NOTES TO UNAUDITED FINANCIAL STATEMENTS
| 1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Business Activity: Vet Online Supply Inc. (the "Company") is a Florida corporation incorporated on May 31, 2014. We are a US based reseller of premium veterinary supplies. The goal of "Vet Online Supply" is to provide the USA with value priced, superior quality products. Vet Online Supply sources our products through Concord Veterinary Supply. Concord, established in 1999, is now one of Canada’sCanada's largest, independent suppliers of veterinary surgical and dental instruments. Our headquarters are located at 9612 West Hawthorne Crystal River, Florida 34428.
1041 Market Street, PMB 389, San Diego, CA, 92101. Recently the Company has expanded its offfering to include its own cannabis product line for pets, in addition to its legacy veterinarian supplies line. These new products are designed to help with arthritis, compromised immune systems, stress responses, aggression and digestive issues and have may also be useful in treating acute ailments like sprains and strains, torn ligaments, bone breaks and even during post-operative care to reduce swelling, pain and stiffness.
During August 2015, the Company filed amended articles with the Florida Secretary of State to:
| - | Set a series of preferred stock, each one share being convertible into one share of common stock and with no voting rights; |
| - | Set par value for each of the preferred and common stock at $0.001 per share. |
On July 25, 2016, the Company filed a Certificate of Amendment with the State of Florida to increase the authorized Common Stock, par value $0.001, to 8,000,000,000 common shares, and to effect a forward split of 150 shares for each 1 share of the Company’sCompany's issued Common Stock (“("Forward Split”Split"). The effective date of the Forward Split is July 28, 2016. On March 28, 2017, the Company filed an amendment to its articles of incorporation reducing the number of authorized common shares from 8,000,000,000 to 1,000,000,000 par value $0.001, and designating 20,000 shares of its authorized preferred stock, par value $0.001 as Series B Voting Preferred Stock. The Series B Voting Preferred Stock shall have the right to vote the shares on any matter requiring shareholder approval on the basis of 4 times the votes of all the issued and outstanding shares of common stock, as well as any issued and outstanding preferred stock.
All share and per share data contained in these financial statements reflects the retroactive application of the aforementioned forward share split.
To date, our activities have been limited to formation, the raising of equity capital, and the initial stages of implementation of our business plan. WeRecently we have filed a Form S-1 Registration Statementexpanded our product line and retained various consultants to assist in enhacing corporate growth. While we have operated our veterinary supply business for several years, we areactively seeking to substantially increase revenues with the U.S. Securities and Exchange Commission, have received a notice of effect and trade on the OTC Markets, PINK under the symbol VTNL. We are continuing to explore additional sources of capital. We anticipate incurring operating losses as we continue to implement our business plan.marketing efforts in fiscal 2017.
Unaudited Interim Financial Statements
The unaudited interim consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the period ended December 31, 2015, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The interim unaudited consolidated financial statements should be read in conjunction with those audited financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the ninesix months ended SeptemberJune 30, 20162017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.2017.
Financial Statement Presentation: The audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Fiscal year end: The Company has selected December 31 as its fiscal year end.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.
Cash Equivalents: The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) |
Revenue recognition and related allowances: Revenue from the sale of goods is recognized when the risks and rewards of ownership have been transferred to the customer, which is usually when title passes. Revenue is measured at the fair value of the consideration received, net of trade discounts and sales taxes.
Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Bad debts and allowances are provided based on historical experience and management’smanagement's evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis. The allowance for doubtful accounts at SeptemberJune 30, 20162017 and December 31, 20152016 is Nil.
VET ONLINE SUPPLY INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
| 1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) |
Inventories: The Company is a reseller of premium veterinary supply products and cannabis based supplements and as such will not maintain inventory as allinventory.All items are directly drop shipped to customers when ordered and no inventory is held on hand as a result.
Warranty: The Company is a reseller of products which are shipped to our customers directly from the manufacturer and as a result, there are no costs that may be incurred by the Company under the terms of the limited warranty provided by the manufacturers directly to the purchasers. We do not provide any provisions for obligations which may arise under manufacturer’smanufacturer's warranties and therefore at no time incur any warranty liabilities.
Advertising and Marketing Costs: Advertising and marketing costs are expensed as incurred and were $nil during the nine-monthsix month period ended SeptemberJune 30, 2016 ($15,000 – September 30, 2015)2017 and 2016.
Fair Value Measurements:
FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.
