UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A10-K
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☒Annual report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended November 30, 2016
Or
☐Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________________ to ________________
Commission file number 000-53157
Telco Cuba, Inc.
(Exact name of small business issuer as specified in its charter)
| Nevada | 98-0546544 | |
(State of Incorporation) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
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| Registrant’s telephone number,
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Securities registered pursuant to Section 12(b) of the Act: | None | |
| Securities registered pursuant to Section 12(g) of the Act: | Common Stock, par value $0.001 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes r ☐ Nox ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes r ☐ Nox ☒
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.
Indicate by check mark whether the registrantregistrant: (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 ☐ No ☒
Yes x No r
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive DataDate File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of the chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☒
Yes r 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'sregistrant’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. r☐
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“large accelerated filer," "accelerated filer"” “accelerated filer” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| Non-accelerated filer |
☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☒ |
| Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2126-2 of the Exchange Act).act): Yes q ☐ Nox ☒
The number of shares of Common Stock held by non-affiliates, as May 31, 2015November 30, 2016 was 46,288,136214,631,231 shares, all of one class of common stock, $0.001 par value, having an aggregate market value of $115,720$107,315.60 based on the closing price of the Registrant'sRegistrant’s common stock of $0.0025$0.0005 on May 31,November 30, 2016 as quoted on the Electronic Over-the-Counter Bulletin Board (“OTCPK”).
The number of shares of Common Stock held by non-affiliates, as November 30, 2015 was 123,106,039 shares, all of one class of common stock, $0.001 par value, having an aggregate market value of $480,113.55 based on the closing price of the Registrant’s common stock of $0.0039 on November 30, 2015 as quoted on the Electronic Over-the-Counter Bulletin Board ("OTCPK"(“OTCPK”).
Indicate the number of shares outstanding of each of the registrant'sregistrant’s classes of common stock, as of the latest practicable date.
Class: common stock - $0.001 par value | Outstanding at November | ||
| Class: common stock - $0.001 par value | Outstanding at November 30, 2015: |
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).
None
Table of Contents
TABLE OF CONTENTS
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| 1. BUSINESS. |
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| ITEM 1B. | UNRESOLVED STAFF |
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| PROPERTIES |
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LEGAL PROCEEDINGS |
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| Mine Safety Disclosures |
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED |
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SELECTED FINANCIAL DATA | 7 | ||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 8 | ||
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QUANTITATIVE AND |
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FINANCIAL STATEMENTS OF SMALLER REPORTING COMPANIES |
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
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CONTROLS AND PROCEDURES |
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OTHER INFORMATION |
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
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EXECUTIVE COMPENSATION |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND |
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| 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
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| 14. PRINCIPAL ACCOUNTING FEES AND SERVICES |
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| 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
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EXPLANATORY NOTE
This annual report of Telco Cuba, Inc. (together with its consolidated subsidiaries, “Telco Cuba”, the “Company”, “we”, “us”, and “our”, unless the context indicates otherwise) covers periods after March 31, 2011.December 1st, 2014. Readers should be aware that several aspects of this Annual Report on Form 10-K differ from other annual reports. First, this report is for each of the fiscal years ended November 30, 2012, November 30, 2013,2015, and November 30, 2014,2016, in lieu of filing separate reports for each of those years. Second, because of the amount of time that has passed since our last periodic report was filed with the Securities and Exchange Commission (the “SEC”), the information relating to our business and related matters is focused on our more recent periods. Finally, in this report, we are including expanded financial and other disclosures in lieu of filing separate Quarterly Reports on Form 10-Q for each of the quarters ended February 20132015 through August 31, 2014.2016. We do not intend to file the Quarterly Reports on Form 10-Q for any of the quarters ended February 20132015 through August 31, 2014.2016. We believe that the filing of this expanded annual report enables us to provide information to investors in a more efficient manner than separately filing each of the quarterly reports described above.
FORWARD-LOOKING STATEMENTS
Certain statements made in this Annual Report on Form 10-K/A10-K are “forward-looking statements” regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Telco Cuba, Inc. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company'sCompany’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-lookingforward looking statements include, but are not limited to, the factors set forth herein under the headings “Description of Business”. We undertake no obligation to revise or update publicly any forward-looking statements unless required by law.
3CERTAIN TERMS USED IN THIS REPORT
When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Telco Cuba, Inc. f/k/a CaerVision Global, Inc., f/k/a American Mineral Group, Inc., f/k/a Sungro Minerals, Inc. and its consolidated subsidiaries. “SEC” refers to the Securities and Exchange Commission.
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ITEM 1.
DESCRIPTION OF BUSINESS BUSINESS.
Overview
Telco Cuba, Inc., fka CaerVision Global, Inc. fka American Mineral Group Minerals Inc. (the "Company"“Company” or "Telco Cuba"“Telco Cuba”) was incorporated under the laws of the State of Nevada on August 10, 2007. On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to change its name from CaerVision Global, Inc. to Telco Cuba, Inc. following a share exchange with Amgentech, Inc. consummated on June 12, 2015 under which the shareholders of Amgentech became the majority shareholders of the company and Amgentech elected to become the successor issuer to CaerVision Global.
This filing is the last annual filing required for the conduct of business as
About Our Company
Telco Cuba, Inc. (fka CaerVision Global, Inc. (see footnote on Subsequent Events). All descriptions and information will pertain to CaerVision Global, Inc. and its operations through November 30, 2014 except as otherwise indicated.
About Our Company
Telco Cuba, Inc. (formerly CaerVision Global, Inc., fka American Mineral Group Inc.) (The “Company”) was incorporated under the laws of the State of Nevada on August 10, 2007. On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to change its name from CaerVision Global, Inc. to Telco Cuba, Inc.
The Company was an early stage Mining and Exploration Company throughout the fiscal year ended November 30, 2014 and into early 2015. The company sought2015, seeking to acquire, develop, and manage various oil, gas, and mineral properties and resources.
In August 2009, the Company entered into an agreement to acquire the mineral rights to 331 unpatented lode mining claims known as the Conglomerate Mesa, located in Inyo County, California. In March 2011, the Company added an additional 217 unpatented lode mining claims. In fiscal year 2012, the Company determined that the effort and cost of developing these claims required more resources that could be more effectively used on other opportunities, and abandoned the Conglomerate Mesa project.
In February 2013, the Company acquired a 28% Working Interest in the Grand Chenier oil and gas prospect in Louisiana. The property contains an estimate 9.0 million barrels of oil and was in production until approximately 2009 when the then operator failed to manage the interests and certain repairs were not made leading to the cessation of production. The Company believes that with approximately $2 million in capital, the field can be returned to production and additional wells within the prospect can then be brought online increasing production to a profitable level. During the year ended November 30, 2013, the Company impaired the full property amounting to $2 million.
In November 2014, the Company entered into negotiations to acquire Vitall, Inc. and was renamed CaerVision Global, Inc., and closed on this deal in January 2015. The newly renamed Company had 60 days to close on a minimum $500,000 in debt or equity financing to support the new direction. When this was not achieved, the prior owner invoked a rescission clause and terminated the transaction.
On June 12, 2015, the Company consummated a Share Exchange with Amgentech, Inc. (“Amgentech”), a Florida corporation. Under the terms of the Share Exchange, the holders of Amgentech received 50,88850,088 shares of CaerVision Series B Preferred Stock that had been previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech. Each shareshares of Series B preferred is convertible into 5,000 shares of common stock (254,440,000 shares total) and has voting rights of 5,000 per share (254,440,000 votes). As a result of this transaction, Amgentech became a wholly-owned subsidiary of CaerVisionthe Company with control transferring to the previous owners of Amgentech. Amgentech elected to be treated as the successor issuer to CaerVision for SEC reporting and accounting purposes. The Share Exchange was accounted for as a reverse acquisition and re-capitalization. The Amgentech Shareholders obtained approximately 60% of voting control on the date of Share Exchange. Amgentech was the acquirer for financial reporting purposes and the Company was the acquired company. The Company filed an amendment to its articles of incorporation and changed its name to Telco Cuba, Inc. The Company still controls its interest
Amgentech, Inc. is a Florida based Corporation engaged in the Grand Chenier oilbusiness of providing technology solutions, integrating and gas projectbuilding technology infrastructure and software and website development. Amgentech, Inc. also offers managed collocated and leased servers. Originally founded in Louisiana but2001, Amgentech, Inc. has recorded an impairmentbeen providing Internet based solutions, VoIP infrastructure and consulting services for over 14 years to diverse clients in The United States of America, the asset value ascounties of November 30, 2014El Salvador, Nicaragua, Costa Rica, Panama, Colombia and 2013.Venezuela. Amgentech, Inc. continues to provide these same services, in addition to providing the technical and Internet know how to implement the technological vision that is envisioned for Telco Cuba, Inc., Amgentech will be the sole technical services provider.
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Telco Cuba, Inc. offers telecommunication services and equipment, including mobile phones, mobile voice service, VoIP service, and calling cards. The services and devices initially offered will be for consumption solely in The United States of America. Telco Cuba, Inc. has positioned itself to offer low cost mobile cell phone service/plans in The United States. Telco Cuba, Inc. will offer prepaid service/plans that include predefined minute/unlimited minute plans. Telco Cuba, Inc. is positioning itself to enter the telecommunications market in Cuba once able to.
Telco Cuba is foremost a cellulartechnology solutions service provider thatoffering services under the brand name “Amgentech” and “Telco Cuba”.
Under the brand name “Telco Cuba”, the company is targeting the Cuban American demographic in the United States and intends to offer its services in Cuba when legally able to.States. The vast majority of Telco Cuba’s potential subscribers are currently customers of lower-end cellular providers such as Metro PCS, Boost and Simple Mobile. Telco Cuba plans to offer low cost international rates commensurate with that of lower end cellular providers on any of its prepaid all-you-can-talk/text with and without data plans. All of Telco Cuba’s calling plans will allow international calls at similar or lower rates than competitive landline rates. Additionally, as an MVNO of Sprint, Telco Cuba will offer direct text messaging and calling to the Country of Cuba. As part of a landmark deal, Telco Cuba will offer cell phone roaming services in Cuba. In Addition to its cell phone services, Telco Cuba offers digital home phone service and will be bundling its digital and cell phone service in Q1.service. Currently there is no provider of these services targeting the Cuban American demographic. Telco Cuba has already received a license with the FCC, allowing it to directly peer with telephone providers outside of the United States. This license fits into the long term plan Telco Cuba has of building out its own infrastructure. The company’s strategy is to offer different price plans with included international roaming (when available) targeted to the Cuban nation, U.S. based Cubans and travelers. The target market not only includes U.S.-based Cubans but also native Cubans worldwide. Telco Cuba has engaged IDT, the only American long distance carrier with a direct relationship with ETECSA and will be offering digital calling plans (calling cards, digital phone service, and Cell phone service) targeted to the Cuban market in the states with the largest Cuban demographic: Florida, New Jersey, and Chicago.
Under the brand name “Amgentech”, the company offers best of breed technology solutions which include, but are not limited to Software and Network architecture services, software development, web site development, hosting and colocation services, managed network and managed server services, voice over ip servers and bulk mailing services. Amgentech has been providing services since 2001, building out networks and services in the international markets of Costa Rica, Panama, Colombia, and Panama.
Governmental Regulations and Environmental Compliance
The Company’s operations’ is subject to various federal regulations. Telco Cuba has received all of the necessary licenses to operate as a cell phone service provider, digital phone service provider and calling card service provider. In addition, The United States government has already removed many of the limitations imposed by the U.S. Department of the Treasury for doing business in Cuba. As of December 17, 2014, Telco Cuba has been able to legally export telecommunication devices and equipment to Cuba.
Plan of Operation
Telco Cuba has received the necessary licenses with the FCC and is able to offer cell phone services in the United States and abroad. The company’s strategy is to offer different price plans with included service roaming in the nation of Cuba (Available during December, 2015) targeted to travelers going to the Cuban nation U.S. based Cubans and travelers.of Cuba. The target market not only includes U.S.-based Cubans but also nativeexpat Cubans worldwide. Telco Cuba has engaged IDT, the only American long distance carrier with a direct relationship with ETECSA and will be offering calling cards targeted to the Cuban market in the states with the largest Cuban demographic: Florida, New Jersey, and Chicago.
In July of 2015, Telco Cuba executed an agreement with Next Communications, an MVNE (Mobile Virtual Network Enabler) provider with Sprint Corporation. Telco Cuba intends to create a first of its kind niche market by implementing its pre-paid mobile service to the Cuban-American market with primary focus in the South Florida market. The cellular services are expected to include unlimited talk, text, and web offerings at low-cost competitive market rates. Aside from competitive mobile monthly pricing plans, Telco Cuba will also offer its customers the ability to call internationally (namely to Cuba) directly from the GSM mobile handset, using the MVNE network. This unprecedented service should greatly improve the connectivity of all Cuban-Americans residing in U.S., thus allowing Telco Cuba to capture U.S. to Cuba long distance market share.
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After implementation of its domestic mobile program, Telco Cuba intends to negotiate to re-establish a direct link with Cuba that will lower the company's expenses and improve connectivity with a direct service. This agreement would allow Telco Cuba to offer vastly reduced per minute price points. Additionally, cell phone roaming services in Cuba’s cell network and our Cuban centric approach already gives Telco Cuba the advantage. The combination of U.S. to Cuba direct mobile handset communication and roaming capabilities for visitors should provide a significant competitive advantage to Telco Cuba as it seeks to enter an emerging market.
Additionally, the portfolio of services that Telco Cuba is putting together includes government contract work. Telco Cuba has signed a money remittance/top-off service. This direct-to-consumer online service will enable anyone online to send minutes to Cuban cell subscribers or any of the more than 30 worldwide carriers. The initial phase will target the Cuban -American community in South Florida. Further, the Company’s objectives include:
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Increase the subscriber base, thereby gaining an economy of scale allowing the purchase/installation of equipment in Cuba
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Gain licensing in Cubateaming agreement to offer services directlyto the US Government through the governments NS2020 initiative.
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Gain spectrum licensing for leasing to other services and internal use
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Create a portfolio of complementary services that feed off each other, maximizing the company’s marketing dollar
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Provide calling solutions including calling cards and mobile cell services to a portfolio of users/consumers in Cuba
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Telco Cuba’s Cuba centric plans, marketing and promotions will address the needs of over 2 million Cuban’s residing in the United States. Telco Cuba’s approach will allow the company to access a highly profitable market.
The Company still controls its interest in the Grand Chenier oil and gas project in Louisiana which is listed as Assets Held Forfor Sale in the accompanying financial statements. There are no current plans to develop the oil and gas asset.
Employees
Amgentech, a subsidiary of Telco Cuba, Inc. continues to provide hosting, colocation, software development and website design services.
Employees
The Company presently has 2 full-time employees, of which 0 are management and 2 are involved in operations. We expect that as we begin rolling out new services, additional personnel will be added. We believe that our relationship with employees is satisfactory. We have not suffered any labor problems during the last two years.
ITEM 1A. RISK FACTORS
Investment in our securities involves a high degree of risk. We are subject to various risks that may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.
We are “Development Stage Company,”a smaller reporting company as such you cannot evaluate the investment merits of our Company based on historical performance because we have no operating history.
Our Company has no operating history since it was organized, which makes it difficult to evaluate the investment merits of our Company. We have no operating history and we did not have any business prior to our organization.
We may not be able to continue as a going concern if we do not obtain additional financing.
Because of our lack of sufficient funds and short operating history incurring only expenses, and no revenues, our independent auditors report states that there is substantial doubt about our ability to continue as a going concern. Since we have incurred only losses since our inception, it raises substantial doubt about our ability to continue as a going concern. Therefore, our ability to continue as a going concern is highly dependent upon obtaining additional financing for our planned operations. Asdefined by Rule 12b-2 of the date hereof, cash has been raised from the issuance of securitiesExchange Act and promissory notes.
Our Negative Cash Flow, Operating Losses, Lack of Revenue, And Limited Operating History Makes It Difficult or Impossible To Evaluate Our Performance And Make Predictions About The Future.
As a development stage company, we haveare not yet generated revenue. Consequently, there is no meaningful historical operating or financial information about our business upon whichrequired to evaluate future performance. We cannot assure generation of significant revenues, sustained profitability or generation of positive cash flow from operating activities in the future. If we cannot generate enough revenue, our business may not succeed and our Common Stock may have little or no value.
We Are Subject To A Working Capital Deficit, Which Means That Our Current Assets On November 30, 2014 Were Not Sufficient To Satisfy Our Current Liabilities.
As of November 30, 2014, we have incurred substantial operating losses. Since we have no revenue, we have generated negative free cash flow and expect to continue to experience negative free cash flow at least through our exploration phase. We have current liabilities of $4,973,800 and current assets of $2 at November 30, 2014, and a working capital deficiency of $4,973,798. If we cannot meet our current liabilities, we may have to curtail or cease business operations.
In Prior Fiscal Years We Have Been The Subject Of A Going Concern For November 30, 2014, 2013 and 2012, Which Means That We May Not Be Able To Continue Operations Unless We Obtain Additional Funding.
Our independent auditors have added an explanatory paragraph to their audit report issued in connection with our financial statements for all fiscal years presented. We have incurred losses of $225,210, $2,575,247 and $1,132,203 for the years ended November 30, 2014, 2013, and 2012, respectively, and a cumulative loss of $17,374,759. We had a working capital deficiency of $4,973,798 at November 30, 2014. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
If we do not obtain additional financing, our business will fail because we cannot fund our business objectives.
We need to raise money to meet our general and administrative expenses, and we need to raise money to achieve our business objective to acquire other mineral properties or a target company or business. As of November 30, 2014, we had cash in the amount of $2, and current liabilities of $4,973,800. We currently do not have any operations and we have no income. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including the fact that we have no business and the present financial market conditions may make obtaining additional financing difficult. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.
