UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KWASHINGTON,
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended JulyDecember 31, 2013
Commission File No. file number: 333-185103
333-185103Synergy Strips Corp.
(Exact name of registrant as specified in its charter)
Nevada | 99-0379440 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
865 Spring Street Westbrook, ME | 04092 | |
(Address of principal executive offices) | ( | |
Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to sectionSection 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨Act.Yes [ ] No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)15 (d) of the Act. Yes ¨[ ] No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x[X] No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨[X] No x
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated”accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] | Accelerated filer [ ] | ||
Non-accelerated filer | |||
Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x[ ] No ¨
The aggregate market value of the votingregistrant’s common stock held by non-affiliates as of June 30, 2014 was approximately $25.7 million based upon the closing price of the Registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) was $0. At October 28, 2013,common stock as quoted by the Over-the-Counter Bulletin Board (the “OTC Bulletin Board”)
As of March 23, 2015, there were 6,000,00066,695,187 shares of the Registrant’s common stock, $0.00001 par value per share, outstanding. At July 31, 2013, the end of the Registrant’s most recently completed fiscal year, there were 6,000,000 shares of the Registrant’sregistrant’s common stock, par value $0.00001 per share, outstanding.
Table of Contents
PART I | ||||
BUSINESS | 4 | |||
ITEM 1A. | RISK FACTORS | 8 | ||
ITEM 1B. | UNRESOLVED STAFF COMMENTS | 8 | ||
ITEM 2. | PROPERTIES | 8 | ||
ITEM 3. | LEGAL PROCEEDINGS | 8 | ||
ITEM 4. | MINE SAFETY DISCLOSURES | 8 | ||
PART II | ||||
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 9 | ||
ITEM 6. | SELECTED FINANCIAL DATA | 9 | ||
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 10 | ||
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 | ||
ITEM 8. | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 14 | ||
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 16 | ||
ITEM 9A. | CONTROLS AND PROCEDURES | 16 | ||
ITEM 9B. | OTHER INFORMATION | 17 | ||
PART III | ||||
PART IV | ||||
EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES | 24 | |||
SIGNATURES | 26 | |||
EXHIBIT INDEX |
Information contained in this annual report contains “forward-looking statements,”statements” as defined inby the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identifyThese forward-looking statements are contained principally in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” and are generally identifiable by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “continue”“project” or the negative of such terms andthese words or other variations on these words or comparable terminology. TheseAs used herein, “we,” “us,” “our” and the “Company” refers to Synergy Strips Corp. and its wholly owned subsidiary.
The forward-looking statements include, without limitation, statements aboutherein represent our market opportunity,expectations, beliefs, plans, intentions or strategies concerning future events, including, but not limited to: our strategies, competition, expected activitiesfuture financial performance; the continuation of historical trends; the sufficiency of our cash balances for future needs; our future operations; our sales and expendituresrevenue levels and gross margins, costs and expenses; the relative cost of our operation as we pursuecompared to our business plan,competitors; new product introduction, entry and expansion into new markets and utilization of new sales channels and sales agents; improvements in, and the adequacyrelative quality of, our available cash resources. Although we believe thattechnologies and the expectations reflectedability of our competitors to copy such technologies; our competitive technological advantages over our competitors; brand image, customer loyalty and expanding our customer base; the sufficiency of our resources in thefunding our operations; and our liquidity and capital needs.
Our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of minerals prices, the possibility that exploration efforts will not yield economically recoverable quantities of minerals, accidents and other risks associated with mineral exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company’s need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration and development plans, other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).
Except as required by applicable laws, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the company will have sufficient funds to acquire or maintain the services of these consultants.
Months from completing our public offering | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 |
Phase 1 - (Magnetic Survey) | ||||||||||||||||
Permitting | X | X | X | |||||||||||||
Field Work | X | |||||||||||||||
Summary Results | X | |||||||||||||||
Phase 2 - (Gravity Survey) | ||||||||||||||||
Field Work | X | |||||||||||||||
Summary Report | X | |||||||||||||||
Phase 3 - (Drilling) | ||||||||||||||||
Permitting | X | X | ||||||||||||||
Drill Mobilization Drilling | X | |||||||||||||||
Sample Analysis | X | |||||||||||||||
Final Report | X |
3 |
ITEM 1. BUSINESS – OVERVIEW OF OUR COMPANY
Overview
We are in the business of marketing and distributing consumer-branded products through various distribution channels primarily in the health and wellness industry. Our strategy is to grow both organically and by future acquisition.
Development of the Business
We were organized as a corporation under the laws of the State of Nevada on December 29, 2010 under the name “Oro Capital Corporation”. On April 7, 2014, an Agreement and Plan of Merger (the “Merger Agreement”) was entered into by and among us, Synergy Merger Sub, Inc., a Delaware corporation and our wholly owned subsidiary formed for the purpose of the transactions under the Merger Agreement (“Merger Sub”), and Synergy Strips Corp., a Delaware corporation incorporated on January 24, 2012 (“SSC”). The Merger Agreement provided for the merger of Merger Sub with and into SSC (the “Merger”), with SSC surviving the merger as our wholly owned subsidiary. On April 17, 2014, we issued a share dividend to our shareholders in order to effect a 30-for-1 forward stock split. The Merger was consummated on April 21, 2014. On April 21, 2014, we changed our fiscal year end from July 31 to December 31. On April 28, 2014, we changed the name of the Company from “Oro Capital Corporation” to “Synergy Strips Corp.”
Current Fiscal Year Developments
Loan and Warrants
On January 22, 2015, we entered into a Loan and Security Agreement (“Loan Agreement”) with Knight Therapeutics (Barbados) Inc. (“Knight”), pursuant to which Knight agreed to loan us $6.0 million (the “Loan”), and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring the Focus Factor Business (defined below). At closing, we paid Knight an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000 of Knight’s expenses associated with the Loan. The Loan bears interest at a rate of 15% per year; provided, however, that upon the occurrence of an equity or convertible equity offering by us of at least $1.0 million, the interest rate will drop to 13% per year. Interest accrues quarterly and is payable in arrears on March 31, June 30, September 30 and December 31 in each year, beginning on March 31, 2015.
All outstanding principal and accrued and unpaid interest is due on the earliest to occur of either January 20, 2017 (the “Maturity Date”), or the date that Knight, in its discretion, accelerates our obligations due to an event of default. We may extend the Maturity Date for two successive additional 12-month periods if at March 31, 2016 and March 31, 2017, respectively, our revenues exceed $13.0 million and our EBITDA exceeds $2.0 million for the respective 12-month period then ending. Principal payments under the Loan Agreement commence on June 30, 2015 and continue quarterly as set forth on the repayment schedule attached to the Loan Agreement.
Subject to certain restrictions, we may prepay the outstanding principal of the Loan (in whole but not in part) at any time if we pay a concurrent prepayment fee equal to the greater of (i) the total unpaid annual interest that would have been payable during the year in which the prepayment is made if the prepayment is made prior to the first anniversary of the closing, and (ii) $300,000. Our obligations under the Loan Agreement are secured by a first priority security interest in all of our present and future assets. We also agreed to not pledge or otherwise encumber our intellectual property assets, subject to certain customary exceptions.
The Loan Agreement includes customary representations, warranties, and affirmative and restrictive covenants, including covenants to attain and maintain certain financial metrics, and to not merge or dispose of assets, acquire other businesses (except for businesses substantially similar or complementary to our business, provided the aggregate consideration to be paid does not exceed $100,000) or make capital expenditures that exceed the amount provided in our annual business plan by greater than $100,000 in any year. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants, change of control and material adverse effect default. Upon the occurrence of an event of default and during the continuation thereof, the principal amount of the Loan will bear a default interest rate of an additional 5%.
In connection with the Loan Agreement, we issued to Knight a warrant that entitles Knight to purchase 4,595,187 shares of our common stock (“Common Stock”) on or prior to close of business on January 30, 2015 (the “ST Warrant”). The aggregate exercise price of the ST Warrant is $1.00. Knight exercised the ST Warrant on January 22, 2015. Also in connection with the Loan Agreement, we issued to Knight a warrant to purchase 3,584,759 shares of Common Stock on or prior to the close of business of January 22, 2025 (the “LT Warrant”). The exercise price per share of the Common Stock under the LT Warrant is $0.34. The LT Warrant provides for cashless exercise. The LT Warrant also provides that, in the event the closing price of the Common Stock remains above $1.00 for six consecutive months (the “Benchmark Period”), Knight will forfeit the difference between the number of shares acquired upon exercise of the LT Warrant prior to the expiration of the 90-day period after the Benchmark Period, and 25% of the shares purchasable under the LT Warrant.
Asset Purchase Agreement
On January 22, 2015 (the “Closing Date”), we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Factor Nutrition Labs, LLC, a Delaware limited liability company (the “Seller”),Vita Partners, LLC, RPR Partners, LLC, and Thor Associates, Inc. (each a “Principal Owner”). Pursuant to the Purchase Agreement, we purchased all of the assets of the Seller’s line of business and products called FOCUS Factor (the product purchased thereunder, together with the business related to the product, is collectively referred to as the “Focus Factor Business”) and assumed the accounts payable and contractual obligations of the Focus Factor Business for an aggregate purchase price of $6.0 million, with $4.5 million paid on the Closing Date, and $750,000 to be paid on or before January 20, 2016 and an additional $750,000 to be paid on or before January 20, 2017.
The Purchase Agreement contains customary representations and warranties and covenants by each party. The Purchase Agreement contains customary indemnification provisions in our favor, including, subject to certain limitations, whereby the Seller and each of the Principal Owners agree to indemnify us and our affiliates for any losses arising out of any breach of their representations or warranties and any breach or failure to perform their covenants under the Purchase Agreement, among others.
The Purchase Agreement also provides that during the period beginning on the Closing Date and ending on the fifth anniversary of the Closing Date (the “Restricted Period”), the Seller, the Principal Owners (other than Thor Associates, Inc.), and their respective affiliates agree to not, among other things, (i) compete against the Focus Factor Business, (ii) solicit any employee or consultant providing services in connection with the Focus Factor Business (a “Covered Employee”), (iii) hire any former Covered Employee who left employment or retention by us within one year of such departure, or (iv) solicit any of our customers or suppliers who was a customer or supplier within the two year-period prior to the solicitation, to the extent such business is similar to the business conducted by such customer or supplier with us.
Distribution Agreement
On January 22, 2015, we and Knight entered into a Distribution, License and Supply Agreement (the “Distribution Agreement”), pursuant to which we granted to Knight an exclusive license to commercialize FOCUSFactor, FOCUSFactor Kids and Synergy Strip and all improvements thereto (together the “Licensed Products”) and appointed Knight as the exclusive distributor to offer to sell and sell the Licensed Products in Canada, and, at Knight’s election, one or more of the State of Israel, the Russian Federation, and Sub-Saharan Africa (the “Territory”). The Distribution Agreement provides that Knight may sublicense its rights or use sub-distributors under the Distribution Agreement on terms consistent with the terms of the Distribution Agreement. During the term of the Distribution Agreement, Knight agrees to obtain from us all its requirements for the Licensed Products and we agree to supply the Licensed Products at its adjusted production cost plus a designated percentage and any applicable taxes.
Pursuant to the Distribution Agreement, Knight agrees to not (i) knowingly solicit or accept orders of Licensed Products from any customer outside the Territory, (ii) knowingly distribute Licensed Products for sale or use outside the Territory, or (iii) supply any third-party distributor with Licensed Products after Knight has actual knowledge that such third party has distributed or offered to distribute Licensed Products outside the Territory. Similarly, under the terms of the Distribution Agreement, we agree that we will not (i) knowingly solicit or accept orders of Licensed Products from a customer in the Territory, (ii) knowingly distribute Licensed Products for sale or use in the Territory, or (iii) supply any third-party distributor with Licensed Products after we have knowledge that such third party has distributed or offered to distribute Licensed Products in the Territory.