The following table provides a summary of the fair value of our derivative liabilities as of June 30, 2017 and December 31, 2016:
| | | Fair value measurements on a recurring basis | |
| | | Level 1 | | | Level 2 | | | Level 3 | |
| As of June 30, 2017: | | | | | | | | | |
| Derivative liabilities | | $ | - | | | $ | - | | | $ | 525,980 | |
| | | | | | | | | | | | | |
| As of December 31, 2016: | | | | | | | | | | | | |
| Derivative liabilities | | $ | - | | | $ | - | | | $ | - | |
VET ONLINE SUPPLY INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
| 1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) |
Income taxes: The Company has adopted SFAS No. 109 – “Accountingaccounts for Income Taxes”.income taxes in accordance with FASB ASC Topic 740, "Income Taxes", which requires the use of the asset and liability method ofapproach for financial accounting and reporting for income taxes. Under the asset and liability method of ASC Topic 740, deferredDeferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Basic and Diluted Loss Per Share: In accordance with ASC Topic 280 – “Earnings"Earnings Per Share”Share", the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
New Accounting Pronouncements:
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
The Company has experienced net losses to date, and it has not generated sufficient revenue from operations weto meet our operational overhead. We will need additional working capital to service debt and for ongoing operations, which raises substantial doubt about itsour ability to continue as a going concern. Management of the Company has developedis preparing a strategy to meet operational shortfalls which may include equity funding, short term or long term financing or debt financing, to enable the Company to reach profitable operations. Historically, the Company's sole officer and director has provided short term loans to meet working capital shortfalls. We have recently entered into financing agreements with various third parties to meet our capital needs in fiscal 2017.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
3. | DEFERRED OFFERING COSTS |
The Company has filed a Form S-1 Registration Statement to offeraccompanying financial statements do not include any adjustments related to the public uprecoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to 900,000,000 common shares at $0.000667 per share. The $12,500 in costs relating to such Registration Statement was applied to additional paid in capitalcontinue as at March 31, 2016.a going concern.
4.3. | RESELLER AGREEMENT AND PROMISSORY NOTE |
On June 1, 2014 the Company entered into a Reseller Agreement with Concord Veterinary Supplies Inc., (“Concord”("Concord"), where under Concord has authorized the non-exclusive right to Vet Online Supply, Inc. to market, promote, advertise, sell, distribute and deliver, veterinary products carried by Concord Veterinary Supply, which are listed on www.concord-surgical.com, for a one-time fee of $50,000. The fee payable has been secured by an interest free convertible promissory note (the “Note”"Note") due within ninety (90) days of the Company getting notice of effect from its S-1 Registration Statement as filed with the Securities and Exchange Commission, which occurred December 22, 2015. At any time prior to maturity of the Note, Concord Veterinary Supply may elect to convert the debt amount into shares of the common stock of the Company at a fixed price of $0.000667 per share.
There is no beneficial conversion feature resulting from the conversion price compared to market price.
On April 11, 2017 Concord Veterinary Supply agreed to cancel its outstanding promissory note in the amount of $50,000 for no further consideration.
The Company recorded a gain on debt forgiveness of $50,000. VET ONLINE SUPPLY INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
| CONVERTIBLE NOTE AND DERIVATIVE LIABILITY |
| Convertible Note due on December 30, 2017 |
On March 15, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $35,000 from total loan proceeds of $38,000, which loan bears interest at 12% per annum and is due on December 30, 2017. Legal fees of $3,000 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average lowest two (2) trading prices for the previous fifteen (15) trading days to the date of conversion.
| Convertible Note due on April 25, 2018 |
On April 25, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $50,000 from total loan proceeds of $55,000, which loan bears interest at 8% per annum and is due on April 25, 2018. Legal fees of $5,000 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average lowest three (3) trading prices for the previous twenty (20) trading days to the date of conversion.
| Convertible Note due on May 1, 2018 |
On May 1, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $40,000 from total loan proceeds of $45,000, which loan bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $2,300 and legal fees of $2,700 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average three (3) lowest closing price for the previous twenty (20) trading days preceding the date of conversion.
| Convertible Note due on May 8, 2018 |
On May 8, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $30,000 from total loan proceeds of $36,000, which loan bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $4,500 and legal fees of $1,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 45% discount to the lowest trading price for the previous twenty (20) trading days to the date of conversion.
In addition, the Company paid an additional $3,000 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
| Convertible Note due on February 28, 2018 |
On May 22, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $25,000 from total loan proceeds of $28,000, which loan bears interest at 12% per annum and is due on February 28, 2018. Legal fees of $3,000 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average lowest two (2) trading prices for the previous fiftteen (15) trading days to the date of conversion.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
| 4. | CONVERTIBLE NOTE AND DERIVATIVE LIABILITY (continued) |
| (f) | Convertible Note due on May 25, 2018 |
On May 25, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $47,500 from total loan proceeds of $50,000, which loan bears interest at 8% per annum and is due on May 25, 2018. Legal fees of $2,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest closing price in the previous twenty (20) trading days to the date of conversion.
In addition, the Company paid an additional $4,750 to a consultant in respect to the consulting agreement (ref: Note 5 – (4)).
| Convertible Note due on March 16, 2018 |
On June 16, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $47,250 from total loan proceeds of $64,000, which loan bears interest at 8% per annum and is due on March 16, 2018. Original issue discount of $9,000 and legal fees of $7,750 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest trading price for the previous thirty (30) trading days to the date of conversion.
