DNA TESTING CENTERS, CORP. |
(Exact name of registrant as specified in its charter) |
Florida | applied for | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
2378 Parkhaven Blvd., Oakville, Ontario | L6H 0E7 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Each Exchange On Which Registered | |
N/A | N/A |
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
(Do not check if a smaller reporting company) | Emerging growth company | ☒ |
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| · | 7612176 Canada Inc., a Canadian corporation, controlled by Dr. Barjinder Sohal, our chief executive officer, president and director; |
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| · | 7322640 Canada Inc. a Canadian corporation controlled by Dr. Nitan Arora, our vice president and director; and |
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| · | 7322747 Canada Inc. a Canadian corporation controlled by Navjot Nanda our secretary, treasurer and director, |
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Type of Test | Price Per Kit | Accuracy of Test | ||||||
Prenatal Gender Test | $ | 149.00 | 98 | % | ||||
Paternity Tests - Informational | $ | 94.00 | 99.8 | % | ||||
Paternity Tests - Legal | $ | 150.00 | 99.8 | % | ||||
Kinship Test | $ | 155.00 | 99.8 | % | ||||
Ancestry DNA Testing | $ | 250.00 | 99.8 | % | ||||
Genetic Predisposition (Carrier, Drug, Health) | $ | 249.00 | 99.8 | % | ||||
Genetic Pred + Diet & Fitness as Bundle Test | $ | 349.00 | 99.8 | % | ||||
Carrier Testing | $ | 300.00 | 99.8 | % | ||||
Drug Response Testing | $ | 300.00 | 99.8 | % | ||||
Health Condition Testing | $ | 300.00 | 99.8 | % | ||||
Diet & Fitness Testing | $ | 300.00 | 99.8 | % |
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| · | In April of 2015: |
o | we began to create email materials for our marketing campaign for physicians, medical practitioners and fitness centers in Canada; | ||
o | we began social media campaigns on Twitter, Facebook, and other websites to market our products; |
| · | In July of 2017: |
o | we continue to use Google AdWords and search engine optimization campaigns targeting consumers in Canada; | ||
o | we started advertising our products in medical journals; | ||
o | we are planning to implement a new search engine optimization (SEO) plan |
| · | In July of 2017, we continue to offer incentives for medical practitioners, medical facilities and fitness centers that purchase our products on a repeat basis; and |
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| · | We are actively looking for opportunities to offer event promotions to medical offices, clinics and fitness centers in Canada to demonstrate our products. |
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| · | 3 are our officers and/or directors, of which 2 are doctors |
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| · | 1 clerical employee who distributes tests, and handles calls, and emails |
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| · | 1 administrative employee who handles office management and oversees development of content for our website |
| · | develop a user friendly appealing website to sell our DNA testing kits directly to consumers and medical practitioners in Canada; |
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| · | develop our slogans ”DNA For Family” and ”DNA For Health”; |
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| · | attract medical practitioners and their customers through the existing relationships of our chief executive officer, president and director, Dr. Barjinder Sohal, a licensed physician, and Dr. Nitan Arora, our vice president and director, a chiropractic physician; and |
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| · | implement our marketing plan that includes incentives for medical practitioners, medical facilities and fitness centers that purchase our products on a repeat basis. |
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We purchase our test components from Pro Printing and Mailing Services Inc. and finished test kits previously from Pathway Genomics Lab, both of which sell products to other companies. As such, third parties can purchase the same products as us which puts us at a competitive disadvantage and may have a negative impact on our revenues.
