UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2013
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 333-183814
LIFE STEM GENETICS INC.
(Exact name of registrant as specified in its charter)
Nevada N/A
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
433 North Camden Drive, Suite 400, Beverly Hills, CA 90210
(Address of principal executive offices) (Zip Code)
(310) 279-5234
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] YES [X] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) [ ] YES [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 44,537,500 common shares issued
and outstanding as of November 18, 2013.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements ........................................... 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................... 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk ..... 19
Item 4. Controls and Procedures ........................................ 19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings .............................................. 20
Item 1A. Risk Factors .................................................. 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds .... 20
Item 3. Defaults Upon Senior Securities ................................ 20
Item 4. Mine Safety Disclosures ........................................ 20
Item 5. Other Information .............................................. 20
Item 6. Exhibits ....................................................... 20
SIGNATURES .................................................................. 22
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our unaudited interim financial statements for the three month period ended
September 30, 2013 form part of this quarterly report. They are stated in United
States Dollars (US$) and are prepared in accordance with United States generally
accepted accounting principles.
3
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, June 30,
2013 2013
---------- ----------
ASSETS
Current assets:
Cash $ 19,898 $ 192
---------- ----------
Total current assets 19,898 192
---------- ----------
Capitalized software development costs 150,000 --
---------- ----------
Total assets $ 169,898 $ 192
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 500 $ --
Accounts payable - related party 161,332 120,000
Accrued executive compensation - related party 22,500 15,000
Notes payable - related party 55,991 4,329
---------- ----------
Total current liabilities 240,323 139,329
---------- ----------
Total liabilities 240,323 139,329
---------- ----------
Stockholders' equity:
Common stock, $0.001 par value, 250,000,000 shares authorized,
44,037,500 and 26,422,500 shares issued and outstanding 44,038 26,423
Additional paid in capital (54,963) (15,423)
Common stock payable 200,000 --
Retained earnings (259,500) (150,137)
---------- ----------
Total stockholders' equity (70,425) (139,137)
---------- ----------
Total liabilities and stockholders' equity $ 169,898 $ 192
========== ==========
See Accompanying Notes to Consolidated Financial Statements.
4
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the three November 30, 2012
months ended (Inception) to
September 30, September 30,
2013 2013
------------ ------------
Revenue $ -- $ --
------------ ------------
Operating expenses:
General and administrative 3,503 8,640
Professional fees 26,160 36,160
Professional fees - related party 72,200 192,200
Executive compensation - related party 7,500 22,500
------------ ------------
Total operating expenses 109,363 259,500
------------ ------------
Loss before provision for income taxes (109,363) (259,500)
Provision for income taxes -- --
------------ ------------
Net (loss) $ (109,363) $ (259,500)
============ ============
Weighted average number of common shares
outstanding - basic and fully diluted 28,528,641
============
(Loss) per share - basic and fully diluted $ (0.00)
============
See Accompanying Notes to Consolidated Financial Statements.
5
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the three November 30, 2012
months ended (Inception) to
September 30, September 30,
2013 2013
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (109,363) $ (259,500)
Adjustments to reconcile net (loss)
to net cash used in operating activities:
Shares issued for services -- 10,000
Changes in operating assets and liabilities:
Increase in accounts payable 500 500
Increase in accounts payable - related party 41,332 161,332
Increase in accrued executive compensation - related party 7,500 22,500
---------- ----------
Net cash provided (used) in operating activities (60,031) (65,168)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capitalized software development costs (150,000) (150,000)
---------- ----------
Net cash (used) in investing activities (150,000) (150,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - related party 29,940 38,227
Repayments for notes payable - related party (203) (3,161)
Proceeds from common stock payable 200,000 200,000
---------- ----------
Net cash provided by financing activities 229,737 235,066
---------- ----------
NET CHANGE IN CASH 19,706 19,898
CASH AT BEGINNING OF PERIOD 192 --
---------- ----------
CASH AT END OF PERIOD $ 19,898 $ 19,898
========== ==========
SUPPLEMENTAL INFORMATION:
Interest paid $ -- $ --
========== ==========
Income taxes paid $ -- $ --
========== ==========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued for debt $ 1,000
========== ==========
Shares issued for services $ -- $ 10,000
========== ==========
Notes payable - related party assumed with merger $ 21,925 $ 21,925
========== ==========
See Accompanying Notes to Consolidated Financial Statements.