In addition, the Company paid an additional $4,725 to an consultant in respect to the consulting agreement (ref: Note 5 – (4)).
| (h) | Convertible Note due on June 19, 2018 |
On June 16, 2017, the Company entered into a convertible loan agreement with an investor in the form of a back end note. The Company received net proceeds of $20,000 from total loan proceeds of $25,500, which loan bears interest at 2% per annum and is due on June 16, 2018. Original issue discount of $4,000 and legal fees of $1,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 45% discount to the lowest trading price for the previous twenty (20) trading days to the date of conversion.
In addition, the Company paid an additional $2,000 to a consultant in respect to the consulting agreement (ref: Note 5 –(4)).
In our evaluation of above financing arrangements, we concluded that the conversion features were not afforded the exemption as a conventional convertible instrument and did not otherwise meet the conditions set forth in current accounting standards for equity classification. Accordingly, they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.
The summary of net proceeds of above convertible notes is as follows:
| | | Total | |
| Face value of certain convertible notes | | | 341,500 | |
| Less: original issue discount | | | (19,800 | ) |
| Deferred financing costs | | | (41,425 | ) |
| Net proceeds from certain convertible notes: | | $ | 280,275 | |
| | | | | |
NOTES TO UNAUDITED FINANCIAL STATEMENTS
| 4. | CONVERTIBLE NOTE AND DERIVATIVE LIABILITY (continued) |
The summary of carrying value of above convertible notes is as follows:
Carrying value, December 31, 2016 | | $ | - | |
| Add: Face value of certain convertible notes | | | 341,500 | |
| Less: unamortized discount | | | (323,097 | ) |
| Carrying value, June 30, 2017 | | | 18,403 | |
Amortization of the discount over the six months ended June 30, 2017 totaled $47,908, which amount has been recorded as interest expense. The unamortized discount of $323,097 associated with above notes will be expensed in future periods.
As a result of the application of ASC No. 815 in six months ended June 30, 2017 the fair value of the conversion feature associated with the convertible note is summarized as follows:
| Balance at December 31, 2016 | | $ | - | |
| Derivative additions associated with convertible notes | | | 309,780 | |
| Loss on change in fair value during the period | | | 216,200 | |
| Balance at June 30, 2017 | | $ | 525,980 | |
The fair values at the commitment and re-measurement dates for the Company's derivative liabilities were based upon the following management assumptions as of June 30, 2017 and commitment date(s):
| | | Commitment Date(s) | | | June 30, 2017 | |
| Expected dividends | | | 0 | | | | 0 | |
| Expected volatility | | 150.28 % ~ 300.10% | | | 214.4% | |
| Expected term | | 0.79 ~ 1 years | | | 0.50 ~ 0.97 years | |
| Risk free interest rate | | 1.02 % ~ 1.24% | | | 1.02% ~ 1.03% | |
| (1). | Engagement Agreement |
On March 21, 2017, the Company entered a three-month engagement agreement with a consultant, where under the Company retains consultant to advise it regarding certain legal, corporate and business operations, and more specifically with regard to public filings and compliance with regard to the Company, and the consultant is to be compensated in the amount of $1,000 per month for the services rendered. The contract expired on June 21, 2017 and was not renewed.
On March 17, 2017 the Company entered into a consulting agreement with a third party where under the consultant shall provide administrative and business services for a period of three months from the date of the agreement, and the consultant shall be compensated in the amount of $1,500 per month for the services rendered with a bonus of $15,000 payable in shares as of the date of the agreement.
The stock bonus was not issued as of March 31, 2017, and $15,000 was recorded as stock-based compensation and included as consulting fees. NOTES TO UNAUDITED FINANCIAL STATEMENTS
| Consultant Agreement (continued) |
On May 16, 2017, the Company amended the terms of the agreement so that the $15,000 in services payable in stock shall convert at $0.01 per share for a total of 1,500,000 common shares of stock to be issued. 1,500,000 common shares were issued as of the date of is the amendment and were valued at $82,500, or $0.055 per share based on the fair market value on the date of the agreement.. The Company recorded the additional $67,500 as stock-based compensation which is included in consulting fees.
On March 28, 2017, the Company entered into an investor relations agreement with a third party, whereunder the third party will provide advertising, promotional and marketing services for the Company between April 1, 2017 and July 1, 2017. In consideration of the foregoing services performed by the third party, the Company will pay a fee of 1,920,000 restricted shares on or before April 1, 2017. In addition, the third party will remain the owner of at least 1% of the company's outstanding shares for a 1 year period. On April 1, 2018, the Company shall issue additional shares as necessary to bring the total number of shares paid to the third party to equal 1% of the outstanding shares of common stock as of 4/1/2018. In the event the Company does not issue the shares as required under this provision, the Company will be subject to a penalty of $5,000 per month until the shares are issued.
1,920,000 shares were issued on March 28, 2017 and valued at the fair market value on the date of grant totaling $96,000, which amount has been expensed as stock based compensation as part of consulting expenses.
