UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TOUNDER SECTION 13 OR 15(d)15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 20162017
¨ TRANSITION REPORT PURSUANT TO SECTION 13UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________________ to _________________________
Commission file numbernumber: 333-174759
EMS FIND, INC. |
(Exact Name of Registrant as Specified in Its |
Nevada | 38-3839462 | |
(State or Other Jurisdiction of | (I.R.S. Employer |
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(Address of principal executive offices) (Zip Code) |
(215) 350-2255
(Registrant'sRegistrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨x No xo
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 ¨x No xo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check One):See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | Smaller reporting company | x | |
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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 o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨o No x
The number of shares issued, issuable, and outstanding of the issuer'sissuer’s common stock, $0.001 par value per share, was 42,200,494173,031,382 as of February 8,June 1, 2017.
EMS FIND, INC.
FORM 10-Q
DECEMBERMARCH 31, 20162017
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PART I – FINANCIAL INFORMATION
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Condensed | 4 | |||||
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EMS Find, Inc. March 31, June 30, (Unaudited) ASSETS Current assets: Cash Other receivable Total current assets Other assets: Property and equipment held for sale, net Deposits Total other assets Total assets LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Convertible notes payable, net of discounts Accounts payable Due to related party Accrued expenses Checks written in excess of cash balance Derivative liability Total current liabilities Total liabilities Commitments and contingencies Stockholders’ deficit: Series A preferred stock, $0.001 par value, (20,000,000 shares authorized, 500,000 shares issued and outstanding) Series B preferred stock, $0.001 par value, (500,000 shares authorized, 120,000 and 0 shares issued and outstanding as of March 31, 2017 and June 30, 2016, respectively) Common stock, $0.001 par value, (3,000,000,000 shares authorized, 113,021,170 and 32,711,272 shares issued and outstanding as of March 31, 2017 and June 30, 2016, respectively) Additional paid-in capital Accumulated deficit Total stockholders’ deficit Total liabilities and stockholders’ deficit
2017
2016$ 31,082 $ 1,975 566 566 31,648 2,541 4,870 4,870 700 700 5,570 5,570 $ 37,218 $ 8,111 $ 259,426 $ 188,131 30,138 13,915 37,042 31,476 43,862 36,543 - 11,695 579,105 1,208,414 949,573 1,490,174 949,573 1,490,174 500 500 120 - 113,021 32,711 4,080,966 3,644,483 (5,106,962 ) (5,159,757 ) (912,355 ) (1,482,063 ) $ 37,218 $ 8,111
See notes to condensed financial statements
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EMS Find, Inc. and Subsidiaries December 31, June 30, 2016 2016 (unaudited) ASSETS Current assets Cash Other receivable Total current assets Other assets Fixed assets, net Fixed assets held for sale, net Deposits Total other assets Total assets LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Convertible notes payable, net of discounts Accounts payable Due to related party Accrued expenses Checks written in excess of cash balance Derivative liability Total current liabilities Total liabilities Stockholders' deficit Series A preferred stock, $0.001 par value, (20,000,000 shares authorized, 500,000 and 1,000,000 shares issued and outstanding as of December 31, 2016 and June 30, 2016, respectively) Series B preferred stock, $0.001 par value, (500,000 shares authorized, 60,000 and 0 shares issued and outstanding as of December 31, 2016 and June 30, 2016, respectively) Common stock, $0.001 par value, (100,000,000 shares authorized 35,643,949 and 32,711,272 shares issued, issuable and outstanding as of December 31, 2016 and June 30, 2016, respectively) Additional paid in capital Accumulated deficit Total stockholders' deficit Total liabilities and stockholders' deficit See accompanying notes to unaudited condensed consolidated financial statements. EMS Find, Inc. (Unaudited) Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue Operating expenses: Consulting fees Professional fees Executive compensation Stock-based compensation Research and development Payroll General and administrative Rent Depreciation and amortization Total operating expenses Loss from operations Other income (expense): Amortization of debt discount Amortization of original issue discount Change in fair value of derivative liability Loss on sale of property and equipment Loss on conversion of debt into common stock Interest expense Total other income (expense) Income (loss) before income taxes Provision for income taxes Net income (loss) Net income (loss) per common share, basic and diluted Weighted average number of common shares outstanding: Basic Diluted $ 28,523 $ 1,974 566 566 29,089 2,540 - - 4,870 4,870 700 700 5,570 5,570 $ 34,659 $ 8,111 $ 215,117 $ 188,131 41,209 13,916 20,496 31,476 39,437 36,543 - 11,695 414,248 1,208,414 730,507 1,490,174 730,507 1,490,174 500 500 90 - 46,427 32,711 4,678,329 3,644,483 (5,421,194 ) (5,159,757 ) (695,848 ) (1,482,063 ) $ 34,659 $ 8,111
March 31,
March 31,$ - $ - $ - $ - 750 12,768 4,742 64,984 11,760 9,385 64,768 50,934 30,750 2,491 56,250 49,307 19,360 2,342,097 721,810 2,666,081 - 13,942 738 119,303 - 6,447 - 54,542 39,234 33,247 103,096 75,978 1,900 2,100 4,700 7,400 - 46 - 140 103,754 2,422,523 956,104 3,088,669 (103,754 ) (2,422,523 ) (956,104 ) (3,088,669 ) (119,060 ) (34,443 ) (301,618 ) (47,328 ) (5,515 ) (9,324 ) (24,969 ) (14,344 ) 929,850 11,532 2,087,579 (75,142 ) - (22,855 ) - (22,855 ) (344,935 ) - (694,419 ) - (42,354 ) (4,986 ) (57,674 ) (7,914 ) 417,986 (60,076 ) 1,008,899 (167,583 ) 314,232 (2,482,599 ) 51,317 (3,256,252 ) - - - - $ 314,232 $ (2,482,599 ) $ 52,795 $ (3,256,252 ) $ 0.00 $ (0.08 ) $ 0.00 $ (0.11 ) 71,884,144 29,076,715 47,911,533 28,939,010 195,662,692 29,076,715 171,690,081 28,939,010
See notes to condensed financial statements
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EMS FIND, INC. and Subsidiaries (unaudited) For the Three Months Ended For the Six Months Ended December 31, December 31, 2016 2015 2016 2015 Revenues Gross sales Cost of goods sold Gross profit General and administrative expenses Consulting fees Professional fees Executive compensation Stock-based compensation Research and development Payroll Expense General & administrative Rent Depreciation and amortization Total general and administrative expenses Loss from operations Other income (expense) BCF expense OID expense Change in FV of embedded conversion options Loss on conversion of debt into common stock Interest expense Total other income (expense) Discontinued operations Loss from discontinued operations Total discontinued operations Net loss Basic and diluted loss per share Basic and diluted loss per share - discontinued operations Weighted average number of common shares outstanding See accompanying notes to unaudited condensed consolidated financial statements. EMS Find, Inc. (Unaudited) Nine Months Ended 2017 2016 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash used in operating activities: Stock-based compensation Amortization of debt discount Amortization of original issue discount Change in fair value of derivative liability Loss on sale of property and equipment Loss on conversion of debt into common stock Financing fees related to notes payable Depreciation and amortization Changes in assets and liabilities: Deposits Accounts payable Due to related party Accrued expenses Checks written in excess of cash balance Net cash used in operating activities Cash flows from investing activities Net cash used in investing activities Cash flows from financing activities: Proceeds from convertible notes payable Proceeds from related party Proceeds from sale of common stock Net cash provided by financing activities Net increase (decrease) in cash Cash, beginning of period Cash, end of period Supplemental disclosure of cash flow information: Cash paid for interest Cash paid for income taxes Non-cash investing and financing activities: Shares issued for convertible notes payable Shares issued for due to related party Shares issued for accounts payable Derivative liability Cancellation of preferred stock Debt discount Accrued interest for notes payable $ - $ - $ - $ - - - - - - - - 3,992 24,082 3,992 52,216 4,207 25,604 53,008 41,549 - 1,528 - 112,411 58,500 323,984 702,450 323,984 738 2,021 738 5,361 6,000 20,239 25,500 36,881 22,898 3,620 63,863 11,774 700 2,100 2,800 5,300 - - - - 97,034 403,178 852,350 589,476 (97,034 ) (403,178 ) (852,350 ) (589,476 ) (107,578 ) (12,885 ) (182,558 ) (12,885 ) (3,611 ) (5,020 ) (19,454 ) (5,020 ) 376,412 (86,674 ) 1,157,729 (86,674 ) (234,210 ) - (349,484 ) - (8,939 ) (2,928 ) (15,320 ) (2,928 ) 22,074 (107,507 ) 590,913 (107,507 ) - (27,566 ) - (76,670 ) - (27,566 ) - (76,670 ) $ (74,960 ) $ (538,251 ) $ (261,437 ) $ (773,653 ) $ (0.00 ) $ (0.02 ) $ (0.01 ) $ (0.00 ) $ - $ (0.000 ) $ - $ (0.000 ) 38,946,514 28,946,199 39,660,326 28,870,906
March 31,$ 52,795 $ (3,256,252 ) 721,810 2,666,081 301,618 47,328 24,969 14,344 (2,087,579 ) 75,142 - 22,855 694,419 - 40,993 12,000 - 140 - (700 ) 32,769 (13,712 ) 42,782 (47,651 ) 9,626 12,598 (11,695 ) - (177,493 ) (467,827 ) - - - - 206,600 200,500 - 178,844 - 55,000 206,600 434,344 29,107 (33,483 ) 1,975 45,843 $ 31,082 $ 12,360 $ - $ - - - $ 808,452 $ 260,480 68,716 210,000 16,546 - 1,458,270 227,411 - (500 ) 359,659 - 462 -
EMS FIND, INC. and Subsidiaries For the Six Months Ended December 31, (unaudited) 2016 2015 Cash flows from operating activities Net loss Adjustments to reconcile net loss to net cash used in operations: Stock-based compensation BCF expense OID expense Change in FV of embedded conversion options Loss on conversion of debt into common stock Discontinued operations Changes in assets and liabilities: Prepaid expenses Accounts payable Due to related party Accrued expenses Checks written in excess of cash balance Net cash used in operating activities Cash flows from financing activities Proceeds from sale of common stock Proceeds from related party Proceeds received from notes payable Net cash provided by financing activities Net increase in cash Cash at beginning of period Cash at end of period Supplemental disclosures of cash flow information: Cash paid for interest Cash paid for taxes Non-cash investing and financing activities Shares issuance for notes Shares issuance for accrued compensation See accompanying notes to unaudited condensed consolidated financial statements.$ (261,437 ) $ (773,653 ) 702,450 323,984 182,558 12,885 19,454 5,020 (1,157,729 ) 86,674 349,484 - - (31,855 ) - (4,583 ) 27,293 (13,716 ) (10,980 ) 2,894 (11,695 ) - (157,708 ) (395,244 ) - 55,000 - 180,000 184,257 200,500 184,257 435,500 26,549 40,256 1,974 45,843 $ 28,523 $ 86,099 $ - $ - $ - $ - $ 327,160 $ 260,480 $ 37,500 $ -
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EMS FIND, INC. AND SUBSIDIARIESFind, Inc.
NOTESNotes to Condensed Financial Statements TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBERNine Months Ended March 31, 20162017
(unaudited)(Unaudited)
NOTE 1 –1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
EMS Find, Inc. (the "Company," "we," "our,"“Company,” “we,” “our,” or "EMS Find"“EMS Find”) was incorporated in the State of Nevada on March 22, 2011, under the name of Lightcollar, Inc. On March 20, 2015, the Company amended its articles of incorporation and changed its name from Lightcollar, Inc. to EMS Find, Inc., and in May 2017, changed its name to Integrated Ventures, Inc. (see Note 9).
