Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
1 - Nature of Operations and Financial Condition
Veroni
Brands Corp. (the “Company”) was incorporated on December 7, 2016 under the laws of the state of Delaware to engage in any
lawful corporate undertaking, including, but not limited to, selected mergers and acquisition.
The
Company has been formed to acquire, operate, develop, grow and import premium European products into the U.S. market. Veroni Brands was
created to search out desirable premium products across Europe and make them accessible to discerning consumers in the U.S. Veroni Brands
strives to import the extraordinary and delight its consumers with experiences that had previously only been attainable in Europe. In
January 2018, the Company became an exclusive importer and distributor of “Iron Energy” by Mike Tyson. The beverage became
available to consumers in select Chicago area markets in May 2018 in three different flavors such as “Mojito,” “Zero
Sugar” and “Original.” During 2019, the Company built the distribution of the Iron Energy product nationwide. Beginning
in February 2019, the Company expanded its import and distribution network with the distribution of chocolate products and significantly
grew its sales and distribution volumes. The Company entered into long term supply agreements with major U.S national retailers to import
chocolate products under “Private Label Brands” that are currently being sold in over 20,000 retail locations across the
U.S. The Company takes pride in the variety of consumer products it imports and is proud to share them with its consumers nationwide.
The Company’s recent expansion of the import and distribution of snacks, chocolate and chocolate related products that are currently
being sold to U.S. national retailers presents the Company with a substantial growth opportunity to introduce to its retail partners
to many other consumer products and to increase its network of retailers.
Going
Concern
The
Company has generated revenue this year of approximately $5.6 million and incurred a net loss of $379,108 for the year ending December
31, 2020 and has an accumulated deficit of $1,386,108 since its inception. As of December 31, 2020, the Company had a cash balance available
of approximately $116,730 and working capital of ($342,796) which is not sufficient to meet its operating requirements for the next twelve
months. Therefore, the Company’s ability to continue as a going concern is dependent on its ability to grow its revenue and generate
sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its shareholders or other sources,
as may be required.
The
Company failed to meet its minimum annual purchase requirements under the FoodCare Sp. z.o.o. (“FoodCare”) agreement, in
part due to FoodCare’s failure to provide promised marketing support. In 2020, the Company terminated the agreement and relationship
with FoodCare and no longer had exclusive rights to distribute FoodCare’s Iron Energy drinks. The Company has found greater success
with the distribution of chocolate and snack products instead of beverages. In addition to importing products from ZWC Millano, the Company
has recently established relationships with other European manufacturers that can manufacture wide range of “panned” products,
meaning those that are coated with a sugar syrup and/or chocolate, such as nuts, raisin, pretzels, fruits and many other “panned”
and healthy snacks items as well as chocolate bars, multi-flavor truffles, sticks, chocolate cups, 5-bites, chocolate covered gummies,
chocolate Easter eggs, custom Christmas chocolate figures as well as Advent calendars and many other products to support demand of the
Company’s national retailers.
The
Company is continuing to evaluate various financing options in order to continue the funding of the expansion of its operations, the
products being offered and its customer base. The Company is also focusing on broadening its customer base. As disclosed below in Accounts
Receivable and Concentration of Credit Risk, a significant customer did not select the Company as a vendor for 2021.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition
raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications
of liabilities that may result should the Company be unable to continue as a going concern.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
2 – Summary of Significant Accounting Policies
Reclassifications
Certain
reclassifications have been made in the 2019 financial statements to conform to the 2020 presentation. These reclassifications have no
effect on net loss for 2019.
Advertising
The
Company’s policy is to expense advertising costs as incurred. Advertising expense for the year ending December 31, 2020 and 2019
is $30,935 and $50,117, respectively.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include
the carrying amount of inventory and associated reserves, and allowances and reserves in regards to receivables and revenue. Actual results
could differ from those estimates.
Revenue
Recognition
The
Company’s significant accounting policy for revenue was updated as a result of the adoption of ASU Topic 606. The Company has adopted
the new standard on January 1, 2019 and has used the modified retrospective method. The majority of the Company’s business is ship
and bill. Based on our analysis, the Company did not identify a cumulative effect adjustment to retained earnings at December 31, 2018.
The Company recognizes revenue in accordance with the five-step model as prescribed by ASU 606 in which the Company evaluates the transfer
of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that
reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine
revenue recognition for the arrangements that the Company determines are within the scope of ASU 606, the Company performs the following
five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the
transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or
as) the entity satisfies a performance obligation. See Note 12 for revenue disaggregated by product line.
The
Company recognizes revenue from the sale of products when title and risk of loss passes and the customer accepts the goods, which generally
occurs at the time of delivery to a customer warehouse. Customer sales incentives such as volume-based rebates or discounts are treated
as a reduction of sales at the time the sale is recognized. Shipping and handling costs are treated as fulfillment costs and presented
in warehouse and selling expenses.
