UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedended: March 31, 20172018
or
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to __________
Commission File Number:033-25126D
Commission File Number 033-25126-D
MedeFile International,Hash Labs Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 85-0368333 | |
| (State or other jurisdiction of incorporation) | ( | |
| Identification No.) |
301 Yamato Rd,Road, Suite 1200
1240, Boca Raton, FLFlorida 33431
(Address of principal executive offices) (Zip Code)
561-295-1990
(Registrant’s telephone number, including area code(561) 912-3393code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sectionsection 13 or 15(d) of the Securities Exchange Act of 1934 during the precedingpast 12 months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☒ No ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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).files. Yes ☒ Yes No ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☒ | ||
| Emerging growth company | ☐ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☐ No ☒ No
NumberAs of May 15, 2018, there were 18,451,277 shares outstanding of the registrant’s common stock, par value $0.0001: 28,756,010 as of May 15, 2017.stock.
Table of Content
| PART I. | FINANCIAL INFORMATION | 1 | |
| 1 | |||
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | ||
| ITEM 4. | Controls and Procedures | ||
| PART | OTHER INFORMATION | 15 | |
| ITEM 1. | Legal Proceedings | ||
| ITEM 1A. | Risk Factors | ||
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||
| ITEM 3. | Defaults Upon Senior Securities | ||
| ITEM 4. | Mine Safety Disclosures | ||
| ITEM 5. | Other Information | ||
| ITEM 6. | Exhibits | ||
| SIGNATURES | 16 | ||
PART I
ITEM 1. FINANCIAL STATEMENTS
Item 1. Financial Statements.Hash Labs Inc.
Consolidated Balance Sheets
(unaudited)
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 26,262 | $ | 13,118 | ||||
| Merchant services reserve | 2,938 | 2,938 | ||||||
| Total current assets | 29,200 | 16,056 | ||||||
| Domain | 17,845 | - | ||||||
| Total assets | $ | 47,045 | $ | 16,056 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 110,239 | $ | 78,865 | ||||
| Note payable - related party | 437,850 | 334,817 | ||||||
| Convertible debenture - related party | 17,707 | 17,287 | ||||||
| Derivative liability convertible note | 16,329 | 12,567 | ||||||
| Total current liabilities | 582,125 | 443,536 | ||||||
| Stockholders' deficit | ||||||||
| Preferred stock, $.0001 par value: 10,000,000 authorized, no shares issued and outstanding | - | - | ||||||
| Common stock, $.0001 par value: 700,000,000 authorized; 28,756,010 and 28,756,010 shares issued and outstanding on March 31, 2017 and December 31, 2016, respectively | 2,875 | 2,875 | ||||||
| Additional paid-in capital | 28,504,754 | 28,504,754 | ||||||
| Accumulated deficit | (29,042,709 | ) | (28,935,109 | ) | ||||
| Total stockholders' deficit | (535,080 | ) | (427,480 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 47,045 | $ | 16,056 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1
| For the three | For the three | |||||||
| months ended | months ended | |||||||
| March 31, | March 31, | |||||||
| 2017 | 2016 | |||||||
| Revenue | $ | 9,709 | $ | 4,995 | ||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | 106,594 | 109,323 | ||||||
| Total operating expenses | 106,594 | 109,323 | ||||||
| Loss from operations | (96,885 | ) | (104,328 | ) | ||||
| Other income (expenses) | ||||||||
| Interest expense | (6,953 | ) | (893 | ) | ||||
| Change in fair value of derivative liabilities | (3,762 | ) | 5,454 | |||||
| Total other income (expense) | (10,715 | ) | 4,561 | |||||
| Net loss | $ | (107,600 | ) | $ | (99,767 | ) | ||
| Net loss per share: basic and dilute | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average share outstanding: basic and diluted | 28,756,010 | 26,793,559 | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
| For the three | For the three | |||||||
| months ended | months ended | |||||||
| March 31, | March 31, | |||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (107,600 | ) | $ | (99,767 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Change in derivative liability - convertible debenture | 3,762 | (5,454 | ) | |||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | - | 4,965 | ||||||
| Accounts payable and accrued liabilities | 31,374 | 5,195 | ||||||
| Accrued interest - convertible debenture | 420 | 384 | ||||||
| Accrued interest - note payable | 6,533 | 508 | ||||||
| Deferred revenue | - | 121 | ||||||
| Net cash used in operating activities | (65,511 | ) | (94,048 | ) | ||||
| Cash flows from investing activities | ||||||||
| Cash paid for domain names | (17,845 | ) | - | |||||
| Net cash used in investing activities | (17,845 | ) | - | |||||
| Cash flow from financing activities | ||||||||
| Proceeds from note payable - related party | 96,500 | 100,000 | ||||||
| Net cash provided by financing activities | 96,500 | 100,000 | ||||||