The Distribution Agreement includes customary representations and warranties and covenants by the parties, each of which also agrees to customary indemnification provisions. In the event of our long-term inability to supply Knight with the Licensed Products, Knight is entitled to require, among other remedies, that we grant a Knight-designated third party a non-exclusive license to use all relevant intellectual property to manufacture and supply Knight with the Licensed Products for commercialization in the Territory. The term of the Distribution Agreement expires 15 years from the date of the first commercial sale of a Licensed Product in Canada, and the Distribution Agreement will automatically renew for successive 15-year periods unless either party provides the other with written notice of its intention not to renew (a “Non-Renewal Notice”). We agree that, in the event we issue a Non-Renewal Notice, we will pay to Knight a non-renewal fee equal to the net sales of the Licensed Products achieved by Knight in the Territory during the eight calendar quarters preceding the date of such notice, plus all applicable taxes.
Mr. Jack Ross, CEO of the Company has entered into Stock Pledge and Security Agreement with Factor Nutrition Labs, LLC on January 22, 2015 and pledged certain shares as a guarantee for additional payment of $1,500,000 pursuant to the said Asset Purchase Agreement.
Distribution Option Agreement
In connection with the Loan Agreement, we entered into a Product Distribution Option Agreement, dated January 22, 2015 (the “Option Agreement”), pursuant to which we granted Knight the exclusive right to negotiate the exclusive distribution rights of any one or more of our products, including products from the Focus Factor Business, for the territories of Canada, the Russian Federation, Sub-Saharan Africa and the State of Israel (the “Option”), pursuant to designated parameters. The Option Agreement is effective upon the date of the Option Agreement, will expire on January 31, 2045, and will automatically renew thereafter for successive five-year periods unless either party provides a notice of termination prior to the Option Agreement’s expiration. If Knight does not exercise the Option, then we successfully identify commercializable mineral depositsare free to contract for distribution with other parties, but only on terms no less favorable than those offered by Knight pursuant to the Option Agreement.
Description of the Business.
FOCUSfactor is sold at America’s leading retailers such as Costco, Sam’s Club, Walmart, Walgreens and obtain the required government license, our primary business activityThe Vitamin Shoppe. FOCUSfactor is anticipated to be mining, processing and distributing diamond bearing kimberlite bodies,a brain-health nutritional supplement that includes a proprietary blend of brain supporting vitamins, minerals, antioxidants and other mineral products. Canadanutrients. In December 2012, the United States Patent and Trademark Office issued US Patent 8,329,227 covering FOCUSfactor’s proprietary formulation “for enhanced mental function.” The issuance of the patent marked one of the few times a patent has been issued for a nationally branded nutritional supplement. FOCUSfactor is currentlyclinically tested with results demonstrating improvements in focus, concentration and memory in healthy adults.
Strategy.
We intend to expand on the FOCUSfactor product’s retail strategy and build out a net importerstrong online sales model.
Technology.
In December 2012, the United States Patent and Trademark Office issued U.S. Patent 8,329,227 covering FOCUSfactor’s proprietary formulation “for enhanced mental function.” The issuance of nonferrous metals. There are governmental restrictions on explorationthe patent marked one of the few times a patent has been issued for a nationally branded nutritional supplement.
The issuance of the patent for FOCUSfactor came after a 2011 clinical study report which showed that FOCUSfactor improved memory, concentration and mining activityfocus in Canada, discussed further below.
Products
Current Products
Adult Version | Kids Version | |
Development and Commercialization Strategy
Research and Development
We currently outsource our research and development to ensure that the all the diamonds have been recovered.
Manufacturing
We currently outsource the manufacturing of our products to third parties who have the necessary equipment and technology to provide mass quantities if required.
Commercialization
We are highly dependent on two retailers for the sale of our FOCUSfactor product: Costco Wholesale Corporation and Sam’s West, Inc./Walmart (a/k/a Sam’s Club). We intend to diversify our sales network and generate revenue by selling our consumer-ready products to retailers across North America, which retailers may then sell to end consumers through retail distribution channels. We also sell direct to wholesalers and distributors at a reduced cost to grow our revenue base quickly and to penetrate the market more effectively.
Intellectual Property
Our success depends in part upon our ability to protect our core technology and intellectual property. To establish and protect our proprietary rights, we will rely on a combination of patents, patent applications, trademarks, copyrights, trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights. In December 2012, the United States Patent and Trademark Office issued U.S. Patent 8,329,227 covering FOCUSfactor’s proprietary formulation “for enhanced mental function.” The issuance of the Star deposit. To this date therepatent marked one of the few times a patent has been issued for a nationally branded nutritional supplement.
The issuance of the patent for FOCUSfactor came after a 2011 clinical study report which showed that FOCUSfactor improved memory, concentration and focus in healthy adults participating in the study. The clinical study of FOCUSfactor was sponsored by Factor Nutrition Labs, the owner of the Focus Factor Business at the time, and was conducted by Cognitive Research Corporation, a full-service contract research organization that specializes in the effects of nutritional supplements and pharmaceutical products on human cognition. The study was conducted in compliance with all applicable country requirements for the conduct of clinical studies, including those outlined by the International Conference on Harmonization, Consolidated Guidelines on Good Clinical Practices, and the Food and Drug Administration.
Distribution and Marketing
We plan to focus on selling to retailers and distributors who currently are active in the consumer product space to expedite the penetration of market acceptance of the product. We are currently conducting research with focus groups to find out what the best approach for marketing efforts is no known mineral resourceand how to do so on the propertymost cost-effective manner. We also plan to develop an online sales channel.
Markets
We sell the products in mostly North America retail locations along with other developed countries with similar retail landscapes to North America. Knight has distribution rights to sell the FOCUSfactor product in Canada and no productioncertain other territories.
Competition
Although there are competing products on the market, FOCUSfactor is the only product in its category with both a patent and clinical study to support its claims. These competitors include a wide range of any kind has taken place. Oro Capital Corporation acquired a 70% interest inproducts, from targeted brain-enhancement supplements to indirect competitors such as energy drinks that claim to improve concentration.
Government Regulation
The products that we sell, and those that we are developing for future sale, are and will be subject to U.S. Food and Drug Administration (“FDA”) approval for packaging compliance and, with respect to the propertyproducts we currently sell, we have obtained such approvals from Mr. Bainthe FDA. Since the current products sold are considered nutraceuticals, minimal FDA regulations are placed on September 1, 2011. And on 21 st of February 2012 100% interest in the property was transferred from Mr. Bain to Mr. Aaron, our president.
The Company will rely on legal and lacustrine gravel, sand, silt and clay, all of Pleistocene age. These multiple phases of sedimentary deposition have been repeatedly mixed by advance and retreat of continental glaciation so that original layering no longer exists. This reduces confidence in any till sampling program to test for diamond indicator minerals. Most of the bedrock data is provided from well drillings scattered throughout the general Fort à la Corne region,operational compliance programs, as well as assessment records of drillinglocal counsel, to guide its businesses in the project area. All known kimberlites in the Fort a la Corne area are found within the Uppercomplying with applicable laws and Lower Colorado Group units and the underlying Mannville Group rocks.
Preliminary review of assessment work | $ | 1,000.00 | |
Mobilization/demobilization of crew | $ | 1,000.00 | |
Pace and compass/GPS lines, estimated 7 line km, 25 m spacing | $ | 2,000.00 | |
Detailed magnetometer survey, 7 line km | $ | 2,000.00 | |
Base station and instrument rental | $ | 1,000.00 | |
Consumables – flagging, pickets etc | $ | 100.00 | |
Accommodation/meals, 3 men | $ | 400.00 | |
Drafting and report | $ | 1,500.00 | |
Contingencies | $ | 1,000.00 | |
TOTAL COST, PHASE 1 PROGRAM | $ | 10,000.00 |
Review of previous work | $ | 1,500.00 | |
Mobilization/demobilization of crew | $ | 2,000.00 | |
Pace and compass/GPS lines, estimated 7 line km, 25 m spacing | $ | 3,000.00 | |
Detailed gravity survey, 7 line km | $ | 4,000.00 | |
Base station and instrument rental | $ | 2,000.00 | |
Consumables – flagging, pickets etc | $ | 1,000.00 | |
Accommodation/meals, 3 men | $ | 1,000.00 | |
Drafting and report | $ | 3,000.00 | |
Contingencies | $ | 2,500.00 | |
TOTAL COST, PHASE 2 PROGRAM | $ | 20,000.00 |
Review of previous work | $ | 2,000.00 | |
Mobilization/demobilization of crew | $ | 10,000.00 | |
Diamond drilling, all inclusive $200 per meter, 1000 m total | $ | 200,000.00 | |
Drafting and report | $ | 10,000.00 | |
Contingencies | $ | 28,000.00 | |
TOTAL COST, PHASE 3 PROGRAM | $ | 250,000.00 |
7 |
The Company does not anticipate, at this time, that the cost of reclamationcompliance with U.S. and environmental remediation for all work undertaken which causes sufficient surface disturbance to necessitate reclamation work. Both reclamationforeign laws will have a material financial impact on its operations, business or financial condition. There are however no guarantees that new regulatory and environmental remediation refer to putting disturbed ground back as close totariff legislation may not have a material negative effect on its original state as possible. Other potential pollution or damage must be cleaned-up and renewed along standard guidelines outlinedbusiness in the usual permits. Reclamation is the processfuture.
Employees
As of bringing the land backMarch 23, 2015, we have six full-time employees and no part-time employees. We intend to a natural state after completion of exploration activities. Environmental remediation refersgrow our employee base in response to the physical activity of taking steps to remediate, or remedy, any environmental damage caused, i.e. refilling trenches after sampling or cleaning up fuel spills. Our initial programs do not require any reclamation or remediation other than minor clean updemands and removal of supplies because of minimal disturbance to the ground. The amount of these costs is not known at this time as we do not know the extentrequirements of the exploration program we will undertake, beyond completion of the recommended three phases described above. Because there is presently no information on the size, tenor, or quality of any resource or reserve at this time, it is impossible to assess the impact of any capital expenditures on our earnings or competitive position in the event a potentially economic deposit is discovered.
As a “smaller reporting company,” as defined in Rule 12b-2by Item 10 of the Exchange Act,Regulation S-K, we are not required to provide the information called for by this Item.
Not Applicable.
As of December 31, 2014, the Company neither owned nor leased any real property.
None.
ITEM 4. MINE SAFETY DISCLOSURES.DISCLOSURES
Not Applicable.
8 |
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS MARKET INFORMATIONAND ISSUER PURCHASES OF EQUITY SECURITIES.
Only a sporadic and limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder in all likelihood will be unable to resell his, her or its securities in our Company. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. Our sharessecurities are traded on the OTCQB operated by OTCMarkets.com under the symbol “SNYR”.
Quarter Ending | High | Low | |||||||
12/31/14 | $ | 0.55 | $ | 0.31 | |||||
9/30/14 | $ | 0.60 | $ | 0.31 | |||||
6/30/14 | $ | 2.00 | $ | 0.30 | |||||
3/31/14 | $ | 0.33 | $ | 0.33 | |||||
12/31/13 | — | — | |||||||
9/30/13 | — | — | |||||||
6/30/13 | — | — | |||||||
3/31/13 | — | — |
Shareholders
As of common stock are not listed on any exchange or quoted over-the-counter. We intend toMarch 23, 2015, we have 64 shareholders of record of our common stock be quoted on the OTC Bulletin Board. If our securities arestock.
Dividend Policy
We have not quoted on the OTC Bulletin Board, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The OTC Bulletin Board differs from national and regional stock exchanges in that it:
Section 15(g) of the Securities Exchange Act of 1934
Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as we expectamended, which imposes additional sales practice requirements on broker/dealers who sell such securities to retainpersons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years excluding the value of their primary residence). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our future earnings for usesecurities and also may affect your ability to sell your shares in the operationsecondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and expansionsecondary marketing; terms important to an understanding of our business.
Sales of July 31, 2013 the Company had 6,000,000 shares of common stock issued and outstanding held by 38 holders of record.
During 2014, we havedid not paidissue any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.
Purchases of common stock or other securities duringEquity Securities by the year ended July 31, 2013.
None.
As a “smaller reporting company,” as defined in Rule 12b-2by Item 10 of the Exchange Act,Regulation S-K, we are not required to provide the information called for by this Item.information.
9 |
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOPERATIONS.