Payments
that are received before performance obligations are recorded are shown as current liabilities.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments
with original maturities of 90 days or less.
Shipping
Costs
Costs
associated with shipping product to customers aggregating approximately $206,052 and $201,561 for the years ended December 31, 2020 and
2019, respectively, is included in warehouse and selling expenses.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
2 – Summary of Significant Accounting Policies (Continued)
Concentration
of Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its
cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation
limit as of December 31, 2020 and 2019, respectively.
Accounts
Receivable and Concentration of Credit Risk
Accounts
receivable are recorded at the invoiced amounts less an allowance for doubtful accounts. The allowance for doubtful accounts is based
on the Company’s estimate of the amount of probable credit losses in its accounts receivable. The Company determines the allowance
for doubtful accounts based upon an aging of accounts receivable, historical experience and management judgment. Accounts receivable
balances are periodically reviewed for collectability, and balances are charged off against the allowance when the Company determines
that the potential for recovery is remote. An allowance for doubtful accounts of approximately $-0- and $2,125 is reserved as of December
31, 2020 and 2019, respectively.
We
are exposed to credit risk in the normal course of business, primarily related to accounts receivable. To limit credit risk, management
periodically reviews and evaluates the financial condition of its customers and maintains an allowance for doubtful accounts. For the
year ended December 31, 2020, we had one customer who comprised approximately 57% or $617,272 of our contract receivables with recourse
and two customers who comprised approximately 100% or $14,303 of our accounts receivable. For the year ended December 31, 2019, we had
one customer who comprised approximately 86% or $1,453,432 of our contract receivables with recourse and one customer who comprised approximately
57% or $74,544 of our accounts receivable.
For
the year ended December 31, 2020, we had two customers with sales in excess of 10% of our revenue and they represented 77% of our revenue.
For the year ended December 31, 2019, we had two customers with sales in excess of 10% of our revenue and they represented 72% of our
revenue.
One
of these customers had sales of approximately $2,405,000 and $3,887,000 in 2020 and 2019, respectively. Per Note 15, the Company was
not selected as a vendor for 2021 for this customer.
Distribution
Agreements and Supplier Concentration
In
January 2018, the Company entered into a distributor agreement with FoodCare, which was amended and restated on January 30, 2018. FoodCare
is a company organized under the laws of Poland. FoodCare is a manufacturer and supplier of desserts, cereals, energy drinks and other
beverage products. FoodCare manufactures the “Iron Energy” drink, a product sponsored by celebrity Mike Tyson.
Under
the terms of the distribution agreement, the Company became the exclusive distributor of FoodCare products in the United States, Puerto
Rico and the U.S. Virgin Islands. FoodCare is the sole supplier of Iron Energy to the Company. The term of the agreement was for ten
years and gave the Company exclusive rights to distribute FoodCare products within the U.S. market, so long as the Company purchased
the required quantity of product from FoodCare.
The
Company failed to meet its minimum purchases in 2018, due in part to FoodCare’s failure to provide marketing support as promised.
The Company terminated the agreement and relationship with FoodCare in 2020. Sales of Iron Energy were only $33,475 in 2020. The termination
of the “Iron Energy” drink distribution agreement did not significantly affect the company or its revenue, as the Company
has found greater success with the distribution of chocolate and snack products instead of beverages.
At
the beginning of 2019, the Company established relationships with other European manufacturers that can manufacture a wide range of “panned”
products such as nuts, raisin, pretzels, fruits and many other “panned” and healthy snacks items, as well as chocolate bars,
multi-flavor truffles, sticks, chocolate cups, 5-bites, chocolate covered gummies, chocolate Easter eggs, custom Christmas chocolate
figures as well as Advent calendars and many other products to support demand from the Company’s national retailers.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
2 – Summary of Significant Accounting Policies (Continued)
Vendor
Concentration
Currently,
the Company is sourcing all its chocolate products and snacks from the Millano Group, a related party. The Company has not entered into
a distributor agreement but is currently negotiating an agreement with Millano Group. The Company, due to relationships with other European
manufacturers could find other sources to replace its chocolate and snack products if the Company were to terminate Millano Group as
its suppler for chocolate products. Total purchases in 2020 and 2019 were approximately $3,961,711 and $5,102,224, respectively which
represents 100% and 99% of product purchases, respectively.
Income
Taxes
Under
ASC 740, Income Taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. 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 be recovered or settled. Valuation allowances are established when it is more
likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2020 and 2019, there were no
net deferred tax assets, as the Company established a 100% valuation allowance, due to the uncertainty of the realization of net
operating loss carryforwards prior to their expiration.
Loss
Per Common Share
Basic
loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding
during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the
loss of the entity. As of December 31, 2020 and 2019, there are no outstanding dilutive securities.
