Item
1. Financial Statements.
Our
unaudited financial statements are stated in United States dollars and are prepared in accordance with United States generally
accepted accounting principles.
It
is the opinion of management that the unaudited interim financial statements for the quarter ended September 30, 2017 include
all adjustments necessary in order to ensure that the unaudited interim financial statements are not misleading.
AppCoin
Innovations Inc. (formerly RedStone Literary Agents, Inc.)
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
September
30, 2017
|
|
|
December
31, 2016
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
195,011
|
|
|
$
|
56,050
|
|
Total Current Assets
|
|
|
195,011
|
|
|
|
56,050
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
195,011
|
|
|
$
|
56,050
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued expenses
|
|
$
|
10,140
|
|
|
$
|
49,013
|
|
Unsecured loan
payable
|
|
|
250,000
|
|
|
|
-
|
|
Total Current Liabilities
|
|
|
260,140
|
|
|
|
49,013
|
|
|
|
|
|
|
|
|
|
|
Non-Current Liabilities
|
|
|
|
|
|
|
|
|
Convertible notes
payable
|
|
|
214,799
|
|
|
|
163,270
|
|
Total Liabilities
|
|
|
474,939
|
|
|
|
212,283
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Deficit
|
|
|
|
|
|
|
|
|
Common stock, $0.001
par value, 75,000,000 shares authorized; 6,000,000 shares issued and outstanding:
|
|
|
6,000
|
|
|
|
6,000
|
|
Additional paid-in-capital
|
|
|
63,717
|
|
|
|
63,717
|
|
Accumulated deficit
|
|
|
(349,645
|
)
|
|
|
(225,950
|
)
|
Total
Stockholders’ Deficit
|
|
|
(279,928
|
)
|
|
|
(156,233
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Stockholders’ Deficit
|
|
$
|
195,011
|
|
|
$
|
56,050
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
AppCoin
Innovations Inc. (formerly RedStone Literary Agents, Inc.)
Condensed
Consolidated Statement of Operations
(Unaudited)
|
|
Three
Months
Ended
September 30,
2017
|
|
|
Three
Months
Ended
September 30,
2016
|
|
|
Nine
Months
Ended
September 30,
2017
|
|
|
Nine
Months
Ended
September 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note interest
and bank charges
|
|
|
6,100
|
|
|
|
3,447
|
|
|
|
21,539
|
|
|
|
10,036
|
|
Consulting fees
|
|
|
56,500
|
|
|
|
2,750
|
|
|
|
77,900
|
|
|
|
8,200
|
|
Professional fees
|
|
|
8,450
|
|
|
|
5,409
|
|
|
|
20,234
|
|
|
|
11,282
|
|
Filing
and transfer fees
|
|
|
2,062
|
|
|
|
770
|
|
|
|
4,022
|
|
|
|
4,238
|
|
Total general and administrative
expenses
|
|
|
73,112
|
|
|
|
12,376
|
|
|
|
123,695
|
|
|
|
33,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
|
(73,112
|
)
|
|
|
(12,376
|
)
|
|
|
(123,695
|
)
|
|
|
(33,756
|
))
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(73,112
|
)
|
|
$
|
(12,376
|
)
|
|
|
(123,695
|
)
|
|
|
(33,756
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share – Basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)*
|
|
|
(0.02
|
)
|
|
|
(0.00
|
)*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding, basic and diluted
|
|
|
6,000,000
|
|
|
|
6,000,000
|
|
|
|
6,000,000
|
|
|
|
6,000,000
|
|
*
Denotes a loss of less than $(0.01) per share.
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
AppCoin
Innovations Inc. (formerly RedStone Literary Agents, Inc.)
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
Nine
Months Ended
September 30, 2017
|
|
|
Nine
Months Ended
September 30, 2016
|
|
Cash derived from
(used for)
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
$
|
(123,695
|
)
|
|
$
|
(33,756
|
)
|
Adjustments to reconcile
net loss to net cash provided by (used in) operating activities
|
|
|
-
|
|
|
|
-
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
|
Accrued interest
included in convertible notes payable
|
|
|
21,529
|
|
|
|
10,036
|
|
Accounts
payable and accrued expenses
|
|
|
(38,873
|
)
|
|
|
(1,380
|
)
|
Net cash (used
in) operating activities
|
|
|
(141,039
|
)
|
|
|
(25,100
|
)
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
-
|
|
|
|
-
|
|
Net cash provided
by (used in) investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of convertible notes payable
|
|
|
30,000
|
|
|
|
20,000
|
|
Proceeds
from unsecured loan payable
|
|
|
250,000
|
|
|
|
-
|
|
Net cash provided
by financing activities
|
|
|
280,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
Net changes in cash and equivalents
|
|
|
138,961
|
|
|
|
(5,100
|
)
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at beginning of
the year
|
|
|
56,050
|
|
|
|
13,870
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
at end of the year
|
|
$
|
195,011
|
|
|
$
|
8,770
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash
paid in interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
AppCoin
Innovations Inc. (formerly RedStone Literary Agents, Inc.)