| Net decrease in cash and cash equivalents | 13,144 | 5,952 | ||||||
| Cash and cash equivalents at beginning of period | 13,118 | 38,371 | ||||||
| Cash and cash equivalents at end of period | $ | 26,262 | $ | 44,323 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| March 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 323 | $ | 730 | ||||
| Merchant services reserve | 2,938 | 2,938 | ||||||
| Total current assets | 3,261 | 3,668 | ||||||
| Dino Might program | 1,979 | 1,979 | ||||||
| Total assets | $ | 5,240 | $ | 5,647 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 263,590 | $ | 235,589 | ||||
| Bank overdraft | 432 | 1,577 | ||||||
| Note payable - related party | 719,075 | 653,405 | ||||||
| Convertible debenture - related party | 19,518 | 19,055 | ||||||
| Derivative liability convertible note | 26,933 | 19,406 | ||||||
| Total current liabilities | 1,029,548 | 929,032 | ||||||
| Stockholders' deficit | ||||||||
| Preferred stock, $.0001 par value: 10,000,000 authorized, no shares issued and outstanding on March 31, 2018 and December 31, 2017, respectively | - | - | ||||||
| Preferred stock Series C, $0.0001 par value: 7,000 authorized, 7,000 shares issued and outstanding on March 31, 2018 and December 31, 2017, respectively | 1 | 1 | ||||||
| Common stock, $.0001 par value: 700,000,000 authorized; 151,277 shares issued and outstanding on March 31, 2018 and December 31, 2017, respectively | 15 | 15 | ||||||
| Additional paid-in capital | 29,328,064 | 29,328,064 | ||||||
| Accumulated deficit | (30,352,388 | ) | (30,251,465 | ) | ||||
| Total stockholders' deficit | (1,024,308 | ) | (923,385 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 5,240 | $ | 5,647 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
MedeFile International,Hash Labs Inc.
Notes to Unaudited Consolidated Financial Statements of Operations
(unaudited)
| For the Three months ended | ||||||||
| March 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenue | $ | 6,899 | $ | 9,709 | ||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | 90,187 | 106,594 | ||||||
| Total operating expenses | 90,187 | 106,594 | ||||||
| Loss from operations | (83,288 | ) | (96,885 | ) | ||||
| Other expenses | ||||||||
| Interest expense | (10,108 | ) | (6,953 | ) | ||||
| Change in fair value of derivative liabilities | (7,527 | ) | (3,762 | ) | ||||
| Total other expenses | (17,635 | ) | (10,715 | ) | ||||
| Net loss | $ | (100,923 | ) | $ | (107,600 | ) | ||
| Net loss per common share: basic and diluted | $ | (0.67 | ) | $ | (0.75 | ) | ||
| Weighted average common shares outstanding: basic and diluted | 151,277 | 143,780 | ||||||
1.The accompanying notes are an integral part of these unaudited consolidated financial statements.
Hash Labs Inc.
Consolidated Statements of Cash Flows
(unaudited)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (100,923 | ) | $ | (107,600 | ) | ||
| Adjustments to reconcile net loss to netcash used in operating activities: | ||||||||
| Loss on change in fair value of derivative liability | 7,527 | 3,762 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts payable and accrued liabilities | 28,001 | 31,374 | ||||||
| Bank overdraft | (1,145 | ) | ||||||
| Accrued interest - convertible debenture | 463 | 420 | ||||||
| Accrued interest - notes payable | 9,645 | 6,533 | ||||||
| Net cash used in operating activities | (56,432 | ) | (65,511 | ) | ||||
| Cash flows from investing activities | ||||||||
| Cash paid for Domain names | - | (17,845 | ) | |||||
| Net cash used in investing activities | - | (17,845 | ) | |||||
| Cash flow from financing activities | ||||||||
| Proceeds from notes payable - related party | 56,025 | 96,500 | ||||||
| Net cash provided by financing activities | 56,025 | 96,500 | ||||||
| Net increase (decrease) in cash and cash equivalents | (407 | ) | 13,144 | |||||
| Cash and cash equivalents at beginning of period | 730 | 13,118 | ||||||
| Cash and cash equivalents at end of period | 323 | 26,262 | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
HASH LABS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
NOTE 1 – BASIS OF PRESENTATION AND& GOING CONCERN
Basis of Presentation
The accompanying unaudited consolidated financial statements of MedeFile InternationalHash Labs Inc., a Nevada corporation (the "Company"“Company”), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. These unaudited consolidated financial statements and related notes should be read in conjunction with the Company'sCompany’s Form 10-K for the fiscal year ended December 31, 2016.2017. In the opinion of management, these unaudited consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of March 31, 2017,2018, and the results of operations and cash flows for the three months ended March 31, 20172018 and 2016.2017. The results of operations for the three months ended March 31, 20172018 are not necessarily indicative of the results that may be expected for the entire fiscal year.
