UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterquarterly period ended February 28, 2009
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________
333-222709
Commission File Number:
Social Life Network, Inc.
(Exact name of Registrantsmall business issuer as specified in its charter)
46-0495298 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3465 S Gaylord Ct. Suite A509
Englewood, Colorado80113
(Address of principal executive offices) (Zip Code)
(855) 933-3277
(Company’s telephone number, including area code: (310) 352-3300
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company,” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer | |||
Non-accelerated filer | 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-2 of the Exchange Act).
The Company has common stock shares outstanding as of May 24, 2021.
Explanatory Note
References throughout this Amendment No. 1 to the registrant hasAnnual Report on Form 10Q to “we,” “us,” “our” or the “Company” are to Social Life Network, Inc. unless otherwise indicates.
This Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form 10-Q/A amends the Quarterly Report on Form 10-Q for the quarter ending March 31, 2021 as filed all documentswith the Securities and reports requiredExchange Commission (the “SEC”) on May 26, 2021 (the “Original Filing”).
During the three months ended March 31, 2021, four convertible noteholders converted $138,071 of principal and $129,102 of interest into 709,449,234 shares of our restricted common stock. We inadvertently failed to be filed by Sections 12, 13 or 15(d)consider the market price of our securities on the date of conversion thus yielding an incorrect initial calculation of a $271,174 gain on the extinguishment of debt. The proper calculation of the Securities Exchange Actgain or loss on conversion should have been a loss of 1934$1,551,768 on the extinguishment of debt. We are filing this Amendment No. 1 to restate our financial statements as of March 31, 2022 that were previously reported on the Original Filing. The following items have been amended to reflect the restatements:
Part I Item 1. Consolidated Financial Statements (Unaudited) and Footnotes
Part I Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In addition, the Company’s Principal Executive and Principal Financial Officer has provided new certifications dated as of the date of this filing in connection with this Form 10-Q/A (Exhibits 31.1 and 32.1).
Except as described above, no other information included in the Original Filing is being amended or updated by this Amendment No. 1 and this Amendment No. 1 does not purport to reflect any information or events subsequent to the distribution of securities under a plan confirmed by a court.
TABLE OF CONTENTS
Page | |||
PART I | — FINANCIAL INFORMATION | ||
ITEM 1. | Consolidated Financial Statements | F-1 | |
ITEM | |||
ITEM 2. | 17 | ||
ITEM 3. | Quantitative and Qualitative Disclosures | 18 | |
ITEM 4. | Controls and Procedures | 19 | |
ITEM 1. | Legal Proceedings | 19 | |
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 19 | |
ITEM 3. | Defaults Upon Senior Securities | 20 | |
ITEM 4. | |||
20 | |||
ITEM 5. | |||
20 | |||
ITEM 6. | Exhibits | 20 | |
21 |
3 |
PART I
ITEM 1. Consolidated Financial Statements (Unaudited)
SOCIAL LIFE NETWORK, INC.
INDEX TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
F-1 |
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, 2021 | December 31, 2020 | |||||||
(As Restated) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 114,695 | $ | - | ||||
Accounts receivable | - | 52 | ||||||
Accounts receivable – related party | 407,500 | 368,000 | ||||||
Prepaid expenses | 45,000 | - | ||||||
Assets from discontinued operations | - | 28,500 | ||||||
Total current assets | 567,195 | 396,552 | ||||||
Investment–related party | 800 | - | ||||||
Total Assets | $ | 567,995 | $ | 396,552 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 112,537 | $ | 189,169 | ||||
Cash overdraft | - | 307 | ||||||
Total Current Liabilities | 112,537 | 189,476 | ||||||
Loans payable – related party | 169,925 | 113,675 | ||||||
PPP Loan | 163,111 | 163,111 | ||||||
Convertible debt and accrued interest | - | 128,346 | ||||||
Total Liabilities | 445,573 | 594,608 | ||||||
Stockholders’ Equity (Deficit): | ||||||||
Common Stock par value $ | shares authorized, and shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively7,441,151 | 6,368,347 | ||||||
Additional paid in capital | 25,945,949 | 25,199,811 | ||||||
Accumulated deficit | (33,264,678 | ) | (31,766,214 | ) | ||||
Total Stockholders’ Equity (Deficit) | 122,422 | (198,056 | ) | |||||
Total Liabilities and Stockholders’ Equity | $ | 567,995 | $ | 396,552 |
The accompanying notes are an integral part of these unaudited condensed financial statements included herein have been prepared bystatements.
F-2 |
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
2021 | 2020 | |||||||
For the three months ended March 31, | ||||||||
2021 | 2020 | |||||||
(As Restated) | ||||||||
Revenues | ||||||||
Licensing revenue – related party | 62,500 | 62,500 | ||||||
Total revenue | 62,500 | 62,500 | ||||||
Cost of goods sold | - | 1,282 | ||||||
Gross margin | 62,500 | 61,218 | ||||||
Operating expenses | ||||||||
Compensation expense | 43,934 | 63,793 | ||||||
Sales and marketing | 138 | 5,632 | ||||||
General and administrative | 146,794 | 143,025 | ||||||
Total operating expenses | 190,866 | 212,450 | ||||||
Income (loss) from operation | (128,366 | ) | (151,232 | ) | ||||
Oher income (expense) | ||||||||
Loss on the extinguishment of debt | (1,551,768 | ) | - | |||||
Interest expense | - | (28,500 | ) | |||||
Other income (expense) | (155,319 | ) | (40,290 | ) | ||||
Total other income (expense) | (1,707,087 | ) | (68,790 | ) | ||||
Net loss from continuing operations | $ | (1,835,453 | ) | $ | (220,022 | ) | ||
Net loss from discontinued operations | (27,700 | ) | (2,968 | ) | ||||
Net income (loss) | $ | (1,863,153 | ) | $ | (222,990 | ) | ||
Weighted average number of shares outstanding | ||||||||
Basic | 7,443,135,871 | 556,248,107 | ||||||
Diluted | 7,451,800,634 | 2,020,195,518 | ||||||
Net income (loss) per share from continuing operations | ||||||||
Basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
Net income (loss) per share from discontinued operations | ||||||||
Basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
Diluted | $ | (0.00 | ) | $ | (0.00 | ) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-3 |
SOCIAL LIFE NETWORK, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
unaudited
Shares | Amount | Shares | Amount | Capital | Deficit | Totals | ||||||||||||||||||||||
Common Stock B | Common Stock A | Additional Paid In | Accumulated | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Totals | ||||||||||||||||||||||
Balance, December 31, 2019 | - | $ | - | 140,777,231 | $ | 140,791 | $ | 31,016,394 | $ | (31,563,493 | ) | $ | (406,308 | ) | ||||||||||||||
Beginning balance | - | $ | - | 140,777,231 | $ | 140,791 | $ | 31,016,394 | $ | (31,563,493 | ) | $ | (406,308 | ) | ||||||||||||||
Common stock issued to investors | - | - | 6,277,555,119 | 6,227,555 | (5,666,864 | ) | - | 560,691 | ||||||||||||||||||||
Conversion of convertible notes | ||||||||||||||||||||||||||||
Conversion of convertible notes, shares | ||||||||||||||||||||||||||||
Private placement | ||||||||||||||||||||||||||||
Private placement, shares | ||||||||||||||||||||||||||||
MJLink spinoff adjustments | ||||||||||||||||||||||||||||
Net loss from discontinued operations | ||||||||||||||||||||||||||||
Net loss for the quarter ended December 31, 2020 | - | - | - | - | - | (202,720 | ) | (202,720 | ) | |||||||||||||||||||
Balance, December 31, 2020 (As Restated) | 25,000,000 | - | 6,368,332,350 | 6,368,346 | 25,199,811 | (31,766,213 | ) | (198,056 | ) | |||||||||||||||||||
Conversion of convertible notes | - | - | 1,072,803,521 | 1,070,805 | 963,104 | 2,033,909 | ||||||||||||||||||||||
Private placement | - | - | 2,000,000 | 2,000 | 98,000 | - | 100,000 | |||||||||||||||||||||
MJLink spinoff adjustments | - | - | - | - | (314,967 | ) | 364,689 | 49,722 | ||||||||||||||||||||
Net loss from discontinued operations | - | - | - | - | - | (27,700 | ) | (27,700 | ) | |||||||||||||||||||
Net loss from continuing operations | - | - | - | - | - | (1,835,453 | ) | (1,835,453 | ) | |||||||||||||||||||
Balance, March 31, 2021 (As Restated) | 25,000,000 | $ | - | 7,443,135,871 | $ | 7,441,151 | $ | 25,945,948 | $ | (33,264,678 | ) | $ | 122,422 | |||||||||||||||
Ending balance | 25,000,000 | $ | - | 7,443,135,871 | $ | 7,441,151 | $ | 25,945,948 | $ | (33,264,678 | ) | $ | 122,422 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-4 |
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
2021 | 2020 | |||||||
For the three months ended March 31, | ||||||||
2021 | 2020 | |||||||
(As Restated) | ||||||||
Cash flows used in operating activities | ||||||||
Net loss from continuing operations | $ | (1,835,453 | ) | $ | (220,022 | ) | ||
Net loss from discontinued operations | (27,700 | ) | (2,968 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities | - | |||||||
Loss on the extinguishment of debt | 1,577,592 | - | ||||||
Changes in assets and liabilities | ||||||||
Accounts receivable | (11,448 | ) | 12,500 | |||||
Prepaids | (45,000 | ) | 13,631 | |||||
Accounts payable and accrued expenses | 300,261 | (102,977 | ) | |||||
Net cash used in operating activities | (41,748 | ) | (299,836 | ) | ||||
Cash flows used in investing activities | ||||||||
Net cash used in investing activities | - | - | ||||||
Cash flows provided by financing activities | ||||||||
Proceeds from the sale of common stock – private placement | 100,000 | - | ||||||
Proceeds from the sale of common stock - convertible note | - | 294,647 | ||||||
Proceeds from related party loans | 56,250 | - | ||||||
Net cash provided by financing activities | 156,250 | 294,647 | ||||||
Net increase in cash | 114,502 | (5,190 | ) | |||||
Cash, beginning of period | 193 | 11,557 | ||||||
Cash, end of period | $ | 114,695 | $ | 6,367 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | - | $ | 28,501 | ||||
Cash paid for taxes | $ | - | $ | - | ||||
Supplemental disclosure of non-cash information: | ||||||||
Common stock issued in satisfaction of convertible notes payable | $ | 128,346 | $ | - | ||||
Cancellation of shares issued in prior years | $ | 29,737 | $ | - |
The accompanying notes are an integral part of these unaudited condensed financial statements.
F-5 |
COMPARATIVE RESULTS FOR FISCAL YEARS
Consolidated Performance - Results of Operations for the Company, without audit, pursuant3-month periods ended March 31, 2021 and 2020
Revenues
For the 3-month period ending March 31, 2021, we recognized revenue from licensing of $62,500 compared to $62,500 dollars of revenue for the 3-month period ending March 31, 2020.
For the 3-month period ending March 31, 2021, we recognized zero digital subscription revenue as compared to zero for the 3-month period ending March 31, 2020, due to the rulesdiscontinuation of selling digital subscriptions in 2021.
For the 3-month period ending March 31, 2021, we recognized zero event revenue as compared to zero for the 3-month period ending March 31, 2020, due to the discontinuation of putting on events in 2021.
For the 3-month period ending March 31, 2021, we recognized zero digital marketing revenue as compared to zero for the 3-month period ending March 31, 2020, due to the discontinuation of selling digital marketing in 2021.
Cost of Revenue
Cost of revenue was zero for the 3-month period ending March 31, 2021 compared to $1,282 the 3-month period ending March 31, 2020, representing decreased revenue of $1,282 or 100%. The decrease is due to the discontinuation of selling digital subscriptions, events and regulationsdigital marketing in 2021.
Operating Expenses
Cash-paid compensation expense decreased by $19,859 or 45% to $43,934 for the 3-month period ending March 31, 2021 from $63,793 for the 3-month period ending March 31, 2020. The decrease is due to the discontinuation of selling digital subscriptions, events and digital marketing in 2021.
During the 3-month period ending March 31, 2021, we recognized zero of non-cash stock-based compensation expense for employees, consultants, and professionals compared to zero for the 3-month period ending March 31, 2020.
During the 3-month periods ending March 31, 2021 and 2020, we recognized zero of non-cash stock-based compensation expense for warrants for the respective quarters.
Sales and marketing expense decreased by $5,494 to $138 for the 3-month period ending March 31, 2021 from $5,632 for the 3-month period ending March 31, 2020. The decrease is due to the discontinuation of selling digital subscriptions, events and digital marketing in 2021.
General and administrative expense was $146,794 for the 3-month period ending March 31, 2021, approximately equivalent to $143,025 for the 3-month period ending March 31, 2020.
Other income (expense)
During the three months ended March 31, 2021, we generated $1,707,087 of other expense associated with the loss from converting our debt and accrued interest outstanding into common stock.
