Notes
to Condensed Consolidated Financial Statements
February
28, 2017
(unaudited)
NOTE
1 – NATURE OF BUSINESS AND PRESENTATION
Organization
PetLife
Pharmaceuticals, Inc. (the “Company,” “we,” “our,” “PetLife”) was incorporated
in the State of Nevada on April 5, 2002 as Aztek Ventures Inc. Effective November 13, 2007, we filed a Certificate of Amendment
to our Articles of Incorporation to change our name to Genesis Uranium Corp. Effective April 21, 2008, we amended our Articles
of Incorporation to change our name to Vault Technology, Inc. to reflect the change in our business focus beyond solely that of
uranium exploration. Effective July 10, 2009, we filed a Certificate of Amendment to our Articles of Incorporation to change our
name to “Modern Renewable Technologies, Inc. (“Modern”). On May 27, 2011, Modern, merged with Eco Ventures Group,
Inc., and the name of the Company was changed to Eco Ventures Group, Inc. On July 15, 2013, the Company entered into an Agreement
and Plan of Merger with Clear TV Ventures, Inc. Under the terms of the merger, Clear TV became the surviving corporation. On June
26, 2014, Eco Ventures Group, Inc. entered into an Agreement and Plan of Merger with its subsidiary, PetLife Pharmaceuticals,
Inc., a Nevada corporation, with PetLife Pharmaceuticals, Inc. being the surviving entity. As part of that merger, the name of
the Company was changed to PetLife Pharmaceuticals, Inc. and each 15 shares of our common stock were exchanged for one share in
the surviving company. Effective August 12, 2014, we completed the closing of the Share Exchange Agreement and the acquisition
of PetLife and changed our name to PetLife Pharmaceuticals, Inc. On July 20, 2016, PetLife Pharmaceuticals, Inc. entered into
an Agreement and Plan of Merger with its wholly-owned subsidiary, PetLife Merger Subsidiary, Inc., a Nevada corporation, with
PetLife Merger Subsidiary, Inc. being the surviving entity. As part of that merger, the name of the PetLife Merger Subsidiary
was changed back to PetLife Pharmaceuticals, Inc. The purpose of the subsidiary merger was to effectuate a 1 for 5 reverse exchange
of PetLife’s common stock pursuant to the terms of the merger. The combined entities continue on public markets pursuant
to Rule 12g-3 of the Securities Exchange Act of 1934, as amended.
Nature
of Operations
PetLife
is a registered U.S. Veterinary Pharmaceutical company whose mission is to bring its scientifically proven, potentiated bioactive
medication and nutraceuticals, VitalZul™, to the world of veterinary oncology. The Company specializes in the research,
development, sales and support of advanced drugs and nutraceuticals for pet cancer and autoimmune related diseases such as arthritis.
The Company will also introduce a line natural pet food and other complementary products.
Basis
of presentation
The accompanying unaudited condensed consolidated
financial statements of PetLife Pharmaceuticals, Inc. have been prepared in accordance with U.S. generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q and done under §240.13(a) of the Securities
Act. The results of operations for the interim period ended February 28, 2017 shown in this report are not necessarily
indicative of results to be expected for the full fiscal year ending August 31, 2017. In the opinion of the Company’s management,
the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation
of the Company’s results of operations, financial position and cash flows. The unaudited interim financial statements should
be read in conjunction with the audited financial statements in the Company’s Form 10-K for the year ended August 31, 2016,
filed on December 21, 2016 and Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
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 period. Actual results could differ from those estimates. Significant estimates in the accompanying financial
statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, allowance
for accounts receivable, depreciable lives of the web site and fixed assets, and valuation of share-based payments.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Property,
Equipment and Depreciation
Property
and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives
of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the
lease term or the useful life of the leased equipment. Leasehold improvements, if any, would be amortized over the lesser of the
lease term or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our
capitalization threshold are expensed as incurred.
PETLIFE
PHARMACEUTICALS, INC.
Notes
to Condensed Consolidated Financial Statements
February
28, 2017
(unaudited)
Accounting
for Derivatives
The
Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components
of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under
certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability.
In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations
as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at
the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity
that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the
instrument on the reclassification date.
Impairment
of Long-Lived Assets
The
Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10,
“Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to
sell.
Fair
Value of Financial Instruments
The
Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain
of our financial instruments, including cash, accounts payable, accrued expenses, and short term loans the carrying amounts approximate
fair value due to their short maturities.