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Year Ended | ||||||||
December 31, | ||||||||
2018 $ | 2017 $ | |||||||
Revenues | 41,973 | 49,816 | ||||||
Direct costs | 21,731 | 28,798 | ||||||
Operating expenses | 79,007 | 73,569 | ||||||
Net loss | (58,765 | ) | (52,551 | ) |
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Year Ended | ||||||||
December 31, | ||||||||
2018 $ | 2017 $ | |||||||
Advertising and promotion | 5,087 | 5,131 | ||||||
Depreciation | 480 | 599 | ||||||
Consulting fees | 17,932 | 3,039 | ||||||
Foreign exchange loss (gain) | 1,069 | (1,391 | ) | |||||
Office and miscellaneous | 12,090 | 13,277 | ||||||
Professional fees | 20,507 | 28,201 | ||||||
Rent | 3,617 | 9,809 | ||||||
Salaries | 18,225 | 14,904 | ||||||
Total Expenses | 79,007 | $ | 73,569 |
At | At | |||||||
December 31, | December 31, | |||||||
2018 $ | 2017 $ | |||||||
Current Assets | 47,512 | 83,100 | ||||||
Current Liabilities | 189,305 | 161,482 | ||||||
Working Capital (Deficit) | (141,793 | ) | (78,382 | ) |
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Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Net Cash Provided by (Used in) Operating Activities | (43,584 | ) | (34,281 | ) | ||||
Net Cash Provided by (Used in) Investing Activities | - | - | ||||||
Net Cash Provided by (Used in) Financing Activities | 10,346 | 118,933 | ||||||
Effect of Foreign Exchange Rate Changes on Cash | (2,722 | ) | (5,330 | ) | ||||
Increase (Decrease) in Cash During the Year | (35,960 | ) | 79,322 |
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Amount | ||||
Expense | ($) | |||
Consulting Fees for Research and Development | 10,000 | |||
Fixed asset purchases | 5,000 | |||
Professional fees | 20,000 | |||
Rent | 12,000 | |||
Sales, Travel and Marketing | 20,000 | |||
Other general administrative expenses | 30,000 | |||
Total | 97,000 |
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DNA TESTING CENTERS, CORP. Consolidated Financial Statements Years Ended December 31, 2018 and 2017 (Expressed in U.S. dollars) |
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December 31, 2018 $ | December 31, 2017 $ | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | 47,140 | 83,100 | ||||||
Accounts receivable | 256 | – | ||||||
Prepaid expenses | 116 | – | ||||||
Total current assets | 47,512 | 83,100 | ||||||
Property and equipment (Note 3) | 2,733 | 3,476 | ||||||
Total assets | 50,245 | 86,576 | ||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 39,675 | 32,843 | ||||||
Due to related parties (Note 4) | 149,630 | 128,639 | ||||||
Total liabilities | 189,305 | 161,482 | ||||||
Nature of operations and continuance of business (Note 1) | ||||||||
Stockholder’s deficit | ||||||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, nil shares issued and outstanding | – | – | ||||||
Common stock, $0.0001 par value, 490,000,000 shares authorized, 21,496,404 shares issued and outstanding | 2,149 | 2,149 | ||||||
Share subscriptions received (Note 5) | 100,000 | 100,000 | ||||||
Additional paid-in capital | 206,318 | 221,318 | ||||||
Accumulated other comprehensive loss | (12,929 | ) | (22,540 | ) | ||||
Deficit | (434,598 | ) | (375,833 | ) | ||||
Total stockholder’s deficit | (139,060 | ) | (74,906 | ) | ||||
Total liabilities and stockholder’s deficit | 50,245 | 86,576 |
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Year ended December 31, 2018 $ | Year ended December 31, 2017 $ | |||||||
Revenue | 41,973 | 49,816 | ||||||
Direct costs | 21,731 | 28,798 | ||||||
Gross profit | 20,242 | 21,018 | ||||||
Expenses | ||||||||
