Atacama Resources International, Inc. (hereinafter “ARII”) is a company incorporated in the State of Florida in June 2013. We were formed as a consultant to the mining industry. The mining industry is subject to constant change due to market trends, thereby making it extremely competitive. The mining industry is complex, because several segments are regulated by both federal and state governments. ARII’s approach assists general business operations with the growth and development, international expansion and marketing aspects of their business, allowing our potential customers to focus on the business aspects of operations. By using the services provided by ARII, our clients are free to focus on compliance with regulations within their industry, and to complete their primary business goals.
Atacama Resources International Inc. purchase 100% of Good2Drive LLC, a smartphone application company that establishes a baseline to test driver’s alertness, in December 2015. The acquisition includes the rights to two filed patent applications. The financial operations of Good2Drive LLC have been consolidated in the unaudited financial statements of Atacama Resources International Inc.
The Company’s consolidated financial statements are prepared using accounting principles generally accepted 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. The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles. For complete financial statements please refer to our 2016 Annual Report on Form 10-K, filed on April 17, 2017.
In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the consolidated financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.
The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require 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 consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents totaled $10,421 at September 30, 2017 and $17,670 at December 31, 2016.
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.
Costs of acquiring mining properties and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially mineable property in accordance with FASB ASC 930, Extractive Activities – Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining properties by individual property and defers such costs for later amortization only if the prospects for economic productions are reasonably certain.
Capitalized costs are expensed in the period when the termination has been made that economic production does not appear reasonably certain.
During the nine months ending September 30, 2017 and 2016, the Company recorded exploration costs of $33,578 and $18,344, respectively.
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. Related party transactions are summarized in Note 7.
The Company’s consolidated balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
The Company recognizes revenue from the sale of products and services in accordance with ASC 605,”Revenue Recognition.”
The Company recognizes revenue from services only when all of the following criteria have been met:
Revenue related to multi-media downloads is fully recognized when the above criteria are met.
The Company derives revenue from the sale of its Good2Drive appliation. Revenue is generated by a third party, iTunes or the Google Play Store (the Vendors) when a customer purchases the application. The Vendors submit inivoices and slaes reports to the Company and submits payment net of their cost. As of September 30 2017 the Company record $36 of revenue.
The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of September 30, 2017 or December 31, 2016.
Net income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at September 30, 2017 and December 31, 2016. As of September 30, 2017, the Company had no dilutive potential common shares.
ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
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.
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future financial statements.
We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-10”) and have applied the standard as of the dates during the periods reported.
We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-9”). The Company does not believe that the new or modified principal will not have a material effect on these financial statements.
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
The Company’s prepaid expense consisted of a retainer fee paid the law offices of Clifford J. Hunt, P.A. of $2,250 retainer and a last month rental fee for a storage facility of $1,644. The prepaid balance was $0 and $7,483 on September 30, 2017 and December 31, 2016, respectively.
NOTE 5. INVESTMENTS
|
|
September 30, 2017
|
December 31, 2016
|
|
|
|
|
|
CJP Properties: On April 5, the Company completed a purchase of mineral rights acquired in are in and around Biron Bay, Ontario Canada. Consists of 3,114 acres. The Company exchanged 600,000 shares of stock on April 5, 2017 valued at $158,000 resulting in a price per share of 26 cents. The market value at April 5 was .36 cents per share resulting in a loss of $61,000 which is included in the Company’s profit and loss as impairment equaling $219,000. The purchase included an additional payment of $127,000 in Canadian dollars to be paid at an undetermined future date.
The separate properties are described as follows:
Property Mineral Size/Acres
1.
Biron Bay Iron Ore 99
2.
A1 Kimberlite Diamond 395
3.
Simon Copper Copper 939
4.
Cabo Diamond 317
5.
Mystery Graphite Graphite 1,265
6.
Coronation Graphite Graphite 99
The valuation of these mineral rights have been re-measured and deemed to have no carrying value at September 30, 2017. This includes the $219,000 and $9,647 in prior periods for a total impairment expense of $228,647.
|
$ 0
|
$9,647
|
|
Allsopp Properties: Mineral Rights acquired in the Kirkland Lake Gold’s Macassa mine Complex Ontario Canada. Consists of 1,680 acres.