In respect to the investor relations agreement, 15,000 additional shares have been allocated for issuance effective May 16, 2017, and $825 has been expensed as stock based compensation as part of consulting expenses due to 1,500,000 shares of common stock issued to a consultant (ref Note 5 – (2)).
The 15,000 shares were not issued as of June 30, 2017, and $825 was recorded on the balance sheet as liabilities for unissued shares.
On April 6, 2017 the Company entered into a consulting agreement with an advisor, where under the advisor will provide access to financing for the Company's business activities. In consideration of the foregoing services performed by the advisor, the Company will pay a fee of 10% of net proceeds on each financing introduced.
During the six months ended June 30, 2017, the Company paid of $14,475 to the advisor in respect of this agreement.
| (5). | Consultant Agreement |
On April 1, 2017, the Company expanded its board of directors to include Matthew C. Scott, in order to assist with development of our internet marketing efforts with a goal of growing our business. Concurrently we entered into a consulting agreement with Mr. Scott for a term of one year, where under Mr. Scott shall receive an annual fee of $100,000 payable in quarterly installments. Further effective April 1, 2017 the Company agreed to issue Mr. Scott 2,000,000 shares of restricted common stock for his services as a director. The shares upon issue will be held by the Company for a term of six months and are cancelable should Mr. Scott not serve in his capacity as director for a minimum term of six months.
The Company recorded $140,000 in respect to the 2,000,000 shares based on the fair market value on April 1, 2017 which amount has been recorded on the balance sheet as liabilities for unissued shares, and expensed $70,000 as stock based compensation as part of consulting expenses in the period ended June 30, 2017. The balance of $70,000 will be expensed in the quarter ended September 30, 2017. As at June 30, 2017 the shares remained unissued.
VET ONLINE SUPPLY INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
| 5. | COMMITMENTS (continued) |
On June 19, 2017, the Company entered into a Consulting Agreement with Mr. Samuel Berry with regard to marketing and distribution of online retail sales for all products. Mr. Berry will receive an annual salary of $50,000, payable in quarterly payments of $12,500 per quarter.
On June 19, 2017 the Board of Directors appointed Mr. Samuel L. Berry as Director. For accepting the position of Director, Mr. Berry will receive 1,000,000 shares of the Company's common stock, valued at $0.05 per share. Additionally, Mr. Berry will be paid $500 for each board meeting for which he is physically present.
The Company recorded $50,000 in respect to the value of 1,000,000 unissued shares as liabilities for unissued shares, and expensed $50,000 as stock based compensation as part of consulting expenses in the period ended June 30, 2017.
| 6. | COMMON AND PREFERRED STOCK |
TheOn March 28, 2017, the Company hasfiled an amendment to its articles of incorporation reducing the number of authorized 10,000,000common shares from 8,000,000,000 to 1,000,000,000 par value $0.001, and designating 20,000 shares of its authorized preferred stock, with par value $0.001 as Series B Voting Preferred Stock. The Series B Voting Preferred Stock shall have the right to vote the shares on any matter requiring shareholder approval on the basis of $0.0014 times the votes of all the issued and 8,000,000,000outstanding shares of common stock, with paras well as any issued and outstanding preferred stock.
Series B Voting Preferred Shares issued during the six months ended June 30, 2017:
On April 7, 2017, the Company issued 20,000 shares of Series B Voting Preferred Stock to Edward Aruda. The Company obtained a third party valuation of the preferred stock to determine the fair value as at the date of issue. The report results provided for a value of $0.001. Each one share$ $21,000 as stock based compensation as part of
preferred stock is convertible into one share of common stock, and preferred stock carries no voting rights. consulting expenses.
As of SeptemberJune 30, 20162017, and December 31, 2015, no2016, 20,000 and nil preferred shares were issued and outstanding.outstanding, respectively.
Common Shares issued during the six months ended June 30, 2017:
On March 28, 2017, the Company approved the issuance of 1,920,000 shares of the Company's common stock for services provided by a consultant, in the form of stock awards which shall vest as of the date of grant. The shares were valued at the fair market value on the date of grant totaling $96,000, which amount has been expensed as stock based compensation as part of consulting expenses.
On May 16, 2017, the Company amended the terms of a consulting agreement (Note 5 (2)) so that $15,000 in services payable by shares of common stock shall convert at $0.01 per share for a total of 1,500,000 common shares. The shares were issued as of the date of is the amendment and were valued at $82,500, or $0.055 per share based on the fair market value on the date of the agreement.. The Company recorded the additional $67,500 as stock-based compensation which is included in consulting fees.
Common Shares issued during the nine monthsyear ended September 30,December 31, 2016:
During the nine monthsyear ended September 30,December 31, 2016, the Company has received proceeds totaling $35,500 from various parties subscribing for a total of 53,250,000 shares at $0.000667 per share under our Form S-1 registration statement. 53,250,000 shares of the Company’sCompany's common stock were issued in respect of these subscriptions.
On July 25, 2016, 1,500,000,000 shares of treasury stock were returned.