Advertising and promotion | 5,087 | 5,131 | ||||||
Depreciation | 480 | 599 | ||||||
Consulting fees | 17,932 | 3,039 | ||||||
Foreign exchange loss (gain) | 1,069 | (1,391 | ) | |||||
Office and miscellaneous | 12,090 | 13,277 | ||||||
Professional fees | 20,507 | 28,201 | ||||||
Rent (Note 4) | 3,617 | 9,809 | ||||||
Salaries | 18,225 | 14,904 | ||||||
Total expenses | 79,007 | 73,569 | ||||||
Net loss for the year | (58,765 | ) | (52,551 | ) | ||||
Other comprehensive income (loss) | ||||||||
Foreign currency translation gain (loss) | 9,611 | (12,822 | ) | |||||
Comprehensive loss for the year | (49,154 | ) | (65,373 | ) | ||||
Loss per share, basic and diluted | – | – | ||||||
Weighted average shares outstanding | 21,496,404 | 21,496,404 |
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Common stock | Share subscriptions | Additional paid-in | Accumulated other comprehensive | Total stockholders’ | ||||||||||||||||||||||||
Number of shares | Amount $ | received $ | capital $ | loss $ | Deficit $ | deficit $ | ||||||||||||||||||||||
Balance, December 31, 2016 | 21,496,404 | 2,149 | – | 221,318 | (9,718 | ) | (323,282 | ) | (109,533 | ) | ||||||||||||||||||
Share subscriptions received | – | – | 100,000 | – | – | – | 100,000 | |||||||||||||||||||||
Foreign currency translation adjustment | – | – | – | – | (12,822 | ) | – | (12,822 | ) | |||||||||||||||||||
Net loss for the year | – | – | – | – | – | (52,551 | ) | (52,551 | ) | |||||||||||||||||||
Balance, December 31, 2017 | 21,496,404 | 2,149 | 100,000 | 221,318 | (22,540 | ) | (375,833 | ) | (74,906 | ) | ||||||||||||||||||
Return of capital | – | – | – | (15,000 | ) | – | – | (15,000 | ) | |||||||||||||||||||
Foreign currency translation adjustment | – | – | – | – | 9,611 | – | 9,611 | |||||||||||||||||||||
Net loss for the year | – | – | – | – | – | (58,765 | ) | (58,765 | ) | |||||||||||||||||||
Balance, December 31, 2018 | 21,496,404 | 2,149 | 100,000 | 206,318 | (12,929 | ) | (434,598 | ) | (139,060 | ) |
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Year ended December 31, 2018 $ | Year ended December 31, 2017 $ | |||||||
Operating activities | ||||||||
Net loss | (58,765 | ) | (52,551 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 480 | 599 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (256 | ) | 2,410 | |||||
Prepaid expenses | (116 | ) | – | |||||
Accounts payable and accrued liabilities | 6,832 | 2,168 | ||||||
Due to related parties | 8,241 | 13,093 | ||||||
Net cash used in operating activities | (43,584 | ) | (34,281 | ) | ||||
Financing activities | ||||||||
Proceeds from related parties | 25,346 | 18,933 | ||||||
Return of capital | (15,000 | ) | – | |||||
Proceeds from share subscriptions received | – | 100,000 | ||||||
Net cash provided by financing activities | 10,346 | 118,933 | ||||||
Effect of foreign exchange rate changes on cash | (2,722 | ) | (5,330 | ) | ||||
Change in cash | (35,960 | ) | 79,322 | |||||
Cash, beginning of year | 83,100 | 3,778 | ||||||
Cash, end of year | 47,140 | 83,100 | ||||||
Supplemental disclosures: | ||||||||
Interest paid | – | – | ||||||
Income taxes paid | – | – |
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1. | NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS |
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| DNA Testing Centers, Corp. (the “Company”) was incorporated in Florida on July 3, 2014. On July 3, 2014, the Company acquired DNA Testing Centers of Canada Ltd. (“DNA Canada”). DNA Canada performs testing related to analyzing and monitoring an individual’s genetic makeup.
