC. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
As
of March 31, 2022
(Unaudited)
Note
9 – Convertible Notes and Notes Payable
Notes
Payable
As
of March 31, 2022, the CEO and companies controlled by the CEO have loaned the Company a total of $1,673,558 in addition to the convertible
notes discussed above. The loans carry an interest rate of 8% and mature one year and one day from the date of the loan. The Company
accrued interest of $378,251 on the loans. $1,513,899 of these loans are in default as of March 31, 2022.
During
2016, 2017, and 2019, Balance Group loaned an additional $66,850 at an interest rate of 8%. The notes are currently in default and have
an accrued interest balance of $27,748.
On
October 3, 2019, The Company received $40,000 from The Foundation in exchange for a promissory note which bears 12% interest per annum
and matured on October 10, 2020 or upon the Company raising $500,000 from outside investors, whichever occurs first. The promissory note
is currently in default, and as of March 31, 2022, accrued interest on the note is $14,821. The promissory note comes with a warrant
to purchase 40,000 shares of the Company’s stock with an exercise price of $1.00 per share and expires on October 10, 2022. The
warrants have a relative fair value of $8,283, which was recorded as a debt discount. As of December 31, 2020, the debt discount was
fully amortized.
Convertible
Notes Payable
On
December 23, 2015, the Company issued a secured convertible promissory note in the amount of $25,000. The note carries a rate of 8% and
was due on March 23, 2016. It is secured by all the assets of the Company. The note further contains a provision that the lender may
convert any part of the note, including accrued interest, that is unpaid into the Company’s common stock at an exercise price of
$0.50 per share. The note also contains a five-year warrant to purchase 100,000 shares of common stock at an exercise price of $0.50
per share until December 23, 2020. As of March 23, 2016, the note is in default and the interest rate has been increased to 18%. The
accrued interest balance of $32,110 as of March 31, 2022.
On
April 1, 2016, the Company received $500,000 from Newell Trading Group in exchange for a convertible debenture due April 2, 2017 bearing
interest at 10% and convertible into common stock at $.25 per share unless the note is paid by the Company prior to the election of the
holder to convert. The Company recognized a beneficial conversion feature expense of $500,000 that has been fully amortized. As of March
31, 2022, accrued interest on the note is $300,000. On October 3, 2019, Newell Trading Group assigned its rights and interests in its
$500,000 convertible debenture to the Sammy Farkas Foundation Inc., (the “Foundation”), a related party. The Foundation then
entered into an agreement with the Company to extend the maturity date of the convertible debenture to October 10, 2024 in exchange for
54,000 shares of the Company’s stock. The shares have a fair value of $56,700 which was recorded as a debt discount and amortized
over the life of the extension. On November 11, 2019, The Sammy Farkas Foundation transferred all the rights and interests of the note
to another party, 16th Avenue Associates. The terms remain the same and the transfer has no effect on the financial statements. During
the three months ended March 31, 2021 and 2022, the Company amortized $2,835 and $2,835, respectively of debt discount. As of March 31,
2022, the remaining debt discount was $28,350.
On
September 30, 2016, Balance Group LLC loaned the Company $120,000 with an interest rate of 10% and is convertible into common stock at
$1.00. In addition, the Company issued the CEO 600,000 warrants and recorded a debt discount of $111,428, which has been fully amortized.
The Company valued the warrants using the Black-Scholes option pricing model with the following assumptions: Expected volatility of 514%,
expected life of five years, risk free rate of return of 1.14% and an expected divided yield of 0%. The warrants had a fair value of
$85,714. The note is currently in default and has an accrued interest balance of $66,016 as of March 31, 2022.
On
June 27, 2021, the Company received $50,000 from the CEO in exchange for a convertible promissory note with a face value of $53,192 which
bears 12% interest per annum and matures on June 27, 2022 or upon the Company raising $250,000 from investors, whichever occurs first.
The difference between the amount received and the face value of $3,192 was recorded as a discount and is being amortized over the life
of the note. Additionally, the note comes with a beneficial conversion feature of $3,799 which was also recorded as a discount and is
being amortized over the life of the note. For the three months ended March 31, 2022, the Company recorded $1,723 of amortization of
debt discount. As of March 31, 2022, the remaining discount on the note is $1,705 and the Company has accrued interest of $4,827.
Note
10 – Subsequent events
On
April 1, 2022, the Company converted $27,218
note receivable and interest receivable
into 68,045
shares of common stock of Descrypto Holdings,
Inc. common stock.