We Could Fail To Attract Or Retain Key Personnel
Our success largely depends on the efforts and abilities of key executives and consultants, including William Sanchez, our Chief Executive Officer. The loss of the services of any of these individuals could materially harm our business because of the cost and time necessary to replace and train a replacement. Such loss would also divert management attention away from operational issues. We do not presently maintain key-man life insurance policies on any executive. In addition, we need to attract additional high quality geological, investor relations, and consulting personnel. To the extent that we are smaller than our competitors and have fewer resources we may not be able to attract the sufficient number and quality of staff.
We Are Subject To Regulation by both US and Foreign Governments
Municipalities, domestic and foreign governments may require us to obtain various permits and licenses in order to operate. Our inability to obtain the necessary permits or licenses could delay or impede the development of a revenue model, as well as force us to incur additional costs.
No Expectation of Dividends on Common Stock.
We have never paid cash dividends on our Common Stock and we do not expect to pay cash dividends on our Common Stock at any time in the foreseeable future. The future payment of dividends directly depends upon the future earnings, capital requirements, financial requirements and other factors that our Board of Directors will consider. Since we do not anticipate paying cash dividends on our Common Stock, the return on investment on our Common Stock will depend solely on an increase, if any, in the market value of the Common Stock.
Our Common Stock May Lack Liquidity And Be Affected By Limited Trading Volume.
Our Common Stock is traded on the OTC Markets Pink Sheets. There can be no assurance that an active trading market for our common stock will be maintained. An absence of an active trading market could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our stock will be stable or appreciate over time.
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The Volatility Of Stock Prices May Adversely Affect The Market Price Of Our Common Stock.
The market for our Common Stock is highly volatile. The trading price of our Common Stock could be subject to wide fluctuations in response to, among other things:
(i)
changes in market price of the various minerals;
(ii)
quarterly variations in operating and financial results;
(iii)
changes in mineral resources within the claim areas;
(iv)
changes in our revenue and revenue growth rates; and
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marketing and advertising.
Statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or related to it could result in an immediate effect in the market price of our Common Stock. In addition, the stock market has from time to time experienced extreme price and volume fluctuations which have particularly affected the market price for the securities of many mining and exploration companies and which often have been unrelated to the operating performance of these companies. These broad market fluctuations may adversely affect the market price of our Common Stock.
Risks Relating to Financing Arrangements - The Conversion Price Feature of Notes, Preferred Stock, and Debentures May Encourage Short Sales in the Company’s Common Stock.
The Company has issued convertible debentures in connection with its financing needs. These debentures are convertible at a variable price that is computed at an average of sixty percent of the average of the lowest three days closing bid price prior to the date of conversion.
The downward pressure on the price of the common stock as the selling stockholders under both these financings convert and sell amounts of common stock could encourage short sales by investors. This could place further downward pressure on the price of the common stock. The selling stockholders could sell common stock into the market in anticipation of covering the short sale by converting their securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion or exercise of notes and related warrants, and Series B preferred stock, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock.
Rules of the Securities and Exchange Commission concerning low priced securities may limit the ability of shareholders to sell their shares
Our common stock is subject to Rule 15g-9 of the Securities and Exchange Commission which regulates broker/dealer practices in connection with transactions in "penny stocks". Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security are provided by the exchange or system. The penny stock rules require a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level or risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and if the broker/dealer is the sole market-maker, the broker/dealer must discloseinformation under this fact and the broker/dealers presumed control over the market. This information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. The bid and offer quotations, and the broker/dealer and its salesperson compensation information, must be given to the customer in writing before or with the customer's confirmation. The broker/dealer must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale. Monthly statements must be sent by the broker/dealer to the customer disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. These disclosure requirements may reduce the level of trading activity in the market for our common stock and may limit the ability of investors in this offering to sell our common stock in the secondary market.item.
The limited public market for our common stock may limit the ability of shareholders to sell their shares.
There has been only a limited public market for the Company's common stock. An active trading market for our stock may not develop and purchasers of the shares may not be able to resell their securities at prices equal to or greater than the price paid for these shares. The market price of our common stock may decline as the result of announcements by the Company or its competitors, variations in our results of operations, and market conditions in the real estate and commodities markets in general.
ITEM 1B1B. UNRESOLVED STAFF COMMENTSCOMMENTS.
None.
ITEM 2. PROPERTIES
In February 2013, the Company acquired a 28% working interest in the Grand Chenier oil
Headquarters and gas prospect in Louisiana. administration offices
Currently, Telco Cuba occupies approximately 2,000500 Square Feet of office space at a cost of $2,100$649.38 a month.
ITEM 3. LEGAL PROCEEDINGS
None
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
| 1. | Mammoth West Corporation brought a lawsuit against the company on April 4, 2016. Case number: 16L353 in the 19th circuit court of Lake County, Illinois. The note holder sued for enforcement of two promissory notes issued to Mammoth on November 18, 2010, and June 30, 2011. The case was settled for a debt conversion amount of $132,000.00 on December, 2016. The terms of the notes were amended to reflect a 0% discount, 0 day look back, and no additional interest. The terms of the settlement have been met and the amount paid back. |
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| 2. | Redwood Management, LLC., brought a lawsuit against the company on November 14, 2014. Case number: CACE14021854 in the 17th circuit court of Broward County, Florida. The note holder sued for enforcement of two promissory notes issued by the company to Redwood on November 11, 2010 and March 31, 2011. The case was settled on December 21, 2017 for a debt conversion amount of $57,640.83. The terms of the note were amended to reflect the new balance, and the terms were changed to a (25%) discount rate, and a total monthly conversion restriction. The company is working with the note holder to convert the settled amount into stock of the company. |
| 3. | Anthony J Rivera brought a lawsuit against the company on May 29, 2018. Case number: CACE18012914 in the 17th circuit court of Broward County, Florida. The note holder sued for enforcement of a note issued by the company on December 1, 2015. The case was settled, and the note was amended with a more favorable 50% discount, 5 day look back term on the note. The settlement occurred on September, 2018. The company is working with the note holder to convert the settled amount into stock of the company. |
| 4. | On September 28, 2018, the company filed a lawsuit against Cuentas, Inc. (NASDAQ: CUEN), f/k/a Next Group Holdings, Inc/Meimoun & Mammon, LLC/Next Mobile, LLC in the 11th circuit court of Miami-Dade County, Florida. Case number: 2018-032974-CA-01 is still ongoing. The case was filed due to CUEN failing to perform on a contract signed on July, 2015. The company is suing for damages and the return of the funds paid for the undelivered Mobile Virtual Network Operator (MVNO) platform. (https://www2.miami-dadeclerk.com/ocs/search.aspx) During the month of February, 2020, the company hired Attorney Jonathan Leinwand, to take over the lawsuit against Cuentas, Inc. NASDAQ: CUEN During the month of September, 2021 the company filed a summary judgement motion based on CUEN failure to deliver on the contract. |
ITEM 4. Mine Safety DisclosuresMINE SAFETY DISCLOSURES
Not applicable
4
PART II
ITEM 5. MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERSTOCKHOLDERS MATTERS, AND ISSUER PURCHASESPURCHASE OF EQUITY SECURITIESSECURITIES.
As of November 2, 2015, there were approximately 110 owners of record of the Company's common stock. The Company's
Market Information.
Public Market for Common Stock
Our common stock, par value $.001 per share (the “Common Stock”), is tradedcurrently quoted on the OTC Bulletin BoardOTCBB under the symbol "QBAN"“QBAN”. Set forth below areThe OTCBB is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter, or the range ofOTC, equity securities. An OTCBB equity security generally is any equity that is not listed or traded on a national securities exchange. The following table shows, for the periods indicated, the high and low bid quotations for the periods indicatedprices per share of our common stock as reported by the OTC Bulletin Board.OTCBB quotation service. These bid prices represent prices quoted by broker-dealers on the OTCBB quotation service. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions.
Price range of common stock
| High Close | Low Close | |||||||
| Fiscal Year Ended November 30, 2016 | ||||||||
| 1st Quarter | $ | 0.0049 | $ | 0.0011 | ||||
| 2nd Quarter | $ | 0.0026 | $ | 0.0010 | ||||
| 3rd Quarter | $ | 0.0005 | $ | 0.0012 | ||||
| 4th Quarter | $ | 0.0007 | $ | 0.0004 | ||||
| Fiscal Year Ended November 30, 2015 | ||||||||
| 1st Quarter | $ | 0.011 | $ | 0.011 | ||||
| 2nd Quarter | $ | 0.025 | $ | 0.025 | ||||
| 3rd Quarter | $ | 0.006 | $ | 0.0045 | ||||
| 4th Quarter | $ | 0.0039 | $ | 0.0039 | ||||
| Fiscal Year Ended November 30, 2014 | ||||||||
| 1st Quarter | $ | 0.0028 | $ | 0.0001 | ||||
| 2nd Quarter | $ | 0.01 | $ | 0.0031 | ||||
| 3rd Quarter | $ | 0.0199 | $ | 0.0005 | ||||
| 4th Quarter | $ | 0.0180 | $ | 0.0035 | ||||
The following table reports highmarket price of our common stock will be subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and low closing prices, on a quarterly basis,other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for the Company'sour common stock:stock, regardless of our actual or projected performance.
5
Holders of Common Stock
We had 120 record holders of our common stock as of November 30, 2016.
We had 114 record holders of our common stock as of November 30, 2015.
Penny Stock
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker'sbroker’s or dealer'sdealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer'scustomer’s account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser'spurchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability
statement.
These disclosure requirements may have the effect of reducing the trading activity for our Common Stock. Therefore, stockholders may have difficulty selling our securities.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Recent Sales of Unregistered Securities
The following sets forth certain information regarding sales of, and other transactions with respect to, our securities, which sales and other transactions were not registered pursuant to the Securities Act of 1933, during the last three years.year. Unless otherwise indicated, no underwriters were involved in such transactions.
6
InDuring the month of December 2012,2015, 3,000 Series A shares were returned to the Companycompany from the holder.
Between February 1st 2016 and July 31st 2016, the company issued 626,66757,525,192 common shares in connection with the conversion of $4,700$26,394 of convertible debentures and accrued interest. The conversions had an average price of $0.0075$0.0003 per share.share and resulted in no gain or loss.
In January 2013,
During the month of February 2016, the Company issued 626,667 common shares in connection with the conversion of $4,700 of convertible debentures and accrued interest. The conversions had an average price of $0.0075 per share.
In January 2013, the Company issued 680,000 common shares in connection with the conversion of $2,125 of convertible debentures and accrued interest. The conversions had an average price of $0.0031 per share.
There were no share issuances during the fiscal year ended November 31, 2014.
Subsequent to November 30, 2014, the Company converted a total of $42,585 in convertible debt and accrued interest owed to unaffiliated third party accredited investors into 10,302,905 shares of restricted common stock.
Between February 2015 and October 28, 2015, the Company issued 72,780,0001,200,000 common shares to unaffiliated third partythird-party accredited investors in connection with the conversion of 14,556 shares240 preferred B shares. This conversion was within the terms of Preferred B Shares. preferred stock conversion feature and resulted in no gain or loss on the exchange.
TheDuring the month of March 2016, the Company issued 4,007,1465,800,000 common shares to unaffiliated third-party accredited investors in connection with the conversion of restricted common1,160 preferred B shares. This conversion was within the terms of preferred stock to third partiesconversion feature and resulted in no gain or loss on the exchange.
During the month of March 2016, the Company issued 5,000,000 shares as payment for consulting services rendered valued at $5,000.$14,370.
During the month of March 2016, the Company sold and issued 15,000 preferred B shares for $112,500.
On September 4, 2015,November 1, 2016, the Company issued 100,000 shares of Series C Preferred Stock to the Company’s CEO in exchange for services rendered to the Company. The
During the month of November 2016, the Company sold and issued 55,555 Series A shares for $25,000.
During the month of November 2016, the Company sold and issued 10,000,000 common stock shares for $5,000.00.
During the month of November 2016, William Sanchez converted 2,400 Preferred B shares into 12,000,000 common shares. This conversion was within the terms of preferred stock conversion feature and resulted in no gain or loss on the exchange.
For the year ended November 30, 2015:
During December 2014, the Company converted a total of $17,520 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into 12,130,729 shares of restricted common stock resulting in no gain or loss.
Between February and April 2015, the Company issued 12,230,000 common shares to unaffiliated third-party accredited investors in connection with the conversion of 2,446 shares of Preferred B Shares, resulting in no gain or loss.
Between May 2015 and November 1, 2015, the Company issued 49,450,000 common shares to unaffiliated third-party accredited investors in connection with the conversion of 9,890 preferred B shares resulting in no gain or loss.
On September 4, 2015, the Company issued 100,000 shares of Series C Preferred are non-convertibleStock to the Company’s CEO and have voting rights equal3,007,146 common shares in exchange for services rendered to 10,000 votes of common stock per share.
the Company.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
7
ITEM 7. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The financial data presented below should be read in conjunction with the more detailed financial statements and related notes, which are included elsewhere in this report. Information discussed herein, as well as elsewhere in this Annual Report on Form 10-K, includes forward-looking statements or opinions regarding future events or the future financial performance of the Company, and are subject to a number of risks and other factors which could cause the actual results to differ materially from those contained in forward-looking statements. Among such factors are general business and economic conditions, and risk factors as listed in this Form 10-K or listed from time to time in documents filed by the Company with the Securities and Exchange Commission.
Financial Condition
As of November 30, 2014,2016, the Company had total current assets of $2$26,864 and total current liabilities of $4,973,800$5,381,900 for a net working capital deficit of $4,973,798. $5,355,036. As of November 30, 2015, the Company had total current assets of $17,100 and total current liabilities of $6,200,054 for a net working capital deficit of $6,182,954.
We need to raise additional money to meet our general and administrative expenses, and we need to raise money to achieve our business objectives. The additional funding will come from equity financing from the sale of Telco Cuba'sCuba’s common stock or the issuance of debt securities. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in Telco Cuba. The Company does not have any financing arranged and we cannot provide investors with any assurance that the Company will be able to raise sufficient funding from the sale of its common stock or debt securities. In the absence of such financing, our business will fail.
Based on the nature of Telco Cuba'sCuba’s business, management anticipates incurring operating losses in the foreseeable future. Management bases this expectation, in part, on the fact that unrolling a telecommunications operation in Cuba will cost a substantial amount of money, and possibly take several years before becoming profitable. The Company’s future financial results are also uncertain due to a number of factors, some of which are outside its control. These factors include, but are not limited to:
Telco Cuba'sCuba’s ability to raise additional funding;
Telco Cuba'sCuba’s ability to capture market share; and
Due to the Company’s lack of operating history and present inability to generate revenues, our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with our financial statements for 2012, 20132015, and 20142016 indicating substantial doubt about Telco Cuba'sCuba’s ability to continue as a going concern. This means that there is substantial doubt whether the Company can continue as an ongoing business for the next 12 months unless we obtain additional capital to pay our bills.
Liquidity
Liquidity
The Company'sCompany’s internal sources of liquidity will be loans that may be available from management.management as well as revenue from its subsidiaries. Although Telco Cuba has no written arrangements with its management, we expect that the officers may provide the Company with nominal liquidity, when and if it is required.
The Company’s external sources of liquidity will be private placements for equity and debt financing. There are no assurances that Telco Cuba will be able to achieve further sales of its common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue its plan of operations, then the Company will not be able to continue its operations and its business will fail.
8
Capital Resources
As of November 30, 2014,2016, the Company had total assets of $2,$41,602, total liabilities of $4,973,800$5,381,900, and a working capital deficit of $4,973,798, compared with$5,355,036.
As of November 30, 2015, the Company had total assets of $32,101, total liabilities $6,200,054, and a net working capital deficit of $4,748,588 as of November 30, 2013 and $2,189,397 as of November 30, 2012. The assets as of November 30, 2014 are comprised of cash. Mineral rights and oil field equipment for which the Company paid $2.0 million in common stock and notes and were deemed impaired and valued at $0. The liabilities consisted mainly of accounting, audit and legal fees, convertible debentures, demand notes, officer loans, and accrued expenses.$6,182,954.
The Company’s current cash is not sufficient to fully finance its operations at current and planned levels for the next 12 months. Management intends to manage the Company'sCompany’s expenses and payments to preserve cash until the Company is profitable, otherwise additional financing must be arranged. Specifically, management is deferring payments due them until such time as there is sufficient financing in place to permit their payment or the possible issuance of the Company’s stock in settlement of amounts due.
Results of Operations
We did not earn anyearned total revenues of $146,731 for the fiscal yearsyear ended November 30, 2014, 2013 or 2012. 2016.
We do not anticipate earningearned total revenues inof $173,560 for the fiscal year endingended November 30, 2015.
We are presently in the development stage of our business, and we can provide no assurance that we will be able to generate revenues from the sale of telecommunications services in the future. DuringThe company’s subsidiary, Amgentech, Inc., has been actively providing infrastructure and telecommunication services during these periods. The revenue presented is attributed to the periods presented, the Company was actively seeking to develop mineral exploration and intended to sell such reserves if and when recovered. However, the Company was unable to secure adequate funding for exploration and recovery operations.acquisition of Amgentech, Inc.
We incurred operating expenses in the amount of $362,654$359,634 during the fiscal year ended November 30, 2014, $404,7172016.
We incurred operating expenses in the amount of $657,927 during the fiscal year ended November 30, 2013, and $366,566 during the fiscal year ended November 30, 2012. For the 2014 fiscal year, these expenses consisted mainly of general and administrative expenses. For 2013, the Company had general and administrative expenses of $404,717 and recorded a one-time impairment on the oil and gas assets of $2,000,000. For 2012, the Company incurred $616,566 in general and administrative expenses, which was offset by $250,000 in mineral claims.2015.
Other Income and Expense
During the years ended November 30, 2014, 2013,2016 and 2012,2015, the Company incurred interest expense of $165,766, $238,810,$335,120, and $115,855,$290,819, respectively, which was incurred on the Company’s third partythird-party debt and convertible debentures.
