UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,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 ENDED MARCH 31, 2019

(Mark One)
ORQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2017
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______to______   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number:000-54163COMMISSION FILE NUMBER

333-193220

 

NuLife Sciences, Inc.
(Exact name of registrant as specified in its Charter)

GULF WEST SECURITY NETWORK, INC.

(Exact name of registrant as specified in its charter)

 

Nevada 46-3876675

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employee Identification No.)

2618 San Miguel, Suite 203

Newport Beach, CA

incorporation)
 92660(I.R.S. Employer Identification No.)
(Address of principal executive office)(Zip Code)

 

(949) 973-0684Park Tower Building, 4th Floor, Suite 4200-A, 400 East Kaliste Saloom Road

Lafayette, LA 70508-8517

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code)

Not Applicable

code: (337) 210-8790(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 Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuerregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes              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). 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 accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filerAccelerated filer
Non-accelerated filer (Do not check if smaller reporting company)Smaller reporting company
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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).     Yes                     No      

 

Indicate the numberAs of May 20, 2019, there were 4,518,250 shares outstanding of each of the issuer’s classes ofour common stock, as of the latest practicable date: As of February 20, 2017, there were 40,504,391 shares of $0.001 par value common stock, issued and$0.001 per share, outstanding.



 

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GULF WEST SECURITY NETWORK, INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 31, 2019

INDEX

PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial StatementsPART I:FINANCIAL INFORMATION 3
  
Item 1:Financial Statements3
Item 2:2. Management’s Discussion and Analysis of Financial Condition and Results of OperationOperations 20
Item 3:Quantitative and Qualitative Disclosures about Market Risk24
Item 4:Controls and Procedures24 16
  
PART II:OTHER INFORMATIONItem 3. Quantitative and Qualitative Disclosure About Market Risk 18
  
Item 1:Legal Proceedings4. Controls and Procedures25 18
Item 1A:Risk FactorsPART II – OTHER INFORMATION25 19
Item 2:1.  Legal Proceedings 19
UnregisteredItem 1A.  Risk Factors 19
Item 2. Recent Sales of Equity Securities andUnregistered Securities; Use of Proceeds from Registered Securities25 19
Item 3:3. Defaults Upon Senior Securities28 19
Item 4:4. Mine Safety Disclosures28 19
Item 5:5. Other Information28 19
Item 6:6. Exhibits29 19
  
SIGNATURES2920
EXHIBIT INDEX 

 

 

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PART I - FINANCIAL INFORMATION

 

ITEMItem 1. FINANCIAL STATEMENTSFinancial Statements

  

NuLife Sciences,Gulf West Security Network, Inc. (fka “SmooFi, Inc.”)

Condensed Consolidated Balance Sheets

(Unaudited)

  

December 31,

2017

(Unaudited)

 September 30, 2017
     
ASSETS        
         
CURRENT ASSETS:        
Cash $40  $44,123 
Prepaid expenses  —     5,000 
Advances receivable  —     1,090 
               Total Current Assets  40   50,213 
         
Security deposit  4,871   4,871 
         
TOTAL ASSETS $4,911  $55,084 
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT        
         
CURRENT LIABILITIES:        
Accrued expenses $610,410  $633,689 
Due to related parties  135,730   84,500 
Accrued interest  35,821   36,508 
Notes payable  205,910   99,500 
Convertible note, current portion, net  92,380   58,432 
TOTAL CURRENT LIABILITIES  1,080,251   912,629 
         
Convertible notes, net  14,177   23,027 
Derivative liability  102,559   231,733 
TOTAL LONG TERM LIABILITIES  116,736   254,760 
         
TOTAL LIABILITIES  1,196,987   1,167,389 
         
STOCKHOLDERS’ DEFICIT:        
Preferred stock Series A, $0.001 par value; 15,000,000 shares authorized; 117,500 and 117,500 issued or outstanding, respectively  118   118 
Preferred stock Series B, $0.001 par value; 10,000,000 shares authorized; nil and 10,000,000 issued or outstanding, respectively  —     10,000 
Common stock, $0.001 par value; 475,000,000 shares authorized; 40,504,391 and 37,797,238 shares issued and outstanding, respectively  40,504   37,797 
Additional paid in capital  6,251,065   5,445,385 
Accumulated deficit  (7,483,763)  (6,605,605)
TOTAL STOCKHOLDERS’ DEFICIT  (1,192,076)  (1,112,305)
         
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $4,911  $55,084 

  

March 31, 

 December 31,
Assets 2019 2018
  Current Assets        
Cash $22,406  $64,798 
Accounts receivable  1,923   1,906 
Prepaid expenses  31,422   85,560 
Inventory  6,327   —   
Total Current Assets  62,078   152,264 
Total Assets $62,078  $152,264 
         
Liabilities and Stockholders’ Equity (Deficit)        
Current Liabilities:        
Accounts payable and accrued liabilities $283,104  $176,611 
Bridge loan  746,000   671,000 
Liabilities of discontinued operations  586,049   636,561 
         
Total Current Liabilities  1,615,153   1,484,172 
         
Commitments and contingencies        
         
Stockholders’ Equity (Deficit)        
 Preferred stock Series A, $0.001 par value; 15,000,000 shares authorized; 742,500 and 117,500 issued and outstanding, respectively  743   743 
 Preferred stock Series B, $0.001 par value; nil issued and outstanding  —     —   
 Preferred stock Series C, $0.001 par value; 1 share authorized; 1 and nill issued and outstanding, respectively  —     —   
 Preferred stock Series D, $0.001 par value; 1,000 shares authorized; 1,000 and nill issued and outstanding, respectively  1   1 
 Common stock, $0.001 par value; 475,000,000 shares authorized; 4,518,250 shares issued and outstanding  4,518   4,518 
Additional paid in capital  177,210   177,210 
Accumulated deficit  (1,735,547)  (1,514,379)
Total Stockholders’ (Deficit)  (1,553,075)  (1,331,908)
Total Liabilities and Stockholders’ (Deficit) $62,078  $152,264 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NuLife Sciences,Gulf West Security Network, Inc. (fka “SmooFi, Inc.”)

Condensed Consolidated Statements of Operations

For the Three Months Ended December 31, 2017 and 2016

(Unaudited)

  

  Three months ended Three months ended
  March 31, March 31,
  2019 2018
Revenue        
Monitoring and related services $3,869  $4,985 
Product sales and installation  —     —   
   3,869   4,985 
         
Cost of Product  1,989   1,052 
         
Gross Profit  1,880   3,933 
         
Operating Expenses        
General and administrative  263,515   77,673 
Sales and marketing  10,044   9,768 
Total operating expenses  273,559   87,441 
         
Operating loss  (271,679)  (83,507)
         
Loss from continuing operations before provision for income taxes  (271,679)  (83,507)
         
Provision for income taxes  —     —   
         
Loss from continuing operations  (271,679)  (83,507)
         
Income from discontinued operations  50,512   —   
         
Net Loss $(221,167) $(83,507)
         
Basic and diluted net loss per common share, continuing operations $(0.06) $(0.02)
Basic and diluted earnings per common share, discontinued operations $0.01  $—   
         
Weighted average shares outstanding  4,518,250   3,820,990 

 

  2017 2016
     
Revenue $—    $—   
Cost of sales  —     —   
Gross Profit  —     —   
Operating expense:        
General and administrative expenses  (768,775)  (98,856)
Related party compensation  (42,994)  (303,404)
Total operating expense  (811,769)  (402,260)
Loss from operations  (811,769)  (402,260)
Interest expense  (201,254)  (36,479)
Interest income  —     504 
Forgiveness of accounts payable  73,644   —   
Gain (loss) on change in fair value of derivative and derivative expense  61,221   (14,319)
Loss before provision for income tax  (878,158)  (452,554)
Provision for income taxes  —     —   
         
Net loss $(878,158) $(452,554)
Basic and diluted net loss per share $(0.02) $(0.01)
Weighted average common shares outstanding – basic and diluted  38,209,901   31,085,800 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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NuLife Sciences,Gulf West Security Network, Inc. (fka “SmooFi, Inc.”)

Condensed Consolidated StatementStatements of Cash FlowsStockholders Deficit

For the Three Months Ended December 31, 2017 and 2016

(Unaudited)

  

  2017 2016
     
CASH FLOW FROM OPERATING ACTIVITIES:        
Net loss $(878,158) $(452,554)
Adjustments to reconcile net loss to net cash used in operating activities:        
Interest expense - amortization of debt discount  170,765   27,495 
(Gain) loss on change in fair value of derivative and derivative expense  (61,221)  14,319 
Stock-based compensation expense  640,000   186,904 
Forgiveness of accounts payable  (73,644)  —   
Note receivable  —     (504)
Prepaid expenses  5,000   —   
Accounts payable and accrued expenses  50,365   35,656 
Due to related party  52,320   (2,867)
Accrued interest payable  2,080   8,983 
         
Net Cash Used in Operating Activities  (92,493)  (182,568)
         
CASH FLOW FROM FINANCING ACTIVITIES:        
Loan proceeds  106,410   685,000 
Proceeds from the issuance of convertible notes  20,000   —   
Payment of convertible notes  (78,000)  —   
Net Cash Provided by Financing Activities  48,410   685,000 
         
CHANGE IN CASH  (44,083)  502,432 
CASH AT BEGINNING OF PERIOD  44,123   1,086 
CASH AT END OF PERIOD $40  $503,518 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION        
         
Cash paid for:        
Interest $—    $—   
Income taxes $—    $—   
         
NON-CASH INVESTING AND FINANCING ACTIVITIES:        
         
Shares issued for convertible debt and interest $77,767  $—   
Derivative liability written off due to payment of debt $67,953  $—   
Initial value of beneficial conversion feature $12,667  $—   

  Preferred stock Series A Preferred stock Series B Preferred stock Series C Preferred stock Series D Common stock     Total
  Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Additional Paid in Capital Accumulated Deficit Stockholders' Equity/(Deficit)
 Balance as of January 1, 2018  117,500   118   —     —     —     —     —     —     4,050,439   4,050   164,102   (155,830)  12,440 

 Shares issued for debt settlement  

  25,000   25   —     —     —     —     —     —     15,385   15   (1,836)  —     (1,796)
 Net loss  —     —     —     —     —     —     —     —     —     —     —     (83,507)  (83,507)
 Balance as of March 31, 2018  142,500   143   —     —     —     —     —     —     4,065,824   4,065   162,266   (239,337)  (72,863)
                                                     
 Balance as of January 1, 2019  742,500   743   —     —     1   0   1,000   1   4,518,250   4,518   177,210   (1,514,380)  (1,331,908)
Net loss  —     —     —     —     —     —     —     —     —     —     —     (221,167)  (221,167)
 Balance as of March 31, 2019  742,500   743   —     —     1   0   1,000   1   4,518,250   4,518   177,210   (1,735,547)  (1,553,075)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NULIFE SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSGulf West Security Network, Inc.

DECEMBER 31, 2017 and 2016Condensed Consolidated Statements of Cash Flows

(Unaudited)

  

NOTE 1 - ORGANIZATION

NuLife Sciences Inc., formerly SmooFi, Inc. (the "Company") was incorporated under the laws of the State of Nevada on October 15, 2013. The Company issued 7,250,000 shares of its common stock to our founder, Derek Cahill, as consideration for the purchase of a business plan along with a website. On April 21, 2015, the Board of Directors of the Company approved a three-for-one forward stock split of the Company's common stock (the “Forward Split”). Accordingly, shareholders owning shares of the Company's common stock received two additional shares of the Company for each share they owned, and Mr. Cahill’s 7,250,000 shares became 21,750,000 shares. Prior to the Forward Split the Company had 10,128,600 shares issued and outstanding and following the Forward Split the Company has 40,504,391 shares issued and outstanding. 

