Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-K

 

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the year ended December 31, 2017

 

or

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Vitalibis, Inc.
(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

333-202970

(Commission File Number)

 

30-0828224

(IRS Employer Identification No.)

 

5348 Vegas Drive, Las Vegas, NV 89108

(Address of principal executive offices)

 

702-944-9620

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:

None

 

Name of each exchange on which registered:

None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Title of each class:

None

 

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes  ¨   No  x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨   No  x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ¨   No  x

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer ¨ Smaller reporting company x
    Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes  x   No  ¨

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant's most recently completed fiscal quarter.

 

Not available as shares did not trade.

 

As of December 31, 2017, there were 27,010,000 shares of Common Stock, $.001 par value issued and outstanding.

 

Documents Incorporated by Reference: None. 

 

 

     

 

 

 

Table of Contents

 

Part I      
         
Item 1 Business     3  
Item 1A Risk Factors     8  
Item 1B Unresolved Staff Comments     8  
Item 2 Properties     8  
Item 3 Legal Proceedings     8  
Item 4 Mine Safety Disclosures     8  
           
Part II        
           
Item 5 Market for Registrant's Common Equity and Related Stockholder Matters     9  
Item 6 Selected Financial Data     11  
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations     12  
Item 7A Quantitative and Qualitative Disclosure about Market Risk     13  
Item 8 Financial Statements and Supplementary Data     13  
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures     25  
Item 9A Controls and Procedures     25  
           
Part III        
           
Item 10 Directors, Executive Officers of the Registrant     27  
Item 11 Executive Compensation     29  
Item 12 Security Ownership of Certain Beneficial Holders and Management     31  
Item 13 Certain Relationships and Related Transactions     31  
Item 14 Principal Accountant Fees and Services     32  
           
Part IV        
           
Item 15 Exhibits, Financial Statements Schedules     33  
Item 16

Form 10–K Summary

    33
           
Signatures     34  

 

 

 

 

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FORWARD LOOKING STATEMENTS

 

There are statements in this annual report that are not historical facts. These "forward-looking statements" can be identified by use of terminology such as "believe," "hope," "may," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire Registration Statement carefully, especially the risks discussed under "Risk Factors." Although management believes that the assumptions underlying the forward- looking statements included in this Registration Statement are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward- looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Registration Statement will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  ii  

 

  

PART I

 

ITEM 1. BUSINESS

 

Overview

 

We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act. We will continue to be an emerging growth company until: (i) the last day of our fiscal year during which we had total annual gross revenues of $1,000,000,000 or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (iii) the date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which we are deemed to be a large accelerated filer, as defined in Section 12b-2 of the Exchange Act.

 

As an emerging growth company, we are exempt from:

 

Section 14A (a) and (b) of the Exchange Act, which requires companies to hold stockholder advisory votes on executive compensation and golden parachute compensation;

 

The requirement to provide in any registration statement periodic report or other report to be filed with the Securities and Exchange Commission, certain modified executive compensation disclosure under Item 402 of Regulation S-K or selected financial data under Item 301 of Regulation S-K for any period before the earliest audited period presented in our initial registration statement;

 

Compliance with new or revised accounting standards until those standards are applicable to private companies;

 

The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 to provide auditor attestation of our internal controls and procedures; and

 

Any Public Company Accounting Oversight Board ("PCAOB") rules regarding mandatory audit firm rotation, or an expanded auditor report and any other PCAOB rules subsequently adopted, unless the Securities and Exchange Commission determines the new rules are necessary for protecting the public.

 

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Startups Act.

 

Vitalibis, Inc. (the “Company”) was formed on April 11, 2014 as a Nevada corporation, under the name of Crowd 4 Seeds, Inc. On January 9, 2017, the Company filed a certificate of amendment to its Certificate of Incorporation with the Secretary of State of the State of Nevada in order to change its name to "Sheng Ying Entertainment Corp." On December 16, 2017, new management took over control of the Company and, on February 5, 2018, the Company filed a certificate of amendment to its Certificate of Incorporation with the Secretary of State of the State of Nevada in order to change its name to “Vitalibis, Inc”.

 

As of December 31, 2017, and through current date, most of our resources and work have been devoted to adopting and integrating our new business plan, research and development, seeking capital to finance our operations and complying with our obligations under applicable securities laws, rules and regulations.

 

We are a public company and, as such, we have incurred and will continue to incur significant expenses for legal, accounting and related services. As a public entity, subject to the reporting requirements of the Exchange Act of 1934, we incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $80,000 per year over the next few years and may be significantly higher if our business volume and transactional activity increases but should be lower for this year in 2017 because our overall business volume (and financial transactions) will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until we exceed $75 million in market capitalization (if ever). These obligations will certainly reduce our ability and resources to expand our business plan and activities. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling outstanding obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of these efforts. We will also reduce compensation levels paid to management (if we attract or retain outside personnel to perform this function) if there is insufficient cash generated from operations to satisfy these costs.

 

 

 

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We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services to us, although there can be no assurances that we will be successful in any of those efforts. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management. The Company may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due to them.

 

Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

 

We do not have any subsidiaries.

 

Going Concern

 

Our auditor has issued a “going concern” qualification as part of its opinion in the Audit Report for the year ending December 31, 2017 disclosing that our ability to continue as a going concern is contingent on us being able to raise working capital to grow our operations and generate revenue. There can be no assurance we will be able to do so.

  

Previous Business

 

The Company initially, under the management of Itzhak Ostashinsky, planned to operate in the field of crowd funding and to run an online platform for investments in Israeli startup companies. Those plans never materialized, and there were no operations by the Company during the tenure of Mr. Ostashinsky.

 

On December 30, 2016, in a change-of-control transaction (“2106 Change of Control”), Tycoon Luck Global Limited acquired 65.72% of the equity interest of the Company from Itzhak Ostashinsky, the major shareholder and sole officer of the Company at the time, for $220,152 in cash, and both parties agreed all the net liabilities of the Company as of the acquisition date would be assumed by Itzhak Ostashinsky. On the same day, the new management team was appointed. The new management then decided to transition the Company’s business plan to provide sub-junket services to main junkets based in Cambodia.

 

In furtherance of that new plan, the Company was intending to acquire Sheng Ying Investments Limited, a BVI company incorporated on January 5, 2017, and wholly-owned by Kok Chee LEE, the then-CEO of the Company; however, that plan never materialized and was abandoned due to the change in control and management in October 2017. There were no operations by the Company during the tenure of Kok Chee LEE.

 

On October 24, 2017, in furtherance of a change-of-control transaction (“2017 Change of Control”), Kok Chee LEE resigned from his positions as CEO and director of the Company, and the Board of Directors of the Company appointed Thomas Raack as a director of the Company. On October 25, 2017, Siew Heok Ong resigned from his positions as director and CFO of the Company, and Sreyneang Jin resigned from her positions as director and COO of the Company. On October 26, 2017, Thomas Raack, the sole remaining director of the Company, appointed himself as the CEO, president and treasurer of the Company, and also terminated David E. Price as secretary and appointed himself as secretary of the Company.

 

Current Business

 

Commencing in December 2017, the Company changed its business to focus on the development of technologies and products related to CBD-based personal care products.

 

The CBD Market

 

Our proposed business plan has nothing whatsoever to do with THC, the psychoactive component of marijuana, and instead, is focused exclusively on non-medicinal cannabidiol ("CBD"), a component of hemp.

 

 

 

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CBD can be produced from hemp, which, for all practical purposes, is devoid of THC, and can be grown far more efficiently than marijuana. Hemp is also a legal crop in many U.S. states.

 

Scientific research is now bringing to light the many health benefits of CBD. CBD is non-toxic and appears to exhibit few side effects, and none life-threatening.