We
follow accounting guidance for financial and non-financial assets and liabilities. 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.
Revenue
Recognition
The
Company recognizes revenue for our services in accordance with ASC 605-10, “Revenue Recognition in Financial Statements.”
Under these guidelines, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement
did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably
assured. The Company has no revenue streams at this time.
Stock-Based
Compensation
The
Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies
to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued
to employees. The Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50. The value of the portion
of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line
attribution method. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing
model. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.
PETLIFE
PHARMACEUTICALS, INC.
Notes
to Condensed Consolidated Financial Statements
February
28, 2017
(unaudited)
Income
Taxes
The
Company adopted the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are
filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others
are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.
In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the
period during which, based on all available evidence, management believes it is more likely than not that the position will be
sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset
or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the
largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing
authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above
should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions
are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax
benefits. As of February 28, 2017, tax years 2012 - 2016 remain open for IRS audit. The Company has received no notice of audit
from the IRS for any of the open tax years.
Company
adopted ASC 740-10,
“
Definition of Settlement in FASB Interpretation No. 48,” (“ASC 740-10”), which
was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position
is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively settled”
replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or
“settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe
measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion
of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled,
an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be
sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10
did not have an impact on the accompanying financial statements.
Net
Earnings (Loss) Per Share
In
accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing
the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted
earnings (loss) per share are computed using the weighted average number of common stock shares outstanding during the period.
Reclassifications
For comparability, certain prior period
amounts have been reclassified, where appropriate, to conform to the financial statement presentation used in 2017. The reclassifications
have no impact on net loss.
Effect
of Recent Accounting Pronouncements
The
Company reviews new accounting standards and updates as issued. No new standards or updates had any material effect on these unaudited
financial statements. The accounting pronouncements and updates issued subsequent to the date of these audited financial statements
that were considered significant by management were evaluated for the potential effect on these audited financial statements.
Management does not believe any of the subsequent pronouncements will have a material effect on these audited financial statements
as presented and does not anticipate the need for any future restatement of these audited financial statements because of the
retro-active application of any accounting pronouncements issued subsequent to February 28, 2017 through the date these audited
financial statements were issued.
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued an ASU on lease accounting. The ASU requires
the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets
and liabilities on the balance sheet. The ASU is effective for reporting periods beginning after December 15, 2018 with early
adoption permitted. While the Company is still evaluating the ASU, the Company expects the adoption of the ASU to have a material
effect on the Company’s financial condition due to the recognition of the lease rights and obligations as assets and liabilities.
The Company does not expect the ASU to have a material effect on the Company’s results of operations, and the ASU will have
no effect on cash flows.
NOTE
2 – GOING CONCERN
The Company has a net loss for the six months
ended February 28, 2017 of $20,442,414 and working capital deficit as of February 28, 2017 of $912,416, and has used cash in operations
of $339,409 for the six months ended February 28, 2017. In addition, as of February 28, 2017, the Company had a stockholders’
deficit and accumulated deficit of $912,416 and $27,573,744, respectively. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
The
accompanying condensed financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of
the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business.
The ability of the Company to continue its operations is dependent on the execution of management’s plans, which include
the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient
to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize
its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation
of the consolidated financial statements.
PETLIFE
PHARMACEUTICALS, INC.
Notes
to Condensed Consolidated Financial Statements
February
28, 2017
(unaudited)
There
can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources
to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability
of assets and classification of assets and liabilities that might be necessary. Based on the Company’s current resources,
the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful
in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities
and/or contemplate the sale of its assets, if necessary.
NOTE
3 – NOTES PAYABLE
The
Company has notes payable as of February 28, 2017 and August 31, 2016 are as follows:
Convertible
Notes payable
|
|
February
28, 2017
|
|
|
August
31, 2016
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
Principal
|
|
|
Discount
|
|
|
Principal
|
|
|
Principal
|
|
|
Discount
|
|
|
Principal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shelton
Davis
|
|
$
|
25,000
|
|
|
$
|
-
|
|
|
$
|
25,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
William
Bodenheimer III
|
|
|
30,000
|
|
|
|
-
|
|
|
|
30,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Peter
Sherman
|
|
|
12,500
|
|
|
|
-
|
|
|
|
12,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Steven
Sass
|
|
|
25,000
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
92,500
|
|
|
$
|
-
|
|
|
$
|
92,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
On July 27, 2016, the Company executed
a convertible promissory note with Shelton Avery Davis, as part of a private offering, for $25,000. The note has a maturity date
of July 27, 2017 and bears interest of 10% which accrues. The note converts into common stock at $0.25 per share. As of February
28, 2017, $1,486 of interest has been accrued.