During our fiscal year ended September 30, 2017, the Company formed three subsidiaries in the state of Nevada: NuLife BioMed, Inc. (“NuLife BioMed”), NuLife Technologies, Inc. (”NuLife Technologies”) and NuLife Medical Inc., (“NuLife Medical”), and one in the state of Wyoming: , NuLife Oncology LLC, a Wyoming Limited Liability Company (“NuLife Oncology”), the Managing Member of which is NuLife Technologies NuLife BioMed was the only active subsidiary during the first fiscal quarter ended December 31, 2017.

On January 29, 2017, the Company announced the completion of an Asset Purchase Agreement to acquire all of the assets (the “Asset Purchase”) of GandTex LLC, a Texas Limited Liability Company (“GandTex”). GandTex is a biomedical company focused on advancing human organ transplant technology and medical research. The assets being transferred pursuant to the Asset Purchase consisted of certain proprietary patents for eliminating the need for an organ or tissue match, and the necessity for anti-rejection drugs, as well as management of, and historical data for, animal trials (“Animal Trials”) conducted by GandTex(collectively, the “GandTex Assets”). Pursuant to the terms of the Asset Purchase, and upon achieving certain pro-forma goals, the Company agreed to provide additional funding for the Trials in the aggregate amount of $300,000. In exchange for the GandTex Assets, the Company issued to GandTex 10,000,000 shares of its Series B Convertible Preferred Stock. GandTex is owned and controlled by a single individual Managing Member who beneficially owns 70% of GandTex The Asset Purchase was amended by an Addendum to the Asset Purchase Agreement effective July 11, 2017, and subsequently restructured so as to perfect ownership of the GandTex Assets by way of the GandTex Restructuring Agreements effective July 27, 2017 between GandTex and Duplitrans Inc. (“Duplitrans”), and as to certain of the agreements, the Company. In late October 2017, the Company terminated the Asset Purchase and the GandTex Restructuring Agreements on October 24, 2017 in an unwinding of the Asset Purchase by way of a Settlement an Release Agreement dated October 24, 2017, involving the full return of the 10,000,000 shares of the Company’s Series B Convertible Preferred Stock in exchange for a full release of any and all claims that Duplitrans or GandTex may have had against the Company, and the transfer of the patents contained within the GandTex Assets to GandTex, and the Exclusive License to Duplitrans, and we entered into a Memorandum of Understanding with NuGenesis, a new entity being formed by certain shareholders of Duplitrans, with the intent to continue the development of the Wound Care technique in concert with NuGenesis. On December 29, 2017, the Company issued 2,000,000 common shares which 1,960,000 common shares were issued to Duplitrans and 40,000 common shares were issued to the legal counsel of Duplitrans in regards to the agreement with GandTex. On the date of the settlement, October 24, 2017, the shares had a fair market value of $640,000. Accordingly, the Company recorded $640,000 of stock based compensation during the three months ended December 31, 2017. Refer to NOTE 4 – Asset Purchase Agreement.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

  Three months ended Three months ended
  March 31, March 31,
  2019 2018
Cash Flows from Operating Activities        
Loss from continuing operations $(271,679) $(83,507)
Adjustments to reconcile net loss to net cash used in operating activities:        
Income from discontinued operations  50,512   —   
Depreciation  —     100 
Changes in operating assets and liabilities:        
Accounts receivable  (17)  (1,068)
Prepaid expenses  54,138   (10,094)
Inventory  (6,327)  —   
Accounts payable and accrued liabilities  106,493   3,545 
Net cash used in operating activities - continuing operations  (66,880)  (91,025)
Net cash used in operating activities - discontinued operations  (50,512)  —   
         
Cash Flows from Investing Activities:  —     —   
Net cash used in investing activities  —     —   
         
Cash Flows from Financing Activities        
Contributions, net  —     (1,796)
Proceeds from bridge loan  75,000   100,000 
Net cash provided by financing activities  75,000   98,204 
         
Net (decrease) increase in cash  (42,392)  7,180 
         
Cash, beginning of period  64,798   6,137 
         
Cash, end of period $22,406  $13,317 
         
Supplemental disclosure of cash flow information:        
      Cash paid for interest $—    $—   
      Cash paid for income taxes $—    $—   

 

The Company's financial statementsaccompanying notes are prepared using the accrual methodan integral part of accounting. The Company elected a September 30 fiscal year-end. These financial statements present thethese unaudited condensed consolidated financial statements of NuLife Sciences, Inc. and its two wholly owned subsidiaries, NuLife Biomed, NuLife Technologies, an NuLife Medical, along with NuLife Oncology, of which NuLife Technologies is the Managing Member, as of the Company’s fiscal quarter ended December 31, 2017.statements.   

 

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NuLife Technologies,

Gulf West Security Network, Inc., NuLife Medical

Notes to Condensed Consolidated Financial Statements

For the three months ended March 31, 2019 and NuLife Oncology were all inactive at December 31, 2017 and remain inactive as2018

(Unaudited)

Note 1 – Nature of the date of this report.Business

Gulf West Security Network, Inc. (a Nevada Corporation), and its wholly-owned subsidiaries, formerly known as “NuLife Sciences, Inc.” (“we”, “us”, “our”, “Gulf West”, “GWSN”, or the “Company”), are principally engaged in providing residential and commercial electronic security, home automation, and systems integration services on both a retail and wholesale basis.

 

The unaudited interim financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments)Company’s retail division, which are,includes its wholly-owned subsidiary LJR Security Services, Inc. (a Louisiana Corporation) (“LJR”), is actively engaged in the opinionhands-on design, engineering, sales, installation, after-market servicing, inspection and remote electronic monitoring of management, necessary to fairly present the operating results for the respective periods. Certain informationhome (residential) burglar, fire and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally acceptedmedical alarm systems as well as fully-integrated business (commercial) security and automation systems in the United StatesStates.

The Company’s wholesale division, which operates under the name Gulf West Security Network (or “Gulf West”), is further engaged in the development and expansion of Americaa proprietary coalition (alliance or network) of independently-branded life safety and property protection providers, fire alert and suppression system installers, electronic remote monitoring and video surveillance specialists, smart home designers, commercial systems integrators, structured wiring professionals and electrical contractors.

Merger

On August 9, 2018, the Board of Directors of the Company through its wholly-owned subsidiary NuLife Acquisition Corp. (“NuLife Sub”) approved and executed an agreement of merger and plan of reorganization (the “Merger Agreement”), to become effective at such time as the articles of merger have been omitted pursuantfiled with the Secretary of State of Louisiana (the “Effective Time”), and after the satisfaction or waiver by the parties thereto of the conditions set forth in Article VI of the Merger Agreement. Pursuant to such rulesthe terms of the Merger Agreement, and regulations. These condensedin exchange for all one hundred (100) issued and outstanding shares of LJR Security Services, Inc. (“LJR”), LJR received one thousand (1,000) shares of series D senior convertible preferred stock, par value $.001 per share (the “Series D Preferred Stock”) of the Company, convertible into fifty million two hundred thirty-nine thousand five hundred forty-one (50,239,541) shares of common stock of the Company. In addition, the LJR shareholder received one share of series C super-voting preferred stock of NuLife which granted the holder 50.1% of the votes of NuLife at all times.

The merger was accounted for as a reverse merger, whereby LJR was considered the accounting acquirer and became our wholly-owned subsidiary. In accordance with the accounting treatment for a “reverse merger”, the Company’s historical financial statements prior to the reverse merger has been replaced with the historical financial statements of LJR prior to the reverse merger. The consolidated financial statements should be read in conjunction withafter completion of the audited financial statementsreverse merger include the assets, liabilities, and notes for the year ended September 30, 2017 included in our Annual Report on Form 10-K. The results of the three-month period ended December 31, 2017 are not necessarily indicativeoperations of the results to be expected forcombined company from and after the full year ending September 30, 2018.closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’ equity remaining in the consolidated financial statements.

 

Cash EquivalentsRestatement of Articles of Incorporation

 

For purposesOn September 19, 2018, LJR Security Services, Inc. amended and restated its articles of incorporation providing for a change in the Company’s name to “Gulf West Security Network, Inc.” The Company’s authorized shares of common stock, preferred stock and the par value of the balance sheetstock will remain unchanged. The Company also amended and statementrestated its bylaws to reflect the name change.

On September 20, 2018, the Board of cash flows,Directors of the Company considers all highly liquid instruments with maturitydesignated one (1) share of three months or less atSeries C Preferred Stock (the “Series C Stock”) and one thousand (1,000) shares of Series D Preferred Stock (the “Series D Stock”). The classes of Series C Stock and Series D Stock were created in anticipation of the timeclosing of issuance to be cash equivalents. The Company does not have any cash equivalent as of December 31, 2017 and September 30, 2017.the Merger Agreement.

 

Stock-based CompensationChange of Fiscal Year

On September 28, 2018, the Company’s Board approved a change in fiscal year end from September 30th to December 31st. The decision to change the fiscal year end was related to the recent merger of the Company with LJR to closely align its operations and internal controls with that of its wholly owned subsidiary LJR.

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Note 2 – Summary of Significant Accounting Policies

Use of Estimates

 

The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurementpreparation of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized Nonemployee share-based payments are measured at fair value, based on either the fair value of the equity instrument issued or on the fair value of the services received. We determine the fair value of common stock grants based on the price of the common stock on the measurement date (which is the earlier of the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, if there are sufficient disincentives to ensure performance, or the date at which the counterparty's performance is complete). We determine the fair value of preferred stock grants based on the price of the preferred stock as potentially converted into common stock and based on the underlying common stock on the measurement date (which is the earlier of the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, if there are sufficient disincentives to ensure performance, or the date at which the counterparty's performance is complete).

Use of Estimates and Assumptions

Preparation of thecondensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certainthe reported amounts of assets and disclosures. Accordingly, actualliabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The Company has adopted the provisions of ASC 260.

 

Management makes estimates that affect certain accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the yearperiod in which such adjustments are determined.

 

Loss per SharePrinciples of Consolidation

The Company’s condensed consolidated financial statements include all accounts of Gulf West Security Network, Inc., LJR, and NuLife Sciences, Inc. from September 28, 2018, the consummation of the Merger Agreement.All inter-company balances and transactions have been eliminated in consolidation.

Basis of Presentation

 

The basic loss per shareaccompanying consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of one year or less, when purchased, to be cash. As of March 31, 2019 and December 31, 2018, the Company had no cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.

Capitalization of Fixed Assets

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.

Goodwill

Goodwill is calculated by dividingnot amortized but are evaluated for impairment annually or when indicators of a potential impairment are present. The Company intends to perform its impairment testing of goodwill annually. The annual evaluation for impairment of goodwill is based on management’s assessment of the Company's net loss availablecarrying values of such assets.