On December 23, 2014, the Company authorized a forward split (the "Forward Split"“Forward Split”) of its issued and authorized common shares, whereby every one (1) old share of common stock was exchanged for five (5) new shares of the Company'sCompany’s common stock. As a result, the issued and outstanding shares of common stock was increased from five million six hundred fifty thousand (5,650,000) common shares prior to the Forward Split to twenty-eight million two hundred fifty thousand (28,250,000) common shares following the Forward Split. Fractional shares were rounded upward.
On March 10, 2015, the Company, with the approval of a majority vote of its shareholders filed a Certificate of Designation establishing the designations, preferences, limitations and relative rights of the Company'sCompany’s Series A preferred stock (the "Series“Series A Designation"Designation” and the "Series“Series A Preferred Stock"Stock”). The terms of the Certificate of Designation of the Series A Preferred Stock, which was filed with the State of Nevada on March 12, 2015, include the right to vote in aggregate, on all shareholder matters equal to 1,000 votes per share of Series A Preferred Stock, Series A Preferred Stock shares are not convertible into shares of our common stock.
Effective March 20, 2015, the Company, with the approval of its board of directors and its majority shareholders by written consent in lieu of a meeting, filed a Certificate of Amendment (the "Certificate of Amendment") with the Secretary of State of Nevada. As a result of the Certificate of Amendment, the Company, among other things, (i) changed its name to "EMS Find, Inc.," and (ii) changed its symbol to "EMSF."
On March 23, 2015, the Company issued 50,000 shares of Series A Preferred Stock in consideration for services on the Company's Board of Directors.
On March 31, 2015, the Company issued 450,000 shares of Series A Preferred Stock in consideration for services on the Company's Board of Directors.
On March 31, 2015, the Company signed the share exchange agreement with EMS Factory, Inc. ("(“EMS Factory"Factory”), a company incorporated under the laws of the State of Pennsylvania, and the shareholder of EMS Factory (the "Selling Shareholder"“Selling Shareholder”) pursuant to a share exchange agreement by and among the Company, EMS Factory and the Selling Shareholder. The Company acquired 100% of the issued and outstanding securities of EMS Factory in exchange for the issuance of 10,000,000 shares of the Company'sCompany’s restricted Common Stock, par value $0.001 per share and 500,000 shares of the Company'sCompany’s Series A Preferred Stock, par value $0.001. The Company also has an agreement with an investor to fund $300,000 over the next one hundred and twenty days, to support the continued development and commercialization of EMS Factory's technology, in the following manner:
As a result of the Agreement the Selling Shareholder acquired up to 49% of the voting rights of Company'sCompany’s currently issued and outstanding shares of common stock. Upon completion of the agreement, EMS Factory became a wholly-owned subsidiary and the Company acquired the business and operations of EMS factory. Further, on the Closing dateFactory. As of the Agreement, Steve Rubakh, was appointed the President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and a Directorsecond quarter of the Company, and Mr. Matveev Anton resigned all of his positions with the Company.
Basis of Presentation
The accompanying unaudited consolidated financial statements of EMS Find, Inc. and its wholly-owned subsidiaries,2015, EMS Factory Inc. and Viva Entertainment, have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. The results of operations for the interim period ended December 31, 2016 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2017. All intercompany balances and transactions have been eliminated. In the opinion of the Company's management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company's results of operations, financial position and cash flows. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company's Form 10-K for the year ended June 30, 2016 filed on September 27, 2016 and Management's Discussion and Analysis of Financial Condition and Results of Operations. For accounting purposes and due to the accounting for the reverse merger, the Company is using the accounting year end of EMS Factory, Inc., for the presentation in this filing.
EMS FIND, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(unaudited)
Nature of Businessdiscontinued operations.
The Company transitioned its operations from acting as a licensed ambulance provider to providing medical transportation information and acting as an intermediary coordinating dispatch services for providers, patients and medical transport companies. The Company is designing, developing, marketing, and operating software assets mainly in the on-demand mobile healthcare sector.sector, and plans to expand its mobile technology operations to acquisitions of or partnering with revenue generating companies, primarily in the healthcare, e-commerce, mobile technologies, transportation and consumer goods markets. There is no assurance that the required additional capital for this effort will be available to enable us to expand the scope of our operations into this area. The Company plans to change its name to Integrated Ventures, Inc. to reflect its new plan to diversify the Company's operation.
PrinciplesOn October 21, 2015, the Company formed Viva Entertainment Group, Inc. (“Viva Entertainment,”) a Delaware corporation, as a wholly-owned subsidiary. Viva Entertainment was formed to manage the development and marketing of Consolidationit’s over the top (“IPTV/OTT”) application for connected TVs, desktop computers, tablets and smart phones. On April 6, 2016, the Company sold Viva Entertainment to Black River Petroleum Corp. (“Black River”).
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EMS Find, Inc.
Notes to Condensed Financial Statements
Nine Months Ended March 31, 2017
(Unaudited)
Basis of Presentation
The consolidatedaccompanying unaudited condensed financial statements includeof the accountsCompany have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. The results of operations for the interim period ended March 31, 2017 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2017. In the opinion of the Company’s management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2016 filed on September 27, 2016 and Management’s Discussion and Analysis of Financial Condition and Results of Operations. For accounting purposes and due to the accounting for the reverse merger, the Company is using the accounting year end of April 30 of EMS Find andFactory, Inc. for the presentation in this filing.
Nature of Business
The Company has discontinued its wholly-owned subsidiaries, EMS Factory business and has sold its subsidiary, Viva Entertainment. All significant inter-company balances and transactions have been eliminatedThe Company plans in consolidation.the near future to restructure its operations from a software development company to a holdings company.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company maintains cash balances in non-interest-bearing accounts that currently do not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The Company had cash balances of $28,523$31,082 and $1,974$1,975 as of DecemberMarch 31, 20162017 and June 30, 2016 respectively.
Property and Equipment Held for Sale
Property and equipment held for sale consists of ambulances and medical equipment and are stated at cost. Ambulance and medical equipment is depreciated using the straight-line method over the estimated service life of five years. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property and equipment are recorded upon disposal.
Accounting for Derivatives
The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.
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EMS Find, Inc.
Notes to Condensed Financial Statements
Nine Months Ended March 31, 2017
(Unaudited)
We estimate the fair value of the derivatives associated with our convertible notes payable using the Black-Scholes pricing model. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, and, in the case of our convertible notes payable, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
During the nine months ended March 31, 2017, the Company had the following activity in its derivative liability:
Derivative liability at June 30, 2016 Addition to liability for new debt issued Change in fair value Derivative liability at March 31, 2017 $ 1,208,414 1,458,270 (2,087,579 ) $ 579,105
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, "Accounting“Accounting for the Impairment or Disposal of Long-Lived Assets"Assets”. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options, warrants and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options and warrants at the grant date by using the Black-Scholes option-pricing model.
The Company accounts for non-employee share-based awards based upon ASC 505-50, “Equity-Based Payments to Non-Employees.” ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete. Generally, our awards do not entail performance commitments. When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.
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EMS FIND, INC. AND SUBSIDIARIESFind, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSNotes to Condensed Financial Statements
DECEMBERNine Months Ended March 31, 20162017
(unaudited)(Unaudited)
Revenue Recognition
Our revenue is derived from the service revenue from ambulance transportation services.
The Company'sCompany’s revenue recognition policy is in accordance with the requirements of Staff Accounting Bulletin ("SAB"(“SAB”) No. 104, Revenue Recognition ("(“SAB 104"104”), and other applicable revenue recognition guidance under US GAAP. Sales revenue is recognized for our retail and wholesale customers when: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) collectability is reasonably assured — generally when products are shipped to the customer and services are rendered, except in situations in which title passes upon receipt of the products by the customer. In this case, revenues are recognized upon services rendered.
Income Taxes
The Company adopted the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of June 30, 2016, tax year 2015 remainremains open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years.
The Company adopted ASC 740-10, “Definition of Settlement in FASB Interpretation No. 48,” (“ASC 740-10”), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying financial statements.
Net EarningsIncome (Loss) Per Share
In accordance with ASC 260-10, "Earnings“Earnings Per Share,"” basic net earningsincome (loss) per common share is computed by dividing the net earningsincome (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earningsincome (loss) per share areis computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Dilutive common stock equivalent shares which may dilute future earnings per share consistinclude 4,550,833 common shares issuable upon exercise of outstanding options and warrants and 123,778,548 common shares issuable upon conversion of convertible notes convertible into 54,688,841 common shares.payable. Equivalent shares are not utilized when the effect is anti-dilutive (see Note 4).anti-dilutive.
Recent Pronouncements
On November 2014, The Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2014-16—Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). The amendments in this Update do not change the current criteria in GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. That is, an entity will continue to evaluate whether the economic characteristics and risks of the embedded derivative feature are clearly and closely related to those of the host contract, among other relevant criteria. The amendments clarify how current GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. The effects of initially adopting the amendments in this Update should be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective. Retrospective application is permitted to all relevant prior periods.
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EMS FIND, INC. AND SUBSIDIARIESFind, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSNotes to Condensed Financial Statements
DECEMBERNine Months Ended March 31, 20162017
(unaudited)(Unaudited)
On November 2014, The Financialcommon shares used in the computation of basic and diluted net income (loss) per share are reconciled as follows:
Three Months Ended March 31, Nine Months Ended March 31, 2017 2016 2017 2016 Weighted average number of shares outstanding – basic Dilutive effect of convertible debt Weighted average number of shares outstanding – diluted 71,884,144 29,076,715 47,911,533 28,939,010 123,778,548 - 123,778,548 - 195,662,692 29,076,715 171,690,081 28,939,010
Recently Issued Accounting Pronouncements
In January 2017, the FASB issued Accounting Standards Board (FASB)Update (“ASU”) No. 2017-4, “Intangibles – Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment.” This update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity should apply the amendments in this update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this update. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.
In January 2017, the FASB issued Accounting Standard UpdateASU No. 2014-17—Business2017-1, “Business Combinations (Topic 805): Pushdown Accounting (a consensusClarifying the Definition of the FASB Emerging Issues Task Force).a Business.” The amendments in this Update provide an acquired entityupdate clarify the definition of a business with an optionthe objective of adding guidance to apply pushdownassist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity.including acquisitions, disposals, goodwill, and consolidation. The amendments inof this UpdateASU are effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be a change in accounting principle.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern. The new standard requires management of public and private companies to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern and, if so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The standard requires management to evaluate, for each reporting period, whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. The new standard is effectivebusiness entities for annual periods endingbeginning after December 15, 2016,2018, and interim periods within annual periods beginning after December 15, 2016. Early adoption2019. The amendments in this Update are to be applied prospectively on or after the effective date. The Company is permitted. We do not expectcurrently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.
Although there are several other new accounting pronouncements issued or proposed by the ASU toFASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a significantmaterial impact on our consolidatedits financial statements.position or results of operations.
NOTE 2 –Reclassifications
Certain amounts in the condensed financial statements for the three and nine months ended March 31, 2016 have been reclassified to conform to the presentation for the three and nine months ended March 31, 2017.
2. GOING CONCERN
The Company has not generated any revenues, has recurring net losses, a working capital deficiency as of DecemberMarch 31, 20162017 of $701,419,$917,925, and used net cash in operations of $157,708$177,493 and $395,244$467,827 for the sixnine months ended DecemberMarch 31, 20162017 and 2015,2016, respectively. In addition, as of DecemberMarch 31, 2016,2017, the Company had an accumulated deficit of $5,421,194.$5,106,962. These conditions raise substantial doubt about the Company'sCompany’s ability to continue as a going concern.
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EMS Find, Inc.
Notes to Condensed Financial Statements
Nine Months Ended March 31, 2017
(Unaudited)
The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of management'smanagement’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements.
There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company'sCompany’s current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.