Net Loss
Our net loss for the for the 3-month period ending March 31, 2021 was $1,835,453 compared to a net loss of $220,022 for the 3-month period ending March 31, 2020. The increase in net loss of $1,615,431 is a result of lack of issuance of non-cash stock-based compensation expenses to our personnel, and reduction in revenue, offset with the loss received for the conversion of our convertible debt to zero.
Additionally as result of the Securitiesspinoff of MJLink which became a discontinued operation, we incurred net losses from discontinued operations of $27,700 and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations$2,698, respectively, for the periods presentedperiod ended March 31, 2021 and March 31, 2020, respectively.
Liquidity and Capital Resources
Cash Flows from Operating Activities
We have been made. The results for interim periods are not necessarily indicativegenerated positive cash flows from operating activities. For the 3-month period ending March 31, 2021, net cash inflows used in operating activities was $41,748 compared to net cash used of trends or of results to be expected$299,836 for the full year. These financial statements should be read3-month period ending March 31, 2020. The $258,088 decrease in conjunctioncash in operating activities is primarily attributable to the increase of $1,615,431 in our operating losses offset by $1,551,768 in loss of extinguishment of debt and an increase in accounts payable and accrued expenses of $266,173 during the three months ended March 31, 2021.
Cash Flows from Financing Activities
For the 3-month period ending March 31, 2021, net cash provided by financing activities was $156,250 compared to $294,647 for the 3-month period ended March 31, 2020.
F-6 |
SOCIAL LIFE NETWORK, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 2021
(unaudited)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization
Social Life Network, Inc. (referred to herein as “we” or “our” or “us”) is a Technology Business Incubator (TBI) that provides tech start-ups with seed technology development and executive leadership, making it easier for start-up founders to focus on raising capital, perfecting their business model, and growing their network usership. Our seed technology is an artificial intelligence (AI) powered social network and Ecommerce platform that leverages blockchain technology to increase speed, security, and accuracy on the financial statements and notes thereto includedniche social networks that we license to the companies in the Company's most recent registration statement on Form SB-2our TBI.
Corporate Changes
On August 30, 1985, we were incorporated as amended.
In June 2014, Sew Cal Logo, Inc. was placed into receivership in Nevada’s 8th Judicial District (White Tiger Partners, LLC et al v. Sew Cal Logo, Inc.et al, Case No A-14-697251-C) (Dept. No.: XIII) (the “Receivership”).
On January 29, 2016, we, as the seller (the “Seller”), completed a business combination/merger agreement (the “Agreement”) with the buyer, Life Marketing, Inc., a Colorado corporation (the “Buyer”), its subsidiaries and holdings, and all of the Buyer’s securities holders. We acted through the court-appointed receiver and White Tiger Partners, LLC, our judgment creditor. The Agreement provided that the then current owners of the private company, Life Marketing, Inc., become the majority shareholders, pursuant to which an aggregate of common stock shares were issued to our officers, composed of shares each to our Chief Executive Officer, Kenneth Tapp, and Andrew Rodosevich, our then-Chief Financial Officer. Pursuant to the terms of the Agreement and related corporate actions in our domicile, Nevada:
● | We cancelled all previously created preferred class of stock; | |
● | We delivered newly issued, common stock shares equivalent to approximately 89.5% of its outstanding shares as a control block in exchange for 100% of the Buyer’s outstanding shares; | |
● | The court appointed receiver sold its judgment to the Buyer and the Seller agreed to pay the receiver $30,000 and the equivalent of 9.99% of the outstanding stock (post-merger) of the newly issued unregistered exempt shares; | |
● | Our then officers and directors were terminated, and Kenneth Tapp and Andrew Rodosevich became the Company’s Chief Executive Officer/Director and Chief Financial Officer/Director, respectively; | |
● | We effected a 5,000 to 1 reverse stock split effective April 11, 2016, with each shareholder retaining a minimum of 100 shares; | |
● | We changed our name from Sew Cal Logo, Inc. to WeedLife, Inc, and then to Social Life Network, Inc. effective in Nevada on April 11, 2016; | |
● | We changed our stock symbol from SEWC to WDLF; | |
● | We decreased our authorized common stock shares from shares to shares, effective in Nevada on March 17, 2016. |
On June 6, 2016, the Court issued an order in the Receivership pursuant to Section 3(a) (10) of the Securities Act of 1933, as amended, ratifying the above actions. The receiver was discharged on June 7, 2016.
On September 20, 2018, we incorporated MjLink.com, Inc. (“MjLink”), a Delaware Corporation. On February 1, 2020, MjLink.com, Inc. filed its Form 1-A Offering Document for a Regulation A Tier 2 initial public offering, which the SEC qualified on September 28, 2020. . We ceased operating MjLink as a division and they continued operations as an independent company, in return for 15.17% of the MjLink.com, Inc. outstanding Class A common stock shares.
On March 4, 2020, our Board increased our number of authorized shares of Common Stock from pursuant to an amendment to our Articles of Incorporation with the state of Nevada, and submitted to Nevada our Certificate of Designation of Preferences, Rights and Limitations of our Class B Common Stock, providing that each Class B Common Stock Share has one-hundred (100) votes on all matters presented to be voted by the holders of Common Stock. The Class B Common Stock Shares only have voting power and have no equity, cash value, or any other value. to Common Stock Shares
Effective March 4, 2020, our Board of Directors (the “Board”) authorized the issuance of twenty-five million () Class B Common Stock Shares to Ken Tapp, our Chief Executive Officer, in return for his services as our Chief Executive Officer from February 1, 2016 to February 29, 2020, which shares are equal to two billion five hundred million ( ) votes and have no equity, cash value or any other value.
Effective March 28, 2021, our Board the issuance of fifty million (2009,2021, which shares are equal to five billion ( ) votes and have no equity, cash value or any other value. As of the related statementsdate of operations, stockholders’ equity (deficit)this filing, our Chief Executive Officer controls approximately in excess of 98% of shareholder votes via the Company’s issuance of 75,000,000 Class B Shares to Ken Tapp, thereby controlling over 7,500,000,000 votes. ) Class B Common Stock Shares to Ken Tapp, our Chief Executive Officer, in return for his services as our Chief Executive Officer from March 1, 2020 to February 28,
F-7 |
On May 8, 2020, we filed Amended and Restated Articles of Incorporation (“Amended Articles”) in Nevada to increase our authorized shares from Additionally, the Amended Articles authorized us from May 8, 2020 and continuing until March 31, 2021, as determined by our Board in its sole discretion, to effect a Reverse Stock Split of not less than 1 share for every 5,000 shares and no more than 1 share for every 25,000 shares (the “Reverse Stock Split”). to Shares and our Preferred Shares from to Shares.
On December 11th, 2020, we filed a Form 8-K stating that we would not be executing the Reverse Stock Split, which Reverse Stock Split expired on March 31st, 2021 pursuant to the May 8, 2020 Amended Articles described immediately above.
Our Business
We are a Technology Business Incubator (TBI) that, through individual licensing agreements, provides tech start-ups with seed technology development, legal and cash flowsexecutive leadership, makes it easier for start-up founders to focus on raising capital, perfecting their business model, and growing their network usership. Our seed technology is an artificial intelligence (“AI”) powered social network and Ecommerce platform that leverages blockchain technology to increase speed, security and accuracy on the three-monthniche social networks that we license to the companies in our TBI.
From 2013 through the first half of 2021, we have added niche social networking tech start-ups to our TBI that target consumers and six-month periods ended February 28, 2009business professionals in the Cannabis and February 29, 2008. These interimHemp, Residential Real Estate industry, Space industry, Hunting, Fishing, Camping and RV’ing industry, Racket Sports, Soccer, Golf, Cycling, and Motor Sports industries.
Each of our TBI licensees’ goal is to grow their network usership to a size enabling sale to an acquiring niche industry company or taking the TBI licensee public or helping them sell their company through a merger or acquisition.
Using our state-of-art AI and Blockchain technologies, our licensees’ social networking platforms learn from the changing online social behavior of users to better connect the business professionals and consumers together. We also utilize AI in the development and updating of our code, in order to identify and debug our platform faster, and be more cost effective.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements are the responsibility of the Corporation’s management.
SEW CAL LOGO, INC. | ||||||||
BALANCE SHEETS | ||||||||
February 28, | August 31, | |||||||
2008 | 2008 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 2,267 | $ | 15,716 | ||||
Accounts Receivable, net | 133,628 | 216,108 | ||||||
Inventory | 46,388 | 70,902 | ||||||
Prepaid Expenses | 2,200 | 2,200 | ||||||
Total current assets | 184,483 | 304,926 | ||||||
Equipment and machinery, net | 114,911 | 141,977 | ||||||
Security Deposits | 6,000 | 6,000 | ||||||
Total assets | $ | 305,394 | $ | 452,903 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | 207,755 | 98,693 | ||||||
Note Payable-shareholder | 328,884 | 353,884 | ||||||
Other current liabilities | 450,542 | 443,220 | ||||||
Current Poriton of Long Term Debt | 139,780 | 158,290 | ||||||
Total current liabilities | 1,126,961 | 1,054,087 | ||||||
Long-term liabilities | ||||||||
Note Payable-related party | 21,552 | 25,135 | ||||||
Convertible Debentures | 2,637,247 | 2,655,975 | ||||||
Discount on Convertible Debentures | (646,899 | ) | (646,899 | ) | ||||
Equipment Loans | 7,329 | 9,101 | ||||||
Total liabilities | 3,146,190 | 3,097,399 | ||||||
Stockholders' Equity (Deficit) | ||||||||
Preferred stock, authorized 12,000,000 shares, | ||||||||
Par value $0.001, issued and outstanding at | ||||||||
02/28/2009 and 8/31/08 is 22,300,000 and 300,000 | ||||||||
respectively | 22,300 | 300 | ||||||
Common stock, authorized 2,000,000,000 shares, | ||||||||
$0.001 par value, issued and outstanding at | ||||||||
February 28, 2009 and August 31, 2008 is | ||||||||
271,873,638 and 143,124,535 shares respectively. | 271,874 | 143,125 | ||||||
Additional Paid in Capital | 4,001,154 | 4,120,649 | ||||||
Stock Subscribed | - | - | ||||||
Accumulated Deficit | (7,136,124 | ) | (6,908,570 | ) | ||||
Total stockholders' equity (deficit) | (2,840,796 | ) | (2,644,496 | ) | ||||
Total liabilities and stockholders' equity | $ | 305,394 | $ | 452,903 | ||||
The accompanying notes are an integral part of these statements |
SEW CAL LOGO, INC. | ||||||||||||||||
STATEMENTS OF OPERATIONS | ||||||||||||||||
Six Months Ended | Three Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenue: | ||||||||||||||||
Sales of Caps, Embroidery and Other | $ | 661,377 | $ | 998,339 | $ | 307,184 | $ | 449,427 | ||||||||
Total Revenue | 661,377 | 998,339 | 307,184 | 449,427 | ||||||||||||
Cost of Goods Sold | 583,782 | 933,810 | 287,582 | 466,907 | ||||||||||||
Gross profit/(loss) | 77,595 | 64,529 | 19,602 | (17,480 | ) | |||||||||||
Expenses: | ||||||||||||||||
General and Administrative | 91,666 | 122,681 | 29,027 | 58,583 | ||||||||||||
Officer and Administrative Compensation | 8,116 | 91,908 | 4,654 | 31,308 | ||||||||||||
Consulting, Legal and Accounting | 14,007 | 127,798 | 6,000 | 59,667 | ||||||||||||
Depreciation | 27,065 | 3,118 | 9,012 | 1,559 | ||||||||||||
Rent | 108,000 | 48,000 | 60,000 | 12,000 | ||||||||||||
Total expenses | 248,854 | 393,505 | 108,693 | 163,117 | ||||||||||||
Loss from Operations | (171,259 | ) | (328,976 | ) | (89,091 | ) | (180,597 | ) | ||||||||
Other Income (Expenses) | ||||||||||||||||
Interest (Expense) | 56,295 | 37,846 | 28,850 | 17,268 | ||||||||||||
Total other expenses | 56,295 | 37,846 | 28,850 | 17,268 | ||||||||||||
Loss before income taxes | (227,554 | ) | (366,822 | ) | (117,941 | ) | (197,865 | ) | ||||||||
Provision for income taxes | - | - | - | - | ||||||||||||
Net loss | $ | (227,554 | ) | $ | (366,822 | ) | $ | (117,941 | ) | $ | (197,865 | ) | ||||
Basic and Diluted Earnings (Loss) per Share | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Weighted Average Number of Common Shares | 232,941,574 | 27,595,484 | 232,941,574 | 27,595,484 | ||||||||||||