Revenue Recognition

The Company retrospectively adopted FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers”, on January 1, 2018, which did not have a material impact on the Company’s financial statements. The Company generates revenue primarily through contractual monthly recurring fees received for monitoring and related services provided to common shareholderscustomers. In transactions involving security systems that are sold outright to the customer, or where equipment is already owned by the weighted average numbercustomer, the Company’s performance obligations include monitoring, related services, and the sale and installation, or refurbish and repair, of common shares during the year. The diluted loss per sharesecurity systems. Revenue associated with the sale and installation of security systems is calculated by dividing the Company's net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstandingrecognized once installation is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss per share are the same as basic earnings loss per share due to the lack of dilutive itemscomplete, and is reflected in installation and repair revenue in the Company.

consolidated statements of operations. Revenue associated with monitoring and related services is recognized as those services are provided, and is reflected in monitoring and related services revenue in the consolidated statements of operations.

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Early termination of the contract by the customer results in a termination charge in accordance with the contract terms. Contract termination charges are recognized in revenue when collectability is probable, and are reflected in monitoring and related revenue in the consolidated statements of operations. Amounts collected from customers for sales and other taxes are reported net of the related amounts remitted.

Barter Transactions

The Company conducts certain barter sales through trade organizations for which it is a member, as are some of its customers. The barter transactions are generally related to the Company providing its security services, and the value of these services is recorded at fair value which is the contracted for value of the services with the customer, which is the more readily available measure as to its valuation.

Fair Value Measurements

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in its balance sheet, where it is practicable to estimate that value.

In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” the Company measures certain financial instruments at fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.

 

Fair value estimates discussed hereinis 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. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active markets that are based upon certaineither directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, and pertinent information available to managementsuch as of December 31, 2017 and September 30, 2017. The respective carryingvaluations derived from valuation techniques in which one or more significant inputs or significant value of certain on-balance-sheet financial instruments, approximatedrivers are unobservable.


 

Fair Value Measurement 

at March 31, 2019

  Carrying Value Level 1 Level 2 Level 3
Derivative liabilities, debt and equity instruments $55,461   —     —    $55,461 
                 

Financial assets are considered Level 3 when their fair values. These financial instruments includevalues are determined using pricing models, discounted cash accounts receivable, accounts payable, accrued expensesflow methodologies or similar techniques and notes payable. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair valuesat least one significant model assumption or they are receivable or payable on demand.input is unobservable.

 

The Company usesChanges in Level 3 assets measured at fair value measurements underfor the three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure for fair value measures. The three levels are definedmonths ended March 31, 2019 were as follows:

 

Balance, December 31, 2018 $111,291 
Beneficial conversion derivative liability assumed in Merger  - 
Change in fair value of derivative  (55,830)
Balance, March 31, 2019 $55,461 

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
9Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

  Fair Value Measurements 
Using Fair Value Hierarchy
  Level 1 Level 2 Level 3
 Convertible notes (net of discount) – December 31, 2017  $—    $—    $106,557 
 Convertible notes (net of discount) – September 30, 2017  $—    $—    $81,459 
 Derivative liability – December 31, 2017  $—    $—    $102,559 
 Derivative liability – September 30, 2017  $—    $—    $231,733 
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The following table provides a summary of the changes in fair value of the Company’s Convertible Promissory Notes, which are both Level 3 liabilities as of December 31, 2017:

Balance at September 30, 2017 $81,459 
Issuance of notes  20,000 
Accretion of debt discount  91,617 
Debt discount on convertible notes due to beneficial conversion feature  (12,667)
Accretion of debt discount due to beneficial conversion feature  79,148 
Payment of convertible debt  (78,000)
Conversion of principal into shares of common stock  (75,000)
Balance December 31, 2017 $106,557 

The Company determined the value of its convertible notes using a market interest rate and the value of the derivative liability issued at the time of the transaction less the accretion. There is no active market for the debt and the value was based on the delayed payment terms in addition to other facts and circumstances at the end of December 31, 2017 and September 30, 2017.

The Company determined the value of warrants issued to a consultant using the Black-Scholes Model. There is no active market for the warrants and the value was based on the warrant terms in addition to other facts and circumstances at the end of the Company’s first quarter ended December 31, 2017 and its fiscal year ended September 30, 2017.

Derivative Financial Instruments

 

The Company evaluates our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based financial instruments, the Company uses the Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated

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at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date. 

The Company estimates the fair value of these instruments using the Black-Scholes option pricing model and the intrinsic value if the convertible notes are due on demand.

 

We haveThe Company determined that certain convertible debt instruments outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of the convertible debenturesnotes payable have a variable exercise price, thus are convertible into an indeterminate number of shares for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. Any change in fair value during the period is recorded in earnings as “Other income (expense) - gain“Income (loss) on change in derivative liabilities.from discontinued operations.” Please refer to Note 83 below.

 

Income TaxesGoing Concern

 

Income taxesThe Company’s consolidated financial statements are providedprepared using accounting principles generally accepted in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recordedthe United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has limited commercial experience and had a net loss of $221,167 for all temporary differences betweenthe three months ended March 31, 2019, and an accumulated deficit of $1,735,547 and a working capital deficit of $1,553,075 at March 31, 2019. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern. The accompanying consolidated financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results fromstatements for the net changethree months ended March 31, 2019, have been prepared assuming the Company will continue as a going concern. The Company’s cash resources will likely be insufficient to meet its anticipated needs during the yearnext twelve months. The Company will require additional financing to fund its future planned operations, including research and development and commercialization of deferred tax assets and liabilities.its products.

 

Deferred tax assets are reduced byThe ability of the Company to continue as a valuation allowance when,going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the opinion of management, itCompany is more likely than not thatable to obtain the necessary additional financing on a timely basis, the Company will be forced to delay or scale down some portion or all of its development activities or perhaps even cease the deferred tax assets will not be realized. Deferred tax assetsoperation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and liabilities are adjusted forattain profitable operations. There is substantial doubt about the effectsability of changes in tax laws and rates onthe Company to continue as a going concern within one year after the date of enactment.that the consolidated financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

No provision was made for Federal or State income taxes.

Advertising

Advertising will be expensed in the period in which it is incurred. There have been no advertising expenses for the reporting periods presented.

Intangible Assets

Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment.

Research and Development

Research is planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service (hereinafter “product”) or a new process or technique (hereinafter “process”) or in bringing about a significant improvement to an existing product or process. Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot plants. It does not include routine or periodic alterations to existing products, production lines, manufacturing processes, and other on-going operations even though those alterations may represent improvements and it does not include market research or market testing activities. Per ASC 730, the Company expenses research and development cost as incurred.

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Recently IssuedRecent Accounting PronouncementsPronouncements

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840).Leases. ASU 2016-02 requires lesseesa lessee to recognizerecord a right of use asset and a corresponding lease liability on the balance sheet for all leases on their balance sheets, and leaves accounting for the lessor largely unchanged. The amendments in thiswith terms longer than 12 months. ASU are2016-02 is effective for fiscal yearsall interim and annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years.2018. Early applicationadoption is permitted for all entities. ASU 2016-02 requires apermitted. A modified retrospective transition approach is required for alllessees for capital and operating leases existing at, or entered into after, the datebeginning of initial application, with an option to elect to use certain transition relief.the earliest period presented in the consolidated financial statements. The Company is currently evaluatingevaluated the impact that the application of thisthe new standard has on its consolidated financial statements.

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company has adopted this new standard.

In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating when a set of transferred assets and activities is a business. This guidance will be effective for the Company in the first fiscal quarter of 2018 on a prospective basis, and early adoption is permitted. The Company does not expect the standard to have a material impact on our consolidated financial statements.

In July 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2017-11 (“ASU 2017-11”) which changes the accounting for equity instruments that include a down round feature.  For public entities, this update is effective for fiscal years beginning after December 15, 2018, and interim periods within those years.  Early adoption is permitted.  The Company does not anticipate the adoption of this amendment will have an impact on the consolidated financial statements and related disclosures as the Company does not have any related equity instruments.

and determined there has been no impact. The Company reviewed all recent accounting pronouncements issued byadopted the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company's present or future financial statements.

NOTE 3 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ended December 31, 2017, the Company had a net lossprovisions of $878,158. As of December 31, 2017, the Company had a working capital deficit of $1,080,211 and an accumulated deficit of $7,483,763. The Company does not have a source of revenue and does not anticipate having onethis standard in the near future. Without additional capital, the Company will not be able to remain in business within the next twelve months.first quarter of fiscal 2019.

 

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying 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 from the possible inability of the Company to continue as a going concern.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will advance capital to the Company or that the new business operations will be profitable. The Company’s future plans is fully dependent upon the funding of NuGenesis sufficient to carry forward the research on the Wound Care Process, and upon the ability of Duplitrans to also obtain sufficient funding to continue with the development of the NuLife Process at the Company’s existing facilities.

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In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation and may require the services of valuation experts. ASU 2017-04 is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The possibilityCompany does not anticipate the adoption of failure in obtaining additional fundingASU 2017-04 will have a material impact on its consolidated financial statements.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the potential inabilitySecurities and Exchange Commission did not or are not believed by management to achieve profitability raise doubts abouthave a material impact on the Company’s ability to continue as a going concern.present or future consolidated financial statements.

 

In the long term, management believes that the Company’s projectsNote 3 –Acquired Assets and initiatives will be successfulAssumed Liabilities of Discontinued Operations

Assets Acquired and will provide cash flowLiabilities Assumed through Reverse Merger

Pursuant to the Company, which will be used to financeterms of the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sourcesMerger Agreement, and in exchange for all one hundred (100) issued and outstanding shares of debt or equity funding to meet current commitments and fund the continuationLJR Security Services, Inc., LJR received one thousand (1,000) shares of its business operations, and the abilityseries D senior convertible preferred stock, par value $.001 per share (the “Series D Preferred Stock”) of the Company, to achieve adequate profitability and cash flows from operations to sustain its operations. Substantial doubt has not been alleviated from management’s plan at this time.

NOTE 4 – ASSET PURCHASE AGREEMENT

Following the Closing of the Asset Purchase, in March 2017, we learned that Mr. James Gandy did not have proper authority to transfer the Exclusive License rights from Duplitrans to GandTex, after which we proposed a restructuring of the transaction, which was approved by the Duplitrans shareholders, so that we ended up with exclusive use and ownership of the intellectual property that was in dispute, but at the same time the Duplitrans shareholders were compensated for the license termination by way of an amendment to the conversion terms of the Series B Preferred Stock and a Royalty Agreement in favor of Duplitrans (the “GandTex Restructuring”).

Following our initial stage of the resumption of the Animal Trials conducted earlier in Ecuador by Duplitrans and GandTex, and the GandTex Restructuring, we learned that certain critical information concerning the organ transplantation process, thought to be contained in the GandTex Assets, was not contained in any of the Patents or License comprising the GandTex Assets, and was withheld by the inventor, Mr. Gandy during his review of our Protocol for the transplantation procedures (the “Omitted Transplantation Information”). In October 2017, as described in our Form 8-K filed October 21, 2017 following the discovery of the Omitted Transplantation Information, we enteredconvertible into a settlement agreements with Duplitrans and GandTex pursuant to which we reversed the Asset Acquisition and the GandTex Restructuring Agreements in their entirety, and GandTex and Duplitrans agreed to the full return of the 10,000,000 shares of our Series B Preferred Stock, the cancellation of the Royalty Agreement with Duplitrans/GandTex, and a full release by GandTex and Duplitrans from any and all claims that they may have believed they had against us (the “Release”). In consideration for the termination of the Asset Purchase Agreement and the GandTex Restructuring Agreements, the Release and the return of our Series B Preferred Stock, we issued 2,000,000 shares of our common Stock to Duplitrans and to Duplitrans legal counsel.