 

Asset Purchase Agreement

 

On December 16, 2017, Sheng Ying Entertainment, Inc. (the “Registrant”), as Buyer, entered into an Asset Purchase Agreement with Steven Raack, an individual; Thomas A. Raack, an individual; and Larry McNabb, an individual, as Sellers, whereby the Registrant acquired certain intangible assets from Sellers relating to non-medicinal cannabidiol ("CBD")-based personal care technologies that include: (a) certain proprietary technology and intellectual property; (b) certain proprietary ideas, know-how, proposed business plans and concepts; and (c) a proposed marketing plan combined with related experiential marketing strategies (the “Technology”), together, the “Assets”. The Assets consist of plans and intellectual property, only, and do not include fixed assets or tangible property or products, and constitute the intangible personal property developed solely by Sellers. Each of the Sellers own 33.33% of the Assets and Sellers together own 100%of all rights, titles and interests in and to the Assets.

 

As full consideration for the Assets, the Registrant issued 22,500,000 restricted shares of the Company’s Common Stock, par value $.001, with each Seller receiving 7,500,000 shares. Due to the change of control and related party nature of the transaction a carry-over basis was applied. There is no historical book value for the asset purchased so the Company assigned a value of $0 to the assets.

 

Steven Raack and Thomas A. Raack are brothers, and Thomas A. Raack was, on the date of the Agreement, a Director, CEO, President, Secretary and Treasurer of the Company. Subsequent to the acquisition, Steven Raack was appointed as a Director, Thomas A. Raack resigned as CEO and President, and Steven Raack was appointed as the CEO and President.

 

Operations

 

We plan to focus on the development, sale and distribution of hemp oil-based products that contain naturally occurring cannabinoids, including cannabidiol ("CBD") and other products containing CBD-rich hemp oil (“Legal Hemp”). We intend to use third-party contract manufacturers to manufacture our proposed products, using proprietary formulations we plan to create.

 

We also plan to focus on products that are formulated for the nutraceutical and cosmeceutical industries, including skin care products. The Company is not in the business of engaging in either recreational or medical marijuana, directly or indirectly. The Company's plans focus only on products that contain only those substances that are derived from the part of the cannabis plant that is excluded from the definition of “marijuana” under the Controlled Substances Act and are both federally legal and outside of the purview of the Drug Enforcement Administration.

 

We plan to offer our anticipated customers and affiliates high-quality products, exclusive experiences and referral-based income. Our business plan is based on the anticipated growth of the regulated cannabis / Cannabidiol (CBD) market, along with the trends in digital media and experiential lifestyles.

 

Our proposed products are planned to be formulated with health and safety in mind. We intend to sell branded CBD oils, personal care, body care and nutritional products. CBD oils we plan to include in our proposed products are planned to contain less than .3% THC and are planned to be extracted using a third-party vapor distillation process to retain cannabinoid and terpene benefits, without using hexane or butane.

 

We plan to enable our anticipated customers to purchase our proposed products directly from our planned website and they will also be eligible to receive benefits for referring other customers to us. We plan to offer additional surprise and delight offers to loyal customers. Those who join our proposed marketing system as an Affiliate will receive the opportunity to earn income on each referred sale. We are not a multi-level marketing company.

 

We intend to be a digital marketplace which utilizes technology as a massive differentiator within the regulated cannabis industry. We anticipate that this technology may be able to leverage the best strategies and frameworks of eCommerce, peer-to-peer selling and experiential marketing.

 

 

 

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We believe that the expanding cannabis marketplace may include many fragmented and under-resourced businesses. We will attempt to operate our planned business with our proprietary technology, proposed high-quality products, anticipated excellent customer care and planned exclusive experiences in an effort to become an iconic brand.

 

Market, Customers and Distribution Methods

 

The market for CBD-related products is an emerging market.

 

In order to have a chance for our anticipated success in the market, we must formulate our proposed products in a manner that will appeal to the market and customers; we must test and sample consumer reaction to/acceptance of our proposed products; and we must also identify and establish distribution methods. If and when we obtain financing for our proposed business and operations, of which there can be no assurance, we intend to formulate our proposed products; test and sample such products; and identify and establish distribution methods.

 

We plan to initially market our proposed products via internet sales, direct sales and trade show sales.

 

Competition

 

We are a new business with no history of operations or current operations. Rather, we are just starting activities to engage in our proposed business, as well as seek necessary financing, as we currently have no financial resources, and as such, we have a weak competitive position in the industry. We intend to compete with independent manufacturers and institutional and individual investors who are actively seeking to develop and market CBD-based products.

 

There are several companies developing and utilizing cannabinoid for a range of products. The cannabinoid area currently includes formulated extracts of the  Cannabis  plant and synthetic formulations. These formulations include CBD and  THC, or a combination of CBD/THC as the active pharmaceutical ingredient. Certain companies such as GW Pharmaceuticals, PLC, have focused on plant-based CBD formulations; while other companies, such as Zynerba Pharmaceuticals Inc. and Insys Therapeutics Inc., have focused on synthetic CBD formulations.

 

The CBD-based consumer product industry is highly fragmented with numerous companies, many of which may be under-capitalized. We plan to routinely evaluate internal and external opportunities in an effort to seek optimize value for shareholders through new product development or by asset acquisitions or sales. There are also large, well-funded companies that currently do not offer hemp-based consumer product.

 

We may also compete with other CBD-related technology and product companies for financing from a limited number of investors that may be prepared to invest in such companies. The presence of competing companies in our field of endeavor may impact our ability to raise initial, needed capital in order to fund our proposed business and operations. If investors perceive that investments in our competitors are more attractive, based on the merit of their technologies, their products, the advanced stage of their marketing or development, or the price of the investment opportunity, we may not obtain our needed financing.

 

Many of our competitors have substantially greater resources, experience in conducting research, experience in developing and manufacturing their products, operating experience, research and development and marketing capabilities, name recognition and production capabilities. We will face competition from companies marketing existing products or developing new products which may render our technologies (and proposed products) obsolete.

 

These companies may have numerous competitive advantages, including:

 

  • significantly greater name recognition;

 

  • established distribution networks;

 

  • more advanced technologies and product development;

 

  • additional lines of products, and the ability to offer rebates, higher discounts or incentives

 

  •

greater experience in conducting research and development, manufacturing, obtaining regulatory approval for products, and marketing approved products; and

 

  •

greater financial and human resources for product development, sales and marketing, and patent litigation.

 

 

 

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Our commercial success, if any, will depend on our ability to compete effectively in product development areas such as, but not limited to, safety, price, marketing and distribution.

 

There can be no assurance that competitors will not succeed in developing products that are more effective than our current technology, therefore rendering our proposed products obsolete and noncompetitive.

 

Accordingly, in addition to our proposed research and development efforts, we may need to create a public relations/advertising program designed to establish our “brand” name recognition early on in our proposed business development; we intend to develop and market our brand name pending our proposed commercialization of products, if any, we may derive from our proposed research and development efforts. 

 

Intellectual Property

 

We currently own intellectual property which we obtained from Mssrs. Steve Raack, Tom Raack and Larry McNabb in the Asset Purchase Agreement, described in the section of this Report entitled “Asset Purchase Agreement”, above.

 

We have also filed a registration with the US Patent and Trademark Office for the mark:

VITALIBIS TM .

 

Research and Development

 

We did not incur any research and development expenses during the period from April 11, 2014, (inception) through our year ended December 31, 2017.

 

Reports to Security Holders

 

We are subject to the reporting and other requirements of the Exchange Act and we intend to furnish our shareholders annual reports containing financial statements audited by our independent registered public accounting firm and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year. After the effectiveness of this Registration Statement we will begin filing Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K with the Securities and Exchange Commission in order to meet our timely and continuous disclosure requirements. We may also file additional documents with the Commission if they become necessary in the course of our company’s operations.

 

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

 

Government Regulations

 

We are not yet aware of any direct government regulations relating to the marketing of CBD-related products containing less than .03 parts THC, which are the only products we intend to include in our proposed products and business plan.