NOTE 3 –3. PROPERTY AND EQUIPMENT HELD FOR SALE
AssetsProperty and equipment held for Salesale consisted of the following at:
December 31, June 30, 2016 2016 Assets held for sale Less: Accumulated depreciation Total equipment, net March 31, June 30, 2017 2016 Property and equipment held for sale Less accumulated depreciation Net $ 13,246 $ 13,246 (8,376 ) (8,376 ) $ 4,870 $ 4,870 $ 13,246 $ 13,246 (8,376 ) (8,376 ) $ 4,870 $ 4,870
Depreciation and amortization expense for the three months ended DecemberMarch 31, 20162017 and 20152016 was $0 and $47,$46, respectively. Depreciation and amortization expense for the nine months ended March 31, 2017 and 2016 was $0 and $140, respectively. After the merger in March 2015, the Company discontinued all of its ambulance services. During the three months and nine months ended March 31, 2017 and 2016, The Company wrote down $8,200 as of June 30, 2015 for its assetsproperty and equipment held for sale and took a loss of $13,097 on a sale of three of its vehicles it used for its medical transportation business. On March 28, 2016, the Company sold various assets valued at $35,521, net of accumulated depreciation, for $23,422. With the fees associated with the sale, the Company recorded a loss on the sale of $22,855.
NOTE 4 –4. RELATED PARTY TRANSACTIONS
In April 2015, the Company entered a month-to-month lease agreement for an office space for $1,250 per month owned by a relative of Steve Rubakh (“Rubakh”), an officer and director of the Company. The lease was terminated on August 30, 2015.
EMS FIND, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(unaudited)
On August 5, 2015, Shang Fei resigned from the Company as a board member and surrendered his 500,000 shares of Series A Preferred Stock which the companyCompany had issued to him in March 2015. Mr. Shang Fei also has provided the Company with $260,000 of capital of which $210,000 and a prior loan for expenses of $19,095 waswere converted into 212,050 shares of common stock.
On September 25, 2015, the Company authorized the issuance of 125,000 shares of common stock as part of an agreement with Daniel Grillo (“Grillo”), a director of the Company, for services from September 25, 2015 through March 31, 2016. The value of the shares arewas amortized over the period of the agreement. See Note 6.
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EMS Find, Inc.
Notes to Condensed Financial Statements
Nine Months Ended March 31, 2017
(Unaudited)
On October 28, 2015, Viva Entertainment, a subsidiary of the Company, entered into an employment agreement with Johnny Falcones (“Falcones”), for the period October 28, 2015 through December 31, 2018. Falcones was issued on January 2, 2016, warrants to purchase 3,000,000 shares of common stock of the Company, with an exercise price of $0.74.$0.74 and an expiration date of January 2, 20121. The common stock of the Company current price on the date of the issuance was $0.47. The warrants were valued at $0.383 using a Black-Scholes calculation. The Company recorded an expense of $1,149,000 in the three months and nine months ended March 31, 2016. Additionally, Falcones would receive three year warrants to purchase up to 5% of the common stock of Viva Entertainment, at an exercise price of $0.50, which are exercisable in the event that Viva Entertainment is spun out of the Company. Furthermore, Falcones was to receive 375,000 shares of common stock of the Company on a monthly basis, starting on February 1, 2016, for a period of four months, for an aggregate total of 1,500,000 shares of common stock of the Company. On April 6, 2016, as part of the sale of Viva Entertainment, these warrants held by Falcones were cancelled and his employment agreement terminated. See Notes 1 and 6.
On January 2, 2016, the Company issued 3,000,000 warrants for common stock of the Company to Steve Rubakh, the Company’s President and Chief Executive Officer, as a compensation incentive. The warrants mature on January 2, 2021. The exercise price is $0.74 and the warrant has a cashless exercise option. The common stock of the Company current price on the date of issuance was $0.47. The warrants were valued at $0.383 using a Black-Scholes calculation. The Company recorded ana stock-based compensation expense of $1,149,000. See Note 6.
On January 2, 2016,$1,149,000 in the Company issued 3,000,000 warrants for common stock of the Company to Falcones as a compensation incentive. The warrants mature on January 2, 2021. The exercise price was $0.74three months and the warrant had a cashless exercise option. The common stock of the Company current price on the date of the issuance was $0.47. The warrants were value at $0.383 using a Black-Scholes calculation. The Company recorded an expense of $1,149,000. See Note 6. As part of the April 6, 2016 sale of Viva Entertainment (see Notes 1 and 6), these warrants were cancelled effective the date of issuance.nine months ended March 31, 2016.
On March 15, 2016, the Company issued 242,424 shares of common stock to Sophia Rubakh, a relative of Steve Rubakh, in consideration of various consulting administrative and marketing services provided to the Company. The shares were issued with a value of $0.21, or $50,909. See Note 6.
On June 1, 2016, the Company entered into a convertible promissory note with Steve Rubakh, converting $81,364 of payables to Steve Rubakh into the note. The note is non-interest bearing and matures on December 1, 2016. The note has a conversion rate of $0.03 per share. The closing price of the Company’s common stock on the previous day was $0.08. On June 27, 2017,2016, Steve Rubakh converted the principal of $81,364 into 2,712,133 shares of common stock. The conversion resulted in a loss of $298,335. Additionally, beneficial conversion feature expense of $61,134 had been recorded as of the date of conversion. See Notes 5 and 6.
On June 27, 2016, Rubakh converted his convertible promissory note in the amount of $81,364 into 2,712,133 shares of common stock. The conversion price was $0.03 whereas the current stock price was $0.14 therefore, a loss of $298,335 was recorded. See Notes 5 and 6.Additionally, beneficial conversion feature expense of $61,134 had been recorded as of the date of conversion.
On July 1, 2016, the Board of Directors of the Company agreed with Steve Rubakh to reduce his compensation to $75,000 per year and to terminate the monthly issuance of 30,000 shares of common stock and in exchange, Steve Rubakh will receive 30,000 shares of Series B Preferred Stock on a quarterly basis. The initialFor the nine months ended March 31, 2017, the Company authorized the issuance effective for the period April 1, 2016 through June 30, 2016of 120,000 shares of Series B preferred stock as part of Steve Rubakh’s compensation package. Stock-based compensation of $707,100 was issued on August 29, 2016, and the second issuance for the period July 1, 2016 through December 31, 2016 was issued on September 1, 2016.recorded.
On July 1, 2016, the Board of Directors of the Company agreed with Steve Rubakh to convert $6,000 of accrued compensation into 300,000 shares of common stock, at a conversion rate of $0.02 per share. The current price of the common stock was $0.125, therefore, a loss on conversion of $31,500 was recorded. See Note 6.
ForOn February 14, 2017, the six months ended December 31, 2016, the Company authorized the issuanceBoard of 90,000 shares of Series B preferred stock as part of Rubakh's compensation package. Stock-based compensation of $697,500 was recorded. See Note 6.
Due to the garnishment of the Company’s bank account, related to LG Capital, LLC and its legal actions against the Company (see Note 8), the Company has no feasible method of conducting business without the use of a bank account. ManagementDirectors of the Company determined that any monies requiredagreed with Steve Rubakh to operate the Company for the future would be garnished according to the court order. Furthermore, without the ability to utilizeconvert $31,216 of accrued compensation into 12,486,400 shares of common stock, at a bank account, the Company would potentially have to cease operations, which would be to the detrimentconversion rate of the Company and its shareholders. To enable the Company to continue to conduct business, which is also the only way LG Capital, LLC would be able to have the outstanding balance satisfied, a member of management opted to utilize the bank account for an unrelated company, which is controlled by this member of management, to enable the Company to receive funds and meet its operating needs, as well as to satisfy the outstanding liability to LG Capital, LLC, and the other debt holders and vendors of the Company.$0.0025 per share.
On February 14, 2017, 6,618,400 shares of common stock valued at $16,546 were issued to Steve Rubakh to reimburse him for payments made by him to a vendor.
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EMS FIND, INC. AND SUBSIDIARIESFind, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSNotes to Condensed Financial Statements
DECEMBERNine Months Ended March 31, 20162017
(unaudited)(Unaudited)
NOTE 5 – NOTES PAYABLE AND5. CONVERTIBLE NOTES PAYABLE NET OF DISCOUNTS
Notes payable and convertibleConvertible notes payable, all classified as current, at December 31, 2016 and June 30, 2016, consist of the following:
Notes and convertible notes, net of discounts December 31, 2016 June 30, 2016 Original Principal, Original Principal, Debt Issue net of Debt Issue net of Principal Discounts Discount Discounts Principal Discounts Discount Discounts LG Capital Funding, LLC LG Capital Funding, LLC Global Opportunity Group, LLC Old Main Capital, LLC River North Equity, LLC EMA Financial, LLC Global Opportunity Group, LLC Global Opportunity Group, LLC GPL EMA Financial, LLC Global Opportunity Group, LLC Total $ 125,000 $ - $ - $ 125,000 $ 125,000 $ (13,905 ) $ (5,840 ) $ 105,255 25,000 - - 25,000 125,000 (34,132 ) (7,992 ) 82,876 16,500 (11,075 ) (822 ) 4,603 - - - - 33,333 (18,447 ) (1,845 ) 13,041 - - - - 33,333 (11,876 ) (1,187 ) 20,270 - - - - 33,000 (21,247 ) (2,125 ) 9,628 4,643 (3,323 ) 1,320 10,000 (9,151 ) 849 37,463 (34,816 ) 2,647 33,000 (25,225 ) 7,775 18,700 (12,151 ) (1,565 ) 4,984 - - - - $ 369,972 $ (147,311 ) $ (7,544 ) $ 215,117 $ 250,000 $ (48,037 ) $ (13,832 ) $ 188,131
March 31, 2017 June 30, 2016 Original Original Debt Issue Debt Issue Principal Discount Discount Net Principal Discount Discount Net LG Capital Funding, LLC LG Capital Funding, LLC Old Main Capital, LLC River North Equity, LLC EMA Financial, LLC Global Opportunity Group, LLC GPL Ventures, LLC EMA Financial, LLC GPL Ventures, LLC �� Global Opportunity Group, LLC Global Opportunity Group, LLC Howard Schraub Howard Schraub Global Opportunity Group, LLC Total On March 23, 2015, the Company issued a note to Green Construction for $30,400 with 10% interest per annum, as of June 30, 2015 the note had accrued interest of $822. The note was due on October 15, 2015. On July 30, 2015, the Company issued 26,885 to satisfy this debt.$ 125,000 $ - $ - $ 125,000 $ 125,000 $ (13,905 ) $ (5,840 ) $ 105,525 - - - - 125,000 (34,132 ) $ (7,992 ) 82,876 33,333 (10,228 ) (1,023 ) 22,082 - - - - 31,297 - - 31,297 - - - - 16,341 - - 16,341 - - - - 18,700 (7,540 ) (1,146 ) 10,014 - - - - 39,193 (17,638 ) - 21,555 - - - - 33,000 (17,088 ) - 15,912 - - - - 10,000 (4,906 ) - 5,094 - - - - 10,000 (8,740 ) (874 ) 386 - - - - 15,840 (2,975 ) - 12,865 - - - - 8,638 (8,306 ) - 332 - - - - 16,500 (16,364 ) - 136 - - - - 18,150 (18,002 ) (1,736 ) (1,588 ) - - - - $ 375,992 $ (111,788 ) $ (4,779 ) $ 259,426 $ 250,000 $ (48,037 ) $ (13,832 ) $ 188,131
On October 22, 2015, the Company entered into a Securities Purchase Agreement ("(“Purchase Agreement"Agreement”), dated as of October 22, 2015, with LG Capital Funding, LLC ("LG"(“LG”), pursuant to which the Company sold LG a convertible note in the principal amount of $125,000 (the first of four such Convertible Notes each in the principal amount of $125,000 provided for under the Purchase Agreement), bearing interest at the rate of 8% per annum (the "Convertible Note"“Convertible Note”). Each of the Convertible Notes issuable under the Purchase Agreement provides for a 15% original issue discount ("OID"(“OID”), such that the purchase price for each Convertible Note is $106,250, and at each closing LG is entitled to be paid $6,000 for legal and other expenses. The Convertible Note provides LG the right to convert the outstanding balance, including accrued and unpaid interest, of such Convertible Note into shares of the Company'sCompany’s common stock at a price ("(“Conversion Price"Price”) for each share of common stock equal to 80% of the lowest trading price of the common stock as reported on the National Quotations Bureau for the OTCQB exchange on which the Company'sCompany’s shares are traded or any exchange upon which the common stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent. The Convertible Note is payable, along with interest thereon, on October 22, 2016.2016 and is in default. As of DecemberMarch 31, 2016, $11,2532017, $13,255 of interest has been accrued. The convertible note has an OID of 15%, which was recorded at $18,750 ofand which was fully amortized as of DecemberMarch 31, 2016.2017. The Company recorded a debt discount of $44,643, which was fully amortized as of DecemberMarch 31, 2016, was fully amortized. 2017. The Company has recorded a derivative liability of $139,055 as of March 31, 2017.
