INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 1 – Nature of Business, Presentation, and Going Concern
Organization
Organization
Inelco Corporation ("the Company") was organized under the laws of the State of Nevada on December 31, 2007 as InfoSpi Inc. The Company was established as part of the implementation of the Chapter 11 plan of reorganization of Arrin Systems, Inc. ("Arrin"). Arrin filed for Chapter 11 Bankruptcy in April 2007 in the U.S. Bankruptcy Court for the Southern District of California. Arrin’s plan of reorganization was confirmed by the Court on December 12, 2007 and became effective on December 30, 2007. The plan of reorganization provided for the establishment of the Issuer and the sale to the Issuer of Arrin’s proprietary software (used in the employee background screening industry) in exchange for 0.284 shares of InfoSpi’s common stock which were distributed to Arrin’s general unsecured creditors.
At that time, management believed the Company lacked the resources to effectively market its services on its own and therefore engaged in a search for a merger or acquisition partner with the resources to either develop this business or enter another line of business which will bring value to the Issuer's shareholders.
The Company was founded to develop innovative, practical and cost-effective solutions to some of the most significant environmental challenges facing industries and governments around the world. Additionally, these solutions must show promise of generating profits for the company. Specifically the company has determined that one industry that meets both of the above-mentioned prongs of criteria is the Energy Saving Lighting Industry.
Effective on February 14, 2011, the Board of Directors of the Company approved and authorized the execution of a definitive agreement dated February 14, 2011 (the “Agreement”) among the Company, NexPhase Lighting, Inc., a privately held Florida corporation (“NexPhase”)., and the shareholders of NexPhase (the “NexPhase Shareholders”). In accordance with the terms and provisions of the Agreement: (i) the Company acquired from the NexPhase Shareholders an aggregate 55,622,000 shares of common stock of NexPhase representing the total issued and outstanding shares of NexPhase; (ii) in exchange thereof, the Company issued to the NexPhase Shareholders an aggregate 33.75 shares of its restricted common stock generally in proportion to the equity holdings of the NexPhase Shareholders; (iii) NexPhase transferred and assigned to the Company all existing material contracts including those related to distribution, licensing and marketing and those dealing with the grant of rights for the use of any and all intellectual property; (iv) the Company assumed all other assets of NexPhase, including licenses, royalty rights, equipment, product designs, marketing and sale materials, logos, trademarks, copyrights and website; and (v) the Company further assumed all liabilities of NexPhase, including all trade and debt obligations. Therefore, as of the February 14, 2011, NexPhase has become a wholly-owned subsidiary of the Company.
NexPhase is in the business of designing, developing, manufacturing and marketing a high quality and high efficiency full line of LED intelligent lighting fixtures and control systems for commercial applications and projects involving both new construction and retrofits (the “LED Lighting Fixtures”), as well as licensing its technologies to territories outside of the United States.
On March 29, 2011, we filed a Certificate of Amendment with the Nevada Secretary of State in order to change our name from “InfoSpi Inc.” to “Onteco Corporation” (the “Name Change”). The Name Change was effective with the Nevada Secretary of State on March 29, 2011 when the Certificate of Amendment was filed. The Name Change was approved by our Board of Directors pursuant to written consent resolutions dated March 15, 2011 and further approved by certain shareholders holding a majority of our total issued and outstanding shares of common stock pursuant to written consent resolutions dated March 16, 2011.
On April 1, 2013, we filed a Certificate of Amendment with the Nevada Secretary of State in order to change our name from “Onteco Corporation” to “Inelco Corporation” (the “Name Change”). The Name Change was effective with the Nevada Secretary of State on April 1, 2013 when the Certificate of Amendment was filed. The Name Change was approved by our Board of Directors pursuant to written consent resolutions dated January 14, 2013 and further approved by certain shareholders holding a majority of our total issued and outstanding shares of common stock pursuant to written consent resolutions dated January 14, 2013.
We filed the appropriate documentation with FINRA in order to effectuate the Name Change in the OTC Markets. The Name Change was effected on the OTC Markets April 11, 2011.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 1 – Nature of Business, Presentation, and Going Concern (Continued)
Organization (Continued)
Therefore, as of April 11, 2011, our trading symbol is “ONTC”. Our management deemed it appropriate to change our name to Inelco Corporation in furtherance of and to better reflect the nature of our new business operations.
The Company’s Board of Directors has unanimously adopted a resolution, and has received shareholder approval, to authorize the Board to effectuate a Spin-Off of NexPhase upon receipt of all necessary regulatory approvals and the passage of all necessary waiting periods. The Board of Directors had determined that it would be in the Company’s best interest to effect the Spin-Off and has received the consent of holders of over 100% of the voting rights and power of the Company’s securities to authorize the Board of Directors to effect the Spin-Off. The Company will issue shares of NexPhase to the existing shareholders of the Company on a pro-rated basis on or about June 30, 2013. See Note 7 – Spin-Off of NexPhase Lighting.
Effective October 25, 2012, the Company’s Board of Directors approved and authorized the execution of a share exchange agreement (the “Share Exchange Agreement”) with Cyber Centers Worldwide Corporation, a private Florida corporation (“CCWC”), and the shareholders of CCWC (the "CCWC Shareholders"). In accordance with the terms and provisions of the Share Exchange Agreement, the Company will acquire approximately 150,000,000 shares of common stock of CCWC and 1,000,000 shares of Series B preferred stock of CCWC, which represents 100% of the total issued and outstanding shares held of record by the CCWC Shareholders. In exchange for the acquisition of the capital shares of CCWC, the Company shall issue to the CCWC Shareholders on a pro rata basis 75,000 restricted shares of common stock of the Company and 1,000,000 shares of Series B preferred stock of the Company. This resulted in CCWC becoming the wholly-owned subsidiary of the Company. Prior to this share exchange, CCWC changed its name from Cyber Centers International Corporation ("CCIC"). See Note 6 – Acquisition of Cyber Centers Worldwide Corporation.
In accordance with the Share Exchange Agreement and anticipated consummation of the spin-off of the Company's wholly-owned subsidiary, NexPhase Lighting Inc., the operations of the Company will change from the business of designing, developing, manufacturing and marketing a high quality and high efficiency full line of LED intelligent lighting fixtures and control systems for commercial applications and projects involving both new construction and retrofits. The business operations of the Company will be conducted through its new wholly-owned subsidiary, CCWC, which involves interactive online gaming within the entertainment industry. Over the past years, the founders of CCIC have invested private capital, time and effort and innovative technology in its product development. CCWC today is capitalizing on the emerging trends in interactive gaming and social marketing with a vision to become the benchmark in the gaming industry with a reputation for customer safety, security and quality customer service, while also upholding the interests of shareholders.
Stock Splits
On November 2, 2011, the Company's Board of Directors declared a one for one-thousand reverse stock split of all outstanding shares of common stock. The total number of authorized common shares and the par value thereof was not changed by the split.
On January 14, 2013, the Company's Board of Directors declared a one for two-thousand reverse stock split of all outstanding shares of common stock. All common share and per common share data in these consolidated financial statements and related notes hereto have been retroactively adjusted to account for the effect of the reverse stock splits for all periods presented prior to December 31, 2012. The total number of authorized common shares and the par value thereof was not changed by the split.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”).
Reclassifications
Certain items on the 2011 balance sheet, statement of operations and statement of cash flows have been reclassified to conform to current period presentation.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 1 – Nature of Business, Presentation, and Going Concern (Continued)
Development Stage Enterprise
Since its formation on December 31, 2007, the Company became a “development stage company” as defined in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) ASC Topic 915 “Development Stage Entities”. To date, the Company's planned principal operations have not fully commenced.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses of $2,470,238 and $1,813,191 for the years ended December 31, 2012 and 2011, respectively, and has incurred cumulative losses since inception of $5,061,170. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate revenues, its ability to continue to raise investment capital, and implement its business plan. No assurance can be given that the Company will be successful in these efforts.
These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas of estimate include the estimates and assumptions related to its deferred income tax asset valuation and the inputs used in calculating stock compensation and transactions.
The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Principles of Consolidation
The consolidated financial statements include the accounts of Inelco Corporation and its wholly-owned subsidiaries, NexPhase and CCWC. All significant inter-company balances and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2012 and 2011, respectively, the Company had no cash equivalents.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 2 – Summary of Significant Accounting Policies (Continued)
Property and Equipment
Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives ranging from 5 years to 7 years. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.
Depreciation expense was $1,375 and $1,300 for the years ended December 31, 2012 and 2011, respectively.
Impairment or Disposal of Long-Lived Assets
The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, other current assets, accounts payable and notes payable. The carrying amount of cash, other current assets, payables and notes payable approximates fair value because of the short-term nature of these items.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist principally of cash. Cash was deposited with a high quality credit institution.
Beneficial Conversion Feature of Convertible Notes Payable
The Company accounts for convertible notes payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 470-20, “Debt with Conversion and Other Options”, Emerging Issues Task Force ("EITF") 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF 00-27, Application of Issue No 98-5 To Certain Convertible Instruments. The Beneficial Conversion Feature ("BCF") of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a BCF related to the issuance of a convertible note when issued and also records the estimated fair value of any warrants issued with those convertible notes.
The BCF of a convertible note is measured by allocating a portion of the note's proceeds to the warrants, if applicable, and as a reduction of the carrying amount of the convertible note equal to the intrinsic value of the conversion feature, both of which are credited to additional paid-in-capital. The Company calculates the fair value of warrants issued with the convertible note using the Black Scholes valuation model and uses the same assumptions for valuing employee options in accordance with ASC Topic 718 “Compensation – Stock Compensation”. The only difference is that the contractual life of the warrants is used.
The value of the proceeds received from a convertible note is then allocated between the conversion features and warrants on a relative fair value basis. The allocated fair value is recorded in the financial statements as a debt discount (premium) from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 2 – Summary of Significant Accounting Policies (Continued)
Income Taxes
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized.
The FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of December 31, 2012.
Stock Based Compensation
The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.
The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in shareholders' equity/(deficit) over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period.
The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services.
During the year ended December 31, 2012 and 2011, the Company granted no stock options to the Company's employees, directors and consultants.
Basic and Diluted Loss Per Share
The Company computes income (loss) per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were no potentially dilutive shares as of December 31, 2012 and 2011.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 2 – Summary of Significant Accounting Policies (Continued)
Accounting for Obligations and Instruments Potentially to be settled in the Company’s Own Stock
We account for obligations and instruments potentially to be settled in the Company’s stock in accordance with ASC 815 “Accounting for Derivative Financial Instruments”. This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company’s own stock.
Fair Value Accounting
On October 1, 2010, we adopted ASC 820, “Fair Value Measurements.” which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. ASC 820 does not require any new fair value measurements, and has been partially deferred for non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. The partial adoption of ASC 820 for financial assets and liabilities did not have a material impact on our financial position, results of operations or cash flow.
Revenue and Expense Recognition
Revenue is recognized when earned rather than when received. Sales are recognized when a product is delivered or shipped to the customer and all material conditions relating to the sale have been substantially performed. Expenses are charged to operations as incurred.
Accounting Standards Codification
The FASB’s Accounting Standards Codification (“ASC”) became effective on September 15, 2009. At that date, the ASC became the FASB’s officially recognized source of authoritative generally accepted accounting principles (“GAAP”) applicable to all public and non-public non-governmental entities, superseding existing FASB, American Institute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”) and related literature. All other accounting literature is considered non-authoritative. The switch to the ASC affects the way companies refer to U.S. GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.
Effect of Recent Accounting Pronouncements
The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to December 31, 2012 through the date these financial statements were issued.
