NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF APRIL 30, 2016 and 2015
NOTE
1 – ORGANIZATION
Magnolia
Lane Income Fund, formerly known as Palmerston Stock Agency, Inc. (the “Company,” ”We,” “Ours,”
“Us”), was incorporated on May 12, 2009 under the laws of the State of Delaware. On November 12, 2015, the Company
changed domicile from the State of Delaware to the State of Nevada by filing Articles of Domestication and Articles of Incorporation
with the Secretary of State of Nevada. The Company was originally formed to commence business as a stock agent in the wool
trade.
On
May 13, 2013, we entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Ian Raleigh and Michael
Raleigh (the “Sellers”) and Magnolia Lane Financial, Inc. (the “Purchaser”), whereby the Purchaser purchased
from the Sellers, 10,000,000 shares of common stock, par value $0.0001 per share, of the Company (the “Shares”), representing
approximately 69.57% of the issued and outstanding shares of the Company. As a result, the Purchaser became the majority shareholder
of the Company.
In
connection with the Stock Purchase Agreement, we have ceased pursuing our prior business plan and have begun focusing on our new
business which is to manage and invest in real property. Our current Chief Executive Officer, Chief Financial Officer and
sole director, Brian Woodland, has numerous years in the real estate acquisition, syndication and asset management business. We
intend to acquire real estate in small markets with high degrees of safety to provide income streams to our shareholders. In addition,
we will develop property, syndicate, manage and acquire property for capital appreciation.
In
connection with this change of control and change of business, we have conducted a name change and reverse stock split. On August
1, 2013, we filed a Certificate of Amendment to our Articles of Incorporation (the “Amendment”) to change its name
from “Palmerston Stock Agency, Inc.” to “Magnolia Lane Income Fund” (the “Name Change”) and
to memorialize a 1:8 reverse stock split (the “Stock Split”). The Amendment was effective as of August 1, 2013.
On
August 12, 2013, the Company received approval from the Financial Industry Regulatory Authority (“FINRA”) to effectuate
the Name Change and Stock Split. FINRA also confirmed that the new stock symbol is MIFC.
On
December 23, 2013, a shareholder of ours, Magnolia Lane Financial, entered into three separate LLC Membership Interest Purchase
and Sale Agreements for the acquisition of two limited liability companies, Grove Realty Partners, LLC and Walker Partners, LLC
(the “
Acquisition Agreements
”). Pursuant to the Acquisition Agreements, Magnolia Lane Financial acquired 100%
of the equity interests in Grove Realty Partners, LLC and Walker Partners, LLC. As consideration for the acquisition, Magnolia
Lane Financial transferred 134,574 shares of our Common Stock to WS Advantage and Phalanx Wealth Management (the “
Consideration
Shares
”). For purposes of the Acquisition Agreements, the parties valued the shares at $16.60 per share for a total
purchase price of $2,233,928. Prior to this transaction, Magnolia Lane Financial owned 1,250,000 shares of our common stock and
now owns 1,115,426 shares of our common stock. WS Advantage, LP owns 115,347 shares of our common stock and Phalanx Partners,
LLC owns 19,227 shares of our common stock.
On
January 16, 2014, we entered into an LLC Membership Interest Purchase and Sale Agreement with Magnolia Lane Financial, Inc. (the
“
Agreement
”). Pursuant to the Agreement, we acquired all rights, title and interest to all assets of Magnolia
Lane Financial, including the assets acquired in the Acquisition Agreements, for a total purchase price of $3,000.
On
October 15, 2015 the Company paid a total of $761,355 for the purchase of 64% of Butler Cabin LLC. This entity is controlled by
our President, a principal of Butler Cabin LLC.
On November 12, 2015, the Company
changed domicile from the State of Delaware to the State of Nevada by filing Articles of Domestication and Articles of Incorporation
with the Secretary of State of Nevada.