Notes
to Condensed Unaudited Consolidated Financial Statements
As
of September 30, 2017 and for the nine months ended September 30, 2017 and 2016
1.
NATURE AND CONTINUANCE OF OPERATIONS
AppCoin
Innovations Inc. (formerly RedStone Literary Agents, Inc.)(the “Company”) was incorporated under the laws of State
of Nevada, U.S. on July 20, 2010, with an authorized capital of 75,000,000 common shares, having a par value of $0.001 per share.
During the period ended December 31, 2010, the Company commenced operations by issuing shares and developing its publishing service
business, focused on representing authors to publishers.
In
November 2014, Ms. Wolf resigned as a director of the Company and the Company ceased pursuing the publishing service business.
On
August 1, 2017, the Company incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc., which will be used to operate the
Company’s new business of providing services for blockchain initial coin offerings.
On
August 17, 2017, the Company, Redstone Literary Agents, Inc., completed a merger with its wholly owned subsidiary AppCoin Innovations
Inc., a Nevada corporation to effect a change in the Company’s name from “RedStone Literary Agents, Inc.” to
“AppCoin Innovations Inc.”.
The
Company’s new business is a services and development business that provides a turnkey set of services for companies to develop
and integrate blockchain and cryptocurrency technologies with a view to conducting initial coin offerings. The Company will enable
its customers to focus on their core competencies while providing the necessary resources and expertise to execute a strategy
that will enable companies to integrate new blockchain plus cryptocurrency technologies and execute initial coin offerings. The
Company’s plan is to be partially compensated by these companies by receiving tokens or coins in the initial coin offerings.
This will allow the Company’s shareholders to indirectly participate in multiple initial coin offerings without having to
open new accounts or electronic wallets with cryptocurrency exchanges.
The
Company’s services will include strategic planning, project planning, structure development and administration, campaign
management, business plan modelling, technology development support, whitepaper preparation, due diligence reporting, escrow management,
governance planning and management.
Going
Concern
These
consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize
its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred
losses since inception resulting in an accumulated deficit of $348,973 as at September 30, 2017 and further losses are anticipated
in the pursuit of the Company’s new service business opportunity, raising substantial doubt about the Company’s ability
to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable
operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from
normal business operations when they come due. Management intends to finance operating costs over the next twelve months with
existing cash on hand, loans from directors and/or the private placement of common stock.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles
(“
U.S. GAAP
”) in the United States of America and are presented in US dollars.
Unaudited
Interim Financial Information
The
accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with U.S.
GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission
(the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for complete consolidated financial statements. The unaudited interim consolidated financial
statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily
indicative of the results for the full fiscal year. These unaudited interim consolidated financial statements should be read in
conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto contained in the
information as part of the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 23, 2017.
Income
Taxes
The
Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities
are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values
and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date.
At
September 30, 2017, a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.
Earnings
per Share
The
Company computes loss per share in accordance with ASC 105, “Earnings per Share” which requires presentation of both
basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing
net loss available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted
loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes
all potential common shares if their effect is anti-dilutive.
With
the exception of the convertible notes payable discussed in Note 3, the Company had no potentially dilutive debt or equity instruments
issued or outstanding during the interim three-month periods ended September 30, 2017 and 2016.
3.
NOTES PAYABLE
On
September 14, 2015, the Company entered into a private placement subscription agreement and issued an unsecured convertible note
(the “
First Note
”) in the principal amount of $73,825 to one subscriber. The First Note, and accrued interest,
will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded
annually. The principal amount of the First Note, plus any interest accrued thereon, may be converted into shares of common stock
of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the First Note had a balance outstanding of
$103,463, comprised of a principle amount of $73,825 and accrued interest of $27,160. The Company has determined that no beneficial
conversion feature exists due to the current share value on the date of issuance.