 

Environmental Regulations

 

We expect to comply with all applicable laws, rules and regulations relating to our business, and at this time, we do not anticipate incurring any material capital expenditures to comply with any environmental regulations or other requirements. While our proposed business activities do not currently violate any laws, any regulatory changes that impose additional restrictions or requirements on us or on our anticipated potential customers could adversely affect us by increasing our operating costs or decreasing demand for our proposed products, which could have a material adverse effect on our results of operations.

 

Employees

 

As of December 31, 2017, we did not have any employees. Steve Raack and Tom Raack each intend to devote about 20 hours per week on our proposed operations. The Company will consider employing staff in the future, but only if the new business is growing and cash flow will support such staff.

 

 

 

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Litigation

 

We are not party to any pending, or to our knowledge, threatened litigation of any type.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

None.

 

DESCRIPTION OF PROPERTY

 

Our principal office is located at 5348 Vegas Drive, Las Vegas, NV 89108, as part of a group of executive suites. Our telephone number is (310) 982-1331. We pay $45.00 per month to an unrelated third-party lessor for our offices, on a month-to-month basis.

 

ITEM 3. LEGAL PROCEEDINGS

 

We are not party to any legal proceedings.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

  

 

 

 

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PART II

 

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS

 

(a) Market Information.

 

The Company's common stock trades in the OTC Market under the symbol "VCBD". Trading in our Company's common stock on the OTC Market has been very sparse as of the date of this annual report.

 

Description of Securities

 

The Company is authorized by its Certificate of Incorporation to issue an aggregate of 117,500,000 shares of capital stock, of which 112,500,000 are shares of common stock, par value $0.001 per share (the "Common Stock") and 5,000,000 are shares of preferred stock, par value $0.001 per share (the "Preferred Stock"). As of December 31, 2017, a total of 27,010,000 shares of Common Stock were issued and outstanding.

 

Preferred Stock

 

Our certificate of incorporation authorizes the issuance of 5,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our board of directors. No shares of preferred stock have been designated, issued or were outstanding as of December 31, 2017. Accordingly, our board of directors is empowered, without stockholder approval, to issue up to 5,000,000 shares of preferred stock with voting, liquidation, conversion, or other rights that could adversely affect the rights of the holders of the common stock. Although we have no present intention to issue any shares of preferred stock, there can be no assurance that we will not do so in the future.

 

Among other rights, our board of directors may determine, without further vote or action by our stockholders:

 

  • the number of shares and the designation of the series;

 

  • whether to pay dividends on the series and, if so, the dividend rate, whether dividends will be cumulative and, if so, from which date or dates, and the relative rights of priority of payment of dividends on shares of the series;

 

  • whether the series will have voting rights in addition to the voting rights provided by law and, if so, the terms of the voting rights;

 

  • whether the series will be convertible into or exchangeable for shares of any other class or series of stock and, if so, the terms and conditions of conversion or exchange;

 

  • whether or not the shares of the series will be redeemable and, if so, the dates, terms and conditions of redemption and whether there will be a sinking fund for the redemption of that series and, if so, the terms and amount of the sinking fund; and

 

  • the rights of the shares of the series in the event of our voluntary or involuntary liquidation, dissolution or winding up and the relative rights or priority, if any, of payment of shares of the series.

 

We presently do not have plans to issue any shares of preferred stock. However, preferred stock could be used to dilute a potential hostile acquirer. Accordingly, any future issuance of preferred stock or any rights to purchase preferred shares may have the effect of making it more difficult for a third party to acquire control of us. This may delay, defer or prevent a change of control in our Company or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings attributable to, and assets available for distribution to, the holders of our common stock and could adversely affect the rights and powers, including voting rights, of the holders of our common stock.

 

 

 

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Common Stock

 

Our certificate of incorporation authorizes the issuance of 112,500,000 shares of common stock. There are 27,010,000 shares of our common stock issued and outstanding at December 31, 2017. The holders of our common stock:

 

  • have equal ratable rights to dividends from funds legally available for payment of dividends when, as and if declared by the board of directors;
     
  • are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
     
  • do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and
     
  • are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders

 

Pursuant to an Amendment to the Articles of Incorporation, effected under NRS 78.207 and .209, the Company effected a 2.5 for 1 forward stock split of our number of authorized shares of the Common Stock and a corresponding increase in the number of issued and outstanding shares of Common Stock held by each stockholder of record as of February 8, 2018, the “Effective Date” of the forward split, as set by  FINRA.

 

All shares referenced in this Report have been retroactively adjusted to reflect this stock split.

 

Authorized but Unissued Capital Stock

 

Nevada law does not require stockholder approval for any issuance of authorized shares. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital or to facilitate corporate acquisitions.

 

One of the effects of the existence of unissued and unreserved common stock (and/or preferred stock) may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our board by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of our common stock at prices higher than prevailing market prices.

 

The description of certain matters relating to the securities of the Company is a summary and is qualified in its entirety by the provisions of the Company's Certificate of Incorporation and By-Laws.

 

(b) Holders

 

As of December 31, 2017, there were approximately 7 qualified holders of record of our common stock.

 

(c) Dividends.

 

The Registrant has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Registrant's business.

 

(d) Securities Authorized for Issuance under Equity Compensation Plans

 

None. The Company has no Equity Compensation Plan.

 

 

 

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(e) Recent Sale of Unregistered Securities

 

The Company's Board of Directors has the power to issue any or all of the authorized but unissued Common Stock without stockholder approval. The Company currently has no commitments to issue any shares of common stock.

 

The Company has recently sold unregistered securities, as follows:

 

The Company issued 800,000 shares of its restricted Common Stock to 7 “accredited” investors as full consideration for services each of the vendors performed for the Company. Each of the vendors was a material vendor to the Company. These sales were all made in the period March 7 to 9, 2018, in reliance on an exemption from Registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D, including Rule 506(b), promulgated thereunder. No underwriters were used in these transactions.

 

The Company also issued 301,000 shares of its restricted Common Stock to 10 “unaccredited” investors, who were all friends or associates of the management of the Company, as full consideration for cash in the sum of US$1.00 per share. The total aggregate consideration paid in cash by the investors was US$301,000, all of which has been received by the Company. These sales were all made in the period March 9 to 29, 2018, in reliance on an exemption from Registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D, including Rule 506(b), promulgated thereunder. No underwriters were used in these transactions.

 

ITEM 6. SELECTED FINANCIAL DATA

 

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 we are not required to provide the information under this item.

 

 

 

  11  

 

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company for the fiscal years ended December 31, 2017 and 20162016. The discussion and analysis that follows should be read together with the section entitled "Forward Looking Statements" and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on Form 10-K.

 

Except for historical information, the matters discussed in this section are forward-looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.

 

Company Overview

 

After a change in control on October 26, 2017, and a change in ownership in December 2017, the Company changed its business to focus on the development of technologies and products related to CBD-based personal care products.

 

Although the Company did not obtain any financing in 2017, it plans to seek financing to start up operations and pursue its new business plan through a private placement of its shares of common stock, commencing in early 2018. There is, however, no assurance it will be able to do so.

 

Results of Operations

 

For the years ended December 31, 2017 and 2016

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses for the period ending December 31, 2017, were $102,865 compared to $61,000 for the year ending December 31, 2016. The expenses were consisted primarily of contributed services from the former major shareholder and sole officer, legal, accounting and travel expenses.

 

Liquidity and Capital Resources

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the year ended December 31, 2017 and for the year ending December 31, 2016:

 

    Year ended
December 31, 
2017 		    Year ended
December 31, 
2016 		 
Operating Activities     (1,130 )     (31,000 )
Investing Activities     –       –  
Financing Activities     –       30,130  
Net Effect on Cash     (1,130 )     (870 )

 

As of December 31, 2017, the majority of our resources and work had been devoted to planning our previous business (servicing junkets in Cambodia) and complying with our reporting obligations under applicable regulations. Our planned junket business never commenced operations, and was abandoned in October 2017.