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at December 31, 2018, the Company has an accumulated deficit of $434,598 and a working capital deficit of $141,793, and realized negative cash flows from operations totaling $43,584 for the year ended December 31, 2018. The Company currently has limited liquidity and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
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2. | SIGNIFICANT ACCOUNTING POLICIES |
(a) | Basis of Presentation and Consolidation | |
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, DNA Canada. All inter-company accounts and transactions have been eliminated on consolidation. | ||
(b) | Use of Estimates | |
The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the useful life and recoverability of property and equipment, and deferred income tax asset valuation allowances. 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. | ||
(c) | Cash and Cash Equivalents | |
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. |
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2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
(d) | Accounts Receivable | |
The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on the business environment, historical bad debt expense, the age of receivables, and the specific identification of receivables the Company considers at risk. The Company reviews the adequacy of its allowance for doubtful accounts on a regular basis. | ||
(e) | Property and Equipment | |
Property and equipment is recorded at cost. Depreciation is provided annually at rates and methods over their estimated useful lives. Management reviews the estimates of useful lives of the assets every year and adjusts them on prospective basis, if needed. |
Medical equipment | 10 years straight-line |
(f) | Long-Lived Assets | |
In accordance with ASC 360, “ Property, Plant, and Equipment ”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. | ||
(g) | Income Taxes | |
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “ Income Taxes ”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company has not recorded any amounts pertaining to uncertain tax positions. |
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2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
(h) | Revenue Recognition | |
The Company derives revenue from the sale of DNA diagnostic testing kits in relation to analyzing and monitoring an individual’s genetic makeup. Under ASC 606, “ Revenue from Contracts with Customers” , the Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. | ||
(i) | Foreign Currency Translation | |
The Company’s functional and reporting currency is the U.S. dollar. The functional currency of DNA Canada is the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets, liabilities and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. | ||
The assets and liabilities of DNA Canada are translated into U.S. dollars using the exchange rate in effect at the balance sheet date. Revenue and expenses are translated using the average exchange rates during the period. Related exchange gains and losses are included in a separate component of stockholders’ equity as accumulated other comprehensive income (loss). | ||
(j) | Stock-based Compensation | |
The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation ” and ASC 505, “Equity Based Payments to Non-Employees ”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. | ||
(k) | Financial Instruments | |
ASC 820, “ Fair Value Measurements and Disclosures ”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | ||
Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
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2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
(k) | Financial Instruments (continued) | |
Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. | ||
The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | ||
(l) | Loss Per Share | |
The Company computes earnings (loss) per share in accordance with ASC 260, “ Earnings per Share ”. ASC 260 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 earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares 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. | ||
(m) | Comprehensive Loss | |
Comprehensive loss consists of net loss and other related gains and losses affecting stockholders’ equity that are excluded from net income or loss. As at December 31, 2018 and 2017, comprehensive loss includes cumulative translation adjustments for changes in foreign currency exchange rates during the period. |
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2. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
(n) | Recent Accounting Pronouncements | |
On May 28, 2014, the FASB issued ASU No. 2014-09, “ Revenue from Contracts with Customers” (“Topic 606”), to update the financial reporting requirements for revenue recognition. Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Under ASC 606, the Company recognizes revenue by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. This guidance is effective for annual reporting periods beginning after December 15, 2017, and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company adopted this standard using the modified retrospective approach on January 1, 2018. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements. | ||