On
December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note
(the “
Second Note
”) in the principal amount of $50,000 to one subscriber. The Second Note, and accrued interest,
will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded
annually. The principal amount of the Second Note, plus any interest accrued thereon, may be converted into shares of common stock
of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the Second Note had a balance outstanding of
$56,756, comprised of a principle amount of $50,000 and accrued interest of $6,756. The Company has determined that no beneficial
conversion feature exists due to the current share value on the date of issuance.
On
December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note
(the “
Third Note
”) in the principal amount of $21,500 to one subscriber. The Third Note included repayment
of the principal amount of $20,000 for an unsecured note issued on June 6, 2016 plus a $1,500 restructuring fee. The Third Note,
and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest
per annum, compounded annually. The principal amount of the Third Note, plus any interest accrued thereon, may be converted into
shares of common stock of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the Third Note had a
balance outstanding of $24,405, comprised of a principal amount of $21,500 and accrued interest of $2,905. The Company has determined
that no beneficial conversion feature exists due to the current share value on the date of issuance.
On
March 2, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the
“
Fourth Note
”) in the principal amount of $20,000 to one subscriber. The Fourth Note, and accrued interest,
will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded
annually. The principal amount of the Fourth Note, plus any interest accrued thereon, may be converted into shares of common stock
of the Company at a conversion price of $0.03 per share. As at September 30, 2017, the Fourth Note had a balance outstanding of
$22,091, comprised of a principle amount of $20,000 and accrued interest of $2,091. The Company has determined that no beneficial
conversion feature exists due to the current share value on the date of issuance.
On
June 8, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the
“
Fifth Note
”) in the principal amount of $10,000 to one subscriber. The Fifth Note, and accrued interest, will
mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually.
The principal amount of the Fifth Note, plus any interest accrued thereon, may be converted into shares of common stock of the
Company at a conversion price of $0.03 per share. As at September 30, 2017, the Fifth Note had a balance outstanding of $10,562,
comprised of a principle amount of $10,000 and accrued interest of $562. The Company has determined that no beneficial conversion
feature exists due to the current share value on the date of issuance.
3.
NOTES PAYABLE (CONT’D)
On
September 7, 2017, the Company received a $250,000 loan from a shareholder. The loan is unsecured, repayable on demand and is
non-interest bearing. Subsequent to September 30, 2017, this loan was used to subscribe an unsecured convertible debenture as
explained in Note 5 - Subsequent Events.
4.
RELATED PARTY TRANSACTIONS
In
support of the Company’s efforts and cash requirements, it may rely on advances from stockholders until such time as the
Company can support its operations through revenue generation, or attain adequate financing through sales of its equity or traditional
debt financing. There is no formal written commitment for continued support by stockholders. Amounts represent advances or amounts
paid in satisfaction of liabilities.
The
Company’s office premises are provided to it at no cost by its sole director and officer. The Company’s sole director
and officer did not take any fees for serving as director or officer during the interim three-month periods ended September 30,
2017 and 2016.
5.
SUBSEQUENT EVENTS
On
October 9, 2017, James P. Geiskopf resigned as secretary and treasurer. Michael Blum was appointed as the chief financial officer,
secretary, treasurer and a director of the Company. James P. Geiskopf remains as a non-executive director of the Company.
On
October 15, 2017, the Company appointed Bruce Elliott as the president of the Company.
In
order to accommodate the appointment of Bruce Elliott, Cameron Chell has resigned as the president and was appointed as a non-executive
chairman.
On
October 15, 2017, the Company granted a total of 1,400,000 stock options to its directors and officers. The stock options are
exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. The stock options vest
as follows:
|
(i)
|
1/3
upon the date of grant;
|
|
|
|
|
(ii)
|
1/3
on the first anniversary date; and
|
|
|
|
|
(iii)
|
1/3
on the second anniversary date.
|
On
October 30, 2017, the Company entered into a private placement subscription agreement and issued unsecured convertible notes in
the principal amount of $325,000 in exchange for the previously issued unsecured and non-interest bearing note payable from one
subscriber and additional funds received from a second subscriber. The convertible note and accrued interest, will mature three
(3) years from the date of issuance and will bear interest at the rate of 10% per annum compounded annually. The principal of
this convertible note, plus any accrued interest thereon, may be converted into shares of common stock of the Company at a conversion
price of $0.10 per share.