For the years ended November 30, 20142016 and 2013,2015, the Company recorded a gain of $303,210$1,192,310, and $68,280,a loss of $(222,251), respectively, attributable to fluctuations in the valuation of the derivative liability. For the year ended November 30, 2012, the Company recorded a loss of $381,370 for derivative liability attributable to issuing convertible debentures.
During the year ended November 30, 2012, the Company incurred amortization of debt discount of $268,413, which was incurred on the Company’s convertible debentures compared to nil for the years ended November 30, 2014 and 2013.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Material Agreements
In July 2015, the Company entered into an agreement with Next Group Holdings pursuant to which Next Group agreed to provide a virtual call processing platform for telecommunications, a web portal and sales portal. In exchange, the Company agreed to pay $50,000 and use Next Group as its provider for local and international voice, data, and text services as part of its operational platform.
9
Subsequent Events
The Company evaluated subsequent events from December 1, 20142016 through the date this filing was completed, noting the following:
On January 26, 2015,
During the Company acquired Vitall, Inc. a company which has developed and is marketing a Smartwatch dedicated to the burgeoning health and wellness industry which offers a telephone, a blood pressure monitor, a heart rate monitor, fitness application, and has an emergency help button. The Company amended its Articlesmonth of Incorporation to change the name to CaerVision Global, Inc. Under the terms of the Agreement, the Company agreed to a share exchange in which:
·
Settlements with various debt holders in which prior officers, directors, preferred shareholders, and current common shareholders would receive twenty-five percent (25%) of the post-merger issued and outstanding shares; and
·
Vitall, Inc. shareholders would receive seventy-five percent (75%) of the post-merger issued and outstanding shares.
On March 17, 2015, Vitall, Inc. terminated the merger agreement due to non-performance on the part of the Company.
On June 12, 2015, the Company consummated a Share Exchange with Amgentech, Inc., a Florida corporation. Under the amended terms of the Share Exchange, the holders of Amgentech received 50,088 shares of the Company’s Series B Preferred stock (representing 60% of the total issued and outstanding preferred Series B) that had been previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech. As a result of this transaction, Amgentech became a wholly-owned subsidiary ofDecember 2016, the company and the shareholders of Amgentech became the control persons of the Company. For accounting and reporting purposes, this transaction has been treated as a “reverse merger” with Amgentech treated as the successor issuer to CaerVision. On June 15, 2015, the Company filed an Amendment to the Articles of Incorporation changing the name of the company to Telco Cuba, Inc.
Subsequent to November 30, 2014, the Company converted a total of $42,585 in convertible debt and accrued interest in to 10,302,905 shares of restricted common stock.
Between February and October 2015, the Company issued 72,780,00010,000,000 common shares in connection with the conversion of 2,446 shares$2,000.00 of Preferred B Shares. convertible debentures and accrued interest. The conversions had an average price of $0.0003
8In February 2017, an officer converted a portion ($1,344) of salary due to him into 2,240,000 common shares.
During the month of February 2017, the company wrote off accrued expenses and payroll former officers which resulted in a 1.3 million gain, which is reported in the statements of operations as other income.
During the month of July 2017, the company procured settlements with three note holders. The settlements were a result of the company’s renegotiating of the terms of the original notes. The new terms included the waiving of all additional interest, waiving of default fees, conversion standstill and restrictions on the number of conversions per month, and fixed balances. The notes affected by these settlements were with EMA Financial, Essex Global Investment Corp, and LG Capital.
During the month of August 2017, the company wrote off a promissory note which resulted in a $2,000,000 gain, which is reported in the statements of operations as other income. The write off occurred as a result of the rescission, by the prior owner of a transaction involving a working interest the company had in a certain oil property. The original transaction occurred during the month of July, in the year 2014.
On October 25, 2017, the Company entered into a definitive purchase agreement with Net Bee Wireless, Inc. The purchase was contingent on the Company making the purchase price payment. The deal was rescinded in February 2018 as a result of the company not opting to follow through on the purchase.
During the month of December 2017, the company issued 12,130,729a promissory note in the amount of $60,000 in exchange for the assets of Naked Papers, Inc.
During the month of December 2017, the Company converted a total of $26,031.55 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 276,163,333 shares of restricted common stock onstock.
During the conversionmonth of $19,373 in notes payable held by unaffiliated third parties.
The Company issued 4,007,146 shares of restricted common stock to third parties for services rendered valued at $5,000.
In July 2015, the Company entered into an agreement with Next Group Holdings pursuant to which Next Group agreed to provide a virtual call processing platform for telecommunications, a web portal and sales portal. In exchange, the Company agreed to pay $50,000 and use Next Group as its provider for local and international voice, data, and text services as part of its operational platform.
On September 4, 2015,December 2017, the Company issued 100,000 shares of Series500,000 Preferred C Preferred Stock to the Company’s CEO in exchange for services rendered to the Company.
During the first quarter 2018, the company acquired the assets of Naked Papers and is currently selling the product under its brand name, Naked Papers under the subsidiary, Naked Papers Brand, Inc., incorporated in the state of Florida.
During the month of January 2018, the Company converted a total of $63,734.00 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 1,262,266,666 shares of restricted common stock.
During the month of February 2018, the Company converted a total of $38,925.56 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 768,225,915 shares of restricted common stock.
During the month of March 2018, the Company converted a total of $14,550.00 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 306,000,000 shares of restricted common stock.
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Anthony J Rivera brought a lawsuit against the company on May 29, 2018. Case number: CACE18012914 in the 17th circuit court of Broward County, Florida. The Series C Preferred are non-convertiblenote holder sued for enforcement of a note issued by the company on December 1, 2015. The case was settled, and have voting rights equalthe note was amended with a more favorable 50% discount, 5 day look back term on the note. The settlement occurred on September, 2018. The company is working with the note holder to 10,000 votesconvert the settled amount into stock of the company.
On September 28, 2018, the company filed a lawsuit against Cuentas, Inc. (OTCQB: CUEN), f/k/a Next Group Holdings, Inc/Meimoun & Mammon, LLC/Next Mobile, LLC in the 11th circuit court of Miami-Dade County, Florida. Case number: 2018-032974-CA-01 is still ongoing. The case was filed due to CUEN failing to perform on a contract signed on July, 2015. The company is suing for damages and the return of the funds paid for the undelivered Mobile Virtual Network Operator (MVNO) platform.
During the first quarter 2019, the company acquired Advanced Satellite Systems, Inc. and all of its assets, and is continuing to offer its services under the Advanced Cable service mark. Advanced Satellite Systems, Inc, is incorporated in the state of Florida and is registered as a subsidiary of Telco Cuba, Inc.
During the month of February 2019, the company issued a promissory note in the amount of $100,000.00 to purchase Advanced Satellite Systems, Inc.
During the month of February 2019, the Company converted a total of $16,900.00 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 338,000,000 shares of restricted common stock.
During the month of March 2019, the Company converted a total of $18,500.00 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 370,000,000 shares of restricted common stock.
During the month of March 2019, the Company issued 250,000,000 shares to Mr. Roland H Malo as part of the compensation he received for staying on with Advanced Satellite Systems, Inc.
During the month of May 2019, JMZ Alliance forgave all debt owed to JMZ Alliance by Telco Cuba, Inc. The note securing the debt as well as all interest was forgiven by JMZ.
During the month of April 2019, the Company converted a total of $15,000.00 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 300,000,000 shares of restricted common stock.
During the month of December 2020, the Company converted a total of $3,900.00 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 93,000,000 shares of common stock per share.
stock.
During the month of January 2021, the Company converted a total of $51,388.81 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 599,867,533 shares of common stock.
During the month of January 2021, the Company converted the partial monetary value of a consultants’ contract into 441,977,932 restricted common shares.
During the month of February 2021, the Company converted the partial monetary value of a consultants’ contract into 34,000,000 restricted common shares.
During the month of February 2021, a shareholder converted 55,555 Series A shares into 55,555,000 restricted common shares. These common shares have an effective date of February 11, 2021 and are denoted as such in section 3A of this disclosure.
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During the month of February 2021, the Company converted a total of $49,259.66 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in 164,198,867 shares of common stock.
During the month of March 2021, 23,574,570 restricted common shares were issued to appointed members of the board of directors.
During the month of March 2021, preferred B shareholders converted 6,000 preferred shares into 30,000,000 restricted common shares.
During the month of March 2021, the Company converted a total of $7,000.00 in convertible debt to an unaffiliated third-party accredited investor into 46,666,667 shares of common stock.
During the month of April 2021, the company converted a total of $62,966 in convertible debt and accrued interest owed to an unaffiliated third-party accredited investor into 155,471,605 shares of common stock.
During the month of May 2021, the company restated a promissory note as convertible in the amount of $100,000.00. The holder, an unaffiliated third-party unaccredited investor converted the note principle and accrued interest owed into 400,000,000 restricted common shares. These common shares have an effective date of May 6, 2021, and are denoted as such in section 3A of this disclosure.
During the month of May 2021, the company converted a total of $54,934.69 in convertible debt and accrued interest owed to an unaffiliated third-party accredited investor into 73,246,253 shares of common stock. These common shares have an effective date of May 6, 2021, and are denoted as such in section 3A of this disclosure.
During the month of May 2021, a third-party accredited investor/noteholder cancelled and returned 155,471,605 common shares to the company due to a reversal of a third party note purchase.
During the month of May 2021, 25,000,000 restricted common shares were issued to appointed members of the board of directors.
During the month of May 2021, the company converted a total of $52,021.00 in convertible debt and accrued interest owed to an unaffiliated third-party accredited investor into 115,602,222 shares of common stock.
During the month of May 2021, the company sold 40,000,000 shares of restricted common stock to an unaffiliated third-party accredited investor for $10,000.00. These common shares have an effective date of May 26, 2021.
We evaluated subsequent events after the balance sheet date through the date the financial statements were issued. We did not identify any additional material events or transactions occurring during this subsequent event reporting period that required further recognition or disclosure in these financial statements.
Critical Accounting Policies
The following accounting policies were in effect for all periods presented:
Exploration Stage Company
The Company was considered to be in the exploration stage. The Company devoted substantially all of its efforts to exploring and identifying mineral properties suitable for development.
Accounting Principles
The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.principles.
Mineral Property Exploration
The Company was in the exploration stage and did not realize any revenue from its mining operations. Mineral property acquisition costs have been capitalized. Additionally, mine development costs incurred either to develop new mineral deposits and constructing new facilities were capitalized pending the commencement of operations. All such capitalized costs are amortized using a straight-line basis, based on the minimum original license term at acquisition, but do not exceed the useful life of the capitalized costs. Upon commercial development of a mineral body, the applicable capitalized costs would then be amortized using the units-of-production method. Exploration costs, costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected cash flows and/or estimated salvage value in accordance with guidance issued by the FASB, "Accounting for Impairment or Disposal of Long-Lived Assets."
Location / Access:
The Grand Chenier oil and gas prospect is located Cameron Parish, Louisiana.
Title / Conditions:
The Company acquired a twenty-eight percent (28%) working interest to the leases covered by the prospect.
Geological Description / Mineralization:
The Grand Chenier oil and gas prospect is in Cameron Parish, Louisiana, an area that has been developed, mapped, and proven to contain significant petroleum and gas reserves.
The Company has a report authored by Netherland, Sewall & Associates, Inc. which analyzes the proven, probable, and possible reserves and future revenue. The report, completed in November 2008, utilized $70 per barrel of oil and $6.84 per million BTU’s in computation of the estimates in the table below.
12
|
| Net Reserves |
| Future Net Revenue $ | ||||
Category |
| Oil (Barrels) |
| Gas (MCF) |
| Total |
| Present Worth at 6% |
Proved Developed Non-Producing |
| 6,159 |
| - |
| $ 92,700 |
| $ 83,800 |
Proved Undeveloped |
| 3,436 |
| 1,321,632 |
| $ 6,765,000 |
| $ 5,251,700 |
Total Proved |
| 9,595 |
| 1,321,632 |
| $ 6,857,700 |
| $ 5,335,500 |
Probable |
| 2,554 |
| 982,332 |
| $ 6,468,100 |
| $ 3,083,000 |
Possible |
| 44,778 |
| 17,222,400 |
| $ 109,725,400 |
| $ 75,697,400 |
Background / Work Completed to date / Current Condition
The leases underlying the Grand Chenier prospect were in production until approximately 2009. The wells and infrastructure to support production remain on the property awaiting reactivation and resumption of production.
Plant / Equipment / Improvements
Currently, there are improvements, equipment, and roadways on the site. These include a sea water disposal pump, six storage tanks, dehydration units, air compressors, process heaters, pressure regulators and well pumps. Repairs are required to the equipment to place it back in service prior to resuming production.
Known Reserves
The estimated reserves are indicated in the table above under the heading Geological Description/Mineralization.
Subsequent to November 30, 2014, and as a result of the share exchange agreement with Amgentech, Inc. (See Note 13 – Subsequent Events, accompanying this report), and the Company determined that it was no longer economically feasible to pursue development of the oil and gas assets. Accordingly, the Company recorded an impairment of $2,000,000 for the year ended November 30, 2013 and forward. The Company is seeking a buyer for these assets and, should such a buyer be located, the Company would record a gain on the sale of assets based on the purchase price.
Cautionary Statement Regarding Forward-Looking Statements
This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "our company believes," "management believes" and similar language. These forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions, including those set forth in the following discussion, including under the heading "Risk Factors". Our actual results may differ materially from results anticipated in these forward-looking statements. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. In addition, our historical financial performance is not necessarily indicative of the results that may be expected in the future and we believe that such comparisons cannot be relied upon as indicators of future performance. Other important factors that could cause actual results to differ materially include the following: business conditions, the price of precious metals, ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Form 10-Q; and any current reports on Form 8-K. In addition, the Company disclaims any obligation to update or correct any forward-looking statements in all the Company's annual reports and SEC filings to reflect events or circumstances after the date hereof.
9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 8. FINANCIAL STATEMENTS OF SMALLER REPORTING COMPANIES
The financial statements and related notes are included as part of this report as indexed in the appendix on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
(a) On June 1 2015, the Company was advised that the Company’s as independent auditors, Sherb & Co., were no longer conducting business, necessitating the appointment of new independent auditors.
Besides a standard going concern qualification, the report of Sherb & Co. on the Company’s financial statements for fiscal year ended November 30, 2011 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audit of the Company’s financial statement for the fiscal year ended November 30, 2011 (1) there were no disagreements with Sherb & Co. on any matter of accounting principles or practices, financial statement disclosure and procedure which, if not resolved to the satisfaction of Sherb & Co., would have caused Sherb & Co. to make reference to the matter in the filing and (2) there were no “reportable events” as that term is defined in Item 304 of Regulation S-K promulgated under the Securities Exchange Act of 1934 (“Item 304”).
(b) On June 9, 2015, the Company engaged RBSM LLP in New York as the Company'sCompany’s independent accountant to audit the Company’s financial statements and to perform reviews of interim financial statements. During the fiscal years ended November 30, 2012 through November 30, 2014, neither the Company nor anyone acting on its behalf
consulted with RBSM regarding (i) either the application of any accounting principles to a specific completed or contemplated transaction of the Company, or the type of audit opinion that might be rendered by RBSM on the Company'sCompany’s financial statements; or (ii) any matter that was either the subject of a disagreement with Sherb & Co. or a reportable event with respect to Sherb & Co.Co..
(c) On August 18, 2021, the Company engaged M&K CPAS, PLLC in Houston, Texas as the Company’s independent accountant to audit the Company’s financial statements and to perform reviews of interim financial statements. During the fiscal years ended November 30, 2016 through November 30, 2015, neither the Company nor anyone acting on its behalf consulted with M&K CPAS, PLLC (i) either the application of any accounting principles to a specific completed or contemplated transaction of the Company, or the type of audit opinion that might be rendered by M&K CPAS, PLLC on the Company’s financial statements; or (ii) any matter that was either the subject of a disagreement with RBSM LLP or a reportable event with respect to RBSM LLP.
13
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of the Company'sCompany’s management, including the Company'sCompany’s principal executive officer and principal financial officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and Rule 15d-15(e) as of the end of the fiscal years covered by this annual report. Based on that evaluation, the principal executive officer and principal financial officer believe the disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission'sCommission’s rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Subsequent to November 30, 2014, the Company implemented several changes to the Company'sCompany’s internal controls to address the deficiencies and material weaknesses that led to the previous late filings. Chief among these changes included hiring a new independent audit firm and retaining the services of a consulting firm specializing in financial statement preparation, US GAAP, and Securities Act reporting.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of November 30, 2014 based on the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Based on management’s assessment, management concluded that, as of November 30, 2014, the Company’s internal control over financial reporting was ineffective. Subsequent to November 30, 2014, the Company implemented several changes to the Company'sCompany’s internal controls to address the deficiencies and material weaknesses that led to the misstatements and errors. Chief among these changes included hiring a new independent audit firm and retaining the services of a consulting firm specializing in financial statement preparation, US GAAP, and Securities Act reporting.
This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
ITEM 9B. OTHER INFORMATION
None
14
10
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors
The following table sets forth the directors and executive officers of our Company, their ages and positions with our Company, during the periods covered by this report. Pursuant to our bylaws, our directors are elected at our annual meeting of stockholders and each director holds office until his successor is elected and qualified. Officers are elected by our Board of Directors and hold office until an officer'sofficer’s successor has been duly appointed and qualified unless an officer sooner dies, resigns or is removed by the Board.
There are no arrangements or understandings’ regarding the length of time a director of our company is to serve in such a capacity.
The following table sets forth information about our executive officers and directors.
