EXHIBIT 99.1
INDEX TO FINANCIAL STATEMENTS
Page No.
--------
Report of Independent Registered Public Accounting Firm F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Members' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
[Letterhead Of StarkSchenkein, LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members of The Fuelist, LLC
Berkeley, California
We have audited the accompanying balance sheet of The Fuelist, LLC as of August
31, 2013, and the related statements of operations, changes in members' equity
(deficit) and cash flows for the period from May 3, 2013 (Inception) to August
31, 2013. The Fuelist, LLC's management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Fuelist, LLC as of August
31, 2013, and the results of its operations and its cash flows for the period
from May 3, 2013 (Inception) to August 31, 2013 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
entity will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered losses from
operations and had no operating revenues. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ StarkSchenkein, LLP
------------------------------------
StarkSchenkein, LLP
October 29, 2013
F-2
THE FUELIST, LLC
(A Development Stage Enterprise)
Balance Sheet
August 31, 2013
ASSETS
Current Assets:
Cash $ 25,373
--------
Total Current Assets 25,373
--------
Total Assets $ 25,373
========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $ 19,300
Advance on purchase of membership interest 45,200
--------
Total Current Liabilities 64,500
--------
Commitments and Contingencies --
Members' Equity (Deficit):
Members' capital contributions 32,400
Due from Members for capital contributions (18,900)
Deficit accumulated during development stage (52,627)
--------
Total Members' Equity (Deficit) (39,127)
--------
Total Liabilities and Members' Equity (Deficit) $ 25,373
========
See accompanying notes to the financial statements
F-3
THE FUELIST, LLC
(A Development Stage Enterprise)
Statement of Operations
For the Period from May 3, 2013 (Inception) to August 31, 2013
Operating Revenue $ --
---------
Operating Expenses:
Consulting expenses 47,274
Rent expense 2,000
Administrative expenses 1,636
Travel expenses 1,584
Legal expenses 425
Other operating expenses 1,708
---------
Total Operating Expenses 54,627
---------
Loss from Operations (54,627)
---------
Other Revenue:
Sub-lease rent revenue 2,000
---------
Net Loss $ (52,627)
=========
See accompanying notes to the financial statements
F-4
THE FUELIST, LLC
(A Development Stage Enterprise)
Statement of Changes in Members' Equity (Deficit)
For the Period from May 3, 2013 (Inception) to August 31, 2013
Due from Deficit
Members' Members for Accumulated Total
Capital Capital During Members'
Contributions Contributions Development Stage Equity (Deficit)
------------- ------------- ----------------- ----------------
Balance at Beginning of Period,
May 3, 2013 (Inception) $ -- $ -- $ -- $ --
Capital Contributions 32,400 (18,900) -- 13,500
Net Loss -- -- (52,627) (52,627)
-------- -------- -------- --------
Balance at End of Period, August 31, 2013 $ 32,400 $(18,900) $(52,627) $(39,127)
======== ======== ======== ========
See accompanying notes to the financial statements
F-5
THE FUELIST, LLC
(A Development Stage Enterprise)
Statement of Cash Flows
For the Period from May 3, 2013 (Inception) to August 31, 2013
Cash Flows from Operating Activities:
Net Loss $(52,627)
Adjustments to reconcile net loss to net
cash used by operating activities:
Change in accounts payable 19,300
--------
Net Cash Used by Operating Activities (33,327)
--------
Cash Flows from Financing Activities:
Capital contributions 13,500
Advances on purchase 45,200
--------
Net Cash Provided by Financing Activities 58,700
--------
Net Increase in Cash and Cash Equivalents 25,373
Cash and Cash Equivalents at the Beginning of the Period --
--------
Cash and Cash Equivalents at the End of the Period $ 25,373
========
Supplemental Disclosure of Non-Cash Investing and
Financing Activities:
Cash Paid for Income Taxes $ --
========
Cash Paid for Interest $ --
========
Due from Members for Capital Contributions $ 32,400
========
See accompanying notes to the financial statements
F-6
THE FUELIST, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
August 31, 2013
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Fuelist, LLC (the "Company", "our", "we" or "The Fuelist"), a limited
liability company, was formed in the State of California on May 3, 2013. The
Company's headquarters are located in Berkeley, California.
DEVELOPMENT STAGE OPERATIONS
The Company is a development stage entity formed for the primary purpose of the
development of a data-driven mobile and web technology platform that leverages
extensive segment expertise and big data analysis tools to value classic
vehicles. These tools will enable users to quickly find values, track valuations
over time, and to identify investment and arbitrage opportunities in this
lucrative market.
The Company had no significant operating history from May 3, 2013 (Inception) to
August 31, 2013, had no operating revenues, and has generated a net loss from
operations of $52,627. The accompanying financial statements for the period from
May 3, 2013 (Inception) to August 31, 2013, have been prepared assuming the
Company will continue as a going concern.