 

We are a public company and as such we have incurred and will continue to incur significant expenses for legal, accounting and related services. As a public entity, subject to the reporting requirements of the Exchange Act of 1934, we incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year over the next few years and may be significantly higher if our business volume and transactional activity increases but should be lower during our first year of being public because our overall business volume (and financial transactions) will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until we exceed $75 million in market capitalization (if ever). These obligations will certainly reduce our ability and resources to expand our business plan and activities. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling outstanding obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of these efforts. We will also reduce compensation levels paid to management (if we attract or retain outside personnel to perform this function) if there is insufficient cash generated from operations to satisfy these costs.

 

 

 

  12  

 

 

We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services to us, although there can be no assurances that we will be successful in any of those efforts. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management's ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management. The Company may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due to them.

 

As of December 31, 2017, total liabilities increased to $6,169 from $1,130 as of December 31, 2016, due to increases in trade accounts payable at the end of the year.

 

Recently Issued Accounting Pronouncements

 

Refer to the notes to the financial statements for a complete description of recent accounting standards which we have not yet been required to implement and may be applicable to our operation, as well as those significant accounting standards that have been adopted during the current year.

 

Critical Accounting Policies

 

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions. The following accounting policies require significant management judgments and estimates.

 

We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from these estimates.

 

Going Concern

 

Our auditor has issued a "going concern" qualification as part of their opinion for the fiscal year ended December 31, 2017.

 

Off-Balance Sheet Arrangements

 

We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

 

Contractual Obligations

 

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

 

  13  

 

 

 

 

VITALIBIS, INC.

(formerly known as Sheng Ying Entertainment Corp.)

(formerly known as Crowd 4 Seeds, Inc.)

 

FINANCIAL STATEMENTS

 

DECEMBER 31, 2017 AND 2016

 

 

TABLE OF CONTENTS

 

 

Report of Independent Registered Public Accounting Firm     15  
         
Balance Sheets at December 31, 2017 and 2016     16  
         
Statements of Operations for the years ended December 31, 2017 and 2016     17  
         
Statements of Stockholders' Deficit for the years ended December 31, 2017 and 2016     18  
         
Statements of Cash Flows for the years ended December 31, 2017 and 2016     19  
         
Notes to the Financial Statements     20- 24  

 

 

 

 

 

 

 

 

 

 

  14  

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

To the Shareholders and Board of Directors of

Vitalibis, Inc

(formerly known as Sheng Ying Entertainment Corp.)

(formerly known as Crowd 4 Seeds, Inc.)

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Vitalibis, Inc (the “Company”) as of December 31, 2017 and 2016, and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern Matter

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the Company's auditor since 2016.

Houston, Texas

April 9, 2018

 

  15  

 

 

VITALIBIS, INC.

(FORMERLY KNOWN AS SHEN YING ENTERTAINMENT CORP.)

(FORMERLY KNOWN AS CROWD 4 SEEDS, INC.)

BALANCE SHEETS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

   

 

    December 31,  
    2017     2016  
             
ASSETS                
Current assets:                
Cash   $ –     $ 1,130  
                 
Total current assets     –       1,130  
                 
Total assets   $ –     $ 1,130  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
Accrued liabilities and other payables   $ 6,169     $ –  
Accounts payable - related parties     –       1,130  
Total current liabilities     6,169       1,130  
                 
Total liabilities     6,169       1,130  
                 
COMMITMENTS AND CONTINGENCIES                
                 
Stockholders' deficit:                
Preferred stock; $.001 par value, 5,000,000 shares authorized, none issued and outstanding     –        –   
Common stock; $.001 par value, 112,500,000 shares authorized, 27,010,000 shares issued and 22,635,000 shares issued outstanding as of December 31, 2017 and 2016, respectively     27,010       22,635   
Additional paid-in capital     291,725       199,365  
Accumulated deficit     (324,904 )     (222,000 )
Total stockholders’ deficit     (6,169 )     –  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT   $ –     $ 1,130  

 

The accompanying notes are an integral part of the financial statements.

 

 

 

 

  16  

 

 

VITALIBIS, INC.

(FORMERLY KNOWN AS SHEN YING ENTERTAINMENT CORP.)

(FORMERLY KNOWN AS CROWD 4 SEEDS, INC.)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

 

 

 

 

    For the Years Ended December 31,  
    2017     2016  
Operating expenses:                
Selling, general and administrative expenses   $ 102,865     $ 61,000  
                 
Loss from operations     (102,865 )     (61,000 )
Other expenses, net     (39 )     –  
                 
Loss before provision for income taxes     (102,904 )     (61,000 )
Provision for income taxes     –       –  
                 
Net loss   $ (102,904 )   $ (61,000 )
                 
Net loss per common share – basic and diluted   $ (0.00 )   $ (0.00 )
                 
Weighted average common shares outstanding – basic and diluted     24,398,370       22,635,000  

 

The accompanying notes are an integral part of the financial statements.

 

 

 

  17  

 

 

VITALIBIS, INC.

(FORMERLY KNOWN AS SHEN YING ENTERTAINMENT CORP.)

(FORMERLY KNOWN AS CROWD 4 SEEDS, INC.)

STATEMENTS OF CHANGE IN SHAREHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

 

 

    Share Capital     Additional              
    Number of           paid-in     Accumulated        
    Shares     Amount     capital     deficit     Total  
                               
Balance at December 31, 2015     22,635,000     $ 22,635     $ 64,365     $ (161,000 )   $ (74,000 )
                                         
Debt assumed and waived by former major shareholder and sole officer     –       –       107,000       –       107,000  
Contributed services     –       –       28,000       –       28,000  
Net loss     –       –       –       (61,000 )     (61,000 )
                                         
Balance at December 31, 2016     22,635,000       22,635       199,365       (222,000 )     –  
                                         
Shares returned and cancelled from prior management     (18,125,000 )     (18,125 )     18,125       –       –  
Debt balance forfeited by prior management     –       –       93,981       –       93,981  
Shares issued to new officers related to change of control     22,500,000       22,500       (22,500 )     –       –  
Contributed services     –       –       2,754       –       2,754  
Net loss     –       –               (102,904 )     (102,904 )
Balance at December 31, 2017     27,010,000     $ 27,010     $ 291,725     $ (324,904 )   $ (6,169 )

 

The accompanying notes are an integral part of the financial statements.

 

 

 

  18  

 

 

VITALIBIS, INC.

(FORMERLY KNOWN AS SHEN YING ENTERTAINMENT CORP.)

(FORMERLY KNOWN AS CROWD 4 SEEDS, INC.)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

 

 

    Year Ended  
    December 31,  
    2017     2016  
Cash flow from operating activities:                
Net loss   $ (102,904 )   $ (61,000 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Contributed services     2,754       28,000  
Changes in operating assets and liabilities:                
Prepaid expenses     –       4,000  
Accrued liabilities and other payables     6,169       (2,000 )
Accounts payable - related parties     92,851       –  
Net cash used in operating activities     (1,130 )     (31,000 )
                 
Cash flow from financing activities:                
Advances from related parties     –       30,130  
Net cash provided by financing activities     –       30,130  
                 
NET DECREASE IN CASH     (1,130 )     (870 )
CASH AT BEGINNING OF PERIOD     1,130       2,000  
CASH AT END OF PERIOD   $ –     $ 1,130  
                 
Supplemental disclosure of cash flow information:                
Cash paid for interest   $ –     $ –  
Cash paid for income taxes   $ –     $ –  
                 
Non-cash transactions                
Debt assumed and waived by former major shareholder and sole officer   $ –     $ 107,000  
Debt balance forfeited by prior management   $ 93,981     $ –  
                 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

  19  

 

 

VITALIBIS, INC.