Name and Address |
| Age | Position | |
|
|
| ||
|
|
| ||
|
|
| ||
William Sanchez
|
| 44 | Chairman, CEO, and CFO | |
Maria Anez
|
| 46 | Director, Secretary | |
Linnette Miller(2) Ft. Lauderdale, FL | 48 | Director |
(1)
These individuals resigned their positions with the Company subsequent to November 30, 2014 and in connection with the change in control resulting from the Share Exchange Agreement executed June 12, 2015.
(2)
These individuals were appointed to their positions in June 2015.
Frederick J. Pucillo, Jr. served as our President, Chief Executive Officer and Director since December 2009. Mr. Pucillo has over twenty years’ experience serving mid-size to Fortune 100 companies in the banking and finance area, having managed a $110 million loan portfolio with 10,000 accounts, and other capital funding and business development opportunities. Mr. Pucillo was the CFO for Atlantic Fire Protection, LLC from 2007 through 2009, and previously, was CFO for Zammido Automotive Group from 2000 through 2007. He is thoroughly familiar with finance, cash flow analysis and budgeting, as well as negotiation of promising opportunities.
| Note 1. | Maria Anez resigned from her position as director on February, 2018. |
| Note 2. | Linnette Miller resigned from her position as director on December 2, 2016. |
Erwin Vahlsing, Jr. served as our Chief Financial Officer, Secretary, Treasurer, and Director since September 2009. Mr. Vahlsing is a financial executive with domestic and international experience managing finance departments in the manufacturing, service, and construction industries. Mr. Vahlsing has acted as Chief Financial Officer to ICOA, Inc. since 2001. He acted as a Consultant to E&M Advertising for SEC compliance and due diligence. Mr. Vahlsing received an MBA from the University of Rhode Island in 1986 and a Bachelor degree in Accounting from the University of Connecticut.
Thomas J. Craft, Jr., is a Florida attorney, specializing in federal securities law and mergers and acquisitions. He practices securities law in Florida. Mr. Craft has more than 15 years of experience in federal securities matters as well as the public markets generally. Mr. Craft has served on the board of directors of several public companies prior to joining the Company's board of directors on November 22, 2002. Mr. Craft has served as a member of our Audit Committee since 2002 and in April 2007 Mr. Craft was appointed as a member of our Compensation Committee and Nominating Committee. Mr. Craft has served as an officer and a director of Peregrine Industries, Inc., a public reporting company, since March 2004.
William J Sanchezhas served as our President, Chief Executive Officer and Chairman of the board since June 15th, 2015. Mr. Sanchez has over 20 years’ experience serving fortune 50, 100 and smaller companies. Mr. Sanchez has held positions at CBS Sports fka Sportsline USA, Tribune Interactive Services, Knight Ridder, DLJ Direct and has been instrumental in the creation of several nascent companies such as Starmedia, Inc., Sportsline, USA, and Picknation, Inc.
Maria Beatriz Anez has served as our corporate secretary and public relations manager since July, 2015. Mrs. Anez has honed a career in business analysis and sales relationships. A native of Venezuela, she was part of a team that ran a highly successful health care concern. Her responsibilities included negotiating contracts with the Venezuela government, supply negotiations and public relations.
Linnette Miller is a Manager in the Tax Services practice at Daszkal Bolton LLP, with more than 20 years of experience in public accounting. She focuses on domestic and international tax planning, as well as tax compliance for companies/ individuals, including those with cross border income tax issues and income tax filing. Ms. Miller also assists companies in maximizing their assets and minimizing their liabilities through tax planning and tax efficient structuring. Prior to joining Daszkal Bolton LLP, Ms. Miller held the position of Tax and Audit Director for Chaves & Armstrong, PA, a firm with expertise in international tax, technical accounting and complex audit services. During her professional career, Ms. Miller also worked for KPMG in Panama, where she assisted companies and individuals with tax planning, tax efficient structuring and tax filing requirements.
15
Committees of the Board of Directors
The functions of the audit committeeAudit Committee are currently carried out by our Board of Directors. In 2009, we hired a Chief Financial Officer. He was subsequently appointed to the Board. Our Board of Directors has determined that at current, we do not needhave an additionalaudit committee financial expert because we are a start-up exploration company and have no revenue.on our Board of Directors carrying out the duties of the Audit Committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director of American Mineral Group and to be a member of the audit committeeAudit Committee or otherwise perform audit committeeAudit Committee functions outweighs the benefits of having a financial expert on the audit committee. Audit Committee. Our Board of Directors has three members.
We do not have a compensation committee, nominating committee, executive committee of our board of directors, stock plan committee or any other committees.
Code of Ethics
We have adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Controller and persons performing similar functions within the Company. A copy of the code of ethics is filed with the SEC as an exhibit to the Company'sCompany’s Form S-1 filed on February 22, 2008. If we make any substantive amendments to the Code of Ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics to our directors, officers and employees, we will disclose the nature of such amendment or waiver in a report on Form 8-K.
Family Relationships
There are no family relationships between any two or more of our directors or executive officers. There is no arrangement or understanding between any of our directors or executive officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings to our knowledge between non-management shareholders that may directly or indirectly participate in or influence the management of our affairs.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act, of 1934 requires that our directors and executive officers and persons who beneficially own more than 10% or greater shareholders of our Common Stock (referred to herein as the Company ("Reporting Persons"“Reporting Persons”) to file with the Securities and Exchange Commission initialSEC various reports of ownership (Form 3) and reports of changes inas to their ownership of equity securities ofand activities relating to our Common Stock. Such Reporting Persons are required by the Company (Form 4 and Form 5) andSEC regulations to providefurnish us with copies of all such forms as filed to the Company. With the exception of the CFO, who has completed his Form 3 report but which as of the date of this filing had not been filed with the Commission, he also has not completed a Form 4 to update his holdings. Aside from this, the Company is not aware of any Reporting Persons that have failed to fileSection 16(a) reports on a timely basis.
Mr. Pucillo has completed and filed his Form 3 indicating he was the owner of 24,156 common shares, and 12,500 Preferred B shares as of November 30, 2014.
At the time of Mr. Vahlsing’ hiring, he completed his Form 3. It appears the Company filed itthey file. Based on the Canadian, SEDA system and failedinformation available to file itus, there are no beneficial owners of common stocks based on the SEC’s Edgar database. The report is being updated with current information and will be filed subsequent to the date of this report. Mr. Vahlsing was the owner of 24,000 common shares and 12,500 Preferred B shares at the period end covered by this report. rule promulgated under section 16(a).
Significant Personnel
We have no significant personnel other than our officers and directors. We presently rely on consultants and other third party contractors to perform administrative and geological services for the Company. We have no formal contracts with any of these consultants and contractors.
11
Nominating Committee
We do not have a standing nominating committee; our Board of Directors is responsible for identifying new candidates for nomination to the Board. We have not adopted a policy that permits shareholders to recommend candidates for election as directors or a process for shareholders to send communications to the Board of Directors.
16
ITEM 11. EXECUTIVE COMPENSATION
To date, our directors do not currently receive and have never received any compensation for serving as a director of the Company. Effective September 2, 2010July, 2015 the Company entered into Employment AgreementsAgreement with our CEO, CFO, and Investor Relations.CEO.
The following table sets forth all compensation awarded to, earned by, or paid for services rendered to officers and directors in all capacities for the last three fiscal years.
Summary Compensation Table
| Annual Compensation | Long-Term Compensation | |||||||
Name & | Fiscal Year Nov 30, | Salary | Bonus | Other Annual Compensation (2) | Restricted Stock Awards in US$(1) |
| Options/SARs | LTIP Payouts | All Other Compensation(2) |
|
|
|
|
|
|
|
|
|
|
Frederick J. Pucillo, Jr. | 2014 | $ 0 | $0 | $139,933 | $ 0 |
| $0 | $0 | $0 |
Chief Executive Officer, Director | 2013 | $ 0 | $0 | $134,551 | $ 0 |
| $0 | $0 | $0 |
| 2012 | $ 0 | $0 | $129,376 | $ 31,250 |
| $0 | $0 | $0 |
|
|
|
|
|
|
|
|
|
|
Erwin Vahlsing, Jr | 2014 | $ 0 | $0 | $136,933 | $ 0 |
| $0 | $0 | $0 |
Chief Financial Officer, | 2013 | $ 0 | $0 | $134,551 | $ 0 |
| $0 | $0 | $0 |
Secretary, Treasurer, Director | 2012 | $ 0 | $0 | $129,376 | $31,250 |
| $0 | $0 | $0 |
|
|
|
|
|
|
|
|
|
|
Thomas J. Craft, Jr. | 2014 | $ 0 | $0 | $0 | $0 |
| $0 | $0 | $0 |
Director | 2013 | $ 0 | $0 | $0 | $0 |
| $0 | $0 | $0 |
| 2012 | $ 0 | $0 | $0 | $0 |
| $0 | $0 | $0 |
| Annual Compensation | Long-Term Compensation | ||||||||||||||||||||||||||||||
| Name & Principal Position | Fiscal Year Nov 30, | Salary | Bonus | Other Annual Compensation | Restricted in US$(1) | Options/SARs | LTIP Payouts | All Other Compensation | |||||||||||||||||||||||
| William J Sanchez (1) | 2015 | $ | 240,000.00 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Chief Executive Officer, Director | 2014 | $ | 240,000.00 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Maria Beatriz Anez | 2015 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Secretary, Director | 2014 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Linnette Miller | 2015 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
| Director | 2014 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
See notes below:
| (1) | The named executive officer’s salary was accrued and paid during the years 2015 and 2016. An evergreen employment contract was signed with the named executive with no expiration date. |
(1)
The named executive officers received grants of restricted stock in connection with entry into 5-year employment agreements.
(2)
Salary was accrued in 2014 with only partial payment made during the years 2013 and 2012. The balance may be paid either in cash or stock.
(3)
These individuals resigned their positions with the Company subsequent to November 30, 2014 and in connection with the change in control resulting from the Share Exchange Agreement executed June 12, 2015. All employment contracts were voluntarily cancelled without recourse.
We do not presently have a stock option plan but intend to develop an incentive based stock option plan for our officers and directors in the future and may reserve up to ten percent of our outstanding shares of common stock for that purpose.
Compensation Committee
We do not have a compensation committee. The functions of the compensation committee are currently carried out by our Board of Directors.
17
12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities authorized for issuance under equity compensation plans
The Company has no securities authorized for issuance under equity compensation plans.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of November 1, 2015September 30, 2021 with respect to the beneficial ownership of our Company'sCompany’s common stock with respect to each named director and executive officer of our Company, each person known to our Company to be the beneficial owner of more than 5% of said securities, and all directors and executive officers of our Company as a group:
| Name and Address | Title of Class | Amount and Nature of Beneficial Ownership | Percentage of Class (1) | |||||||
| William Sanchez (1) | Preferred B | 43,885 | 82,35 | % | ||||||
| Chief Executive Officer | Series C | 700,000 | 100 | % | ||||||
| Common | 49,382,857 | 0.68 | % | |||||||
| Camille Whiddon, director | Common | 25,000,000 | 0.36 | % | ||||||
| Francis X Flinn, director | Common | 10,416,670 | 0.15 | % | ||||||
| Patrick T Wall, director | Common | 13,157,900 | 0.20 | % | ||||||
| Sayis Tequia, director | Preferred B | 100 | 0.18 | % | ||||||
| Santiago Munoz, director | Preferred B | 1,503 | 2.8 | % | ||||||
| Frank Gerardi | Common | 531,532,932 | 6.87 | % | ||||||
| Samuel Fromkin | Preferred B | 3,000 | 5.6 | % | ||||||
| Pinecroft LLC / Paul Konigsberg | Preferred B | 3,000 | 5.6 | % | ||||||
| Roland Malo | Common | 400,000,000 | 5.8 | % | ||||||
| All officers, directors, and beneficial owners as a group | Common | 582,347,502 | 14.9 | % | ||||||
| Preferred B | 51,488 | 96.60 | % | |||||||
| Series C | 700,000 | 100 | % | |||||||
| 1. | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
This individual was appointed to their position on June 2015.
(2)
JMZ Alliance Group holds non-votable preferred B shares
(3) Mr. Sanchez and Ms. Anez are husband and wife. The shares shown represent a combination of direct and beneficial ownership.
The persons named above have full voting and investment power with respect to the shares indicated, unless otherwise indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner"“beneficial owner” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
18
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Since the beginning of the Company’s last fiscal year, no director, executive officer, security holder, or any immediate family of such director, executive officer, or security holder owing more than 5% of our shares of common stock has had any direct or indirect material interest in any transaction or currently proposed transaction, which the Company was or is to be a participant, that exceeded the lesser of (1) $120,000, or (2) 1% of the average of the Company'sCompany’s total assets at year endyear-end for the last two completed fiscal years.
In September 2010,July 2015, the Company entered into 5-yeara 5 year employment agreementsagreement with its three employees.CEO. Below is a summary of the basic terms of the Agreements:
·
Base Salary for the CEO and CFO
$120,000is $240,000 per year
·
Base Salary for Investor relations
$100,000 per yearA vehicle allowance is provided
·
The officers received stock grants in connection with the contracts of:
o
CEO
1,500,000 common shares
o
CFO
1,000,000 common shares
o
Investor Relations
1,000,000 common shares
·
4% annual increases in Base Salary
·
Bonus provision if and when the Company reaches profitability
·
Other normal benefits provided such as health, life, and auto insurance as negotiated by the Company
Subsequent to November 30, 2014, each of these employment agreements was terminated by mutual consent and without further recourse to either party.
Our CEO and CFO have from time to time lent money to the Company. At November 30, 2014, 2013 and 2012, the balance owed to them was $1,384, $1,384, and $1,025 respectively. The balances do not bear interest and are due on demand.
The Company'sCompany’s transactions with its officers, directors and affiliates have been and such future transactions will be, on terms no less favorable to the Company than could have been realized by the Company in arm'sarm’s length transactions with non-affiliated persons and will be approved by a majority of the independent disinterested directors.
Directors Independence
The only independent director on our board as of November 30, 20142015 was Thomas Craft, Jr.,Linnette Miller, our other two directorsdirector Mr. Pucillo and Mr. Vahlsing, wereSanchez, was not independent, pursuant to the definition of an "independent director"“independent director” set forth in Rule 5605(a)(2) of the NASDAQ Manual. In summary, an "independent director"“independent director” means a person other than an executive officer or employee of the issuer or any other individual having a relationship which, in the opinion of the issuer'sissuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
We do not have a compensation committee, nominating committee or audit committee; the functions of these committees are performed by our directors and Chief Financial Officer.
The Company is currently traded on the OTC Market Pink Sheet, which does not require that a majority of the Board be independent.
19
ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES
The fees billed to the Company for the fiscal years ending November 30, 201, 20132014, and 20122015 were as follows:
| Year ended | Year ended | Year ended |
|
Audit Fees | $12,000 | $12,000 | $12,000 |
|
Audit-Related Fees | $0 | $0 | $0 |
|
Tax Fees | $0 | $0 | $0 |
|
All Other Fees | $0 | $0 | $0 |
|
| Year ended Nov, 30, 2016 | Year ended 2015 | Year ended | ||||||||||
| Audit Fees | $ | 24,000 | $ | 16,000 | $ | 25,000 | ||||||
| Audit-Related Fees | $ | 0 | $ | 0 | $ | 0 | ||||||
| Tax Fees | $ | 0 | $ | 0 | $ | 0 | ||||||
| All Other Fees | $ | 0 | $ | 0 | $ | 0 | ||||||
Because the Company does not have an audit committee, it has not instituted pre-approval policies and procedures as described in paragraph (c)(7)(i) of Rule 2-01 of regulation S-X.
20
13
PART IV
ITEM
15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Financial Statements and Schedules
The financial statements are set forth under Item 8 of this Annual Report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.
Exhibit Listing
Exhibit No. | Filed herewith | Incorporated by reference | ||||||||
| Description of Exhibit | Form | Exhibit | Filing date | |||||||
| 3.1 | Articles of Incorporation | S-1 | 3.1 | 02/22/08 | ||||||
| 3.2 | Certificate of Change dated July 20, 2009 | 8-K | 3.1 | 08/03/09 | ||||||
| 3.3 | Bylaws | S-1 | 3.2 | 02/22/08 | ||||||
| 4.1 | Specimen Stock Certificate | S-1 | 4.1 | 02/22/08 | ||||||
| 14 | Code of Ethics | S-1 | 14 | 02/22/08 | ||||||
| 31.1 | Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 | X | ||||||||
| 32.1 | Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 | X | ||||||||
Exhibit No. | Description of Exhibit | Filed herewith | Incorporated by reference |
| |
Form | Exhibit | Filing date (mm/dd/yy) | |||
3.1 | Articles of Incorporation |
| S-1 | 3.1 | 02/22/08 |
3.2 | Certificate of Change dated July 20, 2009 |
| 8-K | 3.1 | 08/03/09 |
3.3 | Bylaws |
| S-1 | 3.2 | 02/22/08 |
3.4 | Certificate of Designation for Series C Preferred | X |
|
|
|
4.1 | Specimen Stock Certificate |
| S-1 | 4.1 | 02/22/08 |
10.6 | Consulting and Fee Agreement dated July 1, 2009 between Internet Marketing Solutions, Inc. and American Mineral Group |
| 10-K | 10.6 | 03/17/10 |
10.7 | Employment Agreement dated September 2, 2010 between Frederick Pucillo, Jr. and American Mineral Group |
| 10-K | 10.7 |
|
10.8 | Employment Agreement dated September 2, 2010 between Erwin Vahlsing, Jr. and American Mineral Group |
| 10-K | 10.8 |
|
14 | Code of Ethics |
| S-1 | 14 | 02/22/08 |
31.1 | Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 | X |
|
|
|
32.1 | Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 | X |
|
|
|
21
14
Telco Cuba, Inc.
FINANCIAL STATEMENTS ADDENDUM
INDEX
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Telco Cuba, Inc.