The following discussion is an overview of the important factors that management focuses on in evaluating our business; financial condition and operating performance should be read in conjunction with the financial statements included in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of any number of factors, including those set forth in the Company’s reports filed with the SEC on Form 10-K, 10-Q and 8-K as well as in this Annual Report on Form 10-K. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
Overview.
The Company is in the business of marketing and distributing consumer branded products through various distribution channels primarily in the health and wellness industry. The Company’s strategy is to grow both organically and by future acquisition.
On April 7, 2014, an Agreement and Plan of Merger (the “Merger Agreement”) was entered into by and among the Company, Synergy Merger Sub, Inc., a Delaware corporation and the wholly owned subsidiary of the Company formed for the purpose of the transactions under the Merger Agreement (“Merger Sub”), and Synergy Strips Corp., a Delaware corporation incorporated on January 24, 2012 (“SSC”). The Merger Agreement provided for the merger of Merger Sub with and into SSC (the “Merger”), with SSC surviving the merger as the wholly owned subsidiary of the Company. The Merger was consummated on April 21, 2014.
On April 21, 2014, the Company changed its fiscal year end from July 31 to December 31. On April 28, 2014, the Company changed its name from “Oro Capital Corporation” to “Synergy Strips Corp.” in connection with the Merger.
Our management’s discussion and analysis of our financial condition and results of operations are only based on our current business. Key factors affecting our results of operations include revenues, sincecost of revenues, operating expenses and income and taxation.
Results of Operations for the Years Ended December 29, 2010 (inception).
Revenue
For the year ended December 31, 2014, we had revenues of $9,158 from sales of our products, as compared to revenue of $0 for the year ended July 31, 2013. These expenses were comprised
Cost of $3,000Revenue
For the year ended December 31, 2014, our cost of revenue was $5,616. This was primarily due to securing an arrangement with the U.S. military via a distributor in consulting services, $8,500 in exploration, $1,583 in general and administrative, $3,000 in rent, $5,700 in legal and accounting, and $1,418 in imputed interest expense.
Operating Expenses
For the year ended December 31, 2014, our operating expenses. These expenses were comprised of $3,000 in consulting services, $3,000 in rent, $6,000 in impairment of mineral claims, $3,000 in legal$961,636. This was primarily due to promoting the Synergy brand throughout North America and accounting and $1,200 in imputed interest expense.
Net Loss
For the year ended December 31, 2014, our net loss since inception (September 19, 2009) through July 31, 2013 is $48,248. The following table provides selected financial data about our company forwas $963,634. This was primarily due to increased spending on developing the yearsSynergy brand and securing penetration in the U.S. market and loss from the Merger transaction. For the year ended July 31, 2013, and 2012.
Balance Sheet Data | July 31, 2013 | July 31, 2012 | ||||||
Cash and Cash Equivalents | $ | 33,908 | $ | 4,000 | ||||
Total Assets | $ | 33,908 | $ | 4,000 | ||||
Total Liabilities | $ | 20,691 | $ | 18,000 | ||||
Shareholders’ Equity (Deficit) | $ | (10,217 | ) | $ | (14,000) |
Results of Operations for Oro Capital which includes a statement raising substantial doubt as to our ability to continue as a going concern.
Revenue and Cost of Revenue
For the next 12five months are expected to be approximately $57,000. Ifended December 31, 2013, we experience a shortagehad no revenues and cost of funds prior to generating revenues from operations we may utilize funds from our directors, who have informally agreed to advance funds to allow us to pay for operating costs, however they have no formal commitment, arrangement or legal obligation to advance or loan funds to us. Management believes our current cash balance will not be sufficient to fund our operations for the next twelve months.
Preliminary review of assessment work | $ | 1,000.00 | |
Mobilization/demobilization of crew | $ | 1,000.00 | |
Pace and compass/GPS lines, estimated 7 line km, 25 m spacing | $ | 2,000.00 | |
Detailed magnetometer survey, 7 line km | $ | 2,000.00 | |
Base station and instrument rental | $ | 1,000.00 | |
Consumables – flagging, pickets etc. | $ | 100.00 | |
Accommodation/meals, 3 men | $ | 400.00 | |
Drafting and report | $ | 1,500.00 | |
Contingencies | $ | 1,000.00 | |
TOTAL COST, PHASE 1 PROGRAM | $ | 10,000.00 |
Operating Expenses
For the five months ended December 31, 2013, our operating expenses were $24,538.
Net Loss
For the five months ended December 31, 2013, our net loss was $24,951.
Liquidity and Capital Resources
Overview
As of December 31, 2014, we had $338 cash on positive resultshand and a $125,666 working capital deficit.
Year Ended December 31, 2014 and July 31, 2013
Net Cash Used in Operating Activities
For the year ended December 31, 2014, we used net cash of $489,175 in operating activities, as compared to $15,783 used in operating activities for the year ended July 31, 2013. The increase was primarily attributable to higher net loss during the year ended December 31, 2014 offset with stock based compensation expense and loss from the Phase I mag survey - Phase II could be planned.
Net Cash Provided by Financing Activities
For the year ended December 31, 2014, financing activities provided $486,283, as compared to $45,691 provided by financing activities for the year ended July 31, 2013. The increase was primarily attributable to proceeds from sale of common stock offset with repayment of notes payable.
Five Months Ended December 31, 2013
Net Cash Used in Operating Activities
For the five months ended December 31, 2013, we used net cash of $30,678 in operating activities.
Net Cash Provided by Financing Activities
For the five months ended December 31, 2013, financing activities provided $0.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
None.
Off-Balance Sheet Arrangements
None.
Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the Phase 1 work a Phase 2 program would be initiated to provide additional information. This exploration program would consistCompany and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of a gravity survey to test the best targets determined from the Phase 1 work. The estimated cost of the Phase 2 program is $20,000USD.
The preparation of the consolidated financial statements in accordanceconformity with U.S. generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of net revenue and expenses induring the reporting period. We regularly evaluate our estimatesActual results could differ from those estimates.
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Cash and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us July differ materially and adversely from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.
The Company considers all highly liquid instrumentscash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when acquired,purchased, to be cash and cash equivalents. WeAs of December 31, 2014 the Company had no cash equivalents at July 31, 2013 or 2012.
Capitalization of Fixed Assets
The Company compliescapitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.
Revenue Recognition
Revenue is recognized in accordance with FASB guidelines for its descriptionStaff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104. We recognize revenue when persuasive evidence of an exploration stage company.
Accounts receivable
Accounts receivable are generally unsecured. The majority of the mining project. At July 31, 2012, the Company did an assessment whether this payment would meet the characteristics requiredCompany’s sales are in cash from truck stop sales. Receivables relate to record it as an asset at year-end and determined that an impairment charge of $6,000 should be reflected as of July 31, 2012 because the Company could not substantiate that there would be a future economic benefit arising from this payment.
INCOME TAXES - Income Taxes
The Company accounts for income taxes under the provisions issued by the FASButilizes Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 740, “Income Taxes,” which requires the recognition of deferred tax liabilitiesassets and assetsliabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilitiesassets and assetsliabilities are determined based on the difference between the financial statement and tax basesbasis of assets and liabilities usingand their financial reporting amounts based on enacted tax laws and statutory tax rates in effect forapplicable to the yearperiods in which the differences are expected to reverse. affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.
Net Earnings (Loss) Per Common Share
The Company computes tax asset benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured itearnings per share under ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is more likely than not it will utilizecomputed by dividing the net operating losses carried forward in future years.
Going Concern
The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had accumulated deficit at December 31, 2014 of $1,033,291. The Company has a working capital deficit of $125,666 as of December 31, 2014. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and to 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 establishes a revenue stream and becomes profitable. If the Company is unable to obtain adequate capital it could be forced to cease development of operations.
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In order to continue as a going concern and to develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through borrowing and sales of common stock. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Fair Value Measurements
The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with provisionsASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.
ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the FASB. use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:
Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.
Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs for the asset or liability.
The provisions require dual presentationdetermination of basicwhere assets and diluted loss per share. Basic net loss per share excludesliabilities fall within this hierarchy is based upon the impactlowest level of common stock equivalents. Diluted net loss per share utilizesinput that is significant to the average market price per share when applying the treasury stock method in determining common stock equivalents. fair value measurement.
As of JulyDecember 31, 2013 and 2011,2014, the Company has determined that there were no common stock equivalents outstanding.assets or liabilities measured at fair value.
Inventory
Inventory consists of finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market.
Stock-Based Compensation
The Company adopted the provisions of ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to718. We estimate the fair value of all financial instruments included on its balance sheet asstock options using a binomial model, consistent with the provisions of July 31, 2013ASC 718 and July 31, 2012.SEC Staff Accounting Bulletin No. 107, Share-Based Payment. Option-pricing models require the input of highly subjective assumptions, including the price volatility of the underlying stock. We determined that the use of implied volatility is expected to be more reflective of market conditions and, therefore, could reasonably be expected to be a better indicator of our expected volatility than historical volatility. The Company’s financial instruments consist of cash. The Company considersexpected term assumption used in calculating the carryingestimated fair value of such amounts inour stock-based compensation awards using the financial statementsbinomial model is based on detailed historical data about employees’ exercise behavior, vesting schedules, and death and disability probabilities. In addition, we are required to approximate theirestimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised and cancelled. We believe the resulting binomial calculation provides a more refined estimate of the fair value due to the short-term nature of these financial instruments.our employee stock options.
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The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to SEC Paragraphs Pursuantentities that have not commenced planned principal operations.
The Company has elected to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant toadopt the issuanceprovisions of SAB No. 114.ASU 2014-10 from the fiscal quarter ending June 30, 2014. The adoption of ASU 2012-032014-10 did not have a significant impact on our results of operations, financial condition or cash flow.
The FASB has issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company has not yet determined the effect of the adoption of this standard and it is not expected to have a material impact on ourthe Company’s condensed consolidated financial position orand results of operations.
The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements”revenue recognition requirements in Accounting Standards Update No. 2012-04.Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The amendmentsstandard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in this update cover a wide rangean amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of Topics ininitially applying the Accounting Standards Codification. These amendments include technical corrections and improvements toASU recognized at the Accounting Standards Codification and conforming amendments related to fair value measurements.date of initial application. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. TheCompany has not yet determined the effect of the adoption of ASU 2012-04this standard and it is not expected to have a material impact on ourthe Company’s condensed consolidated financial position orand results of operations.
In February 2013,August 2014, the Financial Accounting Standards Board (FASB)FASB issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,a new accounting standard which requires management to improve the transparency ofevaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires alreadyIf substantial doubt exists, additional disclosure is required torequired. This new standard will be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
There were various updates recently issued, most of ASU No. 2013-02 iswhich represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on ourthe Company’s condensed financial position, or results of operations.
Change in Fiscal Year End
As reported in the Company’s current report on Form 8-K filed on May 7, 2014, on April 21, 2014, the Company’s board of directors approved a change to the Company’s fiscal year end from July 31 to December 31 of each year. With the change effective this 2014 fiscal year, which will now end December 31, 2014, there is a five month transition period covering the months from August 2013 to December 2013.
As a “smaller reporting company,” as defined in Rule 12b-2by Item 10 of the Exchange Act,Regulation S-K, we are not required to provide the information called for by this Item.
The information required by this Item is set forth in the consolidated financial statements and notes thereto beginning at page F-1 of this Form 10-K.
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FINANCIAL STATEMENTS
Synergy Strips Corp.
(formerly ORO Capital Corporation)
F-1 | |
- F-2 | |
F-3 | |
F-4 | |
F-5 | |
Consolidated Statements of Cash Flows | F-6 |
Notes to the Consolidated Financial Statements | F-7 |
15 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and shareholders
Synergy Strips Corp.
(formerly ORO Capital Corporation)
We have audited the accompanying consolidated balance sheets of Synergy Strips Corp. (formerly ORO Capital Corporation) (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year ended December 31, 2014 and five months ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Synergy Strips Corp. (formerly ORO Capital Corporation) at December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the for the year ended December 31, 2014 and five months ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ RBSM LLP | |
RBSM LLP | |
March 27, 2015 | |
New York, New York |
F-1 |
To the Board of Directors
Oro Capital Corporation, Inc.