Common Shares issued during the year ended December 31, 2015:
On May 1, 2015, Mr. Minsky returned 1,500,000,000 shares of the Company issued for services provided during fiscal 2014 in exchange for $1,000. The shares were returned to treasury and the Company posted as treasury stock in the amount of $1,000 using the cost method.
On May 1, 2015 a signing bonus in the amount of $75,000 payable by way of 7,500,000,000 shares of the Company’s common stock as determined by the Company’s board of directors, was issued toDecember 2, 2016, our sole officer and director, Mr. Edward Aruda.Aruda, returned 7,361,250,000 shares of the Company's common stock for no consideration. Mr, Aruda was originally issued 7,500,000,000 shares as a signing bonus in fiscal 2015.
As at SeptemberJune 30, 2017 and December 31, 2016, there were 7,553,250,000195,420,000 and 192,000,000 shares issued and outstanding.outstanding, respectively.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
6.7. | RELATED PARTY TRANSACTIONS |
(1) Mr. Harold Minsky, Former President and director
On May 1, 2015, the Company received the resignation of the President and sole director, Mr. Harold Minsky. In addition, Mr. Minsky concurrently agreed to return 1,500,000,000 shares of the Company issued for services provided in exchange for $1,000 effective as of the date of his resignation.
During the year ended December 31, 2015 a total of $11,000 has been accrued in respect of fees payable to our former President and director, and a total of $12,000 is reflected on the Company’s balance sheet as accounts payable, related party as at December 31, 2015.
During the nine months ended September 30, 2016, the Company paid $12,000 in full to Mr. Harold Minsky.
(2) Mr. Edward Aruda, President, CEO and director
On May 1, 2015 Mr. Edward Aruda was appointed to serve as President, CEO and Director ofDuring the Company to manage the affairs of the Company for a one (1) year period (the “Term”) under a management agreement beginning on the Effective Date, and thereafter the Term may be renewable for six months unless and until such time as either Mr. Edward Aruda or the Company shall give written notice to the other at least 30 days prior to the expiration of the then current Term that no such automatic extension shall occur. In exchange, a signing bonus in the amount of $75,000 payable by way of 7,500,000,000 shares of the Company’s common stock was issued as fully paid and non assessable to Mr. Aruda effective as of the date of the agreement.
On December 31, 2015, the Company issued a Promissory Note in the principal amount of $7,736 to Mr. Aruda, to evidence various funds previously advanced by Mr. Aruda to the Company during the year ended December 31, 2015 in order to settle certain accounts as they came due. The Promissory Note bears interest at 10% per annum and is due and payable on December 1, 2016.
On March 31, 2016 and June 30, 2016, the Company issued further Promissory Notes in the principal amounts of $2,771 and $5,240, respectively, to Mr. Aruda, to evidence various funds advanced by Mr. Aruda to the Company during the nine months ended September 30, 2016 in order to settle certain accounts as they came due. The Promissory Notes bear interest at 10% per annum and are due and payable March 31, 2017 and June 30 2017, respectively.
During the nine months ended September 30, 2016, the Company repaid $10,700 to Mr. Aruda in respect of funds previously advanced including $10,507 in principal and $193 in accrued interest$1,500 to settle the December 31, 2015 and March 31 2015 notes in full.Comapny.
As of SeptemberJune 30, 2017, and December 31, 2016, $5,240$10,940 and $9,440 is reflected on the Company’sCompany's balance sheetsheets as promissory notes payable – related party (December 31, 2015 - $7,736) in respect of amounts which remain payable to Mr. Aruda.
During the six months ended June 30, 2017, Mr. Aruda invoiced $30,000 ($5,000 per month) as consulting fees. The Company paid $12,500 in cash, leaving $17,500 on the Company's balance sheets as accounts payable – related parties.
On April 7, 2017, the Company issued 20,000 shares of Series B Voting Preferred Stock to Edward Aruda. The Company obtained a third party valuation of the preferred stock to determine the fair value as at the date of issue. The report results provided for a value of $ $21,000 as stock based compensation as part of consulting expenses.
Mr. Matthew C. Scott, Director
On April 1, 2017, the Company expanded its board of directors to include Matthew C. Scott. Concurrently the Company entered into a consulting agreement with Mr. Scott for a term of one year, where under Mr. Scott shall receive an annual fee of $100,000 payable in quarterly installments. Further effective April 1, 2017 the Company agreed to issue Mr. Scott 2,000,000 shares of restricted common stock for his services as a director. The shares upon issue will be held by the Company for a term of six months and are cancelable should Mr. Scott not serve in his capacity as director for a minimum term of six months.
The Company recorded $140,000 in share based compensation in respect of the 2,000,000 shares issuable based on the fair market value on April 1, 2017which amount has been recorded on the balance sheet as liabilities for unissued shares. Further a total of $70,000 has been expensed in the three months ended June 30, 2017 as stock based compensation as part of consulting expenses. A further $70,000 will be expensed in the three months ended September 30, 2017.