On October 14, 2016, the Supreme Court of the State of New York County of Kings, in regards to LG Capital Funding, LLC v. EMS Find, Inc., issued a judgment against EMS Find, Inc. in favor of LG Capital Funding, LLC, in the amount of $135,202, which includes principal and interest (calculated as of September 29, 2016), in regards to the convertible promissory note dated October 22, 2015. The judgment includes an Information Subpoena with Restraining Notice, which addressed the EMS Find, Inc. bank account at TD Bank. As of the date of this filing, $1,304 was garnished.
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EMS Find, Inc.
Notes to Condensed Financial Statements
Nine Months Ended March 31, 2017
(Unaudited)
On December 3, 2015, the Company issued the second convertible note to LG as discussed, for $125,000. As of DecemberMarch 31, 2016, $8,9932017, $9,278 of interest has been accrued. The Company has recorded an OID of 15%, which was recorded at $18,750 and which was fully amortized as of DecemberMarch 31, 2016.2017. The Company has recorded a debt discount of $85,165, which was fully amortized as of DecemberMarch 31, 2016, was fully amortized.2017. The Company sold $60,000 principal of the note to Global Opportunity Group, LLC (“Global”) on August 18, 2016, $40,000 principal of the note and $462 accrued interest to GPL Ventures, LLC (“GPL”) on December 15, 2016 and sold $50,000 principal of the note (including a $25,000 penalty added to principal) to Global on February 21, 2017. The note has recorded abeen repaid in full and no related derivative liability of $8,993was recorded as of DecemberMarch 31, 2016.2017.
On July 21, 2016, the Company entered into a convertible promissory note with Old Main Capital, LLC (“Old Main”) for $33,333. The note matures on July 21, 2017 and bears interest at 10%. The convertible promissory note providesprovided for an OID of $3,333, a deduction of $1,250 for Old Main’s legal fees, and $2,500 for Old Main’s legal fees related to the equity purchase agreement. Therefore, the net proceeds to the Company was $26,250. The Company recorded a debt discount of $33,333. The conversion price is the lower of 65% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. As of DecemberMarch 31, 2016, $1,4882017, $2,310 of the OID had been amortized, $14,886$23,105 of the debt discount had been amortized, and there was accrued interest of $1,498.$2,320. The Company has recorded a derivative liability of $78,333$46,420 as of DecemberMarch 31, 2016.2017. Subsequent to March 31, 2017, the Company and Old Main entered into a Settlement Agreement & Mutual Release with respect to this note (see Note 8).
On July 25, 2016, the Company entered into an equity purchase agreement with River North Equity, LLC (“River North”) for up to $2,000,000. On July 25, 2016, the Company entered into a convertible promissory note with River North for $40,000.$33,333. The convertible promissory note has a maturity date of March 29, 2017 and is non-interest bearing.bears interest at 10%. The convertible promissory note provided for an OID of $3,333, a deduction of $4,000 for River North’s legal fees, and a debt discount of $33,333. The conversion price is the lower of 65% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. The convertible promissory note provides for an OIDOn February 1, 2017, River North converted $2,036 principal and $1,744 accrued interest into 2,643,876 common shares of $3,333, a deduction of $4,000 for River North’s legal fees, and a debt discount of $33,333.the Company. As of DecemberMarch 31, 2016, $2,146 of2017, the OID had been amortized, $21,457 ofand the debt discount had been fully amortized and there was accrued interest of $1,753.$2,310. The Company has recorded a derivative liability of $93,728$43,042 as of DecemberMarch 31, 2016.2017.
On August 10, 2016, the Company entered into a securities purchase agreementconvertible promissory note with Global Opportunity Group, LLC (“Global”) for $16,500. The Company received net proceedsconvertible promissory note has a maturity date of $15,000. Additionally, the Company issued 165,000 warrants for common stock with an exercise price of $0.15 per shareAugust 10, 2017 and have a cashless exercise option (see Note 6)bears interest at 12%. The convertible promissory note providesprovided for an OID of $1,500, a deduction of $1,000 for Global’s legal fees, and a debt discount of $16,500. The Company received net proceeds of $15,000. Additionally, the Company issued 165,000 five-year warrants for common stock with an exercise price of $0.15 per share, subject to certain adjustments, and a cashless exercise option. The Company sold $16,500 principal of the note to Howard Schraub (“Schraub”) on March 16, 2017. As of DecemberMarch 31, 2016, $822 of2017, the OID had been amortized, $5,425 ofand the debt discount had been fully amortized and there was accrued interest of $656.$1,063. The Companynote has recorded abeen repaid in full and no related derivative liability of $54,330was recorded as of DecemberMarch 31, 2016.
EMS FIND, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(unaudited)2017.
On August 18, 2016, Global purchased $60,000 of the December 2015 LG convertible promissory note. The replacement convertible promissory note had a conversion feature wasof 50% of the previous 20 days’ lowest traded price. The acquisition was in two tranches, $30,000 each, thirty days apart. SubsequentIn a series of transactions during August 2016 through January 2017, Global converted $68,593 principal (including a penalty of $8,593 added to the acquisitionprincipal), $101 accrued interest payable and $5,000 in fees into 12,472,222 shares of the first $30,000, LG completed the following conversions: on August 29, 2016, $5,000 ($4,500 principal and legal fees of $500) into 250,000 shares, converted atCompany’s common stock, recording a rate of $0.02 per share, with atotal loss on conversion of $15,500 as the current stock price was $0.082; on September 2, 2016, $10,000 ($9,500 principal$236,845. The replacement note has been repaid in full and legal fees of $500) into 500,000 shares, converted at a rate of $0.02 per share, with a loss on conversion of $25,000 as the current stock price was $0.07; on September 13, 2016, $8,500 ($8,000 principal and legal fees of $500) into 680,000 shares, converted at a rate of $0.0125 per share, with a loss on conversion of $18,700 as the current stock price was $0.04, and; on September 26, 2016, $8,500 ($8,000 principal and legal fees of $500) into 1,202,677 shares, converted at a rate of $0.0071 per share, with a loss on conversion of $31,871 as the current stock price was $0.0275 (see Note 6). On October 7, 2016, Global converted $6,000 ($5,500 principal and legal fees of $500) into 1,000,000 shares, converted at a rate of $0.006 per share, with a loss on conversion of $13,000 as the current stock price was $0.019 (see Note 9). On November 9, 2016, Global converted $7,815 ($7,315 principal and legal fees of $500) into 1,563,000 shares, converted at a rate of $0.00468 per share, with a loss on conversion of $23,445 as the current stock price was $0.02 (see Note 9). On November 22, 2016, a default fee of $8,593 was added to the principal balance. On November 28, 2016, Global converted $4,890 ($4,390 principal and legal fees of $500) into 1,420,000 shares, converted at a rate of $0.003444 per share, with a loss on conversion of $23,010 as the current stock price was $0.02 (see Note 9). On December 7, 2016, Global converted $8,550 ($8,050 principal and legal fees of $500) into 1,900,000 shares, converted at a rate of $0.004237 per share, with a loss on conversion of $29,450 as the current stock price was $0.02 (see Note 9). On December 22, 2016, Global converted $7,695 ($7,195 principal and legal fees of $500) into 1,900,000 shares, converted at a rate of $0.003787 per share, with a loss on conversion of $49,305 as the current stock price was $0.03 (see Note 9). As of December 31, 2016, the principal balance is $4,643 and the accrued interest is $95. The Company has recorded ano related derivative liability of $4,451was recorded as of DecemberMarch 31, 2016.2017.
On August 23, 2016, the Company entered into a securities purchase agreementconvertible promissory note with EMA Financial, LLC (“EMA”), for $33,000. The Company received net proceedsconvertible promissory note has a maturity date of $29,700.August 23, 2017 and bears interest at 16%. The convertible promissory note providesprovided for an OID of $3,300, a deduction of $3,000 for EMA’s legal fees, and a debt discount of $33,000. The Company received net proceeds of $29,700. Pursuant to three conversions in March 2017, EMA converted $16,659 principal and $261 in fees into 10,576,500 shares of the Company’s common stock, recording a total loss on conversion of $92,798. As of DecemberMarch 31, 2016, $1,175 of2017, the OID had been amortized, $11,753 ofand the debt discount had been fully amortized and there was accrued interest of $1,895.$3,111. The Company has recorded a derivative liability of $80,035$26,292 as of DecemberMarch 31, 2016. On January 17, 2017, EMS converted $5,244, consisting of $4,642 of principal, $102 of accrued interest, and $500 in legal fees, into 2,056,545 shares of common stock. See Notes 6 and 8. The conversion price was $0.00255. A loss on conversion will be recorded accordingly.
On September 12, 2016, LG converted $8,500 of principal of the October 22, 2015 convertible promissory note (see Note 6) into 680,000 shares of common stock. The conversion price, based on a 50% discount, was $0.0125. A loss on conversion will be recorded accordingly.2017.
On October 6, 2016, the Company entered into a convertible promissory note with EMA for $33,000. The note matures on October 6, 2017 and bears interest at 12%. A debt discount of $33,000 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. As of DecemberMarch 31, 2016, $7,7752017, $15,912 of the debt discount had been amortized, and there was accrued interest of $944.$2,246. The Company has recorded a derivative liability of $54,327$64,533 as of DecemberMarch 31, 2016.2017.
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EMS Find, Inc.
Notes to Condensed Financial Statements
Nine Months Ended March 31, 2017
(Unaudited)
On December 2, 2016, the Company entered into a convertible promissory note with Global for $18,700. The note matures on December 2, 2017 and bears interest at 12%. The convertible promissory note provides for an OID of $1,700. Therefore, the net proceeds to the Company was $11,500.$17,000. A debt discount of $18,700 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. As of DecemberMarch 31, 2016, $1352017, $554 of the OID had been amortized, $1,049$11,760 of the debt discount had been amortized and there was accrued interest of $184.$738. The Company has recorded a derivative liability of $31,890$37,013 as of DecemberMarch 31, 2016.
On December 15, 2016,2017. Additionally, the Company entered into a convertible promissory note with GPLissued 82,500 five-year warrants for $40,463. The note matures on July 15, 2017 and bears interest at 10%. A debt discount of $40,463 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. On December 22, 2016, GPL converted $3,000 into 3,000,000 shares of common stock (see Note 6). The conversion was at a ratewith an exercise price of $0.001, which was the adjusted rate due$0.15 per share, subject to certain conditions of default. A loss on conversion of $87,000 was recorded. On January 17, 2017, GPL converted $4,500 into 4,500,000 shares of common stock (see Notes 6adjustments, and 8). The conversion was at a rate of $0.001, which was the adjusted rate due to certain conditions of default. A loss on conversion of $20,250 will be recorded. As of December 31, 2016, $3,054 of the debt discount had been amortized, and there was accrued interest of $188.cashless exercise option.