Hollywood, FL
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Telco Cuba, Inc. (the “Company”),Company) as of November 30, 2014, 20132015 and 2012,2016, and the related statements of operations, stockholders’ deficit, and cash flows for each of the three years in the two-year period ended November 30, 2014. These financial statements are2015 and 2016, and the responsibility ofrelated notes (collectively referred to as the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We have conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America)“financial statements”). Those standards require that we plan and perform the audit 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’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, as well as evaluating the overall financial statement presentation. We believe that our audits 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 Telco Cuba, Inc.the Company as of November 30, 2014, 20132015 and 2012,2016, and the results of its operations and its cash flows for each of the three years in the two-year period ended November 30, 2014,2015 and 2016 in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring lossesa net loss from operations and has an accumulated deficit as of November 30, 2014,a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to theseregarding those matters are also describeddiscussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussedBasis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in Note 2(l)accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities Exchange Commission and PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the Company’s financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the 2014, 2013amounts and 2012disclosures in the financial statements have been restated to correctstatements. Our audits also included evaluating the accounting forprinciples used and the valuesignificant estimates made by management, as well as evaluating the overall presentation of the oil and gas reserves in 2013 and recalculatedfinancial statements. We believe our audits provide a reasonable basis for our opinion
| /s/ M&K CPAS, PLLC |
We have served as the fair value of derivative liabilities for all periods presented.
Company’s auditors since 2021.
Houston, TX
/s/ RBSM LLP
September 28, 2022
F-2
New York, New York
November 30, 2015
F-2
| Telco Cuba, Inc. |
|
| |||||||||||
| BALANCE SHEETS AS ON |
|
| |||||||||||
|
|
|
|
|
|
| ||||||||
|
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 | ||||||||
ASSETS |
| (Restated) |
| (Restated) |
| (Restated) | ||||||||
CURRENT ASSETS: |
|
|
|
|
|
| ||||||||
Cash | $ | 2 | $ | 2 | $ | 470 | ||||||||
Prepaid Expenses |
| - |
| - |
| 3,500 | ||||||||
TOTAL CURRENT ASSETS |
| 2 |
| 2 |
| 3,970 | ||||||||
|
|
|
|
|
|
| ||||||||
MINERAL RIGHTS and PROPERTIES |
|
|
|
|
|
| ||||||||
Working Interest in Grand Chenier oil & gas prospect |
| - |
| - |
| - | ||||||||
|
|
|
|
|
|
| ||||||||
TOTAL MINERAL AND FIXED ASSETS |
| - |
| - |
| - | ||||||||
TOTAL ASSETS | $ | 2 | $ | 2 | $ | 3,970 | ||||||||
|
|
|
|
|
|
| ||||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
| ||||||||
CURRENT LIABILITIES: |
|
|
|
|
|
| ||||||||
Accounts payable | $ | 101,390 | $ | 106,644 | $ | 103,523 | ||||||||
Accrued expenses |
| 447,402 |
| 282,473 |
| 103,095 | ||||||||
Accrued payroll |
| 1,297,949 |
| 928,083 |
| 577,281 | ||||||||
Convertible debentures |
| 375,925 |
| 375,925 |
| 306,950 | ||||||||
Notes payable |
| 2,233,332 |
| 2,233,132 |
| 211,244 | ||||||||
Other payables |
| 17,476 |
| 18,796 |
| 19,816 | ||||||||
Due to officers |
| 1,384 |
| 1,384 |
| 1,025 | ||||||||
Derivative liability |
| 498,942 |
| 802,153 |
| 870,433 | ||||||||
TOTAL CURRENT LIABILITIES | $ | 4,973,800 | $ | 4,748,590 | $ | 2,193,367 | ||||||||
|
|
|
|
|
|
| ||||||||
STOCKHOLDERS' DEFICIT: |
|
|
|
|
|
| ||||||||
Preferred Stock, $0.001 par value: Series A; authorized shares - 100,000 shares; 3,000 shares issued and outstanding |
| 3 |
| 3 |
| 3 | ||||||||
Series B; authorized shares - 100,000 shares; 87,500 shares issued and outstanding |
| 88 |
| 88 |
| 88 | ||||||||
Common stock, $.001 par value; authorized shares - 500,000,000 shares; 15,885,259, 15,885,259 and 13,202,138 shares issued and outstanding |
| 15,885 |
| 15,885 |
| 13,202 | ||||||||
Additional paid-in capital |
| 12,384,985 |
| 12,384,985 |
| 12,371,612 | ||||||||
Deficit accumulated |
| (17,374,759) |
| (17,149,549) |
| (14,574,302) | ||||||||
TOTAL STOCKHOLDERS' DEFICIT |
| (4,973,798) |
| (4,748,588) |
| (2,189,397) | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 2 | $ | 2 | $ | 3,970 | ||||||||
|
|
|
|
|
|
| ||||||||
| The accompanying notes are an integral part of these financial statements
F-3 |
|
| |||||||||||
Telco Cuba, Inc.
BALANCE SHEETS
STATEMENTS OF OPERATIONS
| November 30, 2016 | November 30, 2015 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 21,414 | $ | 7,592 | ||||
| Deposits | - | 6,201 | ||||||
| Accounts receivable | - | 3,307 | ||||||
| Inventories | 5,450 | - | ||||||
| TOTAL CURRENT ASSETS | 26,864 | 17,100 | ||||||
| FIXED ASSETS (net of accumulated depreciation of $6,686 in 2016 and $6,423 in 2015) | 14,738 | 15,001 | ||||||
| TOTAL ASSETS | $ | 41,602 | $ | 32,101 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 167,854 | $ | 103,436 | ||||
| Accrued expenses | 2,088,082 | 2,010,792 | ||||||
| Notes payable – related parties | 120,577 | 132,577 | ||||||
| Convertible debentures – related parties | 15,000 | 1,973 | ||||||
| Notes payable | 2,236,446 | 2,233,361 | ||||||
| Convertible debentures | 621,843 | 393,506 | ||||||
| Derivative liability (Note 7) | 132,098 | 1,324,409 | ||||||
| TOTAL CURRENT LIABILITIES | 5,381,900 | 6,200,054 | ||||||
| TOTAL LIABILITIES | 5,381,900 | 6,200,054 | ||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
| Preferred A stock, $ par value; authorized shares - shares; and issued and outstanding | 56 | 3 | ||||||
| Preferred B stock, $ par value; authorized shares - shares; and issued and outstanding | 82 | 71 | ||||||
| Preferred C stock, $ par value; authorized shares - shares; and issued and outstanding | 200 | 100 | ||||||
| Common stock, $ par value; authorized shares - shares; in 2016 and shares in 2015 issued and outstanding | 214,631 | 123,106 | ||||||
| Additional paid-in capital | 558,926 | 467,247 | ||||||
| Accumulated deficit | (6,114,193 | ) | (6,758,480 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | $ | (5,340,298 | ) | $ | (6,167,953 | ) | ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 41,602 | $ | 32,101 | ||||
|
| For the Years ended | ||||
|
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 |
|
| (Restated) |
| (Restated) |
| (Restated) |
COST OF OPERATIONS: |
|
|
|
|
|
|
Impairment of operating assets | $ | - | $ | 2,000,000 | $ | - |
TOTAL MINERAL PROPERTY EXPENSES |
| - |
| 2,000,000 |
| - |
GROSS LOSS |
| - |
| (2,000,000) |
| - |
OPERATING EXPENSES: |
|
|
|
|
|
|
General and administrative |
| 362,654 |
| 404,717 |
| 616,566 |
Mineral claims maintenance costs |
| - |
| - |
| (250,000) |
TOTAL OPERATING EXPENSES |
| 362,654 |
| 404,717 |
| 366,566 |
OPERATING LOSS |
| (362,654) |
| (2,404,717) |
| (366,566) |
OTHER EXPENSES (INCOME): |
|
|
|
|
|
|
Interest Expense |
| 165,766 |
| 238,810 |
| 115,855 |
Change in fair value of derivative liability |
| (303,210) |
| (68,280) |
| 381,370 |
Amortization of debt discount |
| - |
| - |
| 268,413 |
TOTAL OTHER (INCOME) EXPENSES |
| (137,444) |
| 170,530 |
| 765,638 |
NET LOSS | $ | (225,210) | $ | (2,575,247) | $ | (1,132,203) |
|
|
|
|
|
|
|
BASIC AND DILUTED LOSS PER SHARE | $ | (0.01) | $ | (0.17) | $ | (0.13) |
WEIGHTED AVERAGE COMMON |
|
|
|
|
|
|
Basic and Diluted |
| 15,885,259 |
| 15,227,441 |
| 8,709,142 |
The accompanying notes are an integral part of these financial statements
F-3
Telco Cuba, Inc.
STATEMENTS OF OPERATIONS
| For the Years ended | ||||||||
| November 30, 2016 | November 30, 2015 | |||||||
| REVENUES | $ | 146,731 | $ | 173,560 | ||||
| OPERATING EXPENSES | 359,634 | 831,489 | ||||||
| OPERATING (LOSS) | (212,903 | ) | (657,927 | ) | ||||
| OTHER (INCOME) EXPENSE: | ||||||||
| Interest expense | 335,120 | 290,819 | ||||||
| Change in fair value of derivative liability | (1,192,310 | ) | 222,251 | |||||
| TOTAL OTHER (INCOME) EXPENSE | 857,190 | 513,070 | ||||||
| NET INCOME (LOSS) | $ | 644,287 | $ | (1,170,997 | ) | |||
| NET INCOME (LOSS) PER SHARE: | ||||||||
| BASIC | $ | 0.004 | $ | (0.02 | ) | |||
| DILUTED | $ | 0.001 | $ | (0.02 | ) | |||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||
| BASIC | 172,312,161 | 63,865,281 | ||||||
| DILUTED | 671,516,358 | 452,789,678 | ||||||
The accompanying notes are an integral part of these financial statements
F-4
Telco Cuba, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED NOVEMBER 30, 2015
Telco Cuba, Inc. | |||||||||||||||
STATEMENTS OF STOCKHOLDERS' DEFICIT | |||||||||||||||
For the years ended November 30, 2014, 2013 and 2012 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||
| Preferred Series A Stock ($.001 par value) | Preferred Series B Stock ($.001 par value) | Common Stock ($.001 par value) |
|
|
|
|
|
| ||||||
| Shares |
| Amount | Shares |
| Amount | Shares |
| Amount |
| Additional Paid-In Capital |
| Accumulated Deficit |
| Total Stockholder’s Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 1, 2011 | 3,000 | $ | 3 | 22,000 | $ | 22 | 1,568,780 | $ | 1,569 | $ | 11,983,437 | $ | (13,442,099) | $ | (1,457,068) |
Issuance of stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debentures | - |
| - | - |
| - | 11,633,358 |
| 11,633 |
| 224,491 |
| - |
| 236,124 |
Compensation | - |
| - | 65,500 |
| 66 | - |
| - |
| 163,684 |
| - |
| 163,750 |
Net loss | - |
| - | - |
| - | - |
| - |
|
|
| (1,132,203) |
| (1,132,203) |
Balance, November 30, 2012- (Restated) | 3,000 |
| 3 | 87,500 |
| 88 | 13,202,138 |
| 13,202 |
| 12,371,612 |
| (14,574,302) |
| (2,189,397) |
Issuance of stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debentures | - |
| - | - |
| - | 2,683,121 |
| 2,683 |
| 13,373 |
| - |
| 16,056 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
| (2,575,247) |
| (2,575,247) |
Balance, November 30, 2013- (Restated) | 3,000 |
| 3 | 87,500 |
| 88 | 15,885,259 |
| 15,885 |
| 12,384,985 |
| (17,149,549) |
| (4,748,588) |
Net loss | - |
| - | - |
| - | - |
| - |
| - |
| (225,210) |
| (225,210) |
Balance, November 30, 2014- (Restated) | 3,000 | $ | 3 | 87,500 | $ | 88 | 15,885,259 | $ | 15,885 | $ | 12,384,985 | $ | (17,374,759) | $ | (4,973,798) |
| Preferred A Stock | Preferred B Stock | Preferred C Stock | Common Stock | Additional | Total | |||||||||||||||||||||||||||||||||||||||
| ($.0001 par value) | ($.0001 par value) | ($.0001 par value) | ($.0001 par value) | Paid-In Capital | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||
| Balance, November 30, 2014 | - | - | - | - | - | - | - | $ | 1,000 | $ | - | $ | 5,991 | $ | 6,991 | |||||||||||||||||||||||||||||
| Distributions | - | $ | (62,135 | ) | $ | (62,135 | ) | |||||||||||||||||||||||||||||||||||||
Recapitalization - Telco Cuba | 3,000 | $ | 3 | 83,680 | $ | 83 | - | - | 46,288,164 | $ | 46,288 | (5,471,140 | ) | - | (5,424,766 | ) | ||||||||||||||||||||||||||||
Recapitalization - Telco Cuba | $ | (1,000 | ) | $ | 1,000 | - | ||||||||||||||||||||||||||||||||||||||
| Common and Preferred Stock Issuance: | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of debentures | 12,130,729 | $ | 12,131 | $ | 5,389 | $ | 17,520 | |||||||||||||||||||||||||||||||||||||
| Conversion of Preferred B shares to common shares | (12,336 | ) | $ | (12 | ) | 61,680,000 | $ | 61,680 | $ | (61,668 | ) | - | ||||||||||||||||||||||||||||||||
| Issuance of common shares as payment for consulting services | 3,007,146 | $ | 3,007 | $ | 67,710 | $ | 70,717 | |||||||||||||||||||||||||||||||||||||
| Issuance of Preferred C shares | 100,000 | $ | 100 | 394,618 | $ | 394,718 | ||||||||||||||||||||||||||||||||||||||
| Insufficient Additional Paid-in-Capital balance transferred to Accumulated Deficit | 5,532,337 | (5,532,337 | ) | - | ||||||||||||||||||||||||||||||||||||||||
| Net Loss | $ | (1,170,997 | ) | $ | (1,170,997 | ) | ||||||||||||||||||||||||||||||||||||||
| Balance, November 30, 2015 | 3,000 | $ | 3 | 71,344 | $ | 71 | 100,000 | $ | 100 | 123,106,039 | $ | 123,106 | $ | 467,247 | $ | (6,758,480 | ) | $ | (6,167,953 | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements
F-5
Telco Cuba, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEAR ENDED NOVEMBER 30, 2016
Telco Cuba, Inc. |
|
| |||
STATEMENTS OF CASH FLOWS |
|
| |||
|
|
|
|
|
|
| For the years ended November 30, | ||||
| 2014 |
| 2013 |
| 2012 |
| (Restated) |
| (Restated) |
| (Restated) |
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
Net loss | $ (225,210) |
| $ (2,575,247) |
| $ (1,132,203) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
Amortization of debt discount | - |
| - |
| 268,413 |
Stock issued for compensation | - |
| - |
| 163,750 |
Penalty on debenture default | - |
| - |
| 56,900 |
Change in fair value of derivative liability | (303,211) |
| (68,280) |
| 381,370 |
Impairment of oil & gas interests | - |
| 2,000,000 |
|
|
Mineral claims maintenance costs write off | - |
| - |
| (250,000) |
Change in operation assets and liabilities: |
|
|
|
|
|
Decrease in prepaid expenses | - |
| 3,500 |
| 417 |
Increase in accounts payable and accrued expenses | 528,221 |
| 617,312 |
| 401,799 |
NET CASH USED IN OPERATING ACTIVITIES | (200) |
| (22,715) |
| (109,554) |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES | - |
| - |
| - |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
Proceeds from notes payable | 200 |
| 21,888 |
| 108,700 |
Proceeds from officer and prior CEO | - |
| 359 |
| 925 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 200 |
| 22,247 |
| 109,625 |
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH | - |
| (468) |
| 71 |
CASH - BEGINNING OF PERIOD | 2 |
| 470 |
| 399 |
|
|
|
|
|
|
CASH - END OF PERIOD | $ 2 |
| $ 2 |
| $ 470 |
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
| |
Cash paid for interest | $ - | $ | - | $ | - |
Cash paid for taxes | $ - | $ | - | $ | - |
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
Stock issued in connection with conversion of debentures | $ - | $ | 16,056 | $ | 236,124 |
Note issued in connection with oil & gas acquisition | $ - | $ | 2,000,000 | $ | - |
| Preferred A Stock | Preferred B Stock | Preferred C Stock | Common Stock | Total | ||||||||||||||||||||||||||||||||||||||||
| ($.0001 par value) | ($.0001 par value) | ($.0001 par value) | ($.0001 par value) | Additional Paid-In | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||
| Balance, November 30, 2015 | 3,000 | $ | 3 | 71,344 | $ | 71 | 100,000 | $ | 100 | 123,106,039 | $ | 123,106 | $ | 467,247 | (6,758,480 | ) | $ | (6,167,953 | ) | |||||||||||||||||||||||||
| Sale of common and preferred stock | 55,555 | $ | 56 | 15,000 | $ | 15 | $ | - | 10,000,000 | $ | 10,000 | $ | 132,429 | $ | 142,500 | |||||||||||||||||||||||||||||
| Preferred A shares returned to Company | (3,000 | ) | $ | (3 | ) | $ | 3 | $ | - | |||||||||||||||||||||||||||||||||||
| Issuance of stock for: | ||||||||||||||||||||||||||||||||||||||||||||
| Note Payable conversion | 57,525,192 | $ | 57,525 | $ | (31,131 | ) | $ | 26,394 | ||||||||||||||||||||||||||||||||||||
| Conversion of Preferred B to common shares | (3,800 | ) | $ | (4 | ) | 19,000,000 | $ | 19,000 | $ | (18,996 | ) | $ | - | |||||||||||||||||||||||||||||||
| Issuance of common shares as payment for consulting services | 5,000,000 | $ | 5,000 | $ | 9,374 | $ | 14,374 | |||||||||||||||||||||||||||||||||||||
| Issuance of Preferred C shares | 100,000 | $ | 100 | $ | 100 | |||||||||||||||||||||||||||||||||||||||
| Net Income | 644,287 | $ | 644,287 | |||||||||||||||||||||||||||||||||||||||||
| Balance, November 30, 2016 | 55,555 | $ | 56 | 82,544 | $ | 82 | 200,000 | $ | 200 | 214,631,331 | $ | 214,631 | $ | 558,926 | (6,114,193 | ) | $ | (5,340,298 | ) | |||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements
F-6
Telco Cuba, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the years ended | ||||||||
| November 30, | November 30, | |||||||
| 2016 | 2015 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income (Loss) | $ | 644,287 | $ | (1,170,997 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Change in fair value of derivative | (1,192,311 | ) | 222,252 | |||||
| Discount amortization | 119,366 | 60,977 | ||||||
| Stock based compensation | 14,474 | 465,436 | ||||||
| Depreciation | 263 | (13,192 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 9,508 | (953 | ) | |||||
| Inventory | (5,450 | ) | - | |||||
| Accounts payable | 64,417 | 3,453 | ||||||
| Accrued expenses | 77,290 | 304,833 | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | (268,156 | ) | (128,191 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from Sale of Stock | 142,500 | - | ||||||
| Proceeds from Borrowing | 219,728 | 335,343 | ||||||
| Principal Payments on Debt | (80,250 | ) | (149,150 | ) | ||||
| Distributions to shareholder | - | (62,137 | ) | |||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 281,978 | 124,056 | ||||||
| NET (DECREASE) INCREASE IN CASH | 13,822 | (4,135 | ) | |||||
| CASH - BEGINNING OF PERIOD | 7,592 | 11,727 | ||||||
| CASH - END OF PERIOD | $ | 21,414 | $ | 7,592 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Preferred B Stock conversion to common shares | $ | 19,000 | $ | 61,680 | ||||
| Stock issued in connection with conversion of debentures | $ | 26,394 | $ | 17,520 | ||||
| Merger with Amgentech and Recapitalization: | $ | - | $ | - | ||||
| Transfer insufficient Additional Paid-in-Capital balance to Retained Earnings | $ | - | $ | 5,532,337 | ||||
| Common Stock issued for merger and recapitalization, net | $ | - | $ | 5,470,140 | ||||
The accompanying notes are an integral part of these financial statements
F-7
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2014, 20132016 and 20122015
| 1. | Nature of Operations and Going Concern |
1. Nature of Operations and Going Concern
Telco Cuba, Inc. (fka CaerVision Global, Inc. and, fka American Mineral Group Minerals Inc.) (the "Company"“Company”) was incorporated in the State of Nevada on August 10, 2007. Up until June 12, 2015, the company was previously engaged in the exploration, development, and acquisition of mineral properties (Referproperties.