Nature of Business Operations
Our Company was originally formed on November 1, 2005 when Bio-Solutions International, Inc. (“Bio-Solutions”) entered into an Agreement and Plan of Merger with OmniMed Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of Bio-Solutions, OmniMed International, Inc. (“OmniMed”) and the shareholders of OmniMed. Pursuant to the agreement, Bio-Solutions acquired all of the outstanding equity stock from the OmniMed shareholders. As a result, the OmniMed shareholders assumed control of Bio-Solutions and changed the name of the Company to OmniMed International, Inc., effective November 21, 2006. On January 17, 2006, OmniMed changed its name to MedeFile International, Inc. The Company’s business following the closing of this agreement was the sale of an Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s medical records, and in connection therewith, providing a professional service specializing in HIPAA compliant retrieval, reproduction and release of information. Under this service, Company personnel go onsite to physicians’ offices weekly to reproduce the records requested by third parties.
In October 2017, the name of the Company was changed to Tech Town Holdings, Inc. to reflect a new business strategy centered on identifying and fostering new or early stage business opportunities being aggressively fueled by digital reinvention and innovation. To that end, our business-building platform was segmented into six focused categories, for which we planned to advance numerous technology development projects:
| ● | Digital News Aggregation |
| ● | Digital Entertainment and Gaming |
| ● | Digital Health and Wellness |
| ● | Cryptocurrencies and Blockchain Technologies |
| ● | CannaTech |
| ● | Mobile App Design and Development |
However, following closer scrutiny of the new business opportunities we were exploring in late 2017, coupled with our evaluation of market trends and growth dynamics in their respective categories, we determined that a more prudent strategy was to narrow our focus, working instead on capitalizing on global growth opportunities in a single industry category. At this time, we continue to evaluate prevailing opportunities for our Company and anticipate determining a focused course of action in mid-2018. In January 2018, the Company’s name was changed to Hash Labs Inc. We also continue to provide a professional service specializing in HIPAA compliant retrieval, reproduction and release of information.
HASH LABS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
Going Concern
The accompanying unaudited consolidated financial statements have been prepared contemplating a continuation of the Company as a going concern. However, the Company has reportedincurred a net loss of $107,600$100,923 for the three months ended March 31, 20172018 and has negative working capital of $552,925$1,026,287 as of March 31, 2017.2018.
The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern. The operating losses and working capital deficit raise substantial doubt about the Company'sCompany’s ability to continue as a going concern. The Company'sCompany’s ability to obtain additional financing depends on the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond the Company'sCompany’s control. The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
We will need to raise additional investmentscapital in order to continue operations. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Additional financing may not be available on terms acceptable to the Company, or at all.
However, the trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, we may incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail or cease our operations.
Financial Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 is a comprehensive revenue recognition standard that has superseded nearly all existing revenue recognition guidance under current U.S. GAAP and replaced it with a principle based approach for determining revenue recognition. ASU 2014-09 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017.
The Company’s primary source of revenue is from providing a professional service that specializes in HIPAA compliant retrieval, reproduction and release of information. Orders are fulfilled as requested, then invoiced. Once payment is received, revenue is recognized when records are delivered.
During the fourth quarter of 2017, the Company finalized its assessment related to the new standard and determined that the timing of revenue recognition related to the Company’s revenues will remain consistent between the new standard and the previous standard.
The Company adopted ASU 2014-09 effective January 1, 2018 using the modified retrospective method, and there was no cumulative adjustment to retained earnings.
Fair Value of Financial Instruments
Cash and Equivalents, Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities
The carrying amounts of these items approximated fair value.
HASH LABS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
The application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities as of March 31, 20172018 and December 31, 20162017 are described below:
| Fair Value Measurements | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| March 31, 2018: | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liabilities | $ | - | $ | - | $ | 26,933 | $ | 26,933 | ||||||||
| Total | $ | - | $ | - | $ | 26,933 | $ | 26,933 | ||||||||
| December 31, 2017: | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liabilities | $ | - | $ | - | $ | 19,406 | $ | 19,406 | ||||||||
| Total | $ | - | $ | - | $ | 19,406 | $ | 19,406 | ||||||||
| Fair Value Measurements | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| March 31, 2017: | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liabilities | $ | - | $ | - | $ | 16,329 | $ | 16,329 | ||||||||
| Total | $ | - | $ | - | $ | 16,329 | $ | 16,329 | ||||||||
| December 31, 2016: | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liabilities | $ | - | $ | - | $ | 12,567 | $ | 12,567 | ||||||||
| Total | $ | - | $ | - | $ | 12,567 | $ | 12,567 | ||||||||
Derivative liability as of March 31, 2017 is $16,329,2018 was $26,933, compared to $12,567$19,406 as of December 31, 2016.2017.