We have audited the accompanying balance sheets of Oro Capital Corporation, Inc. (An Exploration Stage Company) as of July 31, 2013 and July 31, 2012 and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for the yearsyear then ended and for the period from December 29, 2010 (inception) through July 31, 2013.ended. These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our auditsaudit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsaudit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oro Capital Corporation, Inc. as of July 31, 2013, and July 31, 2012, and the results of its operations, changes in stockholders’ equity (deficit) and cash flows for the periods described aboveyear then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1.2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC | |
M&K CPAS, PLLC | |
www.mkacpas.com | |
Houston, Texas | |
October 28, 2013 |
F-2 |
(formerly ORO Capital Corporation
Consolidated Balance Sheets
July 31, 2013 | July 31, 2012 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 33,908 | $ | 4,000 | ||||
Total Current Assets | 33,908 | 4,000 | ||||||
Total Assets | $ | 33,908 | $ | 4,000 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
Current Liabilities | ||||||||
Accounts Payable and Accrued Liabilities | $ | 3,000 | $ | 3,000 | ||||
Due to Directors | 20,691 | 15,000 | ||||||
Total Liabilities | 23,691 | 18,000 | ||||||
Stockholders’ Equity (Deficit) | ||||||||
Common Stock (75,000,000 shares authorized, par value 0.00001, 6,000,000 shares issued and outstanding (2012: 5,000,000)) | 60 | 50 | ||||||
Additional paid-in capital | 58,405 | 10,997 | ||||||
Deficit accumulated during the exploration stage | (48,248 | ) | (25,047 | ) | ||||
Total Stockholders’ Equity (Deficit) | 10,217 | (14,000 | ) | |||||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 33,908 | $ | 4,000 |
December 31, 2014 | December 31, 2013 | July 31, 2013 | ||||||||||
Assets | ||||||||||||
Current Assets | ||||||||||||
Cash and cash equivalents | $ | 338 | $ | 3,230 | $ | 33,908 | ||||||
Accounts Receivable | 2,898 | - | - | |||||||||
Receivable from related party | 16,077 | - | - | |||||||||
Prepaid expenses | 10,000 | - | - | |||||||||
Inventory | 26,064 | - | - | |||||||||
Total Current Assets | 55,376 | 3,230 | 33,908 | |||||||||
Total Assets | $ | 55,376 | $ | 3,230 | $ | 33,908 | ||||||
Liabilities and Stockholders’ (Deficit) Equity | ||||||||||||
Current Liabilities: | ||||||||||||
Accounts payable and accrued liabilities | $ | 74,642 | $ | 16,051 | $ | 23,691 | ||||||
Notes payable, related party | 100,000 | - | - | |||||||||
Notes payable, others | 6,400 | - | - | |||||||||
Total Current Liabilities | 181,042 | 16,051 | 23,691 | |||||||||
Commitments and contingencies | - | - | - | |||||||||
Stockholders’ (Deficit) Equity: | ||||||||||||
Common stock, $0.00001 par value; 75,000,000 shares authorized; 62,100,000, 180,000,000 and 180,000,000 shares issued and outstanding, respectively | 621 | 1,800 | 1,800 | |||||||||
Common stock to be issued | 40,000 | - | - | |||||||||
Additional paid in capital | 867,004 | 58,578 | 56,665 | |||||||||
Accumulated deficit | (1,033,291 | ) | (73,199 | ) | (48,248 | ) | ||||||
Total stockholders’ (deficit) equity | (125,666 | ) | (12,821 | ) | 10,217 | |||||||
Total Liabilities and Stockholders’ (Deficit) Equity | $ | 55,376 | $ | 3,230 | $ | 33,908 |
The Accompanying Notesaccompanying notes are an Integral Partintegral part of These Financial Statements)these consolidated financial statements
F-3 |
(formerly ORO Capital Corporation
Consolidated Statements of Operations
Year Ended July 31, 2013 | Year Ended July 31, 2012 | Inception December 29, 2010 to July 31, 2013 | ||||||||||
Operating Expenses | ||||||||||||
Consulting services | $ | 3,000 | $ | 3,000 | $ | 7,750 | ||||||
Exploration | 8,500 | - | 8,500 | |||||||||
General and administrative | 1,583 | - | 1,603 | |||||||||
Rent | 3,000 | 3,000 | 7,750 | |||||||||
Legal and accounting | 5,700 | 3,000 | 13,680 | |||||||||
Impairment of Mineral Claims | - | 6,000 | 6,000 | |||||||||
Total Operating Expenses | 21,783 | 15,000 | 45,283 | |||||||||
Other Expense | ||||||||||||
Imputed Interest Expense | 1,418 | 1,200 | 2,965 | |||||||||
Total Expenses | 23,201 | 16,200 | 48,248 | |||||||||
Net Loss | $ | (23,201 | ) | $ | (16,200 | ) | $ | (48,248 | ) | |||
Net Loss Per Common Share – Basic and Diluted | $ | (0.00 | ) | $ | 0.00 | |||||||
Weighted Average Number of Common Shares Outstanding | 5,096,541 | 5,000,000 |
For the year ended | For the five months ended | For the year ended | ||||||||||
December 31, 2014 | December 31, 2013 | July 31, 2013 | ||||||||||
Revenue | $ | 9,158 | $ | - | $ | - | ||||||
Cost of Sales | ||||||||||||
Cost of Sales | 5,616 | - | - | |||||||||
Total costs of sales | 5,616 | - | - | |||||||||
Gross Profit | 3,542 | - | - | |||||||||
Operating expenses | ||||||||||||
General and administrative | 961,636 | 24,538 | 21,783 | |||||||||
Total operating expenses | 961,636 | 24,538 | 21,783 | |||||||||
Other expenses | ||||||||||||
Imputed and other interest expense | 1,998 | 413 | 1,418 | |||||||||
Total expenses | 963,634 | 24,951 | 23,201 | |||||||||
Net Loss | $ | (960,092 | ) | $ | (24,951 | ) | $ | (23,201 | ) | |||
Net loss per share – basic and diluted | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Weighted average common shares – basic and diluted | 97,165,479 | 180,000,000 | 152,896,230 |
The accompanying notes are an Integral Partintegral part of These Financial Statements)these consolidated financial statements
F-4 |
(formerly ORO Capital CorporationCorporation)
Consolidated Statement of Stockholders’ (Deficit) Equity
Common stock | Additional Paid in | Common Stock | Accumulated | Total Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | to be issued | Deficit | Equity | |||||||||||||||||||
Balance as of July 31, 2012 | 150,000,000 | $ | 1,500 | $ | 9,547 | $ | - | $ | (25,047 | ) | $ | (14,000 | ) | |||||||||||
Issuance of shares for cash | 30,000,000 | 300 | 39,700 | - | - | 40,000 | ||||||||||||||||||
Donated services and rent | - | - | 6,000 | - | - | 6,000 | ||||||||||||||||||
Imputed interest expense | - | - | 1,418 | - | - | 1,418 | ||||||||||||||||||
Net loss | - | - | - | - | (23,201 | ) | (23,201 | ) | ||||||||||||||||
Balance as of July 31, 2013 | 180,000,000 | $ | 1,800 | $ | 56,665 | $ | - | $ | (48,248 | ) | $ | 10,217 | ||||||||||||
Donated services and rent | - | - | 1,500 | - | - | 1,500 | ||||||||||||||||||
Imputed interest expense | - | - | 413 | - | - | 413 | ||||||||||||||||||
Net loss | - | - | - | - | (24,951 | ) | (24,951 | ) | ||||||||||||||||
Balance as of December 31, 2013 | 180,000,000 | $ | 1,800 | $ | 58,578 | $ | - | $ | (73,199 | ) | $ | (12,821 | ) | |||||||||||
Cancellation of Oro Corporation shares | (135,900,000 | ) | (1,359 | ) | 1,359 | - | - | - | ||||||||||||||||
Common stock issued to Synergy shareholders | 16,000,000 | 160 | 24,840 | - | - | 25,000 | ||||||||||||||||||
Common stock issued for cash | 2,000,000 | 20 | 499,980 | - | - | 500,000 | ||||||||||||||||||
Fair value of vested stock options | - | - | 282,247 | - | - | 282,247 | ||||||||||||||||||
Common stock to be issued for services | - | - | - | 40,000 | - | 40,000 | ||||||||||||||||||
Net loss | - | - | - | - | (960,092 | ) | (960,092 | ) | ||||||||||||||||
Balance as of December 31, 2014 | 62,100,000 | $ | 621 | $ | 867,004 | $ | 40,000 | $ | (1,033,291 | ) | $ | (125,666 | ) |
The accompanying notes are an integral part of these consolidated financial statements
F-5 |
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
Year Ended July 31, 2013 | Year Ended July 31, 2012 | Inception December 29, 2010 to July 31, 2013 | ||||||||||
Operating Activities | ||||||||||||
Net loss | $ | (23,201 | ) | $ | (16,200 | $ | (48,248 | ) | ||||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||||||
Impairment of mineral claims | - | 6,000 | 6,000 | |||||||||
Imputed interest expense | 1,418 | 1,200 | 2,965 | |||||||||
Donated consulting services and rent expenses | 6,000 | 6,000 | 15,500 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts payable and accrued liabilities | - | 3,000 | 3,000 | |||||||||
Net Cash Used in Operating Activities | (15,783 | ) | - | (20,783 | ) | |||||||
Investing Activities | ||||||||||||
Purchase of mining claims | - | - | (6,000 | ) | ||||||||
Financing Activities | ||||||||||||
Borrowings on debt-related party | 5,691 | - | 20,691 | |||||||||
Issuance of common shares for cash | 40,000 | - | 40,000 | |||||||||
Net Cash from Financing Activities | 45,691 | - | 60,691 | |||||||||
Increase in Cash | 29,908 | - | 33,908 | |||||||||
Cash – Beginning of Period | 4,000 | 4,000 | - | |||||||||
Cash - End of Period | $ | 33,908 | $ | 4,000 | $ | 33,908 | ||||||
Supplemental Disclosure of Cash Flow Information Cash paid during the period for : | ||||||||||||
Interest | $ | - | $ | - | $ | - | ||||||
Income taxes | $ | - | $ | - | $ | - | ||||||
Non Cash | ||||||||||||
Issuance of founders shares | $ | - | $ | - | $ | 50 |
For the year ended | For the five months ended | For the year ended | ||||||||||
December 31, 2014 | December 31, 2013 | July 31, 2013 | ||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net loss | $ | (960,092 | ) | $ | (24,951 | ) | $ | (23,201 | ) | |||
Stock based compensation expense | 322,247 | - | - | |||||||||
Imputed interest expense | - | 413 | 1,418 | |||||||||
Donated consulting services and rent expenses | - | 1,500 | 6,000 | |||||||||
Loss on acquisition | 109,040 | - | - | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | (2,898 | ) | - | - | ||||||||
Inventory | (26,064 | ) | - | - | ||||||||
Prepaid expense | 10,000 | - | - | |||||||||
Accounts payable and accrued liabilities | 58,591 | (7,640 | ) | - | ||||||||
Net cash used in operating activities | (489,175 | ) | (30,678 | ) | (15,783 | ) | ||||||
Cash Flows from Investing Activities | - | - | - | |||||||||
Cash Flows from Financing Activities | ||||||||||||
(Repayments to) advances from related party notes | (16,077 | ) | - | 5,691 | ||||||||
Proceeds from notes payable | 100,000 | - | - | |||||||||
Repayment of notes payable | (97,640 | ) | - | - | ||||||||
Proceeds from issuance of common stock | 500,000 | - | 40,000 | |||||||||
Net cash provided by financing activities | 486,283 | - | 45,691 | |||||||||
Net increase in cash and cash equivalents | (2,892 | ) | (30,678 | ) | 29,908 | |||||||
Cash and Cash Equivalents, beginning of period | 3,230 | 33,908 | 4,000 | |||||||||
Cash and Cash Equivalents, end of period | $ | 338 | $ | 3,230 | $ | 33,908 | ||||||
Supplemental Disclosure of Cash Flow Information: | ||||||||||||
Cash paid during the period for: | ||||||||||||
Interest | $ | 1,667 | $ | - | $ | - | ||||||
Income taxes | $ | - | $ | - | $ | - | ||||||
Supplemental Disclosure of Non-cash Investing and Financing Activities: | ||||||||||||
Cancellation of common stock as part of purchase transaction | $ | 1,359 | $ | - | $ | - | ||||||
Financing for prepaid insurance | $ | 20,000 | $ | - | $ | - | ||||||
Assumption of liabilities as part of acquisition transaction | $ | 84,040 | $ | - | $ | - | ||||||
Issuance of shares as part of acquisition transaction | $ | 25,000 | $ | - | $ | - |
The Accompanying Notesaccompanying notes are an Integral Partintegral part of These Financial Statements)these consolidated financial statements
F-6 |
(FORMERLY ORO CAPITAL CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Nature of Contentsthe Business
Synergy Strips Corp. (“Synergy”, “we”, “us”, “our” or the “Company”) (formerly ORO Capital Corporation
Deficit Accumulated | ||||||||||||||||||||
Common Stock | Additional Paid-in | During the Exploration | ||||||||||||||||||
Shares | Amount | Capital | Stage | Total | ||||||||||||||||
Balance at December 22, 2010 | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Issuance of common stock to founders | 5,000,000 | 50 | (50 | ) | - | - | ||||||||||||||
Donated consulting services and rent | - | - | 3,500 | - | 3,500 | |||||||||||||||
Imputed interest expense | - | - | 347 | - | 347 | |||||||||||||||
Net loss | - | - | - | (8,847 | ) | (8,847 | ) | |||||||||||||
Balances at July 31, 2011 | 5,000,000 | 50 | 3,797 | (8,847 | ) | (5,000 | ) | |||||||||||||
Donated services and rent | - | - | 6,000 | - | 6,000 | |||||||||||||||
Imputed interest expense | - | - | 1,200 | - | 1,200 | |||||||||||||||
Net loss | - | - | - | (16,200 | ) | (16,200 | ) | |||||||||||||
Balances at July 31, 2012 | 5,000,000 | $ | 50 | $ | 10,997 | $ | (25,047 | ) | $ | (14,000 | ) | |||||||||
Issuance of shares for cash | 1,000,000 | 10 | 39,990 | - | 40,000 | |||||||||||||||
Donated services and rent | - | - | 6,000 | - | 6,000 | |||||||||||||||
Imputed interest expense | - | - | 1,418 | - | 1,418 | |||||||||||||||
Net loss | - | - | - | (23,201 | ) | (23,201 | ) | |||||||||||||
Balances at July 31, 2013 | 6,000,000 | $ | 60 | $ | 58,405 | $ | (48,248 | ) | $ | 10,217 |
The Company is an exploration stage corporation. An exploration stage corporation is one engaged in the search for mineral deposits or reserves which are notbusiness of marketing and distributing best in eitherclass consumer branded products through various distribution channels primarily in the development or production stage.health and wellness industry. The Company intendsCompany’s strategy is to explore for diamond-bearing kimberlite on its mining property.