The accompanying financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
BASIS OF ACCOUNTING
The Company maintains its financial statements on the accrual method of
accounting in accordance with accounting principles generally accepted in the
United States of America.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents. The Company had no cash equivalents as
of August 31, 2013.
F-7
THE FUELIST, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
August 31, 2013
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
REVENUE RECOGNITION
The Company's principal service will include using data aggregation and analysis
tools to determine valuations of classic vehicles and provide business
intelligence tools for subscribers to use to help identify investment
opportunities
Revenue is recognized when persuasive evidence of an arrangement exists,
delivery has occurred, the fee is fixed or determinable, and collectability is
probable.
INCOME TAXES
The Company has elected to be taxed as a partnership under federal income tax
law, which provides that in lieu of corporate income taxes, the members will
separately account for their pro rata share of the Company's items of income,
deductions, losses, and credits.
The Company complies with Financial Accounting Standards Board (FASB) Accounting
Standards Update (ASC) Topic 740-10, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES,
which clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements, and prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. Management
evaluated the Company's tax positions during the period from May 3, 2013
(inception) to August 31, 2013, and concluded that the Company had taken no
uncertain tax positions that require adjustment to the financial statements to
comply with the provisions of this guidance.
The Company is subject to income tax examinations by the U.S. federal, state or
local tax authorities for its first filing period, beginning for the period from
May 3, 2013 (Inception) through December 31, 2013, which will be the end of the
Company's first tax filing year.
RECENT ACCOUNTING PRONOUNCEMENTS
There were various updates recently issued, most of which represented technical
corrections to the accounting literature or application to specific industries,
which are not expected to have a material impact on the Company's financial
position, results of operations or cash flows.
NOTE 2. MEMBERS' EQUITY
Members' equity includes member capital accounts consisting of such member's
capital contributions in the form of cash, the fair market value of property
other than cash and services that are contributed and/or agreed to be
contributed to the Company. Member capital accounts are increased by each
member's pro-rata share of income and gains and decreased by each member's
pro-rata share of losses and deductions and also distributions made by the
Company to such member. Each members' voting rights consists of their respective
percentage interests in the Company.
The Company entered into an agreement for a new member to pay for a 2.5%
membership interest payable over 12 monthly installments of $2,700 beginning in
F-8
THE FUELIST, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
August 31, 2013
May 2013. During the period from May 3, 2013 (Inception) to August 31, 2013, the
Company received $13,500 from this member resulting in $18,900 outstanding at
August 31, 2013.
NOTE 3. CONTRACTUAL OBLIGATIONS
On June 1, 2013, the Company entered into open-ended contractual agreements with
six consultants related to the development of the Company's web technology
platform and other related operations. The consultants are compensated
periodically based on work performed and invoiced. The Company recognized
$47,274 in consulting expenses related to these agreements during the period
from May 3, 2013 (Inception) to August 31, 2013.
On May 1, 2013 the Company entered into a lease agreement with a related party
limited liability company for the Company's main office. The lease term is for
one year beginning on May 1, 2013 and ending May 1, 2014. The Company is
obligated to pay rent of $6,000 per year in equal monthly installments of $500
payable on the 1st of each month. The Company subsequently entered into a
sublease agreement with another related party entity in which it was not legally
relieved of its primary obligation for the lease agreement. The Company
recognized $2,000 in sub-lease rent revenue and $2,000 in rent expense in
relation to these agreements during the period from May 3, 2013 (Inception) to
August 31, 2013.
NOTE 4. RELATED PARTY TRANSACTIONS
For the period from May 3, 2013 (Inception) to August 31, 2013, the Company
recognized $35,800 in consulting expenses for services provided by three
members, of which $13,000 is included in accounts payable at August 31, 2013.
NOTE 5. CHANCELLOR GROUP, INC. TRANSACTION
These financial statements were prepared for the period from May 3, 2013
(Inception) to August 31, 2013 excluding the Chancellor Group, Inc. transaction
that is set forth below. The financial statements include minimal activity that
occurred from August 15, 2013 through August 31, 2013.
On August 15, 2013, the Company and founding members ("the Founders") entered
into a binding term sheet with Chancellor Group, Inc., a Nevada corporation
("Chancellor") to sell 51% of its membership interests to Chancellor, in
consideration for a receivable of $271,200 to be paid in 12 monthly installments
of $22,600 beginning in August 2013, plus 2,000,000 shares of Chancellor common
stock valued at $156,000, or $0.078 per share.
Related to this capital transaction with Chancellor, the Company has not
recognized either the receivable or the common stock in these financial
statements, and has recorded the first two cash payments received through August
31, 2013 of $45,200 as deferred member capital contributions. Therefore, these
financial statements exclude the contractual obligations with Chancellor.
NOTE 6. SUBSEQUENT EVENTS
Events occurring after August 31, 2013 were evaluated through the date the
financial statements were issued, in compliance FASB ASC Topic 855 "SUBSEQUENT
EVENTS", to ensure that any subsequent events that met the criteria for
recognition and/or disclosure in this report have been included.
F-9