In conjunction with Mr. Gandy’s final disclosure of the Omitted Transplantation Information, but prior to the Release and unwinding of the Asset Purchase, we entered into a Memorandum of Understanding (the “MOU”) with NuGenesis, an entity in formation organized by certain of the Duplitrans shareholders (“NuGenesis”), which we believed could enable us to continue to pursue the Animal Studies and a secondary application of the NuLife Process – known as the “Wound Care Technique”.

To date, the proposed Wound Care activities (the “Wound Care Technique”) are still in the investigation stage, without significant expenditures by the Company due to our efforts to maintain adequate funding for our corporate operations. The commercial relationship between the NuGenesis and Duplitrans has not yet been established in an adequate definitive joint venture agreement, but only through the MOU during this exploratory stage of the business. Neither the Company or NuGenesis currently have the necessary funding to resume the development of the Wound Care Technique, and the reduction of the MOU to a definitive agreement is contingent upon either the Company or NuGenesis obtaining the funding necessary to carry the proposed development through to completion

NOTE 5 - CONSULTING AGREEMENTS

On April 1, 2015, the Company entered into a twelve-month consulting agreement with an investor relations firm. Per the agreement, the Company will pay the consultant a monthly fee of $8,500 on the first day of each month with the payment deferred until the Company closes financing in the amount of $3fifty million or greater. Additionally, the Company was required to issue the consultant 200,000two hundred thirty-nine thousand five hundred forty-one (50,239,541) shares of common stock on October 1, 2015.of the Company. In addition, the LJR shareholder received one (1) share of series C super-voting preferred stock of the Company which granted the holder 50.1% of the votes of the Company at all times.

As a result of the Reverse Merger, the Company has acquired the following assets and liabilities which were recorded at fair value. The agreementfair values of assets acquired and liabilities assumed are as follows:

 Security deposit $4,871 
 Goodwill  612,771 
 Accrued expenses  (125,647)
 Accrued interest  (49,261)
 Notes payable  (117,500)
 Convertible notes  (138,500)
 Derivative liability  (172,532)
Total identified net assets $14,202 

As a result of the Reverse Merger, we acquired approximately $0.6 million of liabilities of the former operations of NuLife Sciences, Inc., which have been discontinued. We are evaluating the means to relieve the Company of these liabilities. The assets and liabilities described below have been classified as discontinued operations in the consolidated financial statements.

Goodwill

The Company acquired goodwill through the Reverse Merger described above. The carrying value of $612,771 was terminated on October 16, 2016. During the three months endedimpaired as of December 31, 2017 and 2016,2018.

Notes Payable

As a result of the Reverse Merger the Company recorded compensation expense in the amountassumed notes payable with total outstanding principal of $-0-$117,500 and $2,133 related to this agreement.accrued interest of $36,304, detailed as follows:

 

·Demand note payable with outstanding principal of $25,000, and accrued interest of $17,400. The note matured on June 30, 2015 and carries an interest rate of 12%. This note is in default.

·Demand notes payable to East West Secured Developments, LLC, with a combined outstanding principal of $74,500, and accrued interest of $18,061. These notes matured on October 31, 2016 and carry an interest rate of 12%. These notes are in default.

·Term note payable with outstanding principal of $18,000, and accrued interest of $843. The note is due on July 31, 2019 and carries an interest at the rate of 3%.
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On February 28, 2017, but effective January 5, 2017,

As of March 31, 2019, notes payable had total outstanding principal of $117,500 and accrued interest of $43,720. These liabilities have been incorporated into liabilities from discontinued operations.

Convertible Notes

As a result of the Reverse Merger the Company entered into an Advisory Agreementassumed convertible notes with Global Business Strategies Inc. (“Global “), a company controlled Mr. Luke (the “Global Agreement”). Pursuant to the Global Agreement the Company retained Global to provide management advice, corporate development strategies, toassist in the generaltotal outstanding principal of $138,500 and administrative functions, and to make Mr. Luke available to serveaccrued interest of $11,078, detailed as a Director or a member of the Company’s management (the “Services” as defined in the Global Agreement).  In consideration for the Services the Company agreed to pay Global $8,500 per month, which included any and all fees for Mr. Luke continuing to serve as the Company’s President and fees to others working for Global, and allowed for reimbursement of expenses up to $500 per month without prior written approval. The Company also agreed to pay Global an additional $1,500 per month if Mr. Luke was appointed to serve as a Director also incorporated you of the Company, and agreed to issue to Global55,000 shares of its Series A Convertible Preferred Stock. Mr. Luke has not been appointed a Director of the Company as of the date of this report. During the three months ended December 31, 2017 and 2016, the Company recorded compensation expense in the amount of $25,500 and $-0- related to this agreement.follows:

  March 31, 2019
(A)    Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share and is due December 2019 $5,000 
(B)    Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share and is due August 2020  50,000 
(C)    Convertible note payable, annual interest rate of 5%, convertible into common stock at a variable rate per share and was due September 2018 (in default)  63,500 
(D)    Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.30 per share and is due October 13, 2020  20,000 
 Total convertible debt $138,500 

 

On June 10,A. Originally made in 2017, the Company entered into a Master Service Agreement with an investment consultant to provide services to the Company for a periodoutstanding principal of six months. The agreement calls for a budget$5,000, and accrued interest of $215,000 with an initial payment of $150,000. Additionally, the agreement called for the issuance of 250,000 cashless warrants exercisable for three years at a price of 110% of the closing price on June 10, 2017. The Company paid $65,000 of the initial payment$715.

B. Hayden note was made on August 14,23, 2017, outstanding principal of $50,000, and accrued interest of $4,538.

C. Current holder acquired the remaining $85,000note in May 2018. Current outstanding principal of the initial payment$63,500, and $65,000accrued interest of the balance$4,295.

D. Escala note was made October 13, 2017, outstanding principal of the agreement, for a total$20,000, and accrued interest of $150,000 is included in accounts payable as of December 31, 2017 and September 30, 2017. See Note 13– Subsequent Events.

NOTE 6 – NOTES PAYABLE$1,530.

 

As of DecemberMarch 31, 2017, the Company2019, convertible notes had a note payable issued andtotal outstanding to a third-party lender with a total principleprincipal of $25,000$138,500 and accrued interest of $15,912. The note was due on June 30, 2015, has an interest rate of 12%. This note is in default and remains unpaid at December 31, 2017. The Company has$16,450. These liabilities have been able in the past to arrange equity or debt financing sufficient to pay off its notes, not in dispute, but there cannot be any assurance that the Company will be able to continue to attract such financing in the future.incorporated into liabilities from discontinued operations.

Derivative Liability

 

As of DecemberMarch 31, 2017,2019, the Company had three notes payable issued and outstanding withderivative liabilities were valued at $55,461, related to a former director with a total principle of $74,500 and accrued interest of $14,366. The three notes, in the amount of $47,000, $15,000 and $12,500, were issued on January 14, 2016. February 10, 2016 and February 29, 2016, respectively. The three notes areconvertible note due on the earlier of one week after the closing of a certain contemplated farm property acquisition or July 31, 2016, and have an interest rate of 10%September 2018 (listed above). The former director for all three notes is East West Secured Developments, LLC, an Arizona Limited Liability Company (“EWSD”) of which Mr. Brian Loiselle, the EWSD Managing Member, was also a former director of the Company. On June 30, 2016, the Company entered into Amendment #1 (the “EWSD Amendment”) to these three notes to extend the due date to one week after the closing of a certain contemplated farm property acquisition or October 31, 2016. The three notesThese liabilities have been reclassified to non-related party debt. Since the closing of the contemplated farm property never occurred, the Company has taken the position, pursuant to the language of the EWSD Amendments, that there is not legal date for repayment, and it intends to leave the subject notes on its Financial Statements until a mutual settlement agreement can be reached between Mr. Loiselle and the Company.incorporated into liabilities from discontinued operations.

 

On December 28, 2017, the Company entered into a note payable in the aggregate principal amount of $106,410. The Note matures on March 31, 2018, and bears interest at the rate of 12% per annum. As of December 31, 2017, the note balance and accrued interest is $106,410 and $105, respectively. This note remains unpaid at December 31, 2017.

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NOTE 7 – CONVERTIBLE NOTES

Convertible notes consist of the following:

  December 31, 2017 September 30,
2017
     
Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share and due December 2019. $5,000  $80,000 
Convertible note payable, annual interest rate of 12%, convertible into common stock at a variable rate per share and due June 2018  —     78,000 
Convertible note payable, annual interest rate of 8%, convertible into common stock at a variable rate per share and due November 2017  65,000   65,000 
Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share and due August 2020  50,000   50,000 
Convertible note payable, annual interest rate of 5%, convertible into common stock at a variable rate per share and due September 2018  82,500   82,500 
Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.30 per share and due October 13, 2020  20,000   —   
Unamortized debt discount  (56,864)  (91,480)
Unamortized debt discount due to beneficial conversion feature  (59,079)  (-) 
   106,557   81,459 
Less current portion  92,380   58,432 
Convertible debt, net of current portion and debt discount $14,177  $23,027 

During the year ended September 30, 2017, the Company entered into certain Note Purchase Agreements (collectively the “Purchase Agreements”) in connection with the issuance of certain convertible promissory notes, in the aggregate principal amount of $685,000. The Purchase Notes are due in 36 months. The Purchase Notes bear interest at the rate of 8% compounded monthly. The Purchase Notes, together with all interest as accrued, are each convertible into shares of the Company’s common stock at a conversion price of Eleven cents ($0.11) per share. Due to the beneficial conversion feature of these notes, the Company recorded $635,545 of debt discount as a contra liability and amortized $576,838 of the discount during the year ended September 30, 2017. During July 2017, certain note holders converted their respective principal and accrued interest into 5,720,066 shares of the Company’s common stock. During October 2017, certain note holders converted their respective principal and accrued interest into 707,153 shares of the Company’s common stock. As of December 31, 2017, the note balances and accrued interest are $5,000 and $419, respectively.

On June 26, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “Power Up Note”) in the aggregate principal amount of $78,000. The Power Up Note matures on June 30, 2018 (the “Maturity Date”), and bears interest at the rate of 12% per annum. After 180 days, the Note may not be prepaid. Any amount of principal or interest on this note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date. This note, together with all interest as accrued, is convertible into shares of the Company’s common stock at a 35% discount to the lowest trading price in the 10-day period ending on the latest complete Trading Day prior to the Conversion Date. Due to the beneficial conversion feature of this note, the Company recorded $78,000 of debt discount as a contra liability and amortized $57,707 of the discount during the three months ended December 31, 2017. During the quarter ended December 2017, this note along with accrued interest and a prepayment were paid in full.

On August 14, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “Kingdom Note”) in the aggregate principal amount of $65,000. The Note matures on November 14, 2017 (the “Maturity Date”), and bears interest at the rate of 8% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11 per share. Due to the beneficial conversion feature of this note, the Company recorded $65,000 of debt discount as a contra liability and amortized $31,056 of the discount during the three months ended December 31, 2017. As of December 31, 2017, the note balance and accrued interest is $65,000 and $1,995, respectively. This note is in default and remains unpaid at December 31, 2017, however, the Company and the Payee entered into a Debt Conversion Agreement in February, 2018 pursuant to which the Payee received shares of the Company’s Series A Convertible Preferred Stock in exchange for the full release of any and all obligations related to the Kingdom Note. Refer to NOTE 13. SUBSEQUENT EVENTS.