The accompanying notes are an integral part of these statements |
SEW CAL LOGO, INC. | ||||||||||||||||||||||||||||||||
STATEMENTS OF STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||
( From Inception to February 28, 2009) | ||||||||||||||||||||||||||||||||
Additional | Total | |||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid in | Stock | Accumulated | Stockholders' | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Subscribed | (Deficit) | Equity | |||||||||||||||||||||||||
Balance, August 31, 2005 | 234,800 | $ | 235 | 5,176,168 | $ | 5,176 | $ | 187,517 | $ | 36,000 | $ | (673,814 | ) | $ | (444,886 | ) | ||||||||||||||||
Shares issued for Services | ||||||||||||||||||||||||||||||||
at $0.15 per share | 50,000 | 50 | 7,450 | 7,500 | ||||||||||||||||||||||||||||
Fair Value of Warrants attached to | ||||||||||||||||||||||||||||||||
Convertible Debentures | 1,081,657 | 1,081,657 | ||||||||||||||||||||||||||||||
Beneficial Conversion Feature attached to | ||||||||||||||||||||||||||||||||
Convertible Debentures | 2,500,000 | 2,500,000 | ||||||||||||||||||||||||||||||
Shares issued for Services | ||||||||||||||||||||||||||||||||
at $0.10 per share | 33,334 | 33 | 3,300 | 3,333 | ||||||||||||||||||||||||||||
Shares issued for Conversion of Debt | 290,000 | 290 | 32,741 | 33,031 | ||||||||||||||||||||||||||||
Net Loss for Year | (2,947,833 | ) | (2,947,833 | ) | ||||||||||||||||||||||||||||
Balance, August 31, 2006 | 234,800 | 235 | 5,549,502 | 5,549 | 3,812,665 | 36,000 | (3,621,647 | ) | 232,802 | |||||||||||||||||||||||
Preferred Shares issued for Services | 65,200 | 65 | 1,891 | 1,956 | ||||||||||||||||||||||||||||
Common Stock Issued for Cash | 61,000 | 61 | 60,939 | (36,000 | ) | 25,000 | ||||||||||||||||||||||||||
Shares issued for Services | 3,500,200 | 3,501 | 214,000 | 217,501 | ||||||||||||||||||||||||||||
Shares issued for Conversion of Debt | 24,970,000 | 24,970 | 65,482 | 90,452 | ||||||||||||||||||||||||||||
Net Income (Loss) for period | (2,570,683 | ) | (2,570,683 | ) | ||||||||||||||||||||||||||||
Balance, August 31, 2007 | 300,000 | 300 | 34,080,702 | 34,081 | 4,154,977 | - | (6,192,330 | ) | (2,002,972 | ) | ||||||||||||||||||||||
Shares issued for Services | 9,150,000 | 9,150 | 36,600 | 45,750 | ||||||||||||||||||||||||||||
Shares issued for Conversion of Debt | 744,833 | 745 | 292 | 1,037 | ||||||||||||||||||||||||||||
Shares issued for Conversion of Debt | 200,000 | 200 | - | 200 | ||||||||||||||||||||||||||||
Shares issued for Services | 17,200,000 | 17,200 | (8,450 | ) | 8,750 | |||||||||||||||||||||||||||
Shares issued for Conversion of Debt | 27,916,000 | 27,916 | (18,411 | ) | 9,505 | |||||||||||||||||||||||||||
Shares issued for Conversion of Debt | 53,833,000 | 53,833 | (44,359 | ) | 9,474 | |||||||||||||||||||||||||||
Net Income (Loss) for period | (716,240 | ) | (716,240 | ) | ||||||||||||||||||||||||||||
Balance, August 31, 2008 | 300,000 | 300 | 143,124,535 | 143,125 | 4,120,649 | - | (6,908,570 | ) | (2,644,796 | ) | ||||||||||||||||||||||
Shares issued for Conversion of Debt | 128,749,103 | 128,749 | (119,495 | ) | 9,254 | |||||||||||||||||||||||||||
Shares issued for Services | 2,200,000 | 22,000 | 22,000 | |||||||||||||||||||||||||||||
Net Income (Loss) for period | (227,554 | ) | (227,554 | ) | ||||||||||||||||||||||||||||
Balance, February 28, 2009 | 2,500,000 | $ | 22,300 | 271,873,638 | $ | 271,874 | $ | 4,001,154 | $ | - | $ | (7,136,124 | ) | $ | (2,840,796 | ) | ||||||||||||||||
The accompanying notes are an integral part of these statements |
SEW CAL LOGO, INC. | ||||||||||||||||
STATEMENTS OF CASH FLOWS | ||||||||||||||||
Six Months Ended | Three Months Ended | |||||||||||||||
February 28, | February 28, | |||||||||||||||
Operating Activities: | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Net income (loss) | $ | (227,554 | ) | $ | (366,822 | ) | $ | (117,941 | ) | $ | (197,865 | ) | ||||
Adjustments to reconcile net income (loss) | ||||||||||||||||
Depreciation | 27,066 | 3,118 | 9,012 | 3,118 | ||||||||||||
Stock issued for services | 22,000 | 45,950 | - | 200 | ||||||||||||
Amortization of Discount on Debentures | - | - | - | - | ||||||||||||
Changes in Assets and Liabilities | ||||||||||||||||
(Increase) decrease in prepaid expenses | - | (2,200 | ) | - | (2,200 | ) | ||||||||||
(Increase) decrease in inventory | 24,514 | 17,980 | 24,514 | 3,230 | ||||||||||||
(Increase) decrease in security deposits | - | 3,800 | - | 3,800 | ||||||||||||
(Increase) decrease in accounts receivable | 82,480 | (598 | ) | 8,167 | 48,964 | |||||||||||
Increase (decrease) in accounts payable | 109,062 | 28,687 | 85,295 | 51,598 | ||||||||||||
Increase (decrease) in other current liabilities | 7,322 | 113,408 | 7,463 | 73,467 | ||||||||||||
Net cash provided by (used in) operating activities | 44,890 | (156,617 | ) | 16,510 | (156,677 | ) | ||||||||||
Investing Activities: | ||||||||||||||||
(Purchases) disposal of equipment | - | 34,591 | - | 15,737 | ||||||||||||
Cash (used) in investing activities | - | 34,591 | - | 15,737 | ||||||||||||
Financing Activities: | ||||||||||||||||
Notes Payable | - | - | - | - | ||||||||||||
Debentures Payable | (9,474 | ) | 6,000 | - | 6,000 | |||||||||||
Increase/(Decrease) in shareholder loan | (28,583 | ) | - | (25,000 | ) | - | ||||||||||
Repayment of loans | (18,510 | ) | (10,312 | ) | - | (5,188 | ) | |||||||||
Proceeds from equipment loan | (1,772 | ) | (882 | ) | (766 | ) | (882 | ) | ||||||||
Net cash provided by (used in) financing activities | (58,339 | ) | (5,194 | ) | (25,766 | ) | (70 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | (13,449 | ) | (127,280 | ) | (9,256 | ) | 80 | |||||||||
Cash and cash equivalents at beginning of the period | 15,716 | 155,704 | 11,523 | 28,296 | ||||||||||||
Cash and cash equivalents at end of the period | $ | 2,267 | $ | 28,424 | $ | 2,267 | $ | 28,424 | ||||||||
Cash Paid For: | ||||||||||||||||
Interest | $ | 56,295 | $ | 74,566 | $ | 27,445 | $ | 37,846 | ||||||||
Taxes | $ | - | $ | - | $ | - | $ | - | ||||||||
Non Cash Activities: | ||||||||||||||||
Stock issued for services | $ | 22,000 | $ | 45,950 | $ | - | $ | 200 | ||||||||
Stock issued for convertible debt | $ | 9,254 | $ | 1,237 | $ | 2,114 | $ | 1,037 | ||||||||
The accompanying notes are an integral part of these statements |
Use of Estimates
The preparation of financial statements have been prepared in conformity with generally accepted accounting principles generally accepted in the United States, which requirerequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (includingand disclosure of contingent assets and liabilities)liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
F-8 |
2/28/2009 | 8/31/2008 | |||||||
Gross Trade Accounts Receivable | $ | 134,978 | $ | 218,343 | ||||
Allowance for Doubtful Accounts | (1,350 | ) | (2,235 | ) | ||||
Accounts Receivable, net | $ | 133,628 | $ | 216,108 |
Cash equivalents
The Company recognizes revenue from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.
2/28/2009 | 8/31/2008 | |||||||
Raw Materials and WIP | $ | 46,388 | $ | 709,025 | ||||
Finished Goods | - | - | ||||||
Total Inventory | $ | 43,688 | $ | 70,902 |
2/28/2009 | 8/31/2008 | |||||||
Equipment and Machinery | $ | 980,717 | $ | 942,890 | ||||
Less: | ||||||||
Accumulated depreciation | (865,806 | ) | (800,913 | ) | ||||
$ | 114,911 | $ | 141,977 |
Accounts Receivable
Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net earnings (loss) per common sharerealizable value when considered necessary. Any allowance for uncollectible amounts is computed by dividing net earnings (loss) applicable to common shareholders byevaluated quarterly.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the weighted-average number of common shares outstanding during the period.
Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
Level 3: | Pricing inputs that are generally observable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and Related Information,”liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company has determined it operated in only one segment.
The Company does 0t have any assets or liabilities measured at fair value on a recurring or a non-recurring basis as of March 31, 2021 and August 31, 2008)
Revenue recognition
The accompanying financial statements have been prepared assuming thatCompany follows paragraph 605-15-25 of the FASB Accounting Standards Codification for revenue recognition when the right of return exists. The Company will continue as a going concern, which contemplatesrecognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has accumulated a loss $7,136,124 during its years of operation. This raises substantial doubt about the Company’s ability to continue as a going concern.following criteria are met: (i) The financial statements do not include any adjustments that might result from this uncertainty.
F-9 |
Income taxes
The subordinated loan, which was consented to by United Commercial Bank and subsequent banks, is collateralized by the assetsCompany follows Section 740-10-30 of the Company, including but not limited to any and all equipment owned by the Company, inventory, and outstanding receivables. The balance due at February 28, 2009 is $328,884.
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||||||||||||||
Office /warehouse lease | $ | 150,000 | $ | 150,000 | $ | 150,000 | $ | 150,000 | $ | 150,000 |
On December 22, 2018, the Tax Cuts and Jobs Act (TCJA) was signed into law by the cumulative NOLPresident of $7,063,535 the total valuation allowanceUnited States. TCJA is a comparable $1,553,978.
August 31, | ||||||||
2008 | 2007 | |||||||
Deferred Tax Asset | $ | 157,573 | $ | 565,550 | ||||
Valuation Allowance | (157,573 | ) | (565,550 | ) | ||||
Current Taxes Payable | - | - | ||||||
Income Tax Expense | $ | - | $ | - |
Year | Amount | Expiration | |||
1996 | 2,104 | 2011 | |||
1997 | 9,265 | 2012 | |||
1998 | 26,317 | 2013 | |||
1999 | 21,074 | 2019 | |||
2000 | 50,619 | 2020 | |||
2001 | 21,675 | 2021 | |||
2002 | 319,424 | 2022 | |||
2003 | 45,381 | 2023 | |||
2005 | 105,366 | 2025 | |||
2006 | 2,947,833 | 2026 | |||
2007 | 2,570,683 | 2027 | |||
2008 | 716,240 | 2028 | |||
YTD 2009 | 227,554 | 2029 | |||
Total | $ | 7,063,535 |
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded at August 31, 2008in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it wouldis more likely than not that the tax position will be a long-term asset of $1,553,978. Continued profitabilitysustained on examination by the Company will be a major factortaxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Stock-based Compensation
We account for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.
We account being removedfor employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the recordingperiod during which services are rendered.
F-10 |
Net income (loss) per common share is computed pursuant to section 260-10-45 of this asset.
Recently issued by the Financial Accounting Standards Board (FASB) and their effect on the Company.
In June 2008,January 2018, the FASB issued ASU 2018-01, Business Combinations (Topic 805) Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning after December 15, 2018 and should be applied prospectively on or after the effective date. The Company is in the process of evaluating the impact of this accounting standard update.
In November 2016, the FASB Staff Position EITF 03-6-1, Determining Whether Instruments Grantedissued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its statements of cash flows.
In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Transactions Are Participating Securities,
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), and has since issued amendments thereto, related to the accounting for leases (collectively referred to as “ASC 842”). ASC 842 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company will adopt ASC 842 on January 1, 2021. A modified retrospective transition approach is prohibited.
F-11 |
In May 2008,2014, August 2015, April 2016 and May 2016, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, AccountingASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016- from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with accounting for Financial Guarantee Insurance Contracts-and interpretationrevenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of FASB Statement No. 60. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years.
In December 2007,January 2017, the FASB issued SFASAccounting Standards Update No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment2017-01 (ASU 2017-01) “Business Combinations (Topic 805): Clarifying the Definition of ARB No. 51. A noncontrolling interest, sometimes called a minority interest,Business.” ASU 2017-01 provides guidance to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is the portion of equityconcentrated in a subsidiarysingle asset or a group of similar assets, the assets acquired (or disposed of) are not attributable, directly or indirectly,considered a business. We adopted ASU 2017-01 as of January 1, 2017 on a prospective basis and there was no material impact to a parent. The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in itsour consolidated financial statements related to the noncontrolling or minority interest.