2. NOTENOTES PAYABLE – RELATED PARTY
During the year ended December 31, 2016, the Company entered into eight unsecured 7% Promissory Notes with a significant shareholder. During the quarteryear ended MarchDecember 31, 2017, the Company entered into an additional five unsecured 7% Promissory Notes totaling $53,000.$215,500. As of March 31, 2018, $367,000 of the notes were in default. During the first quarter 2018, the Company entered into five additional notes totaling $41,000 with an interest rate of 7%. The notes mature four to twelve month12 months from issuance and total $275,000.issuance.
The changes in thesebalance of notes payable to related party consistedas of March 31, 2018
| March 31, 2018 | December 31, 2017 | |||||||
| Notes payable – related party at beginning of period | $ | 470,603 | 231,569 | |||||
| Borrowings on notes payable – related party | 41,000 | 215,500 | ||||||
| Accumulated interest | 6,622 | 23,534 | ||||||
| Notes payable – related party | $ | 518,225 | 470,603 | |||||
HASH LABS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
On March 21, 2018, the following duringCompany, entered into an unsecured 7% Promissory Note with a significant shareholder in the amount of $15,000. The note has a term of one year. The note includes interest calculated for the three months endedending March 31, 2017:2018, from another note owned by the same shareholder.
| March 31, 2017 | March 31, 2018 | |||||||
| Notes payable – related party at beginning of period | $ | 231,569 | $ | 15,000 | ||||
| Borrowings on notes payable – related party | 53,000 | |||||||
| Repayment | - | |||||||
| Accumulated interest | 4,558 | 1,113 | ||||||
| Notes payable – related party | $ | 289,127 | $ | 16,113 | ||||
On July 15, 2016, the Company entered into an unsecured 7% Promissory Notes with a significant shareholder in the amount of $100,000. The note has a one year term.one-year term and was in default as of March 31, 2018.
The changes in these notes payable to related party consisted of the following during the three months ended March 31, 2017:2018:
| March 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||||
| Notes payable at beginning of period | $ | 103,248 | $ | 110,688 | $ | 103,248 | ||||||
| Borrowings on notes payable | - | - | - | |||||||||
| Repayment | - | - | - | |||||||||
| Accumulated interest | 1,802 | 1,910 | 7,440 | |||||||||
| Notes payable – related party | $ | 105,050 | $ | 112,598 | $ | 110,688 | ||||||
During the quarteryear ended MarchDecember 31, 2017, the Company entered into twofive unsecured 7% Promissory Notes with a significant shareholder totaling $43,500.$65,500. As of March 31, 2018, $65,500 are in default.
The changes in these notes payable to related party consisted of the following during the three months ended March 31, 2017:2018:
| March 31, 2017 | ||||
| Notes payable – related party at beginning of period | $ | - | ||
| Borrowings on notes payable – related party | 43,500 | |||
| Repayment | - | |||
| Accumulated interest | 173 | |||
| Notes payable – related party | $ | 43,673 | ||
5
| March 31, 2018 | December 31, 2017 | |||||||
| Notes payable at beginning of period | $ | 68,696 | $ | - | ||||
| Borrowings on notes payable | - | 65,500 | ||||||
| Repayment | - | - | ||||||
| Accumulated interest | 1,084 | 3,469 | ||||||
| Interest transferred to related party | (1,084 | ) | - | |||||
| Notes payable – related party | $ | 68,696 | $ | 68,696 | ||||
During the year ended December 31, 2017, the Company borrowed a total of $4,275 from the CEO of the Company, repaid $4,330 to the CEO, and the amount due to the CEO was $3,145 as of December 31, 2017.The CEO loaned an additional $25 during the three months ended March 31, 2018. The total amount due on March 31, 2018 is $3,170.The advance carries 0% interest rate, is unsecured, and is due on demand.
HASH LABS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
Other Related Party Transaction
Michael Delin, a director of the Company, provides accounting services to the Company through an entity he owns. During the three month ended March 31, 2018, the Company paid Mr. Delin $3,500 for such services.
3. CONVERTIBLE DEBEBTUREDEBENTURE – RELATED PARTY
The Company entered into two 10% Secured Convertible Debentures with a significant shareholder in the amount of $50,000 on November 4, 2013 and $60,000 on December 17, 2013. The debentures carry a one year term. Both debentures have aone-year term and are convertible into common stock at conversion feature at a share price ofequal to the lower of $2.00$400 or 80% of the previous day’s closing price. The note was in default at March 31, 2018.