On
September 30, 2016, the Company executed a convertible promissory note with William Bodenheimer III, as part of a private offering,
for $30,000. The note has a maturity date of September 30, 2017 and bears interest of 10% which accrues. The note converts into
common stock at $0.25 per share. As of February 28, 2017, $1,249 of interest has been accrued.
On
October 4, 2016, the Company executed a convertible promissory note with Peter Sherman, as part of a private offering, for $12,500.
The note has a maturity date of October 4, 2017 and bears interest of 10% which accrues. The note converts into common stock at
$0.25 per share. As of February 28, 2017, $507 of interest has been accrued.
On December 8, 2016, the Company executed a convertible promissory note with Steven
Sass, as part of a private offering, for $25,000. The note has a maturity date of December 8, 2017 and bears interest of 10% which
accrues. The note converts into common stock $0.25 per share. As of February 28, 2017, $569 of interest has been accrued.
The
Company has notes payable to related parties, net of discounts, as of February 28, 2017 and August 31, 2016, as follows:
|
|
February
28, 2017
|
|
|
August
31, 2016
|
|
Notes payable to related
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
parties,
net of discounts
|
|
Principal
|
|
|
Discount
|
|
|
Principal
|
|
|
Principal
|
|
|
Discount
|
|
|
Principal
|
|
Ralph Salvagno
|
|
$
|
153,011
|
|
|
$
|
-
|
|
|
$
|
153,011
|
|
|
$
|
153,011
|
|
|
$
|
-
|
|
|
$
|
153,011
|
|
Lanham
|
|
|
10,000
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
10,000
|
|
Dreadnought 1906, Inc.
|
|
|
150,000
|
|
|
|
(100,000
|
)
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Ralph Salvagno
|
|
|
59,852
|
|
|
|
-
|
|
|
|
59,852
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
372,863
|
|
|
$
|
(100,000
|
)
|
|
$
|
272,863
|
|
|
$
|
163,011
|
|
|
$
|
-
|
|
|
$
|
163,011
|
|
During
the year ended August 31, 2015, we received $10,000 from a shareholder advance which is unsecured, non-interest bearing, and due
on demand. As of February 28, 2017, $10,000 remains outstanding. See Note 4.
On August 31, 2016, the Company executed a
promissory note with Ralph Salvagno (“Salvagno”), the Company’s CEO and Director, for $153,011. The note converted
various payables to Salvagno. The note is due on demand and bears interest at 2% per annum which accrues. As of February
28, 2017, $1,526 of interest has been accrued. See Note 4.
PETLIFE
PHARMACEUTICALS, INC.
Notes
to Condensed Consolidated Financial Statements
February
28, 2017
(unaudited)
On October 25, 2016, the Company
executed a promissory note with Dreadnought 1906, Inc., which is controlled by Vyvyan Campbell (“Campbell”), the
Company’s Director, for $150,000. The note matures on November 1, 2017 and bears interest at 10% per annum which
accrues. As an incentive for the issuance of the note, 250,000 shares of common stock were issued and recorded as a debt
discount. The shares were valued at $150,000 for the debt discount. As of February 28, 2017, $7,479 of interest has been
accrued and $50,000 of the debt discount amortized. See Note 4.
On January 14, 2017, the Company executed
a promissory note with Salvagno for $59,852. The note converted various payables to Salvagno. The note is due on demand and bears
interest at 4% per annum which accrues. As of February 28, 2017, $1,194 of interest has been accrued. See Note 4.
NOTE 4 – RELATED PARTY TRANSACTIONS
During the year ended August 31, 2015,
we received $10,000 from a shareholder advance which is unsecured, non-interest bearing, and due on demand. As of February 28,
2017, $10,000 remains outstanding. See Note 3.
As of February 28, 2017, the Company has
a loan from an officer of $36,330.
As of February 28, 2017 and August 31,
2016, there are related party accounts payable and accrued expenses of $350,000 and $383,974, respectively, related to employment
and consulting services.