On December 13, 2016, the Company entered into a convertible promissory note with GPL for $10,000. The note matures on July 13, 2017 and bears interest at 12%. A debt discount of $10,000 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. As of DecemberMarch 31, 2016, $8492017, $5,094 of the debt discount had been amortized, and there was accrued interest of $62.$358. The Company has recorded a derivative liability of $17,154$18,617 as of DecemberMarch 31, 2016.2017.
On December 15, 2016, GPL purchased $40,000 principal and $462 accrued interest of the December 2015 LG convertible promissory note. The replacement convertible promissory note with GPL for $40,462 matures on July 15, 2017 and bears interest at 10%. A debt discount of $40,462 was recorded. The conversion price is the lower of 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date or the closing bid price on the original issue date. Pursuant to three conversions in December 2016 through February 2017, GPL converted $1,270 principal into 12,700,000 shares of the Company’s common stock, recording a total loss on conversion of $129,670. As of March 31, 2017, $23,005 of the debt discount had been amortized, and there was accrued interest of $1,153. The Company has recorded a derivative liability of $70,599 as of March 31, 2017.
On February 13, 2017, the Company entered into a convertible promissory note with Global for $10,000. The note matures on February 13, 2018 and bears interest at 2%. The convertible promissory note provides for an OID of $1,000. Therefore, the net proceeds to the Company was $9,000. A debt discount of $10,000 was recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of March 31, 2017, $126 of the OID had been amortized, $1,260 of the debt discount had been amortized and there was accrued interest of $25. The Company has recorded a derivative liability of $19,228 as of March 31, 2017. Additionally, the Company issued 33,333 seven-year warrants for common stock with an exercise price of $0.01 per share, subject to certain adjustments, and a cashless exercise option.
On February 21, 2017, Global purchased $50,000 principal of the December 2015 LG convertible promissory note. The $50,000 replacement note matures on February 21, 2018 and interest does not accrue prior to an event of default or the maturity date. A debt discount of $50,000 was recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. Pursuant to four conversions in February 2017 through March 2017, Global converted $34,159 principal and $2,000 in fees into 17,923,000 shares of the Company’s common stock, recording a total loss on conversion of $171,586. As of March 31, 2017, $30,458 of the debt discount had been amortized. The Company has recorded a derivative liability of $30,458 as of March 31, 2017.
On March 16, 2017, Schraub purchased $16,500 principal of the August 10, 2016 Global convertible promissory note. The $16,500 replacement note matures on March 16, 2018 and bears interest at 12%. A debt discount of $16,500 was recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. Pursuant to a conversion in March 2017, Schraub converted $7,862 principal and $400 in fees into 4,590,000 shares of the Company’s common stock, recording a loss on conversion of $33,048. As of March 31, 2017, $8,194 of the debt discount had been amortized and there was accrued interest of $45. The Company has recorded a derivative liability of $16,755 as of March 31, 2017.
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EMS FIND, INC. AND SUBSIDIARIESFind, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSNotes to Condensed Financial Statements
DECEMBERNine Months Ended March 31, 20162017
(unaudited)(Unaudited)
NOTE 6 – STOCKHOLDERS'On March 28, 2017, the Company entered into a convertible promissory note with Schraub for $16,500. The note matures on March 28, 2018 and bears interest at 10%. A debt discount of $16,500 was recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of March 31, 2017, $136 of the debt discount had been amortized and there was accrued interest of $14. The Company has recorded a derivative liability of $31,949 as of March 31, 2017. Additionally, the Company issued 605,000 seven-year warrants for common stock with an exercise price of $0.01 per share, subject to certain adjustments, and a cashless exercise option.
On March 28, 2017, the Company entered into a convertible promissory note with Global for $18,150. The note matures on March 28, 2018 and bears interest at 10%. The convertible promissory note provides for an OID of $1,750. Therefore, the net proceeds to the Company was $16,400. A debt discount of $18,150 was recorded. The conversion price is 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. As of March 31, 2017, $149 of the OID had been amortized, $14 of the debt discount had been amortized and there was accrued interest of $15. The Company has recorded a derivative liability of $35,144 as of March 31, 2017. Additionally, the Company issued 605,000 seven-year warrants for common stock with an exercise price of $0.01 per share, subject to certain adjustments, and a cashless exercise option.
As detailed above, during the nine months ended March 31, 2017, a total of 60,905,098 shares of the Company’s common stock, valued at $808,452, were issued in conversion of $130,579 principal, $1,845 accrued interest payable, $7,400 in fees, $5,709 adjustment to debt discount and $662,919 loss on conversion of debt into common stock.
6. STOCKHOLDERS’ DEFICIT
Preferred Stock
Series A Preferred Stock
On March 10, 2015, the Company, with the approval of a majority vote of its Board of Directors, approved the filing of a Certificate of Designation establishing the designations, preferences, limitations and relative rights of the Company'sCompany’s Series A preferred stock (the "Series“Series A Designation"Designation” and the "Series“Series A Preferred Stock"Stock”). The terms of the Certificate of Designation of the Series A Preferred Stock, which was filed with the State of Nevada on March 12, 2015, include the right to vote in aggregate, on all shareholder matters equal to 1,000 votes per share of Series A Preferred Stock and eachStock. The shares of Series A Preferred Stock share are not convertible into shares of our common stock.
The Company has 1,000,00020,000,000 shares of Series A Preferred Stock authorized.
On March 23, 2015, the Company issued 50,000 shares of Series A Preferred Stock in consideration for services on the Company'sCompany’s Board of Directors.
On March 31, 2015, the Company issued 450,000 shares of Series A Preferred Stock in consideration for services on the Company'sCompany’s Board of Directors.
On March 31, 2015, the Company issued 500,000 shares of Series A Preferred Stock as part of the share exchange agreement with EMS Factory, Inc.
On August 5, 2015, Shang Fei resigned from the Company as a board member and surrendered his 500,000 shares of Series A Preferred Stock which the company had issued to him in March 2015. Mr. Shang Fei also has provided the Company with $260,000 of capital of which $210,000 and a prior loan for expenses of $19,095 was converted into 212,050 shares of common stock.
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EMS Find, Inc.
Notes to Condensed Financial Statements
Nine Months Ended March 31, 2017
(Unaudited)
Series B Preferred Stock
On December 21, 2015, the Company filed a Certificate of Designation for its new Series B Convertible Preferred Stock with the State of Nevada following approval by the board of directors of the Company. Five Hundred (500,000) Thousand shares of the Company'sCompany’s authorized preferred stock are designated as the Series B Convertible Preferred Stock (the "Series“Series B Preferred Stock"Stock”), par value of $0.001 per share and with a stated value of $0.001 per share (the "Stated Value"“Stated Value”). Holders of Series B Preferred Stock shall be entitled to receive dividends, when and as declared by the Board of Directors out of funds legally available therefor. At any time and from time to time after the issuance of shares of the Series B Preferred Stock, each issued share of Series B Preferred Stock is convertible into One (100) Hundred shares of Common Stock ("(“Conversion Ratio"Ratio”). The holders of the Series B Preferred Stock shall have the right to vote together with holders of Common Stock, on an as "converted basis"“converted basis”, on any matter that the Company'sCompany’s shareholders may be entitled to vote on, either by written consent or by proxy. Upon any liquidation, dissolution or winding-up of the Company, the holders of the Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Series B Preferred Stock an amount equal to the Stated Value, and all other amounts in respect thereof then due and payable prior to any distribution or payment shall be made to the holders of any junior securities.
On July 1, 2016, the Board of Directors of the Company agreed withto compensate Steve Rubakh to reduce his compensation to $75,000 per year and to terminateon a quarterly basis through the monthly issuance of 30,000 shares of common stock and in exchange, Rubakh will receive 30,000 shares of Series B Preferred Stock on a quarterly basis with the initial issuance effective for the period April 1, 2016 through June 30, 2016 were issued on August 29, 2016, the second issuance for the period July 1, 2016 through September 30, 2016 were issued on September 1, 2016, and the third issuance for the period October 1, 2016 through December 31, 2016 were issued on November 1, 2016. Stock-based compensation of $639,000 was recorded. See Note 4.
Stock. For the sixnine months ended DecemberMarch 31, 2016,2017, the Company authorized the issuance of 90,000issued 120,000 shares of Series B preferred stock as partto Steve Rubakh valued at $707,100.
Common Stock
On January 20, 2017, the holder of Rubakh's compensation package. Stock-based compensationin excess of $697,500 was recorded.51% of the total voting power of all issued and outstanding shares of the Company authorized an amendment to the Company’s Certificate of Incorporation increasing the number of authorized common shares, $0.001 par value, to 3,000,000,000 shares. The Board of Directors of the Company approved the increase in the authorized number of common shares.
During the nine months ended March 31, 2017, the Company issued a total of 80,309,898 shares of its common stock.
On July 1, 2016, 300,000 shares of common stock valued at $37,500 were issued to Steve Rubakh for accrued compensation. See Note 4.
Common StockOn February 14, 2017, 12,486,400 shares of common stock valued at $31,216 were issued to Steve Rubakh for accrued compensation. See Note 4.
On February 14, 2017, 6,618,400 shares of common stock valued at $16,546 were issued to Steve Rubakh to reimburse him for payments of $16,546 made by him to a vendor.
As detailed in Note 5, during the nine months ended March 31, 2017, a total of 60,905,098 shares of the Company’s common stock, valued at $808,452, were issued in conversion of $130,579 convertible note principal, $1,845 accrued interest payable, $7,400 in fees, $5,709 adjustment to debt discount and $662,919 loss on conversion of debt into common stock.
During the nine months ended March 31, 2016, the Company issued a total of 654,604 shares of its common stock.
On July 22, 2015, the Company sold 48,245 shares of common stock for $55,000.
On July 30, 2015, the Company issued 26,885 shares of common stock for debt converted of $31,465. The balance of $115 was forgiven.
On August 5, 2015, Shang Fei resigned from the Company as a board member and surrendered his 500,000 shares of Series A Preferred Stock which the company had issued to him in March 2015. Mr. Shang Fei, also hasa former Director of the Company, agreed to convert $210,000 of capital provided the Company with $260,000 of capital of which $210,000 and a prior loan for expenses of $19,095 was converted into common stock. On August 6, 2015, the Company issued 17,606 shares of common stock for debt converted of $19,015 and 194,444 shares of common stock for debt converted of $210,000, for a total of 212,050 shares of common stock. See Note 4.
EMS FIND, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2016
(unaudited)
On September 25, 2015, the Company authorized the issuance of 125,000 shares of common stock as part of an agreement with Grillo, a directorDirector of the Company, for services from September 25, 2015 through March 31, 2016. The shares are amortized over the period of the agreement. See Note 4.
On March 15, 2016, the Company issued 242,424 shares of common stock to Sophia Rubakh, a relative of Steve Rubakh, in consideration of various consulting administrative and marketing services provided to the Company. The shares were issued with a value of $0.21, or $50,909. See Note 4.
On April 25, 2016, the Company issued 500,000 shares of common stock to Falcones as compensation for his services. The shares were issued with a value of $0.21 or $105,000.
On June 27, 2016, Rubakh converted his convertible promissory note in the amount of $81,364 into 2,712,133 shares of common stock. The conversion price was $0.03 whereas the current stock price was $0.14 therefore, a loss of $298,335 was recorded. See Notes 4 and 5.