Exploration costs of $50,000 annually for the first two years of the agreement are required to meet contractual commitments and have been incurred by December 2016. The valuation of these mineral rights have been re-measured and deemed to have no carrying value at September 30, 2017.
|
$ 0
|
$ 9,222
|
NOTE 6. INTANGIBLE ASSET
The Company had no intangible assets at September 30, 2017.
11
NOTE 7. NOTES PAYABLE
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
|
|
|
On August 31, 2017, Adar Baya, LLC an unrelated party has entered into a convertible note with the Company in the amount of $100,000. The note states an 12% interest rate with a maturity date of July 31, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 45% to the lowest trading day during the previous 25 trading days.
|
|
$100,000
|
|
-
|
|
|
|
|
|
|
|
On May 9, 2017, Power Up Lending Group, LTD an unrelated party has entered into a convertible note with the Company in the amount of $35,000. The note states an 8% interest rate with a maturity date of November 5, 2017, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 45% to the lowest trading day during the previous 15 trading days.
|
|
35,000
|
|
-
|
|
|
|
|
|
|
|
On July 26, 2017, Power Up Lending Group, LTD an unrelated party has entered into a convertible note with the Company in the amount of $53,000. The note states an 8% interest rate with a maturity date of April 30, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time after 180 days from the date of the note at a discount rate of 45% to the lowest trading day during the previous 15 trading days.
|
|
53,000
|
|
-
|
|
|
|
|
|
|
|
On April 24, 2017, Crown Bridge Partners, LLC, an unrelated party has entered into a convertible note with the Company in the amount of $30,000. The note states an 12% interest rate with a maturity date of April 23, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time during the period beginning on the date of this note at a discount rate of 55% to the lowest trading day during the previous 15 trading days.
|
|
30,000
|
|
-
|
|
|
|
|
|
|
|
On May 19, 2017, Eagle Equities, LLC, an unrelated party has entered into a convertible note with the Company in the amount of $30,000. The note states an 8% interest rate with a maturity date of January 12, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at the lender’s discretion at any time from the date of the note at a discount rate of 55% to the lowest trading day during the previous 15 trading days.
|
|
30,000
|
|
-
|
|
|
|
|
|
|
12
|
On June 26, 2017, GS Capital Partners, LLC , an unrelated party has entered into a convertible note with the Company in the amount of $42,000. The note states an 8% interest rate with a maturity date of June 25, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time from the date of the note at a discount rate of 40% to the lowest trading day during the previous 15 trading days.
|
|
42,000
|
|
-
|
|
|
|
|
|
|
|
On June 2, 2017, LG Capital Funding, LLC , an unrelated party has entered into a convertible note with the Company in the amount of $30,000. The note states an 8% interest rate with a maturity date of February 2, 2018, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time from the date of the note at a discount rate of 55% to the lowest trading day during the previous 15 trading days.
|
|
30,000
|
|
-
|
|
|
|
|
|
|
|
On June 30, 2017, Peak One Opportunity Fund, L.P, an unrelated party has entered into a convertible note with the Company in the amount of $50,000. The note states an -0-% interest rate with a maturity date of June 30, 2020, upon which all interest is due unless the note is converted. The notes may be converted into Company stock at any time from the date of the note at a discount rate of 45% to the lowest trading day during the previous 15 trading days.
|
|
50,000
|
|
-
|
|
|
|
|
|
|
|
New Opportunity Business Solutions, Inc., a related party by virtue of common ownership in various companies that hold stock, for consulting services to the Company. Atacama Resources International, Inc. (ARII) is a client of New Opportunity Business Solutions, Inc. The original amount of the note payable was $199,800. The note states a 10% interest rate with no set maturity date and is due on demand. Payment of principal and interest is due on demand and is not contingent. However, to the extent that the Company incurs expense to accomplish the goal of the consulting agreement, the obligation of the company shall be reduced an equal amount. The note is as support for the consulting fee which was owed by ARII but not paid as required. Accrued interest at September 30, 2017 and December 31, 2016 was $27,902 and $63,663, respectively.
|
|
23,800
|
|
143,880
|
|
|
|
|
|
|
|
Total notes payable
|
$
|
393,800
|
$
|
143,880
|
|
|
|
|
|
|
|
Current portion
|
$
|
393,800
|
$
|
143,880
|
NOTE 8. INCOME TAXES
At September 30, 2017, the Company had a net operating loss carry–forward for Federal income tax purposes of approximately $4,154,331 that may be offset against future taxable income through 2032 No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets calculated at the effective rates note below, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by the valuation allowance.
