The accompanying notes are an integral
part of these unaudited financial statements
The accompanying
notes are an integral part of these unaudited financial statements
NOTES TO THE UNAUDITED CONDENSED FINANCIAL
STATEMENTS
NOTE 1 – BASIS OF PRESENTATION AND NATURE OF BUSINESS
Nature of Business
Sibannac, Inc. ("Sibannac" or "Company"
or "we") was incorporated in June 1999 in the State of Nevada as Naprodis, Inc. On August 25, 2014, the Company transferred
all its assets to Naprodis, Inc., a Colorado corporation (“Colorado Naprodis”). On November 25, 2014, the Company changed
its name to Sibannac, Inc.
Basis of Presentation
The accompanying condensed consolidated financial
statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present
the financial position, results of operations and cash flows for the stated periods have been made. Except as described below,
these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included
in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted. These condensed consolidated unaudited financial statements should be
read in conjunction with a reading of the Company’s consolidated financial statements and notes thereto included in Form
10-K filed with the SEC on December 14, 2016. Interim results of operations for the three months ended November 30, 2016 and 2015
are not necessarily indicative of future results for the full year. Certain amounts from the 2015 period have been reclassified
to conform to the presentation used in the current period.
The condensed consolidated financial statements
of the Company
include the consolidated accounts of Sibannac and its’ wholly owned
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
NOTE 2 – CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Cash and Cash Equivalents
The Company considers all highly liquid instruments
with an original maturity of three months or less to be cash equivalents. At certain times, cash in bank may exceed the amount
covered by FDIC insurance. At November 30, 2016 and August 31, 2016, there were deposit balances in a United States bank of $698
and $8,725 respectively.
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued ASC
(Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets
and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair
value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit
price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between
market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires
an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required
by the standard that the Company uses to measure fair value:
Level 1: Quoted prices in active markets for identical assets or
liabilities.
Level 2: Observable inputs other than Level
1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs
that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the assets or liabilities.
As of November 30, 2016, all of the Company’s financial instruments
are recorded at fair value.
Accounts Receivable and concentration
of credit risk
The Company extends unsecured credit to its
customers in the ordinary course of business. Accounts receivable related to online media revenues is recorded at the time services
are delivered and payment is reasonably assured. Online media revenues are generally collected from 30 to 60 days after the invoice
is received. On a periodic basis, the Company evaluates its receivables and establishes allowances based on historical experience
and other currently available information. As of November 30, and August 31, 2016, management determined it was necessary to establish
an allowance for doubtful accounts of $4,329. There was no allowance at August 31, 2016. As of November 30, 2016, and August 31,
2016, the Company had accounts receivable, net of $11,632 and $60,071, respectively.
Loss per share
The Company computes net loss per common share
in accordance with FASB ASC 260 (SFAS No. 128 “Earnings per Share” and SAB No. 98). Under the provisions
of ASC 260, the basic net loss per common share is computed by dividing the net loss available to common stock outstanding during
the period. Net loss per share on a diluted basis is computed by dividing the net loss for the period by the weighted
average number of common and dilutive common stock equivalent shares outstanding during the period.
The Company has no potentially dilutive securities outstanding as
of November 30, 2016, and August 31, 2016.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued
accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
NOTE 3– NOTE RECEIVABLE AND PUT PAYABLE
As part of the acquisition of Apollo Media
Network, Inc. (“Apollo”), on July 15, 2015, the Company assumed a note receivable from the principal of Apollo that
is due at the payees’ discretion from two to nine years from the notes formation on August 31, 2014, resulting in a long
term note receivable due to the company as of November 30, 2016, and August 31, 2016. The principal amount of the note receivable
is expected to be paid through the exercise of the related Put Option payable that was also established at the same time The Company
accrued interest on the note receivable through August 31, 2016, at an annualized rate of 1.59%, or $3,975. As of November 30,
2016, the Company has recorded bad debt expense of $3,975 and an allowance on the interest receivable, as the collectability of
the interest is uncertain.
As part of the acquisition of Apollo, the Company
issued a put option to repurchase 1,400,000 shares of common stock from the principal of Apollo which is to be outstanding for
the same period of time as the Note Receivable described above. The exercise price of the Put is stated as being the full satisfaction
of the promissory note valued at $250,000 The Company has not delivered the 1,400,000 shares of common stock to the principal of
Apollo, since the shares were to be returned to the Company upon the exercise of the Put Option.
The note receivable for $250,000 and the Put
payable for $250,000 are linked to one another and will offset each other once the principal of Apollo elects to exercise. Upon
the exercise no cash will exchange hands but the asset and offsetting liability will be removed from the Companies records at that
time.