Note 3 – Project Development Costs
On January 15, 2010 the Company engaged an engineering firm to design, plan and supervise the development of proprietary “critical reactor” equipment to be used in environmentally friendly sewer and sludge conversion and used tire and plastic recovery. The initial cost of this project, in the amount of $27,600 was capitalized pending the results of the Company’s efforts to commercialize this technology. On June 30, 2011, Management determined that although the critical reactor project was commercially feasible, it was in the best interest of the company to commit all future funding to the NexPhase Lighting subsidiary. Therefore, on June 30, 2011, the project development cost in the amount of $27,600 was written off.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
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On February 10, 2010 the Company entered into a convertible promissory note with a web designer for services rendered in the amount of $3,150. Terms include bonus interest of $315, the note is payable on demand and has no stated interest rate or due date. On January 3, 2011 the parties amended the terms and conditions of the promissory note as follows: On January 5, 2011, the note was assigned from the web designer to a non-affiliated related party investment firm. The “Note Conversion Price” shall be adjusted from $60.00 to the par value of the common stock, or $0.001 per share representing 3,465,000 unregistered common shares. No payments have been made on this note. On February 25, 2011 a portion of the note in the amount of $1,316 was converted to Common Stock. The note is currently in default. | | $ | 2,149 | | | $ | - | | | $ | 2,149 | | | $ | 2,149 | | | $ | - | | | $ | 2,149 | |
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| On June 7, 2010 the Company entered into a convertible promissory note with an investor in the amount of $5,000. The note is payable on demand, has no stated interest rate or due date and is convertible at a rate of $60.00. No payments have been made on this note. | | | 5,000 | | | | - | | | | 5,000 | | | | 5,000 | | | | - | | | | 5,000 | |
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On August 9, 2010 the Company entered into a convertible promissory note with an investor in the amount of $5,000. The note is payable on demand, has no stated interest rate or due date and is convertible at a rate of $2.000. No payments have been made on this note. During the year ended December 31, 2012, the entire note balance of $5,000 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 5,000 | | | | - | | | | 5,000 | |
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| On August 25, 2010 the Company entered into a convertible promissory note with an investor in the amount of $4,000. The note is payable on demand, has no stated interest rate or due date and is convertible at a rate of $2.00. No payments have been made on this note. | | | 4,000 | | | | - | | | | 4,000 | | | | 4,000 | | | | - | | | | 4,000 | |
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On September 2, 2010 the Company entered into a convertible promissory note with an investor in the amount of $20,000. The note is payable on demand, has no stated interest rate or due date and is convertible at a rate of $2.00 per share. No payments have been made on this note. During the year ended December 31, 2012, the note in the amount of $20,000 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 20,000 | | | | - | | | | 20,000 | |
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| On October 13, 2010 the Company entered into a convertible promissory note with an investor in the amount of $3,000. The note is payable on demand, has no stated interest rate or due date and is convertible at a rate of $2.00 per share. No payments have been made on this note. | | | 3,000 | | | | - | | | | 3,000 | | | | 3,000 | | | | - | | | | 3,000 | |
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On October 29, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $30,000. Terms include simple interest at twelve percent (12.0%), the note is due on October 29, 2011 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. During the year ended December 31, 2012, a portion of the note in the amount of $27,000 was converted to Common Stock. | | | 3,000 | | | | - | | | | 3,000 | | | | 30,000 | | | | - | | | | 30,000 | |
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| On November 4, 2010 the Company entered into a convertible promissory note with an investor in the amount of $19,600. The note is payable on demand, includes bonus interest of $1,600, has no due date and is convertible at a rate of $2.00 per share. No payments have been made on this note. | | | 19,600 | | | | - | | | | 19,600 | | | | 19,600 | | | | - | | | | 19,600 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
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On November 8, 2010 the Company entered into a convertible promissory note with an investment firm in the amount of $5,500. Terms include bonus interest of $500, the note is payable on demand and is convertible at a rate of $2.00 per share. No payments have been made on this note. During the year ended December 31, 2012, the note in the amount of $5,500 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 5,500 | | | | - | | | | 5,500 | |
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On November 15, 2010 the Company entered into a convertible promissory note with an investor in the amount of $28,000. The note is payable on demand, has no stated interest rate or due date and is convertible at a rate of $2.00. No payments have been made on this note. During the year ended December 31, 2012, the entire note in the amount of $28,000 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 28,000 | | | | - | | | | 28,000 | |
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On November 30, 2010 the Company entered into a convertible promissory note with an investment firm in the amount of $9,300. Terms include bonus interest of $930, the note is payable on demand and has no stated interest rate or due date and is convertible at a rate of $2.000 per share. No payments have been made on this note. During the year ended December 31, 2012, the note in the amount of $9,300, plus $930 of bonus interest, was converted to Common Stock. | | | - | | | | - | | | | - | | | | 9,300 | | | | - | | | | 9,300 | |
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| On December 15, 2010 the Company entered into a convertible promissory note with an investment firm in the amount of $15,500. Terms include simple interest at ten percent (10.0%), the note is due on December 15, 2011 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 15,500 | | | | - | | | | 15,500 | | | | 15,500 | | | | - | | | | 15,500 | |
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| On January 10, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $1,000. Terms include simple interest at ten percent (10.0%), the note is due on January 10, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 1,000 | | | | - | | | | 1,000 | | | | 1,000 | | | | (27 | ) | | | 973 | |
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On February 23, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $21,600. Terms include simple interest at ten percent (10.0%), the note is due on February 23, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the year ended December 31, 2012, the entire note balance in the amount of $21,600 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 21,600 | | | | (3,195 | ) | | | 18,405 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
On March 1, 2011 the Company entered into a convertible promissory note assigned from NexPhase in the amount of $60,000. Terms include simple interest at ten percent (10.0%), the note is due on March 1, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. As of December 31, 2011, a portion of the note in the amount of $49,000 has been converted to Common Stock. The note is currently in default. | | | 11,000 | | | | - | | | | 11,000 | | | | 11,000 | | | | (1,833 | ) | | | 9,167 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 10, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $3,000. Terms include simple interest at ten percent (10.0%), the note is due on March 10, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 3,000 | | | | - | | | | 3,000 | | | | 3,000 | | | | (574 | ) | | | 2,426 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On March 31, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $5,500. Terms include simple interest at ten percent (10.0%), the note is due on March 31, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the year ended December 31, 2012, the entire note of $5,500 plus $600 of accrued interest has been converted to Common Stock. | | | - | | | | - | | | | - | | | | 5,500 | | | | (1,367 | ) | | | 4,133 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On March 31, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $6,500. Terms include simple interest at ten percent (10.0%), the note is due on March 31, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. During the year ended December 31, 2012, a portion of the note in the amount of $5,500 has been converted to Common Stock. The note is currently in default. | | | 1,000 | | | | - | | | | 1,000 | | | | 6,500 | | | | (1,616 | ) | | | 4,884 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
On April 14, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $17,500. Terms include simple interest at ten percent (10.0%), the note is due on April 14, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the year ended December 31, 2012, a portion of the note in the amount of $11,000 was converted to Common Stock. The note is currently in default. | | | 6,500 | | | | - | | | | 6,500 | | | | 17,500 | | | | (5,020 | ) | | | 12,480 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On April 15, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $27,000. Terms include simple interest at ten percent (10.0%), the note is due on April 15, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the year ended December 31, 2012, a portion of the note in the amount of $25,000 was converted to Common Stock. The note is currently in default. | | | 2,000 | | | | - | | | | 2,000 | | | | 27,000 | | | | (7,819 | ) | | | 19,181 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On April 18, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $1,000. Terms include simple interest at ten percent (10.0%), the note is due on April 18, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the year ended December 31, 2012, the entire note in the amount of $1,000 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 1,000 | | | | (298 | ) | | | 702 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On April 18, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $2,000. Terms include simple interest at ten percent (10.0%), the note is due on April 18, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 2,000 | | | | - | | | | 2,000 | | | | 2,000 | | | | (595 | ) | | | 1,405 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On April 21, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $5,000. Terms include simple interest at ten percent (10.0%), the note is due on April 21, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 5,000 | | | | - | | | | 5,000 | | | | 5,000 | | | | (1,530 | ) | | | 3,470 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On April 27, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $2,500. Terms include simple interest at ten percent (10.0%), the note is due on April 27, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 2,500 | | | | - | | | | 2,500 | | | | 2,500 | | | | (806 | ) | | | 1,694 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On April 28, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $2,500. Terms include simple interest at ten percent (10.0%), the note is due on April 28, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 2,500 | | | | - | | | | 2,500 | | | | 2,500 | | | | (813 | ) | | | 1,687 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On May 16, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $15,000. Terms include simple interest at ten percent (10.0%), the note is due on May 16, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. During the year ended December 31, 2012, the entire note balance, plus accrued interest of $1,478, was converted to Common Stock. | | | - | | | | - | | | | - | | | | 15,000 | | | | (5,614 | ) | | | 9,386 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On June 1, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $3,000. Terms include simple interest at ten percent (10.0%), the note is due on June 1, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 3,000 | | | | - | | | | 3,000 | | | | 3,000 | | | | (1,254 | ) | | | 1,746 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On June 10, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $3,000. Terms include simple interest at ten percent (10.0%), the note is due on June 10, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. | | | 3,000 | | | | - | | | | 3,000 | | | | 3,000 | | | | (1,327 | ) | | | 1,673 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On June 20, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $6,500. Terms include simple interest at ten percent (10.0%), the note is due on June 20, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the nine months ended September 30, 2012, the note balance of $6,500, plus accrued interest of $671, was converted to Common Stock. | | | - | | | | - | | | | - | | | | 6,500 | | | | (3,054 | ) | | | 3,446 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On June 24, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $2,000. Terms include simple interest at ten percent (10.0%), the note is due on June 24, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. The note is currently in default. During the year ended December 31, 2012, a portion of the note in the amount of $250, plus accrued interest of $11, was converted to Common Stock. | | | 1,750 | | | | - | | | | 1,750 | | | | 2,000 | | | | (961 | ) | | | 1,039 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
On August 4, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $15,000. Terms include simple interest at ten percent (10.0%), the note is due on August 4, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. During the year ended December 31, 2012, the entire note balance of $15,000, plus accrued interest of $868, was converted to Common Stock. | | | - | | | | - | | | | - | | | | 15,000 | | | | (8,893 | ) | | | 6,107 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On August 4, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $20,000. Terms include simple interest at ten percent (10.0%), the note is due on August 4, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. During the year ended December 310, 2012, a portion of the note in the amount of $18,000 was converted to Common Stock. The note is currently in default. | | | 2,000 | | | | - | | | | 2,000 | | | | 20,000 | | | | (11,857 | ) | | | 8,143 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On August 18, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $2,500. Terms include simple interest at ten percent (10.0%), the note is due on August 18, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 2,500 | | | | - | | | | 2,500 | | | | 2,500 | | | | (1,577 | ) | | | 923 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On September 13, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $6,000. Terms include simple interest at ten percent (10.0%), the note is due on September 13, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 6,000 | | | | - | | | | 6,000 | | | | 6,000 | | | | (4,212 | ) | | | 1,788 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On September 22, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $1,000. Terms include simple interest at ten percent (10.0%), the note is due on September 22, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 1,000 | | | | - | | | | 1,000 | | | | 1,000 | | | | (726 | ) | | | 274 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On September 28, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $2,000. Terms include simple interest at ten percent (10.0%), the note is due on September 28, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 2,000 | | | | - | | | | 2,000 | | | | 2,000 | | | | (1,189 | ) | | | 811 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On October 6, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $5,800. Terms include simple interest at ten percent (10.0%), the note is due on October 6, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 5,800 | | | | - | | | | 5,800 | | | | 5,800 | | | | (444 | ) | | | 5,356 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On October 21, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $1,700. Terms include simple interest at ten percent (10.0%), the note is due on October 21, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 1,700 | | | | - | | | | 1,700 | | | | 1,700 | | | | (548 | ) | | | 1,152 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