Merger
On April 7, 2014, an Agreement and Plan of Merger (the “Merger Agreement”) was entered into by and among the Company, has no operations, has been issuedSynergy Merger Sub, Inc., a going concern opinionDelaware corporation and relies upon the salewholly owned subsidiary of our securities and loans from its sole officer and director to fund operations.
On April 21, 2014, following the satisfaction or waiver of the conditions set forth in and classification of recorded asset amounts and classification of liabilities that might be necessary should ORO Capital Corporation be unable to continue as a going concern. As at July 31, 2013 ORO Capital Corporation has a working capital deficiency, has not generated revenues and has accumulated losses of $48,248 (2012: $25,047) since inception. The continuation of ORO Capital Corporation as a going concern is dependent upon the continued financial support from its shareholders, the ability of ORO Capital Corporation to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the ORO Capital Corporation’ ability to continue as a going concern.
The Merger has been accounted for under the acquisition method of accounting. Under the acquisition method of accounting, principles generally acceptedthe total acquisition consideration price is allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. The Company determined there were no assets acquired and $84,040 of liabilities assumed. As a result, the Company charged the fair value of the consideration paid of 16,000,000 shares which were valued at $25,000 and assumed liabilities of $84,040 and recorded a loss on acquisition of $109,040 during the year ended December 31, 2014.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in the United States, and are expressed in U.S. dollars. The Company’s fiscal year-end is July 31.
Use of Estimates
The preparation of the consolidated financial statements in accordanceconformity with U.S. generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of net revenue and expenses induring the reporting period. We regularly evaluate our estimatesActual results could differ from those estimates.
Cash and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us July differ materially and adversely from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.
The Company considers all highly liquid instrumentscash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when acquired,purchased, to be cash and cash equivalents. WeAs of December 31, 2014 the Company had no cash equivalents at July 31, 2013 or 2012.
Capitalization of Fixed Assets
The Company compliescapitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.
F-7 |
Revenue Recognition
Revenue is recognized in accordance with FASB guidelines for its descriptionStaff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104. We recognize revenue when persuasive evidence of an exploration stage company.
Accounts receivable
Accounts receivable are generally unsecured. The Company calculates imputed interest expense atestablishes an interest rateallowance for doubtful accounts receivable based on the age of 8% (2012: 8%) per annum. Interest expenseoutstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for the year ended July 31, 2013 was $1,418 (2012:$1,200)
INCOME TAXES - Income Taxes
The Company accounts for income taxes under the provisions issued by the FASButilizes Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 740, “Income Taxes,” which requires the recognition of deferred tax liabilitiesassets and assetsliabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilitiesassets and assetsliabilities are determined based on the difference between the financial statement and tax basesbasis of assets and liabilities usingand their financial reporting amounts based on enacted tax laws and statutory tax rates in effect forapplicable to the yearperiods in which the differences are expected to reverse. affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.
Net Earnings (Loss) Per Common Share
The Company computes tax asset benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured itearnings per share under ASC subtopic 260-10, Earnings Per Share. Basic earnings (loss) per share is more likely than not it will utilizecomputed by dividing the net operating losses carried forward in future years.
Going Concern
The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had accumulated deficit at December 31, 2014 of $1,033,291. The Company has a working capital deficit of $125,666 as of December 31, 2014. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and to 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 establishes a revenue stream and becomes profitable. If the Company is unable to obtain adequate capital it could be forced to cease development of operations.
In order to continue as a going concern and to develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through borrowing and sales of common stock. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
F-8 |
Fair Value Measurements
The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with provisionsASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.
ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the FASB. use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:
Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.
Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs for the asset or liability.
The provisions require dual presentationdetermination of basicwhere assets and diluted loss per share. Basic net loss per share excludesliabilities fall within this hierarchy is based upon the impactlowest level of common stock equivalents. Diluted net loss per share utilizesinput that is significant to the average market price per share when applying the treasury stock method in determining common stock equivalents. fair value measurement.
As of JulyDecember 31, 2013 and 2012,2014, the Company has determined that there were no common stock equivalents outstanding.assets or liabilities measured at fair value.
Inventory
Inventory consists of finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market.
Stock-Based Compensation
The Company adopted the provisions of ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to718. We estimate the fair value of all financial instruments included on its balance sheet asstock options using a binomial model, consistent with the provisions of July 31, 2013ASC 718 and July 31, 2012.SEC Staff Accounting Bulletin No. 107, Share-Based Payment. Option-pricing models require the input of highly subjective assumptions, including the price volatility of the underlying stock. We determined that the use of implied volatility is expected to be more reflective of market conditions and, therefore, could reasonably be expected to be a better indicator of our expected volatility than historical volatility. The Company’s financial instruments consist of cash. The Company considersexpected term assumption used in calculating the carryingestimated fair value of such amountsour stock-based compensation awards using the binomial model is based on detailed historical data about employees’ exercise behavior, vesting schedules, and death and disability probabilities. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised and cancelled. We believe the resulting binomial calculation provides a more refined estimate of the fair value of our employee stock options. For our employee stock purchase plan, we decided to continue to use the Black-Scholes model to calculate the estimated fair value.
Recent Accounting Pronouncements
In June of 2014 the FASB issued ASU 2014-10, “Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation” (“ASU 2014-10”). The amendments in ASU 2014-10 remove the definition of a development stage entity from the master glossary of the ASC, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to approximate theirentities that have not commenced planned principal operations.
The Company has elected to adopt the provisions of ASU 2014-10 from the fiscal quarter ending June 30, 2014. The adoption of ASU 2014-10 did not have a significant impact on our results of operations, financial condition or cash flow.
The FASB has issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value dueof the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the short-term nature of these financial instruments.
F-9 |
The FASB has issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying2014-09, Revenue from Contracts with Customers. This ASU supersedes the Scoperevenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of Disclosures about Offsetting Assetspromised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and Liabilities, which clarifies which instruments and transactions are subjectshould be applied retrospectively to each prior reporting period presented or retrospectively with the offsetting disclosure requirements originally established bycumulative effect of initially applying the ASU 2011-11.recognized at the date of initial application. The new ASU addresses preparer concerns thatCompany has not yet determined the scopeeffect of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01this standard and it is not expected to have a material impact on ourthe Company’s condensed consolidated financial position orand results of operations.
In October 2012,August 2014, the FASB issued Accounting Standards Update ASU 2012-04, “Technical Correctionsa new accounting standard which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this updateinterim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for fiscalthe Company for annual and interim periods beginning after December 15, 2012.2016. Early adoption is permitted. The adoptionCompany expects to adopt this new standard for the fiscal year ending December 31, 2015 and the Company will continue to assess the impact on its consolidated financial statements.
There were various updates recently issued, most of ASU 2012-04 iswhich represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on ourthe Company’s condensed financial position, or results of operations.
Change in Fiscal Year End
As reported in the Project.
Note 3 – Income Taxes
Deferred income taxes July arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-currentnoncurrent depending on the periods in which the temporary differences are expected to reverse. The Company does not have any uncertain tax positions.
The Company’s provision for income taxes was $-0- for the years ended December 31, 2014, December 31, 2013 and July 31, 2013, respectively, since the Company has accumulated taxable losses from operations. The total deferred tax asset is calculated by multiplying a 34 percent marginal tax rate by the cumulative Net Operating Loss (“NOL”).The Company currently has net operating loss carryforwards aggregating $29,783 (2012: $14,000),$691,955, which expire through 2030.2032. The deferred tax asset related to the carryforwards has been fully reserved.
The Company has deferred income tax assets, which have been fully reserved, as follows as of December 31, 2014, December 31, 2013 and July 31, 2013:
December 31, 2014 | December 31, 2013 | July 31, 2013 | ||||||||||
Deferred tax assets | $ | 241,245 | $ | 24,969 | $ | 10,424 | ||||||
Valuation allowance for deferred tax assets | (241,245 | ) | (24,969 | ) | (10,424 | ) | ||||||
Net deferred tax assets | $ | - | $ | - | $ | - |
The Company has not filed its tax returns. Due to net operating loss carryforwards, income tax returns remain subject to examination by federal and most state tax authorities.
F-10 |
2013 | 2012 | |||||||
Deferred tax assets | $ | 10,424 | $ | 4,900 | ||||
Valuation allowance for deferred tax assets | (10,424 | ) | (4,900 | ) | ||||
Net deferred tax assets | $ | - | $ | - |
Note 4 – Inventory
Inventory consists of finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market.
The carrying value of inventory consisted of the following:
December 31, 2014 | December 31, 2013 | July 31, 2013 | ||||||||||
Energy product | $ | 26,064 | $ | - | $ | - | ||||||
Total inventory | $ | 26,064 | $ | - | $ | - |
As of January 22, 2015, inventory was pledged to Knight Therapeutics under the Loan Agreement (see note 10).
Note 5 – FAIR VALUE MEASUREMENTS
On April 2, 2014, the Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relatesgranted 1,000,000 options valued at approximately $282,000 to financial assets and financial liabilities.