Fair
Value of Financial Instruments
The
Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value
measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally,
the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value
in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level
3 measurements). The three levels of the fair value hierarchy are as follows:
Level
1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access
at the measurement date.
Level
2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level
3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their
fair values because of the short maturity of these instruments.
The
carrying amounts of the Company’s financial instruments, which include cash and cash equivalents and accounts payable approximate
their fair values at December 31, 2020 and 2019 due to their short-term nature and management’s belief that their carrying amounts
approximate the amount for which the assets could be sold or the liabilities could be settled.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
2 – Summary of Significant Accounting Policies (Continued)
Share-Based
Compensation
The
Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50,
Equity–Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the
fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair
value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
In June 2018, the Financial Accounting Standards Board adopted Accounting Standards Update 2018-07 Compensation – Stock
Compensation
(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. In that update, ASC 505 has been rescinded in its entirety and
share based compensation issued to nonemployees will now fall under ASC 718 and its associated fair value measurements. Due to the Emerging
Growth Company (see below) status of the Company, the Company has adopted the update on January 1, 2020.
Emerging
Growth Company
The
Company has elected to be an emerging growth company as defined under the Jumpstart Our Business Startups Act of 2012 (“Jobs Act”).
Included with this election, the Company has also elected to use the provisions within the Jobs Act that allow companies that go public
to continue to use the private company adoption date rules for new accounting policies. Should the Company obtain revenues in excess
of $1 billion on an annual basis, have its non-affiliated market capitalization increase to over $700 million as of the last day of its
second quarter, or raise in excess of $1 billion in public offerings of its equity or instruments directly convertible into its equity,
it will forfeit its status under the Jobs Act as an emerging growth company.
Recent
Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in ASU 2016-02 provides guidance in GAAP about the
recognition of assets and liabilities by lessees for those leases classified as operating leases under GAAP. The guidance requires that
a lessee should recognize in the statement of financial position a liability to make lease payments and a right-to-use asset representing
the company’s right to use the underlying assets for the term of the lease. The guidance allows a lessee who enter into a lease
with a term of 12 months or less to make an accounting policy election to not recognize assets and liabilities.
In
January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment. The update simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual
or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment
charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update also
eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if
it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative
assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update should be applied on a prospective
basis. The provisions of ASU 2017-04 are effective for the fiscal years beginning after December 15, 2019. Early adoption is permitted.
The Company has elected this accounting guidance as of January 1, 2020. It has had no effect on the Company’s financial statements.
On
June 20, 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share based payments granted to nonemployees for goods
and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based
payments granted to employees. For emerging growth companies, the amendments in ASU 2018-07 are effective for fiscal years beginning
after December 15, 2018. The Company is in the process of reviewing the potential impact of ASU 2018-07.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
3 – Inventory
Finished
Goods inventory consist of “Iron Energy” energy drinks, chocolates, and related products imported from Poland and is stated
at the lower of actual cost (first-in, first-out method) or net realizable value. Inventory cost includes all freight (ocean, air and
truck) costs to the warehouse, import duties, regulatory and miscellaneous fees. Inventory is as follows:
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Finished goods – in transit to warehouse
|
|
$
|
-
|
|
|
$
|
399,043
|
|
Finished goods – in warehouse
|
|
|
550,657
|
|
|
|
211,604
|
|
Finished goods - consignment
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
550,657
|
|
|
$
|
610,647
|
|
During
2019, the Company removed beverage product totaling approximately $245,000 from inventory due to reaching the end of its shelf life and
became unsaleable. A proprietary label problem on some chocolate products of approximately $207,900 was identified and removed from inventory
as the product was unsaleable. The labeling problem was corrected for future products.
Note
4 – Prepaid Expenses
Prepaid
inventory
The
Company’s foreign suppliers will generally require that the Company pay in advance of an inventory shipment to it from Europe.
The Company’s current agreement with FoodCare includes provisions in which title for the inventory passes upon FoodCare loading
the product onto truck transport for delivery to the seaport in Poland. Amounts transferred to the Company’s suppliers to secure
future delivery, but prior to transfer of title of those shipments, are recorded as prepaid inventory and are included in prepaid expenses
and other current assets.
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Prepaid services
|
|
$
|
5,524
|
|
|
$
|
1,049
|
|
Prepaid Rent
|
|
|
-
|
|
|
|
4,655
|
|
Prepaid inventory
|
|
|
-
|
|
|
|
50,310
|
|
|
|
$
|
5,524
|
|
|
$
|
56,014
|
|
Note
5 – Notes Payable Other
On
February 6, 2019 the Company issued a promissory note in the amount of $150,000, bearing interest at 4 percent monthly or the equivalent
of 48 percent per annum rate. The note was repaid in full June 2019. The Company issued to the lender 26,965 shares of the Company’s
common stock value at $20,224 lieu of a cash payment of interest. The shares were valued at $0.75 per share, being the last price at
which shares had been sold.