| On November 23, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $2,000. Terms include simple interest at ten percent (10.0%), the note is due on November 23, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 2,000 | | | | - | | | | 2,000 | | | | 2,000 | | | | (717 | ) | | | 1,283 | |
| | | | | | | | | | | | | | | | | | | | �� | | | | | |
| On December 5, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $11,500. Terms include simple interest at ten percent (10.0%), the note is due on December 5, 2012 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. The note is currently in default. | | | 11,500 | | | | - | | | | 11,500 | | | | 11,500 | | | | (4,273 | ) | | | 7,227 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On January 8, 2012 the Company converted accrued compensation and entered into a convertible promissory note with its former Chief Executive Officer in the amount of $501,425. Terms include simple interest at six and one-quarter percent (6.25%), the note is due on January 8, 2013 and is convertible at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. During the year ended December 31, 2012, $20,000 has been paid on the note. | | | 481,425 | | | | (10,960 | ) | | | 470,465 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On January 20, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $17,700. Terms include simple interest at ten percent (10.0%), the note is due on demand and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. During the year ended December 31, 2012, a portion of the note in the amount of $12,900 has been converted to Common Stock. | | | 4,800 | | | | - | | | | 4,800 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On January 26, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $36,580. Terms include simple interest at ten percent (10.0%), the note is due on January 26, 2013 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. On August 15, 2012, the note plus accrued interest of $2,225 was assigned to a third party investment firm. | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On February 3, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $3,000. Terms include simple interest at ten percent (10.0%), the note is due on demand and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. | | | 3,000 | | | | - | | | | 3,000 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On February 27, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $900. Terms include simple interest at ten percent (10.0%), the note is due on February 27, 2013 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. | | | 900 | | | | (142 | ) | | | 758 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 20, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $1,370. Terms include simple interest at ten percent (10.0%), the note is due on demand and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. | | | 1,370 | | | | - | | | | 1,370 | | | | - | | | | - | | | | - | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 4 – Notes Payable – Non-affiliated Related Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
| On March 21, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $1,600. Terms include simple interest at ten percent (10.0%), the note is due on March 21, 2013 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. | | | 1,600 | | | | (350 | ) | | | 1,250 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 28, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $11,500. Terms include simple interest at ten percent (10.0%), the note is due on demand and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. | | | 11,500 | | | | - | | | | 11,500 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On July 9, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $1,000. Terms include simple interest at ten percent (10.0%), the note is due on July 9, 2013 and is convertible at the option of the holder at a price of $2.00 per share. No payments have been made on this note. | | | 1,000 | | | | (520 | ) | | | 480 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 31, 2011 the Company entered into a stock repurchase agreement with a NexPhase investor to repurchase 50 shares of Common Stock acquired in the NexPhase acquisition. Terms include principal in the amount of $27,500 including premium interest of ten percent (10.0%) ($2,500), the note is due on June 30, 2012. Payments totaling $7,453 have been made on this note during the year ended December 31, 2011. Payments totaling $12,000 have been made on this note during the year ended December 31, 2012. The note is currently in default. | | | 8,048 | | | | - | | | | 8,048 | | | | 20,048 | | | | - | | | | 20,048 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 31, 2011 the Company entered into a stock repurchase agreement with a NexPhase investor to repurchase 10 shares of Common Stock acquired in the NexPhase acquisition. Terms include principal in the amount of $5,500 including premium interest of ten percent (10.0%) ($500), the note is due on June 30, 2012. No payments have been made on this note. Payments totaling $1,490 have been made on this note during the year ended December 31, 2011. The note is currently in default. | | | 4,010 | | | | - | | | | 4,010 | | | | 4,010 | | | | - | | | | 4,010 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 31, 2011 the Company entered into a stock repurchase agreement with a NexPhase investor to repurchase 12 shares of Common Stock acquired in the NexPhase acquisition. Terms include principal in the amount of $6,600 including premium interest of ten percent (10.0%) ($600), the note is due on June 30, 2012. No payments have been made on this note. The note is currently in default. | | | 6,600 | | | | - | | | | 6,600 | | | | 6,600 | | | | - | | | | 6,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 31, 2011the Company entered into a stock repurchase agreement with a NexPhase investor to repurchase 10 shares of Common Stock acquired in the NexPhase acquisition. Terms include principal in the amount of $5,500 including premium interest of ten percent (10.0%) ($500), the note is due on June 30, 2012. No payments have been made on this note. The note is currently in default. | | | 5,500 | | | | - | | | | 5,500 | | | | 5,500 | | | | - | | | | 5,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On March 31, 2011 the Company entered into a stock repurchase agreement with a NexPhase investor to repurchase 40 shares of Common Stock acquired in the NexPhase acquisition. Terms include principal in the amount of $22,000 including premium interest of ten percent (10.0%) ($2000), the note is due on June 30, 2012. Payments totaling $5,962 have been made on this note during the year ended December 31, 2011. Payments totaling $2,000 have been made on this note during the year ended December 31, 2012. The note is currently in default. | | | 14,038 | | | | - | | | | 14,038 | | | | 16,038 | | | | - | | | | 16,038 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Notes Payable -- Related Parties | | $ | 674,790 | | | $ | (11,972 | ) | | $ | 662,818 | | | $ | 402,345 | | | $ | (72,139 | ) | | $ | 330,206 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| Notes Payable -- Third Parties - Inelco Corporation | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
| On January 17, 2010 the Company entered into a convertible promissory note with an advisory firm for services rendered in the amount of $59,000. Terms include bonus interest of $5,900, the note is payable on demand and has no stated interest rate or due date and is convertible at a rate of $60.00 per share or 886 unregistered common shares. Total payments of $11,750 have been made on this note. | | $ | 53,150 | | | $ | - | | | $ | 53,150 | | | $ | 53,150 | | | $ | - | | | $ | 53,150 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On February 10, 2010 the Company entered into a convertible promissory note with a project consultant for services rendered in the amount of $7,800. Terms include bonus interest of $780, the note is payable on demand and has no stated interest rate or due date and is convertible at a rate of $60.00 per share or 143 unregistered common shares. No payments have been made on this note. | | | 8,580 | | | | - | | | | 8,580 | | | | 8,580 | | | | - | | | | 8,580 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On February 10, 2010 the Company entered into a convertible promissory note with an engineering firm for services rendered in the amount of $27,600. Terms include bonus interest of $2,760, the note is payable on demand and has no stated interest rate or due date and is convertible at a rate of $60.00 per share or 506 unregistered common shares. No payments have been made on this note. | | | 30,360 | | | | - | | | | 30,360 | | | | 30,360 | | | | - | | | | 30,360 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On June 7, 2010 the Company entered into a convertible promissory note with an investor in the amount of $10,000. The note is payable on demand and has no stated interest rate or due date and is convertible at a rate of $60.00 per share or 167 unregistered common shares. No payments have been made on this note. | | | 10,000 | | | | - | | | | 10,000 | | | | 10,000 | | | | - | | | | 10,000 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties (Continued)
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
| On July 19, 2010 the Company entered into a convertible promissory note with an investor in the amount of $2,500. The note is payable on demand and has no stated interest rate or due date and is convertible at a rate of $60.00 per share or 42 unregistered common shares. No payments have been made on this note. | | | 2,500 | | | | - | | | | 2,500 | | | | 2,500 | | | | - | | | | 2,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On April 28 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $56,000. Terms include simple interest at eight percent (8.0%), the note is due on January 31 2012 and is convertible at the option of the holder at a price calculated at a forty percent discount to the market closing bid price on the date of the conversion notice. As of December 31, 2011, a portion of the note in the amount of $35,500 has been converted to Common Stock. During the year ended December 31, 2012, the remainder of the note in the amount of $20,500 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 20,500 | | | | (1,524 | ) | | | 18,976 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On June 20, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $53,000. Terms include simple interest at eight percent (8.0%), the note is due on March 22, 2012 and is convertible at the option of the holder at a price calculated at a forty percent discount to the market closing bid price on the date of the conversion notice. During the year ended December 31, 2012, the note in the amount of $53,000 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 53,000 | | | | (10,497 | ) | | | 42,503 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On August 24, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $15,000. Terms include simple interest at ten percent (10.0%), the note is due on April 24, 2012 and is convertible at the option of the holder at a price calculated at a fifty percent discount to the market closing bid price on the date of the conversion notice. During the year ended December 31, 2012, the note in the amount of $15,000 plus accrued interest of $2,425 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 15,000 | | | | (7,069 | ) | | | 7,931 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
On September 1, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $50,000. Terms include simple interest at eight percent (8.0%), the note is due on June 6, 2012 and is convertible at the option of the holder at a price calculated at a forty percent discount to the market closing bid price on the date of the conversion notice. During the year ended December 31, 2012, the note in the amount of $50,000 was paid plus accrued interest of $2,315 and a redemption premium of $22,685. | | | - | | | | - | | | | - | | | | 50,000 | | | | (18,877 | ) | | | 31,123 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On October 26, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $12,000. Terms include simple interest at twelve percent (12.0%), the note is due on October 26, 2012 and is convertible at the option of the holder at a price calculated at a fifty percent discount to the market closing bid price on the date of the conversion notice. During the year ended December 31, 2012, the note in the amount of $12,000 plus accrued interest of $2,175 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 12,000 | | | | (9,835 | ) | | | 2,165 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On October 26, 2011 the Company entered into a convertible promissory note with a an investment firm in the amount of $78,124. Terms include simple interest at twelve percent (12.0%), the note is due on June 26, 2012 and is convertible at the option of the holder at a price calculated at a fifty percent discount to the market closing bid price on the date of the conversion notice. The note was assigned from a non-affiliated related party investment firm. No payments have been made on this note. As of December 31, 2011, a portion of the note in the amount of $38,124 has been converted to Common Stock. During the year ended December 31, 2012, the remainder of the note in the amount of $40,000 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 40,000 | | | | (29,180 | ) | | | 10,820 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
On December 5, 2011 the Company entered into a convertible promissory note with a an investment firm in the amount of $25,000. Terms include simple interest at ten percent (10.0%), the note is due on December 5, 2012 and is convertible at the option of the holder at a the lesser of par ($0.001) or a price calculated at a fifty percent discount to the market closing bid price on the date of the conversion notice. The note was assigned from a non-affiliated related party investment firm. No payments have been made on this note. As of December 31, 2011, a portion of the note in the amount of $6,800 has been converted to Common Stock. During the year ended December 31, 2012, the remainder of the note in the amount of $18,200 was converted to Common Stock. | | | - | | | | - | | | | - | | | | 18,200 | | | | (6,763 | ) | | | 11,437 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On February 7, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $32,500. Terms include simple interest at eight percent (8.0%), the note is due on November 9, 2012 and is convertible at the option of the holder at a price calculated at a forty-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the year ended December 31, 2012, the entire note, including accrued interest of $1,300, was converted to Common Stock. | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On February 10, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $19,000. Terms include simple interest at ten percent (10.0%), the note is due on February 10, 2013 and is convertible at the option of the holder at a price of $2.00. No payments have been made on this note. | | | 19,000 | | | | (2,128 | ) | | | 16,872 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On April 2, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $75,000. Terms include simple interest at ten percent (10.0%), the note is due on April 2, 2013 and is convertible at the option of the holder at a price of $2.00. The note was assigned from a non-affiliated related party investment firm. No payments have been made on this note. During the year ended December 31, 2012, a portion of the note in the amount of $12,000 plus accrued interest of $149, was converted to Common Stock. | | | 63,000 | | | | (18,904 | ) | | | 44,096 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On April 3, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $37,500. Terms include simple interest at eight percent (8.0%), the note is due on January 9, 2013 and is convertible at the option of the holder at a price calculated at a forty-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. During the year ended December 31, 2012, a portion of the note in the amount of $3,900, was converted to Common Stock. | | | 33,600 | | | | (982 | ) | | | 32,618 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On May 21, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $37,500. Terms include simple interest at eight percent (8.0%), the note is due on February 25, 2013 and is convertible at the option of the holder at a price calculated at a forty-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. | | | 32,500 | | | | (5,010 | ) | | | 27,490 | | | | - | | | | - | | | | - | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