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On August 23, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “Hayden Note”) in the aggregate principal amount of $50,000. The Note matures on August 23, 2020 (the “Maturity Date”), and bears interest at the rate of 8% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11 per share. Due to the beneficial conversion feature of this note, the Company recorded $50,000 of debt discount as a contra liability and amortized $4,197 of the discount during the three months ended December 31, 2017. As of December 31, 2017, the note balance and accrued interest is $50,000 and $1,434, respectively. This note remains unpaid at December 31, 2017.

On September 12, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “First Fire Note”) in the aggregate principal amount of $82,500. The Note matures on September 12, 2018 (the “Maturity Date”), and bears interest at the rate of 5% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at a 35% discount to the lowest trading price in the 21-day period ending on the latest complete Trading Day prior to the Conversion Date. As of December 31, 2017, the note balance and accrued interest is $82,500 and $1,243. This note remains unpaid at December 31, 2017.

On October 13, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “Escala Note”) in the aggregate principal amount of $20,000. The Note matures on October 13, 2020 (the “Maturity Date”), and bears interest at the rate of 8% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.30 per share. Due to the beneficial conversion feature of this note, the Company recorded $12,667 of debt discount as a contra liability and amortized $913 of the discount during the three months ended December 31, 2017. As of December 31, 2017, the note balance and accrued interest is $20,000 and $346, respectively. This note remains unpaid at December 31, 2017.

NOTE 8 – DERIVATIVE LIABILITY

During June 2017, the Company entered into a Loan Agreement with an investor pursuant to which the Company issued a convertible promissory note in the principal amount of $78,000. The Note is convertible into shares of common stock at an initial conversion price subject to adjustment as contained in the Note. The note, together with all interest as accrued, is convertible into shares of the Company’s common stock at 65% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. The Note accrues interest at a rate of 12% per annum and matures on June 30, 2018. The note was paid in full during the three months ended December 31, 2017.

During September 2017, the Company entered into a Loan Agreement with an investor pursuant to which the Company issued a convertible promissory note in the principal amount of $82,500. The Note is convertible into shares of common stock at an initial conversion price subject to adjustment as contained in the Note. The note, together with all interest as accrued, is convertible into shares of the Company’s common stock at 65% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. The Note accrues interest at a rate of 5% per annum and matures on September 12, 2018.

Due to the variable conversion price associated with these convertible promissory notes, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date.

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The initial fair value of the embedded debt derivative of $238,785 was allocated as a debt discount in the amount of $147,500 and excess $91,285 was charged to interest expenses, loss on derivative. The fair value of the described embedded derivative was determined using the Black-Scholes Model with the following assumptions:

 

 September 12, 2017June 26, 2017

March 31,

2019

(1) dividend yield of0%;0%;
(2) expected volatility of265%336%;250%,
(3) risk-free interest rate of1.27%2.18%;1.20% - 1.24%,
(4) expected life of1 year1 year0.33 year;
(5) fair value of the Company’s common stock of$0.540.08 per share.$0.67 per share.

 

DuringNote 4 – Prepaid Expenses

The Company has available to its credit through certain trade organizations as a result of barter transactions for services. These amounts are available for use with certain vendors and establishments who are part of the three months endedsame trade organization. These balances do not represent cash available to the Company, and as such are recorded as the prepaid expenses account as incurred.

As of March 31, 2019 and December 31, 20172018, the available barter credit balances were $23,222 and 2016, the Company recorded the gain (loss) in fair value of derivative and derivative expense in the amount of $61,221 and $(14,319), respectively. 

For the three months ended December 31, 2017, $79,148 and $-0-, were expensed in the statement of operation as amortization of debt discount related to above notes and shown as interest expenses,$22,760, respectively.

 

Note 5 – Bridge Loan

As of March 31, 2019, the Company received advances totaling $746,000 from certain unrelated third parties. The following table representsformal structure and terms of the Company’s derivative liability activity foradvances have not yet been determined by the Company and the third parties. Subsequent to the period ended:ended March 31, 2019 the Company has received an additional advances totaling $62,080 from the same parties.

 

Balance at September 30, 2017 $231,733 
Change in fair value of derivative at period end  (61,221)
Derivative liability written off due to payment of related debt  (67,953)
Balance at December 31, 2017 $102,559 
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NOTE 9

Note 6SHARE CAPITALCapital Stock

 

The Company is authorized to issue 475,000,000 shares of $.001 par value common stock and 25,000,000 shares of$.001of $.001 par value preferred stock.

 

As of DecemberMarch 31, 2017,2019, the Company had 40,504,3914,518,250 shares of its common stock issued and outstanding, with 117,500742,500 shares of its Series A Convertible Preferred Stock issued and outstanding, and -0-0 shares of its Series B Convertible Preferred Stock issued and outstanding..

On December 29, 2017, the Companyoutstanding, 1 share of its Series C Super-Voting Preferred Stock issued 2,000,000 to Duplitrans and the legal counseloutstanding, and 1,000 shares of Duplitrans in regards to the agreement with GandTex. On the date of the settlement, October 24, 2017, the shares had a fair market value of $640,000. Accordingly, the Company recorded $640,000 of stock based compensation during the three months ended December 31, 2017. All of the Company’s 10,000,000its Series BD Senior Convertible Preferred Stock previously issued to GandTex, were cancelled during the quarter ended December 31, 2017.and outstanding.

 

Description of Preferred Stock:

 

Series A Preferred Stock

 

As authorized in the Company’s Amended and Restated Articles of Incorporation, the Company has 2,000,000 shares of Series A Preferred Stock (“Series A Stock”) authorized with the following characteristics:

 

Holders of the Series A Stock shall beare entitled to receive dividends or other distributions with the holders of the Common Stockcommon stock on an “as converted” basis when, as, and if declared by the Board of Directors of theCorporation.

Company.

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Holders of shares of Series A Stock, upon Board of Directors approval, may convert at any time following the issuance upon sixty-one (61) day written notice to the Corporation.Company. Each share of Series A Preferred Stock shall be convertible into such number of fully paid and non-assessable shares of Common Stockcommon stock as is determined by multiplying the number of issued and outstanding shares of the Corporation’s Common StockCompany’s common stock together with all other derivative securities, including securities convertible into or exchangeable for Common Stock,common stock, whether or not then convertible or exchangeable (b) subscriptions, rights, options and warrants to purchase shares of Common Stock,common stock, whether or not then exercisable, but entitled to vote on matters submitted to the Shareholders (collectively, “Derivative Securities”),shareholders, issued by the CorporationCompany and outstanding as of the Datedate of Conversion,conversion, by .000001, then multiplying that number of shares of Series A Stock to be converted.

 

In case of any consolidation, or merger of the Corporation,Company, or a change of control of the CorporationCompany’s Board, the holders are entitled, without any further action required or permission by the Board, to exercise their conversions rights. In the case of any consolidation, merger of the Company, the Board shall mail to each holder of Series A Stock at least thirty (30) days prior tothe consummation of such event, a notice thereof and each such holder shall have the option to either (i) convert such holder’s shares of Series A Stock into shares of Common Stockcommon stock pursuant to this paragraph and thereafter receive the number of shares of Common Stockcommon stock or other securities or property, or cash, as the case may be, to which a holder of the number of shares of Common Stockcommon stock of the CorporationCompany deliverable upon conversion of such Series A Stock would have been entitled upon conversion immediately preceding such consolidation, merger or conveyance, or (ii) exercise such holder’s rights pursuant to Section 8.1(a) hereof; provided however that the Series A Stock shall not be subject to or affected as to the number of Conversion Sharesconversion shares or the redemption or liquidation price by reason of any reverse stock split affected prior or as a result of any reorganization.

 

In the event of a liquidation, the holders of shares of the Series A Stock shall be entitled to receive, prior to the holders of the other series of Preferred Stockpreferred stock and prior and in preference to any distribution of the assets or surplus funds of the CorporationCompany to the holders of any other shares of stock of the CorporationCompany by reason of their ownership of such stock, an amount equal to Five Dollarfive dollars ($5.00) per share with respect to each share of Series B Stock owned as of the date of Liquidation, plus all declared but unpaid dividends with respect to such shares, and thereafter they shall share in the net Liquidation proceeds on an “as converted basis” on the same basis as the holders of the Common Stock.

common stock.

 

The holders of each share of Series A Stock shall have that number of votes as determined by multiplying the number of issued and outstanding shares of the Corporation’s CommonCompany’s common Stock together with all other derivative securities issued by the CorporationCompany and outstanding as of the Datedate of Conversion,conversion, whether or not then convertible or exchangeable, entitled to vote on matters submitted to the Shareholders,shareholders, by .000001, then multiplying that number of shares of Series A Stock to be converted.

13

 

the

● The Corporation shall have the option to redeem all of the outstanding shares of Series A Stock at any time on an “all or nothing” basis, unless otherwise mutually agreed in writing between the Corporation and the holders of shares of Series A Stock holding at least 51% of such Series A Stock, beginning ten (10) business days following notice by the Corporation,Company, at a redemption price the higher of (a) Five Dollarfive dollars ($5.00) per share, or (b) Fiftyfifty percent (50%) of the trailing average highest closing Bidbid price of the Corporation’s Common StockCompany’s common stock as published atquoted on www.OTCMarkets.com or the Corporation’sCompany’s primary listing exchange on the date of Noticenotice of redemption, unless otherwise modified by mutual written consent between the CorporationCompany and the Holdersholders of the Series A Stock (the "Conversion Price"). Redemption payments shall only be made in cash within sixty (60) days of notice by the CorporationCompany to redeem.

 

The shares of Series A Stock acquired by the CorporationCompany by reason of conversion or otherwise can be reissued, but only as an amended class, not as shares of Series A Stock.

16

Series B Preferred Stock

 

In conjunction

Series C Preferred Stock

● 1 share of the Company’s authorized Series C Preferred Stock is issued and outstanding. Although the Series C Preferred Stock carries no dividend, distribution, liquidation or conversion rights, each share of Series C Preferred Stock grants the holder 50.1% of the total votes of all classes of capital stock of the Company and are able to vote together with the unwindingcommon stockholders on all matters. Consequently, the holder of the Asset Acquisition with GandTex,Company’s Series C Preferred Stock is able to unilaterally control the Company cancelled all 10,000,000election of its board of directors and, ultimately, the direction of the Company.

Series D Preferred Stock

● 1,000 of the Company’s authorized 25,000,000 shares of itspreferred stock are designated as Series BD Preferred Stock. Although the Series D Preferred Stock (“Series B Stock”). Pursuant to the terms of the Series B Stock, thehave no voting rights, shares of Series BD Preferred Stock acquired byin the Corporation by reason of conversion or otherwise, can be reissued but only as an amended class, not asaggregate are convertible into fifty million two hundred thirty-nine thousand five hundred forty-one (50,239,541) shares of Series B Stock.

Therefore,common stock of the Company returnedCompany. Additionally, the Series B Stock to its authorized but unissuedD Preferred Stock has pari passu dividend, distribution and no longer has a class of Series B Convertible Preferred Stock.liquidation rights with the common stock.