On July 1, 2016, the Board of Directors of the Company agreed with Rubakh to convert $6,000 of accrued compensation into 300,000 shares of common stock, at a conversion rate of $0.02 per share. The current price of the common stock was $0.125, therefore, a loss on conversion of $31,500 was recorded. See Note 4.
On August 29, 2016, Global converted $5,000 ($4,500 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 250,000 shares, converted at a rate of $0.02 per share, with a loss on conversion of $15,500 as the current stock price was $0.082.
On September 2, 2016, Global converted $10,000 ($9,500 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 500,000 shares, converted at a rate of $0.02 per share, with a loss on conversion of $25,000 as the current stock price was $0.07.
On September 13, 2016, Global converted $8,500 ($8,000 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 680,000 shares, converted at a rate of $0.0125 per share, with a loss on conversion of $18,700 as the current stock price was $0.04.
On September 26, 2016, Global converted $8,500 ($8,000 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 1,202,677 shares, converted at a rate of $0.0071 per share, with a loss on conversion of $31,871 as the current stock price was $0.0275.
On October 6, 2016, Global converted $6,000 ($5,500 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 1,000,000 shares, converted at a rate of $0.006 per share, with a loss on conversion of $23,000 as the current stock price was $0.029.
On November 9, 2016, Global converted $7,815 ($7,315 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 1,563,000 shares, converted at a rate of $0.00468 per share, with a loss on conversion of $23,445 as the current stock price was $0.02.
On November 28, 2016, Global converted $5,890 ($5,390 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 1,420,000 shares, converted at a rate of $0.004148 per share, with a loss on conversion of $22,010 as the current stock price was $0.02.
On December 7, 2016, Global converted $8,550 ($8,050 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 1,900,000 shares, converted at a rate of $0.004237 per share, with a loss on conversion of $29,450 as the current stock price was $0.02.
On December 22, 2016, Global converted $7,695 ($7,195 principal and legal fees of $500) of its note dated August 10, 2016 (see Note 5), into 1,900,000 shares, converted at a rate of $0.003787 per share, with a loss on conversion of $49,305 as the current stock price was $0.03.
On December 22, 2016, GPL converted $3,000 of its note dated August 10, 2016 (see Note 5), into 3,000,000 shares, converted at a rate of $0.001 per share, with a loss on conversion of $87,000 as the current stock price was $0.03.
On January 17, 2017, GPL converted $4,500 of its note dated August 10, 2016 (see Notes 5 and 9), into 4,500,000 shares, converted at a rate of $0.001 per share, with a loss on conversion of $20,250 as the current stock price was $0.0055.
On January 17, 2017, EMS converted $5,244, consisting of $4,642 of principal, $102 of accrued interest, and $500 in legal fees, into 2,056,545 shares of common stock. The conversion was for the note dated August 23, 2016 (see Notes 5 and 9). The conversion price was $0.00255. A loss on conversion will be recorded accordingly.
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EMS FIND, INC. AND SUBSIDIARIESFind, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSNotes to Condensed Financial Statements
DECEMBERNine Months Ended March 31, 20162017
(unaudited)(Unaudited)
Warrants7. WARRANTS
The Company has granted warrants to officers and directors. Warrant activity for officers and directors for the threenine months ended DecemberMarch 31, 20162017 is as follows:
Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Terms Value Outstanding at June 30, 2016 Granted Forfeited Exercised Outstanding at December 31, 2016 Exercisable at December 31, 2016 Weighted Average Grant Date Fair Value Number of Weighted Average Weighted Average Remaining Contract Term Aggregate Intrinsic Outstanding at June 30, 2016 Granted Exercised Forfeited or expired Outstanding and exercisable at March 31, 2017 3,000,000 $ 0.74 - $ - - $ - $ - 3,000,000 $ 0.74 4.01 $ - 3,000,000 $ 0.74 $ 0.74 3,000,000 $ 0.74 - $ - - $ - - $ - 3,000,000 $ 0.74 3.85 $ -
On January 2, 2016, the Company issued 3,000,000 warrants for common stock of the Company to Steve Rubakh as a compensation incentive. The warrants matureexpire on January 2, 2021. The exercise price is $0.74 and the warrant has a cashless exercise option. The market price of the common stock of the Company current price on the date of issuance was $0.47. The warrants were valued at $0.383 using a Black-Scholes calculation. The Company recorded ana stock-based compensation expense of $1,149,000. See Note 5.
On January 2, 2016, the Company issued 3,000,000 warrants for common stock of the Company to Falcones as a compensation incentive. The warrants matureexpire on January 2, 2021. The exercise price is $0.74 and the warrant has a cashless exercise option. The Company recorded an expense ofwarrants were valued at $1,149,000 (see Note 5).using a Black-Scholes calculation. As part of the April 6, 2016 sale of Viva Entertainment, (see Notes 1 and 7), these warrants were cancelled effective the date of issuance, therefore there were no expenses recorded related to the issuance.
The Company has granted warrants to non-employees.non-employees, primarily in connection with the issuance of certain convertible promissory notes. See Note 5. Warrant activity for non-employees for the threenine months ended DecemberMarch 31, 20162017 is as follows:
Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Terms Valu e Outstanding at June 30, 2016 Granted Forfeited Exercised Outstanding at December 31, 2016 Exercisable at December 31, 2016 Weighted Average Grant Date Fair Value Number of Weighted Average Weighted Average Remaining Contract Term Aggregate Intrinsic Outstanding at June 30, 2016 Granted Exercised Forfeited or expired Outstanding and exercisable at March 31, 2017 60,000 $ 0.25 165,000 $ 0.15 $ - $ - 225,000 $ 0.177 4.00 $ - $ 0.177 $ 0.177 60,000 $ 0.25 1,490,833 $ 0.03 - $ - - $ - 1,550,833 $ 0.04 6.40 $ -
The warrants were valued at the grant date using a Black-Scholes calculation. During the nine months ended March 31, 2017, stock-based compensation totaling $14,710 was recorded for the warrants.
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EMS FIND, INC. AND SUBSIDIARIESFind, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSNotes to Condensed Financial Statements
DECEMBERNine Months Ended March 31, 20162017
(unaudited)(Unaudited)
On April 20, 2016, the Company issued 60,000 warrants for common stock of the Company to LG. The issuance was related to the Purchase Agreement dated October 22, 2015 (see Note 6). The warrants expire on April 20, 2019. The exercise price is $0.25 and the warrants have a cashless exercise option. The Company recorded an expense of $10,320.
On August 10, 2016, in conjunction with an agreement between the Company and Global Opportunity (see Note X) for financing, the Company issued 165,000 warrants for common stock to Global Opportunity. The warrants expire on August 10, 2021. The exercise price is $0.15 and the warrants have a cashless exercise option. The Company recorded an expense of $4,950.
NOTE 7 – DISCONTINUED OPERATIONS
As of the second quarter of 2015, the subsidiary, EMS Factory, Inc. discontinued operations which is reflected in the consolidated statements of income and consolidated statements of cash flows. Assets classified as held for sale are reported in the consolidated balance sheet. The Company will sell the remainder if the fixed assets and currently has no cost associated to the assets. The Company reported a loss of $0 and loss of $76,670 during the period ending December 31, 2016 and 2015, respectively.
Reconciliation of the Items Constituting Profit and (Loss)
from Discontinued Operations
(unaudited)
December 31, December 31, Revenues Cost of sales General and administrative Depreciation and amortization 2016 2015 $ - $ - - - - 76,576 - 94 $ - $ (76,670 )
NOTE 8 –8. COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of February 10, 2017,the date of filing of this report, there were no pending or threatened lawsuits, except as stated below.
On October 14, 2016, the Supreme Court of the State of New York County of Kings, in regards to LG Capital Funding, LLC v. EMS Find, Inc., issued a judgment against EMS Find, Inc. in favor of LG Capital Funding, LLC, in the amount of $135,202, which includes principal and interest (calculated as of September 29, 2016), in regards to the convertible promissory note dated October 22, 2015. The judgment includes an Information Subpoena with Restraining Notice, which addressed the EMS Find, Inc. bank account at TD Bank. As of the date of this filing, $1,304 was garnished.
NOTE 9 –9. SUBSEQUENT EVENTS
On January 17,Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:
Subsequent to March 31, 2017, GPL converted $4,500the Company has issued a total of 173,031,382 shares of its common stock to various lenders in a series of conversions of convertible promissory note dated August 10, 2016 (see Notes 5 and 8), into 4,500,000 shares, converted at a rate of $0.001 per share, with a loss on conversion of $20,250 as the current stock price was $0.0055.principal totaling $105,646.
On January 17,Effective April 4, 2017, EMS converted $5,244, consisting of $4,642 of principal, $102 of accruedthe Company entered into a convertible promissory note with Schraub for $20,000. The note matures on April 4, 2018 and bears interest and $500 in legal fees, into 2,056,545 shares of common stock. The conversion was for the note dated August 23, 2016 (see Notes 5 and 6)at 10%. The conversion price was $0.00255. A lossis 50% of the lowest traded price for the twenty consecutive trading days immediately preceding the applicable conversion date. Additionally, the Company issued 750,000 seven-year warrants for common stock with an exercise price of $0.01 per share, subject to certain adjustments, and a cashless exercise option.
On April 20, 2017, the Company entered into a Settlement Agreement & Mutual Release with River North and Old Main, two holders of convertible promissory notes (see Note 5) to settle the litigation arising from certain disputes related to the notes. In consideration for releases granted by the lenders, the Company agreed to the following:
| · | enter into an Amendment to the Convertible Promissory Note Issued on July 25, 2016 to River North to establish the outstanding principal payable to River North at $50,000; | |
| · | the payment of $30,000 to River North, which payment was financed by the issuance of a new convertible promissory note to Global; | |
| · | enter into an Amendment to the Convertible Promissory Note Issued on July 25, 2016 to River North to establish the outstanding principal payable to Old Main at $56,000 (including legal fees) and | |
| · | the payment of $30,000 to Old Main, which payment was financed by the issuance of a new convertible promissory note to Global. |
Effective April 13, 2017, the Company entered into a convertible promissory note with Global for $30,000 to partially fund the settlement with Old Main discussed above. The note matures on April 13, 2018 and bears interest at 10%. The conversion will be recorded accordingly.price is 50% of the lowest traded price for the twenty-five consecutive trading days immediately preceding the applicable conversion date.
Effective May 16, 2017, the Company entered into a convertible promissory note with Global for $30,000 to partially fund the settlement with River North discussed above. The note matures on May 16, 2018 and bears interest at 10%. The conversion price is 50% of the lowest traded price for the twenty-five consecutive trading days immediately preceding the applicable conversion date.
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SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are "forward-looking statements"“forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations."” You can expect to identify these statements by forward-looking words such as "may," "might," "could," "would," "will," "anticipate," "believe," "plan," "estimate," "project," "expect," "intend," "seek"“may,” “might,” “could,” “would,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. 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 the "Risk Factors"“Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended June 30, 20152016 and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.
GENERAL
We were incorporated in the State of Nevada on March 22, 2013 under the name Lightcollar, Inc. On March 22, 2015, we changed our name to EMS Find, Inc., and in May 2017, we changed our name to Integrated Ventures, Inc. Our offices are located at 73 Buck Road, Suite 2, Huntingdon Valley, Pennsylvania 19006.
Effective March 31, 2015, we entered into a Share Exchange Agreement with the sole shareholder of EMS Factory, Inc., a Pennsylvania corporation (“EMS Factory”), and following the closing under the Share Exchange Agreement, EMS Factory became a wholly-owned subsidiary of the Company, withCompany. As of the former stockholdersecond quarter of 2015, EMS Factory owning approximately 35% of the outstanding shares of common stock of the combined company. Our offices are located at 73 Buck Road, Suite 2, Huntingdon Valley, Pennsylvania 19006.discontinued operations.