On December 15, 2010 the Company entered into a convertible promissory note with a non affiliate related party in the amount of $40,000. Terms include simple interest at twelve percent (12%), the note was due on December 15, 2011 and was convertible convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. On July 12, 2012, the note was assigned from the non affiliate related party to a thrid party investor firm. The balance of the note assigned, including accrued interest, was $52,015. The Company replaced the original note with a new convertible promissory note to the thrid party investment firm. Terms include simple interest at twelve percent (12.0%), the note is due on July 12, 2013 and is convertible at the option of the holder at a price calculated at a fifty percent discount to the lowest trading price during the three days prior to the date of the conversionon notice. No payments have been made on this note. During the year ended December 31, 2012, a portion of the note in the amount of $31,815 was converted to Common Stock. | | | 20,200 | | | | (14,329 | ) | | | 5,871 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On July 12, 2012 the Company entered into a convertible promissory note with an investment firm in the amount of $26,500. Terms include simple interest at twelve percent (12.0%), the note is due on March 12, 2013 and is convertible at the option of the holder at a price calculated at a fifty percent discount to average of the lowest three trading prices during the ten day period prior to the date of the conversion notice. No payments have been made on this note. | | | 26,500 | | | | (14,012 | ) | | | 12,488 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On December 10, 2010 the Company entered into a convertible promissory note with an investment firm in the amount of $40,000. Terms include simple interest at twelve percent (12.0%), the note is due on December 8, 2011 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. No payments have been made on this note. On March 11, 2011 the Company entered into a convertible promissory note with an investment firm in the amount of $20,000. Terms include simple interest at twelve percent (12.0%), the note is due on March 11, 2012 and is convertible at the option of the holder at a price which is the greater of (i) twice the par value of the common stock, or (ii) a seventy-five percent discount to the market closing bid price on the date of the conversion notice. On July 31, 2012, the notes were assigned from the non affiliate related parties to a thrid party investor firm. The balance of the notes assigned, including accrued interest, was $75,674. The Company replaced the original note with a new convertible promissory note to the thrid party investment firm. Terms include simple interest at twelve percent (12.0%), the note is due on July 31, 2013 and is convertible at the option of the holder at a price calculated at a fifty percent discount to the lowest trading price during the three days prior to the date of the conversionon notice. No payments have been made on this note. | | | 75,674 | | | | (43,953 | ) | | | 31,721 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On August 1, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $32,500. Terms include simple interest at eight percent (8.0%), the note is due on May 3, 2013 and is convertible at the option of the holder at a price calculated at a forty-five percent discount to the avaerage of the two lowest trading prices during the thirty trading day period prior to the date of the conversion notice. No payments have been made on this note. | | | 32,500 | | | | (11,893 | ) | | | 20,607 | | | | - | | | | - | | | | - | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On August 14, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $42,500. Terms include simple interest at eight percent (8.0%), the note is due on May 16, 2013 and is convertible at the option of the holder at a price calculated at a forty-five percent discount to the avaerage of the three lowest trading prices during the ten trading day period prior to the date of he conversion notice. No payments have been made on this note. | | | 42,500 | | | | (17,197 | ) | | | 25,303 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
On January 26, 2012 the Company entered into a convertible promissory note with a non affiliate related party in the amount of $36,580. Terms include simple interest at twelve percent (10%), the note was due on January 26, 2013 and was convertible at the option of the holder at a price of $2.00 per share. On August 15, 2012, the note was assigned from the non affiliate related party to a thrid party investment firm. The balance of the note assigned, including accrued interest, was $38,805. The Company replaced the original note with a new convertible promissory note to the thrid party investment firm. Terms include simple interest at ten percent (10.0%), the note is due on January 26, 2013 and is convertible at the option of the holder at a price calculated at a forty-five percent discount to the average of the three lowest trading price during the ten day period prior to the date of the conversionon notice. No payments have been made on this note. During the year ended December 31, 2012, a portion of the note in the amount of $2,225 was converted to Common Stock. | | | 36,580 | | | | (4,747 | ) | | | 31,833 | | | | - | | | | - | | | | - | |
| | | | | | | | | �� | | | | | | | | | | | | | | | | |
| On August 16, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $5,000. Terms include simple interest at ten percent (10.0%), the note is due on August 16, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 5,000 | | | | (3,123 | ) | | | 1,877 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On September 20, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $5,000. Terms include simple interest at ten percent (10.0%), the note is due on September 20, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 5,000 | | | | (3,602 | ) | | | 1,398 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On October 18, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $10,000. Terms include simple interest at ten percent (10.0%), the note is due on October 18, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 10,000 | | | | (7,972 | ) | | | 2,028 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On November 9, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $1,500. Terms include simple interest at ten percent (10.0%), the note is due on November 9, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 1,500 | | | | (1,285 | ) | | | 215 | | | | - | | | | - | | | | - | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| On November 15, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $9,000. Terms include simple interest at ten percent (10.0%), the note is due on November 15, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 9,000 | | | | (7,865 | ) | | | 1,135 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On November 30, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $4,000. Terms include simple interest at ten percent (10.0%), the note is due on November 30, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 4,000 | | | | (3,659 | ) | | | 341 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On December 18, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $9,000. Terms include simple interest at ten percent (10.0%), the note is due on December 18, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 9,000 | | | | (8,678 | ) | | | 322 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On December 21, 2012 the Company entered into a convertible promissory note with a an investment firm in the amount of $3,500. Terms include simple interest at ten percent (10.0%), the note is due on December 21, 2013 and is convertible at the option of the holder at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less. No payments have been made on this note. | | | 3,500 | | | | (3,403 | ) | | | 97 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Notes Payable -- Third Parties - Inelco Corporation | | | 533,644 | | | | (172,742 | ) | | | 360,902 | | | | 313,290 | | | | (83,745 | ) | | | 229,545 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 5 – Notes Payable – Third Parties (Continued)
| | | December 31, 2012 | | | December 31, 2011 | |
| | | | | | | | | Principal, | | | | | | | | | Principal, | |
| | | | | | Unamortized | | | net of | | | | | | Unamortized | | | net of | |
| Notes Payable -- Third Parties - Cyber Centers Worldwide | | Principal | | | Discount | | | Discounts | | | Principal | | | Discount | | | Discounts | |
| | | | | | | | | | | | | | | | | | | |
| On September 2, 2011 the Company's subsidiary, Cyber Centers Worldwide Corporation ("CCWC"), entered into a convertible promissory note with a an investment firm in the amount of $17,000. Terms include simple interest at ten percent (10.0%), the note is due on September 2, 2012 and is convertible into shares of CCWC at the option of the holder at the lower of 1) a price of $1.00, or if the stock of CCWC is publicly traded at the time of conversion 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price if the closing market price is $1.00 or less. No payments have been made on this note. This note is currently in default. | | | 17,000 | | | | - | | | | 17,000 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On September 12, 2011 the Company's subsidiary, CCWC, entered into a convertible promissory note with a an investment firm in the amount of $6,000. Terms include simple interest at ten percent (10.0%), the note is due on September 12, 2012 and is convertible into shares of CCWC at the option of the holder at the lower of 1) a price of $1.00, or if the stock of CCWC is publicly traded at the time of conversion 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price if the closing market price is $1.00 or less. No payments have been made on this note. This note is currently in default. | | | 6,000 | | | | - | | | | 6,000 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On January 4, 2012 the Company's subsidiary, CCWC, entered into a convertible promissory note with a an investment firm in the amount of $13,000. Terms include simple interest at ten percent (10.0%), the note is due on January 4, 2013 and is convertible into shares of CCWC at the option of the holder at the lower of 1) a price of $1.00, or if the stock of CCWC is publicly traded at the time of conversion 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price if the closing market price is $1.00 or less. No payments have been made on this note. | | | 13,000 | | | | - | | | | 13,000 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On May 21, 2012 the Company's subsidiary, CCWC, entered into a convertible promissory note with a an investment firm in the amount of $11,806. Terms include simple interest at ten percent (10.0%), the note is due on May 21, 2013 and is convertible into shares of CCWC at the option of the holder at the lower of 1) a price of $1.00, or if the stock of CCWC is publicly traded at the time of conversion 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price if the closing market price is $1.00 or less. No payments have been made on this note. | | | 11,806 | | | | - | | | | 11,806 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On July 10, 2012 the Company's subsidiary, CCWC, entered into a convertible promissory note with a an investment firm in the amount of $11,125. Terms include simple interest at ten percent (10.0%), the note is due on July 10, 2013 and is convertible into shares of CCWC at the option of the holder at the lower of 1) a price of $1.00, or if the stock of CCWC is publicly traded at the time of conversion 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price if the closing market price is $1.00 or less. No payments have been made on this note. | | | 11,125 | | | | - | | | | 11,125 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| On September 3, 2012 the Company's subsidiary, CCWC, entered into a convertible promissory note with a an investment firm in the amount of $12,600. Terms include simple interest at ten percent (10.0%), the note is due on September 3, 2013 and is convertible into shares of CCWC at the option of the holder at the lower of 1) a price of $1.00, or if the stock of CCWC is publicly traded at the time of conversion 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price if the closing market price is $1.00 or less. No payments have been made on this note. | | | 12,600 | | | | - | | | | 12,600 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Notes Payable -- Third Parties - Cyber Centers Worldwide | | | 71,531 | | | | - | | | | 71,531 | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total - Notes Payable -- Third Parties | | $ | 605,175 | | | $ | (172,742 | ) | | $ | 432,433 | | | $ | 313,290 | | | $ | (83,745 | ) | | $ | 229,545 | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 6 – Acquisition of Cyber Centers Worldwide Corporation
Effective October 25, 2012, the Company’s Board of Directors approved and authorized the execution of a share exchange agreement (the “Share Exchange Agreement”) with Cyber Centers Worldwide Corporation, a private Florida corporation (“CCWC”), and the shareholders of CCWC (the "CCWC Shareholders"). In accordance with the terms and provisions of the Share Exchange Agreement, the Company will acquire approximately 150,000,000 shares of common stock of CCWC and 1,000,000 shares of Series B preferred stock of CCWC, which represents 100% of the total issued and outstanding shares held of record by the CCWC Shareholders. In exchange for the acquisition of the capital shares of CCWC, the Company shall issue to the CCWC Shareholders on a pro rata basis 75,000 restricted shares of common stock of the Company and 1,000,000 shares of Series B preferred stock of the Company. This resulted in CCWC becoming the wholly-owned subsidiary of the Company. Prior to this share exchange, CCWC changed its name from Cyber Centers International Corporation ("CCIC").
The following table summarizes the consideration given for CCWC and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date.
| Consideration Given: | | | |
| | | | | |
| | 75,000 shares of Inelco Common Stock | | $ | 60,000 | |
| | 1,000,000 shares of Inelco Series B Preferred Stock | | | 400,000 | |
| | | | | | |
| | Total Consideration | | $ | 460,000 | |
| | | | | | |
| Fair value of identifiable assets acquired and liabilities assumed: | | | | |
| | | | | | |
| | Cash | | $ | 12,852 | |
| | Other current assets | | | 4,200 | |
| | Property and equipment, net | | | 1,472 | |
| | Deposits | | | 375 | |
| | Accounts payable | | | (1,778 | ) |
| | Accrued interest | | | (4,182 | ) |
| | Advances from related parties | | | (4,731 | ) |
| | Notes payable, related parties | | | (71,531 | ) |
| | Identifiable intangible assets | | | 71,531 | |
| | Total identifiable net assets | | | 8,208 | |
| | | | | | |
| Goodwill | | | 451,792 | |
| | | | | | |
| | | | $ | 460,000 | |
The 75,000 shares of Inelco common stock were valued at the market price of $0.80 per share on the date of acquisition. The 1,000,000 shares of Inelco Series B Preferred Stock were valued at the common stock equivalent market price of $0.40 per preferred share on the date of acquisition as the preferred shares are convertible to .5 common shares.
Intangible assets consisting of software in development were valued by management based on the fair value of software development costs incurred to date. As the software remains in development, definite lives have not yet been determined and no amortization has been recognized as of December 31, 2012.
In accordance with the Share Exchange Agreement and anticipated consummation of the spin-off of the Company's wholly-owned subsidiary, NexPhase Lighting Inc., the operations of the Company will change from the business of designing, developing, manufacturing and marketing a high quality and high efficiency full line of LED intelligent lighting fixtures and control systems for commercial applications and projects involving both new construction and retrofits. The business operations of the Company will be conducted through its new wholly-owned subsidiary, CCWC, which involves interactive online gaming within the entertainment industry. Over the past years, the founders of CCIC have invested private capital, time and effort and innovative technology in its product development. CCWC today is capitalizing on the emerging trends in interactive gaming and social marketing with a vision to become the benchmark in the gaming industry with a reputation for customer safety, security and quality customer service, while also upholding the interests of shareholders.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 7 – Spin-Off of NexPhase Lighting
The Company’s Board of Directors has unanimously adopted a resolution, and has received shareholder approval, to authorize the Board to effectuate a Spin-Off of NexPhase upon receipt of all necessary regulatory approvals and the passage of all necessary waiting periods. The Board of Directors had determined that it would be in the Company’s best interest to effect the Spin-Off and has received the consent of holders of over 100% of the voting rights and power of the Company’s securities to authorize the Board of Directors to effect the Spin-Off. The Company will issue shares of NexPhase to the existing shareholders of the Company on a pro-rated basis on or about June 30, 2013.
Since the acquisition of NexPhase, the Company has provided working capital to NexPhase. Amounts due from NexPhase are $991,687 and $405,528 at December 31, 2012 and 2011, respectively.
Due to the transfer of the assets and liabilities of NexPhase to the shareholders, the accounting for NexPhase in this period and historically would be classified as a discontinued operation. Accordingly, the Company has excluded results for NexPhase from its continuing operations in the Consolidated Statement of Operations for all periods presented. The following table shows the results of NexPhase included in the loss from discontinued operations:
| | | Year ended December 31, | |
| | | 2012 | | | 2011 | |
| | | | | | | |
| Revenue | | $ | - | | | $ | 380,216 | |
| Cost of goods sold | | | 33,368 | | | | 187,762 | |
| Gross profit | | | (33,368 | ) | | | 192,454 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| General and administrative | | | 44,521 | | | | 105,669 | |
| Investor relations | | | - | | | | 21,440 | |
| Occupancy - Headquarters | | | - | | | | - | |
| Professional fees | | | - | | | | 14,863 | |
| Staff compensation | | | 39,600 | | | | 410,743 | |
| Depreciation | | | 24,541 | | | | 8,569 | |
| Total operating expenses | | | 108,662 | | | | 561,284 | |
| | | | | | | | | |
| Loss from discontinued operations | | | (142,030 | ) | | | (368,830 | ) |
| | | | | | | | | |
| Other expenses: | | | | | | | | |
| Interest expense | | | 164,378 | | | | 170,194 | |
| | | | | | | | | |
| Net loss from discontinued operations | | $ | (306,408 | ) | | $ | (539,024 | ) |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 7 – Spin-Off of NexPhase Lighting
The major classes of assets and liabilities of discontinued operations on the balance sheet are as follows:
| | | December 31, | |
| | | 2012 | | | 2011 | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash in banks | | $ | 31 | | | $ | 41,128 | |
| Accounts receivable | | | - | | | | 2,251 | |
| Inventories | | | 75,945 | | | | 74,947 | |
| Total current assets | | | 75,976 | | | | 118,326 | |
| | | | | | | | | |
| Property and equipment, net | | | 79,588 | | | | 97,979 | |
| Intellectual property | | | 2,989,149 | | | | 2,989,149 | |
| Security deposits | | | 4,120 | | | | 4,120 | |
| | | | | | | | | |
| Total assets of discontinued operations | | $ | 3,148,833 | | | $ | 3,209,574 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 96,177 | | | $ | 112,046 | |
| Accrued interest | | | 41,030 | | | | 38,244 | |
| Sales tax payable | | | 2,679 | | | | 2,678 | |
| Due to Onteco | | | 991,687 | | | | 405,528 | |
| Advances from related parties | | | 2,100 | | | | - | |
| Notes payable, non-affiliated related parties | | | 160,592 | | | | 242,614 | |
| | | | | | | | | |
| Total liabilities of discontinued operations | | $ | 1,294,265 | | | $ | 801,110 | |
Note 8 – Licensing, Manufacturing and Distribution Agreement
Effective on April 30, 2012, the Board of Directors of Onteco Corporation, a Nevada corporation (the “Company”), approved and authorized the execution of a Licensing, Manufacturing and Distribution Agreement (the “Agreement”) with Jarlyn S.A., an Uruguayan corporation (“Jarlyn”). In accordance with the terms and provisions of the Agreement, Jarlyn shall be designated the exclusive licensee, manufacturer, distributor and re-seller of certain licensed technologies within the Oriental Republic of Uruguay (the “Territory”).
In accordance with the terms and provisions of the Agreement: (i) the Company shall grant to Jarlyn an exclusive license to the Licensed Technology Products, for the manufacturing and distribution of the Licensed Technologies, and for the use of the trademark in the Territory; (ii) the Company shall grant to Jarlyn exclusive distribution rights for the direct sale and resale to resellers or other channels of the Licensed Technology Products in the Territory; (iii) Jarlyn shall compensate the Company for the granting of the license and rights pertaining to the Licensed Technology Products by the transfer to the Company of 1,000,000 shares of common stock held of record by Jarlyn in a publicly traded company acceptable to the Company; (iv) Jarlyn shall further compensate the Company for the granting of the license and rights pertaining to the Licensed Technology Products by the payment of the sum of $200,000 U.S. Dollars as a one-time cash licensing fee; and (v) Jarlyn shall pay to the Company a royalty of ten percent (10%) of all gross revenues received by Jarlyn or its affiliates relating to sales, installation and services associated with the Licensed Technologies in the Territory. The agreement is for a period of seven (7) years.
On November 30, 2012, the Company and Jarlyn entered into a Cancellation Agreement, mutually cancelling the Licensing, Manufacturing and Distribution Agreement previously entered into on April 30, 2012. Accordingly, any and all amounts and transaction previously recorded in the Company’s financial statements have been reversed in their entirety.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 9 – Executive Compensation Agreement
On January 8, 2010, the Company entered an Executive Employment Agreement effective January 11, 2010 with its Chief Executive Officer. Terms of the agreement include an inception bonus of $150,000 and monthly payments of $15,000. The agreement expires on December 31, 2013.
On November 25, 2010, effective with the change in control, the chief executive officer resigned. The executive compensation agreement remains in effect through December 31, 2013.
During the years ended December 31, 2011 and 2010, the Company recorded executive compensation expenses to the Company's chief executive officer; $180,000 and $180,000 respectively, resulting in an accrued employee compensation liability of $488,000 at December 31, 2011.
Oh January 8, 2012, the Company and its former Chief Executive Officer entered into an agreement to terminate the executive compensation agreement and the Company issued a convertible promissory note for the accrued compensation and interest thereon totally $501,425. The note is due January 8, 2013, bears interest at 6.25% and is convertible at the lower of 1) a price of $2.00, or 2) a seventy-five percent discount to the previous day's closing bid price if the closing bid price is $3.00 per share or less.
Note 10 – Stockholders’ Equity (Deficit)
Authorized Capital
On June 15, 2010, our Board of Directors and shareholders holding a majority of the total issued and outstanding shares of common stock pursuant to written consents in lieu of a meeting approved an amendment to our Articles of Incorporation to increase the authorized capital (the “2010 Amendment”). The 2010 Amendment was filed with the Nevada Secretary of State on July 22, 2010 increasing our authorized capital from 75,000,000 shares of common stock to 350,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of preferred stock, par value $0.001.
On January 18, 2011, our Board of Directors and shareholders holding a majority of the total issued and outstanding shares of common stock pursuant to written consents in lieu of a meeting approved a further amendment to our Articles of Incorporation to increase the authorized capital (the “January 2011 Amendment”). The January 2011 Amendment was filed with the Nevada Secretary of State on January 19, 2011 increasing our authorized capital from 350,000,000 shares of common stock to 750,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of preferred stock, par value $0.001.
Effective January 19, 2011, the Board of Directors approved the designation of Series A Preferred Stock. The shares of Series A Preferred stock carry certain rights and preferences, including voting rights consisting of ten thousand votes for each one share of Series A Preferred stock. The shares of Series A preferred stock are convertible into shares of common stock on a one-to-one thousand share basis.
Effective June 18, 2012, the Board of Directors approved the designation of Series B Preferred Stock. The shares of Series B Preferred stock carry certain rights and preferences, including voting rights consisting of one hundred votes for each one share of Series B Preferred stock. The shares of Series B preferred stock are convertible into shares of common stock on a one-to-one thousand share basis.
On November 4, 2011, our Board of Directors and shareholders holding a majority of the total issued and outstanding shares of common stock pursuant to written consents in lieu of a meeting approved a further amendment to our Articles of Incorporation to increase the authorized capital (the “November 2011 Amendment”). The November 2011 Amendment was filed with the Nevada Secretary of State on November 14, 2011 increasing our authorized capital from 750,000,000 shares of common stock to 2,000,000,000 shares of common stock, par value $0.001. The authorized preferred stock of 100,000,000 shares remains unchanged.
On April 3, 2012, our Board of Directors and shareholders holding a majority of the total issued and outstanding shares of common stock pursuant to written consents in lieu of a meeting approved a further amendment to our Articles of Incorporation to increase the authorized capital (the “2012 Amendment”). The 2012 Amendment was filed with the Nevada Secretary of State on April 3, 2012 reducing our authorized capital from 2,000,000,000 shares of common stock to 300,000,000 shares of common stock, par value $0.001, and reducing the authorized capital of preferred stock from 100,000,000 to 10,000,000 shares, par value $0.001.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On August 22, 2012, our Board of Directors and shareholders holding a majority of the total issued and outstanding shares of common stock pursuant to written consents in lieu of a meeting approved a further amendment to our Articles of Incorporation to increase the authorized capital (the “2012 Amendment”). The 2012 Amendment was filed with the Nevada Secretary of State on August 22, 2012 increasing our authorized capital from 300,000,000 shares of common stock to 5,000,000,000 shares of common stock, par value $0.001. The authorized capital of preferred stock remained unchanged at 10,000,000 shares, par value $0.001.
Stock Splits
On November 2, 2011, the Company's Board of Directors declared a one for one-thousand reverse stock split of all outstanding shares of common stock. The total number of authorized common shares and the par value thereof was not changed by the split.
On January 14, 2013, the Company's Board of Directors declared a one for two-thousand reverse stock split of all outstanding shares of common stock. All common share and per common share data in these consolidated financial statements and related notes hereto have been retroactively adjusted to account for the effect of the reverse stock splits for all periods presented prior to December 31, 2012. The total number of authorized common shares and the par value thereof was not changed by the split.
Preferred Stock
Effective October 31, 2011, the Board of Directors authorized the issuance 150,000 shares of Series A Preferred Stock to Dror Svorai, the Company’s Chief Executive Officer, for the period November 24, 2010 through November 23, 2011 based upon recognition of the outstanding services, leadership and innovative business operational strategies provided by Svorai and his continuous dedication and loyalty to the Company. The preferred shares were valued at $150, or $0.001 per share.
Effective October 25, 2012, the Board of Directors authorized the issuance 1,000,000 shares of Series B Preferred Stock to the selling shareholders of CCWC in accordance with the terms of the Share Exchange Agreement between the selling shareholders and the Company. The preferred shares were valued at $400,000, or $0.40 per share.
Common Stock
The Company’s first and second stock issuances took place pursuant to the Plan of Reorganization confirmed by the Bankruptcy Court: On December 12, 2007, the Court ordered the distribution of shares in the Company to all general unsecured creditors of Arrin Systems, Inc. ("Arrin"), with these creditors to receive .0005 of a share in InfoSpi for each $2,940 of Arrin’s debt which they held. These creditors received an aggregate of .28 of a share in the Company on December 31, 2007.
The Court also ordered the distribution of shares and warrants in the Company to all administrative creditors of Arrin, with these creditors to receive one share and five warrants in InfoSpi for each $100 of Arrin's administrative debt which they held. On January 15, 2008, these creditors received an aggregate of 1common shares in the Company and 2.5 warrants.
On February 4, 2008 the Company issued a total of 2 shares of common stock to an Officer and Director in exchange for $4,000 in cash to be used as operating capital for the Company. The shares were issued at a price of $2,000 per share.
On October 28, 2009 and effective September 23, 2009, our Board of Directors pursuant to unanimous written consent authorized the issuance of an aggregate 18 shares of restricted common stock at $5,975 per share in exchange for prior services rendered including, but not limited to, introduction to potential funding arrangements and various strategic partners. Factors considered by the Board in determining the fair value of the 18 shares of common stock included:
| 1. | A lack of observable market price because of the minimal volume of shares that had been traded on any independent market since inception of the Company, |
| 2. | The large number of shares being issued compared to the number of shares of common stock outstanding prior to the stock issuance, |
| 3. | The Company’s issuance of 14 shares for 5,000 warrants converted to common stock effective September 22, 2009 at an issuance price of $2 per share, |
| 4. | The unregistered status of the shares which limits the marketability of the shares, |
| 5. | The fact that issuance of these shares does not change who is in control of the Company, and |
| 6. | The estimated value of the services provided. |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On November 13, 2009 and effective September 22, 2009, our Board of Directors pursuant to unanimous written consent acknowledged the warrants and authorized the exchange of 5,000 warrants and issuance of an aggregate 14 shares of our common stock at a per share price of $2 (par value).
On October 7, 2010, the Board of Directors approved the issuance of 7 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated July 19, 2010 in the amount of $15,400 including bonus interest. In accordance with the terms of the note, the shares were issued at $2,200 per share.
Effective on November 25, 2010, in accordance with the appointment of Dror Svorai as our sole executive officer, President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer, and our sole director, we issued an aggregate 6 shares of restricted common stock to Svorai at $10,416.67 per share. The Board of Directors evaluated certain factors regarding the issuance including, but not limited to, the following: (i) the 6 shares of common stock are restricted and cannot be resold except under the parameters of Rule 144; (ii) the opportunity for successful new business operations for us based upon the engagement of Svorai and the opportunities and business contacts provided to us through his engagement; and (iii) our inability to monetarily compensate Dror Svorai and recognition of his current and continuous dedication and long-term loyalty to us.
On December 1, 2010, we entered into an agreement (the “FIS Agreement”) with Financial Insights & Solutions Inc. (“FIS”). In accordance with the terms and provisions of the FIS Agreement: (i) FIS shall provide consulting services to us in the form of a senior administrator support for business transactions and coordination of outside legal and accounting services and other corporation matters and general business counsel relating to our overall business; (ii) we shall pay FIS an hourly rate of $175.00 for performance of such services; and (iii) issue to FIS 2 shares of our restricted common stock.
On December 10, 2010, we entered into a consulting agreement (the “CEC Consulting Agreement”) with Corporate Excellence Consulting LLC (“CEC”). In accordance with the terms and provisions of the CEC Consulting Agreement: (i) CEC shall perform such services in connection with business development and marketing and growth capital funding; and (ii) we shall issue to CEC 8 shares of our restricted common stock.
Effective February 22, 2011, we entered into a termination and settlement agreement (the “Termination Agreement”) with CEC. In accordance with the terms and provisions of the Termination Agreement: (i) CEC is to return share certificate no. 1332 evidencing the issuance of the 8 shares of common stock, which have been cancelled and returned to treasury; and (ii) we shall issue to CEC 1 share as settlement for services rendered by CEC to us.
Effective on February 14, 2011, the Board of Directors of the Company approved and authorized the execution of a definitive agreement dated February 14, 2011 (the “Agreement”) among the Company, NexPhase Lighting, Inc., a privately held Florida corporation (“NexPhase”)., and the shareholders of NexPhase (the “NexPhase Shareholders”). In accordance with the terms and provisions of the Agreement: (i) the Company acquired from the NexPhase Shareholders an aggregate 55,622,000 shares of common stock of NexPhase representing the total issued and outstanding shares of NexPhase; (ii) in exchange thereof, the Company issued to the NexPhase Shareholders an aggregate 34 shares of its restricted common stock generally in proportion to the equity holdings of the NexPhase Shareholders; (iii) NexPhase transferred and assigned to the Company all existing material contracts including those related to distribution, licensing and marketing and those dealing with the grant of rights for the use of any and all intellectual property; (iv) the Company assumed all other assets of NexPhase, including licenses, royalty rights, equipment, product designs, marketing and sale materials, logos, trademarks, copyrights and website; and (v) the Company further assumed all liabilities of NexPhase, including all trade and debt obligations.
The parties agreed to value the transaction as follows: value based on the patent appraisal and other corporate asset and on-going operations of $18,000,000; agreed discount to value based on the cost to “perfect” the patent and need for additional capital funding to maintain the on-going operations of the subsidiary $17,400,000; agreed value of the transaction: $600,000; agreed number of shares issued 34.
On February 25, 2011, the Board of Directors approved the issuance of 1 unregistered common share in accordance with the convertibility provisions contained in a promissory note dated February 10, 2010 in the amount of $1,316. In accordance with the terms of the note, the shares were issued at $1,316 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On March 10, 2011, the Board of Directors approved the issuance of 2 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 21, 2010 in the amount of $4,000. In accordance with the terms of the note, the shares were issued at $2,000 per share.
On March 15, 2011, we entered into a consulting agreement with Kodiak Capital (“Kodiak”). In accordance with the terms and provisions of the agreement: (i) Kodiak shall perform such services in connection with business development and marketing and growth capital funding; and (ii) we shall issue to Kodiak 1 shares of our restricted common stock.
On March 17, 2011, we entered into a consulting agreement with Tracy Clinton (“Clinton”). In accordance with the terms and provisions of the agreement: (i) Clinton shall perform such services in connection with business development and marketing and growth capital funding; and (ii) we shall issue to Clinton 1 shares of our restricted common stock.
On March 23, 2011, we entered into a consulting agreement with Eric Weinberger (“Weinberger”). In accordance with the terms and provisions of the agreement: (i) Weinberger shall perform such services in connection with business development and marketing and growth capital funding; and (ii) we shall issue to Weinberger 1 shares of our restricted common stock.
On March 31, 2011 the Company entered into a stock repurchase agreement with five NexPhase investors to repurchase .122 of a share of Common Stock acquired in the NexPhase acquisition. Terms include principal and premium interest of ten percent (10.0%), the note is due on June 30, 2012.
On April 5, 2011, we entered into a consulting agreement with Virmmac, LLC (“Virmmac”). In accordance with the terms and provisions of the agreement: (i) Virmmac shall perform such services in connection with business development and marketing and growth capital funding; and (ii) we shall issue to Virmmac 1 share of our restricted common stock.
On April 7, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 21, 2010 in the amount of $9,500. In accordance with the terms of the note, the shares were issued at $1,900 per share.
On April 7, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2010 in the amount of $18,000. In accordance with the terms of the note, the shares were issued at $3,600 per share.
On April 13, 2011, the Board of Directors approved the issuance of 1 unregistered common share in accordance with the convertibility provisions contained in a promissory note dated March 21, 2011 in the amount of $7,500. In accordance with the terms of the note, the shares were issued at $7,500 per share.
On May 4, 2011, the Board of Directors approved the issuance of 3 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 21, 2010 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $1,667 per share.
On May 23 2011, we entered into a consulting agreement with Charles Neustein (“Neustein”). In accordance with the terms and provisions of the agreement: (i) Neustein shall perform such services in connection with business development and marketing and growth capital funding; and (ii) we shall issue to Neustein 1 shares of our restricted common stock.
On May 23, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 21, 2010 in the amount of $10,500. In accordance with the terms of the note, the shares were issued at $2,100 per share.
On May 26, 2011, the Board of Directors approved the issuance of 2 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 21, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $5,000 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On June 7, 2011, we entered into a consulting agreement with Virmmac, LLC (“Virmmac”). In accordance with the terms and provisions of the agreement: (i) Virmmac shall perform such services in connection with business development and marketing and growth capital funding; and (ii) we shall issue to Virmmac 1 share of our restricted common stock.
On June 10, 2011, the Board of Directors approved the issuance of 6 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2010 in the amount of $11,000. In accordance with the terms of the note, the shares were issued at $1,833 per share.
On June 20, 2011, the Board of Directors approved the issuance of 6 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 21, 2010 in the amount of $12,000. In accordance with the terms of the note, the shares were issued at $2,000 per share.
On June 21, 2011, the Board of Directors approved the issuance of 2 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 21, 2011 in the amount of $20,000. In accordance with the terms of the note, the shares were issued at $10,000 per share.
On July 20, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated December 23, 2010 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $2,000 per share.
On August 23, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 21, 2010 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $2,000 per share.
On August 23, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated December 23, 2010 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $2,000 per share.
On August 23, 2011, the Board of Directors approved the issuance of 2 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated December 23, 2010 in the amount of $4,000. In accordance with the terms of the note, the shares were issued at $2,000 per share.
On August 24, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2010 in the amount of $9,000. In accordance with the terms of the note, the shares were issued at $1,800 per share.
On September 1, 2011, the Board of Directors approved the issuance of 8 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated December 23, 2010 in the amount of $15,000. In accordance with the terms of the note, the shares were issued at $1,875 per share.
On September 3, 2011, the Board of Directors approved the issuance of 6 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2010 in the amount of $11,000. In accordance with the terms of the note, the shares were issued at $1,833 per share.
On September 8, 2011, the Board of Directors approved the issuance of 7 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $26,500. In accordance with the terms of the note, the shares were issued at $3,786 per share.
On September 12, 2011, the Board of Directors approved the issuance of 8 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated December 23, 2010 in the amount of $16,500. In accordance with the terms of the note, the shares were issued at $2,063 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On September 15, 2011, the Board of Directors approved the issuance of 3 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $12,000. In accordance with the terms of the note, the shares were issued at $4,000 per share.
On September 21, 2011, the Board of Directors approved the issuance of 2 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $5,000 per share.
On September 27, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $12,000. In accordance with the terms of the note, the shares were issued at $2,400 per share.
On October 14, 2011, the Board of Directors approved the issuance of 6 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $1,667 per share.
On October 20, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $8,000. In accordance with the terms of the note, the shares were issued at $1,600 per share.
On October 28, 2011, the Board of Directors approved the issuance of 5 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $7,500. In accordance with the terms of the note, the shares were issued at $1,500 per share.
On October 28, 2011, the Board of Directors approved the issuance of 6 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $8,124. In accordance with the terms of the note, the shares were issued at $1,354 per share.
On October 28, 2011, the Board of Directors approved the issuance of 8 unregistered common shares as compensation to FIS, a consultant to the Company. The shares were valued at $1,875 per share for a total of $15,000, based on the fair value of the services received.
On October 29, 2011, the Board of Directors approved the issuance of 15 unregistered common shares as recognition of business development accomplishment by NexPhase Lighting, Inc. to John Cooper, an employee of the Company. The shares were valued at $2,000.00 per share for a total of $30,000, based on the fair value of the services received.