During the six months ended June 30, 2017, the Company accrued consulting fees of $25,000, and paid $5,000 in cash, leaving $20,000 on the Company's balance sheets as account payable – related parties with respect to amounts due to Mr. Scott..
Mr. Samuel Berry, Director
On June 19, 2017, the Company entered into a Consulting Agreement with Mr. Samuel Berry.. Mr. Berry will receive an annual salary of $50,000, payable in quarterly installments at $12,500 per quarter.
On June 19, 2017 the Board of Directors appointed Mr. Samuel L. Berry as Director. For accepting the position of Director, Mr. Berry will receive 1,000,000 Shares of the Company's Common Stock, valued at $0.05 per share. Additionally, Mr. Berry will be paid $500 for each board meeting ofor which he is physically present.
The Company recorded $50,000 in respect to the value of 1,000,000 unissued shares as liabilities for unissued shares, and expensed $50,000 as stock based compensation as part of consulting expenses in the period ended June 30, 2017.
During the six months ended June 30, 2017, the Company accrued consulting fees of $4,167 on the Company's balance sheets as account payable – related parties in respect of amounts payable to Mr. Berry.
VET ONLINE SUPPLY INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’sCompany's assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’sCompany's tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
Operating loss carry-forwards generated during the period from May 25, 2014 (date of inception) through SeptemberJune 30, 20162017 of approximately $192,920,$711,400, will begin to expire in 2034. The Company applies a statutory income tax rate of 34%. Accordingly, deferred tax assets related to net operating loss carry-forwards total approximately $65,590$241,870 at SeptemberJune 30, 2016.2017. For the ninesix months ended SeptemberJune 30, 2016,2017, the valuation allowance increased by approximately $10,180.$176,600.
All tax years since inception are open to examination by the Internal Revenue Service.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there are no additional subsequent events to disclose.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
This quarterly report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.
In this report unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares”"common shares" refer to the common shares of our capital stock.
The management’smanagement's discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
As used in this quarterly report, the terms "we", "us", "our", and "our company" means Vet Online Supply, Inc., unless otherwise indicated.
Corporate Information
Vet Online Supply, Inc. was incorporated in the State of Florida on May 31, 2014. We are aan emerging growth company that engages in the sale of veterinary supplies for vet clinics of all sizes. We sell our products on the eCommerce web-based platform called OsCommerce, at our website www.vetonlinesupply.com.www.vetonlinesupplies.com. Our website gives our customers the ability to purchase veterinary supplies at affordable prices, making an order any time of the day, any day of the week. Recently we have expanded our product line to include CBD Pet Products and have plans for further expansion in fiscal 2017. As part of this intiative we recently began selling and shipping our own cannabis product line for pets, in addition to our legacy veterinarian supplies line. The Company’snewest of the products are the Pet Drops, and the Pet Treats. CBD pet drops can help with arthritis, compromised immune systems, stress responses, aggression and digestive issues. Veterinarians are also finding CBD hemp can be useful in treating acute ailments like sprains and strains, torn ligaments, bone breaks and even during post-operative care to reduce swelling, pain and stiffness.
The Company's fiscal year end is December 31. Our shares are listed for trading on OTC Markets, PINK under the symbol VTNL.
Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.
Liquidity and Capital Resources
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements for the ninesix months ended SeptemberJune 30, 20162017 and audited financial statements for the year ended December 31, 2015,2016, along with the accompanying notes. notes, as filed with the Securities and Exchange Commission on Form 10-K on April 17, 2017.
At SeptemberJune 30, 20162017 we had cash on hand totaling $4,610$5,911 (December 31, 20152016 - $1,870)$319), property and equipment of $20,547, prepaid expenses of $73,000, and an other receivable of $177 for total assets of $4,787$99,635(December 31, 2016 - $496). Prepaid expenses consist of fees paid in cash and shares to consultants which are being amortized over the terms of the respective contracts. We had liabilities of $819,728 (December 31, 20152016 - $14,547)$80,352). The substantive increase to our current liabilities is a direct result of certain financings by way of convertible note payable entered into during the six months ended June 30, 2017. In addition we expanded our board of directors, management and liabilitiesconsulting team during the current six months which resulted in an increase to both our accounts payable and our related party accounts payable. We have recently commenced an aggressive plan to increase our online sales including a series of $85,557 (December 31, 2015 - $88,377).newly developed supplements for pets. We must secure additional funds in orderexpect to continue our business. We continue to receive advances from our sole officer and director in order to pay expenses related to meeting our public reporting obligations including legal, accounting and filing fees. While we have raised $35,500 under our Form S-1 Registration Statement, we will needbe required to secure additional financing to fund future filings.operations. To date loans when required have been able to be secured from management of the Company and third party financing sources, however we cannot provide any assurance that we will be able to raise additional proceeds or secure additional loans in the future to cover our expenses related to maintaining our reporting company status (estimated at $25,000$50,000 for the upcoming 12 months). Furthermore, there is no guarantee we will receive the required financing to completefiscal year 2017) and our business strategies; we cannot provide any assurance that future financing will be available to us on acceptable terms.other operational overhead which shall require a minimum of $300,000. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. If we are unable to accomplish raising adequate funds then it would be likely that any investment made into the Company would be lost in its entirety.