NOTE 4– NOTES PAYABLE
Note payable – Sandbox, net
On May, 2016, the Company entered into a Financing
and Security Agreement (“FSA”) with FPP Sandbox, LLC. (“Sandbox”). Pursuant to the FSA, Sandbox agreed
to purchase qualifying invoices from the Company at 70% of the face value of the invoice, charging an initial factoring fee of
3% for the first 30 days and an additional 3% beginning on the 31
st
day. The net balance on this note as of November
30, 2016, and August 31, 2016, is $14,261 and $7,209, respectively.
Notes payable
As part of the acquisition of Apollo, the
company assumed liability for various notes payable due to four individual investors ranging from $5,000 to $64,000 principle
amount. These notes have a stated interest rate of 5% except for one $30,000 note that bears interest at 40%. These notes matured
at various times throughout 2015. The principle balance of all notes totaled $234,100 and accrued interest as of November 30,
2016, and August 31, 2016, was $47,897 and $42,361, respectively. Principal and interest totaled $281,997 and $276,461 as of November
30, 2016, and August 31, 2016, respectively. As of November 30, 2016, all of these notes were past due (see note 8).
NOTE 5– GOING CONCERN
The accompanying condensed consolidated financial
statements have been prepared assuming the Company will continue as a going concern. As of November 30, 2016, the Company had an
accumulated deficit of $435,788 and working capital deficit of $377,598. These factors create a substantial doubt regarding the
Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
NOTE 6 – COMMON STOCK
As of November 30, 2016, and August 31, 2016, there were 17,527,194
shares of common stock issued and outstanding.
NOTE 7 – RELATED PARTY TRANSACTIONS
Notes payable related party
On February 16, 2016, the Company issued a
$50,000 Promissory Note (the “First Note”) to, at the time, one of its board members. The First Note carried a 10%
($5,000) one time interest charge and had a maturity date of April 16, 2016. During the year ended August 31, 2016, the Company
had repaid the $50,000 First Note. As of May 31, 2016, accrued and unpaid interest on the First Note was $2,991.
On October 12, 2016, the Company issued a $30,000
Promissory Note (the “Second Note”) to the same board member. The Second note was comprised of $25,000 the Company
received on June 29, 2016, and the $5,000 interest balance on the First Note. As of November 30, 2016 the principal balance of
the Second Note was $30,000, and accrued and unpaid interest was $1,055 and $431 as of November 30, 2016, and August 31, 2016,
respectively.
NOTE 8 – SUBSEQUENT EVENTS
On December 12, 2016 and January 4, 2017, two shareholders loaned
the Company $5,000 each, respectively.
On June 28, 2017, the same two shareholders agreed to loan the Company
$49,000 in the aggregate.
On June 29, 2017, the Company, entered into
an Asset Purchase Agreement (the “APA”) with Imbutek Holdings Corp (“Imbutek”), a Nevada corporation. Pursuant
to the APA, the Company acquired certain assets and the business of Imbutek in exchange for 43,872,806 shares of common stock.
The mission of Imbutek is to bring to the public market a new financing structure and platform that has not been previously available
to small-cap companies. Imbutek is forming an advisory committee to screen and select firms with developed concepts or products
that are at or near revenue and arrange financing to bring their brands to market while providing guidance and solutions for compliance
with regulations of the public marketplace. The structure was formed to provide a framework to address the most common concerns
for new publicly held companies.
As part of the APA, the holders of notes payable
(see Note 4) agreed to convert $250,000 of their balances to convertible promissory notes. The terms of the convertible promissory
notes include; a) a conversion price of $0.04 per share, b) any amount realized by holders for sales of common stock are capped
at $0.05 with any overage being returned to the treasury account of Company and c) an agreement to Leak-out Agreements, whereby
sales of common stock are limited to the greater of $2,500 per day or 10% of shares sold volume. Also, the holders of the notes
payable- related party, agreed to convert their debt, in the aggregate amount of $86,000,at $0.10 per share based upon the
Company’s issued and outstanding shares of common stock as of June 28, 2017.
On July 14, 2017, the Company filed Amended
and Restated Articles of Incorporation, which included increasing the authorized capital stock of the Company to 120,000,000 shares,
consisting of 110,000,000 shares of par value $0.001 common stock and 10,000,000 shares of par value $0.001 preferred stock. The
board of directors of the Company may issue the preferred stock in one or more series and may designate voting powers, conversion
rights, liquidation preferences and other terms and conditions.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report contains “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks
and uncertainties and are based on the beliefs and assumptions of management and information currently available to management.
The use of words such as “believes”, “expects”, “anticipates”, “intends”, “plans”,
“estimates”, “should”, “likely” or similar expressions, indicates a forward-looking statement.
The identification in this report of factors
that may affect our future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means
exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