On
October 30, 2017, the Company entered into a private placement subscription agreement with 35 subscribers, pursuant to which it
issued an aggregate of 5,600,000 shares of common stock of the Company at a price of $0.10 per share for aggregate gross proceeds
of $560,000.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking
Statements
This
quarterly report contains “forward-looking statements”. All statements other than statements of historical fact are
“forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, statements
regarding: the plans, strategies and objections of management for future operations; the future plans or business of our company;
future economic conditions or performance; and any statements of assumptions underlying any of the foregoing.
Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,” “continue,”
“believe,” “expect” or “anticipate” or other similar words. These forward-looking statements
present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the dates on which they are made. Except as required by applicable
law, we do not intend, and undertake no obligation, to update any forward-looking statement.
Although
we believe the expectations reflected in the forward-looking statements in this report are reasonable, actual results could differ
materially from those projected or assumed in any forward-looking statements. All forward-looking statements are subject to change
and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:
|
●
|
our
current lack of working capital;
|
|
|
|
|
●
|
a
possible inability to raise additional financing;
|
|
|
|
|
●
|
the
fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations,
and they may require our management to make estimates about matters that are inherently uncertain;
|
|
|
|
|
●
|
deterioration
in general or regional economic conditions;
|
|
|
|
|
●
|
adverse
state or federal legislation or regulations that increase the costs of compliance;
|
|
|
|
|
●
|
inability
to efficiently manage our operations; and
|
|
|
|
|
●
|
the
unavailability of funds for capital expenditures.
|
All
financial information contained herein is shown in United States dollars unless otherwise stated. Our consolidated financial statements
are prepared in accordance with United States generally accepted accounting principles.
In
this quarterly report, unless otherwise specified, all references to “shares” refer to shares of common stock in the
capital of our company.
As
used in this quarterly report on Form 10-Q, the terms “we”, “us” “our” and “AppCoin”
refer to AppCoin Innovations Inc. (formerly RedStone Literary Agents, Inc.), a Nevada corporation, unless otherwise specified.
Corporate
Overview
We
were incorporated under the laws of the State of Nevada on July 20, 2010 and are considered a development stage company. Following
incorporation, we commenced the business of representing authors to publishers.
Upon
the resignation of Mary Wolf as an officer of our company on August 28, 2014, we ceased pursuing the business of representing
authors to publishers and sought new business opportunities.
In
July 2017
,
we decided to operate a new business of providing services for blockchain initial coin offerings and incorporated
a Nevada subsidiary, AppCoin Innovations (USA) Inc. on August 1, 2017.
Effective
August 17, 2017, we completed a merger with our wholly-owned subsidiary, AppCoin Innovations Inc., a Nevada corporation, which
was incorporated solely to effect a change in our name. As a result, we have changed our name from “Redstone Literary Agents,
Inc.” to “AppCoin Innovations Inc.”.
On
August 21, 2017, we appointed Cameron Chell as the president and a director of our company. On the same date, James P. Geiskopf
resigned as the president of our company. Mr. Geiskopf remained as the secretary, treasurer and a director of our company. In
connection with our new business, on August 21, 2017, and pursuant to a transfer agreement dated for reference August 21, 2017,
Mr. Geiskopf sold to Blockchain Fund GP Inc., 2,000,000 shares of our common stock for total consideration of $5,000. Cameron
Chell holds a 5.6% interest in Blockchain Fund GP Inc.
On
October 9, 2017, Mr. Geiskopf resigned as our secretary and treasurer and we appointed Michael Blum as the chief financial officer,
secretary, treasurer and a director of our company. Mr. Geiskopf remains as a non-executive director of the Company.
On
October 15, 2017, we appointed Bruce Elliott as the president of our company. In order to accommodate the appointment of Bruce
Elliott, Cameron Chell resigned as the president and was appointed as the non-executive chairman. In connection with Mr. Chell’s
resignation as president, the independent consultant agreement with Mr. Chell was rescinded effective as of the original effective
date of that agreement.
The
principal offices of our company are located at 561 Indiana Court, Venice Beach, CA 90291. Our telephone number is 310.658.4413.
Our
Current Business
On
August 1, 2017, we incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc., which will be used to operate our new business
of providing services for blockchain initial coin offerings.
Our
new business is a services and development business that provides a turnkey set of services for companies to develop and integrate
blockchain and cryptocurrency technologies with a view to conducting initial coin offerings. We enable companies to focus on their
core competencies while providing the necessary resources and expertise to execute a strategy that will enable companies to integrate
new blockchain plus cryptocurrency technologies and execute initial coin offerings. Our plan is to be partially compensated by
these companies by receiving tokens or coins in the initial coin offerings. This will allow our shareholders to indirectly participate
in multiple initial coin offerings without having to open new accounts or electronic wallets with cryptocurrency exchanges.