Results of Operations
For the three months ended SeptemberJune 30, 20162017 and 20152016
We have generated minimal gross profit since inception, and an amount totaling $0$1,226, during the three months ended June 30, 2017 as compared to $172 in gross profit during the three months ended SeptemberJune 30, 2016 as compared to $19 in gross profit during the three months ended September 30, 2015.2016. Additionally, we continue to incur general and administrative costs related to our business plan and the filing requirements as a public reporting issuer. Such general and administrative costs totaled $7,431$28,967 during the three months ended SeptemberJune 30, 20162017 ($5,4942,215 – SeptemberJune 30, 2015)2016). Further we have incurred professional fees of $9,460 (2016 - $14,575) and consulting fees of $445,626 (2016 – Nil) in the current three months ended June 30, 2017. The substantial increase to our operating costs period over period is primarily relateda direct result of the increase to consulting fees period over period as the Company has retained additional consultants to help implement expansion of our business plan. We have also increased our management team with the addition of two new directors in the recent three months. The Company has retained both an increaseIR firm and several administrative consultants in professionalthe most recently completed three months incurring consulting fees associatedof $445,626 of which $223,500 was settled with our ongoing public reporting requirements and Edgar and XBRL filings. Our net loss forshares of the Company's common stock.
During the three months ended SeptemberJune 30, 2016 totaled $7,562,2017 the Company entered into certain convertible notes which resulted in a loss from the associated derivative liabilities of $169,800 in the period as we marked the conversion feature to market, as well as interest expense of $50,939. We further recorded a gain from the extinguishment of debt of $50,000 related to a prior period note payable which was forgiven by the lender for total other expenses of $170,739 in the period as compared to $5,475 at Septemberonly $Nil in the comparative three months ended June 30, 2015.2016.
The Company recorded a net loss of $653,566 and $16,618 respectively as at the three months ended June 30, 2017 and 2016. For the Nine Monthssix months ended SeptemberJune 30, 20162017 and 20152016
We have generated minimal gross profit since inception, and an amount totaling $1,312, during the six months ended June 30, 2017 as compared to $352 in gross profit during the ninesix months ended SeptemberJune 30, 2016 as compared to $647 in gross profit during the nine months ended September 30, 2015.2016. Additionally, we continue to incur general and administrative costs related to our business plan and the filing requirements as a public reporting issuer. Such general and administrative costs totaled $29,968$29,587 during the ninesix months ended SeptemberJune 30, 20162017 ($106,6292,222 – SeptemberJune 30, 2015)2016). Further we have incurred professional fees of $18,080 (2016 - $20,315) and consulting fees of $574,615 (2016 – Nil) in the current six months ended June 30, 2017. The reductionsubstantial increase to our operating costs period over period is primarilya direct result of the increase to consulting fees period over period as the Company has retained additional consultants to help implement expansion of our business plan. We have also increased our management team with the addition of two new directors in the recent six months. The Company has retained both an IR firm and several administrative consultants in the most recently completed six months incurring consulting fees of $574,615 of which $319,500 was settled with shares of the Company's common stock.
During the six months ended June 30, 2017 the Company entered into certain convertible notes which resulted in a loss from the associated derivative liabilities of $216,200 in the period as we marked the conversion feature to market, as well as interest expense of $52,567. We further recorded a gain from the extinguishment of debt of $50,000 related to a reduction in legal fees andprior period note payable which was forgiven by the lender for total other professional fees associated with the initial filing of our Registration Statement on Form S-1. Our net loss for the nine months ended September 30, 2016 totaled $29,940, including interest expenses of $324$218,767 in the period as compared to $105,982only $193 in the comparative six months ended June 30, 2016.
The Company recorded a net loss of $839,737 and $22,378 respectively as at Septemberthe six months ended June 30, 2015 with no comparative charges for interest expenses.2017 and 2016.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies and Estimates
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements, included herein.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A smaller reporting company is not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Management’sManagement's Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report. Our company is in the process of adopting specific internal control mechanisms to ensure effectiveness as we grow.grow and we will work to retain additional qualified individuals to ensure a proper segregation of duties. We have engaged an outside consultant to assist in adopting new measures to improve upon our internal controls. Future controls, among other things, will include more checks and balances and communication strategies between the management and the board, once we are able to secure additional board members, to ensure efficient and effective oversight over company activities as well as more stringent accounting policies to track and update our financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
A smaller reporting company is not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.On May 1, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $40,000 from total loan proceeds of $45,000, which loan bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $2,300 and legal fees of $2,700 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average three (3) lowest closing price for the previous twenty (20) trading days preceding the date of conversion.