NOTES TO FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND GOING CONCERN:

 

We plan to focus on the development, sale and distribution of hemp oil-based products that contain naturally occurring cannabinoids, including cannabidiol ("CBD") and other products containing CBD-rich hemp oil (“Legal Hemp”).

 

Vitalibis (the “Company”) was formed on April 11, 2014 as a Nevada corporation, under the name of Crowd 4 Seeds, Inc.

 

During 2014 the Company issued 9,054,000 shares of its common stock, for a total consideration of $20,000. The Company has yet to start operational or research and development activities. The Company initially planned to operate in the field of crowd funding and to run an online platform for investments in Israeli startup companies. This online platform would present startup companies in various fields. The Company planned to match up Israeli startups looking to raise funds with potential investors from all over the world seeking to make investments in such startups. Potential investors will be able to have access to the marketing information and legal and financial disclosures of any startup company they would like to know more about. The crowd funding legislation in Israel was processed. The online service could be offered only following the final approval of the legislation.

 

On December 30, 2016, Tycoon Luck Global Limited acquired 65.72% of the equity interest of the Company from Itzhak Ostashinsky, the major shareholder and sole officer, at a consideration of $220,152 in cash and both parties agreed all the net liabilities of the Company as of the acquisition date are assumed by Itzhak Ostashinsky. On the same day, the new management team was appointed. The Company plans to commence the business in providing sub-junket services to main junkets based in Cambodia.

 

On January 9, 2017, the Company filed with Secretary of State of Nevada to change its name to Sheng Ying Entertainment Corp. On April 24, 2017, the Financial Industry Regulatory Authority (“FINRA”) approved the name change. The Company’s common stock symbol was also changed from CWWD to SALL, effective April 25, 2017.

 

On January 18, 2018, our Board of Directors approved an agreement and plan of merger to merge with and into our wholly-owned subsidiary, Vitalibis, Inc., a Nevada corporation, and our name changed from Sheng Ying Entertainment Corp. to Vitalibis, Inc. Vitalibis, Inc. was formed solely to effect the change of name and conducted no operations.

 

Initially the Company was planning to acquire Sheng Ying Investments Limited, a BVI company incorporated on January 5, 2017 and wholly owned by Kok Chee LEE, the CEO of the Company, for the purpose of commencing junket business, however that plan was called off due to the change in management team in October, 2017.

 

On October 24, 2017, Kok Chee LEE resigned from his positions as CEO and director of the Company, and the Board of Directors of the Company appointed Thomas Raack as a director of the Company. On October 25, 2017, Siew Heok Ong resigned from his positions as director and CFO of the Company, and Sreyneang Jin resigned from her positions as director and COO of the Company. On October 26, 2017, Thomas Raack, the sole remaining director of the Company, appointed himself as the CEO, president and treasurer of the Company, and also terminated David E. Price as secretary and appointed himself as secretary of the Company.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses and generated negative cash flows from operations since inception. Due to these conditions, it raised substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The significant accounting policies followed in the preparation of the financial statements are as follows:

 

Basis of Presentation :

 

The financial statements are prepared in accordance with accounting principles generally accepted ("GAAP") in the United States of America.

 

 

 

  20  

 

 

Use of Estimates

 

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. 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 dates of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include short-term investments with original maturities of 90 days or less. The recorded value of our cash and cash equivalents approximates their fair value.

 

Income Taxes

 

Deferred taxes are determined utilizing the "asset and liability" method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it's more likely than not that deferred tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current based on the underlying asset or liability or if not directly related to and asset or liability based on the expected reversal dates of the specific temporary differences.

 

Fair value of financial instruments

 

The Company discloses fair value measurements for financial and non-financial assets and liabilities measured at fair value. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

 

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

 

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

 

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

 

Related Parties

 

The Company follows ASC 850,  Related Party Disclosures,  for the identification of related parties and disclosure of related party transactions.

 

Reclassifications

 

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.

 

Recently Issued Accounting Pronouncements

 

Management does not expect adoption of recently issued but not yet effective pronouncements to have a material impact on the Company’s financial statements.

 

 

 

  21  

 

 

NOTE 3 – PROMISSORY NOTE FROM SHAREHOLDER

 

As of December 31, 2015, the Company had promissory note balance of $23,000 payable to Itzhak Ostashinsky, the former major shareholder and sole officer. During the year ended December 31, 2016, another note of $29,000 was issued to the same person. On December 30, 2016, the former major shareholder and sole officer agreed to waive all the outstanding note payable of $52,000 owed to him. Hence there is no promissory note outstanding as of December 31, 2016.

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

In May 2014, the Company engaged a legal counsel who is a family member of the former major shareholder and sole officer of the Company in order to receive legal services concerning the registration statement to be filed with the Securities and Exchange Commission ("SEC"). According to the agreement, the fees will be paid if and only upon receiving the first $50,000 from external investors following the effectiveness of the registration statements. Since this expense was probable it was recorded as a provision amounting to $50,000 as of December 31, 2015.

 

However, the Tycoon Luck Global Limited took over the Company in 2016 and the existing liabilities were assumed by the former major shareholder and sole officer.

 

For the year ended December 31, 2016, the family member of the former major shareholder and sole officer of the Company provided legal services for the Company for free.

 

Our principal office is part of a group of executive suites. We pay $45.00 per month for our offices, on a month-to-month basis.

  

NOTE 5 – STOCKHOLDERS’ DEFICIT

 

Common Stock

 

The Company effected a 2.5 for 1 forward stock split of our  number of authorized shares of the Common Stock and a corresponding increase in the number of issued and outstanding shares of Common Stock held by each stockholder of record as of February 8, 2018, the “Effective Date” of the forward split, as set by  the Financial Industry Regulatory Authority ( “FINRA” ). All shares referenced have been respectively adjusted to reflect this stock split.

 

On the Effective Date, our total authorized shares of Common Stock increased from 45,000,000 to 112,500,000 shares, and our total issued and outstanding shares of Common Stock increased from 10,804,000 to 27,010,000 shares; the par value of $0.001 will remain the same. Any fractional shares resulting from the split will be rounded up to the next whole number. The total authorized shares of our Preferred Shares will not be affected and will remain at 5,000,000.

  

Pursuant to the Asset Purchase Agreement, on December 18, 2017, we issued 22,500,000 shares of our restricted common stock as consideration for the purchase of assets, pursuant to the closing of an Asset Purchase Agreement. No cash was involved in the transaction. The asset transferred consisted of various intangible assets such as plans and know-how related to the proposed CBD-related products the Company plans to develop. Due to the change of control and related party nature of the transaction a carry-over basis was applied. There is no historical book value for the asset purchased so the Company assigned a value of $0 to the assets.

 

The 22,500,000 shares were the sole consideration paid by the Company for the purchase of assets from the three (3) individual owners, on the basis of 7,500,000 shares each. Prior to issuance, Mr. Larry McNabb assigned all his rights, titles and interest in and to his 7,500,00 shares to B.L.U.E. Stone Ltd. The remaining 15,000,000 shares were issued equally to Steve Raack and Thomas Raack who serve as officers and directors of the Company. At this point, the 22,500,000 shares represented control of 83.3% of the total issued and outstanding shares of the Company and constituted control of the C ompany.

 

Related to the issuance above, on December 18, 2017, the following four (4) separate shareholders of the Company, in furtherance of a change-of-control transaction, discussed above, voluntarily surrendered to the transfer agent a total of 18,125,000 restricted shares for cancellation:

 

Shareholder Number of Shares
Tycoon – Luck Global Ltd.  14,875,000 shares
LWH Biomass Sdn Bhd  1,000,000 shares
Yuping Wang  1,125,000 shares
Yujie Wang  1,125,000 shares

 

 

 

  22  

 

 

NOTE 6 – LOSS PER COMMON SHARE

 

The basic net loss per common share is calculated by dividing the Company's net loss available to common shareholders by the weighted average number of common shares during the year. The diluted net loss per common share is calculated by dividing the Company's net loss available to common shareholders by the diluted weighted average number of common shares outstanding during the year. The diluted weighted average number of common shares outstanding is the basic weighted number of common shares adjusted for any potentially dilutive debt or equity. Diluted net earnings (loss) per common share are the same as basic earnings (loss) per common share due to the lack of dilutive items in the Company.

 

    Year ended
December 31, 		    Year ended
December 31, 		 
    2017     2016  
Numerator:                
                 
Net loss   $ (102,904 )   $ (61,000 )
                 
Denominator                
                 
Denominator for basic and diluted net loss per common share - weighted average of common shares     24,398,370       22,635,000  
                 
Basic and diluted net loss per common share attributed to stockholders   $ (0.00 )   $ (0.00 )

 

NOTE 7 – INCOME TAXES

 

Deferred taxes are determined by applying the provisions of enacted tax laws and rates for the jurisdictions in which the Company operates to the estimated future tax effects of the differences between the tax basis of assets and liabilities and their reported amounts in the Company's financial statements. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. Significant components of the Company's deferred tax assets are as follows:

 

    Year ended
December 31, 		    Year ended
December 31, 		 
    2017     2016  
             
Net operating loss carry forward   $ (264,000 )   $ (161,000 )
Limitation in carry forward     256,000       –  
Net operation loss carry forward     (8,000 )     (161,000 )
                 
Deferred tax asset before valuation allowance     1,500       75,480  
Valuation allowance     (1,500 )     (75,480 )
Net deferred tax asset   $ –     $ –  

 

Management currently believes that since the Company has a history of losses it is more likely than not that the deferred tax regarding the loss carry forwards and other temporary differences will not be realized in the foreseeable future. The Company believes that carryforward limitations will be applied to the historical net operating losses due to the recent change of control transition. The Company's net operating loss carry forward will begin to expire in the year 2038.

 

The Company has recorded no liability for income taxes associated with unrecognized tax benefits at the date of adoption and has not recorded any liability associated with unrecognized tax benefits during 2017 and 2016. Accordingly, the Company has not recorded any interest or penalty in regard to any unrecognized benefit.

 

 

 

  23  

 

 

The main reconciling items between the statutory tax rate of the Company and the effective tax rate are the non-recognition of the benefits from accumulated net operating losses carryforward due to the uncertainty of the realization of such tax benefits.

 

On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21%, effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, we revalued our ending net deferred tax assets at December 31, 2017, which were fully offset by a valuation allowance.

 

NOTE 8 – TRANSACTION WITH RELATED PARTIES

 

During the year ended December 31, 2017, $2,754 of services were paid for and contributed to the Company by the current officers.

 

The Company makes borrowings from its related parties from time to time for working capital purposes. As of December 31, 2017, and 2016, the Company owed $0 and $1,130 to Ms. Siew Heok ONG, the former Chief Financial Officer at the time. The amount was due on demand without any interest, but was forgiven on October 25, 2017 and was recorded as a contribution to capital.

 

During the year ended December 31, 2017 $92,851 of expenses were paid directly by Mr. Kok Chee LEE, the Chief Executive Officer of the Company at the time. On October 25, 2017 Mr. Kok Chee Lee forgave amounts owed to him which were recorded as a contribution to capital. As of December 31, 2017 and 2016, the Company owed $0 and $0 to Mr. Kok Chee LEE, respectively.

 

As of December 31, 2015, the Company had an outstanding note payable to the former major shareholder and sole officer (see Note 3). After change in ownership on December 30, 2016, all previous liabilities are assumed by the former major shareholder and sole officer. This included the $52,000 of Promissory Note, $50,000 in Accounts Payable due to Related Party for legal services (see Note 4) and $5,000 of Accounts Payable totaling $107,000.

 

For the year ended December 31, 2016, the Company leased its office space from its former major shareholder and sole officer at no charge.

 

For the year ended December 31, 2016, the legal services of the Company are provided by a related party for $0. The related party is the son of former major shareholder and sole officer.

 

During the year ended December 31, 2016, the Company incurred an expense in the amount of $28,000 for the estimated value of the time devoted by the former major shareholder and sole officer to promote the business plan of the Company. The expense was recorded as a contribution to equity as no payment from the Company was required.

 

NOTE 9 – SUBSEQUENT EVENTS

 

In March and April 2018, the Company sold 301,000 shares of its restricted common stock to 10 unrelated and unaffiliated accredited investors at a price of $1.00 per share, for total net proceeds of $301,000.

 

In March 2018, the Company issued a total of 600,000 shares of common stock to 6 consultants. In addition the Company committed to additional an additional 850,000 of shares that will vest between May 2018 and February 2019.

 

In March 2018, the Company entered into a Consulting Agreement (“Agreement”) with VOTOCAST, INC. dba newkleus, a California corporation formed and owned by Steven Raack, the President, CEO and a Director of the Company. The Company will receive an exclusive license in the cannabis industry for the state-of-the-art newkleus™ technology to (1) facilitate Vitalibis’ micro-influencer sales model, and (2) enhance and compliment Vitalibis’ social media strategy.

 

The Company paid 200,000 shares upon execution of the agreement and a month fee ranging from $0 to $2,000 depending of usage volume. In addition, newkleus will provide operational and business development consulting services.

 

The Agreement grants Vitalibis™ an exclusive license for the newkleus patent-pending, user-generated content (UGC) technology for all applications in the rapidly growing cannabis industry. The integration of the newkleus technology allows Vitalibis to create an interactive digital community, while concurrently acquiring valuable user data and content, all of which Vitalibis anticipates will (1) increase customer acquisition and retention and (2) build direct, meaningful and loyal customer relationships.

 

 

 

  24  

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term "disclosure controls and procedures", as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC`s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2017, that our disclosure controls and procedures are not effective at a reasonable assurance level and are designed to provide reasonable assurance that the controls and procedures will meet their objectives due to the material weaknesses described below. However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

 

Management's Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The internal controls for the Company are provided by executive management's review and approval of all transactions. Our internal control over financial reporting also includes those policies and procedures that:

 

(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
   
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and
   
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls.

 

 

 

  25  

 

 

Based on this assessment, management has concluded that, as of December 31, 2017, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles due to the existence of the following material weaknesses:

 

  · Lack of segregation of duties
     
  · Lack of audit committee and independent directors
     
  · Lack of well established procedures to authorize and approve related party transactions

 

Although we are unable to meet the standards under COSO because of the limited resources available to a company of our size, we are committed to improving our financial organization. As funds become available, we will undertake to: (1) create a position to segregate duties consistent with control objectives, (2) increase our personnel resources and technical accounting expertise within the accounting function (3) appoint one or more independent directors to our board of directors who shall be appointed to a Company audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and (4) prepare and implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

 

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

 

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the Company's internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

 

 

 

 

  26  

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors and Executive Officers

 

Our Articles state that our authorized number of directors shall be not less than one and shall be set by resolution of our Board of Directors. Our Board of Directors has fixed the number of directors at three, and we currently have three directors.

 

The following table contains information as of December 31, 2017 as to each Director and Executive Officer of the Company:

 

Name   Age   Title

Steven Raack

5348 Vegas Drive, Las Vegas, NV 89108

   46 Director, President, and chief executive officer
       

Thomas Raack

5348 Vegas Drive, Las Vegas, NV 89108

   47 Director, secretary, chief financial officer & treasurer
       

Markus W. Frick

5348 Vegas Drive, Las Vegas, NV 89108

   44 Director

 

 

Our Directors will serve in that capacity until our next annual shareholder meeting or until their successors are elected and qualified. Officers hold their positions at the will of our Board of Directors.

 

Steven Raack , 46, ha s over 23 years of strategy, operations, technology, product development and business management experience.  He’s worked for industry leading companies, from global corporations to start-ups, including NASA, Andersen Consulting, Electronic Data Systems, Sony Pictures Entertainment, Herbalife International, Arbonne International, Beautycounter and newkleus.

 

In 2012, Mr. Raack joined Beautycounter as their Chief Operating Officer, and helped launch a progressive brand focused on selling safe skin care, body care and cosmetics products.  He was integral in developing the strategies and execution programs related to their innovative eCommerce, social selling and affiliate marketing business model, which attracted top-tier investors such as TPG Growth.

 

After 3 ½ years with Beautycounter, in 2016, Mr. Raack left to become the Chief Executive Officer of newkleus – a patent-pending customer engagement platform. The newkleus technology platform was strategically designed to maximize social media activities for sports teams, musicians, radio stations, consumer brands and social selling companies.

 

Mr. Raack currently assists several start-up and growth companies as an Executive Advisor. Additionally, he earned a BS in Electrical Engineering from the University of Southern California and an MBA from Pepperdine University.

 

Thomas Raack , 47, has over 20 years of financial, executive and strategic management experience with a diverse group of private and publicly-held companies specializing in the development of technology, medical product distribution, biotechnology, and e-commerce. Mr. Raack has a broad base of business consulting experience and has assisted in structuring and completing, acquisitions, debt and equity financing, reorganizations, as well as designing and implementing business development and financial communications programs. Prior to joining Sheng Ying Entertainment Corp, Mr. Raack was an independent consultant from February 2002- to present, with a focus on assisting private companies with business development and operational systems.  Mr. Raack was also previously managing partner at Alliance Capital Resources from July 1998 to February 2002, with offices in Newport Beach, CA. While at Alliance, Mr. Raack consulted for publicly traded companies handling domestic mergers and acquisitions, venture capital transactions, public offerings and other financings, joint ventures, strategic alliances and distribution agreements.  His experience at Alliance also included managing financial communications for a NASDAQ listed medical products distribution company. He received a B.A. degree in Communications from California State University-Long Beach.

 

 

 

  27  

 

 

Markus W. Frick , 44, has over 20 years of financial, executive and strategic management experience with a diverse group of companies specializing in the development of technology, medical product distribution, biotechnology, and e-commerce. Mr. Frick has been engaged in the research and scientific testing of organic compounds since 2010, through the present. As such, he was engaged in the development of technology and products related to the infrared extraction of organic compounds, that resulted in a patent issued in 2016. He was also engaged in conducting a feasibility study for a potential Nevada cannabis testing lab. He graduated from Villanova University, Villanova, Pennsylvania, in 1995, with a BA in Political Science and a BS in Mechanical Engineering. He served in the U.S. Marine Corp from 1990 through 1996.

 

Conflicts of Interest

 

Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.

 

In general, officers and directors of a corporation are required to present business opportunities to the Company if: we have adopted a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent. In such event, the criteria for determining whether the Company should be offered an opportunity are as follows:

 

· the Company could financially undertake the opportunity;
· the opportunity is within the Company’s line of business; and
· it would be unfair to the Company and its stockholders not to bring the opportunity to the attention of the Company.

  

Family Relationships.

 

The following family relationships exist among our officers, directors, or persons nominated for such positions: Steven Raack is the brother of Thomas Raack.  

 

Involvement in Certain Legal Proceedings

 

No executive officer or director has been involved in the last ten years in any of the following:

 

  • Any bankruptcy petition filed by or against any business or property of such person, or of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

  • Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

  • Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

 

  • Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

  • Being the subject of or a party to any judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation, or any law or regulation respecting financial institutions or insurance companies, including but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail, fraud, wire fraud or fraud in connection with any business entity; or

 

  • Being the subject of or a party to any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act, any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

 

 

  28  

 

 

Board Committees and Audit Committee Financial Expert

 

We do not currently have a standing audit, nominating or compensation committee of the board of directors, or any committee performing similar functions. Our board of directors performs the functions of audit, nominating and compensation committees. As of the date of this annual report, no member of our board of directors qualifies as an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act.

 

Director Nominations

 

As of December 31, 2017, we did not affect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. We have not established formal procedures by which security holders may recommend nominees to the Company's board of directors.

 

Code of Ethics

 

We have adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our code of ethics may be obtained free of charge by contacting us at the address or telephone number listed on the cover page hereof.

 

ITEM 11. EXECUTIVE COMPENSATION

 

SUMMARY COMPENSATION TABLE

 

The following summary compensation table sets forth the total annual compensation paid or accrued by us to or for the account of our principal executive officer during the last completed fiscal year and each other executive officer whose total compensation exceeded $100,000 in either of the last two fiscal years:

 

Name and

Principal Position

  Year    

Salary

($)

   

Bonus

($)

   

Stock

Awards

($)

   

Option

Awards

   

Non-Equity

Incentive

Compensation

($)

   

Non-Qualified

Deferred

Compensation

Earnings ($)

   

All Other

Compensation

($)

   

Totals

($)

 
(a)     (b)       (c)       (d)       (e)       (f)       (g)       (h)       (i)       (j)  
Steve Raack 
President, CEO and Director (1) 		    2017       0       0       0       0       0       0       0       0  
Thomas Raack
Director, Secretary, Treasurer and Chief Financial Officer (1) 		    2017       0       0       0       0       0       0       0       0  
Markus W. Frick 
Director 		    2017       0       0       0       0       0       0       0       0  

 

  (1) Steve Raack and Thomas Raack each own 7,500,000 shares of the Company’s restricted Common Stock.

 

The following table provides information concerning equity awards as of our fiscal year end, December 31, 2017, held by each of our named executive officers.

 

Name  

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

   

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

   

Equity

Incentive

Plan Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

   

Option

Exercise

Price ($)

   

Option

Expiration

Date

   

Number of

Shares of

Stock That

Have Not

Vested (#)

   

Market

Value of

Shares of

Stock That

Have Not

Vested (#)

   

Equity

Incentive

Plan Awards:

Number of

Unearned

Shares,

Shares or

Other Rights That

Have Not

Vested (#)

   

Equity

Incentive

Plan Awards:

Market or

Payout

Value of

Unearned

Shares,

Shares or

Other Rights That

Have Not

Vested ($)

 
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  
                                                       
Steve Raack 
President, CEO and Director (1) 		    0       0       0       0       0       0       0       0       0  
Thomas Raack Director, Secretary, Treasurer and Chief Financial Officer (1)     0       0       0       0       0       0       0       0       0  
Markus W. Frick Director     0       0       0       0       0       0       0       0       0  

____________________

  (1) Steve Raack and Thomas Raack each own 7,500,000 shares of the Company’s restricted Common Stock.

 

 

 

  29  

 

 

We have omitted certain columns in the summary compensation table pursuant to Item 402(a)(5) of Regulation S-K as no compensation was awarded to, earned by, or paid to any of the executive officers or directors required to be reported in that table or column in any fiscal year covered by that table.

 

Option Grants

 

As of the date of this report we had not granted any options or stock appreciation rights to our named executive officers or directors, or to any other party.

 

Management Agreements

 

As of the date of this report we have no management agreement with any of our named executive officers or directors, or with any other party.

 

Compensation of Directors

 

Our directors did not receive any compensation for their services as directors from our inception to the date of this report. We have no formal plan for compensating our directors for their services in the future in their capacity as directors, although such directors may receive compensation as determined by our Board of Directors or by any compensation committee that may be established.

 

Pension, Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

 

Equity Compensation Plan

 

The Company has no equity compensation plan.

 

Compensation Committee

 

We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions. The Board of Directors as a whole participates in the consideration of executive officer and director compensation.

 

Name &
Principal
Position 		  Year   Salary ($)       Bonus ($)       Stock
Awards ($) 		      Option
Awards ($) 		      Non-equity
incentive
plan
compensation ($) 		    Non-qualified
deferred
compensation
earnings
($) 		    All other
compensation
($) 		    Total
($)
 NONE                                                          
      – –       –       –       –       –     -     –     –

 

Grants of Plan-Based Awards Table

 

None of our named executive officers received any grants of stock, option awards or other plan-based awards during the period ended December 31, 2017. The Company has no activity with respect to these awards.

 

Options Exercised and Stock Vested Table

 

None of our named executive officers exercised any stock options, and no restricted stock units, if any, held by our named executive officers vested during the period ended December 31, 2017. The Company has no activity with respect to these awards.

 

Outstanding Equity Awards at Fiscal Year-End Table

 

None of our named executive officers had any outstanding stock or option awards as of December 31, 2017 that would be compensatory to the officer. The Company has not issued any awards to its named executive officers. The Company and its Board of Directors may grant awards as it sees fit to its employees as well as key consultants.

 

 

 

  30  

 

 

Compensation of Directors

 

During our fiscal year ended December 31, 2017, we did not provide compensation to any of our directors for serving as our director. We currently have no formal plan for compensating our directors for their services in their capacity as directors, although we may elect to issue stock options to such persons from time to time. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of December 31, 2017, certain information with regard to the record and beneficial ownership of the Company's common stock by (i) each person known to the Company to be the record or beneficial owner of 5% or more of the Company's common stock, (ii) each director of the Company, (iii) each of the named executive officers, and (iv) all executive officers and directors of the Company as a group:

 

Name and Address of Beneficial Owner of Shares of Common Stock   Amount and Nature of Beneficial Ownership (1)(3)(4)     Percentage of Outstanding Shares of Common 
Stock (2) 		 
Steve Raack *, **, ***,
5348 Vegas Drive
Las Vegas, NV 89108 		    7,500,000       27.8%  
                 
Thomas Raack *, **, ***,
5348 Vegas Drive
Las Vegas, NV 89108 		    7,500,000       27.8%  
                 
B.L.U.E. Stone Ltd. *
B1-214 AJMAN FREE ZONE BOX
16881
HMTFZC
UNITED ARAB EMIRATES 		    7,500,000       27.8%  
                 
Markus W. Frick **, ****
5348 Vegas Drive
Las Vegas, NV 89108 		    0       0  

  ____________________

(1) Unless otherwise indicated, all shares are owned directly by the beneficial owner.
(2) Based on 27,010,000 shares of common stock issued and outstanding.
(3) Unless otherwise indicated, none of these shares are known to be  shares  with respect to which such listed beneficial owner has the right to acquire beneficial ownership.
(4) Unless otherwise indicated, none of these shares are known to be  shares  that are (a) pledged as security or (b) with respect to which such persons have the right to acquire beneficial ownership.

 

*each person known to the Company to be the record or beneficial owner of 5% or more of the Company's common stock

** each director of the Company

*** each of the named executive officers

**** all executive officers and directors of the Company as a group

 

Changes in Control

 

As of December 31, 2017, there are no existing arrangements, known to the Company, i ncluding any pledge by any person of securities of the Company or any of its parents, the operation of which may at a subsequent date result in a change in control of our Company.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

During the year ended December 31, 2017, $2,754 of services were paid for and contributed to the Company by the current officers.

 

The Company makes borrowings from its related parties from time to time for working capital purposes. As of December 31, 2017, and 2016, the Company owed $0 and $1,130 to Ms. Siew Heok ONG, the former Chief Financial Officer at the time. The amount was due on demand without any interest, but was forgiven on October 25, 2017 and was recorded as a contribution to capital.

 

During the year ended December 31, 2017, the Company incurred operating expenses in the amount of $104,874, $92,851 of which was directly paid by Mr. Kok Chee LEE, the Chief Executive Officer of the Company at the time. On October 25, 2017 Mr. Kok Chee Lee forgave amounts owed to him which were recorded as a contribution to capital. As of December 31, 2017 and 2016, the Company owed $0 and $0 to Mr. Kok Chee LEE, respectively.

 

  31  

 

 

As of December 31, 2015, the Company had an outstanding note payable to the former major shareholder and sole officer (see Note 3). After change in ownership on December 30, 2016, all previous liabilities are assumed by the former major shareholder and sole officer. This included the $52,000 of Promissory Note, $50,000 in Accounts Payable due to Related Party for legal services (see Note 4) and $5,000 of Accounts Payable totaling $107,000.

 

For the year ended December 31, 2016, the Company leased its office space from its former major shareholder and sole officer at no charge.

 

For the year ended December 31, 2016, the legal services of the Company are provided by a related party for $0. The related party is the son of former major shareholder and sole officer.

 

During the year ended December 31, 2016, the Company incurred an expense in the amount of $28,000 for the estimated value of the time devoted by the former major shareholder and sole officer to promote the business plan of the Company. The expense was recorded as a contribution to equity as no payment from the Company was required.

 

Corporate Governance and Director Independence.

 

The Company has not:

 

  • Established its own definition for determining whether its directors and nominees for directors are "independent". We currently use NASDAQ's general definition for determining director independence, which states that "independent director" means a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, that, in the opinion of the company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director. 

 

Nor:

 

  • Established any committee of the board of directors.

 

Given the nature of the Company's business, its limited stockholder base and the current composition of management, the board of directors does not believe that the Company requires any corporate governance committees at this time.

 

As of the date hereof, the entire board serves as the Company's audit committee.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Independent Public Accountants

 

On February 8, 2016, we engaged MaloneBailey, LLP ("MB") as our new independent registered public accounting firm. The appointment of MB was approved by our Board of Directors. During the fiscal year ended December 31, 2017, we did not consult with MB on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company's financial statements, and MB did not provide either a written report or oral advice to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

 

Audit Fees

 

The fees involved with the audit by MB of the financial statements for the year ended December 31, 2017 are $15,000. The audit fees were $ 11,100 for the audit for the year ended December 31, 2016.

 

Tax Fees

 

During the year ended December 31, 2017, our principal accountant did not render services to us for tax compliance, tax advice or tax planning.

 

All Other Fees

 

During the year ended December 31, 2017, there were no fees billed for products and services provided by the principal accountant other than those set forth above.

 

Currently, we have no independent audit committee. Our full board of directors functions as our audit committee and is comprised of one director who is not considered to be "independent" in accordance with the requirements of Rule 10A-3 under the Exchange Act. Our audit committee's pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.

 

 

 

  32  

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a) The following documents are filed as a part of this Report:

 

1. Financial Statements. The following financial statements of Vitalibis, Inc. are included in Item 8:

 

  Reports of Independent Registered Public Accounting Firms.
   
  Balance Sheets as of December 31, 2017 and 2016.
   
  Statements of Operations for the fiscal years ending December 31, 2017 and 2016
   
  Statements of Stockholders' Deficit for the fiscal years ending December 31, 2017 and 2016
   
  Statements of Cash Flows for the fiscal years ending December 31, 2017 and 2016
   
  Notes to Financial Statements.

 

2. Financial Statement Schedule(s):

 

All schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable.

 

3. Exhibits:

 

3.1   Articles of Incorporation (1)
     
3.2   By-Laws (1)
     
5.1   Opinion of Michael J. Morrison, Chtd.*
     
14.1   Code of Ethics (2)
     
31   Certification of Chief Executive Officer and Principal Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act of 1934. *
     
32   Certification of Chief Executive Officer and Principal Financial Officer to 18 U.S.C Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. *
     
101   XBRL Interactive Data Files*

_______________

* Filed herewith.

 

(1) Incorporated herein by reference from the Company's Form S-1 filed with the Securities and Exchange Commission on March 25, 2015.

(2) Incorporated herein by reference from the Company's Form 10-K filed with the Securities and Exchange Commission on March 31, 2017

 

ITEM 16. FORM 10–K SUMMARY

 

Not applicable

 

  33  

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  VITALIBIS, INC.  
       
Date: April 10, 2018 By: /s/ Steven Raack  
    Steven Raack  
    Chief Executive Officer  

 

 

 

 

 

  34  

 

 

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