 

Stock Options

 

On November 15, 2016, the Board approved the grant of 1,500,000 common stock purchase options to Fred Luke, the Company’s President, at an exercise price of not less than One Hundred Ten percent (110%)As a result of the ten (10) day lowest trailing average closing bid price of such shares onReverse Merger the date of executionCompany has outstanding the following stock options as of the Option Agreement which was Fourteen cents ($0.14) per share and subject to certain adjustments on November 15, 2016. The options vested immediately.period ended March 31, 2019

 

On January 31, 2017, the Board approved the grant of 120,000 common stock purchase options Dr. Youxue Wang, the Director of Research for NuLife BioMed. The option vested immediately. The exercise price of the options was calculated at January 31, 2017 at One Hundred Ten percent (110%) of the 10-day trailing average closing Bid price of such shares, which was Seventy cents ($0.70) per share.

  Shares 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Term

 

 

Aggregate

Intrinsic Value

 Outstanding, March 31, 2019   2,120,000  $0.17   1.00  $355,200 
 Exercisable, March 31, 2019   2,120,000  $0.17   1.00  $355,200 

 

On May 15, 2017, the Board approved the grant of 1,500,000 common stock purchase options to John Hollister, the Company’s former CEO, at an exercise price of not less than One Hundred Ten percent (110%) of the ten (10) day lowest trailing average closing bid price of such shares on a certain date of agreement which was Fourteen cents ($0.12) per share and subject to certain adjustments on October 17, 2016. The options vested based on certain goals and as such 500,000 common stock options were earned prior to Mr. Hollister’s employment ending with the Company, the remaining 1,000,000 common stock options expired due to his resignation.

Stock option transactions for the three months ended December 31, 2017 are summarized as follows:

  Shares  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Term

 

Aggregate

Intrinsic Value

Outstanding, September 30, 2017  3,120,000  $0.17   2.26$355,200  
Granted  -   -   -$-
Exercised  -   -      
Expired  (1,000,000)   0.12   2.08 $120,000 
Outstanding, December 31, 2017  2,120,000  $0.17   2.00$355,200
Exercisable, December 31, 2017  2,120,000  $0.17   2.00$355,200

The initial fair value of the options was $308,909 charged to operating expense during the year ended September 30, 2017. The fair value of the option was determined using the Black-Scholes Model with the following assumptions:

(1) dividend yield of0%;
(2) expected volatility of236%,313%,223%
(3) risk-free interest rate of1.28%,1.46%,.98%
(4) expected life of3 years, and
(5) fair value of the Company’s common stock of$0.13, $0.60, $0.11 per share.

 1714 

 

WarrantsNote 8 – Commitments & Contingencies

 

On June 10, 2016, the Board approved the grant of 250,000 common stock purchase warrants to a consultant at an exercise price of not less than One Hundred Ten percent (110%) of the ten (10) day lowest trailing average closing bid price of such shares on the date of execution of the warrant which was $0.66 per share. The warrants vested immediately.Office Lease

 

Warrant transactions for the three ended December 31, 2017 are summarized as follows:

  Shares  

Weighted Average

Exercise

Price

  

Weighted Average Remaining

Term

 

Aggregate

Intrinsic Value

Outstanding, September 30, 2017  250,000  $0.66   2.70  
Granted  -   -   -  
Exercised  -   -      
Expired  -   -      
Outstanding, December 31, 2017  250,000  0.66   2.44  
Exercisable, December 31, 2017  250,000  $0.66   2.44  

The initial fair value of the options was $144,800 charged to operating expense during the year ended September 30, 2017. The fair value of the option was determined using the Black-Scholes Model with the following assumptions:

(1) dividend yield of0%;
(2) expected volatility of249%
(3) risk-free interest rate of1.5%
(4) expected life of3 years, and
(5) fair value of the Company’s common stock of$0.60 per share.

The Company recorded $-0- and $186,904 of stock compensation expense in the statements of operations forDuring the three months ended DecemberMarch 31, 2017 and 2016, respectively, related to non-vested share-based compensation arrangements granted under existing stock option plans.

As of December 31, 2017, there was $0 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under existing stock option plans.

NOTE 10 - CONTINGENCY

As of December 31, 2017, as described in Note 6,2019, the Company has accrued $53,200rented space on a month-to-month basis in accrued expenses, note payable of $74,500 and accrued interest of $14,366 due EWSD. At September 30, 2017 the Company owed EWSD the aggregated amount of $138,311,a Class 1 office in Lafayette, LA which it currently occupies. The monthly rent is past due and has been in default since October 31, 2016. On top of the amount accrued by the Company, Mr. Loiselle had demanded for a penalty fee of $101,235, which is approximately 18% monthly default rate on the amount past due. We believe the penalty fee imposed is invalid and are currently in dispute with Mr. Loiselle. See NOTE 6. above.

NOTE 11 – FORGIVENESS OF ACCOUNTS PAYABLE

On November 15, 2017, a service vendor with a balance due of $73,644 agreed to cancel the debt owed by The Company. Accordingly, the Company recorded $73,644 of forgiveness of debt during$3,000. For the three months ended DecemberMarch 31, 2017.2019 and 2018, the Company incurred $9,000 and $0 in rent expense, respectively.

18

 

NOTE 12 - LEASE AGREEMENTLaboratory Lease

 

During May 2017, the Company executed a 5-year lease for a laboratory located at NOVA Southeastern University at which the Company willto be utilizing theused by NuLife Technique to process organs, as well asfor conducting bench research to better characterize and assess the impact of the technique.research. The lease calls for monthly payments of $2,582, which includes the initial base rent of $1,925 along with applicable taxes and shared operating expenses. The lease required a security deposit in the amount of $4,871 and requires a 4% increase in base rent annually. Rent expense for three monthsDuring the year ended December 31, 20172018, the agreement was terminated, with rent declared due and 2016 was $8,225payable immediately in the amount of $142,944, including $46,052 past due rent, $92,850 estimated future rent payments, and $-0-, respectively.$4,042 brokerage fees. These liabilities have been incorporated into liabilities from discontinued operations.

 

Future minimum lease payments are as follows for the years ending:

 September 30, 2018 (remaining months) $17,633 
 September 30, 2019  24,344 
 September 30, 2020  25,318 
 September 30, 2021  26,331 
 September 30, 2022  18,016 
      
   $111,642 

NOTE 13 - SUBSEQUENT EVENTSLitigation

 

On January 30, 2018, the Master Service Agreement as described in note 5 entered into on June 10, 2017 was terminated andFrom time to time the Company receivedmay become a refundparty to litigation in the normal course of $38,000 in cash.business. Management believes that there are no current legal matters that would have a material effect on the Company’s financial position or results of operations.

 

 1915 

 

Effective February 20, 2018 the Company entered into two Debt Conversions Agreements, one with Kingdom Building Inc. (“Kingdom”)Item 2. Management’s Discussion and MZHCI LLC (“MZ”) pursuant to which KingdomAnalysis of Financial Condition and MZ agreed to exchange an aggregateResults of approximately $445,296 of combined Notes Payable and Accounts Payable into 694,041 and 1,086,176 shares, respectively, of the Company’s Series A Convertible Preferred Stock.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSOperations

 

Forward-Looking Statements

The

This quarterly report contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words “believe,” “anticipate,” “expect,” “will,” “estimate,” “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in this Form 10-Q is intended to update the information contained“Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017December 31, 2018. The terms GWSN,” “we,” “us,” “our,” and presumesthe “Company” refer to Gulf West Security Network, Inc.

Business Overview

 Gulf West Security Network, Inc. and its wholly owned subsidiaries, are principally engaged in the sale, installation, servicing, and monitoring of electronic home and business security and automation systems in the United States.

Gulf West Security Network, Inc., a Louisiana corporation (“Gulf West”) and LJR are active in the engineering, design, installation, remote monitoring and after-market servicing of electronic intrusion alert and fire detection systems for homes and businesses (the “alarm industry”). Both Gulf West and LJR are based in Lafayette, Louisiana and were owned by Louis J. (“Lou”) Resweber, a long-time veteran of the alarm industry, who has also previously served as a corporate officer, board member and executive consultant to a number of NYSE and NASDAQ-listed public companies over the past 35 years.

Merger

On August 9, 2018, the Board of Directors of the Company through its wholly-owned subsidiary NuLife Acquisition Corp. (“NuLife Sub”) approved and executed an agreement of merger and plan of reorganization (the “Merger Agreement”), to become effective at such time as the articles of merger have been filed with the Secretary of State of Louisiana (the “Effective Time”), and after the satisfaction or waiver by the parties thereto of the conditions set forth in Article VI of the Merger Agreement. Pursuant to the terms of the Merger Agreement, and in exchange for all one hundred (100) issued and outstanding shares of LJR Security Services, Inc. (“LJR”), LJR will receive one thousand (1,000) shares of series D senior convertible preferred stock, par value $.001 per share (the “Series D Preferred Stock”) of the Company, convertible into fifty million two hundred thirty-nine thousand five hundred forty-one (50,239,541) shares of common stock of the Company. In addition, the LJR shareholder will receive one share of series C super-voting preferred stock of NuLife which grants the holder 50.1% of the votes of NuLife at all times.

Our corporate office is located at Gulf West Security Network, Inc., Park Tower Building, 4th Floor, Suite 4200-A, 400 East Kaliste Saloom Road, Lafayette, Louisiana, 70508, (337) 304-4043.

Critical Accounting Policies and Estimates

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that readers have access to,affect the reported amounts of assets and will have read,liabilities, and disclosure of contingent liabilities at the "Management's Discussion and Analysisdate of Financial Condition and Results of Operations" and other information contained in such Form 10-K. The following discussion and analysis also should be read together with ourthe financial statements and the notesreported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Management makes estimates that affect certain accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the financial statements included elsewhereperiod in this Form 10-Q.which such adjustments are determined.

Recent Accounting Pronouncements

 

Except for historical information,See Note 2 of the matters discussed in this section are forward lookingaccompanying consolidated financial statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report. We strongly encourage investors to carefully read the factors described elsewhere in this report in the section entitled "Risk Factors" for a descriptiondiscussion of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

Company Overview

As a result of the Company not receiving the working capital promised by certain third parties, development of the two business segments described below has been slow, and generated no revenues since its inception on October 15, 2013. In August 2017, changing our name and pursuing the various biomedical opportunities which had been presented to us, one of which, the patents and other rights owned by GandTex seemed very attractive and we elected to acquire the patents purportedly owned by GandTex and develop what is now termed the “NuLife Process” or NuLife Technique”. As a result of operating difficulties relating primarily to the hurricanes and related severe weather in southern Florida, the home of our Animal Trials, and the discovery that certain critical information related to the actual surgical process has been withheld by the inventor of the NuLife Process, we suspended the organ transplantation activities in October 2017. In connection with the return of the Exclusive License to Duplitrans and the return of and the patent rights acquired from GandTex pursuant to individual Settlement and Release Agreements with Duplitrans and GandTex (the “Settlement Agreements).

While the organ transplantation activities were suspended we began investigating other applications of the NuLife Process, in particular the Wound Care Technique.To date, the Company’s participation in the proposed Wound Care activities are still in the investigation stage, without significant expenditures by the Company due to our efforts to maintain adequate funding for our corporate operations. Further, the commercial relationship between the NuGenesis and Duplitrans has not yet been established in an adequate definitive joint venture agreement, but only through the MOU during this exploratory stage of the business. Neither the Company or NuGenesis currently have the necessary funding to resume the development of the Wound Care Technique, and the reduction of the MOU to a definitive agreement is contingent upon either the Company or NuGenesis obtaining the funding necessary to carry the proposed development through to completion

Online marketplace and community

The Company's initially-defined business strategy is to acquire and/or develop and market software and services that will significantly enhance the performance and functionality of the Internet services used by individuals and by small to medium sized businesses. However, .it appears that the Website will not be competitive in the “service” sector of the Internet space without certain modifications, , but could have other applications which we may consider pursuing depending upon the results of the current Animal Trials, our investigation of the Wound Care Process and the potential opportunities in the oncology data management space. Since the acquisition of the organ transplant technology, we narrowed the focus of our platform to the healthcare industry and have, for now, suspended the modification of the Website.recently issued accounting standards.