NOTE
2 – SUMMARY OF ACCOUNTING POLICIES
Principles
of consolidation
The
accompanying consolidated financial statements represent the consolidated financial position and results of
operations of the Company and include the accounts and results of operations of the Company and its subsidiaries. The accompanying
financial statements include the active entity of Magnolia Lane Income Fund and its wholly owned subsidiaries, Walker Partners,
LLC, Grove Realty Partners, LLC. and our 64% subsidiary Butler LLC. from October 15, 2015.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 as well as the reported amount of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Cash
Equivalents
The
Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Restricted
Cash
Restricted
cash consists of cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual
agreements. The Company’s restricted cash is reserved for real estate taxes on both of its properties.
Concentrations
Concentration
in a geographic area
The
Company operates in the real estate industry and the operations are concentrated in the State of Massachusetts.
As
of April 30, 2016, $8,090 of accounts receivable was due from one tenant.
For
the year ended April 30, 2016 we had two clients that represented 19% and 16%, respectively of revenues (related party).
Rental
Property, Net
Rental
property assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated
useful lives of the asset.
We
capitalize replacements and improvements, such as HVAC equipment, structural replacements, windows, appliances, flooring, carpeting
and renovations. Ordinary repairs and maintenance, such as unit cleaning, painting and appliance repairs, are expensed when incurred.
Asset
|
|
Useful
Life
(in years)
|
Building
|
|
30
years
|
Land
|
|
Indefinite
|
Building
Improvements
|
|
30
years
|
Net
loss per common share
Net
loss per common share is computed pursuant to section 260-10-45 of the Financial Accounting Standards Board Accounting Standards
Codification. Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common
stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average
number of shares of common stock and potentially dilutive outstanding shares of common stock during the period.
There
were no potentially dilutive shares outstanding for any periods presented.
Income
Taxes
The
Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax
assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
The
Company follows the provisions of Income Taxes Topic of the FASB Accounting Standards Codification, which provides clarification
on accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance prescribes
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties,
disclosure and transition. At April 30, 2016, no significant income tax uncertainties have been included in the Company’s
Balance Sheets. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense
in the Statements of Operations. No interest and penalties are present for periods open.
The
Company is subject to the United States federal and state income tax examinations by the tax authorities for the 2015, 2014, and
2013 tax years.
Property
Revenue Recognition
Our
commercial property leases are for varied terms ranging from month-to-month to 3 years. Rental income is recognized on a straight-line
basis over the term of the lease.
Rent
concessions, including free rent incurred in connection with commercial property leases, are amortized on a straight-line basis
over the terms of the related leases and are charged as a reduction of rental revenue.
Impairment
of Real Estate Investments
The
Company assesses on a regular basis whether there are any indicators that the carrying value of rental property assets may be
impaired. Potential indicators may include an increase in vacancy at a property, tenant reduction in utilization of a property,
tenant financial instability and the potential sale of the property in the near future. An asset is determined to be impaired
if the asset’s carrying value is in excess of its estimated fair value.
Deferred
Revenue
From
time to time, rental payments may be paid by tenants, but not earned yet by the Company. Such revenue is initially recorded as
a deferred liability and is recognized as revenue once earned. As of April 30, 2016 and April 30, 2015, the Company had $7,459
and $0 in deferred revenue, respectively.
Segments
The
Company operates in one segment and therefore segment information is not presented.
NOTE
3 – RECENT ACCOUNTING PRONOUNCEMENTS
In
April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-03, “
Interest – Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”
, is to simplify presentation of debt
issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet
as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU does not affect
the recognition and measurement guidance for debt issuance costs. For public companies, the ASU is effective for financial statements
issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early application is
permitted. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations,
cash flows or financial condition.
In
April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-04, “
Compensation – Retirement
Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan
Assets”
, permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest
to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The ASU is effective
for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods
within those fiscal years. Early application is permitted. We are currently reviewing the provisions of this ASU to determine
if there will be any impact on our results of operations, cash flows or financial condition.