In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, “Leases”. This new guidance was initiated as a joint project with the International Accounting Standards Board to simplify lease accounting and improve the quality of and comparability of financial information for users. This new guidance would eliminate the concept of off-balance sheet treatment for “operating leases” for lessees for the vast majority of lease contracts. Under ASU No. 2016-02, at inception, a lessee must classify all leases with a term of over one year as either finance or operating, with both classifications resulting in the recognition of a defined “right-of-use” asset and a lease liability on the balance sheet. However, recognition in the income statement will differ depending on the lease classification, with finance leases recognizing the amortization of the right-of-use asset separate from the interest on the lease liability and operating leases recognizing a single total lease expense. Lessor accounting under ASU No. 2016-02 would be substantially unchanged from the previous lease requirements under GAAP. ASU No. 2016-02 will take effect for public companies in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted and for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, lessees and lessors must apply a modified retrospective transition approach. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. | ||
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
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3. | PROPERTY AND EQUIPMENT |
Cost $ | Accumulated depreciation $ | Foreign currency translation loss $ | Net carrying value December 31, 2018 $ | Net carrying value December 31, 2017 $ | ||||||||||||||||
Medical equipment | 5,440 | (1,822 | ) | (885 | ) | 2,733 | 3,476 |
4. | RELATED PARTY TRANSACTIONS |
(a) | As at December 31, 2018, the Company owed $21,652 (2017 – $9,467) to the Chief Executive Officer of the Company which is non-interest bearing, unsecured, and due on demand. | |
(b) | As at December 31, 2018, the Company owed $86,537 (2017 – $86,360) to the Chief Financial Officer of the Company which are non-interest bearing, unsecured, and due on demand. | |
(c) | As at December 31, 2018, the Company owed $1,558 (2017 – $1,558) to a director of the Company which is non-interest bearing, unsecured, and due on demand. | |
(d) | As at December 31, 2018, the Company owed $31,820 (2017 - $28,054) to a director of the Company which is non-interest bearing, unsecured, and due on demand. | |
(e) | As at December 31, 2018, the Company owed $8,063 (2017 - $3,200) to the director of the Company which is non-interest bearing, unsecured, and due on demand. | |
(f) | During the year ended December 31, 2018, the Company incurred $2,315 (2017 - $2,266) of rent to a director of the Company. |
5. | COMMON STOCK |
(a) | During the year ended December 31, 2018, the Company paid a shareholder of the Company a return of capital of $15,000. | |
(b) | During the year ended December 31, 2017, the Company received share subscription proceeds of $100,000 for 1,000,000 shares of common stock to be issued at a price of $0.10 per share. |
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6. | INCOME TAXES |
The Company has net operating losses carried forward of $131,149 available to offset taxable income in future years which commence expiring in the year 2035. As of December 31, 2018, the Company had net operating losses carried forward for foreign income tax purposes of $303,450 which expire beginning in the year 2034. The Company is subject to United States federal and state income taxes at an approximate rate of 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows: |
2018 $ | 2017 $ | |||||||
Net loss before income taxes | (58,765 | ) | (52,551 | ) | ||||
Statutory income tax rate | 21 | % | 35 | % | ||||
Expected income tax recovery | (12,341 | ) | (18,392 | ) | ||||
Tax rate difference for foreign jurisdiction | (3,938 | ) | 2,974 | |||||
Change in enacted tax rate | – | 16,294 | ||||||
Change in valuation allowance | 16,279 | (876 | ) | |||||
Income tax provision | – | – |
The significant components of deferred income tax assets and liabilities as at December 31, 2018 and 2017 are as follows: |
2018 $ | 2017 $ | |||||||
Net operating losses carried forward | 109,473 | 93,194 | ||||||
Valuation allowance | (109,473 | ) | (93,194 | ) | ||||
Net deferred income tax asset | – | – |
On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. The rate reduction is effective on January 1, 2018. As a result of the rate reduction, the Company has reduced the deferred tax asset balance as of December 31, 2017 by $16,294. Due to the Company’s full valuation allowance position, there was no net impact on the Company’s income tax provision at December 31, 2017, as the reduction in the deferred tax asset balance was fully offset by a corresponding decrease in the valuation allowance. | |
In conjunction with the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company has recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities at December 31, 2017. There was no net impact on the Company’s consolidated financial statements for the year ended December 31, 2017, as the corresponding adjustment was made to the valuation allowance. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. |