On
February 22, 2019, the Company entered into a promissory note in the amount of $215,000. The note matured on December 31, 2019 and can
be converted in shares of the Company’s common stock at $0.75 per share during the term of the note. The Company agreed to issue
to the lender 150,000 shares of the Company’s common stock on or before December 31, 2019 as a one-time consideration for making
the loan in lieu of a cash payment of interest. The common stock issuable under the term of the promissory note was valued at $112,500
with an effective interest rate of 88.5% and was amortized over the term of the note. Through December 31, 2019 approximately $112,500
has been amortized and recorded as Interest Expense. The lender in 2020 converted the promissory note into 286,667 shares of the Company’s
common stock at the conversion price of $0.75 per share.
On
March 11, 2019, the Company issued a promissory note in the amount of $65,000. The note accrued interest at 5% every 45 days on the unpaid
principal balance or the equivalent of 40.6% per annum rate. The promissory note was repaid in full on June 11, 2019. The Company issued
to the lender 10,000 shares of the Company’s common stock valued at $7,500 in lieu of a cash payment of interest.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
5 – Notes Payable Other (Continued)
Under
the Small Business Administration (“SBA”), the Company applied for the Paycheck Protection Program (“PPP”) loan.
These loans are forgiven if used for payroll, payroll benefits, including health insurance and retirement plans, as well as certain rent
payments, leases, and utility payments, which are limited to 40% of the loan proceeds, all of which if paid within either 8 weeks or
24 weeks of the receipt of the loan proceeds. At the time of this filing, we anticipate a significant amount of this loan will be forgiven;
however, the forgiveness application process is not yet complete. The Company has elected to record these advances under the debt treatment
for these loans, under GAAP guidance. Unforgiven portions of these loans will be repaid over 5 years, accruing interest at 1% per annum.
The PPP loan has a loan balance of $56,250 as December 31, 2020.
Note
6 – Contract Receivables Liability with Recourse
On
February 21, 2019, the Company entered into a factoring agreement with Advance Business Capital d/b/a Interstate Capital for a term of
one year. On September 11, 2019, the lender (now doing business as Triumph Business Capital), entered into an amended agreement with
the Company which lowered the interest rate charged by the lender from 0.49% for every 10 days to Prime
Rate (floor of 5.5%) plus 3%. As of December 31, 2020 and 2019 the Company owes $649,502 and $1,414,639, respectively for advances
on their receivables. The Company bears all credit risk related to the receivables factored. The Company has given a security interest
in substantially all of its assets and the president of the Company, a major shareholder, have guaranteed the debt.
Note
7 – Long Term Debt
On
August 27, 2020 the Company received an Economic Injury Disaster Loan (EIDL) from the U.S. Small Business Administration SBA) in the
amount of $150,000. The interest rate is 3.75% with payments of $731 beginning twelve month from the date of the loan. Interest is accrued
monthly and payments are first applied to interest accrued to the date of receipt of payment and the balance, if any, will be applied
to the principal. The balance of principal and interest is due 8/27/2050. As of December 31, 2020 the Company owes $149,900.
The
maturity of the EIDL loan as of December 31, 2020 is as follows:
2021
|
|
$
|
-
|
|
2022
|
|
|
-
|
|
2023
|
|
|
2,181
|
|
2024
|
|
|
3,285
|
|
2025
|
|
|
3,410
|
|
Thereafter
|
|
|
141,024
|
|
|
|
$
|
149,900
|
|
Note
8 – Stockholders’ Equity
The
Board of Directors is authorized to issue preferred stock by series that will establish the number of shares to be included and fix the
designation, powers, preferences and rights of the shares each such series and the qualifications, limitations or restrictions thereof.
At December 31, 2020, the Company has not established any series of preferred stock.
The
Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.
From
January 1 to December 31, 2019 the Company issued 203,000 shares of common stock in consideration of cash proceeds of $152,250. The Company
also issued 29,997 shares of common stock for services rendered with a value of $22,497 and issued 186,965 shares valued at $140,223
in lieu of a cash payment of interest.
During
2019, the Company redeemed 250,000 shares of common stock for $25,000 from two of the original founders of the Company. These shares
were cancelled and restored to the status of authorized but unissued shares of common stock.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
8 – Stockholders’ Equity (Continued)
From
January 1 to December 31, 2020 the Company issued 60,000 shares of common stock in consideration of cash proceeds of $45,000. The Company
also issued 286,667 shares of common stock for conversion of promissory note with a value of $215,000.
At
December 31, 2020, the Company has no outstanding options or warrants.
Note
9 –Related Party Transactions
During
2018, two significant shareholders of the Company advanced the Company $157,059. The advance was evidenced by two individual notes totaling
$155,000 which were due on or before August 1, 2019 and a payable of $2,059. The two notes have a fixed interest fee of $1,000 for each
of the notes. One shareholder was repaid in June 2019 on his promissory note and accrued interest, which totaled $61,000. In December
2019 that shareholder paid $6,276 of Company expenses and $14,726 of Company liabilities. In January 2020 the Company reimbursed the
shareholder these amounts.