In
April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-05, “
Intangibles – Goodwill and
Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”
,
provides guidance to customers about whether a cloud computing arrangement includes a software license. If such an arrangement
includes a software license, then the customer should account for the software license element of the arrangement consistent with
the acquisition of other software licenses. If the arrangement does not include a software license, the customer should account
for it as a service contract. For public business entities, the ASU is effective for annual periods, including interim periods
within those annual periods, beginning after December 15, 2015. Early application is permitted. We are currently reviewing the
provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In
April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-06, “
Earnings Per Share (Topic 260):
Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions”
, specifies that, for purposes
of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before
the date of a drop down transaction should be allocated entirely to the general partner. In that circumstance, the previously
reported earnings per unit of the limited partners (which is typically the earnings per unit measure presented in the financial
statements) would not change as a result of the dropdown transaction. Qualitative disclosures about how the rights to the earnings
(losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class
method also are required. The ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within
those fiscal years. Earlier application is permitted. We are currently reviewing the provisions of this ASU to determine if there
will be any impact on our results of operations, cash flows or financial condition.
NOTE
4 – GOING CONCERN
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern,
which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As
reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $707,094 and cash used
in operations of $22,835. These conditions raise substantial doubt about its ability to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business
plan and generate sufficient revenues. The consolidated financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further
implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.
The
consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue
in existence.
NOTE
5 – RENTAL PROPERTY, NET
Rental
Property, Net consisted of the following at April 30, 2016 and 2015:
|
|
April
30,
2016
|
|
|
April
30,
2015
|
|
Land
|
|
358,958
|
|
|
120,733
|
|
Buildings
|
|
|
3,647,917
|
|
|
|
2,695,016
|
|
Leasehold
Improvements
|
|
|
149,860
|
|
|
|
130,731
|
|
Accumulated
Depreciation
|
|
|
(755,316
|
)
|
|
|
(656,862
|
)
|
Net,
Real Estate Investments
|
|
|
3,398,685
|
|
|
|
2,289,618
|
|
As
of April 30, 2016, real estate investments consisted of three properties:
58
Main St. Topsfield, Ma 01983
|
●
|
Description:
4,000 Square foot, Commercial Building
|
|
|
|
|
●
|
Status:
Rented 100% occupancy. Lease term: 3-Year
|
|
|
|
|
●
|
Owner:
Walker Partners, LLC
|
|
|
|
|
●
|
Purchase
Price: $503,000
|
|
|
|
|
●
|
Mortgage
Debt as of April 30, 2016: $525,322
|
7
Grove St., Topsfield, Ma 01983
|
●
|
Description:
12,000 Square foot, Business Office, Retail and Professional Space
|
|
|
|
|
●
|
Status:
Rented at 100% occupancy. Lease term: 3-Year
|
|
|
|
|
●
|
Owner:
Grove Realty Partners, LLC
|
|
|
|
|
●
|
Purchase
Price: $2.025 million
|
|
|
|
|
●
|
Mortgage
Debt: On November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove
Realty into 203,711 shares of common stock ($7.58 per share).
|
6
Park St., Topsfield, Ma 01983
|
●
|
Description:
4,500 Square foot, Business Office, Retail and Professional Space
|
|
|
|
|
●
|
Status:
Rented at 70% occupancy. Lease term: Monthly
|
|
|
|
|
●
|
Owner:
Butler Cabin, LLC
|
|
|
|
|
●
|
Purchase
Price: $1.19 million
|
Depreciation
expense for the years ended April 30, 2016 and 2015 totaled $98,454 and $93,638, respectively.
NOTE
6 – MORTGAGE AND RELATED PARTY NOTES PAYABLE
58
Main Street
On
January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on the property located
at 58 Main Street, Topsfield, Massachusetts. The note bears interest at 6.75% per annum and is due August 26,
2019. Monthly principle and interest payments totaling $4,320 started on September 26, 2009 and will continue through
the maturity date. The mortgage note is secured by the underlying property. At maturity, the balloon payment of $481,454
will be due in full. The remaining principal balance as of April 30, 2016 and 2015 is $525,322 and $542,694, respectively.
7
Grove Street
On
January 16, 2014, the Company assumed a mortgage note payable to a third-party, unrelated to the seller, on the property located
at 7 Grove Street, Topsfield, Massachusetts. The note bore interest at 7.9 % per annum and was scheduled to mature
on September 5, 2032. Monthly payments of $17,775 started on October 5, 2008. The mortgage note was secured
by a mortgage on the property. At maturity, the balloon payment was to be due in full.