 2016 

 

However, with theSettlement Agreements and unwinding of the Asset Acquisition, and the shift in our structure and direction in the healthcare industry to attempt to become involved with NuGenesis in the development of the Wound Care Technique, as funding becomes available we intend to either (a) pursue the joint venture envisioned by the MOU with NuGenesis in the development of the Wound Care Technique, or (b) refocus on our Website and (i) modifying our online marketplace and community to focus on healthcare professionals and those in need of individual at-home and post-operative care, together with Hospitals and physicians who need part time or additional personnel due for expansion, or (ii) simply updating the Website as www.anytimeJobs.com.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions. We have identified in Note 2 - "Summary of Accounting Policies" to the Financial Statements contained in this Quarterly Report certain critical accounting policies that affect the more significant judgments and estimates used in the preparation of the financial statements.

Going Concern

Our auditor has issued a "going concern" qualification as part of its opinion in the Audit Report for the fiscal year ended September 30, 2017, and our financial statements as of and for the year then ended include a "going concern" footnote (See Footnote 3 – Going Concern) disclosing that our ability to continue as a going concern is contingent on us to be able to raise working capital to generate revenue by completing and launching our online marketplace and community portal and implementing the new business strategy of developing the NuLife Process.

Results of OperationOperations

 

Three Months Ended Decembermonths ended March 31, 20172019 and 20162018

 

Revenue.

Revenue was $0We had revenue of $3,869 for the three months ended DecemberMarch 31, 20172019, as compared to $4,985 for the three months ended March 31, 2018 a decrease of $1,116 or 22%. The decrease in revenue was due toa lesser concentration on new alarm system sales and 2016.installations, with our focus moving more toward alarm system monitoring and the corresponding recurring monthly revenue (RMR) that is associated with monitoring services.

 

Cost of Sales.Product

 

Cost of sales was $0product sold for the three months ended DecemberMarch 31, 2017 and 2016.

Operating Expenses.

Operating expenses were $811,769 and $402,2602019 was $1,989, as compared to $1,052 for the three months ended DecemberMarch 31, 20172018.

General and 2016, respectively. Operating expenses consist ofAdministrative

Our general and administrative expenses and related party compensation. During the three months ended December 31, 2017 and 2016 general and administrative expenses were $768,775 and $98,856, respectively. During the three months ended December 31, 2017 and 2016, the Company recorded $640,000 and $-0- of stock-based compensation to non-related parties. During the three months ended December 31, 2017 and 2016 related party compensation was $42,994 and $303,404, respectively. Related party compensation included $186,904 of stock-based compensation during the three months ended December 31, 2016.

21

Interest Expense.

Interest expense was $201,254 and $36,479 for the three months ended DecemberMarch 31, 2017 and 2016, respectively, which related2019 were $263,515, an increase of $185,842, or 239%, compared to interest accrued on borrowings, which were greater at December 31, 2017 as a result of newly issued debt. Included in interest expense$77,673 for the three months ended DecemberMarch 31, 20172018. General and 2016, was also $91,617administrative expenses increased mainly due to legal and $14,392, respectively, of non-cash interest expense related toaccounting costs associated with the amortization of the debt discount and beneficial conversion feature.public company operations.

 

Interest Income.Sales and marketing

 

Interest income was $-0-Our sales and $504marketing expenses for the three months ended DecemberMarch 31, 2017 and 2016, respectively, which related2019 were $10,044, compared to interest due on notes receivable and interest earned in bank accounts, which were greater in$9,768 for the three months ended DecemberMarch 31, 2017.2018.

 

ForgivenessIncome (loss) from discontinued operations

Subsequent to the Merger, management decided to discontinue the activities of Accounts Payable.NuLife. As a result, we recorded income of $50,512 primarily due to a change in the fair value of derivative liability.

Net loss

 

DuringAs a result of the foregoing, for the three months ended DecemberMarch 31, 2017, a vendor cancelled the amount the Company owed. Accordingly, the Company recorded a forgiveness of debt in the amount of $73,644.

Gain(Loss) on derivative.

The Company2019, we recorded a net gain on derivative in the amountloss of $61,221 in$221,167 compared to a net loss of $83,507 for the three months ended DecemberMarch 31, 2017 compared to a loss on derivative of $14,319 during the three months ended December 31, 2016.2018.

 

Liquidity and Capital Resources

 

The following isCompany’s consolidated financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a summarygoing concern, which contemplates the realization of assets and liquidation of liabilities in the Company's cash flows provided by (used in) operating, investing,normal course of business. The Company has limited commercial experience and financing activitieshad a net loss of $221,167 for the three months ended DecemberMarch 31, 20172019, and 2016:an accumulated deficit of $1,735,547 at March 31, 2019. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern. The accompanying consolidated financial statements for the three months ended March 31, 2019, have been prepared assuming the Company will continue as a going concern. The Company’s cash resources will likely be insufficient to meet its anticipated needs during the next twelve months. The Company will require additional financing to fund its future planned operations, including research and development and commercialization of its products.

 

  2017 2016
Operating Activities $(92,493) $(182,568)
Investing Activities  -     - 
Financing Activities  48,410   685,000 
Net Effect on Cash $(44,083)  $502,432 

Operating Activities

 

Since acquiringDuring the business plan and Website, during our fiscal yearthree months ended September 30, 2016, mostMarch 31, 2019, we used $117,392of cash in operating activities primarily as a result of our resourcesloss of $271,679from continuing operations, offset by net changes in working capital items of operating assets and work was devoted toliabilities of $154,287.

During the developmentthree months ended March 31, 2018, we used $91,025 of the Website segmentcash in operating activities primarily as a result of our business. However, this has been suspended for the time being due to certain modifications needed to eliminate the risknet loss of cyber-attacks. When those procedures are completed, which we believe will occur over several months following the receipt$83,507, depreciation expenses of adequate financing, we may resume work on our Website as well further internal development$100, and net changes in operating assets and liabilities of software for which we have developed our initial framework of and completed some coding. We believe that the work needed to initiate and complete the software development for our online marketplace and community portal, attract developers, and initiate our marketing plans, including the development of a saleable product suite, may be in excess of $100,000 if outside contractors and experts are used. If we are able to secure funding to outsource these procedures, of which there are no assurances, we will then commence the launch of our intended services and software products to the public. If we are able to use internal resources only (primarily consisting of the services of our president and chief financial officer), the process will take much longer and our initial launch may be limited to a much smaller target market. If we are unable to raise any funds from third party sources, the development costs would have to be funded by current shareholders, management or by third-parties through the issuance of Convertible or Demand Promissory Notes. While we have previously engaged the services of an established software development firm which we used on an as "needed basis", their involvement is limited by our ability to raise financing. Our goal would be to have software products available, services available, multiple sales channels and a comprehensive corporate website up and running within one year after receipt of adequate financing, but there is no way of estimating what the likelihood of achieving that goal would be.$7,617.

 

 2217 

 

If a market for our shares ever develops, of which there can be no assurances, we may continue to use restricted shares of our common stock or stock options to compensate employees/consultants and independent contractors wherever possible. We cannot predict the likelihood or source of raising capital or funds that may be needed to complete the development of our business plan and its stages as outlined above.

Financing Activities

 

AsDuring the three months ended March 31, 2019, financing activities provided $75,000 in proceeds from a public company, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year over the next few years and may be significantly higher if our business volume and transactional activity increases, and we would not be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for an opinion on our system on internal controls by our independent audit firm unless and until we exceed $75 million in market capitalization. These obligations may reduce our ability and resources to expand our business plan and activities. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling outstanding obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of these efforts. We will also reduce compensation levels paid to management (if we attract or retain outside personnel to perform this function) if there is insufficient cash generated from operations to satisfy these costs.bridge loan.

 

We are presently seeking equity and debt financing for both segments of our business. However, these actions, if successful, could result in dilution ofDuring the ownership interests of existing shareholders and further dilute common stock book value, and such dilution may be material. The Company may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due them.

As of December 31, 2017, we owed $610,410 in accounts payable, accrued expenses and to related parties, a substantial portion of which are past due. The only agreements, written or oral, with any vendors or other providers for payment of services or expenses are with respect to (i) contracted investor relation services, and (ii) compensation to the Company's President, our Chief Executive Officer and our Chief Financial Officer, one of whom is a director. There are no other significant liabilities at December 31, 2017.

As of December 31, 2017, the Company had one note payable issued and outstanding to a third-party lender with a total principle of $25,000 and accrued interest of $15,912. The note was due on June 30, 2015, has an interest rate of 12%. This note is in default and remains unpaid at December 31, 2017.

As of December 31, 2017, the Company had three notes payable issued and outstanding with a former director with a total principle of $74,500 and accrued interest of $14,366. The three notes, in the amount of $47,000, $15,000 and $12,500, were issued on January 14, 2016. February 10, 2016 and February 29, 2016, respectively. The three notes are due on the earlier of one week after the closing of a certain contemplated farm property acquisition or July 31, 2016, and have an interest rate of 10%. The former director for all three notes is East West Secured Developments, LLC, an Arizona Limited Liability Company (“EWSD”) of which Mr. Brian Loiselle, the EWSD Managing Member, was also a former director of the Company. On June 30, 2016, the Company entered into Amendment #1 to these three notes to extend the due date to one week after the closing of a certain contemplated farm property acquisition or October 31, 2016. The three notes have been reclassified to non-related party debt. See NOTE 6 above.

On December 28, 2017, the Company entered into a note payable in the aggregate principal amount of $106,410. The Note matures onmonths ended March 31, 2018, financing activities provided $100,000 in proceeds from a bridge loan and bears interest at the rate$1,796 of 12% per annum. As of December 31, 2017, the note balance and accrued interest is $106,410 and $105, respectively. This note remains unpaid at December 31, 2017net contribution.

 

As of DecemberOff-Balance Sheet Transactions

At March 31, 2017,2019, the Company had five convertible notes payable issued and outstanding with a total principle of $222,500 and accrued interest of $5,437. The notes are due December 31, 2017 through October 13, 2020 anddid not have interest rates of 5% to 12%. The notes remain unpaid as of December 31, 2017.any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

 

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

23

Contractual Obligations

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Item 3. Quantitative and Qualitative Disclosures aboutDisclosure About Market RisksRisk

 

Not applicable because we areAs a smaller reporting company.company, we are not required to provide the information required by this Item 3.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures 

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s President (the “President”) and principal Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) asAs of the end of the period covered by this report. Based upon that evaluation,Form 10-Q, management performed, with the Company’s Presidentparticipation of our principal executive officer and principal financial officer, concluded thatan evaluation of the Company’seffectiveness of our disclosure controls and procedures were not effectiveas defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that the Company fileswe file or submitssubmit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’sour management, including the Company’s Presidentour principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2019, our disclosure as a result of continuingcontrols and procedures were not effective.