13
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate of 3.6% to income before taxes), as follows:
|
|
|
For the Period Ended
September 30, 2017
|
|
For the Period Ended
September 30, 2016
|
|
|
|
|
|
|
|
Tax expense (benefit) at the statutory rate
|
$
|
(3,756,576)
|
$
|
(10,404)
|
|
State income taxes, net of federal income tax benefit
|
|
(397,755)
|
|
(1,102)
|
|
Change in valuation allowance
|
|
4,154,331
|
|
11,506
|
|
Total
|
$
|
0
|
$
|
0
|
The tax effects of the temporary differences between reportable consolidated financial statement income and taxable income are recognized as deferred tax assets and liabilities.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
For the period ending September 30, 2017 and for the year ended December 31, 2016, the Company has net operating losses from operations. The carry forwards expire through the year 2032. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.
The Company’s net deferred tax asset as of September 30, 2017 and December 31, 2016 is as follows:
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
|
|
|
Deferred tax assets
|
$
|
4,154,331
|
$
|
225,475
|
|
Valuation allowance
|
|
(4,154,331)
|
|
(225,475)
|
|
Net deferred tax asset
|
$
|
0
|
$
|
0
|
The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the period from inception ended December 31, 2013 through the year ended December 31, 2016. The Company recognizes interest and penalties related to income taxes in income tax expense. The Company had incurred no penalties and interest through the year ended December 31, 2016.
NOTE 9. SHAREHOLDERS’ EQUITY
The Company, through approval of its Board of Directors, authorized common shares of 500,000,000 with a par value of $0.0001.
COMMON STOCK
On February 1, 2017, the Company issued 2,000,000 shares, at $0.085 per share, to William D. Webb, Jr., a related party, in exchange for consulting services totaling $170,000. The market price on February 1 was $0.10 resulting in a loss of $30,000 which is reflected in the financial statements.
14
On April 4, 2017, the Company issued 600,000 shares, at $0.26 per share, to CJP Exploration, Inc.an unrelated party, in exchange for certain mineral rights described herein totaling $158,000. The market price on April 4, 2017 was $0.31 resulting in a loss of $28,000 which is reflected in the financial statements.
On July 24, 2017, the Company issued 7,000,000 shares, at $0.001 per share, to Warren Booth, an unrelated party, in exchange for debt owed to NOBS. The market price on July 24, 2017 was $0.051 resulting in a loss of $350,000 which is reflected in the financial statements.
On July 27, 2017, the Company issued 7,000,000 shares, at $0.001 per share, to JayCo Consulting, an unrelated party, in exchange for debt owed to NOBS. The market price on July 27, 2017 was $0.0141 resulting in a loss of $91,700 which is reflected in the financial statements.
On July 27, 2017, the Company issued 5,000,000 shares, at $0.002 per share, to Daniel Alejandro Tellez Villa, an unrelated party, in exchange for debt owed to NOBS; and 5,000,000 shares, at $0.002 per share, to Daniel Nunez Tellez, an unrelated party, in exchange for debt owed to NOBS. The market price on July 27, 2017 was $0.0141 resulting in a loss of $123,000 which is reflected in the financial statements.
On July 28, 2017, the Company issued 5,000,000 shares, at $0.002 per share, to Abraham Abu, an unrelated party, in exchange for debt owed to NOBS; and 5,000,000 shares, at $0.002 per share, to Surf Financial Group, an unrelated party, in exchange for debt owed to NOBS. The market price on July 27, 2017 was $0.0141 resulting in a loss of $123,000 which is reflected in the financial statements.
August 14, 2017, the Company issued 900,000 shares, at $0.015 per share, to Karen Clair, an unrelated party. The market price on August 14, 2017 was $0.0115 resulting in a gain of $3,150 which is reflected in the financial statements.
August 14, 2017, the Company issued 782,323 shares, at $0.02 per share, to Alan Flasch, a related party; 1,799,900 shares to Donald Swarz Trust, a related party; 8,116,000 shares to Dan Finch, a related party; 10,000,000 shares to Bower Solution, LTD, a related party; and 3,150,000 shares to Will D. Webb, Jr, a related party in lieu of debt owed to them by the Company. The market price on August 14, 2017 was $0.0115 resulting in a gain of $202,710 which is reflected in the financial statements.