On May 8, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $30,000 from total loan proceeds of $36,000, which loan bears interest at 8% per annum and is due on May 1, 2018. Original issue discount of $4,500 and legal fees of $1,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 45% discount to the lowest trading price for the previous twenty (20) trading days to the date of conversion.
On May 16, 2017, the Company issued a consultant 1,500,000 common shares. The shares were valued at $82,500, or $0.055 per share based on the fair market value on the date of the agreement.
On May 22, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $25,000 from total loan proceeds of $28,000, which loan bears interest at 12% per annum and is due on February 28, 2018. Legal fees of $3,000 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the average lowest two (2) trading prices for the previous fiftteen (15) trading days to the date of conversion.
On May 25, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $47,500 from total loan proceeds of $50,000, which loan bears interest at 8% per annum and is due on May 25, 2018. Legal fees of $2,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest closing price in the previous twenty (20) trading days to the date of conversion.
On June 16, 2017, the Company entered into a convertible loan agreement with an investor. The Company received net proceeds of $47,250 from total loan proceeds of $64,000, which loan bears interest at 8% per annum and is due on March 16, 2018. Original issue discount of $9,000 and legal fees of $7,750 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 42% discount to the lowest trading price for the previous thirty (30) trading days to the date of conversion.
On June 16, 2017, the Company entered into a convertible loan agreement with an investor in the form of a back end note. The Company received net proceeds of $20,000 from total loan proceeds of $25,500, which loan bears interest at 2% per annum and is due on June 16, 2018. Original issue discount of $4,000 and legal fees of $1,500 were paid in respect of the note and deducted from proceeds advanced. Interest shall accrue from the advancement date and shall be payable on maturity. Any portion of the loan and unpaid interest are convertible at any time at the option of the lender into shares of common stock of the Company at a conversion price of a 45% discount to the lowest trading price for the previous twenty (20) trading days to the date of conversion.
On June 19, 2017 the Board of Directors appointed Mr. Samuel L. Berry as Director. For accepting the position of Director, Mr. Berry will receive 1,000,000 Shares of the Company's Common Stock, valued at $0.05 per share.
In respect of the aforementioned convertible loan agreement(s) and the underlying shares, as well as shares issued to a director and consultant, the Company will claim an exemption from the registration requirements of the Securities Act of 1933, as amended, for the issuance of the shares pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are "accredited investors" and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale.
Other than as disclosed above, there were no unregistered securities to report which were sold or issued by the Company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
On July 25, 2016, the Company filed a Certificate of Amendment with the State of Florida to increase the authorized Common Stock, par value $0.001, to 8,000,000,000 common shares, and to effect a forward split of 150 shares for each 1 share of the Company’s issued Common Stock (the “Forward Split”). The effective date of the Forward Split is July 28, 2016.
On June 19, 2017 the Board of Directors appointed Mr. Samuel L. Berry as Director.
| Exhibit Number | | Description |
3.1 | | Articles of Incorporation of Vet Online Supply, Inc. |
3.2 | | Bylaws of Vet Online Supply, Inc. |
3.3 | | Amendment to Articles of Incorporation |
3.4 | | Amendment to Articles of Incorporation to increase authorized common shares* |
10.1 | | ManagementSecurities Purchase Agreement between the Company and Edward ArudaConvertible Note with EMA Financial, LLC, dated May 1, 20152017* |
| | March 1, 2015 Consulting Engagement Separation Degrees-One, Inc.Securities Purchase Agreement and Convertible Note with Crown Bridge Partners LLC dated May 8, 2017* |
| | ResellerSecurities Purchase Agreement and Convertible Note with Concord Veterinary SupplyPower Up Lending Group dated May 22, 2017* |
| | Securities Purchase Agreement and Convertible Promissory note between the CompanyNote with LG Capital dated May 25, 2017* |
| | Securities Purchase Agreement and Concord Veterinary SupplyConvertible Note with Auctus Fund LLC dated June 1, 201416, 2017* |
10.5 | | PromissorySecurities Purchase Agreement and Back End Convertible Note between the Company and Edward Arudawith Crown Bridge Partners LLC dated June 30, 2016*19, 2017* |
| | Certification of the Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) of the Exchange Act* |
| | Certification of the Chief Financial Officer required under Rule 13a-14(a)/15d-14(a) of the Exchange Act* |
| | Certification of the Chief Executive Officer and Chief Financial Officer required under Section 1350 of the Exchange Act* |
| | XBRL Instance Document* |
| | XBRL Taxonomy Extension Schema* |
| | XBRL Taxonomy Extension Calculation Linkbase* |
| | XBRL Taxonomy Extension Definition Linkbase* |
| | XBRL Taxonomy Extension Label Linkbase* |
| | XBRL Taxonomy Extension Presentation Linkbase* |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | VET ONLINE SUPPLY, INC. |
| | | | |
| Date: | October 20, 2016August 18, 2017 | By: | /s/ Edward Aruda |
| | | Name: | Edward Aruda |
| | | Title: | President, Chief Executive Officer, Chief Financial Officer, Director |