Our
services will include strategic planning, project planning, structure development and administration, campaign management, business
plan modelling, technology development support, whitepaper preparation, due diligence reporting, escrow management, governance
planning & management.,
Blockchain
is a continuously growing list of records called blocks, which are linked and secured using cryptography. Each block contains
typically a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently
resistant to modification of the data. Functionally, a blockchain can serve as an open, distributed ledger that can record transactions
between two parties efficiently and in a verifiable and permanent way. For use as a distributed ledger, a blockchain is typically
managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any
given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority.
Blockchains
are secure by design and are an example of a distributed computing system and decentralization can be achieved with a blockchain.
This makes blockchains potentially suitable for the recording of events, medical records and other records management activities,
such as identity management, documenting provenance, digital asset registration and transaction processing.
Initial
coin offerings are an important new finance structure that enable companies to finance their business plans or projects without
issuing equity (and diluting ownership) but rather by facilitating investment by a community of users or supporters that will
actually be participating in the project and creating the value. By having a structured stake in the company or project, the investors
are incentivized to increase the project’s value thereby driving the value of the crypto currency issued in the initial
coin offering.
Cryptocurrency
is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation
of additional units of the currency.
Results
of Operations
Three
Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016
Revenue
We
had no revenue for the three months ended September 30, 2017 and 2016.
Operating
Expenses
We
incurred general and administrative expenses of $73,112 and $12,376 for the three months ended September 30, 2017 and 2016, respectively,
representing an increase of $60,736 between the two periods. These expenses consisted primarily of consulting fees, professional
fees, note interest and bank charges, filing and transfer fees. The increase in consulting fees between the two periods from $2,750
in 2016 to $56,500 in 2017 was due to the entering into of a consulting agreement with Business Instincts Group to provide strategic
and project management services. Business Instincts Group is a related party as Cameron Chell is a common director of the companies.
Professional fees increased from $5,409 in 2016 to $8,450 in 2017 and the increase was primarily due to an increase in legal services
related to the evaluation of potential business opportunities in 2017. The increase in note interest and bank charges from $3,447
in 2016 to $6,100 in 2017 was due to the increase in notes payable in 2017 partially offset by a correction in the historical
calculation. The increase in filing and transfer fees from $770 in 2016 to $2,062 in 2017 was due to the increase in the amount
of transactions with the transfer agent.
Net
Loss
We
incurred net losses of $73,112 and $12,376 for the three months ended September 30, 2017 and 2016, respectively, representing
an increase of $60,736, primarily attributable to the factors discussed above under the heading “Operating Expenses”.
Nine
Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016
Revenue
We
had no revenue for the nine months ended September 30, 2017 and 2016.
Operating
Expenses
We
incurred general and administrative expenses of $123,695 and $33,756 for the nine months ended September 30, 2017 and 2016, respectively,
representing an increase of $89,939 between the two periods. These expenses consisted primarily of consulting fees, professional
fees, note interest and bank charges, filing and transfer fees. The increase in operating expenses between the two periods related
to an increase in consulting fees from $8,200 in 2016 to $77,900 in 2017 due to the entering into of a consulting agreement with
Business Instincts Group to provide strategic and project management services, an increase in note interest and bank charges from
$10,036 in 2016 to $21,539 in 2017 due to the increase in loans payable that bear interest of 18% per annum partially offset by
a correction in the historical calculation, and an increase in professional fees from $11,282 in 2016 to $20,234 in 2017 due to
the evaluation of potential business opportunities in 2017. These increases were partially offset by a decrease in filing and
transfer fees between the two periods from $4,238 in 2016 to $4,022 in 2017 primarily due to decreases in the amount of transactions
with the transfer agent.
Net
Loss
We
incurred net losses of $123,695 and $33,756 for the nine months ended September 30, 2017 and 2016, respectively, representing
an increase of $89,939, primarily attributable to the factors discussed above under the heading “Operating Expenses”.
Liquidity
and Capital Resources
Working
Capital
|
|
As
at
September 30, 2017
|
|
|
As
at
December 31, 2016
|
|
Current Assets
|
|
$
|
195,011
|
|
|
$
|
56,050
|
|
Current Liabilities
|
|
$
|
260,140
|
|
|
$
|
49,013
|
|
Working capital (deficit)
|
|
$
|
(65,129
|
)
|
|
$
|
7,037
|
|
Current
Assets
Current
assets of $195,011 as at September 30, 2017 and $56,050 as at December 31, 2016 were comprised only of cash and cash equivalents.