The changes in these outstanding convertible notes payable to related party consisted of the following during the three months ended March 31, 2017:2018:
| March 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||||
| Convertible debenture – related party at beginning of period | $ | 17,287 | $ | 19,055 | $ | 17,287 | ||||||
| Conversion | - | - | - | |||||||||
| Repayment | - | - | - | |||||||||
| Accumulated interest | 420 | 463 | 1,768 | |||||||||
| Convertible debenture – related party at end of period | $ | 17,707 | $ | 19,518 | $ | 19,055 | ||||||
4. DERIVATIVE LIABILITIES
TheAs noted above, the Company entered into two 10% Secured Convertible Debentures with a significant shareholder, one in the amount of $50,000 on November 4, 2013 and the other in the amount of $60,000 on December 17, 2013. The debentures carry a one year term. Debenturesone-year term and are convertible into common stock at a conversion price ofequal to the lower of $1.00$400 or 80% of the previous day’s closing price.
The Company assesses the fair value of the convertible debenture using the Black Scholes pricing model and records a derivative liability for the value. The Company then assesses the fair value of the warrants quarterly based on the Black Scholes Model and increases or decreases the liability to the new value and records a corresponding gain or loss (see below for variables used in assessing the fair value).
Due to the variable conversion rates, the Company treats the convertible debenture as a derivative liability in accordance with the provisions of ASC 815 “Derivatives and Hedging” (ASC 815). ASC 815 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that potentially settle in an entity’s own common stock. The fair value of the conversion options was determined using the Black-Scholes Option Pricing Model and the following significant assumptions during the three months ended March 31, 2017:2018.
HASH LABS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
| March 31, 2018 | December 31, 2017 | |||||||
| Risk-free interest rate at grant date | 0.45 | % | 0.45 | % | ||||
| Expected stock price volatility | 249 | % | 228 | % | ||||
| Expected dividend payout | - | - | ||||||
| Expected option in life-years | 1 | 1 | ||||||
The change in fair value of the conversion option derivative liability consisted of the following during the three monthsyear ended MarchDecember 31, 2017:
| March 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||||
| Conversion option liability (beginning balance) | $ | 12,567 | $ | 19,406 | $ | 12,567 | ||||||
| Additional liability due to new convertible note | - | - | ||||||||||
| Loss (gain) on changes in fair market value of conversion option liability | 3,762 | |||||||||||
| Loss on changes in fair market value of conversion option liability | 7,527 | 6,839 | ||||||||||
| Net conversion option liability | $ | 16,329 | $ | 26,933 | $ | 19,406 | ||||||
Change in fair market value of conversion option liability resulted in a loss of $3,762$7,527 for the three months ended March 31, 20172018 and a gain of $5,454$6,839 for the three monthsyear ended MarchDecember 31, 2016.2017.
5. INTELLECTUAL PROPERTYEQUITY
In JanuaryOn September 29, 2017, the Company purchasedfiled a websiteCertificate of Designation of Series C Preferred Stock with the Secretary of State of Nevada. The Company authorized 7,000 shares of preferred stock as Series C Preferred Stock. The Company has issued 7,000 shares of Series C Preferred Stock. Each holder of outstanding shares of Series C Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series C Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. The Series C Preferred Stock is convertible into common stock at a conversion ratio determined by dividing the Series C Original Issue Price of $100 per share by the conversion price of $2.00 (such that each share of Series C Preferred Stock is convertible into 50 shares of common stock). The Series C Preferred Stock will vote on an as-converted basis with the common stock, and two domain namesin the event any dividends are paid on the common stock, the Series C Preferred Stock will be entitled to includedividends on an as-converted basis. If a Distribution Event (as defined in the intellectual property.Series C Certificate of Designation) occurs, the Company will pay to the holders of Series C Preferred Stock $30,000 for every $120,000 received from such Distribution Event, and the number of outstanding shares of Series C Preferred Stock will be reduced by an amount determined by dividing the amount of such payment by the Series C Original Issue Price. A Distribution Event is defined as the receipt by the Company of $120,000 in proceeds from a financing not involving any holder of Series C Preferred Stock, or any fiscal period in which the Company generated gross profits of $120,000 or more. In Marchthe event the Corporation shall at any time after the Series C Original Issue Date issue Additional Shares of Common Stock, without consideration or for a consideration per share less than the Series C Conversion Price in effect immediately prior to such issue, then the Series C Conversion Price shall be reduced, concurrently with such issue.
On September 29, 2017, the Company purchased two additional domain names. Website and domain names were purchased for totalissued 7,000 shares of $17,845Series C Preferred Shares in connection with an Asset Purchase Agreement. The value of the shares issued amount to $820,451. The valuation of the Preferred Shares was determined by an independent financial analyst.