6
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The interim consolidated financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
condensed interim consolidated financial statements be read in conjunction with
the financial statements of Life Stem Genetics, Inc. (South Dakota corporation)
for the period of inception (November 30, 2012) to June 30, 2013 and notes
thereto included in the Form 8-K current report and all amendments for Life Stem
Genetic, Inc. (Nevada corporation). The Company follows the same accounting
policies in the preparation of interim reports.
Results of operations for the interim period are not indicative of annual
results.
Organization
Miami Days Corp. was incorporated in the State of Nevada on March 15, 2010.
On September 16, 2013, the Board of Directors and a majority of our shareholders
approved a change of name of our company from Miami Days Corp. to Life Stem
Genetics, Inc. (Nevada corporation) ("LSG Nevada").
On September 20, 2013, LSG Nevada issued 26,422,500 shares of common stock in
exchange for 100% of Life Stem Genetics, Inc. (South Dakota corporation) ("LSG
South Dakota"). Additionally, former management and shareholders LSG Nevada
agreed to cancel a total of 52,000,000 shares of common stock.
LSG South Dakota was incorporated on November 30, 2012 (Date of Inception) under
the laws of the State of South Dakota, as Life Stem Genetics, Inc.
The Company has not commenced significant operations and, in accordance with ASC
Topic 915, the Company is considered a development stage company.
Principles of consolidation
For the period from November 30, 2012 to September 30, 2013, the consolidated
financial statements include the accounts of LSG Nevada and LSG South Dakota.
All significant intercompany balances and transactions have been eliminated. LSG
Nevada and LSG South Dakota will be collectively referred herein to as the
"Company".
Year end
The Company's year end is June 30.
Nature of operations
The Company is establishing a series of Stem Cell therapy based clinics around
the world.
7
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the 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 revenue and expenses during the reporting period. Actual
results could differ significantly from those estimates.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid investments
with an original maturity of three months or less are considered to be cash
equivalents. The carrying value of these investments approximate fair value.
Capitalized software development costs
Capitalized software costs include costs incurred in connection with the
development of software and purchased software. These costs relate to software
used by subscribers to access, manage and analyze information in the Company's
databases. Capitalized costs associated with internally developed software are
amortized over three years which is their estimated economic life.
The Company exercises significant judgment in determining that capitalized
application software costs meet the criteria established in Financial Accounting
Standards Board ("FASB") ASC 350-40, Internal-Use Software. Software production
costs for computer software that is to be used as an integral part of a product
or process shall not be capitalized until both (a) technological feasibility has
been established for the software and (b) all research and development
activities for the other components of the product or process have been
completed.
Revenue recognition
The Company recognizes revenue when consulting and placement services are
rendered on the accrual basis of accounting in accordance with generally
accepted accounting principles in ASC 605. The Company does not recognize
revenue until all four of the following criteria are met: (1) Persuasive
evidence of an arrangement exists, (2) Services have been rendered, (3) The
seller's price to the buyer is fixed and (4) Collectability is reasonably
assured.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of September 30, 2013. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
prepaid expenses and accounts payable. Fair values were assumed to approximate
carrying values for cash and payables because they are short term in nature and
their carrying amounts approximate fair values or they are payable on demand.
Level 1: The preferred inputs to valuation efforts are "quoted prices in active
markets for identical assets or liabilities," with the caveat that the reporting
entity must have access to that market. Information at this level is based on
direct observations of transactions involving the same assets and liabilities,
not assumptions, and thus offers superior reliability. However, relatively few
items, especially physical assets, actually trade in active markets.
Level 2: FASB acknowledged that active markets for identical assets and
liabilities are relatively uncommon and, even when they do exist, they may be
too thin to provide reliable information. To deal with this shortage of direct
data, the board provided a second level of inputs that can be applied in three
situations.
8
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair value of financial instruments (continued)
Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that
fair value measures of many assets and liabilities are less precise. The board
describes Level 3 inputs as "unobservable," and limits their use by saying they
"shall be used to measure fair value to the extent that observable inputs are
not available." This category allows "for situations in which there is little,
if any, market activity for the asset or liability at the measurement date".
Earlier in the standard, FASB explains that "observable inputs" are gathered
from sources other than the reporting company and that they are expected to
reflect assumptions made by market participants.