On June 12, 2015, the Company consummated a Share Exchange with Amgentech, Inc., a Florida corporation. As a result of this transaction, Amgentech became a wholly owned subsidiary of the Company with control transferring to the previous owners of Amgentech. Amgentech elected to be treated as the successor issuer for SEC reporting and accounting purposes. The Share Exchange was accounted for as a reverse acquisition and re-capitalization. The Amgentech Shareholders obtained approximately 60% of voting control on the date of Share Exchange. Amgentech was the acquirer for financial reporting purposes and the Company was the acquired company. The Company filed an amendment to its articles of incorporation and changed its name to Telco Cuba, Inc. Telco Cuba is foremost a technology solutions service provider offering services under the brand names “Amgentech” and “Telco Cuba”.
Going Concern
The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern; accordingly, they do not give effect to adjustmentadjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying financial statements. As shown in the accompanying financial statements, the Company incurred a net loss of $225,210 for the year ended November 30, 2014, and has an accumulated deficit of $17,374,759.more than $5.7 million. The Company currently does not have the cash resources to meet its operating commitments for the next twelve months and expects to have ongoing requirements for capital investment or debt to implement its business plan. These factors, among others, raise substantial doubt that the Company will be able to continue as a going concern for a reasonable period of time. Management plans to raise cash from public or private debt or equity financing, on an as needed basis and in the longer term, to generate revenues from the acquisition, exploration and development of mineral interests, if found.basis. The Company'sCompany’s ability to continue as a going concern is dependent upon achievingin substantial doubt unless it can achieve profitable operations and/or upon obtaining additional financing. The outcome of these matters cannot be predicted at this time.
2.
| 2. | Significant Accounting Policies |
| a) | Accounting Principles |
a) Exploration Stage Company
For all periods presented, the Company was considered to be in the exploration stage. The Company devoted substantially all of its efforts to exploring and identifying mineral properties suitable for development.
b) Accounting Principles
The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.principles.
| b) | Basic and Diluted Loss per Share |
The Company was in the exploration stage and had not yet realized any revenue from its planned operations. Mineral property acquisition costs are capitalized. Additionally, mine development costs incurred either to develop new ore deposits and constructing new facilities are capitalized until operations commence. All such capitalized costs are amortized using a straight-line basis, based on the minimum original license term at acquisition, but do not exceed the useful life of the capitalized costs. Upon commercial development of an ore body, the applicable capitalized costs would then be amortized using the units-of-production method. Exploration costs, costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected cash flows and/or estimated salvage value in accordance with guidance issued by the FASB, "Accounting for Impairment or Disposal of Long-Lived Assets." Subsequent to November 30, 2014, the Company determined that pursuing the development of its oil and gas assets was no longer economically feasible. As a result, the Company recorded an impairment of the assets equal to 100% of their previous carrying value.
d) Foreign Currency Translation
The Company's functional and reporting currency is the U.S. Dollar. All transactions initiated in foreign currencies are translated into U.S. dollars in accordance with ASC Topic 830 "Foreign Currency Matters" as follows:
i) monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;
ii) non-monetary assets at historical rates; and
iii) revenue and expense items at the average rate of exchange prevailing during the period.
Gains and losses from foreign currency transactions are included in the statement of operations.
As of November 30, 2014, the Company only operates in the United States.
e) Basic and Diluted Loss Per Share
Basic and diluted loss per share is based on the weighted average number of shares outstanding. Potential commonFully diluted shares includable inare calculated as follows:
| Schedule Of Earnings Per Share Basic And Diluted | ||||||||
| November 30, 2016 | November 30, 2015 | |||||||
| Weighted average shares – basic | 172,312,161 | 63,865,281 | ||||||
| Convertible debentures | 499,204,197 | 388,924,397 | ||||||
| Weighted average shares – fully diluted | 671,516,358 | 452,789,678 | ||||||
F-8
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the computation of fully diluted per share results are not presented in the financial statements as their effect would be anti-dilutive.Years Ended November 30, 2016 and 2015
f)
| c) | Fair Value Measurements |
Valuation Hierarchy
ASC 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The following table provides the assets and liabilities carried at fair value measured on a recurring and non-recurring basis as of November 30, 2014, 20132016, and 2012:2015:
Derivative liabilities
|
|
|
|
| Fair Value Measurements |
| ||||||
|
|
|
|
| Quoted prices |
|
| Significant |
|
|
|
|
|
| Total Carrying |
|
| in active |
|
| other |
|
| Significant |
|
|
| Value at |
|
| markets |
|
| observable |
|
| unobservable |
|
|
| November 30, 2014 |
|
| (Level 1) |
|
| inputs (Level 2) |
|
| inputs (Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2014 | $ | 498,942 |
| $ | - |
| $ | - |
| $ | 498,942 |
|
November 30, 2013 | $ | 802,153 |
| $ | - |
| $ | - |
| $ | 802,153 |
|
November 30, 2012 | $ | 870,433 |
| $ | - |
| $ | - |
| $ | 870,433 |
|
| Schedule of Fair Value Measurements, Recurring and Nonrecurring | ||||||||||||||||
| Fair Value Measurements | ||||||||||||||||
| Total Carrying value | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| November 30, 2016 | $ | 132,098 | $ | 132,098 | ||||||||||||
| November 30, 2015 | $ | 1,324,409 | - | - | $ | 1,324,409 | ||||||||||
F-7
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2014, 2013 and 2012
Fair Value Measurements (continued)
The derivative liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level 3 of the valuation hierarchy.
The following is a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
| Schedule of Fair Value, Liabilities Measured on Recurring Basis | |||||||||||||||
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 | November 30, 2016 | November 30, 2015 | ||||||||
Beginning balance | $ | 802,153 | $ |
| 870,433 | $ | 489,063 | $ | 1,324,409 | $ | 921,815 | ||||
Derivative liabilities recorded |
| - |
| - |
| - | - | 180,343 | |||||||
Derivative liabilities converted |
| - |
| - |
| - | |||||||||
Unrealized (gain) loss attributable due to the change in liabilities |
| (303,211) |
|
| (68,280) |
| 381,370 | (1,192,311 | ) | 222,251 | |||||
Ending balance | $ | 498,942 | $ |
| 802,153 | $ | 870,433 | $ | 132,098 | $ | 1,324,409 | ||||
The fair value of the derivative liabilities was calculated using the Black-Scholes Option Pricing model under the assumptions detailed in Note 8. Gains and losses (realized and unrealized) included in earnings (to change in fair value of derivative liability) for the years ended November 30, 2014, 20132016, and 2012,2015, are reported in other expenses as follows:
| Schedule of change in fair value of derivative liability | ||||||||
| November 30, 2016 | November 30, 2015 | |||||||
| (Gain) Loss on derivative liabilities recorded during the period | - | - | ||||||
| Debt discount attributable to derivative liabilities recorded | - | - | ||||||
| Derivative liabilities converted during the period | - | - | ||||||
| Unrealized (gain) attributable due to the change in liabilities | $ | (1,192,311 | ) | $ | (222,251 | ) | ||
| Net unrealized (gain) loss included in earnings | $ | (1,192,311 | ) | $ | (222,251 | ) | ||
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 |
(Gain) Loss on derivative liabilities recorded during the period | $ - |
| $ - |
| $ - |
Debt discount attributable to derivative liabilities recorded | - |
| - |
| - |
Derivative liabilities converted during the period | - |
| - |
| - |
Unrealized (gain) loss attributable due to the change in liabilities | (303,210) |
| (68,280) |
| 381,370 |
Net unrealized (gain) loss included in earnings | $ (303,210) |
| $ (68,280) |
| $ 381,370 |
F-9
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2016 and 2015
The Company did not have any Level 1 or Level 2 assets or liabilities as of November 30, 2014, 20132016, and 2012November 30, 2015 and had Level 3 liabilities consisting of notes payable. The carrying amount of the notes payable at November 30, 2014, 20132016, and 20122015 approximate their respective fair value based on the Company’s incremental borrowing rate.
Cash and cash equivalents include money market securities that are considered to be highly liquid and easily tradable as of November 30, 2014, 20132016, and 2012,2015, respectively. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.
In addition, FASB ASC 825-10-25 Fair Value Option was effective at the time of adoption. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.
g)
| d) | Income Taxes |
Income taxes are accounted for in accordance with the provisions of FASB ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
| e) | Cash and Cash Equivalents |
F-8
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2014, 2013 and 2012
h) Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.
i)
| f) | Revenue Recognition |
The Companies follow the guidance of the FASB ASC 605-10-S99 “Revenue Recognition Overall – SEC Materials”. The Companies record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Revenues consist primarily of product sales.
For the years ended November 30, 2014, 2013 and 2012, the Company had no revenues to report.
| g) | Estimates |
j) Estimates
The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those reported.
k)
| h) | Accounts receivable and concentration of credit risk |
The Company provides credit to its clients in the form of payment terms. The Company limits its credit risk
by performing credit evaluations of its clients and maintaining a reserve, if deemed necessary, for potential credit losses. Such evaluations include the review of a customer’s outstanding balances with consideration towards such customer’s historical collection experience, as well as prevailing economic and market conditions and other factors. The Company currently has no accounts receivable no customers,in 2016 and, therefore, does not currently foreseehave a concentrated credit risk associated with trade receivables. If and when the Company commences operations that generate revenue, the Company will evaluate the receivable in light of the collectability in the normal course of business.
l) Restatement of Previously Issued Financial Statements
The Company has restated its un-audited financial statement for the year ended November 30, 2014, 2013 and 2012 filed on July 8, 2015, July 8, 2015 and July 6, 2015, respectively. The table below highlights the material changes to the financial statements:
For the year ended November 30, 2014 - |
|
|
|
|
|
|
| Balance Per Audited |
|
|
|
| Balance Previously |
| Statements |
| Adjustments |
|
| Reported |
Total Other Assets | $ - |
| $ 2,000,000 | (8) |
| $ 2,000,000 |
Total Current Liabilities | $ 4,973,800 |
| $ 1,045,380 | (1) |
| $ 3,928,420 |
Common Stock | $ 15,885 |
| $ 750 | (2) |
| $ 15,135 |
Additional Paid-in Capital | $ 12,384,985 |
| $ 496,000 | (3) |
| $ 12,880,985 |
Accumulated Deficit | $ 17,374,759 |
| $ 2,549,880 | (4) |
| $ 14,824,879 |
Operating Expenses | $ 362,654 |
| $ 10,913 | (5) |
| $ 373,567 |
Interest Expense | $ 165,766 |
| $ 139,389 | (6) |
| $ 26,377 |
Change in Fair Value of Derivative Liability | $ 303,210 |
| $ 303,210 | (7) |
| $ - |
Net Loss | $ 225,210 |
| $ 121,980 |
|
| $ 347,190 |
1)
Change in current liabilities represents an increase in accrued liabilities of $175,806, a decrease in accrued payroll of $21,245, an increase in convertible debentures of $134,000, a decrease in notes payable of $50,000, and an increase in derivative liability of $306,819.
2)F-10
Common stock adjustment reflects adjustment to record a change in the number of shares issued on the conversion of debentures.
3)
Change in additional paid-in capital from an increase of $3,750 results from an adjustment for recording the conversion of debentures payable, and a decrease of $499,750 from the reclassification of stock to be issued to notes payable in FY 2013.
4)
Change in accumulated deficit reflects the combination of changes in the year ended November 30, 2014 plus changes of $2,005,554 in 2013 and $666,306 in 2012.
5)
Change in operating expenses reflects and adjustment to general and administrative expenses.
6)
Change in interest expense results from an increase in the amount of recorded debt outstanding during the year.
7)
Change in derivative liability results from properly recording derivative liability expense for the year.
8)
Change in other current assets results from an impairment on the value of the oil and gas lease.
For the year ended November 30, 2013 - |
|
|
|
|
|
|
| Balance Per Audited |
|
|
|
| Balance Previously |
| Statements |
| Adjustments |
|
| Reported |
Total Other Assets | $ - |
| $ 2,000,000 | (1) |
| $ 2,000,000 |
Total Current Liabilities | $ 4,748,590 |
| $ 1,167,360 | (2) |
| $ 3,581,230 |
Common Stock | $ 15,885 |
| $ 750 | (3) |
| $ 15,135 |
Additional Paid-in Capital | $ 12,384,985 |
| $ 496,000 | (4) |
| $ 12,880,985 |
Accumulated Deficit | $ 17,149,549 |
| $ 2,671,860 | (5) |
| $ 14,477,689 |
Operating Expenses | $ 404,717 |
| $ 16,143 | (6) |
| $ 420,860 |
Interest Expense | $ 234,577 |
| $ 77,332 | (7) |
| $ 157,245 |
Change in Fair Value of Derivative Liability | $ 64,047 |
| $ 64,047 | (8) |
| $ - |
Net Loss | $ 2,575,247 |
| $ 2,005,554 |
|
| $ 569,693 |
1)
Change in other current assets results from an impairment on the value of the oil and gas lease.
2)
Change in current liabilities results from a decrease in accrued expenses of $16,338, a decrease in accrued payroll of $10,332, an increase in convertible debentures of $134,000, a decrease in notes payable of $50,000, and an increase in derivative liability of $610,030.
3)
Common stock adjustment reflects adjustment to record a change in the number of shares issued on the conversion of debentures.
4)
Change in additional paid-in capital from an increase of $3,750 results from an adjustment for recording the conversion of debentures payable, and a decrease of $499,750 from the reclassification of stock to be issued to notes payable.
5)
Accumulated deficit adjustment results from the additive effects of a change in net loss for the year ended November 30, 2013 of $2,005,554 and $666,306 in 2012.
6)
Change in operating expenses results from a decrease in reported general and administrative expenses.
7)
Increase in interest expense results from properly calculating interest on debt outstanding.
8)
Increase in change in derivative liability results from properly calculating derivative liability in the years presented.
F-9
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2014, 20132016 and 20122015
| i) | Inventory |
Inventory is carried at the lower of cost or net realizable value, with the cost being determined on a first-in, first-out (FIFO) basis. The Company reviews physical inventory for obsolescence and/or excess and will record a reserve if necessary. As of the date of this report, no reserve was deemed necessary.
| j) | Fixed Assets |
For the year ended November 30, 2012 - Balance Per Audited Balance Previously Statements Difference Reported Total Current Liabilities $ 2,193,367 $ 666,306 (1) $ 1,527,061 Accumulated Deficit $ 14,574,302 $ 666,306 (2) $ 13,907,996 Operating Expenses $ 366,566 $ 3,592 (3) $ 370,158 Change in Fair Value of Derivative Liability $ 381,370 $ 669,898 (4) $ (288,528) Net Loss $ 1,132,203 $ 666,306 $ 465,897
1)
ChangeFixed assets are stated at cost less accumulated depreciation, with depreciation recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term, if applicable. When assets are retired or disposed, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in current liabilities results from a decrease in accrued expenses of $3,792, a decrease in accrued payroll of $3,300, an increase in convertible debentures of $53,500, a decrease in notes payable of $50,000,income. Repairs and an increase in derivative liability of $669,898.
2)
Accumulated deficit increased duemaintenance are charged to an increaseexpense in the netperiod incurred.
Fixed assets consist primarily of computer equipment and furniture and fixtures. The estimated useful lives range from three to five years..