On
April 12, 2014, the mortgage note payable on the property at 7 Grove Street was paid in full by a shareholder. On that same date,
a new mortgage payable was established between the Company and the shareholder for an amount equal to the balance that was remaining
on the original mortgage. The new related party mortgage payable began on April 12, 2014 and is a 5-year fixed loan
at 5.5% interest, with a balloon payment on May 15, 2019 for the outstanding balance. Interest only payments began
on May 15, 2014 in the amount of $6,536 per month. On November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982
and accrued interest of $117,625 in Grove Realty into 203,711 shares of common stock ($7.58 per share). The transaction with the
related party was valued at historical cost.
Future
principle requirements on long-term debt for fiscal years ending after April 30, 2016 are as follows:
Mortgage
Payable
|
For
fiscal year ending
|
|
Future
Payout
|
|
2017
|
|
$
|
9,925
|
|
2018
|
|
|
16,371
|
|
2019
|
|
|
17,527
|
|
2020
and thereafter
|
|
|
481,499
|
|
Total
|
|
$
|
525,322
|
|
NOTE
7 – SECURED LINE OF CREDIT
On
October 14, 2015, by, between and among Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered
into a $1,000,000 secured revolving line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations
of the Borrower. The line of credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of
Brian Woodland.
The
revolving line of credit note (hereinafter referred to as the “Note”), made by the Borrower and payable to the order
of the bank, at the initial per annum rate of 265 basis points above LIBOR (3.086% as of April 30, 2016), floating for two (2)
years. The Note shall provide for monthly payments of interest only for the first two (2) years of the term. Thereafter, the Note
shall for the next five (5) years of the Loan term provide for monthly payments of principal and interest based upon the 5/15
Federal Home Loan Bank Rate plus 200 basis points. Monthly payments of principal and interest shall be made based upon a 25-year
amortization schedule, with a final payment of the unpaid principal balance, interest, fees and late charges, if any, due on October
14, 2022.
As
of April 30, 2016 the Company has drawn down a total of $956,113 and recorded accrued interest of $2,465.
NOTE
8 – FUTURE RENTS AND TENANT CONCENTRATION
The
Company’s revenue is derived from property leases with varied lease terms. The following table represents future minimum
rents to be received under non-cancelable leases with terms of twelve months or more as of April 30, 2016:
Future Rents
|
2017
|
|
$
|
92,470
|
|
2018
|
|
|
19,380
|
|
|
|
$
|
111,850
|
|
For
the year ended April 30, 2016, one tenant represented approximately 16% of the Company’s revenue. For the year ended April
30, 2015, two tenants represented approximately 17% and 14% of the Company’s revenue
NOTE
9 – RELATED PARTY TRANSACTIONS
Related
parties to the Company include, but are not limited to, officers, directors, and shareholders. From time to time, the Company
receives loans and advances from Phalanx Partners and WS Advantage LP for working capital purposes. Phalanx Partners and WS Advantage
LP formerly held equity interests in Grove Realty Partners, LLC and Walker Partners, LLC and are currently shareholders and controlled
by the Company’s president.
An
aggregate of $504,218 has been received from related parties for working capital purposes and debt and expenses paid on the Company’s
behalf. These advances are interest-free and payable upon demand. During the years ended April 30, 2016 and 2015 the Company imputed
interest expense of $30,245 and $27,991, respectively. During the years ended April 30, 2016 and 2015, the related party advanced
the Company an additional $53,637 and $8,897, respectively, to fund operations.
During the years ended April
30, 2016 and 2015 included $55,760 and $36,000, respectively, in rental income from Phalanx Partners who is owned by our Principal
and Shareholder, who occupies an office in one of the Company’s properties.
During the year
ended April 30, 2016 a 31% owner of Butler Cabin LLC paid us rental income of $6,616.
On October 14, 2015, by, between and among
Grove Realty Partners (the “Borrower”) and Brian Woodland, individually, entered into a $1,000,000 secured revolving
line a credit with a financial institution. The Guarantor has agreed to guaranty the obligations of the Borrower. The line of
credit is securitized by the property at 7 Grove Street and as well as the personal guarantee of Brian Woodland (See Note 7).
On
November 1, 2015 WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty into
203,711 shares of common stock ($7.58 per share).
NOTE
10 – INCOME TAXES
FASB
ASC 740-10 provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements.