On October 31, 2014, the Company borrowed $100,000 through a framework for measuring fair value in accounting principles generally acceptedpromissory note bearing interest at 10% with a maturity date of October 31, 2015 from a Company owned by Company’s chief executive officer. As of December 31, 2014, the Company had principal outstanding in the United Statespromissory note of America (GAAP),$100,000, and expands disclosures about fair value measurements. paid interest of $1,667.
The provisionscompany accrued consulting fees of this standard apply$15,000 per month to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
At December 31, 2014, $16,077 was due from the Company owned by Mr. Jack Ross, Chief Executive Officer of the Company in a form of a note receivable. Note 6 – Accounts Payable and Accrued Liabilities As of December 31, 2014, December 31, 2013 and |
December 31, 2014 | December 31, 2013 | July 31, 2013 | ||||||||||
Accrued payroll | $ | 10,867 | $ | - | $ | - | ||||||
Accrued legal fees | 47,916 | - | - | |||||||||
Other | 15,859 | 16,051 | 23,691 | |||||||||
Total | $ | 74,642 | $ | 16,051 | $ | 23,691 |
Note 7 – Stockholders’ Deficit
The total number of shares of all classes of capital stock which the Company is authorized to issue is 75,000,000 shares of common stock with $0.00001 par value. On July 30, 2014, the Company’s board of directors approved an increase of the Company’s authorized common stock from 75,000,000 to 300,000,000 shares. Such increase shall be subject to the Financial Statements
On June 27, 2013, ORO Capital Corporationthe Company has issued 1,000,00030,000,000 (1,000,000 pre stock split) common shares for $0.04$0.0013 ($0.04 pre stock split) per share for total proceeds of $40,000 to 37 individuals who participated in company’s initial public offering offering.
On April 17, 2014, upon approval from FINRA, the Company effected a 30 for 1 forward stock split by way of a stock dividend, of all of its issued and outstanding shares of common stock (the “Stock Split”). The Stock Split did not affect the number of the Company’s authorized common stock or its par value. All references in the accompanying consolidated financial statements and notes thereto have been retroactively restated to reflect the stock split.
On April 21, 2014, the Company entered into an agreement with accredited investors for the issuance and sale of 2,000,000 shares of its common stock at a purchase price of $0.25 per share, for an aggregate consideration of $500,000.
During the year ended December 31, 2014, the Company cancelled 135,900,000 shares of its common stock (4,530,000 pre-Stock Split) as part of the Merger transaction.
F-11 |
During the year ended December 31, 2014, the Company issued 16,000,000 shares of its common stock valued at $25,000 as part of the Merger Agreement.
During the year ended December 31, 2014, the Company committed to issue 160,000 shares of its common stock valued at $40,000 for services rendered.
As of December 31, 2014, December 31, 2013 and July 31, 2013, there are 62,100,000, 180,000,000 and 180,000,000 shares of the Company’s common stock issued and outstanding, respectively.
Note 8 – SUBSEQUENT EVENTS
From time to time the Company may become a party to litigation in the normal course of business. Management believes that there are no current legal matters that would have a material effect on the Shipman property on August 7, 2013 by: Discover Int'l Geophysics Inc. The geophysical data is currently being plottedCompany’s financial position or results of operations.
Note 9 – Stock Options
On July 30, 2014, the Company’s board of directors approved the Company’s 2014 Equity Incentive Plan and interpreted. There were no other subsequent events upthe reservation of 15,525,000 shares of common stock for issuance under such plan. Such plan shall be subject to the approval of the Company’s shareholders prior to its implementation.
On April 2, 2014, the Company granted 1,000,000 options with an exercise price of $0.25 per share to the Company owned by Mr. Jack Ross, Chief Executive Officer of the Company.
The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to employees and consultants under a stock option plan at December 31, 2014:
Options Outstanding | Options Exercisable | |||||||||||||||||
Exercise Prices ($) | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price ($) | Number Exercisable | Weighted Average Exercise Price ($) | |||||||||||||
$ | 0.25 | 1,000,000 | 4.25 | $ | 0.25 | 1,000,000 | $ | 0.25 |
The stock option activity for the year ended December 31, 2014 is as follows:
Options Outstanding | Weighted Average Exercise Price | |||||||
Outstanding at December 31, 2013 | - | $ | - | |||||
Granted | 1,000,000 | 0.25 | ||||||
Exercised | - | - | ||||||
Expired or canceled | - | - | ||||||
Outstanding at December 31, 2014 | 1,000,000 | $ | 0.25 |
Stock-based compensation expense related to vested options was $282,247 during the year ended December 31, 2014. The Company determined the value of share-based compensation for options vesting during the year ended December 31, 2014 using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Company’s common stock of $0.33, risk-free interest rate of 1.8%, volatility of 125%, expected lives of 4.5 years, and dividend yield of 0%.
Note 10 – Subsequent Events
Conversion of Promissory Note
On January 20, 2015, the Company committed to issue 400,000 shares to settle $100,000 promissory note (see note 5).
F-12 |
Loan and Warrants
On January 22, 2015, Synergy Strips, Inc. (the “Company”) entered into a Loan and Security Agreement (“Loan Agreement”) with Knight Therapeutics (Barbados) Inc. (“Knight”), pursuant to which Knight agreed to loan the Company $6.0 million (the “Loan”), and which amount was borrowed at closing (the “Financing”) for the purpose of acquiring the Focus Factor Business (defined below). At closing, the Company paid Knight an origination fee of $120,000 and a work fee of $60,000 and also paid $40,000 of Knight’s expenses associated with the Loan. The Loan bears interest at a rate of 15% per year; provided, however, that upon the occurrence of an equity or convertible equity offering by the Company of at least $1.0 million, the interest rate will drop to 13% per year. Interest accrues quarterly and is payable in arrears on March 31, June 30, September 30 and December 31 in each year, beginning on March 31, 2015.
All outstanding principal and accrued and unpaid interest is due on the earliest to occur of either January 20, 2017 (the “Maturity Date”), or the date that Knight, in its discretion, accelerates the Company’s obligations due to an event of default. The Company may extend the Maturity Date for two successive additional 12-month periods if the Company’s revenues exceed $13.0 million and its EBITDA exceeds $2.0 million for the 12-month period ending March 31, 2016. Principal payments under the Loan Agreement commence on June 30, 2015 and continue quarterly as set forth on the Repayment Schedule to the Loan Agreement.
Subject to certain restrictions, the Company may prepay the outstanding principal of the Loan (in whole but not in part) at any time if the Company pays a concurrent prepayment fee equal to the greater of (i) the total unpaid annual interest that would have been payable during the year in which the prepayment is made if the prepayment is made prior to the first anniversary of the closing, and (ii) $300,000. The Company’s obligations under the Loan Agreement are secured by a first priority security interest in all present and future assets of the Company. The Company also agreed to not pledge or otherwise encumber its intellectual property assets, subject to certain customary exceptions.
The Loan Agreement includes customary representations, warranties, and affirmative and restrictive covenants, including covenants to attain and maintain certain financial statements were issued.metrics, and to not merge or dispose of assets, acquire other businesses (except for businesses substantially similar or complementary to the Company’s business and the aggregate consideration to be paid does not exceed $100,000) or make capital expenditures in excess of $100,000 over the Company’s annual business plan in any year. The Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants, change of control and material adverse effect default. Upon the occurrence of an event of default and during the continuation thereof, the principal amount of the Loan will bear a default interest rate of an additional 5%.
In connection with the Loan Agreement, the Company issued to Knight a warrant that entitles Knight to purchase 4,595,187 shares of common stock of the Company (“Common Stock”) on or prior to close of business on January 30, 2015 (the “ST Warrant”). The aggregate exercise price per share of the Common Stock under the ST Warrant is $1.00. Knight exercised the ST Option on January 22, 2015. Also in connection with the Loan Agreement, the Company issued to Knight a warrant to purchase 3,584,759 shares of Common Stock on or prior to the close of business of January 22, 2025 (the “LT Warrant”). The exercise price per share of the Common Stock under the LT Warrant is $0.34. The LT Warrant provides for cashless exercise. The LT Warrant also provides that in the event the closing price of the Common Stock remains above $1.00 for six consecutive months, Knight will forfeit the difference between the number of shares acquired under the LT Warrant prior to 90 days after such six-month period, and 25% of the shares purchasable under the LT Warrant.
Asset Purchase Agreement
On January 22, 2015 (the “Closing Date”), the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Factor Nutrition Labs, LLC, a Delaware limited liability company (the “Seller”),Vita Partners, LLC, RPR Partners, LLC, and Thor Associates, Inc. (each a “Principle Owner”). Pursuant to the Purchase Agreement, the Company purchased all of the assets of the Seller’s line of business and products called FOCUS Factor (the product plus the business related to the product is collectively referred to as the “Focus Factor Business”) and assumed the accounts payable and contractual obligations of the Focus Factor Business for an aggregate purchase price of $6.0 million, with $4.5 million paid on the Closing Date, and $750,000 to be paid on or before January 20, 2016 and an additional $750,000 to be paid on or before January 20, 2017.
The Purchase Agreement contains customary representations and warranties and covenants by each party. The Purchase Agreement contains customary indemnification provisions in favor of the Company, including, subject to certain limitations, whereby the Seller and each of the Principal Owners agree to indemnify the Company and its affiliates for any losses arising out of any breach of their representations or warranties and any breach or failure to perform of their covenants under the Purchase Agreement, among others.
The Purchase Agreement also provides that during the period beginning on the Closing Date and ending on the fifth anniversary of the Closing Date (the “Restricted Period”), the Seller, the Principal Owners (other than Thor Associates, Inc.), and their respective affiliates agree to not, among other things, (i) compete against the Focus Factor Business, (ii) solicit any employee or consultant providing services in connection with the Focus Factor Business (a “Covered Employee”), (iii) hire any former Covered Employee who left employment or retention by the Company within one year of such departure, or (iv) solicit any customer or supplier of the Company who was a customer or supplier within the two years prior to the solicitation to the extent such business is similar to the business conducted by such customer or supplier with the Company.
F-13 |
Mr. Jack Ross, CEO of the Company has entered into Stock Pledge and Security Agreement with Factor Nutrition Labs, LLC on January 22, 2015 and pledged 3,750,000 shares as a guarantee for additional payment of $1,500,000 pursuant to the said Asset Purchase Agreement.
Distribution Agreement
On January 22, 2015, the Company and Knight entered into a Distribution, License and Supply Agreement (the “Distribution Agreement”), pursuant to which the Company granted to Knight an exclusive license to commercialize FOCUSFactor, FOCUSFactor Kids and Synergy Strip and all improvements thereto (together the “Licensed Products”) and appointed Knight as the exclusive distributor to offer to sell and sell the Licensed Products in Canada, and, at Knight’s election, one or more of Israel, Russia, and Sub-Saharan Africa. The Distribution Agreement provides that Knight may sublicense its rights or use sub-distributors under the Distribution Agreement on terms consistent with the terms of the Distribution Agreement. During the term of the Distribution Agreement, Knight agrees to obtain from the Company all its requirements for the Licensed Products and the Company agrees to supply the Licensed Products at its adjusted production cost plus a designated percentage and any applicable taxes.
Pursuant to the Distribution Agreement, Knight agrees to not (i) knowingly solicit or accept orders of Licensed Products from any customer outside the Territory, (ii) knowingly distribute Licensed Products for sale or use outside the Territory, or (iii) supply any third party distributor with Licensed Products after Knight has actual knowledge that such third party has distributed or offered to distribute Licensed Products outside the Territory. Similarly, under the terms of the Distribution Agreement, the Company agrees that it will not (i) knowingly solicit or accept orders of Licensed Products from a customer in the Territory, (ii) knowingly distribute Licensed Products for sale or use in the Territory, or (iii) supply any third party distributor with Licensed Products after the Company has actual knowledge that such third party has distributed or offered to distribute Licensed Products in the Territory.
The Distribution Agreement includes customary representations and warranties and covenants by the parties, each of which also agrees to customary indemnification provisions. In the event of a long term inability by the Company to supply Knight with the Licensed Products, Knight is entitled to require, among other remedies, the Company to grant a Knight-designated third party a non-exclusive license to use all relevant intellectual property to manufacture and supply Knight with the Licensed Products for commercialization in the Territory. The term of the Distribution Agreement runs until 15 years from the date of the first commercial sale of a Licensed Product in Canada, and the Distribution Agreement will automatically renew for successive 15-year periods unless either party provides the other with written notice of its intention not to renew (a “Non-Renewal Notice”). The Company agrees that in the event it issues a Non-Renewal Notice, the Company will pay to Knight a non-renewal fee equal to the net sales of the Licensed Products achieved by Knight in the Territory during the eight calendar quarters preceding the date of such notice, plus all applicable taxes.