The Company’s property and equipment are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from the undiscounted future cash flows of such asset over the anticipated holding period. An impairment loss foris measured by the year.excess of the asset’s carrying amount over its estimated fair value.
3)
Operating expenses decreased dueImpairment analyses are based on management’s current plans, asset holding periods, and currently available market information. If these criteria change, the Company’s evaluation of impairment losses may be different and could have a material impact to a reduction in recorded generalthe consolidated financial statements.
For the years ended November 30, 2016, and administrative expenses.
4)
Change in fair value2015, based on the results of derivative liability increased duemanagement’s impairment analyses, there were no impairment losses.
At November 30, 2016 and 2015, fixed assets consisted of the following:
| Schedule of fixed assets | ||||||||
| November 30, 2016 | November 30, 2015 | |||||||
| Furniture and fixtures | $ | 3,153 | $ | 3,153 | ||||
| Computer equipment | 18,271 | 18,271 | ||||||
| Less: accumulated depreciation | (6,686 | ) | (6,423 | ) | ||||
| Fixed assets, net | $ | 14,738 | $ | 15,001 | ||||
During the years ended November 30, 2016, and 2015, there were no additions to proper calculation of derivativefixed assets. Depreciation expense for the period.
The material changes to the financial statements focused primarily on two areas. First, the Company elected to record a reserve against the value of the oil and gas reserves in 2013, which impacted Current Assets, Net Loss, and Retained Deficit for both 2013 and 2014. Second, the Company recalculated the fair value of derivative liabilities, which resulted in changes to Liabilities, Net Loss, and Retained Deficit for all periods presented. The only other material change was to Interest Expense, which was recalculated based on current information, which also affected Net Loss and Retained Deficit.
On a quarterly basis, for the year ended November 2012, the only material change would be to the change in value of the derivative liability, which also impacted Net Loss for the quarters. For the yearyears ended November 30, 2013, the quarterly reports would only be affected by changes to derivative liability2016, and interest expense, which also impacted the Net Loss2015 was $263 and Retained Deficit. The reserve against the oil and gas assets was recorded during the fourth quarter of fiscal 2013. During the year ended November 30, 2014, the quarterly balances were affected by changes to interest expense and deferred liability, which were roughly evenly distributed across all quarters. These changes also impacted Net Loss and Retained Deficit.$13,192, respectively.
m) Material Equity Instruments
| k) | Recently Adopted Accounting Pronouncements |
The Company evaluates preferred stock series A, B & C and other contracts (convertible promissory note payable) to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for under the relevant sections of ASC 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity (“ASC 815”).
Certain of the Company’s embedded conversion features on debt are treated as derivative liabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuant to SEC staff guidance that permits a sequencing approach based on the use of ASC 840-15-25 which provides guidance for contracts that permit partial net share settlement. The sequencing approach may be applied in one of two ways: contracts may be evaluated based on (1) earliest issuance date or (2) latest maturity date. In the case of insufficient authorized share capital available to fully settle outstanding contracts, the Company utilizes the earliest maturity date sequencing method to reclassify outstanding contracts as derivative instruments. These contracts are recognized currently in earnings until such time as the convertible notes or preferred stock are exercised, expire, the related rights have been waived and/or the authorized share capital has been amended to accommodate settlement of these contracts. These instruments do not trade in an active securities market.
As of November 30, 2014, 2013 and 2012, the Company has recorded a derivative liability of $498,942, $802,153 and $870,433, respectively. This derivative liability is a result of the embedded conversion features of the $375,925 in debt to convert into 236,445,529 shares, at fixed prices ranging from $0.00166 to $0.00220 per share. The liability was recorded at the fair market value, which estimated value, was based upon the remaining contractual life of the convertible notes payable (the host instrument), using the Black-Sholes pricing model, and since these earlier notes had reached maturity and were now due on demand the intrinsic value was also considered. The conversion exceeded the market price, accordingly the intrinsic value was also zero. Accordingly, the reclassification of the value of these derivatives had no impact on the Company’s financial statements.
In addition, the Company has issued and outstanding a total of 3,000 shares of Series A Preferred, which is convertible into Common Stock at 1,000:1 and 87,500 shares of Series B Preferred, which is convertible into Common Stock at 5,000:1. Combined, these Preferred Shares could be converted into 440,500,000 shares of Common Stock. Upon analysis, there was no additional adjustment of the derivative liability required regarding these potential conversions.
n) Reclassifications
Certain prior year financial statement balances have been reclassified to conform to the current year presentation. These reclassifications had no effect on the recorded net loss.
o) Recently Adopted Accounting Pronouncements
Management does not believe that any recently issued but not yet effective accounting pronouncements if currently adopted would have a material effect on the accompanying financial statements.
3. Mineral Property
In August 2009, the Company entered into an agreement to acquire the mineral rights to 331 unpatented lode mining claims known as the Conglomerate Mesa, located in Inyo County, California. In March 2011, the Company added an additional 217 unpatented lode mining claims. In fiscal year 2012, the Company determined that the effort and cost of developing these claims required more resources that could be more effectively used on other opportunities, and abandoned the Conglomerate Mesa project.
In February 2013, the Company acquired a 28% Working Interest in the Grand Chenier oil and gas prospect in Louisiana. The property contains an estimate 9.0 million barrels of oil and was in production until approximately 2009 when the then operator failed to manage the interests and certain repairs were not made leading to the cessation of production. In June 2015, the Company determined that it was unable to raise sufficient capital to bring the oil and gas properties back into production and agreed to a share exchange agreement with Amgentech, Inc., a telecommunications provider focusing its efforts on the Cuba and Cuban-American market (See Note 13 - Subsequent Events). As a result of this transaction, and the perceived economic uncertainty of being able to sell the oil and gas assets at carrying value, the Company has recorded impairment against the assets as follows:
Working Interest in Grand Chenier oil & gas prospect
$2,000,000
Impairment as of November 30, 2013F-11
(2,000,000)
Carrying Value as of November 30, 2013
$ -
F-10
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2014, 20132016 and 20122015
| 3. | Capital Stock |
| a) | Authorized |
4. Capital Stock
a) Authorized
On March 12, 2012 the Authorized Capital was increased to 2,500,000,000 shares of common stock, par value $0.001. On March 31, 2013, the company executed a 1:125 reverse split. At the same time, the authorized common was set to 500,000,000 shares. All references to common stock in these financial statements have been retroactively adjusted to reflect the reverse split.
As of November 30, 2014,2016, authorized capital stock consists of:
500,000,000
common shares with a par value of $0.001$0 per share; and
1,000,000
preferred shares with a par value of $0.001$ per share
b) Share Issuances
As of November 30, 2015, authorized capital stock consists of:
common shares with a par value of $0 per share; and
preferred shares with a par value of $ per share
| b) | Share Issuances |
For the year ended November 30, 2012:2016:
·During the month of December 2015, 3,000 Series A shares were returned to the company from the holder.
The Company
Between February 1st 2016 and July 31st 2016, the company issued 11,633,358 common shares of common stock in connection with the conversion of $236,124$26,394 of convertible debentures and accrued interest. The conversions had an average price of $0.0003 per share and resulted in no gain or loss.
·
TheDuring the month of February 2016, the Company issued 65,500 common shares to unaffiliated third-party accredited investors in connection with the conversion of preferred B shares. This conversion was within the terms of preferred stock conversion feature and resulted in no gain or loss on the exchange.
During the month of March 2016, the Company issued common shares to unaffiliated third-party accredited investors in connection with the conversion of preferred B shares. This conversion was within the terms of preferred stock conversion feature and resulted in no gain or loss on the exchange.
During the month of March 2016, the Company issued shares as payment for consulting services valued at $14,370.
During the month of March 2016, the Company sold and issued preferred B shares for $112,500.
On November 1, 2016, the Company issued shares of Series C Preferred Stock to the Company’s CEO in exchange for services rendered to the Company.
During the month of November 2016, the Company sold and issued Series A shares for $25,000.
During the month of November 2016, the Company sold and issued common stock shares for $5,000.00.
During the month of November 2016, William Sanchez converted Preferred B shares into common shares. This conversion was within the terms of preferred stock as compensation to officersconversion feature and directors.resulted in no gain or loss on the exchange.
F-12
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2016 and 2015
For the year ended November 30, 2013:2015:
·During December 2014, the Company converted a total of $17,520 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock resulting in gain or loss.
The
Between February and April 2015, the Company issued 2,683,121 common shares of common stockto unaffiliated third-party accredited investors in connectionsconnection with the conversion of $16,056 shares of convertible debenturesPreferred B Shares resulting in no gain or loss.
Between May 2015 and accrued interest.
·
TheNovember 1, 2015, the Company is obligatedissued common shares to issue 250,000unaffiliated third-party accredited investors in connection with the conversion of preferred B shares resulting in no gain or loss.
On September 4, 2015, the Company issued shares of Series C preferred stock, valued at $500,000, as part ofPreferred Stock to the acquisition cost of its interestCompany’s CEO and common shares in exchange for services rendered to the Grand Chenier oil & gas prospect.Company.
| c) | Preferred Stock |
There were no share issuances of capital stock inFor the fiscal year ended November 30, 2014.2016:
c) Preferred Stock
The Company has 1,000,000400,000 shares of preferred stock authorized of which 300,000 shares were designated in three series as follows:
·
Series A Senior Convertible Voting Non-Redeemable Preferred Stock (the “Series A Preferred”):
o
Par Value: $0.001
o
Authorized Shares: –
o
Issued shares authorized, shares issued and outstanding: 3,000
o
Convertible into Common Stock: 1,000:1outstanding;
·
Series B Senior Subordinated Convertible Voting Redeemable Preferred Stock (the “Series B Preferred”):
o
Par Value: $0.001
o
Authorized Shares: –
o
Issued shares authorized, shares issued and outstanding: 87,500 asoutstanding; and
Series C Senior Subordinated Convertible Voting Redeemable Preferred Stock (the “Series C Preferred”) – shares authorized, issued and outstanding;
Each share of 11/30/14
o
ConvertibleSeries A Preferred is convertible into Common Stock: 5,000:11,000 restricted shares of common stock.Each share of Series B Preferred is convertible into 5,000 restricted shares of common stock.Series C Preferred Stock is convertible into 100,000 votable shares, but not convertible to common shares otherwise. Conversion is at the discretion of the preferred shareholder, and no additional consideration is paid.
The Company Preferred Stock has no dividend rights but does have liquidation rights as follows: The Series A Preferred is senior in liquidation preference to all other series or classes of capital stock, preferred or common; the Series B Preferred is senior in liquidation preference to all series or classes of capital stock other than the Series A Preferred.Preferred; the Series C Preferred is senior in liquidation preference to all classes of Common Stock.
F-13
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2016 and 2015
For the year ended November 30, 2015:
The Company has 400,000 shares of preferred stock authorized of which 300,000 shares were designated in three series as follows:
Series A Senior Convertible Voting Non-Redeemable Preferred Stock (the “Series A Preferred”) – shares authorized, shares issued and outstanding;
Series B Senior Subordinated Convertible Voting Redeemable Preferred Stock (the “Series B Preferred”) – shares authorized, shares issued and outstanding; and
Series C Senior Subordinated Convertible Voting Redeemable Preferred Stock (the “Series C Preferred”) – shares authorized, issued and outstanding.
Each share of Series A Preferred is convertible into 1,000 restricted shares of common stock.Each share of Series B Preferred is convertible into 5,000 restricted shares of common stock. Series C Preferred Stock is convertible into 10,000 votable shares, but not convertible to common shares otherwise. Conversion is at the discretion of the preferred shareholder, and no additional consideration is paid.
The Company Preferred Stock has no dividend rights but liquidation rights as follows: The Series A Preferred is senior in liquidation preference to all other series or classes of capital stock, preferred or common; the Series B Preferred is senior in liquidation preference to all series or classes of capital stock other than the Series A Preferred; the Series C Preferred is senior in liquidation preference to all classes of Common Stock.
Issuance of Preferred Stock
During the month of December 2015, 3,000 Series A shares were cancelled and returned to the company. No consideration was paid for the return of these shares. There were no further issuances or redemptions of Preferred Stock Series A during the fiscal year ending November 30, 2016.
There were no issuances or redemptions of Preferred Stock Series A during the fiscal years endedyear ending November 30, 2014, 2013 and 2012.2015.
During the month of March 2016 Preferred Stock Series B shares were sold to 5 accredited investors. There were 65,500 Preferred Stock Series B shares redeemed into common stock shares. There were no further issuances or redemptions of Preferred Stock Series B during the fiscal year ending November 30, 2016.
There were no new issuances of Preferred Stock Series B during the fiscal year ending November 30, 2015. There were Preferred Stock Series B shares redeemed into common stock shares. There were no further redemptions of Preferred Stock Series B during the fiscal year ending November 30, 2015.
shares of Preferred Stock Series C were issued during November 2016. These shares are included in the financial statements as Stock Based Compensation and are valued at $. There were no further issuances of Preferred Stock Series C during the fiscal year ending November 30, 2016.
shares of Preferred Stock Series C were newly issued during September 2015. 100,000 Preferred Stock Series C shares represent the entire authorized of this class of non-converting class of preferred shares for year ended November 30, 2012 and none during the years ended November 30, 2013 and 2014.2015.
| d) | Warrants and Options |
d) Warrants and Options
For the year ended November 30, 2015, 20142016, and 2013,2015 there are outstanding stock options and warrants.
F-14
5. Concentration RiskTelco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2016 and 2015
| 4. | Concentration Risk |
The Company'sCompany’s financial instruments consist of cash, accounts payable and accrued liabilities. It is management'smanagement’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. Because of the short maturity and capacity of prompt liquidation of such assets and liabilities, the fair values of these financial instruments approximate their carrying values.
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high credit quality financial institutions in the United States. Bank deposits in the United States did not exceed federally insured limits as of November 30, 2014, 2013 or 2012. 2015, and 2016.
The Company may operate outside the United States of America and thus may have significant exposure to foreign currency risk in the future due to the fluctuations between the currency in which the Company operates and the U.S. dollar.
| 5. | Income Taxes |
F-11
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2014, 2013 and 2012
6. Income Taxes
A reconciliation of income taxes at statutory ratesrate with the reported income taxes is as follows:
Period ended November 30, |
| 2014 |
| 2013 |
| 2012 |
Income tax benefit at Federal statutory rate of 35% | $ | 78,824 | $ | 901,336 | $ | 396,271 |
State Income tax benefit, net of Federal effect |
| 11,261 |
| 128,762 |
| 56,610 |
Permanent differences |
| 121,284 |
| 27,312 |
| (152,548) |
Change in valuation allowance |
| (211,368) |
| (1,057,411) |
| (300,333) |
| $ | - | $ | - | $ | - |
| Schedule of Income Taxes | ||||||||
| Period ended November 30, | 2016 | 2015 | ||||||
| Income tax expense (benefit) at Federal statutory rate of 35% | $ | 225,500 | $ | (409,800 | ) | |||
| (Utilization) increase in tax loss carryforward | (225,500 | ) | 409,800 | |||||
| Net income tax | $ | - | $ | - | ||||
The significant components of the Company's deferred income tax assets are as follows:
As at November 30 |
| 2014 |
| 2013 |
| 2012 |
|
|
|
|
|
|
|
Net Operating losses | $ | 6,676,400 | $ | 6,468,400 |
| 5,412,400 |
Asset Impairment |
| - |
| 2,000,000 |
| - |
Valuation allowance |
| (6,676,400) |
| (8,468,400) |
| (5,412,400) |
| $ | - | $ | - | $ | - |
At November 30, 20142016 the Company has available net operating losses of approximately $6,676,400$7.1 million which may be carried forward to apply against future taxable income. These losses will expire in 2034. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization.
7.
| 6. | Convertible Debentures |
As of November 3, 2014, 201330, 2016, and 2012,2015, the Company has issued and outstanding, convertible debt totaling $375,925, $375, 925,$572,843 and $306,950,$395,479, of which all but one note for $ in 2016 and $ in 2015 were issued and held by unrelated third parties. As of November 30, 2014,2016, these debts were all due on demand, bear interest at the rates between 8%8% and 12%12% per annum and are convertible at a discount to the stocksstock’s market price of between 15% and 55%, based on a look back period of between 10 and 30 days prior to conversion. Combined, these convertible instruments can be converted into 166,457,353 and 177,427,343 shares of common stock as of November 30, 20142016, and 2013, respectively, and 39,330,275 (as adjusted for the April 2013 reverse split of 1:125) shares as of November 30, 2012. During the years ended November 30, 2013 and 2012 the Company issued a total of 2,683,121 shares on the conversion of $16,056, and 11,633,358 on the conversion of $236,124 convertible debentures and accrued interest,2015, respectively.
The following table provides a summary of the changes in the Company’s convertible notes, as of November 30, 2014, 20132016, and 2012:2015:
| Schedule of Convertible Debentures | ||||||||
| November 30, 2016 | November 30, 2015 | |||||||
| Prior year balance forward | $ | 395,479 | $ | 375,925 | ||||
| Issuance of new convertible notes | 216,642 | 305,343 | ||||||
| Discount upon issuance of new notes | - | (180,343 | ) | |||||
| Amortization of discount | 119,366 | 60,977 | ||||||
| Principal payments | (68,250 | ) | (149,150 | ) | ||||
| Conversion of notes | (26,394 | ) | (17,273 | ) | ||||
| Balance as of yearend | $ | 636,843 | $ | 395,479 | ||||
F-15
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 |
Prior year balance forward | $ 375,925 |
| $ 306,950 |
| $ 340,805 |
Issuance of new convertible notes | - |
| - |
| - |
Reclass from loan payable into convertible loan payable | - |
| - |
| 134,720 |
Unamortized debt discount | - |
| - |
| - |
| Conversion of intest to convertible note | - | 85,000 | - | ||
Penalty on defaulted debentures | - |
| - |
| 53,750 |
Conversion of notes | - |
| (16,025) |
| (222,325) |
Balance at November 30 (Restated) | $ 375,925 |
| $ 375,925 |
| $ 306,950 |
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2016 and 2015
For the years ended November 30, 2014, 2013,2016, and 2012,2015, interest expense attributable to convertible debentures was $18,167, $103,260,$41,111, and $75,218,$27,662, while accrued interest was $56,314, $38,147,$64,372, and $29,887,$69,071, respectively.