Intellectual property is stated at cost. When retired or otherwise disposed,On October 25, 2017, the related carrying value and accumulated amortization are removed fromCompany filed a Certificate of Amendment to its Articles of Incorporation with the respective accountsSecretary of State of Nevada, pursuant to which a one-for-200 reverse split of its common stock was effected and the net difference less any amount realized from disposition, is reflected in earnings. Minor additionsCompany changed its name to Tech Town Holdings Inc, effective November 2, 2017. All share and renewals are expensedper share amounts herein retroactively reflect the split.
HASH LABS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
6. SUBSEQUENT EVENT
On April 3, 2018, the Company entered into an exchange agreement with The Vantage Group Ltd. (“Vantage”). Pursuant to the exchange agreement, Vantage exchanged outstanding promissory notes of the Company in the aggregate principal amount of $518,225 (including accrued interest) held by Vantage for a new convertible promissory note of the Company in the principal amount of $518,225. The convertible note bears interest at the rate of 7% per year incurred. The properties will be depreciated over their estimated useful lives being 3 years.and is convertible into shares of common stock of the Company at a conversion price of $0.027.
6On April 3, 2018, the Company entered into an exchange agreement with Lyle Hauser. Pursuant to the exchange agreement, Mr. Hauser exchanged outstanding promissory notes of the Company in the aggregate principal amount of $68,969 (including accrued interest) held by Mr. Hauser for a new convertible promissory note of the Company in the principal amount of $68,969. The convertible note bears interest at the rate of 7% per year and is convertible into shares of common stock of the Company at a conversion price of $0.0005. Lyle Hauser (directly and through Vantage, which he owns) is the Company’s largest stockholder.
On April 3, 2018, the Company issued an aggregate of 9,300,000 shares of common stock to Vantage upon the conversion of (i) $241,650 of Vantage’s convertible note and (ii) 7,000 shares of Series C Preferred Stock. In connection with the conversion, Vantage waived any dividends owed to Vantage as the holder of the Series C Preferred Stock.
On April 6, 2018, the Company issued an aggregate of 9,000,000 shares of common stock upon the conversion of a convertible note in the principal amount (including accrued interest) of $243,000.
On April 13, 2018, the Company entered into a $10,000, 7% Promissory Note with a significant shareholder. The note has a six month term.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report may contain "forward-looking statements." The terms "believe," "anticipate," "intend," "goal," "expect," and similar expressions may identify forward-looking statements. TheseSuch forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management and involve risks and uncertainties. Forward-looking statements include statements regarding our plans, strategies, objectives, expectations and intentions, which are subject to change at any time at our discretion. Forward-looking statements include our assessment, from time to time of our competitive position, the industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail in “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2017. Also, forward-looking statements represent the Company's current expectations orour management's beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including customer acceptance of new products, the impact of competition and price erosion, as well as other risks and uncertainties. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation that the strategy, objectives or other plans of the Company will be achieved. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speakassumptions only as of the date made.of this report. Our actual future results may be materially different from what we expect. Except as may be required under applicable securities laws,by law, we undertakeassume no dutyobligation to update this information.these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
OVERVIEWOverview
Organizational History
OnOur Company was originally formed on November 1, 2005 when Bio-Solutions International, Inc. ("Bio-Solutions"(“Bio-Solutions”) entered into an Agreement and Plan of Merger (the "Agreement") with OmniMed Acquisition Corp. (the "Acquirer), a Nevada corporation and a wholly ownedwholly-owned subsidiary of Bio-Solutions, OmniMed International, Inc., a Nevada corporation ("OmniMed" (“OmniMed”), and the shareholders of OmniMed (the "OmniMed Shareholders").OmniMed. Pursuant to the Agreement,agreement, Bio-Solutions acquired all of the outstanding equity stock of OmniMed from the OmniMed Shareholders. As consideration for the acquisition of OmniMed, Bio-Solutions agreed to issue 1,979 shares of Bio-Solutions' common stock to the OmniMed Shareholders.
shareholders. As a result, of the Agreement, the OmniMed Shareholdersshareholders assumed control of Bio-Solutions. Effective November 21, 2005, Bio-Solutions and changed itsthe name of the Company to OmniMed International, Inc. Effective, effective November 21, 2006. On January 17, 2006, OmniMed changed its name to MedeFile International, Inc. ("MedeFile" orThe Company’s business following the "Company").
Overviewclosing of Business
MedeFile International, Inc., through its MedeFile, Inc. subsidiary, has developed and markets a proprietary, patient-centric,this agreement was the sale of an Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s actual medical records. Our goal is to revolutionize the medical industry by bringing patient-centric digital technology to the business of medicine. We intend to accomplish our objective by providing individuals with a simple and secure way to access their lifetime of actual medical records, and in an efficientconnection therewith, providing a professional service specializing in HIPAA compliant retrieval, reproduction and cost-effective manner. Our products and services are designedrelease of information. Under this service, Company personnel go onsite to provide healthcare providers withphysicians’ offices weekly to reproduce the ability to reference their patient's actual past medical records thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures.requested by third parties.