The increase in current assets as at September 30, 2017 was due to our company receiving $250,000 in connection with the purchase
of a convertible note. Even though the purchase of the note has not yet completed, the investor permitted the purchase proceeds
to be released to our company on interest free basis until closing of the purchase. The loan is unsecure, repayable on demand
and is non-interest bearing.
Current
Liabilities
Current
liabilities as at September 30, 2017 were attributable to $10,140 in accounts payable and accrued expenses compared to $49,013
in accounts payable and accrued expenses as at December 31, 2016.
Cash
Flow
|
|
Nine
Months
ended
September 30, 2017
|
|
|
Nine
Months
ended
September 30, 2016
|
|
Net cash (used in) operating
activities
|
|
$
|
(141,039
|
)
|
|
$
|
(25,100
|
)
|
Net cash provided
by financing activities
|
|
|
280,000
|
|
|
|
20,000
|
|
Net changes
in cash and cash equivalents
|
|
$
|
138,961
|
|
|
$
|
(5,100
|
)
|
Operating
Activities
Net
cash used in operating activities was $141,039 for the nine-month period ended September 30, 2017, as compared to $25,100 for
the nine-month period ended September 30, 2016, an increase of $115,939. The increase in net cash used in operating activities
was primarily due to the payment of accounts payable and an increase in operating expenses including an increase in the evaluation
of potential business opportunities.
Investing
Activities
Investing
activities used cash was $nil for the nine-month periods ended September 30, 2017 and September 30, 2016.
Financing
Activities
Financing
activities provided cash of $280,000 for the nine months ended September 30, 2017 and $20,000 for the nine months ended September
30, 2016. On March 2, 2017, we issued an unsecured convertible note in the principal amount of $20,000. The principal amount of
the note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18%
interest per annum, compounded annually. The principal amount, plus any interest accrued thereon, may be converted into shares
of common stock of our company at a conversion price of $0.03 per share. On June 8, 2017, we issued an unsecured convertible note
in the principal amount of $10,000. The principal amount of the note, and accrued interest, will mature five (5) years from the
date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount, plus
any interest accrued thereon, may be converted into shares of common stock of our company at a conversion price of $0.03 per share.
On September 7, 2017, we received $250,000 in connection with the purchase of a convertible note. Even though the purchase of
the note has not yet completed, the investor permitted the purchase proceeds to be released to our company as on interest free
basis until closing.
Plan
of Operations
We
expect that we will require $1.5 million to $2.0 million, in addition to our current cash, to fund our operating expenditures
for the next twelve months. Projected working capital requirements for the next twelve months are as follows:
Estimated
Working Capital Expenditures During the Next Twelve Months
Operating expenditures
|
|
|
|
Operator
expenses
|
|
$
|
1,000,000
|
|
General
and administrative
(including professional fees)
|
|
$
|
500,000
|
|
Total
|
|
$
|
1,500,000
|
|
Professional
fees are expected to include fees related to complying with public reporting requirements, maintaining our quotation on the OTCQB,
conducting capital raises and expenses in connection with our new business.
Cash
Requirements
As
we have no cash flow from operations, we will require additional cash resources, including from the sale of equity or debt securities,
to meet our planned capital expenditures and working capital requirements for the next 12 months. We estimate that our capital
needs over the next 12 months will be $1.5 million to $2.0 million. We expect to require additional cash for general and administrative
expenses and to evaluate new business opportunities. We expect to derive such cash through the sale of additional equity or debt
securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution to our stockholders.
The incurrence of indebtedness will result in debt service obligations, could cause additional dilution to our stockholders, and
could require us to agree to financial covenants that could restrict our operations or modify our plans to source a new business
opportunity. Financing may not be available in amounts or on terms acceptable to us, if at all. Failure to raise additional funds
could cause our company to fail.
Going
Concern
Our
consolidated financial statements are prepared using generally accepted accounting principles in the United States of America
applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course
of business. We have not yet established a source of revenues sufficient to cover our operating costs and to allow us to continue
as a going concern. We have incurred losses since inception resulting in an accumulated deficit of $348,973 as at September 30,
2017 (December 31, 2016: $225,950). Our ability to operate as a going concern is dependent on obtaining adequate capital to fund
operating losses until we become profitable.
In
its report on our financial statements for the year ended December 31, 2016, our independent registered public accounting firm
included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources