| Organization, Operations and Summary of Significant Accounting Policies | SAFE LANES SYSTEMS,
INC. (the “Company”), was incorporated in the State of Colorado on September 10, 2013. The Company was formed to engage
in the sale of traffic safety equipment. The Company may also engage in any other business permitted by law, as designated by
the Board of Directors of the Company. During the second quarter of 2014 the Company secured a perpetual license to all of the
intellectual property of Superior Traffic Control in exchange for the issuance of nonvoting convertible stock in the company.
In the second quarter of 2016 the Company determined that license and related intellectual property should be written off as worthless
due to problems with the engineering provided and the inability to obtain meaningful sales. The Company was redomiciled to become
a Delaware Holding Corporation in September of 2016 and is currently pursuing new business opportunities. Basis of Presentation
- The accompanying financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the
United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission
for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of the Company’s
management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s
results of operations, financial position and cash flows. All such adjustments are of a normal, recurring nature. Reclassifications
- Certain amounts in the prior period’s financial statements have been reclassified to conform to the current quarter’s
presentation and to correct prior period errors. Cash and Cash
Equivalents Cash Flows -
During the period ending September 30, 2016, the Company primarily utilized cash proceeds from an unsecured short term loan and
proceeds from a convertible note payable to fund its operations. Cash flows used
by operations for the period ended September 30, 2016 and 2015 were $34,911 and $186,689 respectively. The Company considers
all highly liquid investments with an original maturity of three months or less as cash equivalents. As of September 30, 2016,
the Company had cash and cash equivalents of $7,871 as compared to cash and cash equivalents of $15,282 as of December 31, 2015. Impairment
of Long-life Assets In accordance
with ASC Topic 360, the Company reviews its long-lived assets, including property, plant and equipment, for impairment whenever
events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total
of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the
difference between the fair value and carrying amount of the asset. No impairment was deemed necessary as of September 30, 2016
and December 31, 2015. Intangible
Assets, Patents During the second
quarter of 2014 fiscal year the Company acquired the exclusive license rights and intellectual property for the patent of the
Kone General device which expires July 2022. As payment for the license rights the company agreed to issue 22,768,273 shares of
class B preferred, nonvoting shares to the shareholders of the original license holders “Superior Traffic Controls”.
The Company accounts for its patent sub-license in accordance with ASC 350-30-30 “Intangibles – goodwill and other”
and 805-50-30 and 805-50-15 related to “Business Combinations” by recognizing the fair value to the amount paid by
the company for the asset at the time of purchase. Since Safe Lanes Systems has a limited operating history management determined
to use par value as the value recognized for the transaction. Since the patent has a predetermined, finite life span, the cost
of the asset will be recognized on a straight line basis over the remaining life of the patent. At the conclusion
of each reporting period the patent is evaluated for impairment. As of September 30, 2016 due to the lack of sales and determining
that incomplete engineering plans were provided the Company determined it should impair the entire remaining value of the intangible
asset and at that time the remaining value was of $1,683 was written off to impairment expense.
September 30, December 31,
Patents $ 2,277 $ 2,277
Less: Accumulated Amortization (595 ) (446 )
Impairment (1,682 ) –
$ – $ 1,831 Amortization expense for the NINE-month
period ended September 30, 2016 and 2015 was $149 and $29 respectively. Accounts payable
and accrued liabilities Accounts payable
consisted of $42,092 at September 30, 2016 and $1,080 at December 31, 2015 respectively. Accrued expense consisted of $11,308
at September 30, 2016 and $0 at December 31, 2015 respectively. Accrued interest consisted of $27,404 at September 30, 2016 and
$14,942 at December 31, 2015 respectively. Unsecured,
short-term notes payable The company obtained
an unsecured, short-term note of $250,000 at 4% from the original holder of the license to the Kone-General patent in the second
quarter of 2014. As of September 30, 2016 the Company had received funding of $250,000 on the note payable and an additional $165,000
under the same terms with a verbal agreement in place and had recognized $27,404 in accrued interest expense. Convertible,
long-term notes payable The company obtained
five unsecured, long-term notes totaling $7,500 in the third quarter of 2016. The notes do not bear interest until December 31,
2016, after which they will bear interest at 12% per year. The notes are due and payable December 31, 2017 but can be converted
into the company’s common stock at the holders request at any time before they are due. Each note will convert into approximately
4% of the companies then outstanding common stock. Stockholders’
Equity At March 31,
2016 and December 31, 2015, the Company was authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share.
In addition, 10,000,000 shares of Class A preferred super majority voting stock, $.0001 par value and 50,000,000 shares of Class
B preferred, $.0001 par value nonvoting convertible shares were authorized. All common stock shares have full dividend rights.
However, it is not anticipated that the Company will be declaring distributions in the foreseeable future. Upon formation,
the Company sold the founder 2,000,000 shares of $0.0001 par value common stock for $1,000 cash. Also upon formation, the Company
paid the founder stock based compensation for services rendered of 10,000,000 shares of $0.0001 par value class A preferred super
majority voting stock. These preferred shares have a stated value of par value of $0.0001. The holder of the Class Stock shall
have the right to vote on any matter with holders of Common Stock and may vote as required on any action, which Colorado law provides
may or must be approved by vote or consent of the holders of the specific series of voting preferred shares and the holders of
common shares. The Record Holders of the Class B Preferred Shares shall have that number of votes equal to that number of common
shares which is not less than 60% of the vote required to approve any action, which Colorado law provides may or must be approved
by vote or consent of the holders of other series of voting preferred shares and the holders of common shares or the holders of
other securities entitled to vote, if any Upon execution
of a patent sublicense agreement the Company issued 22,768,273 shares of its class B preferred convertible stock to a trustee
on behalf of shareholders of the original license agreement. These shares were converted into regular common stock upon the company
registering the underlying shares with the SEC and distribution to stockholders which occurred in the 2015 fiscal year. In the last quarter
of 2015 the Company issued 350,000 shares of stock to two contractors for past work. As the Company has issued no stock for cash
the Company valued the compensation based upon par value of $.0001 per share resulting in a compensation expense of $35 per share
in the period the stock was issued. Professional
and contractor expenses Professional and contractor expenses
are comprised of the following in the nine-month period ended September 30, 2016:
September 30, September 30,
Contract Management Fees $ 48,600 $ 48,600
Other Professional Services 35,110 123,886
$ 83,710 $ 172,486 Use of Estimates The preparation
of financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Stock Based
Compensation The Company accounts
for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation
expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards
using the Black-Scholes option pricing model. Stock compensation
expense for stock options is recognized over the vesting period of the award or expensed immediately under ASC 718 and EITF 96-18
when options are given for previous service without further recourse. The Company issued stock options to contractors that had
been providing services to the Company upon their termination of services. Under ASC 718 and EITF 96-18 these options were recognized
as expense in the period issued because they were given as a form of compensation for services already rendered with no recourse. The following
table summarizes share-based compensation expense recorded in selling, general and administrative expenses during each period
presented:
September 30, December 31,
Stock award – 350,000
Total Share-Based Compensation Expense $ – $ 35 In the last quarter
of 2015 the Company issued 350,000 shares of stock to two contractors for past work. As the Company has issued no stock for cash
the Company valued the compensation based upon par value of $.001 per share resulting in a compensation expense of $35 per share
in the period the stock was issued. Stock option activity was as follows:
Number of Weighted Average
Balance at December 31, 2014 1,000,000 0.20
Granted 0 –
Exercised 0 –
Forfeited or expired 0 –
Balance at December 31, 2015 1,000,000 0.20
Granted 0 –
Exercised 0 –
Forfeited or expired 0 –
Balance at September 30, 2016 1,000,000 0.20 The following
table presents information regarding options outstanding and exercisable as of September 30, 2016:
Weighted average contractual remaining term - options outstanding 0.0 years
Aggregate intrinsic value - options outstanding –
Warrants exercisable 1,000,000
Weighted average exercise price - options exercisable $ 0.20 The fair value
of each option granted is estimated on the date of the grant using the Black-Scholes option pricing model with weighted average
assumptions for grants as follows:
Risk-free interest rate 0.01%
Expected life of options 4-5 years
Annualized volatility 144.00%
Dividend Income 0.00% Income Tax The Company accounts
for income taxes under Statement of Financial Accounting Standards No. 109 (“SFAS 109”). Under SFAS 109
deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences
and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment. Fiscal year The Company employs a fiscal year
ending December 31. Net Income (Loss) per share The net income
(loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding.