Interoperable with most electronic medical record systems utilized by physician practices, clinics, hospitals and other care providers,In October 2017, the highly secure, feature-rich MedeFile iPHR solution has been designed to gather all of its members’ actual medical records on behalf of each member, and create a single, comprehensive Electronic Health Record (EHR). The member can access his/her records 24-hours a day, seven days a week – or authorize a third party user – on any web-enabled device (PC, cell phone, PDA, e-reader, et al), as well as the portable MedeFile flash drive/keychain or branded UBS-bracelet.
By subscribing to the MedeFile system, members can empower themselves to take control of their own health and well-being, as well as empower their healthcare providers to make sound and lifesaving decisions with the most accurate, up-to-date medical information available. In addition, with MedeFile, members enjoy the peace of mind that comes from knowing that their medical records are protected from fire, natural disaster, document misplacement or the closing of a medical or dental practice.
Since launching operations in 2006, MedeFile has endeavored to revolutionize the delivery and effective management of healthcare by bringing our novel patient-centric digital technology to the forefrontname of the healthcare industry. However, despite ongoing development and diligent marketing of our iPHR solution, an array of complex industry dynamics and opposing forces have done littleCompany was changed to aid our Company in achieving our core market penetration objectives.
However, technological advances, coupled with a shift toward patient-centered care and unprecedented consumer accessTech Town Holdings, Inc. to information, have createdreflect a new era of consumer engagement, empowerment and activation – and potentially new life and growth opportunities for pioneering companies, like MedeFile. As healthcare reimbursement continues to shift towards risk-based contracting, providers are seeking to understand the totality of patients’ experience, which requires aggregating data across numerous care silos – something not reasonably possible given today’s electronic medical record system constraints. We maintain the believe that patient-centric, patient-controlled PHR solutions, such as MedeFile, could be the answer.
While MedeFile will continue to take steps to capitalizebusiness strategy centered on changing attitudes towards PHR adoption, we believe it is also our responsibility to begin identifying and pursuing other attractive growthfostering new or early stage business opportunities capable of creatingbeing aggressively fueled by digital reinvention and sustaining meaningful, long term value for our Company’s shareholders.innovation. To that end, our management team has begunbusiness-building platform was segmented into six focused categories, for which we planned to advance numerous technology development projects:
| ● | Digital News Aggregation |
| ● | Digital Entertainment and Gaming |
| ● | Digital Health and Wellness |
| ● | CannaTech |
| ● | Mobile App Design and Development |
However, following closer scrutiny of the new business opportunities we were exploring both alternativein late 2017, coupled with our evaluation of market trends and complementary business plans and technology-related growth strategiesdynamics in their respective categories, we determined that may allow usa more prudent strategy was to best leveragenarrow our team’s collective experience, technological assets and diversefocus; working instead on capitalizing on global growth opportunities in a single industry expertisecategory. At this time, we continue to help drive greater revenue and earnings growthevaluate prevailing opportunities for our Company.Company and anticipate determining a focused course of action in mid-2018. In January 2018, the Company’s name was changed to Hash Labs Inc. We also continue to provide a professional service specializing in HIPAA compliant retrieval, reproduction and release of information.
RESULTS OF OPERATIONSResults of Operations for the Three Months Ended March 31, 2018 and 2017
FOR THE THREE MONTHS ENDED MARCH 31, 2017 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2016
Revenues
Revenues for the three months ended March 31, 20172018 totaled $9,709$6,899 compared to revenues of $4,995$9,709 during the three months ended March 31, 2016. Medical record reimbursement revenue2017. The decrease of $2,810 is a dollarrelated to fewer requests for dollar reimbursement for chargesservice. We generate revenues from members’ doctors for sending updated medicalprofessional service specializing in HIPAA compliant retrieval, reproduction and release of information. Under this service, Company personnel go onsite to physicians’ office weekly to reproduce the records to MedeFile. The off-setting expense is charged to selling general and administrative expense. Revenues received from memberships are recognized through the period of the membership, and, therefore, revenue recognized represents a fraction of the membership in the quarter being reported. requested by third parties.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended March 31, 20172018 totaled $106,594,$90,187, a decrease of $2,728$16,407 or approximately 2.5%15.4% compared to selling, general and administrative expenses of $109,323$106,594 for the three months ended March 31, 2016.2017. The decrease was due mainly to decreased payroll, legal expense and consulting fees.
Interest Expense
Interest expense on convertible debentures for the three months ended March 31, 2018 and 2017, was $463 and 2016, was $420 and $385 respectively. The Company entered into two secured convertible debentures during the third quarter of 2013. The notes have a 10% annual interest rate. Interest expense decreased due to lower note payable balance from partial repayment of note.