Due to resource constraints, material weaknesses (such asare evident to management regarding our inability to generate all the absencenecessary disclosure for inclusion in our filings with the Securities and Exchanges Commission, which is due to the lack of resources and segregation of duties. We lack sufficient personnel with the appropriate level of knowledge, experience and training in GAAP to meet the demands for a public company, including the accounting skills and understanding necessary to fulfill the requirements of GAAP-based reporting. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews. In addition, the Company has not established an audit committee, does not have any independent outside directors on the Company’s Board of Directors, and absencelacks documentation of qualified independent directors) in its internal control over financial reporting.processes.

    

Changes in Internal Controls OverControl over Financial Reporting

 

There have beenwere no changes in the Company'sCompany’s internal control over financial reporting during the latest fiscalfirst quarter of 2019 that have materially affected, or are reasonably likely to materially affect, the Company'sCompany’s internal control over financial reporting.

 

24

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company owes on promissory notes that have an aggregate principal amount of $74,500 and are simple promissory notes with 10% annual interest to EWSD. The notes are in default, but there is not a default interest provided in the notes. Therefore, the notes continue to accrue interest at 10% per annum until paid or collected. Mr. Loiselle is demanding 18% per month interest for the past four months to the present. The Company has disputed this interest that is not detailed on the notes. Furthermore, Mr. Loiselle is claiming unpaid compensation of $10,000 per month for services without an agreement with the Company. These charges are also being disputed by the Company. These disputes represent a material risk, and may be litigated in the future other than the aforementioned, the Company currently has no other litigation pending, threatened or contemplated, or unsatisfied judgments.

From time to time, we are also a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with contractors and suppliers. While the outcome of these legal proceedings cannot at this time be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

Not applicable because we are a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In October 2013, following the Company's incorporation on October 15, 2013, the Company issued 7,250,00 shares of our common, now 21,750,000 shares following the 3:1 forward stock split, stock to its founder, Derek Cahill, as consideration for the purchase of a business plan along with a website. The acquisition of the business plan and website was valued at $72,500.

On October 29, 2013, the Company completed a private placement whereby it issued 5,400,000 shares of common stock to accredited investors at $0.003 per share for total gross proceeds of $18,000.

On April 16, 2014, the Company completed a public offering whereby it issued 1,735,800 shares of common stock at $0.042 per share for total gross proceeds of $72,325. The Company's Registration Statement on Form S-1 was declared effective March 6, 2014.

On August 7, 2015, the Company granted 100,000 shares of restricted common stock to its chief operating officer. On the date of the grant, the shares were valued at $.61 per share which was the unadjusted closing share price on that date for a fair value of $61,000. The shares vest over a six-month period, with the vested shares recorded on the accompanying balance sheet under equity - shares to be issued. The subject 100,000 shares of common stock will be issued in a subsequent period.

The Company amended and restated that certain outstanding promissory note of the Company, dated July 3, 2015, and in the principal amount of $50,025 (the "Default Note"). The replacement convertible promissory note (the “Exchange Note”) matures on December 31, 2017 (the “Maturity Date”), and bears interest at the rate of 8% per annum, and the principal and interest due thereunder may be prepaid at any time. The Exchange Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11, which amount represents the average trailing average high closing Ask price of the Company’s common stock as of the date of issuance of the Exchange Note.

On September 2, 2016, the Company entered into those certain Note Purchase Agreements (collectively, the “Purchase Agreements”) in connection with the issuance of certain convertible promissory notes (collectively, the “Purchase Notes”) in the aggregate principal amount of $50,000. All of the Purchase Notes mature thirty-six months from the date of issuance (the “Maturity Date”), and bear interest at the rate of 10% per annum. Each of the Purchase Notes may be prepaid until the Maturity Date at 110% of the principal and interest amount outstanding. The Purchase Notes, together with all interest as accrued, are each convertible into shares of the Company’s common stock at 50% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. The Purchase Agreements and the Purchase Notes contain representations, warranties, conditions, restrictions, and covenants of the Company that are customary in such transactions with smaller companies.

25

Also, on September 2, 2016, the Company amended and restated the Default Note. The Exchange Note matures on December 31, 2017, and bears interest at the rate of 8% per annum, and the principal and interest due thereunder may be prepaid at any time. The Exchange Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11, which amount represents the average trailing average high closing Ask price of the Company’s common stock as of the date of issuance of the Exchange Note.

The Purchase Notes may be accelerated by the holders thereof in the event of default. In addition, the amounts due and payable under the Purchase Notes (and, consequently, the number of shares of common stock convertible thereunto) may be increased to 150% of the principal and interest amounts of the Purchase Notes. The Purchase Notes are a direct financial obligation of the Company and are considered a current liability of the Company for accounting purposes.

We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above private placement issuances. We believed that Section 4(2) was available because:

• None of these issuances involved underwriters, underwriting discounts or commissions

• We placed restrictive legends on all certificates issued

• No sales were made by general solicitation or advertising

• Sales were made only to accredited investors

In connection with the above transactions, we provided the following to all investors:

• Access to all our books and records

• Access to all material contracts and documents relating to our operation

• The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.

Pursuant to the terms of the Asset Purchase Agreement with GandTex, on December 30, 2016 the Board approved the issuance of 10,000,000 shares of the Company’s Series B Convertible Preferred Stock to GandTex. The shares were released to GandTex concurrent with the closing on January 29, 2017.

On January 20 , 2017, the Company entered into a Debt Conversion Agreement (the “Conversion Agreement”) in respect of $13,750 of the accruing monthly fees due to MZHCI, LLC(“MZ”) by the Company pursuant to the Investor Relations Consulting Agreement between MZ and the Company dated April 1, 2015 (the “Debt”) together with a release by MZ in favor of the Company for any claims for reimbursement of any and all due diligence expenses, investigative costs or any other type of fees or costs incurred by MZ related to the recent purchase by the Company of the GandTex Assets. Pursuant to the terms of the Conversion Agreement, the Company issued to MZ an aggregate of 55,000 shares of restricted Series A Convertible Preferred Stock.

On February 28, 2017 the Company entered into an Advisory Agreement with Global Business Strategies Inc.(“Global“), a Company owned by the Company’s President Fred G. Luke (“the “Global Agreement”), pursuant to which the Company retained Global to provide management advice and corporate development strategies, and to make Mr. Luke available to serve as the Company’s President, for an aggregate of $8,500 per month and, subject to the condition that Global effected filing of the Company’s its Quarterly Report for the period ending December 31, 2016 on Form 10-Q on a timely basis, Global received an aggregate of 55,000 shares of restricted Series A Convertible Preferred Stock.

On June 26, 2017, the Company entered into a Securities Purchase Agreement (“June SPA”) in connection with the issuance of a convertible promissory note (“June Note”) in the aggregate principal amount of $78,000. The June Note matures on June 30, 2018 (the “Maturity Date”), and bears interest at the rate of 12% per annum. After 180 days, the June Note may not be prepaid. Any amount of principal or interest on the June Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date. The June Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at a 35% discount to

26

the lowest trading price in the 10-day period ending on the latest complete Trading Day prior to the Conversion Date. The June SPA and the June Note contain representations, warranties, conditions, restrictions, and covenants of the Company that are customary in such transactions with smaller companies.

On August 14, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “Kingdom Note”) in the aggregate principal amount of $65,000. The Note matures on November 14, 2017 (the “Maturity Date”), and bears interest at the rate of 8% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11 per share. Due to the beneficial conversion feature of this note, the Company recorded $65,000 of debt discount as a contra liability and amortized $31,056 of the discount during the three months ended December 31, 2017. As of December 31, 2017, the note balance and accrued interest is $65,000 and $1,995, respectively. This note is in default and remains unpaid at December 31, 2017, however, the Company and the Payee entered into a Debt Conversion Agreement in February, 2018 pursuant to which the Payee received shares of the Company’s Series A Convertible Preferred Stock in exchange for the full release of any and all obligations related to the Kingdom Note. Refer to NOTE 13. SUBSEQUENT EVENTS.

On August 23, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “Hayden Note”) in the aggregate principal amount of $50,000. The Note matures on August 23, 2020 (the “Maturity Date”), and bears interest at the rate of 8% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11 per share. Due to the beneficial conversion feature of this note, the Company recorded $50,000 of debt discount as a contra liability and amortized $4,197 of the discount during the three months ended December 31, 2017. As of December 31, 2017, the note balance and accrued interest is $50,000 and $1,424, respectively. This note remains unpaid at December 31, 2017.

On September 12, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “First Fire Note”) in the aggregate principal amount of $82,500. The Note matures on September 12, 2018 (the “Maturity Date”), and bears interest at the rate of 5% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at a 35% discount to the lowest trading price in the 21-day period ending on the latest complete Trading Day prior to the Conversion Date. As of December 31, 2017, the note balance and accrued interest is $82,500 and $1,243. This note remains unpaid at December 31, 2017.

On October 13, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (the “Escala Note”) in the aggregate principal amount of $20,000. The Note matures on October 13, 2020 (the “Maturity Date”), and bears interest at the rate of 8% per annum. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.30 per share. Due to the beneficial conversion feature of this note, the Company recorded $12,667 of debt discount as a contra liability and amortized $913 of the discount during the three months ended December 31, 2017. As of December 31, 2017, the note balance and accrued interest is $20,000 and $346, respectively. This note remains unpaid at December 31, 2017.

On December 28, 2017, the Company entered into a note payable in the aggregate principal amount of $106,410. The Note matures on March 31, 2018, and bears interest at the rate of 12% per annum. As of December 31, 2017, the note balance and accrued interest is $106,410 and $105, respectively. This note remains unpaid at December 31, 2017

On December 29, 2017, the Company issued 2,000,000 to Duplitrans and the legal counsel of Duplitrans in regards to the agreement with GandTex. On the date of the settlement, October 24, 2017, the shares had a fair market value of $640,000. Accordingly, the Company recorded $640,000 of stock based compensation during the three months ended December 31, 2017. All of the Company’s 10,000,000 Series B Convertible Preferred Stock, previously issued to GandTex, were cancelled during the quarter ended December 31, 2017.

As of December 31, 2017, the Company had five convertible notes payable issued and outstanding with a total principle of $222,500 and accrued interest of $5,437. The notes are due December 31, 2017 through October 13, 2020 and have interest rates of 5% to 12%. The notes remain unpaid as of December 31, 2017.

27

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information.

None.

 

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PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial condition. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.

Item 1A.  Risk Factors

Not required for smaller reporting companies.

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits.Exhibits

 

Exhibit No.No, Description of Exhibit
3.131.1  * Rule 13a14(a)/15d-14(a) Certification of Chief Executive Officer
3.232 .1  * Section 1350 Certification of Chief Executive Officer
31.1Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS101.INS** XBRL Instance Document
101.SCH101.SCH** XBRL Taxonomy Extension Schema Document
101.CAL101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LAB101.LAB** XBRL Taxonomy Extension Label Linkbase Document
101.PRE101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF** XBRL Taxonomy Definition Linkbase Document

* Filed herewith
** Furnished herewith (not filed).

 19 


 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 


NuLife Sciences, Inc.GULF WEST SECURITY NETWORK, INC.
  
Date: February 23, 2018By: /s/  Fred Luke
Fred Luke
President
(Duly Authorized Officer and Principal Executive Officer)
   
Date: May 20, 2019By:/s/ Louis J. Resweber
Louis J. Resweber
President (Principal Executive Officer)

 

 

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