The Company will adopt this statement beginning March 1, 2009. It ishas implemented all new accounting pronouncements that are in effect. These pronouncements did not believed that this will have anany material impact on the Company’s consolidated financial position, results of operations or cash flows.
F-12 |
NOTE 3 –
RESTATEMENTThe Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115
SCHEDULE OF CONDENSED CONSOLIDATED BALANCE SHEETS
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
As Reported | Restatement Adjustments | As Restated | ||||||||||
March 31, 2021 | ||||||||||||
As Reported | Restatement Adjustments | As Restated | ||||||||||
Current Assets: | ||||||||||||
Cash | $ | 114,695 | - | 114,695 | ||||||||
Accounts receivable | - | - | ||||||||||
Accounts receivable – related party | 407,500 | - | 407,500 | |||||||||
Prepaid expenses | 45,000 | 45,000 | ||||||||||
Assets from discontinued operations | - | - | - | |||||||||
Total current assets | 567,195 | - | 567,195 | |||||||||
Investment–related party | 800 | - | 800 | |||||||||
Total Assets | $ | 567,995 | - | 567,995 | ||||||||
Current Liabilities: | ||||||||||||
Accounts payable and accrued liabilities | $ | 112,537 | - | 112,537 | ||||||||
Cash overdraft | - | - | - | |||||||||
Total Current Liabilities | 112,537 | - | 112,537 | |||||||||
Loans payable – related party | 169,925 | - | 169,925 | |||||||||
PPP Loan | 163,111 | - | 163,111 | |||||||||
Convertible debt and accrued interest | - | - | - | |||||||||
Total Liabilities | 445,573 | - | 445,573 | |||||||||
Stockholders’ Equity (Deficit): | ||||||||||||
Common Stock par value $ | shares authorized, and shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively7,441,151 | - | 7,441,151 | |||||||||
Additional paid in capital | 24,128,008 | 1,817,941 | 25,945,949 | |||||||||
Accumulated deficit | (31,446,737 | ) | (1,817,941 | ) | (33,264,678 | ) | ||||||
Total Stockholders’ Equity (Deficit) | 122,422 | - | 122,422 | |||||||||
Total Liabilities and Stockholders’ Equity | $ | 567,995 | - | 567,995 |
F-13 |
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
SCHEDULE OF CONDENSED CONSOLIDATED STATEMENT OF OPERATION
As Reported | Restatement Adjustments | As Restated | ||||||||||
For the three months ended March 31, 2021 | ||||||||||||
As Reported | Restatement Adjustments | As Restated | ||||||||||
�� | ||||||||||||
Revenues | ||||||||||||
Licensing revenue – related party | 62,500 | - | 62,500 | |||||||||
Total revenue | 62,500 | - | 62,500 | |||||||||
Cost of goods sold | - | - | - | |||||||||
Gross margin | 62,500 | - | 62,500 | |||||||||
Operating expenses | ||||||||||||
Compensation expense | 43,934 | - | 43,934 | |||||||||
Sales and marketing | 138 | - | 138 | |||||||||
General and administrative | 146,794 | - | 146,794 | |||||||||
Total operating expenses | 190,866 | - | 190,866 | |||||||||
Income (loss) from operation | (128,366 | ) | - | (128,366 | ) | |||||||
Oher income (expense) | ||||||||||||
Loss on the extinguishment of convertible promissory notes | - | (1,551,768 | ) | (1,551,768 | ) | |||||||
Interest expense | - | - | - | |||||||||
Other income (expense) | 110,854 | (266,173 | ) | (155,319 | ) | |||||||
Total other income (expense) | 110,854 | (1,817,941 | ) | (1,707,087 | ) | |||||||
Net loss from continuing operations | $ | (17,512 | ) | (1,817,941 | ) | (1,835,453 | ) | |||||
Net loss from discontinued operations | (27,700 | ) | - | (27,700 | ) | |||||||
Net income (loss) | $ | (45,212 | ) | (1,817,941 | ) | (1,863,153 | ) | |||||
Weighted average number of shares outstanding | ||||||||||||
Basic | 7,443,135,871 | - | 7,443,135,871 | |||||||||
Diluted | 7,451,800,634 | - | 7,451,800,634 | |||||||||
Net income (loss) per share from continuing operations | ||||||||||||
Basic | $ | (0.00 | ) | 0.00 | (0.00 | ) | ||||||
Diluted | $ | (0.00 | ) | 0.00 | (0.00 | ) | ||||||
Net income (loss) per share from discontinued operations | ||||||||||||
Basic | $ | (0.00 | ) | 0.00 | (0.00 | ) | ||||||
Diluted | $ | (0.00 | ) | 0.00 | (0.00 | ) |
F-14 |
SOCIAL LIFE NETWORK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
SCHEDULE OF CONDENSED STATEMENTS OF CASH FLOWS
As Reported | Restatement Adjustments | As Restated | ||||||||||
For the three months ended March 31, 2021 | ||||||||||||
As Reported | Restatement Adjustments | As Restated | ||||||||||
Cash flows used in operating activities | ||||||||||||
Net loss from continuing operations | $ | (17,512 | ) | $ | (1,817,941 | ) | (1,835,453 | ) | ||||
Net loss from discontinued operations | (27,700 | ) | - | (27,700 | ) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||
Loss on the extinguishment of debt | 25,824 | 1,551,768 | 1,577,592 | |||||||||
Changes in assets and liabilities | ||||||||||||
Accounts receivable | (11,448 | ) | - | (11,448 | ) | |||||||
Prepaids | (45,000 | ) | - | (45,000 | ) | |||||||
Accounts payable and accrued expenses | 34,088 | 266,173 | 300,261 | |||||||||
Net cash used in operating activities | (41,748 | ) | - | (41,748 | ) | |||||||
Cash flows used in investing activities | ||||||||||||
Net cash used in investing activities | - | - | - | |||||||||
Cash flows provided by financing activities | ||||||||||||
Proceeds from the sale of common stock – private placement | 100,000 | - | 100,000 | |||||||||
Proceeds from the sale of common stock - convertible note | - | - | ||||||||||
Proceeds from related party loans | 56,250 | - | 56,250 | |||||||||
Net cash provided by financing activities | 156,250 | - | 156,250 | |||||||||
Net increase in cash | 114,502 | - | 114,502 | |||||||||
Cash, beginning of period | 193 | - | 193 | |||||||||
Cash, end of period | $ | 114,695 | $ | - | 114,695 | |||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for interest | $ | - | $ | - | - | |||||||
Cash paid for taxes | $ | - | $ | - | - | |||||||
Supplemental disclosure of non-cash information: | ||||||||||||
Common stock issued in satisfaction of convertible notes payable | $ | 128,346 | $ | - | 128,346 | |||||||
Cancellation of shares issued in prior years | $ | 29,737 | $ | - | 29,737 |
F-15 |
NOTE 4 – GOING CONCERN
The Company’s unaudited financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in FAS 159the normal course of business for the foreseeable future. The Company had an accumulated deficit of $33,264,678 at March 31, 2021, and a loss from continuing operations of $1,835,453. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its generating profitable operations in the future and/or to obtain the necessary financing to meet obligations and repay liabilities arising from normal business operations when they come due. The Company’s management intends to finance operating costs over the next three months with existing cash on hand and public issuance of common stock. While the Company believes that it will be successful in obtaining the necessary financing and generating revenue to fund its operations, meet regulatory requirements and achieve commercial goals, there are elective; however, an amendment to FAS 115 Accounting for Certain Investmentsno assurances that such additional funding will be achieved or that the Company will succeed in Debt and Equity Securities applies to all entities with available for sale or trading securities. Some requirements apply differently to entities thatits future operations. The financial statements of the Company do not report net income. SFAS No. 159include any adjustments that may result from the outcome of these uncertainties.
NOTE 5 – RELATED PARTY TRANSACTIONS
Other than as disclosed below, there has been no transaction, since January 1, 2021, or currently proposed transaction, in which our company was or is to be a participant and the amount involved exceeds $5,000 or one percent of our total assets at March 31, 2021, and in which any of the following persons had or will have a direct or indirect material interest:
(a) | any director or executive officer of our company; | |
(b) | any person who beneficially owns, directly or indirectly, more than 5% of any class of our voting securities; | |
(c) | any person that is part of a group, consisting of two or more persons that agreed to act together for the purpose of acquiring, holding, voting or disposing of our common stock, that acquired control of our company when it was a shell company; and | |
(d) | any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the foregoing persons. |
We have Technology Business Incubator (TBI) license agreements with MjLink.com Inc., LikeRE.com Inc., HuntPost.com Inc., RacketStar.com Inc., FutPost.com Inc., GolfLynk.com Inc., CycleFans.com Inc., WEnRV.com Inc., RaceDY.com Inc., and SpaceZE.com Inc., which agreements provide that our TBI licensees pay us a license fee of 5% percentage of annual revenues generated, and 15% of their common stock, issuable immediately prior to a liquidity event such as an IPO or sale of 51% or more, of a licensee’s common stock. The 15% common stock payment is non-dilutive prior to a liquidity event described above. Our Chief Executive Office, Kenneth Tapp, owns less than 1% of our outstanding shares and is a board member of each of our TBI licensees. Ken Tapp owns less than 9.99% of the outstanding common stock in each of our licensees. Pricing for the license agreements was set by our board of directors. This type of licensing agreement is standard for technology incubators and tech start-up accelerators.
Our related party revenue year-to-date for Fiscal Year 2021 is $62,500 or 100.0% of our gross revenue.
We paid 1 (one) of our Advisors, Vincent (Tripp) Keber, $30,000 for his consulting services during the first quarter 2021.
From January 1, 2021 through March 31, 2021, Kenneth Tapp, from time-to-time, provided short-term interest free loans amounting to $145,000 for the Company’s operations. At March 31, 2021 we owed $169,925 to Kenneth Tapp.
As noted in Note 8, the Company completed a December 31, 2020 Division Spin-Off Agreement (“Spin-Off Agreement) between MjLink.com, Inc. (“MjLink”) and the Company whereby the Parties agreed to cease the Company operating MjLink as its cannabis division and going forward MjLink would conduct its own operations. The Company recorded a loss from discontinued operations of $27,700 during the three months ended March 31, 2021. With regards to the Spin-Off, MjLink issued the Company of its Common Stock Shares or % of its outstanding shares for MjLink’s use of the Company’s license from January 1st 2020 to December 31, 2020. Ken Tapp is the Chief Executive Officer of both the Company and MjLink and thus the transaction was treated as a related party transaction. To reflect the true intention of the Parties to the Spin-Off Agreement, the Parties then agreed in an Amended Spin-Off Agreement to reflect an effective date of 12:01 am on January 1, 2021 regarding the Spin-Off transaction (“Effective Date”). Apart from the Effective Date there were no further changes to the Spin-Off Agreement.
NOTE 6 – SALES RETURNS
For the period ended March 31, 2021, the Company did not issue any credit memos.
NOTE 7 – STOCK WARRANTS
During the three months ended March 31, 2021 and the years ended December 31, 2020, 2019, we granted Each warrant entitles the holder to one Social Life Network common stock share at an exercise price ranging from five to twenty cents, with a weighted average price of seven cents. The term of our warrants have a range from 3 to 5 years from the initial exercise date. The warrants will be expensed as they become exercisable beginning January 1, 2018 through April 11, 2024. During the three months ended September 30, 2019, 300,000 additional warrants vested, and as of September 30, 2020 the beginning17,894,873 Warrants are 100% vested. During the twelve months ended December 31, 2019, we executed a cashless conversion of an entities first fiscal year that begins after November 15, 2007. Early adoption is permitted8,800,020 vested warrants in exchange for 4,400,010 common stock shares. The remaining 9,064,853 outstanding warrants are currently 100% vested to date and not exercised. The aggregate fair value of the warrants as of December 31, 2020 total $2,238,800, which values are based on the beginningBlack-Scholes-Merton pricing model using the following estimates: exercise price ranging from $ to $ , stock prices ranging from $ to $ , risk free rates ranging from % - %, volatility ranging from % to %, and expected life of the previous fiscal year providedwarrants ranging from 3 to 5 years. , and warrants, respectively, to our advisors and employees, totaling warrants (the “17,894,873 Warrants”).