Stock-based compensation
The Company records stock based compensation in accordance with the guidance in
ASC Topic 505 and 718 which requires the Company to recognize expense related to
the fair value of its employee stock option awards. This eliminates accounting
for share-based compensation transactions using the intrinsic value and requires
instead that such transactions be accounted for using a fair-value-based method.
The Company recognizes the cost of all share-based awards on a graded vesting
basis over the vesting period of the award.
Earnings per share
The Company follows ASC Topic 260 to account for the earnings per share. Basic
earnings per common share ("EPS") calculations are determined by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted earnings per common share calculations are determined
by dividing net income by the weighted average number of common shares and
dilutive common share equivalents outstanding. During periods when common stock
equivalents, if any, are anti-dilutive they are not considered in the
computation.
Recent pronouncements
The Company has evaluated all the recent accounting pronouncements issued
through November 2013 and believes that none of them will have a material effect
on the company's financial statement.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the recoverability
of assets and the satisfaction of liabilities in the normal course of business.
During the period from November 30, 2012 (inception) to September 30, 2013, the
Company did not generate any revenue and had a net loss of $259,500.
The ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. These financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts, or amounts and classification of
liabilities that might result from this uncertainty.
9
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - NOTES PAYABLE - RELATED PARTY
The Company has the following notes payable - related party:
September 30,
2013
--------
Notes payable with an individual who is the sole officer
and director of an entity that is a shareholder of the
Company, due upon demand, 0% interest $ 510
Notes payable with an immediate family member who is a
shareholder of the Company, due upon demand, 0% interest 3,616
Notes payable with a shareholder of the Company, due upon
demand, 0% interest 5,000
Notes payable with the husband of the officer, director
and shareholder of the Company, due upon demand, 0%
interest 24,940
Notes payable with a former director of the Company, due
upon demand, 0% interest 21,925
--------
Total notes payable - related party $ 55,991
========
NOTE 4 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 250,000,000 of shares of its $0.001 par value
common stock.
On September 16, 2013, the Company effected a 13-for-1 forward stock split of
its $0.001 par value common stock.
All shares and per share amounts have been retroactively restated to reflect the
split discussed above.
COMMON STOCK
Prior to the acquisition of LSG South Dakota, LSG Nevada had 69,615,000 shares
of common stock issued and outstanding.
On September 20, 2013, LSG Nevada issued 26,422,500 shares in exchange for a
100% interest in LSG South Dakota. For accounting purposes, the acquisition of
LSG South Dakota by LSG Nevada has been recorded as a reverse acquisition of a
company and recapitalization of LSG South Dakota based on the factors
demonstrating that LSG South Dakota represents the accounting acquirer. The
Company changed its business direction.
As part of the acquisition, the former management and shareholders of LSG Nevada
agreed to cancel 52,000,000 shares of common stock. After the acquisition and
the cancellation, the Company had 44,037,500 shares of common stock issued and
outstanding.
During September 2013, the Company received cash proceeds of $200,000 from the
sale of common stock which was recorded as common stock payable since the
closing did not occur until October 2013.
NOTE 5 - WARRANTS AND OPTIONS
As of September 30, 2013, there were no warrants or options outstanding to
acquire any additional shares of common stock.
10
LIFE STEM GENETICS, INC.
(FORMERLY MIAMI DAYS CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - MATERIAL AGREEMENTS
On March 13, 2013, the Company executed a facilitation agreement with Prince
Marketing Group, Limited ("Prince"). The Company issued 100,000 shares of common
valued at $10,000 in exchange for Prince to create and establish stem cell
therapy clinics. The Company agreed to pay Prince a quarterly royalty equal to
3% of the gross revenue from stem cell therapy treatments. The royalty payments
shall continue for 90 years commencing on April 1, 2013.
On September 10, 2013, the Company executed a second amendment to a consulting
agreement originally dated December 18, 2012 with James Vanden Bosch for a
period of one year. The consulting fees are $5,000 per month and a signing bonus
of $5,000. The amendment postponed the start date of consulting agreement to
December 1, 2013 or if the Company receives project funding prior to that date,
then at an earlier date to be agreed upon by the parties.
NOTE 7 - RELATED PARTY TRANSACTIONS
Office space and services are provided without charge by the officers and
directors of the Company. Such costs are immaterial to the financial statements
and, accordingly, have not been reflected therein.