F-12During the year ended November 30, 2015, the Company issued four notes total of $140,000 in new convertible debentures. Due to the variable conversion price associated with the above convertible debentures, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. The initial fair value of the embedded debt derivative at the date of issuance was $180,343 allocated as a debt discount and derivatives liability. The debt discount is being amortized over the term of the convertible promissory notes.
In addition, the Company recorded $336,810 in convertible debentures previously issued by Telco Cuba Inc.
NOTES TO FINANCIAL STATEMENTS
Forprior to the Years Endedmerger with Amgentech. These debts bear interest at the rates between 8% and 12% per annum, and are convertible at a discount to the stock’s market price of between 15% and 55%, based on a look back period of between 10 and 30 days prior to conversion. Combined, these convertible instruments can be converted into and shares of common stock as of November 30, 2014, 20132016 and 2012November 30, 2015, respectively.
| 7. | Derivative Liabilities |
8.
Derivative Liabilities
In June 2008, the FASB finalized ASC 815, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.” Under ASC 815, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has determined that it needs to account for convertible debentures issued for its shares of common stock, as derivative liabilities, and apply the provisions of ASC 815. The instruments have a ratchet provision that adjust either the exercise price and/or quantity of the shares as the conversion price equals to variable % of the "market price"“market price” at the time of conversion, as a result, the instruments need to be accounted for as derivative liabilities. In accordance with ASC 815, these convertible debentures have been re-characterized as derivative liabilities. ASC 815, “Accounting for Derivative Instruments and Hedging Activities” (“ASC 815”) requires that the fair value of these liabilities be re-measured at the end of every reporting period with the change in fair value reported in the statement of operations.
During
The fair value of the years ended November 30, 2014, 2013 and 2012,derivative liabilities was measured using the Company issued convertible preferred stock and notes with embedded conversion features and the Company did not, at the date of issuance of these instruments, have a sufficient number of authorized and available shares of common stock to settle the outstanding contracts which triggered the requirement to account for these instruments as derivative financial instruments until such time as the Company has sufficient authorized shares.Black-Scholes option pricing model.
At November 30, the fair value of the embedded derivatives was determined using Binomial Option Pricing Model based on the following assumptions:
| Schedule of assumptions | ||||||||
| November 30, 2016 | November 30, 2015 | |||||||
| (1) dividend yield | % | % | ||||||
| (2) expected volatility | % | % | ||||||
| (3) weighted average risk-free interest rate, | % | % | ||||||
| (4) expected life, and | Year | Year | ||||||
| (5) estimated fair value of the Company’s common stock per share. | $ | $ | ||||||
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 |
(1) dividend yield | 0% |
| 0% |
| 0% |
(2) expected volatility | 377.67% |
| 571.39% |
| 450.94% |
(3)weighted average risk-free interest rate | 4% |
| 5% |
| 11% to 13% |
(4) expected life | 0.25 year |
| 0.25 year |
| 0.25 to 0.92 year |
(5)estimated fair value of the Company’s common stock per share | $ 0.004 |
| $ 0.005 |
| $ 0.0002 |
F-16
There were no new convertible debentures issued during
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the fiscal years endedYears Ended November 30, 2014, 20132016 and 2012.2015
| 8. | Notes Payable |
The following table represents the Company’s debt derivative liability activity for the year ended:
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 | ||
Beginning balance | $ | 802,153 | $ |
| 870,433 | $ | 489,063 |
Derivative liabilities recorded |
| - |
|
| - |
| - |
Derivative liabilities converted |
| - |
|
| - |
| - |
Unrealized (gain) loss attributable due to the change in liabilities |
| (303,211) |
|
| (68,280) |
| 381,370 |
Ending balance | $ | 498,942 | $ |
| 802,153 | $ | 870,433 |
For the years ended November 30, 2014, 2013 and 2012, the Company recorded a derivative liability in the amount of $498,942, $802,153, and $870,433, respectively. This derivative liability is a result of the embedded conversion features of the debt to convert into 236,445,529 shares, at fixed prices ranging from $0.00166 to $0.00220 per share. The liability was recorded at the fair market value, which estimated value, was based upon the remaining contractual life of the convertible notes payable (the host instrument), using the Black-Sholes pricing model, and since these earlier notes had reached maturity and were now due on demand the intrinsic value was also considered. The conversion exceeded the market price accordingly the intrinsic value was also zero. Accordingly, the reclassification of the value of these derivatives had no impact on the Company’s financial statements.
9.
Notes Payable
During the year ended November 30, 2014 the Company borrowed $200, from a non-affiliated accredited investor, bringing the total notes payable to $1,733,332. The Notes carry interest at a rate of 15% per year and are due on demand.
During the year ended November 30, 2013, the Company borrowed $21,888 from a non-affiliated accredited investor. The Note carries interest at a rate of 15% per year and is due on demand. The Company also issued a note on April 27, 2013 in the amount of $1,500,000 associated with the purchase of the Grand Chenier lease. The note was issued to the seller of the asset, bears interest at 8% per annum and is due five years from the date of issuance.
Between December 2011 and November 2012, the Company borrowed $108,700 from a non-affiliated accredited investor. The Notes carry interest at a rate of 15% per year and are due on demand.
As of November 30, 2014, 2013 and 2012, total Notes Payable were $1,733,332, $1,733,132 and $211,244, respectively.
The following table provides a summary of the changes in the Company’s notes payables, as of November 30, 2014, 20132016, and 2012:2015:
| November 30, 2014 |
| November 30, 2013 |
| November 30, 2012 |
Prior year balance forward | $ 2,233,132 |
| $ 211,244 |
| $ 233,014 |
Issuance of notes– net | 200 |
| 2,021,888 |
| 108,700 |
Reclass from loan payable into convertible loan payable | - |
| - |
| (130,470) |
Unamortized debt discount | - |
| - |
| - |
Conversion of notes | - |
| - |
| - |
Balance at November 30 (Restated) | $ 2,233,332 |
| $ 2,233,132 |
| $ 211,244 |
| Schedule of Notes Payable | ||||||||
| November 30, 2016 | November 30, 2015 | |||||||
| Prior year balance forward: | ||||||||
| Due to non-affiliated third parties | $ | 2,233,361 | $ | 2,337,938 | ||||
| Due to related parties | 132,577 | 104,577 | ||||||
| Issuance of notes to related party | - | 28,000 | ||||||
| Note repayments to related party | (12,000 | ) | - | |||||
| Balance on November 30 | $ | 2,353,938 | $ | 2,365,938 | ||||
For the years ended November 30, 2014, 2013,2016, and 2012,2015, interest expense attributable to notes payable was $146,762, $125,118,$145,669, and $37,850, while accrued interest was $327,088, $180,326, and $37,850, respectively.$168,851, respectively
10.
| 9. | Related party transactions |
Our officersOfficers have from time to timetime-to-time lent money to the Company. At November 30, 2014, 20132016, and 2012,2015, they had a balance owed to them (included in the balances above in footnotes 6 and 8) of $1,384, $1,384,$135,577, and $1,025,$134,550, respectively. The balances do not bear interest and are due on demand. The notes are discounted using an imputed interest rate of 12%.
11.
| 10. | Commitments and Contingencies |
A consulting agreement between the Company and Internet Marketing Solutions, Inc. (IMS) provides that IMS will receive a Consulting Fee of ten percent (10%) of the gross value of any project introduced by IMS including cash, stock and stock purchase warrants. As of November 30, 2014, there were no transactions consummated that would have triggered such payment and none are currently contemplated.
The consulting agreement between the Company and Internet Marketing Solutions, Inc. has been terminated under the clauses stipulated in the contract as of November 9th 2015.
Litigation
From time to time, we may becomebe involved in various lawsuits and legal proceedings which ariselitigation relating to claims arising out of our operations in the ordinarynormal course of business. However, litigation is subjectAs of the date of filing of this report, there were no pending or threatened lawsuits.
| 11. | Subsequent Events |
During the month of July 2017, the company procured settlements with three note holders. The settlements were a result of the company’s renegotiating of the terms of the original notes. The new terms included the waiving of all additional interest, waiving of default fees, conversion standstill and restrictions on the number of conversions per month, and fixed balances. The notes affected by these settlements were with EMA Financial, Essex Global Investment Corp, and LG Capital.
On October 25, 2017, the Company entered into a definitive purchase agreement with Net Bee Wireless, Inc. The purchase was contingent on the Company making the purchase price payment. The deal was rescinded on February, 2018 as a result of the company not opting to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not awarefollow through on the purchase.
During the month of any such legal proceedings that we believe will have, individually orDecember 2017, the company issued a promissory note in the aggregate,amount of $60,000 in exchange for the assets of Naked Papers, Inc.
During the month of December 2017, the Company converted a material adverse effect on our business, financial condition or operating results.
total of $26,031 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock.
F-13F-17
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2014, 20132016 and 20122015
12.
Employment Contracts
In September 2010,During the Company entered into five-year Employment Contracts with its three employees. Below is a summarymonth of the basic terms of the Agreements:
·
Base Salary for the CEO and CFO
$120,000 per year
·
Base Salary for Investor relations
$100,000 per year
·
The officers received stock grants in connection with the contracts of:
o
CEO
1,500,000 common shares
o
CFO
1,000,000 common shares
o
Investor Relations
1,000,000 common shares
·
4% annual increases in Base Salary
·
Bonus provision if and when the Company reaches profitability
·
Other normal benefits provided such as health insurance as negotiated by the Company
In June 2015, as part of the share exchange agreement with Amgentech (See Note 13 - Subsequent Events), each of these employment agreements was terminated with mutual consent, and without further recourse or obligation by the Company.
In July 2015, the Company entered into a 5-year employment contract with William Sanchez, the Company’s chairman and Chief Executive Officer. Under the terms of the agreement, the Company is to compensate Mr. Sanchez $16,667 per month in addition to providing medical and dental insurance and an automobile allowance of $350 per month.
13.
Subsequent Events
The Company evaluated subsequent events through the date this filing was completed, noting the following:
On January 26, 2015, the Company acquired Vitall, Inc. a company which has developed and is marketing a Smartwatch dedicated to the burgeoning health and wellness industry which offers a telephone, a blood pressure monitor, a heart rate monitor, fitness application, and has an emergency help button. Under the terms of the Agreement, the Company agreed to a share exchange in which:
On March 17, 2015, Vitall, Inc. terminated the merger agreement due to non-performance on the part of the Company. As a result, the name CaerVision Global, Inc. was surrendered back to its original owner.
On June 12, 2015, the Company consummated a Share Exchange with Amgentech, Inc., a Florida corporation. Under the terms of the Share Exchange, the holders of Amgentech received 50,888 shares of CaerVision Series B Preferred Stock that had been previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech. Each shares of Series B preferred is convertible into 5,000 shares of common stock (254,440,000 shares total) and has voting rights of 5,000 per share (254,440,000 votes). As a result of this transaction, Amgentech became a wholly-owned subsidiary of the Company with control transferring to the previous owners of Amgentech. Amgentech elected to be treated as the successor issuer for SEC reporting and accounting purposes. The Share Exchange was accounted for as a reverse acquisition and re-capitalization. The Amgentech Shareholders obtained approximately 60% of voting control on the date of Share Exchange. Amgentech was the acquirer for financial reporting purposes and the Company was the acquired company. Consequently, the assets and liabilities and the operations reflected in the historical financial statements prior to the Share Exchange were those of Amgentech and was recorded at the historical cost basis of Amgentech, and the consolidated financial statements after completion of the Share Exchange included the assets and liabilities of the Company and Amgentech, historical operations of Amgentech and operations of the Company from the closing date of the Share Exchange. The Company filed an amendment to its articles of incorporation and changed its name to Telco Cuba, Inc.
Subsequent to November 30, 2014, the Company converted a total of $42,585 in convertible debt and accrued interest owed to unaffiliated third party accredited investors into 10,302,905 shares of restricted common stock.
Between February 2015 and October 28, 2015,December 2017, the Company issued 72,780,000 common shares to unaffiliated third party accredited investors in connection with the conversion of 14,556 shares of Preferred Series B Shares.
The Company issued 12,130,729 shares of restricted common stock on the conversion of $19,373 in notes payable held by unaffiliated third parties.
The Company issued 4,007,146 shares of restricted common stock to third parties for services rendered valued at $5,000.
In July 2015, the Company entered into an agreement with Next Group Holdings pursuant to which Next Group agreed to provide a virtual call processing platform for telecommunications, a web portal and sales portal. In exchange, the Company agreed to pay $50,000 and use Next Group as its provider for local and international voice, data, and text services as part of its operational platform.
On September 4, 2015, the Company issued 100,000 shares of Series C Preferred Stock to the Company’s CEO in exchange for services rendered to the Company.
During the first quarter 2018, the company acquired the assets of Naked Papers and is currently selling the product under its brand name, Naked Papers under the subsidiary, Naked Papers Brand, Inc., incorporated in the state of Florida.
During the month of January 2018, the Company converted a total of $63,734 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock.
During the month of February 2018, the Company converted a total of $38,925 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock.
During the month of March 2018, the Company converted a total of $14,550 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock.
Anthony J Rivera brought a lawsuit against the company on May 29, 2018. Case number: CACE18012914 in the 17th circuit court of Broward County, Florida. The Series C Preferred are non-convertiblenote holder sued for enforcement of a note issued by the company on December 1, 2015. The case was settled, and have voting rights equalthe note was amended with a more favorable 50% discount, 5 day look back term on the note. The settlement occurred in September, 2018. The company is working with the note holder to 10,000 votesconvert the settled amount into stock of the company.
On September 28, 2018, the company filed a lawsuit against Cuentas, Inc. (OTCQB: CUEN), f/k/a Next Group Holdings, Inc/Meimoun & Mammon, LLC/Next Mobile, LLC in the 11th circuit court of Miami-Dade County, Florida. Case number: 2018-032974-CA-01 is still ongoing. The case was filed due to CUEN failing to perform on a contract signed in July, 2015. The company is suing for damages and the return of the funds paid for the undelivered Mobile Virtual Network Operator (MVNO) platform.
During the month of February 2019, the Company issued shares to Mr. Roland H Malo as part of the compensation he received for staying on with Advanced Satellite Systems, Inc.
During the month of February 2019, the Company converted a total of $16,900 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock.
During the month of March 2019, the Company converted a total of $18,500 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock.
During the month of April 2019, the Company converted a total of $15,000 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of restricted common stock.
During the month of December 2020, the Company converted a total of $3,900 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of common stock.
During the month of January 2021, the Company converted a total of $51,388 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors into shares of common stock.
F-18
Telco Cuba, Inc.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended November 30, 2016 and 2015
During the month of January 2021, the Company converted the partial monetary value of a consultants’ contract into restricted common shares.
During the month of February 2021, the Company converted the partial monetary value of a consultants’ contract into restricted common shares.
During the month of February 2021, a shareholder converted Series A shares into restricted common shares. These common shares have an effective date of February 11, 2021.
During the month of February 2021, the Company converted a total of $49,259 in convertible debt and accrued interest owed to unaffiliated third-party accredited investors in shares of common stock.
During the month of March 2021, restricted common shares were issued to appointed members of the board of directors.
During the month of March 2021, preferred B shareholders converted preferred shares into restricted common shares.
During the month of March 2021, the Company converted a total of $7,000 in convertible debt to an unaffiliated third-party accredited investor into shares of common stock.
During the month of April 2021, the company converted a total of $62,966 in convertible debt and accrued interest owed to an unaffiliated third-party accredited investor into shares of common stock.
During the month of May 2021, the company restated a promissory note as convertible in the amount of $100,000. The holder, an unaffiliated third-party unaccredited investor converted the note principle and accrued interest owed into restricted common shares. These common shares have an effective date of May 6, 2021.
During the month of May 2021, the company converted a total of $54,934 in convertible debt and accrued interest owed to an unaffiliated third-party accredited investor into shares of common stock. These common shares have an effective date of May 6, 2021.
During the month of May 2021, a third-party accredited investor/noteholder cancelled and returned 155,471,605 common shares to the company due to a reversal of a third party note purchase.
During the month of May 2021, restricted common shares were issued to appointed members of the board of directors.
During the month of May 2021, the company converted a total of $52,021.00 in convertible debt and accrued interest owed to an unaffiliated third-party accredited investor into shares of common stock.
During the month of May 2021, the company sold shares of restricted common stock per share.
to an unaffiliated third-party accredited investor for $10,000. These common shares have an effective date of May 26, 2021.
F-14
F-19
SIGNATURES
SIGNATURES
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.
Telco Cuba, Inc. | ||
| Date: November |
| /s/ William Sanchez |
| William Sanchez, Chief Executive Officer | ||
| Date: November |
| /s/ William Sanchez |
| William Sanchez, Chief Financial Officer, Secretary, and Treasurer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities indicated on the dates indicated.
| Date | ||||
|
| Title | ||
| Date: November | /s/ William J Sanchez
| Director, President, Chief Financial Officer, Secretary, and Treasurer | ||
| William J Sanchez | ||||
| Date: November | /s/ Camille Whiddon |
| Director | |
| Camille Whiddon | ||||
| Date: November | /s/ Sayis Tequia |
| Director
| |
| Sayis Tequia | ||||
| Date: November 1, 2022 | /s/ Santiago Munoz | Director | ||
| Santiago Munoz | ||||
| Date: November 1, 2022 | /s/Francis Flinn | Director | ||
| Francis Flinn | ||||
| Date: November 1, 2022 | /s/Patrick Wall | Director | ||
| Patrick Wall |
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