Warrants, stock options, and common stock issuable upon the conversion of the Company’s preferred stock (if any), are not
included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share. Revenue Recognition The Company is currently in the Development
stage and has very limited revenues. Revenue will be recognized on an accrual basis as earned once operations commence. Financial Instruments The carrying
value of the Company’s financial instruments, including cash and cash equivalents, as reported in the accompanying balance
sheet, are stated at fair value. Going Concern and Managements’
Plans As shown in the
accompanying financial statements for the period ended September 30, 2016, the Company has a limited operating history. The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern, however, the above conditions
raise substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustment
to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of
liabilities that may result should the Company be unable to continue as a going concern. The Company has
a plan in place to remove this threat through the issuance of notes payable and common stocks offerings. If the Offering raises
at least $250,000, then the Company’s estimated expenses related to the Offering and the expenses related to initial projected
operating costs of the Company will be covered. However, the Company will need to generate more than the expenses of the Offering
in order to have enough capital to execute its business plan. Recent Accounting Pronouncements The Company has
reviewed all recently issued but not yet effective accounting pronouncements and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on its financial condition or results of operations. Related Party Transactions The Company pays
its Chief Executive Officer, Paul Dickman through Mr. Dickman’s consulting company, Breakwater Finance, LLC. For the nine-month
period ended September 30, 2016 and June 30, 2015, management fees were $48,600 and $48,600 respectively. Subsequent Events The Company
evaluates events and transactions after the balance sheet date but before the financial statements are issued. As of the date
of this filing there were no events that materially impacted the company. Restatement The financial statements previous
filed for the period ended September 30, 2016, have been restated. The board rescinded the issuance of 14,881,727 shares to the
Company CEO resulting in the financial statement changes presented below.
Balance Sheet
September 30, 2016
Previously
Reported Adjustment Restated
Common stock, $0.0001 par value $ 4,000 $ (1,488 ) $ 2,512
Accumulated earnings $ (501,234 ) $ 1,488 $ (499,746 )
Income Statement
For the Three Months Ended
General & Administrative Expenses $ 4,356 $ (1,488 ) $ 2,868
Total Expense $ 24,756 $ (1,488 ) $ 23,268
Net loss from Operations $ (24,756 ) $ 1,488 $ (23,268 )
Net loss $ (28,940 ) $ 1,488 $ (27,452 )
Weighted average number of common shares outstanding 39,998,273 (15,230,000 ) 24,768,273
Income Statement
For the Nine Months Ended
General & Administrative Expenses $ 5,157 $ (1,488 ) $ 3,669
Total Expense $ 90,550 $ (1,488 ) $ 89,062
Net loss from Operations $ (90,550 ) $ 1,488 $ (89,062 )
Net loss $ (103,012 ) $ 1,488 $ (101,524 )
Weighted average number of common shares outstanding 39,998,273 (15,230,000 ) 24,768,273
Statement of Cash Flow
For the Nine Months Ended September
30, 2016
Net Income $ (103,012 ) $ 1,488 $ (101,524 )
Stock based compensation $ 1,488 $ (1,488 ) $ – |