Interest expense on promissory notes for the three months ended March 31, 2018 and 2017, was $9,645 and 2016 was $6,533 and $508.respectively. The company entered into several promissory notes with an annual interest rate of 7%, with terms varying from 46 months to one year.
Other Expense
Loss on change in fair value of derivate liabilities for the three months ended March 31, 2018 and 2017, was $7,527 and $3,762 compared to a gain of $5,454 for the three months ended March 31, 2016respectively.
Net Loss
For the reasons stated above, our net loss for the three months ended March 31, 20172018 was $107,600,$100,923 or $0.00$0.67 per share, a decrease of $7,833,$6,677, compared to net loss of $99,767,$107,600, or $0.00$0.75 per share, forduring the three months ended March 31, 2016. The significant change is directly related to adjustments in the fair value of our derivative liability and a decrease in our general and administrative and compensation expenses. 2017.
FINANCIAL CONDITION
Liquidity and Capital Resources
As of March 31, 2017,2018, we had cash andof $323, which compared to cash equivalents of $26,262, and merchant services reserve$730 as of $2,938.December 31, 2017. Net cash used in operating activities for the three months ended March 31, 20172018 was $65,511.$56,432. Our current liabilities as of March 31, 20172018 of $582,125$1,029,713, consisted of: $110,239$263,590 for accounts payable and accrued liabilities, convertible debenture of $17,707,$19,518, overdraft of $432, note payable – related party of $437,850,$719,075, and derivative liability of $16,329.$26,933. We have negative working capital of $552,925$1,026,287 as of March 31, 2017.2018.
The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. The Company has reportedincurred a net loss of $107,600$100,923 for the three months ended March 31, 20172018 and had an accumulated deficit of $29,042,709$30,352,388 as of March 31, 2017.2018.
The Company currently estimates that itWe have been funded in recent years primarily through loans from our principal stockholder. We have a working capital deficit of $1,026,287 as of March 31, 2018 and have no committed sources of capital. We will require approximately $420,000need to continue its operations for the next twelve months. Additional investments are being sought, but we cannot guarantee that we will be ableraise additional capital to obtain such investments.maintain and expand operations. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and conditions in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owedAdditional funding may not be available on terms acceptable to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.at all. . If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.
Off-BalanceOff Balance Sheet Arrangements
We do notcurrently have any off balanceno off-balance sheet arrangements asthat have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of March 31, 2017operations, liquidity, capital expenditures or as of the date of this report.capital resources.
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our condensed consolidated financial statements, we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments:
Revenue Recognition
The Company generateshad historically generated revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognizesrecognized revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management'smanagement’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
Stock-basedStock-Based Compensation
The Company accounts for all compensation related to stock, options or warrants using a fair value basedvalue-based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.
Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 is a comprehensive revenue recognition standard that has superseded nearly all existing revenue recognition guidance under current U.S. GAAP and replaced it with a principle based approach for determining revenue recognition. ASU 2014-09 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017.
The Company’s primary source of revenue is from providing a professional service that specializes in HIPAA compliant retrieval, reproduction and release of information. Orders are fulfilled as requested, then invoiced. Once payment is received, revenue is recognized when records are delivered.
During the fourth quarter of 2017, the Company finalized its assessment related to the new standard and determined that the timing of revenue recognition related to the Company’s revenues will remain consistent between the new standard and the previous standard. The Company adopted ASU 2014-09 effective January 1, 2018 using the modified retrospective method, and there was no cumulative adjustment to retained earnings.
Inflation
The effect of inflation on our revenue and operating results was not significant.
Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk.Risk
Not required for a smaller reporting company.
Item 4. Controls and Procedures.Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission'sCommission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.
As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer (Principal Executive and Financial Officer) of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer (Principal Executive and Financial Officer) concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and also are not effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer (Principal Executive and Financial Officer), to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2017, there hasThere have been no changechanges in our internal controlcontrols over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that hasoccurred during the quarter ended March 31, 2018, that have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not party to any material legal proceedings.
Item 1A. Risk Factors
Not required for a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Proceeds
None.None
Item 3. Defaults Uponupon Senior Securities
None.
The Company is in default on a debenture in the approximate amount of $19,518 for failure to make payment when due.
Item 4. Mine Safety Disclosures.Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
| 31.1 | Certification | |
| 32.1 | Certification by the Principal | |
| 101.INS | XBRL Instance Document* | |
| 101.SCH | XBRL Taxonomy Extension Schema Document* | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* |
* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
| By: | /s/ Niquana Noel | |
| Niquana Noel | ||
Chief Executive Officer (Principal Executive Officer, | ||
11