Distribution Option Agreement
In connection with the Loan Agreement, the Company entered into a Product Distribution Option Agreement, dated January 22, 2015 (the “Option Agreement”), pursuant to which the Company granted Knight the exclusive right to negotiate the exclusive distribution rights of any one or more of the Company’s products, including products from the Focus Factor Business, for the territories of Canada, Russia, Sub-Saharan Africa and Israel (the “Option”), pursuant to designated parameters. The Option Agreement is effective upon the date of the Option Agreement, will run until January 31, 2045, and will automatically renew thereafter for successive five-year periods unless either party provides a notice of termination prior to the Option Agreement’s expiration. If Knight does not exercise the option then the Company is free to contract for distribution with other parties, but only on terms no less favorable than those offered by Knight pursuant to the Option Agreement.
F-14 |
On June 26, 2014, we engaged RBSM LLP (“RBSM”) as our independent registered accounting firm. During our two most recent fiscal years and the subsequent interim period through the engagement of RBSM, we did not consult with RBSM on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on our financial statements, and RBSM did not provide either a written report or oral advice to us that was an important factor considered by us in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
Evaluation of Disclosure Controls and with the participation of our management, including our principal executive officer and the principal financial officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internalProcedures
Disclosure controls and procedures as definedare controls and other procedures that are designed to ensure that information required to be disclosed in Rules 13a-15(e) and 15d-15(e)our reports filed or submitted under the Securities Exchange Act of 1934 as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission (“SEC”(the “Exchange Act”) reports is recorded, processed, summarized and reported, within the time periods specified in SECthe Securities and Exchange Commission’s rules and forms relatingforms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company,reports filed or submitted under the Exchange Act is accumulated and communicated to management, including any consolidating subsidiaries,our principal executive and was made knownprincipal financial officers, or persons performing similar functions, as appropriate to usallow timely decisions regarding required disclosure.
As required by others within those entities, particularly duringparagraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our management, with the participation of our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period whencovered by this annual report, was being prepared. December 31, 2014.
Based on this evaluation, our principal executive officer and principal financial officerthese officers concluded that, as of December 31, 2014, these disclosure controls and procedures were not effective to ensure that the evaluation dateinformation required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. The conclusion that our disclosure controls and procedures were not effective aswas due to the presence of July 31, 2013.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internalreporting. The term “internal control over financial reportingreporting” is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s President and Chief Executive Officer, who acts as ouran issuer’s principal executive officer and our principal financial officer,officers, or persons performing similar functions, and effected by the Company’s Boardissuer’s board of Directors,directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of Americagenerally accepted accounting principles and includes those policies and procedures that:
(1) | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the | |
(2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and | |
(3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements. |
Under the supervision of our assets;
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A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of our internal control over financial reporting as of December 31, 2014, we determined that there were control deficiencies that constituted material weaknesses which are indicative of many small companies with small staff, such as:
(1) | inadequate segregation of duties and effective risk assessment; and | |
(2) | insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both generally accepted accounting principles in the United States and guidelines of the Securities and Exchange Commission. |
These control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements could not have been prevented or detected on a timely basis. As a result of the material weaknesses described above, we concluded that we did not maintain effective internal control over financial reporting as of December 31, 2014, based on criteria established inInternal Control – Integrated Framework. Based on that evaluation, completed onlyFrameworkissued by Danny Aaron, our President, Chief Executive Officer and sole Director, who also serves as our principal executive officer, principal financial officer and principal accounting officer, Mr. Aaron concluded that, duringCOSO. Our management is currently evaluating remediation plans for the above deficiencies. During the period covered by this annual report such internal controlson Form 10-K, we have not been able to remediate the the remaining weaknesses described above. However, we plan to take steps to enhance and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below.
None.
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Directors and Executive Officers
The following table sets forth the names of the members of our Board of Directors, nominees for our Board of Directors, executive officer’sofficers, and director’s and their respective age’s as of July 31, 2013 are as follows:
Name | Age | Tenure | ||||
49 | President, | Since October 2014 | ||||
Stephen Fryer | 76 | Director | Since December 2014 | |||
Paul SoRelle | 58 | Director | Since December 2014 |
Each director is elected to be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement, of which none currently exists or is contemplated.
Background of Executive Officer and Board of Directors
The following is a brief account of the business experience of each director, director nominee and executive officer of the Company.
Jack Ross – President, Chief Executive Officer, Chief Financial Officer and Director
Mr. Ross is currently the sole officer and director of Pure Sports Inc., positions he has held since February 2009, the sole officer and director of Gowan Capital Inc., positions he has held since May 2011, the sole officer and director of Synergy Energy Strips World Wide Inc., positions he has held since August 2011, the sole officer and director of Rio e Cigs Inc., positions he has held since December 2011, and the sole officer and director of Kenek Brands Inc., positions he has held since May 2014. From January 2012 to April 2014, Mr. Ross served as the sole officer and director of Synergy Strips Corp., which was acquired by and became a wholly owned subsidiary of the Company in April 2014 (the “Subsidiary”) in connection with the Merger. Other than the Subsidiary, none of these companies are related to or affiliated with the Company. Mr. Ross’s significant leadership experience at various private and until their successors have been duly elected and qualified. The Company’s Bylaws providepublic companies led to the conclusion that thehe should serve as a member of our Board of Directors, will consistin light of no less thanour business and structure.
Mr. Stephen Fryer – Director
Since April 2003, Mr. Fryer has been the Chief Executive Officer and Managing Partner of SC Capital Partners, Inc., a private micro-market investment banking and private equity intermediary. Prior to joining SC Capital Partners, Inc., Mr. Fryer was a consulting investment banker with Grant Bettingen, Inc., a broker-dealer based in California, from January 2001 to March 2003. From May 1989 to August 1997, Mr. Fryer was the Principal and Managing Director of Ventana International, Ltd., a venture capital and private investment banking firm with operations and investors in the United States, Latin America, Europe and Asia. Mr. Fryer earned a B.S. in Mechanical Engineering, with a minor in Economics, from the University of Southern California. Mr. Fryer’s substantial experience in the investment banking industry, and his demonstrated skill in corporate finance, led to the conclusion that he should serve as a member of our Board of Directors, in light of our business and structure.
Mr. Paul SoRelle – Director
Since November 1999, Mr. SoRelle has been the Chief Executive Officer and Managing Partner of Pioneer Press of Greeley, Inc., a commercial offset printing company. Prior to joining Pioneer Press, Mr. SoRelle worked in the gaming business as well as the retail gasoline and convenience store business. Mr. SoRelle’s significant leadership experience at Pioneer Press of Greeley, Inc. led to the conclusion that he should serve as a member of our Board of Directors, in light of our business and structure.
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Legal Proceedings
No director, director nominee, executive officer, or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
CORPORATE GOVERNANCE
Director Independence
As of March 23, 2015, we have three members.directors. Each director is elected to hold office for a one year period or until the next Annual Meeting of Shareholders and until his/her successor has been qualified and elected following the one year of service. Mr. Fryer and Mr. SoRelle are independent directors. Officers are elected by and serve at the discretion of the Board of Directors.
Code of Ethics
The Company does not have a code of ethics for our principal executive or principal financial officers, due to our size and current stage of development. The Company’s management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations.
Committees
The Company does not have any standing committees and the Board of Directors performs the duties of an audit committee, nominating committee and compensation committee. Since the Company has appearedno standing committees, the Company does not have any written charters governing such committees’ conduct.
Nominating Committee
We do not have a nominating committee, as we believe the Company is too small to warrant a partyseparate standing nominating committee. Director Jack Ross is responsible for selecting individuals to stand for election as members of our Board of Directors. The Company does not have a policy with regards to the consideration of any director candidates recommended by our stockholders. Our Board of Directors has determined that it is in any legal proceeding materialthe best position to an evaluationevaluate our Company’s requirements as well as the qualifications of his abilityeach candidate when it considers a nominee for a position on our Board of Directors. If stockholders which to recommend candidates directly to our Board of Directors, they may do so by communicating directly with Jack Ross, our President, Chief Executive Officer, Chief Financial Officer and the Chairman of our Board of Directors by mail, at Synergy Strips Corp., Attn: President, 865 Spring Street, Westbrook, ME 04092, or integrity during the past five years.
Audit Committee
We do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed bycurrently serving and, as a result, our directors. The Board of Directors has not establishedperforms the duties of an audit committee and doescommittee. We also do not have an audit“audit committee financial expert, nor has” as such term is defined in Item 407(d)(5)(ii) of Regulation S-K, however we feel that our directors’ backgrounds and financial sophistication is sufficient to fulfill the duties of the audit committee.
Compensation Committee
We do not have a compensation committee, as we believe the Company is too small to warrant a separate standing compensation committee. As a result, our Board of Directors establishedperforms the duties of a nominatingcompensation committee. The Board is of the opinion that such committees are not necessary sinceWhile the Company is an early exploration stage companybelieves that its current size does not warrant a separate standing compensation committee, it will reassess that need if and has only twowhen additional directors and to date, such directors have been performingare appointed and/or elected.
Shareholder Communications
Shareholders may send written communications on the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.Company’s web site:www.Synergystrips.com
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SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires ourthe Company’s executive officers, and directors, and persons who beneficially own more than ten percent10% of a registered class of ourthe Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership withof the SEC. ExecutiveCompany’s common stock and other equity securities. These executive officers, directors, and greater-than-ten percent stockholdersgreater than 10% beneficial owners are required by SEC regulationsregulation to furnish usthe Company with copies of all Section 16(a) forms they file.filed by such reporting persons. Based on oursolely upon the Company’s review of filings made onsuch forms furnished to it, the SEC website, and the fact of us not receiving certain forms or written representations from certain reporting persons that they have complied with the relevant filing requirements, we believeCompany believes that during the fiscal year ended July 31, 2013, our2014 and through to March 23, 2015, all of its executive officers, directors, and greater-than-ten percent stockholdersevery person who is directly or indirectly the beneficial owner of more than 10% of any class of the Company’s securities, complied with allthe filing requirements of Section 16(a) filing requirements.
ITEM 11. EXECUTIVE COMPENSATIONCOMPENSATION.
The following tables settable sets forth certain information about compensation paid, earned or accrued for services by our President and all otherfor each executive officers (collectively,officer for the “Named Executive Officers”) in thepast two fiscal years ended July 31, 2013 and 2012:
Year | Salary | Bonus | Stock Awards | Option Awards | All Other Compen- sation | Total | ||||||||||||||||||||||
Jack Ross | 2014 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
Chairman, President, Chief Executive Officer and Chief Financial Officer | 2013 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Mark Suponitsky | 2014 | 25,000 | 0 | 0 | 0 | 0 | 25,000 | |||||||||||||||||||||
Former President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director(1) | 2013 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Danny Aaron | 2014 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Former President, Chief Executive Officer, Secretary, Treasurer and Director(2) | 2013 | 0 | 0 | 0 | 0 | 0 | 0 |
(1) | Mr. Suponitsky resigned all such positions, effective October 27, 2014. | |
(2) | Mr. Aaron resigned all such positions, effective April 21, 2014. |
We have not made provisions for paying cash or non-cash compensation awarded to, earned by, or paid to our officers for all services rendered in all capacitiesand directors. No salaries are being paid at the present time to us as of the year ended July 31, 2013, for the fiscal year ended as indicated.