Effective October 31, 2011, the Board of Directors of the Company authorized the issuance of 35 shares of restricted common stock to Dror Svorai, its President/Chief Executive Officer and a member of the Board of Directors (“Svorai”) for the period November 24, 2010 through November 23, 2011 based upon recognition of the outstanding services, leadership and innovative business operational strategies provided by Svorai and his continuous dedication and loyalty to the Company. The common shares were valued at $2,000 per share for a total of $70,000, based on the fair value of the services received.
On November 4, 2011, the Board of Directors approved the issuance of 2 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 1, 2011 in the amount of $2,900. In accordance with the terms of the note, the shares were issued at $1,450 per share.
On November 8, 2011, the Board of Directors approved the issuance of 9 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 4, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $1,111 per share.
On November 11, 2011, the Board of Directors approved the issuance of 10 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $1,000 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On November 15, 2011, the Board of Directors approved the issuance of 9 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 4, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $1,111 per share.
On November 16, 2011, the Board of Directors approved the issuance of 14 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 10, 2011 in the amount of $12,500. In accordance with the terms of the note, the shares were issued at $893 per share.
On November 18, 2011, the Board of Directors approved the issuance of 10 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $9,000. In accordance with the terms of the note, the shares were issued at $900 per share.
On November 21, 2011, the Board of Directors approved the issuance of 9 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $8,000. In accordance with the terms of the note, the shares were issued at $889 per share.
On November 29, 2011, the Board of Directors approved the issuance of 9 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $5,500. In accordance with the terms of the note, the shares were issued at $611 per share.
On November 29, 2011, the Board of Directors approved the issuance of 10 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $2,000. In accordance with the terms of the note, the shares were issued at $200 per share.
On November 30, 2011, the Board of Directors approved the issuance of 18 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 10, 2011 in the amount of $12,500. In accordance with the terms of the note, the shares were issued at $694 per share.
On December 7, 2011, the Board of Directors approved the issuance of 8 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $4,000. In accordance with the terms of the note, the shares were issued at $500 per share.
On December 9, 2011, the Board of Directors approved the issuance of 8 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $4,000. In accordance with the terms of the note, the shares were issued at $500 per share.
On December 13, 2011, the Board of Directors approved the issuance of 17 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated December 5, 2011 in the amount of $6,800. In accordance with the terms of the note, the shares were issued at $400 per share.
On December 13, 2011, the Board of Directors approved the issuance of 10 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $3,000. In accordance with the terms of the note, the shares were issued at $300 per share.
On December 14, 2011, the Board of Directors approved the issuance of 8 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $3,500. In accordance with the terms of the note, the shares were issued at $438 per share.
On December 20, 2011, the Board of Directors approved the issuance of 8 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $3,500. In accordance with the terms of the note, the shares were issued at $438 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On December 23, 2011, the Board of Directors approved the issuance of 8 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $3,500. In accordance with the terms of the note, the shares were issued at $438 per share.
On December 23, 2011, the Board of Directors approved the issuance of 20 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $6,000. In accordance with the terms of the note, the shares were issued at $300 per share.
On December 29, 2011, the Board of Directors approved the issuance of 9 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $3,500. In accordance with the terms of the note, the shares were issued at $389 per share.
On January 4, 2012, the Board of Directors approved the issuance of 10 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $3,500. In accordance with the terms of the note, the shares were issued at $35 per share.
On January 4, 2012, the Board of Directors approved the issuance of 20 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $6,000. In accordance with the terms of the note, the shares were issued at $300 per share.
On January 24, 2012, the Board of Directors authorized the issuance of an aggregate 25,000 shares of its restricted common stock at a per share price of $2.00. Of the 25,000 shares of restricted common stock issued, an aggregate 15,000 shares were issued to Dror Svorai, the President/Chief Executive Officer of the Company, in recognition of his outstanding services, loyalty and dedication to the Company during the period of November 23, 2011 through January 23, 2011. Of the 25,000 shares of restricted common stock issued, an aggregate 10,000 shares were issued to Jon Cooper, the President of NexPhase Lighting Inc., in recognition of his business accomplishments to the Company during fiscal year 2011.
On January 17, 2012, the Board of Directors approved the issuance of 23 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $1,350. In accordance with the terms of the note, the shares were issued at $60 per share.
On January 25, 2012, the Board of Directors approved the issuance of 1,1791 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 23, 2011 in the amount of $23,600. In accordance with the terms of the note, the shares were issued at $20 per share.
On January 25, 2012, the Board of Directors approved the issuance of 54 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 18, 2011 in the amount of $1,078. In accordance with the terms of the note, the shares were issued at $20 per share.
On January 25, 2012, the Board of Directors approved the issuance of 17 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 21, 2011 in the amount of $343. In accordance with the terms of the note, the shares were issued at $20 per share.
On January 27, 2012, the Board of Directors approved the issuance of 107 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $12,000. In accordance with the terms of the note, the shares were issued at $112 per share.
On January 30, 2012, the Board of Directors approved the issuance of 1,350 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 29, 2010 in the amount of $27,000. In accordance with the terms of the note, the shares were issued at $20 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On January 30, 2012, the Board of Directors approved the issuance of 114 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated December 5, 2011 in the amount of $18,200. In accordance with the terms of the note, the shares were issued at $160 per share.
On February 1, 2012, the Board of Directors approved the issuance of 1,400 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 15, 2010 in the amount of $28,000. In accordance with the terms of the note, the shares were issued at $20 per share.
On February 2, 2012, the Board of Directors approved the issuance of 34 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $149 per share.
On February 15, 2012, the Board of Directors approved the issuance of 74 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $135 per share.
On February 15, 2012, the Board of Directors approved the issuance of 54 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 28, 2011 in the amount of $7,240. In accordance with the terms of the note, the shares were issued at $135 per share.
On February 17, 2012, the Board of Directors approved the issuance of 137 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $12,500. In accordance with the terms of the note, the shares were issued at $91 per share.
On February 21, 2012, the Board of Directors approved the issuance of 139 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $15,000. In accordance with the terms of the note, the shares were issued at $108 per share.
On February 21, 2012, the Board of Directors approved the issuance of 1,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 15, 2012 in the amount of $25,000. In accordance with the terms of the note, the shares were issued at $20 per share.
On February 27, 2012, the Board of Directors approved the issuance of 1,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated May 24, 2011 in the amount of $30,000. In accordance with the terms of the note, the shares were issued at $20 per share.
On March 1, 2012, the Board of Directors approved the issuance of 1,700 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2011 in the amount of $3,400. In accordance with the terms of the note, the shares were issued at $2 per share.
On March 1, 2012, the Board of Directors approved the issuance of 1,800 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2011 in the amount of $3,600. In accordance with the terms of the note, the shares were issued at $2 per share.
On March 1, 2012, the Board of Directors approved the issuance of 1,900 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2011 in the amount of $3,800. In accordance with the terms of the note, the shares were issued at $2 per share.
On March 1, 2012, the Board of Directors approved the issuance of 2,000 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2011 in the amount of $4,000. In accordance with the terms of the note, the shares were issued at $2 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On March 8, 2012, the Board of Directors approved the issuance of 217 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $12,000. In accordance with the terms of the note, the shares were issued at $55.20 per share.
On March 14, 2012, the Board of Directors approved the issuance of 217 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $46 per share.
On March 15, 2012, the Board of Directors approved the issuance of 500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated September 2, 2010 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $20 per share.
On March 20, 2012, the Board of Directors approved the issuance of 1,100 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 23, 2011 in the amount of $11,000. In accordance with the terms of the note, the shares were issued at $10 per share.
On March 20, 2012, the Board of Directors approved the issuance of 900 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2011 in the amount of $9,000. In accordance with the terms of the note, the shares were issued at $10 per share.
On March 22, 2012, the Board of Directors approved the issuance of 213 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $6,395. In accordance with the terms of the note, the shares were issued at $30 per share.
On March 27, 2012, the Board of Directors approved the issuance of 235 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $8,120. In accordance with the terms of the note, the shares were issued at $34.60 per share.
On March 29, 2012, the Board of Directors approved the issuance of 2,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 9, 2010 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $2 per share.
On March 30, 2012, the Board of Directors approved the issuance of 679 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $10,180. In accordance with the terms of the note, the shares were issued at $149 per share.
On April 9, 2012, the Board of Directors approved the issuance of 1,350 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 31, 2011 in the amount of $5,600. In accordance with the terms of the note, the shares were issued at $4.20 per share.
On April 9, 2012, the Board of Directors approved the issuance of 2,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 4, 2011 in the amount of $9,000. In accordance with the terms of the note, the shares were issued at $4 per share.
On April 17, 2012, the Board of Directors approved the issuance of 1,079 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 24, 2011 in the amount of $10,000. In accordance with the terms of the note, the shares were issued at $9.20 per share.
On April 25, 2012, the Board of Directors approved the issuance of 2,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated September 2, 2010 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $2 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On April 25, 2012, the Board of Directors approved the issuance of 2,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $2 per share.
On April 25, 2012, the Board of Directors approved the issuance of 2,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2011 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $2 per share.
On April 26, 2012, the Board of Directors approved the issuance of 3,000 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $6,000. In accordance with the terms of the note, the shares were issued at $2 per share.
On May 2, 2012, the Board of Directors approved the issuance of 799 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 24, 2011 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $9.20 per share.
On May 8, 2012, the Board of Directors approved the issuance of 2,750 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2011 in the amount of $5,500. In accordance with the terms of the note, the shares were issued at $2 per share.
On May 23, 2012, the Board of Directors approved the issuance of 2,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated September 2, 2010 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $2 per share.
On May 29, 2012, the Board of Directors approved the issuance of 1,817 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 26, 2011 in the amount of $12,000. In accordance with the terms of the note, the shares were issued at $7.80 per share.
On May 29, 2012, the Board of Directors approved the issuance of 2,800 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $5,600. In accordance with the terms of the note, the shares were issued at $2 per share.
On May 29, 2012, the Board of Directors approved the issuance of 3,000 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 31, 2011 in the amount of $6,000. In accordance with the terms of the note, the shares were issued at $2 per share.
On July 1, 2012, the Board of Directors approved the issuance of 4,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 1, 2011 in the amount of $8,500. In accordance with the terms of the note, the shares were issued at $2 per share.
On July 2, 2012, the Board of Directors approved the issuance of 2,900 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 1, 2011 in the amount of $5,800. In accordance with the terms of the note, the shares were issued at $2 per share.
On July 9, 2012, the Board of Directors approved the issuance of 2,750 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 8, 2010 in the amount of $5,500. In accordance with the terms of the note, the shares were issued at $2 per share.
On July 12, 2012, the Board of Directors approved the issuance of 4,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 8, 2010 in the amount of $8,500. In accordance with the terms of the note, the shares were issued at $2 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On July 13, 2012, the Board of Directors approved the issuance of 4,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 20, 2011 in the amount of $8,500. In accordance with the terms of the note, the shares were issued at $2 per share.
On July 16, 2012, the Board of Directors approved the issuance of 4,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 1, 2011 in the amount of $8,500. In accordance with the terms of the note, the shares were issued at $2 per share.
On July 26, 2012, the Board of Directors approved the issuance of 5,115 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated November 30, 2010 in the amount of $10,230. In accordance with the terms of the note, the shares were issued at $2 per share.
On July 31, 2012, the Board of Directors approved the issuance of 5,000 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated July 12, 2012 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $1 per share.
On August 13, 2012, the Board of Directors approved the issuance of 5,556 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated July 12, 2012 in the amount of $5,000. In accordance with the terms of the note, the shares were issued at $0.80 per share.
On August 21, 2012, the Board of Directors approved the issuance of 5,288 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $5,500. In accordance with the terms of the note, the shares were issued at $1.04 per share.
On August 22, 2012, the Board of Directors approved the issuance of 5,600 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated July 12, 2012 in the amount of $4,480. In accordance with the terms of the note, the shares were issued at $0.80 per share.