F-16 |
A summary of the status of the outstanding stock warrants and changes during the periods is presented below:
SCHEDULE OF OUTSTANDING STOCK WARRANTS
Shares available to purchase with warrants | Weighted Average Price | Weighted Average Fair Value | ||||||||||
Exercisable, December 31, 2019 | 9,094,853 | $ | 0.07 | $ | - | |||||||
Issued | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Expired | - | - | - | |||||||||
Outstanding, March 31, 2020 | 9,094,853 | $ | 0.07 | $ | - | |||||||
Exercisable, March 31, 2020 | 9,094,853 | 0.07 | - | |||||||||
Issued | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Expired | - | - | - | |||||||||
Outstanding, June 30, 2020 | 9,094,853 | 0.07 | $ | - | ||||||||
Exercisable, June 30, 2020 | 9,094,853 | 0.07 | - | |||||||||
Issued | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Expired | - | - | - | |||||||||
Outstanding, September 30, 2020 | 9,094,853 | 0.07 | $ | - | ||||||||
Exercisable, September 30, 2020 | 9,094,853 | $ | 0.07 | $ | - | |||||||
Issued | - | - | - | |||||||||
Exercised | 30,000 | - | - | |||||||||
Expired | - | - | - | |||||||||
Outstanding, December 31, 2020 | 9,064,853 | 0.07 | $ | - | ||||||||
Exercisable, December 31, 2020 | 9,064,853 | 0.07 | $ | - | ||||||||
Exercisable, March 31, 2021 | 9,064,853 | $ | 0.07 | $ | - | |||||||
Issued | - | - | - | |||||||||
Exercised | 101,003 | - | - | |||||||||
Expired | - | - | - | |||||||||
Outstanding, December 31, 2020 | 8,963,850 | 0.07 | $ | 0.31 |
Range of Exercise Prices | Number Outstanding 3/31/2021 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | |||||||||||
$ | – | 8,963,850 | 1.84 years | $ | 0.07 |
In the $5,000,000 Complaint, the Company filed against a Convertible Lender as referenced below under Part II, Item 1, the Company alleges, among other things, that the entity makeswarrants exercised by the Lender were unconscionable since it provided the defendants with $1,000,000 worth of our common stock and violated the doctrine of unconscionability under Nevada and Florida law, and on that choice inbasis, requested that the first 120 daysCourt declare the transaction documents void and unenforceable.
F-17 |
In the $40,000,000 Complaint, The Company filed against a Convertible Lender as referenced below under Part II, Item 1, the Company alleges, among other things, that the Warrant Agreement (the “Warrant”) was substantively unconscionable under California law because it provided the Defendants with hundreds of millions of shares, despite the face of the Warrant providing that fiscal yearthe Lender is entitled to only 412,000 Warrant Shares under the Warrant, and also electson that basis, requested that the Court declare that the Securities Contracts (the transaction documents) are unconscionable and void and unenforceable, including the Warrant Agreement.
NOTE 7 – COMMON STOCK AND CONVERTIBLE DEBT
Common Stock
Class A
For the quarter ending December 31, 2019, the Company issued applythree professionals for their services. The shares are valued at $ , the provisions of SFAS No. 157 Fair Value Measurements. stock shares to
For the quarter ending March 31, 2020, several lenders converted their debt into 0.00140 for a value of $232,257. common shares at an average of $
After unanimous Board of Director approval and Shareholder Approval by consent of over 51% of the Company’s consolidated financial statements.
After unanimous Board of Director approval and 132(R)
For the quarter ending June 30, 2020, several lenders converted their debt into 0.00060, for a value of $44,693. common shares at an average of $
For the quarter ending September 30, 2020, several lenders converted their debt into 0.00005, for a value of $111,977. common shares at an average of $
For the quarter ending December 31, 2020, several lenders converted their debt into 0.00082, for a value of $133,902. common shares at an average of $
For the quarter ending March 31, 2021, the remaining lenders converted their debt into 0.00038 for a value of $267,173. common shares at an average of $
F-18 |
Class B
Effective March 4, 2020, our board of directors authorized the issuance of twenty five million (recognize changesKen Tapp, our Chief Executive Officer, in that funded statusreturn for his services as our Chief Executive Officer from February 1, 2016 to February 29, 2020, which shares are equal to two billion five hundred million ( ) votes and have no equity, cash value or any other value. ) Class B Common Stock Shares to
Effective March 28, 2021, our Board authorized the issuance of fifty million (the year inreturn for his services as our Chief Executive Officer from March 1, 2020 to February 28, 2021, which the changes occur through comprehensive income of a business entityshares are equal to five billion ( ) votes and have no equity, cash value or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan asany other value. As of the date of its year-end statementthis filing, our Chief Executive Officer controls approximately in excess of financial position,98% of shareholder votes via our issuance of Class B Shares to Ken Tapp, thereby controlling over votes. ) Class B Common Stock Shares to Ken Tapp, our Chief Executive Officer, in
Convertible Debt and Other Obligations
Convertible Debt
We have the following convertible notes payable as of March 31, 2021:*
SUMMARY OF CONVERTIBLE NOTES PAYABLE
Note | Funding Date | Maturity Date | Interest Rate | Original Borrowing | Average Conversion Price | Number of Shares Converted | Balance at March 31, 2021 | |||||||||||||||||
Note payable (A) | April 15, 2019 | November 14, 2019 | 7 | % | $ | 100,000 | $ | 0.0000 | 810,911,013 | $ | - | |||||||||||||
Note payable (B) | April 15, 2019 | April 14, 2022 | 10 | % | $ | 67,500 | $ | 0.0000 | 117,869,569 | - | ||||||||||||||
Note payable (C-1) | May 24, 2019 | December 23, 2019 | 10 | % | $ | 80,000 | $ | 0.00004 | 2,098,755,638 | - | ||||||||||||||
Note payable (C-2) | July 3, 2019 | February 2, 2020 | 10 | % | $ | 160,000 | $ | 0.0003 | 1,146,297,040 | - | ||||||||||||||
Note payable (D) | June 12, 2019 | June 11, 2020 | 12 | % | $ | 110,000 | $ | 0.0019 | 691,151,660 | - | ||||||||||||||
Note payable (E) | June 26, 2019 | March 25, 2020 | 12 | % | $ | 135,000 | $ | 0.00004 | 514,781,219 | - | ||||||||||||||
Note payable (F) | August 7, 2019 | August 6, 2020 | 10 | % | $ | 100,000 | $ | 0.0007 | 158,429,766 | - | ||||||||||||||
Note payable (G) | August 21, 2019 | August 20, 2020 | 10 | % | $ | 148,500 | $ | 0.0001 | 431,824,675 | - | ||||||||||||||
Note payable (H) | January 28, 2020 | January 27, 2021 | 10 | % | 63,000 | $ | 0.0001 | 1,102,499,999 | - | |||||||||||||||
Total | $ | 0.0001 | $ | - |
*As indicated below in footnotes A-H, we had various convertible notes with limited exceptions.
A- November 14, 2019
B - June 26, 2019
C - January 25, 2021
D – February 5, 2021
E – January 7, 2021
F – July 28, 2021
G – January 4, 2021
H – August 24, 2020
(A) | On April 15, 2019, we completed a 7-month term original issue discount convertible note and other related documents with an unaffiliated third-party funding group to generate $100,000 in additional available cash resources with a payback provision due. The note was paid in full on November 14, 2019 of $117,700 which includes the original issue discount of $10,000 and interest of $7,700. In connection therewith, we issued common stock shares and additional common stock shares on October 15, 2019, per our original agreement, common stock warrants, and reserved restricted common shares for potential conversion if the note was note paid in full. The shares were issued during the three months ended June 30, 2019. The conversion price is fixed at $0.15. Pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of $13,333 at the date of issuance when the stock price was at $ per share. This note was paid in full on November 14, 2019. |
F-19 |
(B) | On April 15, 2019, we completed convertible debenture at zero interest and other related documents with an unaffiliated third-party funding group to generate $375,000 in additional available cash resources, the funds of which will be released over the 90 days following execution of the agreement in the amounts of $67,500, $90,000, and $180,000, with a payback provision of $75,000, $100,000, and $200,000, respectively, over 36 months. In connection therewith, the Company issued common stock warrants, and restricted common shares as reserve for potential conversion if the note was note paid in full. The note was unsecured and did not bear interest; however, the implied interest was determined to be 10% over 36 months since the note was issued at a 10% discount. Subsequently, on June 26, 2019 we nullified the agreement and other related documents with this funding group after the initial disbursement of $67,500. We refunded the initial tranche of $67,500, a 10% redemption fee of $7,500 for the principle amount plus for the original issue discount of $7,500, and other additional administrative fees of $30,000, which totaled $105,000. This note was paid in full on June 26, 2019. | |
(C) | On May 24, 2019, we completed a 7-month fixed convertible promissory note and other related documents with an unaffiliated third-party funding group to generate $240,000, which will be distributed in three equal monthly tranches of $80,000, in additional available cash resources with a payback provision of $80,000 plus the original issue discount of $4,000 or $84,000 due seven months from each funding date for each tranche, totaling $252,000. We received only two of the three tranches of $80,000, generating $160,000 in additional available cash resources with a payback provision due on December 23, 2019 and February 2, 2020 totaling $184,800 which includes the original issue discount of $8,000 plus interest of $16,800. In connection therewith, we issued common stock shares for two tranches with another common stock shares to be issued with the third tranche, and we have reserved which was subsequently increased to 3 billion restricted common shares for conversion. The conversion price is the lower of $0.08 or sixty five percent (65%) of the 2 lowest traded prices of the Common Stock for the twenty (20) Trading Days immediately preceding the date of the date of conversion. We determined that because the conversion price is variable and unknown, it could not determine if it had enough reserve shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of $130,633 at the date of issuance when the stock price was at $ per share. This note was paid in full on January 25, 2021. | |
(D) | On June 12, 2019, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party funding group to generate $110,000 in additional available cash resources with a payback provision due on June 11, 2020 of $135,250 which includes the original issue discount of $11,000 plus interest of $14,250. In connection with the note, we have reserved restricted common shares as reserve for conversion. The conversion price is a 35% discount to the average of the two (2) lowest trading prices during the previous twenty (20) trading days to the date of a Conversion Notice. We determined that because the conversion price is variable and unknown, it could not determine if we had enough authorized shares to fulfill the conversion obligation. On December 19, 2019, we converted $10,000 of principle into shares of common stock at approximately $0.035 per share. As such, pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of $59,231 at the date of issuance when the stock price was at $ per share. This note was paid in full on February 5, 2021. | |
(E) | On June 26, 2019, we completed a 9-month senior convertible promissory note and other related documents with an unaffiliated third-party funding group to generate $135,000 in additional available cash resources with a payback provision due on March 25, 2020 of $168,000 which includes the original issue discount of $15,000 plus interest of $18,000. In connection with the note, we issued common stock shares and has reserved , which was subsequently increased to billion restricted common shares for conversion. The conversion price is the lower of $0.08 or sixty five percent (65%) of the 2 lowest traded prices of the Common Stock for the twenty (20) Trading Days immediately preceding the date of the date of conversion. We determined that because the conversion price is variable and unknown, it could not determine if we had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of $72,692 at the date of issuance when the stock price was at $ per share. This note was paid in full on January 7, 2021. | |
(F) | On August 7, 2019, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party funding group to generate $100,000 in additional available cash resources with a payback provision due on August 6, 2020 of $121,000 which includes the original issue discount of $10,000 plus interest of $11,000. In connection with the note, we issued common stock shares and has reserved , which was subsequently increased to , restricted common shares for conversion. The conversion price is the lower of $0.08 or sixty five percent (65%) of the 2 lowest traded prices of the Common Stock for the twenty (20) Trading Days immediately preceding the date of the date of conversion. We determined that because the conversion price is variable and unknown, it could not determine if we had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of $73,750 at the date of issuance when the stock price was at $ per share. This note was paid in full on July 28, 2020. |
F-20 |
(G) | On August 21, 2019, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party funding group to generate $148,500, which would be distributed in three equal monthly tranches of $49,500. Only one tranche of $49,500 was received, and created available cash resources with a payback provision of $49,500 plus the original issue discount of $5,500 or $55,000 due twelve months from each funding date for each tranche, totaling $165,000. We generated $49,500 in additional available cash resources with a payback provision due on August 20, 2020 totaling $60,500 which includes the original issue discount of $5,500 plus interest of $5,500. In connection therewith, we issued common stock shares for the first tranche with another common stock shares to be issued with each additional tranche, which will total common shares; we have reserved which was subsequently increased to billion restricted common shares for conversion. The conversion price is the 35% discount to the average of the two (2) lowest trading prices during the previous twenty (20) trading days to the date of a Conversion Notice. We determined that because the conversion price is variable and unknown, it could not determine if it had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of $26,654 at the date of issuance when the stock price was approximately $ per share. This note was paid in full on January 4, 2021. | |
(H) | On January 28, 2020, we completed a 12-month convertible promissory note and other related documents with an unaffiliated third-party funding group to generate up to $925,000, which will be distributed in multiple tranches to be determined, in additional available cash resources with a payback provision of principle debt without an original issue discount plus interest. We received only one tranche and generated $63,000 in additional available cash resources with a payback provision due on January 27, 2021 totaling $69,300 which includes the principle plus interest of $6,300. We reserved , which was subsequently increased to billion restricted common shares for conversion. The conversion price is the 39% discount to the average of the two (2) lowest trading prices during the previous fifteen (15) trading days to the date of a Conversion Notice. We determined that because the conversion price is variable and unknown, it could not determine if it had enough authorized shares to fulfill the conversion obligation. As such, pursuant to current accounting guidelines, we determined that the beneficial conversion feature of the note created a fair value discount of $40,279 at the date of issuance when the stock price was approximately $ per share. This note was paid in full on August 24, 2020. |
● | On June 26, 2019, we fully met and timely paid its debt obligation to Note Payable (B). | |
● | On November 14, 2019, we fully met and timely paid its debt obligation to Note Payable (A). | |
● | On July 28, 2020, we fully met and timely paid its debt obligation to Note Payable (F). | |
● | On August 24, 2020, we fully met and timely paid its debt obligation to Note Payable (H). | |
● | On November 3, 2020, we fully met and timely paid its debt obligation to Note Payable (C-1). | |
● | On January 4, 2021, we fully met and timely paid its debt obligation to Note Payable (G). | |
● | On January 7, 2021, we fully met and timely paid its debt obligation to Note Payable (E). | |
● | On January 25, 2021, we fully met and timely paid its debt obligation to Note Payable (C-2). | |
● | On February 5, 2021, we fully met and timely paid its debt obligation to Note Payable (D). |
Accordingly, all of this new Statement has no material effect onour convertible plus interest obligation was fully settled in the first quarter 2021.