The
due date for the second shareholder note was extended to be due on or before August 1, 2020, and as of December 31, 2019, $78,000 has
been repaid leaving an outstanding loan balance of $17,000 and a payable of $4,370. Unpaid interest of $1,000 has been accrued as of
December 31, 2019 for the remaining balance of the promissory note. The Company repaid the remaining principal and accrued interest in
February 2020 and paid $2,311 of the outstanding payable in March 2020. At December 31, 2020 the related party balances were as follows:
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
-
|
|
|
$
|
18,000
|
|
Accounts payable
|
|
|
-
|
|
|
|
25,370
|
|
Total related party
|
|
$
|
-
|
|
|
$
|
43,370
|
|
During
the year ended December 31, 2020, one of the significant shareholders paid certain expenses on behalf of the Company from time to time.
These amounts were repaid during the year and no amount was owed to the shareholder at December 31, 2020.
The
Company is purchasing all of its chocolate products from Millano Group, a related party (controlled by the father of a major shareholder),
and owed $783,417 and $546,612 at December 31, 2020 and 2019, respectively. The balance is reflected in accounts payable related party.
Note
10 – Income Taxes
The
Company follows the guidance of FASB ASC 740-10 which relates to the Accounting for Uncertainty in Income Taxes, which seeks to
reduce the diversity in practice associated with the accounting and reporting for uncertainty in income tax positions. This interpretation
prescribes a comprehensive model for financial statement recognition, measurement, presentation and disclosure of uncertain tax positions
taken or expected to be taken in income tax returns.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
10 – Income Taxes (Continued)
Significant
components of the Company’s deferred tax assets were as follows for the year ended December 31, 2020 and 2019:
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
$
|
321,981
|
|
|
$
|
214,359
|
|
Total deferred tax assets
|
|
$
|
321,981
|
|
|
$
|
214,359
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets (liabilities)
|
|
|
321,981
|
|
|
|
214,359
|
|
Less valuation allowance
|
|
|
(321,981
|
)
|
|
|
(214,359
|
)
|
Net deferred tax assets (liabilities)
|
|
$
|
-
|
|
|
$
|
-
|
|
At
December 31, 2020 the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $1,264,558.
The federal and state net operating loss carryforwards will expire beginning in 2037. The income tax expense (benefit) consisted of the
following for the years ended December 31, 2020 and 2019:
|
|
|
2020
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
$
|
-
|
|
|
$
|
-
|
|
Total deferred
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The following is a reconciliation of the expected statutory federal
income tax provision (21 percent) to the actual income tax benefit for the years ended December 31, 2020 and 2019:
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Federal statutory rate (benefit)
|
|
$
|
(80,000
|
)
|
|
$
|
(147,000
|
)
|
State tax (benefit), net of federal benefits
|
|
|
(28,000
|
)
|
|
|
(53,000
|
)
|
Permanent differences
|
|
|
-
|
|
|
|
-
|
|
Change in valuation allowance
|
|
|
108,000
|
|
|
|
200,000
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Under
ASC 740, Income Taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the
deferred tax assets will not be realized. As of December 31, 2020 and 2019, there were no deferred taxes due to the uncertainty of the
realization of net operating loss or carry forward prior to expiration.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
11– Office Lease
On
February 4, 2019, the Company entered into a sublease for office space located in Bannockburn, Illinois, with an unrelated third party.
The sublease terminates on May 31, 2022. The sublease requires annual rent of $55,860 for the first year of the sublease, $57,536 for
the second year, $59,262 for the third year, and $61,040 for the last year. Rent for the years ending December 31, 2020 and 2019 was
$53,031 and $52,256, respectively. The Company also paid a security deposit of $9,310, which is reflected in Other Assets - Deposits
As of December 31, 2020, our right of use asset and related liability was $74,721 and $72,073, respectively.
In
determining the present value of our operating lease right-of-use asset and liability, we used a discount rate of 5% (which approximates
our borrowing rate). The remaining term on the lease is 1.42 years.
The
annual rent per the sublease is as follows:
2021
|
|
$
|
59,107
|
|
2022
|
|
|
15,110
|
|
|
|
$
|
74,217
|
|
Note
12– Revenue
During
the year ended December 31, 2020, the Company had two customers whose sales accounted for approximately 77% of revenue.