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- | Lack of proper segregation of duties due to limited personnel; | |
- | Lack of a formal review process that includes multiple levels of review from adequate personnel with requisite expertise. | |
- | Lack of written policies and procedures for accounting and financial reporting. |
41 |
Name | Position Held with our Company | Age | Date First Elected or Appointed | |||
Dr. Barjinder Sohal | Chief Executive Officer, President, Director | 44 | July 3, 2014 | |||
Dr. Nitan Arora | CFO, Vice President, Director | 45 | July 3, 2014 | |||
Navjot Nanda | Treasurer and Secretary, Director | 41 | July 3, 2014 |
42 |
| • | Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time, |
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| • | Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), |
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| • | Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities, |
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| • | Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
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| · | Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity. |
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| · | Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity. |
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| · | Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity. |
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(a) | our principal executive officer; | |
(b) | our principal financial officer; | |
(c) | each of our three most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 2018 and 2017; and | |
(d) | up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2018 and 2017. |
45 |
Name and Principal Position | Year Ended Dec. 31 | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation Earnings ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
Dr. Barjinder Sohal, Chief Executive Officer, President, Director | 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Dr. Nitan Arora, Vice President, Director | 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Navjot Nanda, Treasurer, Secretary, Director | 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
2017 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
46 |
47 |
48 |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percentage of Class | ||
Dr. Barjinder Sohal (2) Unit 8 - 1200, Waverley Street Winnipeg, Manitoba R3T 0P4 | 6,666,666 Common Shares | 31% | ||
Dr. Nitan Arora (3) Unit 8 - 1200, Waverley Street Winnipeg, Manitoba R3T 0P4 | 6,666,666 Common Shares | 31% | ||
Navjot Nanda (4) Unit 8 - 1200, Waverley Street Winnipeg, Manitoba R3T 0P4 | 6,666,666 Common Shares | 31% | ||
Directors and Executive Officers as a Group | 19,999,998 Common Shares | 93% | ||
5%+ Shareholders | ||||
None. | Nil Common Shares | 0% |
(1) | Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on December 31, 2018 or as at the date of this Annual Report. As of December 31, 2018 and February 11, 2020, there were 21,496,404 shares of our company’s common stock issued and outstanding. |
(2) | Dr. Barjinder Sohal is our company’s president, and director. |
(3) | Dr. Nitan Arora is our company’s vice president, CFO and director |
(4) | Navjot Nanda is a Director, secretary and Treasurer of our company. |
49 |
50 |
Year Ended | ||||||
December 31, 2018 | December 31, 2017 | |||||
Audit Fees | Cdn$7,500 | Cdn$9,000 | ||||
Audit Related Fees | Cdn$6,000 | Cdn$7,000 | ||||
Tax Fees | Nil | Nil | ||||
All Other Fees | Nil | Nil | ||||
Total | Cdn$13,500 | Cdn$16,000 |
51 |
(1) | Financial statements for our company are listed in the index under Item 8 of this document | |
(2) | All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto. |
52 |
Exhibit | ||
Number | Exhibit Description | |
(3) | Articles of Incorporation; Bylaws | |
(10) | Material Contracts | |
53 |
(31) | Rule 13a-14(a) / 15d-14(a) Certifications | |
(32) | Section 1350 Certifications | |
101** | Interactive Data File (Form 10-K for the year ended December 31, 2015 furnished in XBRL). | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
** | Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. |
54 |
DNA TESTING CENTERS, CORP. | ||
(Registrant) | ||
Dated: March 4, 2020 | /s/ Barjinder Sohal | |
Dr. Barjinder Sohal | ||
President, Chief Executive Officer and Director (Principal Executive Officer) | ||
Dated: March 4, 2020 | /s/ Nitan Arora | |
Nitan Arora | ||
Chief Financial Officer, Vice President and Director (Principal Financial Officer, Principal Accounting Officer) |
Dated: March 4, 2020 | /s/ Barjinder Sohal | |
Dr. Barjinder Sohal | ||
President, Chief Executive Officer and Director (Principal Executive Officer) | ||
Dated: March 4, 2020 | /s/ Navjot Nanda | |
Navjot Nanda | ||
Treasurer, Secretary and Director | ||
Dated: March 4, 2020 | /s/ Nitan Arora | |
Nitan Arora | ||
Chief Financial Officer, Vice President and Director | ||
(Principal Financial Officer, Principal Accounting Officer) |
55 |