Name and Principal Position | Year | Salary($) | Bonus($) | Stock Awards($) | Option Awards($) | Non-Equity Incentive Plan Com- pensation($) | Non- qualified Deferred Com- pensation($) | All Other Com- pensation($) | Total($) | |||||||||
Danny Aaron (1) | 2013 | 0 | 0 | 0 | 0 | 0 | 0 | 3,000 | 0 | |||||||||
2012 | 0 | 0 | 0 | 0 | 0 | 0 | 3,000 | 0 |
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Fees | Non-Equity | Nonqualified | ||||||||||||
Earned | Incentive | Deferred | ||||||||||||
Paid in | Stock | Option | Plan | Compensation | All Other | |||||||||
Name | Cash ($) | Awards ($) | Awards ($) | Compensation ($) | Earnings ($) | Compensation ($) | Total ($) | |||||||
Danny Aaron | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table lists,sets forth certain information regarding our common stock beneficially owned as of July 31, 2013, the numberdate of shares of common stock of our Company that are beneficially owned bythis report, for (i) each person or entitystockholder known to our Company to be the beneficial owner of 5% or more than 5% of theour outstanding common stock;stock, (ii) each executive officer and director, of our Company; and (iii) all executive officers and directors as a group. Information relatingTo the best of our knowledge, subject to beneficial ownership of common stock by our principal shareholderscommunity and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may notmarital property laws, all persons named have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
Name and Address | Number of Shares Owned | Percent of Class | ||||
Title of Class | of Beneficial Owner (1) | Beneficially | Owned | |||
Common Stock: | Danny Aaron (2) | 5,000,000 | 83.3% | |||
All executive officers and directors as a group (1 persons) | 5,000,000 | 83.3% |
Description | Year ended | Year ended | ||||||
of Service | July 31, 2013 | July 31, 2012 | ||||||
($) | ($) | |||||||
Audit services | 4,200 | 2,000 | ||||||
Tax fees | - | - | ||||||
All other fees | - | - | ||||||
Total | 4,200 | 2,000 |
Common Stock Beneficially Owned | ||||||||
Number of shares beneficially owned | Percentage of shares beneficially owned | |||||||
Executive officers and directors: (1) | ||||||||
Jack Ross (4) | 3,208,649 | 5.3 | % | |||||
Stephen Fryer | — | * | % | |||||
Paul SoRelle | — | * | % | |||||
All directors and executive officers as a group (3 persons) | 3,208,649 | 5.3 | % | |||||
5% Stockholders: (2) | ||||||||
Knight Therapeutics (Barbados) Inc.(3) | 8,179,946 | 11.5 | % | |||||
Dunhill Distribution Group, Inc. (4) | 3,208,649 | 5.3 | % |
(3) | As disclosed pursuant to a Schedule 13G filed with the SEC on February 2, 2015. Includes 3,584,759 shares of common stock that may be acquired upon exercise of warrants. This stockholder’s address is Chancery House, High Street, Bridgetown, Barbados. | |
(4) | This stockholder’s address is: 275 Canterbury Lane, Fall River NS B2T 1A4, Canada. Jack Ross is the Chief Executive Officer |
Equity Compensation Plans
On July 30, 2014, the Company’s board of directors approved the Company’s 2014 Equity Incentive Plan and the reservation of 15,525,000 shares of common stock for issuance under such plan. Such plan shall be subject to the approval of the Company’s shareholders prior to its implementation.
On April 2, 2014, the Company granted 1,000,000 options with an exercise price of $0.25 per share to the Company owned by Mr. Jack Ross, Chief Executive Officer of the Company.
Options Outstanding | Options Exercisable | |||||||||||||||||
Exercise Prices ($) | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price ($) | Number Exercisable | Weighted Average Exercise Price ($) | |||||||||||||
$ | 0.25 | 1,000,000 | 4.25 | $ | 0.25 | 1,000,000 | $ | 0.25 |
The stock option activity for the year ended December 31, 2014 is as follows:
Options Outstanding | Weighted Average Exercise Price | |||||||
Outstanding at December 31, 2013 | - | $ | - | |||||
Granted | 1,000,000 | 0.25 | ||||||
Exercised | - | - | ||||||
Expired or canceled | - | - | ||||||
Outstanding at December 31, 2014 | 1,000,000 | $ | 0.25 |
Stock-based compensation expense related to vested options was $282,247 during the year ended December 31, 2014. The Company determined the value of share-based compensation for options vesting during the year ended December 31, 2014 using the Black-Scholes fair value option-pricing model with the following weighted average assumptions: estimated fair value of Company’s common stock of $0.33, risk-free interest rate of 1.8%, volatility of 125%, expected lives of 4.5 years, and dividend yield of 0%.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
TRANSACTIONS WITH RELATED PERSONS
Since January 1, 2014, the Company has not been a party to any transaction in which the amount involved exceeded or will exceed the lesser of $120,000 or 1% of the average of its total assets at year end for the last two fiscal years, and in which any of its directors, named executive officers or beneficial owners of more than 5% of the Company’s capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than described below:
On April 7, 2014, an Agreement and Plan of Merger (the “Merger Agreement”) was entered into by and among the Company, Synergy Merger Sub, Inc., a Delaware corporation and the wholly owned subsidiary of the Company formed for the purpose of the transactions under the Merger Agreement (“Merger Sub”), and Synergy Strips Corp., a Delaware corporation incorporated on January 24, 2012 (“SSC”). The Merger Agreement provided for the merger of Merger Sub with and into SSC (the ���Merger”), with SSC surviving the merger as the wholly owned subsidiary of the Company. The Merger was consummated on April 21, 2014. In connection with the Merger, Dunhill Distribution Group, Inc. acquired 3,208,649 shares of the Company’s Common Stock. Jack Ross, the Company’s President, CEO, CFO and a director, is the Chief Executive Officer of Dunhill Distribution Group, Inc.
On April 2, 2014, the Company granted 1,000,000 options valued at approximately $282,000 to a company owned by Mr. Jack Ross, Chief Executive Officer of the Company (see note 9).
On October 31, 2014, the Company borrowed $100,000 through a promissory note bearing interest at 10% with a maturity date of October 31, 2015 from a company owned by Company’s chief executive officer. As of December 31, 2014, the Company had principal outstanding in the promissory note of $100,000, and had paid interest of $1,667.
The company accrued consulting fees of $15,000 per month to the Company owned by Mr. Jack Ross, Chief Executive Officer of the company starting October 2014. As of December 31, 2014, the total outstanding balance of $45,000 was paid.
At December 31, 2014, $16,077 was due from a company owned by Mr. Jack Ross, Chief Executive Officer of the Company in a form of a note receivable.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Our Board of Directors pre-approves all services provided by our independent auditors. All of the services and fees summarized below were reviewed and approved by the Board of Directors either before or after the respective services were rendered.
On April 21, 2014, M&K CPAS, PLLC (“M&K”) effectively ceased as our independent registered public accounting firm and on June 26, 2014, we engaged RBSM LLP (“RBSM”) as our independent registered accounting firm. The following table summarizes the aggregate fees M&K CPAS, PLLC and RBSM billed the Company for professional services rendered to the Company. A description of these various fees and services are in the footnotes to the table.
Years Ended | Five Months Ended | Year Ended | ||||||||||
December 31, 2014 | December 31, 2013 | July 31, 2013 | ||||||||||
Audit Fees(1) | $ | 6,000 | $ | - | $ | 4,200 | ||||||
Audit-Related Fees(2) | - | - | - | |||||||||
Tax Fees(3) | - | - | - | |||||||||
All Other Fees(4) | - | - | - | |||||||||
Total | $ | 6,000 | $ | - | $ | 4,200 |
(1) | Audit Fees — This category includes the audit of the | |
Audit-Related Fees — This category consists of | ||
Tax Fees — This category consists of | ||
ITEM 15. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES.
The following documents are filed with the Commission on November 21, 2012.
1. | Consolidated Financial Statements |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
2. | Consolidated Financial Statement Schedules |
None.
3. | Exhibits |
Incorporated by Reference | ||||||||||
(Unless Otherwise Indicated) | ||||||||||
Exhibit | ||||||||||
Number | Exhibit Title | Form | File | Exhibit | Filing Date | |||||
2.1 | Agreement and Plan of Merger, dated April 7, 2014, by and among Oro Capital Corporation, Synergy Merger Sub, Inc. and Synergy Strips Corp. | 8-K | 000-55098 | 2.1 | 4/9/2014 | |||||
2.2 | Agreement and Plan of Merger dated April 21, 2014 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 9, 2014)
| 8-K | 000-55098 | 2.1 | 5/7/2014 | |||||
2.3 | Asset Purchase Agreement, dated January 22, 2015, by and among Synergy Strips Corp.; Factor Nutrition Labs, LLC; Vita Partners, LLC, RPR Partners, LLC, and Thor Associates, Inc. | — | — | — | Filed herewith | |||||
3.1 | Articles of Incorporation | S-1 | 333-185103 | 3.1 | 11/21/2012 | |||||
3.2 | Amendment to Articles of Incorporation | 8-K | 000-55098 | 3.1(b) | 5/7/2014 | |||||
3.3 | By-Laws | S-1 | 333-185103 | 3.2 | 11/21/2012 | |||||
4.1 | Form of Subscription Agreement | S-1/A | 333-185103 | 4.1 | 2/19/2013 | |||||
4.2 | Synergy Strips Corp. Common Stock Purchase Warrant, dated January 22, 2015. | — | — | — | Filed herewith | |||||
4.3 | Synergy Strips Corp. Common Stock Purchase Warrant (10-Year Warrant), dated January 22, 2015. | — | — | — | Filed herewith | |||||
10.1 | Mineral Claim Agreement for the Shipman Diamond Project, dated September 1, 2011. | S-1 | 333-185103 | 10.1 | 11/21/2012 |
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10.2 | Transfer of Mineral Dispositions with Danny Aaron, dated February 21, 2012. | S-1 | 333-185103 | 10.2 | 11/21/2012 | |||||
10.3 | Form of Sales and Marketing Consultant and Distribution Agreement, dated April 2, 2014 | 8-K | 000-55098 | 10.1 | 5/7/2014 | |||||
10.4 | Sales and Marketing Consultant and Distribution Agreement, dated April 2, 2014, between Synergy Strips Corp. and Kenek Brands Inc. | 8-K | 000-55098 | 10.1 | 5/7/2014 | |||||
10.5 | Loan Agreement, dated January 22, 2015, between Knight Therapeutics (Barbados) Inc. and Synergy Strips Corp. | — | — | — | Filed herewith | |||||
10.6 | Product Distribution Option Agreement, dated January 22, 2015, between Knight Therapeutics (Barbados) Inc. and Synergy Strips Corp. | — | — | — | Filed herewith | |||||
10.7 | Distribution, License and Supply Agreement, dated January 22, 2015, by and between Synergy Strips Corp. and Knight Therapeutics (Barbados) Inc. | — | — | — | Filed herewith | |||||
16.1 | Letter from M&K CPAS, PLLC to the Securities and Exchange Commission dated June 11, 2014 | 8-K/A | 000-55098 | 16.1 | 6/12/2014 | |||||
21.1 | Subsidiaries of the Registration | — | — | — | Filed herewith | |||||
23.1 | Promissory Note to Danny Aaron, dated May 17, 2013. | S-1/A | 333-185103 | 23.2 | 5/17/2013 | |||||
23.2 | Promissory Note and Future Advances Note to Danny Aaron , dated May 28, 2013 | S-1/A | 333-185103 | 23.2 | 5/28/2013 | |||||
31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a). | — | — | — | Filed herewith | |||||
31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a). | — | — | — | Filed herewith | |||||
32.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350. | — | — | — | Filed herewith | |||||
32.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350. | — | — | — | Filed herewith | |||||
101.INS | XBRL Instance Document. | — | — | — | Furnished herewith | |||||
101.SCH | XBRL Taxonomy Extension Schema Document. | — | — | — | Furnished herewith | |||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | — | — | — | Furnished herewith | |||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | — | — | — | Furnished herewith | |||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | — | — | — | Furnished herewith | |||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | — | — | — | Furnished herewith |
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act, of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 31, 2015 | By: | /s/ Jack Ross |
President, Chief Executive Officer |
Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE | TITLE | DATE | |||
/s/ Jack Ross | President, Chief Executive Officer | March 31, 2015 | |||
Jack Ross | (principal executive officer) Chief Financial Officer, Chief Accounting Officer, Director | ||||
Director | March 31, 2015 | ||||
Stephen Fryer |