Other Obligations
For the quarter ending March 31, 2021, Kenneth Tapp, from time-to-time provided short-term interest free loans for the Company’s currentoperations. For the first quarter ending of 2021, Kenneth Tapp provided an additional net amount of $84,197 in short term interest free loans for legal expenses, totaling $169,925 liquidity for year-to-date March 31st, 2021.
F-21 |
On April 21, 2020, under the Payroll Protection Program, the Company received a forgivable loan of $37,411, and on June 10, 2020, the Company received an additional forgivable loan of $125,700. Both loans were given to small businesses by the Small Business Application (SBA) to help support employees of the companies, as financial position, results or operations, or cash flows.
On March 12, 2021, MjLink.com relieved all its $364,688 debt obligation to Social Life Network.
The Company’s executive and administrative office is located at 3465 Gaylord Court, Suite A509, Englewood, Colorado 80113. The Company had total rent expense for the quarter ended March 31, 2021 and 2020 of $8,590 and $5,699, respectively, which is recorded as part of General and Administrative expenses in the Statement No. 157
NOTE 8 -DISCONTINUED OPERATIONS
The expanded disclosures include the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value,Company completed a December 31, 2020 Division Spin-Off Agreement (“Spin-Off Agreement) between MjLink.com, Inc. (“MjLink”) and the Company whereby the Parties agreed to cease the Company operating MjLink as its cannabis division and going forward MjLink would conduct its own operations. The Spin-Off has a subsequent financial effect that could potentially increase the profit margins for the Company by removing the ongoing operating expenses of fair value on earnings andMjLink as a division. The Company recorded a loss from discontinued operations of $27,700 during the three months ended March 31, 2021. MjLink is applicable whenever other standards require (or permit) assets and liabilitiesexpected to be measured at fair value. SFAS 157worth more as an independent entity than as a division of the Company. MjLink issued the Company of its Common Stock Shares or % of its outstanding shares for MjLink’s use of the Company’s license from January 1st 2020 to December 31, 2020. Ken Tapp is the Chief Executive Officer of both the Company and MjLink and thus the transaction was treated as a related party transaction. To reflect the true intention of the Parties to the Spin-Off Agreement, the Parties then agreed in an Amended Spin-Off Agreement to reflect an effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.
SCHEDULE OF DISCONTINUED OPERATIONS
March 31, 2021 | March 31, 2020 | |||||||
Three Months ended | ||||||||
March 31, 2021 | March 31, 2020 | |||||||
Operating loss | $ | (27,700 | ) | $ | (2,968 | ) | ||
Income(loss) before provision for income taxes | (27,700 | ) | $ | (2,968 | ) | |||
Provision for income taxes | - | - | ||||||
Net income (loss) | $ | (27,700 | ) | $ | (2,968 | ) |
NOTE 9 – SUBSEQUENT EVENTS
Common Stock
As of May 17, 2021, the Company has not had a material effect onissued common stock shares to an employee nor has sold common shares to an accredited investor.
On April 7th, 2021, LVC Consulting returned current financial position, resultstreasury, leaving LVC Consulting with 30 million common shares. common shares into the Company’s
On April 9, 2021, we (OTC: WDLF) filed a $5,000,000 complaint in The United States District Court for the Southern District of Florida against a convertible debt funder, including allegations of operating as an unregistered dealer and securities fraud.
On April 19, 2021, we filed a $40,000,000 complaint in The United States District Court for the Southern District of California against a convertible debt funder, including allegations of operating as an unregistered dealer and securities fraud.
Convertible Debt
As of May 17, 2021, the Company has not entered into any convertible debt arrangements.
Other Obligations
For the quarter ending March 31, 2021, Kenneth Tapp, from time-to-time provided short-term interest free loans for the Company’s operations. For the first quarter ending of 2021, Kenneth Tapp provided an additional net amount of $84,197 in short term interest free loans, totaling $169,925 liquidity for year-to-date 2021.
Board of Director, Chief Financial Officer, and Board Appointments
None.
F-22 |
ITEM 1A. Risk Factors
Social Life Network, Inc. is referred to hereafter as “we”, “our” or operations, or cash flows.
An investment in our common stock is highly speculative and should be readpurchased only by persons who can afford to lose the entire amount invested in conjunction with the condensed consolidatedcommon stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks occur, our business, financial statements,condition or operating results could be materially adversely affected. In such case, you may lose all or part of our investment. You should carefully consider the notes thereto,risks described below and the financial statements and notes thereto included in the Company's Registration Statement on Form SB-2, as amended, initially filed on March 20, 2004. All non-historicalother information contained in this annual report before in investing in our common stock.
Risks Related to Our Business
Our independent registered public accounting firm has issued a going concern opinion; there is a forward-looking statement. The forward-lookingsubstantial uncertainty that we will continue operations in which case you could lose your investment.
Our financial statements contained herein are subject to certain risks and uncertainties that could cause the actual results to differ materially from those reflected in the forward-looking statements.
If our Social Networking Platform technology becomes obsolete, our ability to license our Platform and generate revenue from it will be negatively impacted.
If our Platform technology becomes obsolete, our results of operations will be adversely affected. The market in which we compete is characterized by rapid technological change, evolving industry standards, introductions of new products, and changes in customer demands that can render existing staff to support expansionproducts obsolete and growth of bothunmarketable. Our Platform will require continuous upgrading, or our private labeltechnology will become obsolete, and our business operations will be curtailed or terminate.
Customer complaints and negative publicity regarding our products and services may hurt our business and entertainment business now thatreputation.
We may receive complaints or claims from threatened legal action or lawsuits from dissatisfied customers regarding the writer’s strike has endedquality of media content distributed through our brand, networking events, promotions, and remain cautiously optimistic on both issues.
Litigation may be able to respond more quickly and effectively than we can to new or changing opportunities or customer requirements. Existing or future competitors may develop or offer products that provide price, service, number or other advantages over those we intend to offer. If we fail to compete successfully against current or future competitors with respect to these or other factors,adversely affect our business, financial condition, and results of operations
From time to time in the normal course of its business operations, we may become subject to litigation that may result in liability material to our financial statements as a whole or may negatively affect our s operating results if changes to our business operations are required. The cost to defend such litigation may be materiallysignificant and may require a diversion of resources. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. Insurance may be unavailable at all or in sufficient amounts to cover any liabilities with respect to these or other matters. A judgment or other liability in excess of the insurance coverage for any claims could have a material adverse effect on our business, results of operations, and financial condition.
If we fail to develop or acquire technologies that adequately serve changing consumer behaviors and support our evolving business needs, our business, financial condition and prospects may be adversely affected.
In order to respond to changing consumer behaviors, we need to invest in new technologies and platforms to deliver content and provide products and services where consumers demand it. If we fail to develop or acquire the necessary consumer-facing technologies or if the technologies we develop or acquire are not received favorably by consumers, our business, financial condition and prospects may be adversely affected. In addition, as our business evolves and we develop new revenue streams, we must develop or invest in new technology and infrastructure that satisfy the needs of the changing business; if we fail to do so, our business, financial condition and prospects may suffer. Further, if we fail to update our current technology and infrastructure to minimize the potential for business disruption, our business, financial condition and prospects may be adversely affected.
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New social network, online marketplace or application platform features or changes to existing features could fail to attract new users, retain existing users or generate revenue.
Our business strategy is dependent on our ability on behalf of our licensees to develop and maintain networks, online marketplaces, and application platforms and features to attract new users and retain existing ones. Any of the following events may cause decreased use of our properties:
● | Emergence of competing websites and applications; | |
● | Inability to convince potential users to join our network or that of our licensees; | |
● | Technical issues related to mobile and desk top compatibility; and | |
● | Rise in safety or privacy concerns. |
Should any of the above factors or a combination thereof have a material effect on our business, our revenues and results of operations will be negatively affected.
Our future success will depend on our key executive officers and our ability to attract, retain, and motivate qualified personnel.
We currentlyare highly dependent on our management team consisting of Kenneth Tapp, our Chief Executive Officer/Chief Technology Officer. Our future success largely depends upon the continued services of our executive officers and management team. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may be unable to replace them readily, if at all. Additionally, we may incur additional expenses to recruit and retain new executive officers. If any of our executive officers joins a competitor or forms a competing company, we may lose some of our customers and potential customers. Finally, we do not maintain “key person” life insurance on any of our executive officers. Because of these factors, the loss of the services of any of these key persons could have a material adverse effect on our business, results of operations, and financial condition.
Our continuing ability to attract and retain highly qualified personnel will also be critical to our success because we will need to hire and retain additional personnel as its business grows. There can be no market share data availableassurance that we will be able to attract or retain highly qualified personnel. We face significant competition for skilled personnel in our industries. This competition inmay make it more difficult and expensive to attract, hire, and retain qualified managers and employees. Because of these areas. factors, we may be unable to effectively manage or grow our business, which could have a material adverse effect on our business, results of operations, and financial condition and as a result, the value of your investment could be significantly reduced or completely lost.
Should we lose our licensing, advertising or digital subscription or digital marketing or events revenues during any given period that have historically represented the majority of our revenues, our financial condition will be negatively affected.
We work on each job through personal contacts and are frequently the only company contactedhave generated a majority of our revenue for the particular project.3 months ended 2021 from licensing revenue and our revenue from digital marketing, microcap events, and digital subscription services of MjInvest.com have been suspended due to COVID-19. The loss of the majority of our revenues in future periods in any of these revenue categories will negatively and materially affect our results of operations.
We expect to incur substantial expenses to meet our reporting obligations as a public company.
We estimate that it will cost approximately $100,000 annually to maintain the proper management and financial controls for our filings required as a public reporting company, funds that would otherwise be spent for our business operations. Our public reporting costs may increase over time, which will increase our expenses and may decrease our potential profitability.
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We have generated a majority of our revenue in 2021 and 2020 from licensing, event, and digital marketing revenues, respectively; the loss of the majority of our revenues in future periods will negatively affect our results of operations. Because our directors and executive officers are among our largest stockholders, they can exert significant control over our business and affairs and have actual or potential interests that may depart from those of investors.
Certain of our executive officers and directors own a significant percentage of our outstanding capital stock. As of the date of this annual report, our executive officers and directors and their respective affiliates beneficially own approximately 0.80% of our outstanding voting stock, including our Chief Executive Officer who owns 0.94% of our voting securities. The holdings of our directors and executive officers may increase further in the future upon vesting or other maturation of exercise rights under any of the options or warrants they may hold or in the future be granted, or if they otherwise acquire additional shares of our common stock. The interests of such persons may differ from the interests of our other stockholders. As a result, in addition to their board seats and offices, such persons will have significant influence and control over all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the following actions:
● | to elect or defeat the election of our directors; | |
● | to amend or prevent amendment of our certificate of incorporation or by-laws; | |
● | to effect or prevent a merger, sale of assets or other corporate transaction; and | |
● | to control the outcome of any other matter submitted to our stockholders for a vote. |
This concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for our common stock, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
Because our directors and executive officers are among our largest voting stockholders, they can exert significant control over our business and affairs and have actual or potential interests that may depart from those of investors.
Certain of our executive officers and directors own a significant percentage of our outstanding voting stock. As of the date of this quarterly report, our executive officers and directors and their respective affiliates beneficially own more than 4% of our outstanding voting stock. The holdings of our directors and executive officers may increase further in the future upon vesting or other maturation of exercise rights under any of the options or warrants they may hold or in the future be granted, or if they otherwise acquire additional shares of our common stock. The interests of such persons may differ from the interests of our other stockholders. As a result, in addition to their board seats and offices, such persons will have significant influence and control over all corporate actions requiring stockholder approval, irrespective of how our company’s other stockholders may vote, including the following actions:
● | to elect or defeat the election of our directors; | |
● | to amend or prevent amendment of our certificate of incorporation or by-laws; | |
● | to effect or prevent a merger, sale of assets or other corporate transaction; and | |
● | to control the outcome of any other matter submitted to our stockholders for a vote. |
This concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for our common stock, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
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We will need substantial additional funding to continue our operations, which could result in dilution to our stockholders; we may be unable to raise capital when needed, if at all, which could cause us to have insufficient funds to pursue our operations, or to delay, reduce or eliminate our development of new programs or commercialization efforts.