The
following table presents revenues by product line for the years ended December 31:
|
|
2020
|
|
|
2019
|
|
Chocolate
|
|
$
|
5,581,645
|
|
|
$
|
6,570,709
|
|
Energy drinks
|
|
$
|
119
|
|
|
$
|
108,081
|
|
Totals
|
|
$
|
5,581,764
|
|
|
$
|
6,678,790
|
|
Note
13– Commitments and Contingencies
The
Company’s operations are subject to the Federal Food, Drug and Cosmetic Act; the Bioterrorism Act; and regulations created by the
U.S. Food and Drug Administration (“FDA”). The FDA regulates manufacturing and holding requirements for foods, specifies
the standards of identity for certain foods and prescribes the format and content of certain information that must appear on food product
labels. In addition, the published applicable rules under the Food Safety Modernization Act (“FSMA”) regulates food products
imported into the United States and provides the FDA with mandatory recall authority.
For
the purchase of products harvested or manufactured outside the United States, and for the shipment of products to customers located outside
of the United States, the Company is subject to customs laws regarding the import and export of shipments. The Company’s activities,
including working with customs brokers and freight forwarders, are subject to regulation by U.S. Customs and Border Protection, part
of the Homeland Security.
On
June 17, 2019, The Scale Effect Company d/b/a Mant Logistics filed an amended complaint in the United States District Court for the Northern
District of Illinois naming as defendants the Company, Baron Chocolatier, Inc. and two significant shareholders of the Company. The action
was originally against Baron Chocolatier only, alleging that Baron did not pay for shipping and logistics services in the amount of $277,233,
plus accrued interest. The complaint was amended to allege that the Company is a successor corporation and continuation of Baron Chocolatier,
thereby making the Company liable for the debts and liabilities of Baron, and that Baron is an alter ego for the Company and the Company’s
two significant shareholders. No trial date has been scheduled. The parties are still in the discovery stage, as the pandemic and a reassignment
of the case to a new judge caused delays. The Company intends to vigorously defend in this lawsuit.
VERONI
BRANDS CORP.
Notes
to Financial Statements
December
31, 2020 and 2019 (Restated)
Note
13– Commitments and Contingencies (Continued)
In
March 2021, Crossmark Inc. initial a lawsuit in the Circuit Court of Cook County, Illinois, against the Company, seeking to collect payment
for services rendered. The Company had entered into an agreement with Crossmark to promote the sale of the Iron Energy products which
the Company had distributed. Crossmark alleges that $100,000 plus costs and attorneys’ fees are owed by the Company. The default
judgment entered in this case has been vacated and the Company intends to defend in this lawsuit. The Company has accrued $100,000 in
2019 as a reserve for this liability.
Note
14 – Explanation of our Restatement
The
Company restating its Annual Report for the Annual period ended December 31, 2019, which was filed with the Securities and Exchange Commission
(“SEC”) on April 14, 2020 (the “Original Report”). The financial statements contained in our Annual Report on
Form 10-K for the year ended December 31, 2019 require restatement in order to correct the presentation of a note payable that was incorrectly
classified as equity, record the right-of-use asset to comply with ASC 842 and accrue $100,000 for the Crossmark lawsuit to comply with
ASC 450 as stated in Note 13. The changes in our consolidated financial statements are summarized, below.
Veroni
Brands Corp.
BALANCE
SHEETS
December
31, 2019
|
|
As Originally Reported
|
|
|
Adjusted
|
|
|
As Restated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & equivalents
|
|
$
|
99,010
|
|
|
$
|
-
|
|
|
$
|
99,010
|
|
Accounts Receivable, net allowance for doubtful accounts of $0 and $2,125
respectively
|
|
|
129,565
|
|
|
|
|
|
|
|
129,565
|
|
Contract Receivables with recourse
|
|
|
1,554,510
|
|
|
|
|
|
|
|
1,554,510
|
|
Inventory
|
|
|
610,647
|
|
|
|
|
|
|
|
610,647
|
|
Prepaid expenses and other current assets
|
|
|
56,014
|
|
|
|
|
|
|
|
56,014
|
|
Total Current Assets
|
|
|
2,449,746
|
|
|
|
-
|
|
|
|
2,449,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
9,310
|
|
|
|
|
|
|
|
9,310
|
|
Right-of-use asset-operating, net
|
|
|
0
|
|
|
|
122,856
|
|
|
|
122,856
|
|
Total Other Assets
|
|
|
9,310
|
|
|
|
122,856
|
|
|
|
132,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
2,459,056
|
|
|
$
|
122,856
|
|
|
$
|
2,581,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
184,561
|
|
|
$
|
-
|
|
|
$
|
184,561
|
|
Accounts payable related party
|
|
|
546,612
|
|
|
|
|
|
|
|
546,612
|
|
Notes payable
|
|
|
-
|
|
|
|
215,000
|
|
|
|
215,000
|
|
Notes payable - related parties including interest
|
|
|
43,370
|
|
|
|
|
|
|
|
43,370
|
|
Contract receivables liability with recourse