On January 1, 2013, the Company executed a one year employment agreement with
Gloria Simov for the role of President of the Company. The annual compensation
is $30,000 due monthly. During the three months ended September 30, 2013, the
Company recorded executive compensation of $7,500. As of September 30, 2013, the
balance of accrued executive compensation is $22,500.
On January 1, 2013, the Company executed an implementation and management
agreement with Lexington Management, Inc. ("Lexington") for a period of five
years. The consulting fees are $20,000 per month. The sole shareholder of
Lexington is married to the President of the Company. During the three months
ended September 30, 2013, the Company recorded professional fees - related party
of $60,000. As of September 30, 2013, the balance of accounts payable is
$161,332.
During the three months ended September 30, 2013, the Company recorded
professional fees - related party of $12,200 to an immediate family member who
is a shareholder of the Company.
NOTE 8 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the financial
statements are issued and there are no material subsequent events to disclose,
except as disclosed below.
On October 31, 2013, the former officer, director and shareholder of the Company
forgave the entire loan balance of $21,925.
Effective October 21, 2013, the Company entered into a private placement
agreement with one person. Pursuant to the agreement, the Company agreed to the
issuance of 500,000 units at a price of $1.00 per unit. Each unit consists of
one share of the Company's common stock and one warrant. Each warrant is
exercisable into one common share of the Company's common stock at price of
$1.00 per warrant share for a period of 12 months. The total proceeds received
from this private placement were $500,000 of which $200,000 was received during
September 2013 and $300,000 was received during October 2013.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties. These statements relate to future events or our
future financial performance. In some cases, you can identify forward-looking
statements by terminology including "could", "may", "will", "should", "expect",
"plan", "anticipate", "believe", "estimate", "predict", "potential" and the
negative of these terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ materially.
While these forward-looking statements, and any assumptions upon which they are
based, are made in good faith and reflect our current judgment regarding the
direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested in this report.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references "common shares" refer to the
common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our" and "our company",
mean Life Stem Genetics Inc., a Nevada company, and our wholly owned subsidiary
Life Stem Genetics, Inc., a South Dakota company, unless otherwise indicated.
GENERAL OVERVIEW
We were incorporated in the State of Nevada on July 5, 2012 under the name Miami
Days Corp. Our company was involved in the business of production and sale of
fast food. The objective of our company was to establish a market in the Balkan
region, particularly in the country of Serbia. We intended to provide the
community with authentic and traditional Serbian fast food. We planned to
generate revenue by selling traditional Serbian fast food cuisine from a chain
of fast food outlets. Previously, our company had a contract with Slavko Didic
to rent a property in order to conduct our business at Save Jovsica 9e, Zvezdara
11000, Belgrade, Serbia.
Unfortunately, we were not able to implement our business plan and consequently
our management began considering alternative strategies, such as business
combinations or acquisitions to create value for our shareholders.
On January 1, 2013, Life Stem Genetics, Inc., a South Dakota corporation ("LSG
South Dakota") entered into an employment agreement with Gloria Simov. Pursuant
to this employment agreement, Ms. Simov agreed to act as the president of LSG
South Dakota. As compensation for acting as president, LSG South Dakota agreed
to compensate Ms. Simov $30,000 per annum. The agreement is to terminate on
January 1, 2014.
Gloria Simov, an officer and director of our company, is also an officer and
director of LSG South Dakota. Ms. Simov is also a major shareholder of LSG South
Dakota.
LSG South Dakota is a State of South Dakota corporation engaged in the business
of providing stem cell therapy treatments.
On August 29, 2013, our company signed a letter of intent with LSG South Dakota
that, if the intent of the letter of intent was carried out, would result in our
company acquiring 100% of the outstanding shares of LSG South Dakota and in
exchange the LSG South Dakota shareholders would receive restricted shares of
our company. In addition, after the proposed share exchange our company would
provide financing to LSG South Dakota sufficient to carry out its business
objectives.
12
On August 30, 2013, our company entered into a share exchange agreement with LSG
South Dakota and the shareholders of LSG South Dakota that would result in our
company acquiring 100% of the outstanding shares of LSG South Dakota and in
exchange the LSG South Dakota shareholders would receive restricted shares of
our company. Pursuant to the terms of the share exchange agreement, we agreed to
acquire all 1,100,000 issued and outstanding shares of LSG South Dakota's common
stock in exchange for the issuance by our company of 26,422,500 shares of our
common stock to the shareholders of LSG South Dakota. The restricted shares to
be issued to the LSG South Dakota shareholders would represent 60% of then
issued shares of our company at the closing of agreement and related
transactions.