August 14, 2017, the Company issued 2,221,420 shares, at $0.02 per share, to Nelson Riis, an unrelated party, in exchange for debt; and 4,534,709 shares at $.02 to Cougar Pipeline Inspections and Consulting LTD, an unrelated party, in exchange for debt. The market price on August 14, 2017 was $0.0115 resulting in a gain of $57,427 which is reflected in the financial statements.
August 21, 2017, the Company issued 666,667 shares, at $0.015 per share, to Barbara Bush, an unrelated party; and 333,333 shares at $.015 to Kimberly Wieting, an unrelated party. The market price on August 14, 2017 was $0.0115 resulting in a gain of $2,300 which is reflected in the financial statements.
August 28, 2017, the Company issued 10,000,000 shares, at $0.001 per share, to Daniel Alejandro Tellez Villa , an unrelated party. The market price on August 28, 2017 was $0.0102 resulting in a loss of $92,000 which is reflected in the financial statements.
August 30, 2017, the Company issued 12,000,000 shares, at $0.001 per share, to New Opportunity Business Solutions, an unrelated party, in lieu of debt owed to New Opportunity. The market price on August 28, 2017 was $0.0101 resulting in a loss of $109,200 which is reflected in the financial statements.
There were 226,023,535 shares of common stock issued and outstanding at September 30, 2017.
NOTE 10. RELATED PARTY TRANSACTIONS
DUE TO RELATED PARTIES
During the nine months ended September 30, 2017, Glenn Grant, CEO and director paid certain expenses on behalf of the Company and is due reimbursement. As of September 30, 2017 the balance due to the related party was 102,579.
EQUITY TRANSACTIONS
15
On February 1, 2017 through approval of its Board of Directors, the Company issued 2,000,000 shares at $0.085 per share to William D. Webb, Jr, CFO and in exchange for services totaling $170,000. The market price was $.10 resulting in a loss of $30,000.
August 14, 2017 through approval of its Board of Directors, the Company issued 782,323 shares, at $0.02 per share, to Alan Flasch, a related party; 1,799,900 shares to Donald Swarz Trust, a related party; 8,116,000 shares to Dan Finch, a related party; 10,000,000 shares to Bower Solution, LTD, a related party; and 3,150,000 shares to Will D. Webb, Jr, a related party in lieu of debt owed to them by the Company. The market price on August 14, 2017 was $0.0115 resulting in a gain of $202,710 which is reflected in the financial statements.
NOTE 11. COMMITMENTS AND CONTINGENCIES
There are no commitments and contingencies of the Company as of September 30, 2017.
NOTE 12. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of common stock of the Company as of September 30, 2017.
NOTE 13. CONVERTIBLE DEBT
On May 9, 2017, The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $35,000 together with an interest rate of eight percent (8%) per annum and a maturity date of November 5, 2017. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid.
The holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-five percent (45%).
The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $131,769.
The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $600 resulting in a debt discount balance of $(7,000).
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Up Lending Group, Ltd., a non-related party convertible promissory note:
|
|
$
|
35,000
|
|
|
$
|
0
|
|
|
Debt discount
|
|
|
(7,000
|
)
|
|
|
|
|
|
Convertible notes payable net of debt discount
|
|
$
|
28,000
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
600
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible note payable and interest
|
|
$
|
27,400
|
|
|
$
|
0
|
|
On July 26, 2017, The Company executed a convertible promissory note with Power Up Lending Group, ltd. The note carries a principal balance of $53,000 together with an interest rate of eight percent (8%) per annum and a maturity date of
16
December 15, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid.
The holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-five percent (45%).
The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $163,006.
The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $0 resulting in a debt discount balance of $(57,292).
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|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Up Lending Group, Ltd., a non-related party convertible promissory note:
|
|
$
|
68,750
|
|
|
$
|
0
|
|
|
Debt discount
|
|
|
(57,292
|
)
|
|
|
|
|
|
Convertible notes payable net of debt discount
|
|
$
|
11,458
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible note payable and interest
|
|
$
|
11,458
|
|
|
$
|
0
|
|
On April 24 2017, The Company executed a convertible promissory note with Crown Bridge Partners, LLC. The note carries a principal balance of $30,000 together with an interest rate of twelve percent (12%) per annum and a maturity date of April 23, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.
The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).
The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,055,671.
The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $3,104 resulting in a debt discount balance of $(16,932).