|
|
|
1,414,639
|
|
|
|
|
|
|
|
1,414,639
|
|
Accrued liabilities
|
|
|
114,816
|
|
|
|
100,000
|
|
|
|
214,816
|
|
Contract liabilities
|
|
|
143,033
|
|
|
|
|
|
|
|
143,033
|
|
Short-Term lease liability-operating
|
|
|
-
|
|
|
|
52,499
|
|
|
|
52,499
|
|
Total Current Liabilities
|
|
|
2,447,031
|
|
|
|
367,499
|
|
|
|
2,814,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Rent
|
|
|
1,716
|
|
|
|
(1,716
|
)
|
|
|
|
|
Economic injury disaster loan (EIDL)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Long-Term lease liability-operating
|
|
|
-
|
|
|
|
72,073
|
|
|
|
72,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Liabilities
|
|
|
1,716
|
|
|
|
70,357
|
|
|
|
72,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
2,448,747
|
|
|
|
437,856
|
|
|
|
2,886,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value; 20,000,000 shares authorized; none outstanding as of December 31, 2020 and 2019
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Common Stock, $0.0001 par value; 100,000,000 shares authorized; 27,085,029 and 26,738,362 shares issued and outstanding as of
December 31, 2020 and 2019, respectively
|
|
|
2,703
|
|
|
|
(29
|
)
|
|
|
2,674
|
|
Additional paid-in capital
|
|
|
914,606
|
|
|
|
(214,971
|
)
|
|
|
699,635
|
|
ACCUMULATED DEFICIT
|
|
|
(907,000
|
)
|
|
|
(100,000
|
)
|
|
|
(1,007,000
|
)
|
Total Stockholders’ Deficit
|
|
|
10,309
|
|
|
|
(315,000
|
)
|
|
|
(304,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
2,459,056
|
|
|
$
|
122,856
|
|
|
$
|
2,581,912
|
|
The
accompanying notes are an integral part of these financial statements
Veroni
Brands Corp.
STATEMENTS
OF OPERATIONS
For
the year ended December 31, 2019
|
|
As Originally Reported
|
|
|
Adjusted
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
6,678,790
|
|
|
$
|
-
|
|
|
$
|
6,678,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, related party
|
|
|
5,197,938
|
|
|
|
|
|
|
|
5,197,938
|
|
Cost of sales
|
|
|
620,500
|
|
|
|
|
|
|
|
620,500
|
|
Total cost of sales
|
|
|
5,818,438
|
|
|
|
-
|
|
|
|
5,818,438
|
|
Gross profit
|
|
|
860,352
|
|
|
|
-
|
|
|
|
860,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse and selling expenses
|
|
|
646,249
|
|
|
|
|
|
|
|
646,249
|
|
General and administrative expenses
|
|
|
673,557
|
|
|
|
100,000
|
|
|
|
773,557
|
|
Total operating expenses
|
|
|
1,319,806
|
|
|
|
100,000
|
|
|
|
1,419,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
|
(459,454
|
)
|
|
|
(100,000
|
)
|
|
|
(559,454
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
140,359
|
|
|
|
|
|
|
|
140,359
|
|
Interest expense - related party
|
|
|
1,000
|
|
|
|
|
|
|
|
1,000
|
|
Total interest expense
|
|
|
141,359
|
|
|
|
-
|
|
|
|
141,359
|
|
Loss before income taxes
|
|
|
(600,813
|
)
|
|
|
(100,000
|
)
|
|
|
(700,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(600,813
|
)
|
|
$
|
(100,000
|
)
|
|
$
|
(700,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
1.66
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
26,799,927
|
|
|
|
(60,074
|
)
|
|
|
26,739,853
|
|
The
accompanying notes are an integral part of these financial statements
Veroni
Brands Corp.
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
December
31, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
26,568,400
|
|
|
$
|
2,656
|
|
|
$
|
409,683
|
|
|
$
|
(306,187
|
)
|
|
$
|
106,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
|
-
|
|
|
|
-
|
|
|
|
29,997
|
|
|
|
3
|
|
|
|
22,494
|
|
|
|
|
|
|
|
22,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
203,000
|
|
|
|
21
|
|
|
|
152,229
|
|
|
|
-
|
|
|
|
152,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, in lieu of interest
|
|
|
-
|
|
|
|
-
|
|
|
|
186,965
|
|
|
|
18
|
|
|
|
140,205
|
|
|
|
-
|
|
|
|
140,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of promissary note to common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
286,667
|
|
|
|
29
|
|
|
|
214,971
|
|
|
|
|
|
|
|
215,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption and cancellation of shares
|
|
|
-
|
|
|
|
-
|
|
|
|
(125,000
|
)
|
|
|
(12
|
)
|
|
|
(24,988
|
)
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of shares
|
|
|
-
|
|
|
|
-
|
|
|
|
(125,000
|
)
|
|
|
(12
|
)
|
|
|
12
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(700,813
|
)
|
|
|
(700,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31 2019 (Original)
|
|
|
-
|
|
|
|
-
|
|
|
|
27,025,029
|
|
|
|
2,703
|
|
|
|
914,606
|
|
|
|
(1,007,000
|
)
|
|
|
(89,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse conversion of promissory note to common
stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(286,667
|
)
|
|
|
(29
|
)
|
|
|
(214,971
|
)
|
|
|
-
|
|
|
|
(215,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 (Restated)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
26,738,362
|
|
|
$
|
2,674
|
|
|
$
|
699,635
|
|
|
$
|
(1,007,000
|
)
|
|
$
|
(304,691
|
)
|
The
accompanying notes are an integral part of these financial statements
Veroni
Brands Corp.