On August 31, 2016, the Company executed a promissory note with Salvagno, the Company’s CEO and
Director, for $153,011. The note converted various payables to Salvagno. The note is due on demand and bears interest at 2% per
annum which accrues. As of February 28, 2017, $1,526 of interest has been accrued. See Note 3.
On
October 25, 2016, the Company executed a promissory note with Dreadnought 1906, Inc., which is controlled by Campbell, the Company’s
Director, for $150,000. The note matures on November 1, 2017 and bears interest at 10% per annum and accrues. As an incentive
for the issuance of the note, 250,000 shares of common stock were issued and recorded as a debt discount. The shares were valued
at $150,000 for the debt discount. As of February 28, 2017, $7,479 of interest has been accrued and $50,000 of the debt discount
amortized. See Note 3.
On
January 14, 2017, the Company executed a promissory note with Salvagno for $59,852. The note converted various payables to Salvagno.
The note is due on demand and bears interest at 4% per annum and accrues monthly. As of February 28, 2017, $1,194 of interest
has been accrued. See Note 3.
NOTE
5 - STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company is authorized to issue up to 50,000,000
shares of preferred stock, par value $0.001 per share. Each share of preferred stock is convertible into common stock on a one-for-one
basis. As of February 28, 2017, there are no shares of preferred stock issued and outstanding.
Common Stock
The Company was authorized to issue up to 750,000,000
shares of common stock, par value $0.001 per share. Each outstanding share of common stock entitles the holder to one vote per
share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no
pre-emptive rights.
During the six months ended February 28,
2017, the Company has issued or is contractually obligated to issue, 53,904,487 common shares for services valued at $22,764,859
which has been recorded as stock-based compensation.
Stock
Option Plan
On
June 9, 2016, the Board of Directors approved the 2016 Stock Option Plan which reserved 20,000,000 shares of common stock.
The
Company has granted options to an employee and to a consultant. Options activity for the six months ended February 28, 2017 is
as follows:
PETLIFE
PHARMACEUTICALS, INC.
Notes
to Condensed Consolidated Financial Statements
February
28, 2017
(unaudited)
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
Number
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
|
of
Options
|
|
|
Price
|
|
|
Terms
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at August 31, 2016
|
|
|
|
4,000,000
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at February 28, 2017
|
|
|
|
4,000,000
|
|
|
$
|
0.25
|
|
|
|
2.28
|
|
|
$
|
1,480,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at February 28, 2017
|
|
|
|
4,000,000
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
On June 9, 2016, the Company granted Ralph
Salvagno, an officer and director of the Company, 2,000,000 options for common stock. The options are fully-vested at issuance,
have a three-year life, and have an exercise price of $0.25 or a 50% discount to market, whichever is higher. The options
were valued at $0.748 or $1,496,389 using Black-Scholes.
On June 9, 2016, the Company granted Richard
Langley, a consultant to the Company, 2,000,000 options for common stock. The options are fully-vested at issuance, have a three-year
life, and have an exercise price of $0.25 or a 50% discount to market, whichever is higher. The options were valued at $0.748
or $1,496,389 using Black-Scholes.
NOTE
6 – COMMITMENTS AND CONTINGENCIES
Legal
Matters
From
time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.
As of the date of this report, there were no pending or threatened lawsuits.
Lease
Commitment
On
February 1, 2016, the Company entered into a lease space effective June 1, 2016 through May 30, 2018. Lease payments of $750 per
month payable in advance on the first day of each month for total lease payments of $18,000.
Future
minimum lease payments are as follows:
2017
|
|
|
$
|
7,500
|
|
2018
|
|
|
|
6,750
|
|
2019
|
|
|
|
-
|
|
2020
|
|
|
|
-
|
|
2021
|
|
|
|
-
|
|
Future
|
|
|
|
-
|
|
Total
|
|
|
$
|
14,250
|
|
NOTE
7 – CONCENTRATIONS
Concentration
of Credit Risk
Financial
instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments.
The
Company places its temporary cash investments with financial institutions insured by the Federal Deposit Insurance Corporation
(“FDIC”) for the United States. No amounts exceeded federally insured limits as of February 28, 2017. There have been
no losses in these accounts through February 28, 2017.
Concentration
of Lender
The
Company has one lender, a related party, that makes up its notes payable.
NOTE
8 – SUBSEQUENT EVENTS
On
March 18, 2017, the Company executed a promissory note with Salvagno for $24,830. The note converted various payables to Salvagno.
The note is due on demand and bears interest at 2% per annum.