The Company develops and markets B2B & B2C on-demand mobile platform, designed to connect health care providers and consumers to a network of medical transport companies throughout the United States and Canada and, on the internet and through mobile applications, and plans to provide specialized online marketing solutions for these businesses that boost customer awareness and merchant visibility on the internet and through mobile applications. The Company has recently determined to expand its business operations to acquisitions of or partnering with revenue generating companies, primarily in the healthcare, e-commerce, mobile technologies, transportation and consumer goods markets that have a seasoned management team, solid operating histories, minimum debt, high growth potential and tangible assets, designed to mitigate investor risk. The Company intends to work with these companies to finance and expand their operations with growth capital. We will require additional capital for this effort, and there is no assurance that such capital will be available to enable us to expand the scope of our operations into this new area.
On April 6, 2016 we completed the sale of our subsidiary Viva Entertainment Group, Inc. (“Viva Entertainment”) to Black River Petroleum Corp., a Nevada publicly-traded company (“Black River”), at a closing where, in exchange for all sale of all of the outstanding shares of Viva Entertainment, Black River issued to the Company its 10% promissory note in the principal amount of $100,000, due December 31, 2016. We have given no effect to the note receivable from this transaction in our financial statements, pending collection of the note and completion of the transaction. The note receivable was in default as of March 31, 2017. We discontinued consolidation of the accounts of Viva Entertainment effective April 6, 2016, In connection with the sale, Viva Entertainment’s Chief Executive Officer, Johnny Falcones (“Falcones”), a member of our Board of Directors, resigned from all positions at our Company and was elected as the sole director and President and Chief Executive Officer of Black River, to manage the development and marketing of Viva Entertainment’s over the top (IPTV/OTT) application for connected TV’s, desktop computers, tablets, and smart phones.
Financial Operations Overview
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RevenueFINANCIAL OPERATIONS REVIEW
To date, we have not generated any revenues from product sales and expect to start bring in revenue toward the end of the 2016 calendar year. Revenues to date have been generated substantially from the now discontinued Ambulance services. Since our inception through June 30, 2016, we have generated approximately $1.1 million in revenue. WeRevenues to date have sincebeen generated substantially from the now discontinued theseAmbulance services, and are focusingwhich we have discontinued to focus on new revenue sources.
We are incurring increased costs as a result of being a publicly-traded company. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. We also have paid compensation through the issuance of shares of our common stock and warrants, the valuation of which has resulted in significant stock-based compensation. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, have required changes in corporate governance practices of public companies and will require us to comply with these rules. These new rules and regulations have will increase our legal and financial compliance costs and have made some activities more time-consuming and costly. In addition, these new rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance, which we currently cannot afford to do. As a result of the new rules, it may become more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur as a result of being a public company or the timing of such costs.
To fund future operations, we will need to raise additional capital. The amount and timing of future funding requirements will depend on many factors, including the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs and related general and administrative support. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources, such as potential collaboration agreements. We cannot be certain that anticipated additional financing will be available to us on favorable terms, or at all.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBERMARCH 31, 20162017 COMPARED TO THE THREE MONTHS ENDED DECEMBERMARCH 31, 20152016
Revenues
Our revenue was $0 and $0We did not have any revenues for the three months ended DecemberMarch 31, 20162017 and 2015.2016.
General and AdministrativeOperating Expenses
For the three months ended DecemberMarch 31, 2016,2017, our general and administrativeoperating expenses were $97,034totaled $103,754 compared to $403,178$2,422,523 for the three months ended DecemberMarch 31, 2015,2016, resulting in a decrease of $306,144.$2,318,769. The decrease was primarily due to the reduction of stock-based compensation, ($58,500$19,360 for the three months ended DecemberMarch 31, 20162017 compared to $323,984$2,342,097 for the three months ended DecemberMarch 31, 2015).2016 when we issued warrants to officers and directors. The decrease in operating expenses in the current year quarter was partially offset by an increase in executive compensation, which increased to $30,750 from $2,491 in the three months ended March 31, 2016.
Net LossOther Income (Expense)
For the three months ended DecemberMarch 31, 2016,2017, our net loss was $74,960 compared to a net lossother income totaled $417,986, comprised of $538,251 for the three months ended December 31, 2015. The net loss for the three months ended December 31, 2016 waschange in fair value of derivative liability of $929,850, partially contributable to beneficial conversion feature ("BCF") expense, $107,578,offset by amortization of debt discount of $119,060, amortization of original issue discount ("OID"), $3,611, theof $5,515, loss on the conversion of debt into common stock $234,210,of $344,935 and interest expense of $42,354. By comparison, our other expense totaled $60,076 for the three months ended March 31, 2016, comprised of amortization of debt discount of $34,443, amortization of original issue discount of $9,324, loss on sale of property and equipment of $22,855 and interest expense of $4,986, partially offset by the change in the fair value of embedded conversion options, $376,412.derivative liability of $11,532.
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SIX MONTHS ENDED DECEMBERThe increase in our interest expense and in the amortization of debt discount in the three months ended March 31, 2016 COMPARED TO THE SIX MONTHS ENDED DECEMBER 31, 20152017 resulted from the increase in our convertible notes payable.
RevenuesThe inputs used to estimate fair value of the derivatives associated with our convertible notes payable using the Black-Scholes pricing model are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
Our revenue was $0 and $0 forThe significant increase in loss on conversion of debt into common stock in the sixthree months ended DecemberMarch 31, 2016 and 2015.
General and Administrative Expenses
For2017 resulted from multiple conversions of convertible notes payable into shares of our common stock where the sixconversion price was substantially lower than the current market price of the common shares issued in the conversions. We reported no loss on conversion of debt into common stock in the three months ended DecemberMarch 31, 2016, our general and administrative expenses were $852,350 compared to $589,476 for the six months ended December 31, 2015, resulting in an increase of $262,874, primarily contributable to an increase in stock-based compensation of $378,466 offset by a reduction in executive compensation of $112,411.2016.
Net Loss
ForAs a result, our net income was $314,232 for the sixthree months ended DecemberMarch 31, 2016, our net loss was $261,4372017 compared to a net loss of $773,653$2,482,599 for the sixthree months ended DecemberMarch 31, 2015. The net loss2016.
NINE MONTHS ENDED MARCH 31, 2017 COMPARED TO THE NINE MONTHS ENDED MARCH 31, 2016
Revenues
We did not have any revenues for the sixnine months ended DecemberMarch 31, 2017 and 2016.
Operating Expenses
For the nine months ended March 31, 2017, our operating expenses totaled $956,104 compared to $3,088,669 for the nine months ended March 31, 2016, resulting in a decrease of $2,132,565. The decrease was primarily due to the reduction of stock-based compensation, $721,810 for the nine months ended March 31, 2017 compared to $2,666,081 for the nine months ended March 31, 2016 when we issued warrants to officers and directors. The decrease in operating expenses in the current year quarter was partially contributable to BCF expense, $182,558, OID, $19,454,offset by an increases in professional fees, executive compensation and general and administrative expenses.
Other Income (Expense)
For the nine months ended March 31, 2017, our other income totaled $1,008,899, comprised of change in fair value of derivative liability of $2,087,579, partially offset by amortization of debt discount of $301,618, amortization of original issue discount of $24,969, loss on the conversion of debt into common stock $349,484, offset byof $694,419 and interest expense of $57,674. By comparison, our other expense totaled $167,583 for the nine months ended March 31, 2016, comprised of amortization of debt discount of $47,328, amortization of original issue discount of $14,344, change in the fair value of embeddedderivative liability of $75,142, loss on sale of property and equipment of $22,855 and interest expense of $7,914.
The increase in our interest expense and in the amortization of debt discount in the nine months ended March 31, 2017 resulted from the increase in our convertible notes payable.
The inputs used to estimate fair value of the derivatives associated with our convertible notes payable using the Black-Scholes pricing model are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
The significant increase in loss on conversion options, $1,157,729.of debt into common stock in the nine months ended March 31, 2017 resulted from multiple conversions of convertible notes payable into shares of our common stock where the conversion price was substantially lower than the current market price of the common shares issued in the conversions. We reported no loss on conversion of debt into common stock in the nine months ended March 31, 2016.
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Net Loss
As a result, our net income was $52,795 for the nine months ended March 31, 2017 compared to net loss of $3,256,252 for the nine months ended March 31, 2016.
LIQUIDITY AND CAPITAL REQUIREMENTSRESOURCES
Overview
As of DecemberMarch 31, 2016,2017, the Company had $28,523$31,082 in cash. We do not have sufficient resources to effectuate our business. We expect to incur a minimum of $50,000 in expenses during the next twelve months of operations. We estimate that these expenses will be comprised primarily of general and administrative expenses, including overhead, legal and accounting fees.
LiquiditySources and Capital Resources during the six months ended December 31, 2016 compared to the six months ended September 30, 2015Used of Cash
We used net cash in operations of $157,708 for$177,493 in the sixnine months ended DecemberMarch 31, 2017 as a result of our net income of $52,795, non-cash expenses totaling $1,783,809, and increases in accounts payable of $32,769, due to related party of $42,782 and accrued expenses of $9,626, offset by non-cash gain of $2,087,579 and decrease in checks written in excess of cash balances of $11,695.
By comparison, we used net cash in operations of $467,827 in the nine months ended March 31, 2016 comparedas a result of our net loss of $3,256,252, increase in deposits of $700 and decreases in accounts payable of $13,712 and due to related party of $47,651, partially offset by non-cash expenses totaling $2,837,890 and increase in accrued expenses of $12,598.
During the nine months ended March 31, 2017 and 2016, we had no net cash used in operations of $395,244 for the six months ended December 31, 2015. The negative cash flow from operating activities for the six months ended December 31, 2016 is attributable to the Company's net loss from operations of $261,437 primarily due to the issuance of common stock for services, $702,450, BCF expense, $182,558, and the loss on conversion of debt into common stock, $349,484, offsetor provided by the change in the fair value of embedded conversion options, $1,157,729. Cash used in operations for the six months ended December 31, 2015 is attributable to the Company's net loss of $773,653.
We used cash in investing or financing activities of $0 and $0 for the six months ended December 31, 2016 and 2015.activities.
We had net cash provided by financing activities of $184,257$206,600 for the sixnine months ended DecemberMarch 31, 2017, comprised of proceeds from convertible notes payable. For the nine months ended March 31, 2016, compared to $435,500 for the same period in 2015.net cash provided by financing activities was $434,344, comprised of proceeds from convertible notes payable of $200,500, proceeds from related party of $178,844 and proceeds from sale of common stock of $55,000.
We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.
Going Concern
The Company has not generated any revenues, has recurring net losses, a working capital deficiency as of DecemberMarch 31, 20162017 of $701,419,$917,925, and used net cash in operations of $157,708$177,493 and $395,244$467,827 for the sixnine months ended DecemberMarch 31, 20162017 and 2015,2016, respectively. In addition, as of DecemberMarch 31, 2016,2017, the Company had an accumulated deficit of $5,421,194.$5,106,962. These conditions raise substantial doubt about the Company'sCompany’s ability to continue as a going concern.
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The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of management'smanagement’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements.
There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company'sCompany’s current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.
Estimated 2017 Capital RequirementsSIGNIFICANT ACCOUNTING POLICIES
We estimateOur significant accounting policies are disclosed in Note 1 to our capital requirements overcondensed financial statements and in the next twelve monthsnotes to our audited financial statements included in our Annual Report on Form 10-K for the developmentyear ended June 30, 2016. The following is a summary of those accounting policies that involve significant estimates and marketingjudgment of our EMS on demand mobile platform app to be $1,000,000 to $3,000,000.management.
We have obtained working capital through various convertible note financings with various third parties.
USE OF ESTIMATES
The preparationUse of the financial statements requires the Company to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to oil and gas properties, intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in these financial statements. Certain amounts for prior periods have been reclassified to conform to the current presentation.