We expect to incur additional costs associated with operating as a public company and to require substantial additional funding to continue to pursue our business and continue with our expansion plans. We may also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may increase our capital needs and/or cause us to spend our cash resources faster than we expect. Accordingly, we expect that we will need to obtain substantial additional funding in order to continue our operations. To date, we have financed our operations entirely through equity investments by founders and other investors and the incurrence of debt, and we expect to continue to do so in the foreseeable future. Additional funding from those or other sources may not be available when or in the amounts needed, on acceptable terms, or at all. If we raise capital through the sale of equity, or securities convertible into equity, it will result in dilution to our existing stockholders, which could be significant depending on the price at which we may be able to sell our securities. If we raise additional capital through the incurrence of additional indebtedness, we will likely become subject to further covenants restricting our business activities, and holders of debt instruments may have rights and privileges senior to those of our equity investors. In addition, servicing the interest and principal repayment obligations under debt facilities could divert funds that would otherwise be available to support development of new programs and marketing to current and potential new clients. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate development of new programs or future marketing efforts. Any of these events could significantly harm our business, financial condition and prospects.
Our financial statements may not be comparable to those of other companies.
Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of The JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result, our financial statements may not be comparable to companies that comply with public company effective dates, and our stockholders and potential investors may have difficulty in analyzing our operating results if comparing us to such companies.
We do not dependhave an independent board of directors which could create a conflict of interests and pose a risk from a corporate governance perspective.
Our Board of Directors consists mostly of current executive officers and consultants, which means that we do not have any outside or independent directors. The lack of independent directors:
● | May prevent the Board from being independent from management in its judgments and decisions and its ability to pursue the Board responsibilities without undue influence. | |
● | May present us from providing a check on management, which can limit management taking unnecessary risks. | |
● | Create potential for conflicts between management and the diligent independent decision-making process of the Board. | |
● | Present the risk that our executive officers on the Board may have influence over their personal compensation and benefits levels that may not be commensurate with our financial performance. | |
● | Deprive us of the benefits of various viewpoints and experience when confronting challenges that we face. |
Because officers serve on our Board of Directors, it will be difficult for the Board to fulfill its traditional role as overseeing management.
Because we do not have a nominating, audit or compensation committee, shareholders will have to rely on the entire board of directors, no members of which are independent, to perform these functions.
We do not have a nominating, audit or compensation committee or any one orsuch committee comprised of independent directors. The board of directors performs these functions. No members of the board of directors are independent directors. Thus, there is a few major customers.potential conflict in that board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.
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Our election not to opt out of the JOBS Act extended accounting transition period may not make our financial statements easily comparable to other companies.
Pursuant to the USTPOJOBS Act of 2012, as an emerging growth company we can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the trademark “Pipeline Posse”PCAOB or the SEC. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the application date for private companies. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. As of present, there are no new or revised accounting standards that have been issued by the PCAOB or the SEC applicable to us for which we have adopted the application date for private companies.
The JOBS Act will also allow us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information provided in several categories. Eachreports filed with the SEC. The recently enacted JOBS Act is intended to reduce the regulatory burden on emerging growth companies. The Registrant meets the definition of an emerging growth company and so long as it qualifies as an “emerging growth company,” it will, among other things:
● | be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting; | |
● | be exempt from the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and certain disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer; | |
● | be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934 and instead provide a reduced level of disclosure concerning executive compensation; and | |
● | be exempt from any rules that may be adopted by the Public Registrant Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements. |
We intend to take advantage of some or all the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”. We have elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Among other things, this means that the Registrant’s independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our applications is activeinternal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, we may elect not to provide certain information, including certain financial information and currently either approved or under reviewcertain information regarding compensation of executive officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for approval byinvestors and securities analysts to evaluate the USPTO examiners We will continue to assess the need for any copyright, trademark or patent applications on an ongoing basis.
We may have difficulty obtaining officer and Russell Crowe. Anydirector coverage or obtaining such coverage on favorable terms or financially be unable to obtain any such coverage, which may make it difficult for our attracting and retaining qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
We also expect that being a public company and these new moviesrules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or TV programsincur substantially higher costs to add?obtain coverage or financially be unable to obtain such coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
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Security breaches and other disruptions could compromise the information that we maintain and expose us to liability, which would cause our business and reputation to suffer.
In the ordinary course of our business, we may collect and store sensitive data, including intellectual property, our proprietary business information and that of our customers and business partners, and personally identifiable information of our customers, in our data centers and on its networks. The secure processing, maintenance and transmission of this information is critical to our business strategy, information technology and infrastructure and we may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our network, services and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, and disruption to our operations and the services it provides to customers. This often times results in a loss of confidence in our products and services, which could adversely affect our ability to earn revenues and competitive position and could have a material adverse effect on our business, results of operations, and financial condition.
The products and services that we develop will result in increased costs.
We expect that our development costs to increase in future periods as we expand into new areas, and such increased costs could negatively affect our future operating results. We expect to continue to focusexpend substantial financial and other resources on growing this areaour current business operations and the creation of our business over the next year with the addition of in-house salespeople. Also, the addition of new silk screening equipment has given us the capability to acceptorganized virtual -events and produce large orders of promotional t-shirts and related items for corporate programs through outside salesdigital marketing and advertising organizations. Our salespeople are now attemptinginitiatives. Furthermore, we intend to solicit business to our existing client base via telephoneinvest in marketing, licensing and Internetproduct development programs, as well as associated sales and marketing programs, and general administration. These investments may not result in increased revenue or growth in the business. Our failure to materially increase our revenues could have a material adverse effect on our business, results of operations, and financial condition.
Our inability to effectively control costs and still maintain our business relationships, could have a material adverse effect on our business, results of operations, and financial condition.
It is critical that we appropriately align our cost structure with prevailing market conditions to minimize the effect of economic downturns our its operations and, in particular, to build and maintain our user relationships. Our inability to align our cost structure in response to economic downturns on a timely basis could have a material adverse effect on our business, results of operations, and financial condition. Conversely, adjusting the cost structure to fit economic downturn conditions may have negative effects during an economic upturn or periods of increasing demand for services/products. If we too aggressively reduce our costs, we may not have sufficient resources to capture opportunities for expansion and growth and meet customer demand. Our inability to effectively manage resources and capacity to capitalize on periods of economic upturn could have a material adverse effect on our business, results of operations, and financial condition.
If we are unable to accurately predict and respond to market developments or demands, its business, results of operations and financial condition will be adversely affected.
The cannabis industry is characterized by rapidly evolving technology, government regulations and methodologies, which makes it difficult to predict demand and market acceptance for our services/products. In order to succeed, we need to adapt the products we offer in order to keep up with technological developments and changes in consumer needs. We cannot guarantee that we will succeed in enhancing our services/products or developing or acquiring new services/products or features that adequately address changing technologies, user requirements and market preferences. We also cannot assure you that the products and services we offer will be accepted by end users. If the products and services that we offer are not accepted by customers, they will no longer purchase them, which could have a material adverse effect on our business, results of operations, and financial condition. Changes in technologies, industry standards, the regulatory environment and customer requirements, and new product introductions by existing or future competitors, could render our existing services/products obsolete and unmarketable, or require us to enhance current products/services or develop new products and services. This may require us to expend significant amounts of money, time, and other resources to meet these demands, which could strain its personnel and financial resources. Furthermore, many modernization projects deal with customer mission critical applications, and therefore encapsulate risk for the customer.
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We may be unable to identify, purchase or integrate desirable acquisition targets, future acquisitions may be unsuccessful, and we may not realize the anticipated cost savings, revenue enhancements or other synergies from such acquisitions.
We plan to investigate and acquire strategic businesses with the potential new customers through the same means as well as through print advertising via mailingto be accretive to earnings, increase our market penetration, brand strength and placement in trade publications. We are committed to making this new division profitableits market position or enhancement of our existing product and more qualified labor has been retained to operate the new equipment as needed. Second and third manufacturing shiftsservice offerings. There can be added as growth requires. We have assigned two in-house clerical persons to service new inquiries and added accounts, as well as order finished goods for embellishment and shipping. Current production capacity is adequate to handle the anticipated increased volume. No other major capital expenditures are anticipated at this time.
If we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud; as a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our brand and operating results will likely be harmed. We may in the future discover areas of our internal controls that need improvement. We cannot be certain that any measures we implement will ensure that we achieve and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information and materially harm our business, which would have created a numbernegative effect on our operations.
We may be unable to effectively manage our growth or improve our operational, financial, and management information systems, which could have a material adverse effect on our business, results of California Driven brandsoperations, and financial condition.
In the near term and contingent upon raising adequate funds from this Offering, we intend to expand our operations significantly to foster growth. Growth may place a significant strain on our business and administrative operations, finances, management and other resources, as follows:
● | The need for continued development of financial and information management systems; | |
● | The need to manage strategic relationships and agreements with manufacturers, customers and partners; and | |
● | Difficulties in hiring and retaining skilled management, technical, and other personnel necessary to support and manage the business. |
Should we fail to successfully manage growth could, our results of products.
If we fail to protect or develop our intellectual property, business, operations and financial condition could be adversely affected.
Any infringement or misappropriation of our intellectual property could damage its value and limit its ability to compete. We may have to engage in litigation to protect the California Driven umbrella, several lines are being developed with specific target marketsrights to our intellectual property, which could result in mind. Currently, several California Driven products are being developed by us but they do not represent anysignificant litigation costs and require a significant amount of management time and attention. In addition, our current overall revenue.ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States, which could make it easier for competitors to capture market position in such countries by utilizing technologies that are similar to those that we develop.
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We may also find it necessary to bring infringement or other actions against third parties to seek to protect its intellectual property rights. Litigation of this nature, even if successful, is often expensive and time-consuming to prosecute and there can be no assurance that we will have the financial or other resources to enforce its rights or prevent other parties from developing similar technology or designing around our intellectual property.
Our trade secrets may be difficult to protect.
Our success depends upon the skills, knowledge, and experience of our technical personnel, consultants and advisors. Because we operate in several highly competitive industries, we rely in part on trade secrets to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We enter into confidentiality or non-disclosure agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers, and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third party’s confidential information developed by the receiving party or made known to the receiving party by us during the course of the receiving party’s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property.
These confidentiality, inventions and assignment agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered by competitors, in which case will be unable to prevent the use of such trade secrets by our competitors. The California Driven brand linesenforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive and time consuming and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could have a material adverse effect on our business, results of operations, and financial condition.
The consideration being paid to our management is not based on arms-length negotiation.
The compensation and other consideration we have paid or will be paid to our management has not been determined based on arm’s length negotiations. While management believes that the consideration is fair for the work being performed, we cannot assure that the consideration to management reflects the true market value of its services.
We are being developedsubject to data privacy and security risks
Our business activities are subject to laws and regulations governing the collection, use, sharing, protection and retention of personal data, which continue to evolve and have implications for how such data is managed. In addition, the Federal Trade Commission (the “FTC”) continues to expand its application of general consumer protection laws to commercial data practices, including to the use of personal and profiling data from online users to deliver targeted Internet advertisements. Most states have also enacted legislation regulating data privacy and security, including laws requiring businesses to provide notice to state agencies and to individuals whose personally identifiable information has been disclosed as an expansion into our own linea result of products to marketa data breach.
Similar laws and sell.
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We are an Emerging Growth Company and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Common Stock less attractive to investors.
For as long as we continue to be an Emerging Growth Company, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Stock less attractive because it will rely on these exemptions. If some investors find our Common Stock less attractive as a professional athlete inresult, there may be a less active trading market for its Common Stock and its stock price may be more volatile.
We will remain an Emerging Growth Company until the developmentearliest of Surf and Sportswear lines. In addition to Mr. Dias, several additional professional Hawaiian surfers are currently under agreement to represent the project and 3 support people have been hired, both in Hawaii and California. Clothing design is being aggressively developed by both in-house personnel and professional independent contractors experienced in product development for the Action Sports Industry.
COVID-19 RELATED RISKS
The outbreak of the Company. This statementcoronavirus may negatively impact our business, results of operations and financial condition.
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the express purposeUnited States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The significant outbreak of availingCOVID-19 has resulted in a widespread health crisis that could adversely affect the Companyeconomies and financial markets worldwide, and could adversely affect our business, results of operations and financial condition.
The outbreak of the protectionsCOVID-19 may adversely affect our customers or subscribers and have an adverse effect on our results of operations.