STATEMENTS
OF CASH FLOW
December
31, 2019
|
|
As Originally Reported
|
|
|
Adjusted
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(600,813
|
)
|
|
$
|
(100,000
|
)
|
|
$
|
(700,813
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for service
|
|
|
22,496
|
|
|
|
|
|
|
|
22,496
|
|
Amortization of debt discount
|
|
|
140,224
|
|
|
|
(27,724
|
)
|
|
|
112,500
|
|
Expenses paid by shareholder
|
|
|
11,586
|
|
|
|
(11,586
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
(108,582
|
)
|
|
|
|
|
|
|
(108,582
|
)
|
Allowance for doubtful accounts
|
|
|
(7,823
|
)
|
|
|
|
|
|
|
(7,823
|
)
|
Contract Receivables
|
|
|
(1,554,510
|
)
|
|
|
|
|
|
|
(1,554,510
|
)
|
Prepaid expenses and other current assets
|
|
|
50,303
|
|
|
|
|
|
|
|
50,303
|
|
Inventory
|
|
|
(402,278
|
)
|
|
|
|
|
|
|
(402,278
|
)
|
Deposits
|
|
|
(9,310
|
)
|
|
|
|
|
|
|
(9,310
|
)
|
Accounts payable
|
|
|
155,574
|
|
|
|
(14,593
|
)
|
|
|
140,981
|
|
Accounts payable related party
|
|
|
546,612
|
|
|
|
|
|
|
|
546,612
|
|
Accrued liabilities
|
|
|
65,894
|
|
|
|
100,001
|
|
|
|
165,895
|
|
Contract liabilities
|
|
|
143,033
|
|
|
|
|
|
|
|
143,033
|
|
ROU asset/liability
|
|
|
1,716
|
|
|
|
|
|
|
|
1,716
|
|
Net cash used in operating activities
|
|
|
(1,545,878
|
)
|
|
|
(53,902
|
)
|
|
|
(1,599,780
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of shareholders loans
|
|
|
(140,000
|
)
|
|
|
-
|
|
|
|
(140,000
|
)
|
Repayment of notes payable
|
|
|
(65,000
|
)
|
|
|
(150,000
|
)
|
|
|
(215,000
|
)
|
Proceeds from issuance of notes payable
|
|
|
280,000
|
|
|
|
203,902
|
|
|
|
483,902
|
|
Proceeds from issuance of common stock
|
|
|
152,250
|
|
|
|
-
|
|
|
|
152,250
|
|
Proceeds from (repayment of) contract receivables with recourse
|
|
|
1,414,639
|
|
|
|
-
|
|
|
|
1,414,639
|
|
Net cash provided by financing activities
|
|
|
1,641,889
|
|
|
|
53,902
|
|
|
|
1,695,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
96,011
|
|
|
|
|
|
|
|
96,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at the beginning of the year
|
|
|
2,999
|
|
|
|
|
|
|
|
2,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at the end of the year
|
|
$
|
99,010
|
|
|
$
|
-
|
|
|
$
|
99,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,000
|
|
|
$
|
-
|
|
|
$
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of promissory note debt discount
|
|
$
|
112,500
|
|
|
$
|
-
|
|
|
$
|
112,500
|
|
Redemption and cancellation of shares
|
|
$
|
25,000
|
|
|
$
|
-
|
|
|
$
|
25,000
|
|
Interest converted to common stock
|
|
$
|
27,591
|
|
|
$
|
-
|
|
|
$
|
27,591
|
|
Adoption of ASC 842
|
|
$
|
169,655
|
|
|
$
|
-
|
|
|
$
|
169,655
|
|
The
accompanying notes are an integral part of these financial statements
Note
15 – Subsequent Events
In
February 2021, the Company entered into a consulting agreement with a firm to provide strategic business planning services for a period
of six months in consideration for the issuance of 27,000 restricted shares of common stock.
In
April 2021, the Company received a letter from one of its significant customers stating that the Company was not selected as a vendor
for 2021.
In
June 2021, the Company entered into storage and procurement distribution agreement with a transportation company to store the chocolate
products, as well as fulfill the purchase orders from the Company’s customers. The agreement is for a term of two years from the
date of first inbound receipt and may be terminated at the option of the Company upon 60 days’ notice.