Management believes that it is reasonably possible that the following material estimates affecting the financial statements could happen in the coming two years:
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting PoliciesEstimates
The preparation of financial statements in conformity with generally accepted accounting principles generally accepted in the United States of America requires usmanagement to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimatesstatements and assumptions affect the reported amounts of revenuesrevenue and expenses during the reporting period. We base ourBecause of the use of estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonableinherent in the circumstances; however,financial reporting process, actual results maycould differ significantly from these estimates under different future conditions.those estimates.
Accounting for Derivatives
The Securities and Exchange Commission recently issued "Financial Reporting Release No. 60 Cautionary Advice About Critical Accounting Policies" ("FRR 60"), suggesting companies provide additional disclosures, discussion and commentary on their accounting policies considered most criticalCompany evaluates its convertible debt, options, warrants or other contracts to its business and financial reporting requirements. FRR 60 considers an accounting policydetermine if those contracts or embedded components of those contracts qualify as derivatives to be critical if itseparately accounted for. The result of this accounting treatment is important tothat under certain circumstances the Company's financial conditionfair value of the derivative is marked-to-market each balance sheet date and resultsrecorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and requires significant judgment and estimatesthen that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the partreclassification date.
We estimate the fair value of managementthe derivatives associated with our convertible notes payable using the Black-Scholes pricing model. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, and, in the applicationcase of our convertible notes payable, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the policy.derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options, warrants and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options and warrants at the grant date by using the Black-Scholes option-pricing model.
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The Company accounts for stock-based compensation to non-employees under ASC 718, "Compensation-Stock Compensation" ("ASC 718"). The compensation cost of the awards is based on the grant date fair-value of these awards and recognized over the requisite service period, which is typically the vesting period. The Company uses the Black-Scholes Option Pricing Model to determine the fair-value of stock options issued for compensation.
The Company accounts for non-employee share-based awards based upon ASC 505-50, "Equity-Based“Equity-Based Payments to Non-Employees."” ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete. Generally, our awards do not entail performance commitments. When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete. Dilutive common stock equivalent shares which may dilute future earnings per share consist of warrants to purchase 3,225,000 at December 31, 2016 shares of common stock and convertible notes convertible into approximately 15,990,474 common shares. Equivalent shares are not utilized when the effect is anti-dilutive.
NON-GAAP FINANCIAL MEASURESOff Balance Sheet Arrangements
Adjusted Net Earnings
In additionWe currently have no off-balance sheet arrangements that have or are reasonably likely to reporting net loss fromhave a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, as defined under generally accepted accounting principles (“GAAP”), the Company presents adjusted net earnings from operations (adjusted net earnings), which is a non-GAAP performance measure. Adjusted net earnings consist of net loss from operations after adjustment for those items shown in the table below. Adjusted net earnings does not represent, and should not be considered an alternative to, GAAP measurements such as net loss from operations (its most comparable GAAP financial measure), and the Company’s calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items shown below, the Company believes that the measure is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies. The Company’s management does not view adjusted net earnings in isolation and also uses other measurements, such as net loss from operation and revenues to measure operating performance. The following table provides a reconciliation of net loss from operations, the most directly comparable GAAP measure, to adjusted net earnings for the periods presented:liquidity, capital expenditures or capital resources.
Adjusted Net Loss For the Six Months Ended December 31, 2016 2015 Net loss Amortization of beneficial conversion feature Amortization of original issue discount Loss on conversion of debt into common stock Change in FV of embedded conversion options Adjusted net loss Weighted average shares outstanding -basic and diluted Adjusted basic and diluted net loss per share $ (261,437 ) $ (773,653 ) (182,558 ) (12,885 ) (19,454 ) (5,020 ) (349,484 ) - 1,192,197 (86,674 ) $ (902,138 ) $ (686,979 ) 39,660,326 28,870,906 $ (0.02 ) $ (0.02 )
Adjusted EBITDA
In addition to reporting net loss from operations as defined under GAAP, the Company also presents adjusted net earnings before interest, income taxes, depreciation, depletion, and amortization from operations (adjusted EBITDA), which is a non-GAAP performance measure. Adjusted EBITDA consists of net loss from operations after adjustment for those items shown in the table below. Adjusted EBITDA does not represent, and should not be considered an alternative to, GAAP measurements such as net loss from operations (its most comparable GAAP financial measure), and the Company’s calculations thereof may not be comparable to similarly titled measures reported by other companies.
By eliminating the items shown below, the Company believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes that adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies. The Company’s management uses adjusted EBITDA to manage its business, including in preparing its annual operating budget and financial projections. The Company’s management does not view adjusted EBITDA in isolation and also uses other measurements, such as net loss from operations and revenues to measure operating performance. The following table provides a reconciliation of net loss from operations, the most directly comparable GAAP measure, to adjusted EBITDA for the periods presented:
Adjusted EBITDA For the Six Months Ended December 31, 2016 2015 Net loss from operations Interest expense Amortization of beneficial conversion feature Amortization of original issue discount Stock-based compensation Loss on conversion of debt into common stock Change in FV of embedded conversion options Adjusted EBITDA Weighted average shares outstanding -basic and diluted Adjusted basic and diluted net loss per share $ (261,437 ) $ (773,653 ) (15,320 ) (2,928 ) (182,558 ) (12,885 ) (19,454 ) (5,020 ) (702,450 ) (323,984 ) (349,484 ) - 1,192,197 (86,674 ) $ (184,368 ) $ (342,162 ) 39,660,326 28,870,906 $ (0.00 ) $ (0.01 )
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
AAs a smaller reporting company, as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term "disclosure“disclosure controls and procedures"procedures” to mean a company'scompany’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission'sCommission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer'sissuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC'sSEC’s rules and forms and that information required to be disclosed is accumulated and communicated to the chief executive and interim chief financial officer to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company'sCompany’s disclosure controls and procedures are not effective as of such date. The Chief Executive Officer and Chief Financial Officer have determined that the Company continues to have the following deficiencies which represent a material weakness:
1. | The Company intends to appoint additional independent directors; | |
2. | Lack of in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions; | |
3. | Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting; | |
4. | Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes. |
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To remediate our internal control weaknesses, management intends to implement the following measures:
· | The Company will add sufficient number of independent directors to the board and appoint additional member(s) to the Audit Committee. | |
· | The Company will add sufficient accounting personnel or outside consultants to properly segregate duties and to effect a timely, accurate preparation of the financial statements. | |
· | The Company will hire staff or outside consultants technically proficient at applying U.S. GAAP to financial transactions and reporting. | |
· | Upon the hiring of additional accounting personnel or outside consultants, the Company will develop and maintain adequate written accounting policies and procedures. |
The additional hiring is contingent upon The Company'sCompany’s efforts to obtain additional funding through equity or debt and the results of its operations. Management expects to secure funds in the coming fiscal year but provides no assurances that it will be able to do so.
Changes in Internal Control Over Financial Reporting
Except as set forth above, duethere was no change to our internal controls or in other factors that could affect these controls during the new business plan, we are in the process of finalizing our controls over the new business process.
Limitations on the Effectiveness of Controls
The Company's management, including the CEO and CFO, does not expectthree month period ended March 31, 2017 that our disclosure controls and procedureshas materially affected, or is reasonably likely to materially affect, our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.reporting.
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There are no pending legal proceedings in which we are a party or in which any of our directors, officers or affiliates, any owner of record or beneficiary of more than 5% of any class of our voting securities is a party adverse to us or has a material interest adverse to us, except as stated below. Our property is not the subject of any pending legal proceedings.
On October 14, 2016, the Supreme Court of the State of New York County of Kings, in regards to LG Capital Funding, LLC v. EMS Find, Inc., issued a judgment against EMS Find, Inc. in favor of LG Capital Funding, LLC, in the amount of $135,202, which includes principal and interest (calculated as of September 29, 2016), in regards to the convertible promissory note dated October 22, 2015. The judgment includes an Information Subpoena with Restraining Notice, which addressed the EMS Find, Inc. bank account at TD Bank. As of the date of this filing, $1,304 was garnished.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On July 1, 2016,During the Board of Directors ofthree months ended March 31, 2017, the Company agreed with Rubakh to convert $6,000issued a total of accrued compensation into 300,00047,489,421 shares of common stock valued at a$419,018 in conversion rate of $0.02 per share.
On August 29, 2016, Global converted $5,000 ($4,500 principal and legal fees of $500) of its note dated August 10, 2016, into 250,000 shares, converted at a rate of $0.02 per share.
On September 2, 2016, Global converted $10,000 ($9,500 principal and legal fees of $500) of its note dated August 10, 2016, into 500,000 shares, converted at a rate of $0.02 per share.
On September 13, 2016, Global converted $8,500 ($8,000 principal and legal fees of $500) of its note dated August 10, 2016, into 680,000 shares, converted at a rate of $0.0125 per share.
On September 26, 2016, Global converted $8,500 ($8,000 principal and legal fees of $500) of its note dated August 10, 2016, into 1,202,677 shares, converted at a rate of $0.0071 per share.
On October 7, 2016, Global converted $6,000 ($5,500 principal and legal fees of $500) of its note dated August 10, 2016, into 1,000,000 shares, converted at a rate of $0.006 per share.
On November 9, 2016, Global converted $7,815 ($7,315 principal and legal fees of $500) of its note dated August 10, 2016, into 1,563,000 shares, converted at a rate of $0.00468 per share.
On November 28, 2016, Global converted $5,890 ($5,390 principal and legal fees of $500) of its note dated August 10, 2016, into 1,420,000 shares, converted at a rate of $0.004148 per share.
On December 7, 2016, Global converted $8,550 ($8,050 principal and legal fees of $500) of its note dated August 10, 2016, into 1,900,000 shares, converted at a rate of $0.004237 per share.
On December 22, 2016, Global converted $7,695 ($7,195 principal and legal fees of $500) of its note dated August 10, 2016, into 1,900,000 shares, converted at a rate of $0.003787 per share.
On December 22, 2016, GPL converted $3,000 of its note dated August 10, 2016, into 3,000,000 shares, converted at a rate of $0.001 per share.
On January 17, 2017, GPL converted $4,500 of its note dated August 10, 2016, into 4,500,000 shares, converted at a rate of $0.001 per share.
On January 17, 2017, EMS converted $5,244, consisting of $4,642 of principal, $102 of accrued interest, and $500 in legal fees, into 2,056,545convertible promissory notes, 12,486,400 shares of common stock. The conversion was for the note dated August 23, 2016. The conversion price was $0.00255.
For the six months ended December 31, 2016, the Company authorized the issuancestock valued at $31,216 in payment of 90,000accrued compensation and 6,618,400 common shares valued at $16,546 in payment of Series B preferred stock as part of Rubakh's compensation package.accounts payable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
None.The Company plans to change its name to Integrated Ventures, Inc. to reflect its new plan to diversify the Company’s operations.
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ITEM 6. EXHIBITS. EXHIBITS.
(a) Exhibits.
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101.INS | XBRL Instance Document * | |
101.SCH | XBRL Taxonomy Extension Schema * | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase * | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase * | |
101.LAB | XBRL Taxonomy Extension Label Linkbase * | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase * |
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* | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
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In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EMS FIND, INC. | ||||
Dated: | By: | /s/ Steve Rubakh | ||
| Steve Rubakh | ||||
President and Chief Executive Officer and Principal Financial Officer | ||||
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EXHIBIT INDEX
Exhibit Number | Exhibit Description | |
101.INS | XBRL Instance Document * | |
101.SCH | XBRL Taxonomy Extension Schema * | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase * | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase * | |
101.LAB | XBRL Taxonomy Extension Label Linkbase * | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase * |
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* | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
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