Further, the risks described above could also adversely affect our potential licensee’s financial condition, resulting in reduced spending by our licensee to pay us our license fees. Risks related to an epidemic, pandemic, or other health crisis, such safe harbor with respect to all forward looking statements contained in this Form 10-Q. We have used forward looking statements to discuss future plans and strategiesas COVID-19, could negatively impact the results of the Company. Management's ability to predict results or the effectoperations of future plans is inherently uncertain. Factors that could affect results include, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions, acceptance, technological change, changes in industry practices and one-time events. These factors should be considered when evaluating the forward looking statements and undue reliance should not be placed on such statements. Should any one or more of these risksour l licensees or uncertainties materialize,potential licensee operations. The ultimate extent of the impact of any epidemic, pandemic or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein.
Certain historical data regarding our consolidatedbusiness, results of operations, financial positioncondition and liquidity does not reflect the impact of the COVID-19 pandemic and related containment measures and therefore does not purport to be representative of our future performance
The information included in this Annual report on Form 10-K and our other reports filed with the SEC includes information regarding our business, results of operations, financial condition and liquidity as of dates and for periods before and during the impact of the COVID-19 pandemic and related containment measures (including quarantines and governmental orders requiring the closure of certain businesses, limiting travel, requiring that individuals stay at home or shelter in place and closing borders). Therefore, certain historical information therefore does not reflect the adverse impacts of the COVID-19 pandemic and the related containment measures. Accordingly, investors are cautioned not to unduly rely on such historical information regarding our business, results of operations, financial condition or liquidity, as that data does not reflect the adverse impact of the COVID-19 pandemic and therefore does not purport to be representative of the future results of operations, financial condition, liquidity or other financial or operating results of us, or our business.
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During 2021 and 2020, we experienced material decreases in our revenues due to Covid-19
During 2021 and 2020, we experienced material decreases in our revenues and results of operations due to Covid-19 when comparing our 2019 results to our 2020 and 2021 financial results. Should this downward Covid-19 related trend continue, our revenues and results of operations will continue to be materially and negatively impacted.
THE OUTBREAK OF COVID-19 HAS RESULTED IN A WIDESPREAD HEALTH CRISIS THAT COULD ADVERSELY AFFECT THE ECONOMIES AND FINANCIAL MARKETS WORLDWIDE AND COULD EXPONENTIALLY INCREASE THE RISK FACTORS DESCRIBED ABOVE AND BELOW.
RISKS RELATED TO OUR SECURITIES
An investment in our shares is highly speculative.
The shares of our common stock are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the risk factors contained herein relating to our business and prospects. If any of the risks presented herein actually occur, our business, financial condition or operating results could be materially adversely affected. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.
The market price of our Common Stock may fluctuate significantly in the future.
We expect that the market price of our Common Stock may fluctuate in response to one or more of the following factors, many of which are beyond our control:
● | competitive pricing pressures; | |
● | our ability to market our services on a cost-effective and timely basis; | |
● | changing conditions in the market; | |
● | changes in market valuations of similar companies; | |
● | stock market price and volume fluctuations generally; | |
● | regulatory developments; | |
● | fluctuations in our quarterly or annual operating results; | |
● | additions or departures of key personnel; and | |
● | future sales of our Common Stock or other securities. |
The price at which you purchase shares of our Common Stock may not be indicative of the price that will prevail in the trading market. Shareholders may experience wide fluctuations in the market price of our securities. These fluctuations may have a negative effect on the market price of our securities and may prevent a shareholder from obtaining a market price equal to the purchase price such shareholder paid when the shareholder attempts to sell our securities in the open market. In these situations, the shareholder may be required either to sell our securities at a market price, which is lower than the purchase price the shareholder paid, or to hold our securities for a longer period than planned. An inactive or low trading market may also impair our ability to raise capital by selling shares of capital stock. You may be unable to sell your shares of Common Stock at or above your purchase price, which may result in substantial losses to you and which may include the complete loss of your investment. Any of the risks described above could adversely affect our sales and profitability and the price of our Common Stock.
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We have authorized 300,000,000 Preferred Shares and 400,000,000 Class B Common Shares that may result in our officers having the ability to influence stockholder decisions.
The board of directors has the power to establish the dividend rates, liquidation preferences, and voting rights of any series of preferred stock, and these rights may be superior to the rights of holders of the Shares. The board of directors may also establish redemption and conversion terms and privileges with respect to any shares of preferred stock; as such, if we establish such terms and privileges to our preferred shares and we sell or issue preferred shares in future transactions to new investors such investors in subsequent transactions could gain rights, preferences and privileges senior to those of holders of our common stock. Any such preferences may operate to the detriment of the rights of the holders of the Shares, and further, could be used by the board of directors as a device to prevent a change in control of the Registrant, include additional voting power to our officers giving them control over a majority of our outstanding voting power, enabling them to control future stock-based acquisition transactions, to fund employee equity incentive programs, and give them the ability to elect certain directors and to determine the outcome of all matters submitted to a vote of our stockholders. This concentrated control eliminates other stockholders’ ability to influence corporate matters
We expect to seek additional financing in order to provide working capital to our business. Our board of directors has the power to issue any or all of such authorized but unissued shares at any price they consider sufficient, without stockholder approval. The issuance of additional shares of common stock in the future will reduce the proportionate ownership and voting power of current stockholders.
Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.
The trading of our securities will be in the over-the-counter market, which is commonly referred to as the OTC Markets as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
Rule 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions that are not available to us. It is likely that our shares will be penny stocks for the periods presentedimmediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.
For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:
● | the basis on which the broker or dealer made the suitability determination, and |
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● | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Disclosure also must be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, probably, will be subject to such penny stock rules for the foreseeable future and our shareholders will, likely, find it difficult to sell their securities.
If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our common stock.
Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The forward-looking statements contained herein report may prove incorrect.
This filing contains certain forward-looking statements, including among others: (i) anticipated trends in our financial condition and results of operations; (ii) our business strategy for expanding our business through regional centers; and (iii) our ability to distinguish ourselves from our current and future competitors. These forward-looking statements are based largely on our current expectations and are subject risks and uncertainties. Actual results could differ materially from these forward-looking statements. In addition to the other risks described elsewhere in this “Risk Factors” discussion, important factors to consider in evaluating such forward-looking statements include: (i) changes to external competitive market factors or in our internal budgeting process which might impact trends in our results of operations; (ii) anticipated working capital or other cash requirements; (iii) changes in our business strategy or an inability to execute our strategy due to unanticipated changes in the environmental cleanup industry; and (iv) various competitive factors that may prevent us from competing successfully in the marketplace. Considering these risks and uncertainties, many of which are described in greater detail elsewhere in this “Risk Factors” discussion, there can be no assurance that the events predicted in forward-looking statements contained in this Prospectus will, in fact, transpire.
Cautionary Note
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.
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ITEM 2. PROPERTIES
Our executive and administrative office is located at 3465 Gaylord Court, Suite A509, Englewood, Colorado 80113. We had total rent expense for the quarter ended March 31, 2021 and 2020 of $8,590 and $5,699, respectively, which is recorded as part of General and Administrative expenses in the Statement of Operations.
ITEM 3. LEGAL PROCEEDINGS
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. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. We are not a party to any legal proceedings.
On April 9, 2021, we (OTC: WDLF) filed a $5,000,000 complaint in The United States District Court for the Southern District of Florida against a convertible debt funder, including allegations of operating as an unregistered dealer and securities fraud.
On April 19, 2021, we filed a $40,000,000 complaint in The United States District Court for the Southern District of California against a convertible debt funder,. including allegations of operating as an unregistered dealer and securities fraud.
We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or any of our subsidiaries or has a material interest adverse to our company or any of our subsidiaries.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. DuringExcept for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.
Although we believe that the expectations reflected in any of our forward- looking statements are reasonable, actual results could differ materially from those projected or assumed in any or our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
Overview
We are a Nevada corporation formed on August 30, 1985. Our headquarters are in Englewood, Colorado. We have been engaged in our current business model since June of 2016, as a result of our having been discharged from a receivership and acquiring Life Marketing, Inc., which was in a different industry as our previous business.
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We have experienced recurring losses and negative cash flows from operations since inception, including in our current business model. We anticipate that our expenses will increase as we ramp up our expansion, which likely will lead to additional losses, until such time that we approach profitability, or which there are no assurances. We have relied on equity and debt financing to fund operations to-date. There can be no guarantee that we will ever become profitable, or that adequate additional financing will be realized in the future or otherwise may be available to us on acceptable terms, or at all. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our expansion efforts. We will need to generate significant revenues to achieve profitability, of which there are no assurances.
Trends and Uncertainties
Our business is subject to the trends and uncertainties associated with expansion of niche industry social networks and ecommerce solutions are increasing in popularity and availability. At some point, industry saturation of technology solutions that we provide to, and support for TBI participant tech startup companies will make it more difficult for our business model to expand. This will force our company to innovate new technology solutions, which will undoubtedly cost more money to fund.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our liabilities and commitments in the normal course of business for the foreseeable future. The Company had an accumulated deficit of $33,264,678 at March 31, 2021, had a net loss of $1,863,153 and used $41,748 in operating activities for the three months ended March 31, 2021. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our management intends to finance operating costs over the next twelve months with existing cash on hand. While we expectbelieve that we will be successful generating revenue to takefund our operations, meet regulatory requirements and achieve commercial goals, there are no assurances that we will succeed in our future operations.
We will attempt to overcome the following stepsgoing concern opinion by increasing our revenues, as follows:
● | By increasing our TBI licensing to additional tech company startups; |
The foregoing goals will increase expenses and lead to possible net losses. There is no assurance that we will ever be profitable. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. There is no assurance we will be successful in connection with the further developmentany of our business and the implementation of our plan of operations.
Off-Balance Sheet Arrangements
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKQuantitative and Qualitative Disclosures About Market Risk.
Not applicable
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ITEM 4T. CONTROLS AND PROCEDURES
Disclosure Controls and Chief Financial Officer (“CFO”), has evaluated the effectiveness of ourProcedures
We maintain disclosure controls and procedures as defined in Securities and Exchange Commission (“SEC”) Rule 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based upon that evaluation, management has concluded that our disclosure controls and procedures are effectivedesigned to ensure that information we are required to disclosebe disclosed in our reports that we file or submitfiled under the Securities Exchange Act is communicated to management, including the CEO and CFO,of 1934, as appropriate to allow timely decisions regarding required disclosure andamended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were nonot effective in providing reasonable assurance in the reliability of our report as of the end of the period covered by this report. This is because we have not sufficiently developed our segregation of duties nor have we established an audit committee.
Changes in Internal Control over Financial Reporting
We had material changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controlscontrol over financial reporting that occurred during the Thirdour most recently completed fiscal quarter, 2008 that has materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
PART II -– OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material pending legal proceedings to which we or our subsidiary is a party or of which any of our properties, or the properties of our subsidiary, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
On or about February 14, 2008 Rick and Judy Songer, RL Songer & Associates LLC and the CompanyApril 9, 2021, we (OTC: WDLF) filed suit against Conoco Phillips, Inc.a $5,000,000 complaint in the SuperiorUnited States District Court for the Southern District of Florida against a convertible debt funder, the Statecomplaint of which may be accessed at:
https://www.sec.gov/Archives/edgar/data/1281984/000149315221008449/ex99-1.htm
On April 19, 2021, we filed a $40,000,000 complaint in the United States District Court for the Southern District of California foragainst a convertible debt funder, the Countycomplaint of Los Angeles for damages for negligence, private nuisance, public nuisance, nuisance per se, trespass, declaratory relief, equitable indemnity and preliminary and permanent injunction. Discoverywhich may be accessed at:
https:www.socialnetwork.ai/LGH-filing.pdf
We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is progressing and a trial date of September 14, 2009party adverse to us or our subsidiary or has been set. The Complaint alleges that the defendants operated and continueda material interest adverse to operate a “TANK FARM” which leaked gasoline and related products, creating a large underground contaminate plume. This plume has spread in a generally South/Southwesterly direction, traveling onto Plaintiffs’ properties along the Southern border of the ConocoPhillips Facility.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
For the 12-month period ending December 31, 2019, a lender converted their debt into 284,373 common shares at an average of $0.03517 for a value of $10,000.
For the 12-month period ending December 31, 2020, several lenders converted their debt into 6,102,436,839 common shares at an average of $0.00009 for a value of $548,646.
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For the 3-month period ending March 31, 2021, the remaining lenders converted their debt into 709,449,528 common shares at an average of $0.00038 for a value of $267,173.
The stock issuances were exempt under Section 4(2) of the Securities Act of 1933, as amended.
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Mine Safety Disclosures.
None
ITEM 5. Other information
None.
ITEM 6. Exhibits.
EXHIBIT INDEX
Exhibit Number | Description | |
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 31, 2022
SOCIAL LIFE NETWORK, INC. | ||
By: | /s/ Ken Tapp | |
Ken Tapp | ||
Chief Executive Officer | ||
(Principal Executive Officer & Chief Executive Officer) |
By: | /s/ Ken Tapp | |
Ken Tapp | ||
Chief Financial Officer | ||
(Chief Financial Officer/Chief Accounting Officer) |
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