On August 31, 2012, the Board of Directors authorized the issuance of 25,000 shares of its restricted common stock at a per share price of $2 to Jorge Schcolnik as partial compensation in connection with his appointment as the President and a Director of the Company. The shares were valued at $1, the market value of the shares on the date of issuance, for a total of $25,000.
On September 4, 2012, the Board of Directors approved the issuance of 7,070 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated July 12, 2012 in the amount of $3,535. In accordance with the terms of the note, the shares were issued at $0.60 per share.
On September 11, 2012, the Board of Directors approved the issuance of 75,000 unregistered common shares to the shareholders of CCWC as an initial deposit relating to the acquisition of CCWC. The shares were valued at $1.40, the market value per share on the date of issuance, for a total of $105,000.
On September 13, 2012, the Board of Directors approved the issuance of 5,357 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $3,000. In accordance with the terms of the note, the shares were issued at $0.60 per share.
On September 13, 2012, the Board of Directors approved the issuance of 3,973 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated August 15, 2012 in the amount of $2,225. In accordance with the terms of the note, the shares were issued at $0.60 per share.
On September 13, 2012, the Board of Directors approved the issuance of 11,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated July 12, 2012 in the amount of $6,900. In accordance with the terms of the note, the shares were issued at $0.60 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On September 14, 2012, the Board of Directors approved the issuance of 11,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 23, 2011 in the amount of $3,067. In accordance with the terms of the note, the shares were issued at $0.27 per share.
On September 17, 2012, the Board of Directors approved the issuance of 12,000 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 11, 2011 in the amount of $3,200. In accordance with the terms of the note, the shares were issued at $0.27 per share.
On September 18, 2012, the Board of Directors approved the issuance of 12,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 02, 2011 in the amount of $3,542. In accordance with the terms of the note, the shares were issued at $0.28 per share.
On September 19, 2012, the Board of Directors approved the issuance of 12,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated June 23, 2011 in the amount of $3,750. In accordance with the terms of the note, the shares were issued at $0.30 per share.
On September 20, 2012, the Board of Directors approved the issuance of 11,429 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $6,400. In accordance with the terms of the note, the shares were issued at $0.56 per share.
On September 27, 2012, the Board of Directors approved the issuance of 11,429 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $6,400. In accordance with the terms of the note, the shares were issued at $0.56 per share.
On October 3, 2012, the Board of Directors approved the issuance of 11,429 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $6,400. In accordance with the terms of the note, the shares were issued at $0.56 per share.
On October 3, 2012, the Board of Directors approved the issuance of 16,748 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated May 16, 2011 in the amount of $6,978. In accordance with the terms of the note, the shares were issued at $0.42 per share.
On October 3, 2012, the Board of Directors approved the issuance of 11,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated July 12, 2012 in the amount of $6,900. In accordance with the terms of the note, the shares were issued at $0.60 per share.
On October 4, 2012, the Board of Directors approved the issuance of 17,500 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 2, 2012 in the amount of $7,292. In accordance with the terms of the note, the shares were issued at $0.42 per share.
On October 5, 2012, the Board of Directors approved the issuance of 18,000 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated January 20, 2012 in the amount of $12,900. In accordance with the terms of the note, the shares were issued at $0.72 per share.
On October 10, 2012, the Board of Directors approved the issuance of 19,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated January 10, 2011 in the amount of $13,796. In accordance with the terms of the note, the shares were issued at $0.72 per share.
On October 18, 2012, the Board of Directors approved the issuance of 10,893 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $6,100. In accordance with the terms of the note, the shares were issued at $0.56 per share.
On October 18, 2012, the Board of Directors approved the issuance of 21,937 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated May 16, 2011 in the amount of $5,850. In accordance with the terms of the note, the shares were issued at $0.27 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 10 – Stockholders’ Equity (Deficit) (Continued)
On October 5, 2012, the Board of Directors approved the issuance of 18,000 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated January 20, 2012 in the amount of $12,900. In accordance with the terms of the note, the shares were issued at $0.72 per share.
On October 10, 2012, the Board of Directors approved the issuance of 19,250 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated January 10, 2011 in the amount of $13,796. In accordance with the terms of the note, the shares were issued at $0.72 per share.
On October 18, 2012, the Board of Directors approved the issuance of 10,893 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $6,100. In accordance with the terms of the note, the shares were issued at $0.56 per share.
On October 18, 2012, the Board of Directors approved the issuance of 21,937 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated May 16, 2011 in the amount of $5,850. In accordance with the terms of the note, the shares were issued at $0.27 per share.
On November 5, 2012, the Board of Directors approved the issuance of 23,750 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 18, 2012 in the amount of $3,563. In accordance with the terms of the note, the shares were issued at $0.15 per share.
On November 8, 2012, the Board of Directors approved the issuance of 11,471 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 3, 2012 in the amount of $3,900. In accordance with the terms of the note, the shares were issued at $0.34 per share.
On November 9, 2012, the Board of Directors approved the issuance of 27,375 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated May 16, 2011 in the amount of $3,650. In accordance with the terms of the note, the shares were issued at $0.13 per share.
On November 12 2012, the Board of Directors approved the issuance of 28,725 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 2, 2012 in the amount of $3,351. In accordance with the terms of the note, the shares were issued at $0.12 per share.
On November 14 2012, the Board of Directors approved the issuance of 30,125 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated March 2, 2011 in the amount of $3,013. In accordance with the terms of the note, the shares were issued at $0.10 per share.
On November 20, 2012, the Board of Directors approved the issuance of 31,625 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated January 10, 2011 in the amount of $2,109. In accordance with the terms of the note, the shares were issued at $0.07 per share.
On November 23 2012, the Board of Directors approved the issuance of 31,739 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 18, 2012 in the amount of $1,587. In accordance with the terms of the note, the shares were issued at $0.05 per share.
On December 3 2012, the Board of Directors approved the issuance of 30,125 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated April 2, 2012 in the amount of $1,506. In accordance with the terms of the note, the shares were issued at $0.05 per share.
On December 17, 2012, the Board of Directors approved the issuance of 33,319 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated October 18, 2012 in the amount of $1,666. In accordance with the terms of the note, the shares were issued at $0.05 per share.
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 11 – Related Party Transactions
The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts.
During the year ended December 31, 2012, the Company advanced $8,960 to its President and Director. The advance has no repayment date and does not bear interest.
See Note 4 – Notes Payable – Non-affiliated Related Parties and Note 10 – Stockholders’ Equity (Deficit) for additional related party disclosures.
Note 12 – Loss on Settlement of Debt
During the year ended December 31, 2012, the Company issued 17,265 shares of common stock to related parties in conversion of $68,730 of notes payable in accordance with the terms of the notes. The fair value of the common stock issued was $780,432 at the date of the conversions, resulting in a loss on the settlements of $711,702.
Note 13 – Income Taxes
No provision for income tax was made for the period from December 31, 2007 (Inception) to December 31, 2012 as the Company had cumulative operating losses. For the years ended December 31, 2012 and 2011, the Company incurred net losses for tax purposes of approximately $2,163,800 and $1,274,200, respectively.
The income tax expense (benefit) differs from the amount computed by applying the United States Statutory corporate income tax rate as follows:
| | | Year Ended December 31, | |
| | | 2012 | | | 2011 | |
| | | | | | | |
| Expected federal income tax at 34% statutory rate | | | -34.0 | % | | | -34.0 | % |
| State income taxes | | | -3.6 | % | | | -3.6 | % |
| Timing differences | | | 0.0 | % | | | 0.0 | % |
| Change in valuation allowance | | | 37.6 | % | | | 37.6 | % |
| | | | | | | | | |
| Actual tax expense | | | 0.0 | % | | | 0.0 | % |
The Company provides for income taxes using the liability method in accordance with FASB ASC Topic 740 “Income Taxes”. Deferred income taxes arise from the difference in the recognition of income and expenses for tax purposes. Deferred tax assets and liabilities are comprised of the following at December 31, 2012 and 2011:
| | | December 31, | |
| | | 2012 | | | 2011 | |
| Deferred income tax assets: | | | | | | |
| | | | | | | |
| Net operating loss carry forwards | | $ | 1,585,100 | | | $ | 771,500 | |
| Valuation allowance | | | (1,585,100 | ) | | | (771,500 | ) |
| | | | | | | | | |
| Net deferred income tax assets | | $ | - | | | $ | - | |
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely than not to be realized from future operations. The Company has established a full valuation allowance on its net deferred tax assets because of a lack of sufficient positive evidence to support its realization. The valuation allowance increased by $813,600 and $479,100 for the years ended December 30, 2012 and 2011, respectively.
No provision for income taxes has been provided in these financial statements due to the net loss for the years ended December 31, 2012 and 2011. At December 31, 2012, the Company has net operating loss carry forwards of approximately $4,215,700, which expire commencing 2027. The potential tax benefit of these losses may be limited due to certain change in ownership provisions under Section 382 of the Internal Revenue Code (“IRS”) and similar state provisions.
IRS Section 382 places limitations (the “Section 382 Limitation”) on the amount of taxable income which can be offset by net operating loss carry forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Generally, after a change in control, a loss corporation cannot deduct operating loss carry forwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the net operating loss and tax credit carry forwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has not concluded its analysis of Section 382 through December 31, 2012, but believes the provisions will not limit the availability of losses to offset future income.
As of December 31, 2012, tax years 2011, 2010, 2009 and 2008 remain open for IRS audit.
Note 14 – Commitments and Contingencies
As of the date of this Report, we have entered into the following material commitments:
On November 8, 2012, we entered into a one year office building lease for our corporate headquarters located in Hollywood, Florida. The lease terms include: (i) monthly rent commencing on November 15, 2012 in the amount of $475 including sales tax; and (ii) triple-net provisions. Future annual lease payments over the term of the lease are as follows:
Note 15 – Subsequent Events
On January 22, 2013, the Company entered into a convertible promissory note with an investment firm in the amount of $9,000. Terms include simple interest at ten percent (10%), the note is due on January 22, 2014 and is convertible at the option of the holder at a price that is the lower of (i) $2.00 or (ii) a seventy-five percent (75%) to the previous day’s closing bid price if the closing market price is $3.00 per share or less.
On February 8, 2013, the Board of Directors approved the issuance of 69,971 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated February 7, 2012 in the amount of $1,746. In accordance with the terms of the note, the shares were issued at $0.025 per share.
On February 20, 2013, the Company entered into a convertible promissory note with an investment firm in the amount of $4,000. Terms include simple interest at ten percent (10%), the note is due on February 20, 2014 and is convertible at the option of the holder at a price that is the lower of (i) $2.00 or (ii) a seventy-five percent (75%) to the previous day’s closing bid price if the closing market price is $3.00 per share or less.
On March 6, 2013, the Company entered into a convertible promissory note with an investment firm in the amount of $6,500. Terms include simple interest at ten percent (10%), the note is due on March 6, 2014 and is convertible at the option of the holder at a price that is the lower of (i) $2.00 or (ii) a seventy-five percent (75%) to the previous day’s closing bid price if the closing market price is $3.00 per share or less.
On March 14, 2013, the Board of Directors approved the issuance of 38,484 unregistered common shares in accordance with the convertibility provisions contained in a promissory note dated May 16, 2011 in the amount of $1,828. In accordance with the terms of the note, the shares were issued at $0.0475 per share
INELCO CORPORATION
f/k/a Onteco Corporation
(An Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
Note 15 – Subsequent Events (Continued)
On March 19 2013, the Company entered into a convertible promissory note with an investment firm in the amount of $7,900. Terms include simple interest at ten percent (10%), the note is due on March 19, 2014 and is convertible at the option of the holder at a price that is the lower of (i) $2.00 or (ii) a seventy-five percent (75%) to the previous day’s closing bid price if the closing market price is $3.00 per share or less.
The Company has evaluated subsequent events through the date the financial statements were issued and filed with Securities and Exchange Commission. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements.