Convertible Note payable consisted of the following as of September 30, 2017:
17
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Crown Bridge Partners, LLC., a non-related party convertible promissory note:
|
|
$
|
30,000
|
|
|
$
|
0
|
|
|
Debt discount
|
|
|
(16,932
|
)
|
|
|
|
|
|
Convertible notes payable net of debt discount
|
|
$
|
13.068
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
3.104
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible note payable and interest
|
|
$
|
9,964
|
|
|
$
|
0
|
|
On May 19, 2017, The Company executed a convertible promissory note with Eagle Equities, LLC. The note carries a principal balance of $30,000 together with an interest rate of twelve percent (8%) per annum and a maturity date of January 12, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.
The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).
The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,090,005
The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $511 resulting in a debt discount balance of $(7,667).
Convertible Note payable consisted of the following as of September 30, 2017:
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|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Eagle Equities, LLC., a non-related party convertible promissory note:
|
|
$
|
30,000
|
|
|
$
|
0
|
|
|
Debt discount
|
|
|
(7,667
|
)
|
|
|
|
|
|
Convertible notes payable net of debt discount
|
|
$
|
21,311
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
511
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible note payable and interest
|
|
$
|
21,822
|
|
|
$
|
0
|
|
On September 26, 2017, The Company executed a convertible promissory note with GS Capital Partners, LLC. The note carries a principal balance of $42,000 together with an interest rate of twelve percent (8%) per annum and a maturity date of September 25, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.
The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-
18
five percent (40%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (60%).
The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,233,491.
The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $933 resulting in a debt discount balance of $(19,600).
Convertible Note payable consisted of the following as of September 30, 2017:
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
GS Capital Partners, LLC., a non-related party convertible promissory note:
|
|
$
|
42,000
|
|
|
$
|
0
|
|
|
Debt discount
|
|
|
(19,600
|
)
|
|
|
|
|
|
Convertible notes payable net of debt discount
|
|
$
|
22.400
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
933
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible note payable and interest
|
|
$
|
21,467
|
|
|
$
|
0
|
|
On September 2, 2017, The Company executed a convertible promissory note with LG Capital Funding, LLC. The note carries a principal balance of $40,000 together with an interest rate of twelve percent (8%) per annum and a maturity date of February 2, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.
The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).
The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $2,659.952.
The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $667 resulting in a debt discount balance of $(13,333).
Convertible Note payable consisted of the following as of September 30, 2017:
19
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
LG Capital Funding, LLC., a non-related party convertible promissory note:
|
|
$
|
40,000
|
|
|
$
|
0
|
|
|
Debt discount
|
|
|
(13,333
|
)
|
|
|
|
|
|
Convertible notes payable net of debt discount
|
|
$
|
26,667
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
(667)
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible note payable and interest
|
|
$
|
26,000
|
|
|
$
|
0
|
|
On August 31, 2017, The Company executed a convertible promissory note with Adar Bays, LLC The note carries a principal balance of $68,750 together with an interest rate of twelve percent (12%) per annum and a maturity date of February 2, 2018. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in lawful money of the United States of America.
The holder shall have the right from time to time, and at any time during the period beginning on the date of this note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal fifty-five percent (55%) of the of the lowest trading price for the Common Stock during the fifteen-day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-two percent (45%).
The Company accounts for this beneficial conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The beneficial conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At September 30, 2017, the fair value of beneficial conversion feature was $163,006.
The Company recorded the fair value of beneficial conversion feature as debt discount. For the 9 months ended September 30, 2017 the total interest expense recorded was $11,458 resulting in a debt discount balance of $(13,333).
Convertible Note payable consisted of the following as of September 30, 2017:
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Adar Bays, a non-related party convertible promissory note:
|
|
$
|
68,750
|
|
|
$
|
0
|
|
|
Debt discount
|
|
|
(57,292
|
)
|
|
|
|
|
|
Convertible notes payable net of debt discount
|
|
$
|
11,458
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
|
(678)
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of convertible note payable and interest
|
|
$
|
10,780
|
|
|
$
|
0
|
|
NOTE 14. INCREASE OF AUTHORIZED SHARES
On August 28, 2017, we filed an amendment to our articles of incorporation increasing our authorized shares to 1,000,000,000. We failed to file an Information Statement in advance of this action, and recognize that we are subject to increased liability under the Exchange Act. The amendment was filed pursuant to the affirmative vote of the holders of a majority of the Company’s issued and outstanding common shares and the unanimous approval by the Board of Directors and in accordance with the laws of the State of Florida.
20
NOTE 15. SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date the consolidated financial statements were issued.
21