Recognition involves a determination of whether it is more likely than not that a tax position will be sustained upon examination
with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant
information.
Pursuant
to FASB ASC 740-10-10, an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have
been previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets
and liabilities is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not anticipated.
At April 30, 2016, the Company
has net operating loss
(“NOL”) carry–forwards for Federal income tax purposes
of approximately $652,000 that may be offset against future taxable income through 2036. Due to changes in ownership,
approximately $121,000 of the NOL carry-forward may be subject to certain annual limitations imposed under Section 382 of the Internal
Revenue Code. At this time, the amount of the limitation has not been determined, since the Company has not completed its Section
382 study. Deferred tax assets would arise from the recognition of anticipated utilization of these net operating losses to offset
future taxable income. No tax benefit has been reported with respect to these deferred tax assets in the accompanying financial
statements because of Management’s assertion that it is more likely than not that the Company’s deferred tax assets
of approximately $652,497 will not be realized and accordingly, the deferred tax assets are offset by a full valuation allowance.
Deferred Tax Assets
|
|
April 30,
2016
|
|
|
April 30,
2015
|
|
Net Operating Loss
|
|
$
|
211,941
|
|
|
$
|
155,727
|
|
Book to tax basis difference on depreciable assets
|
|
|
440,556
|
|
|
|
440,384
|
|
Total Deferred Tax Asset
|
|
|
652,497
|
|
|
|
596,111
|
|
Valuation allowance
|
|
|
(652,497
|
)
|
|
|
(596,111
|
)
|
Net Deferred Tax Asset
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE
11 – NON-CONTROLLING INTERESTS
On October 15, 2015, the
Company paid a total of $761,355 for the purchase of 64% of Butler Cabin LLC. This entity is controlled by our President, a principal
of Butler Cabin LLC. The Company issued 169,286 shares on November 1, 2015 to acquire the remaining minority interest portion.
Subsequent to November 1, 2015 the parties elected to rescind the share issuance. As of April 30, 2016 the shares were returned
to the treasury (See note 11). As of April 30, 2016, our consolidated balance sheets reflected total non-controlling interests
of ($431,050) which represent the equity portion of our subsidiary held by non-controlling investors in Butler Cabin.
Land
|
|
$
|
237,680
|
|
Building
|
|
|
950,715
|
|
Net Assets
|
|
$
|
1,188,395
|
|
NOTE
12 – STOCKHOLDERS’ EQUITY
Common
stock
Common
Stock includes 200,000,000 shares authorized at a par value of $0.0001.
On
November 1, 2015, the Company issued 169,256 shares of common stock valued at $1,184,792 ($7.00 per share) to a related party
to purchase the remaining minority interest in Butler Cabin LLC. Subsequent to November 1, 2015, the parties elected to rescind
the share issuance. As of April 30, 2016 the shares were returned to the treasury.
On
November 1, 2015, WS Advantage elected to convert its mortgage of $1,425,982 and accrued interest of $117,625 in Grove Realty
into 203,711 shares of common stock ($7.58 per share).
Preferred
stock
Preferred
stock includes 100,000,000 shares authorized at a par value of $0.0001, of which none are issued or outstanding.
On
November 12, 2015, the board of directors of the Company authorized a Certificate of Designations of Preferences, Rights and Limitations
of Series A Preferred Stock (the “Certificate of Designation”), designating
five
(5) shares of Series A Preferred stock. Each share of Series A Preferred shall: (i) have a par value of $0.0001 per share, (ii)
rank on parity with the Company's common stock and any class of series of capital stock hereafter created, and (iii) be convertible
into one share of common stock at the option of the holder until January 1, 2017 after which the right to convert to common stock
ceases. Holders of the Series A Preferred are entitled to vote on all matters submitted to the Company's stockholders and are
entitled to such number of votes as is equal to the number of shares of Series A Preferred stock such holder owns. The holders
of Series A Preferred stock are not entitled to any dividends declared by the Company, nor do such holders have any liquidation
preferences or any other asset distribution rights as it relates to the Company.
Additional
paid in Capital
During
the years ended April 30, 2016 and 2015 the Company recorded imputed interest on stockholders loans of $30,245 and $27,991, respectively.