Further, pursuant to the share exchange agreement, we were required to provide a
financing of an aggregate of $500,000, to close no later than 60 days from the
close of the share exchange and on mutually agreeable terms. The financing is to
be used for advancement of our business objectives.
On September 16, 2013, our board of directors and a majority of our shareholders
approved a change of name of our company from "Miami Days Corp." to "Life Stem
Genetics Inc.".
In addition to the name change, our board of directors and a majority of our
shareholders approved a 13 new for 1 old forward split of our issued and
outstanding shares of common stock and an increase to our authorized capital. As
a result in our issued and outstanding common stock would increase from
5,355,000 to 69,615,000 shares and our authorized capital would increase from
75,000,000 shares of common stock to 250,000,000 shares of common stock, all
with a par value of $0.001.
A Certificate of Amendment to effect the change of name and increase to
authorized capital became effective with the Nevada Secretary of State on
September 18, 2013. Our name change and stock split were approved by the
Financial Industry Regulatory Authority ("FINRA") effective September 20, 2013.
The forward split and name change became effective with the Over-the-Counter
Bulletin Board at the opening of trading on September 20, 2013. Our trading
symbol is "LIFS". Our CUSIP number is 53217Y 103.
Subsequent to the filing of our annual report for the fiscal year ended July 31,
2013, we changed our fiscal year-end from July 31 to June 30.
Our principal executive office is located at 433 North Camden Drive, Suite 400,
Beverly Hills, CA 90210. Our phone number is (310) 279-5234.
OUR CURRENT BUSINESS
Our new business is to establish a series of stem cell therapy based clinics
around the world. The first three locations are planned for Las Vegas, Nevada,
Newport Beach, California and Hong Kong. The business goal is to have 20
locations established internationally within five years. Each facility will be
set up in a spa-like atmosphere and offer a variety of treatments.
On September 19, 2013, we entered into an amending agreement with LSG South
Dakota and its shareholders. Pursuant to the terms of the amending agreement, we
mutually agreed to extend the date of closing of the share exchange agreement.
On September 20, 2013, we closed the share exchange by issuing the required
26,422,500 common shares to the shareholders of LSG South Dakota. As a result of
the share exchange, LSG South Dakota became our wholly-owned subsidiary.
Concurrently, and as a condition to closing the share exchange agreement, we
cancelled 52,000,000 shares of our common stock.
13
Additionally, on September 20, 2013, Bojan Didic, a former officer, director and
shareholder of our company, agreed to cancel 52,000,000 shares of common stock.
As a result of the closing of the share exchange agreement with LSG South
Dakota, LSG South Dakota became our wholly-owned subsidiary and we now carry on
business in the state of California. Our company is in the development stage and
has generated only nominal/insignificant revenues.
On September 25, 2013, we entered into a press agreement with Contrarian Press
LLC, pursuant to which Contrarian will establish a proprietary database of
potential investors for our company. Based on the resources necessary to
commence the services, our company has paid an initial amount of $300,000 to be
applied to recurring database acquisitions costs expended by Contrarian.
Throughout the term of the agreement, continuation of activities by Contrarian
and replenishment of the budget by our company will be as approved by mutual
agreement. The agreement is for a term of 24 months and may be terminated in
writing by either party upon five business days written notice to the other
party.
Effective October 21, 2013, we entered into a private placement agreement with
one person. Pursuant to the agreement, we agreed to the issuance of 500,000
units at a price of $1.00 per unit. Each unit consists of one share of our
common stock and one warrant. Each warrant is exercisable into one common share
of our company's common stock at price of $1.00 per warrant share for a period
of 12 months. The total proceeds received from this private placement were
$500,000.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our
stockholders.
CASH REQUIREMENTS
Over the next 12 months we intend to carry on business as a development stage
stem cell therapy treatment company. We anticipate that we will incur the
following operating expenses during this period:
ESTIMATED FUNDING REQUIRED DURING THE NEXT 12 MONTHS
Expense Amount ($)
------- ----------
Consulting Fees for Research and Development(1) 452,000
Fixed asset purchases 20,000
Management Consulting Fees 130,000
Professional fees(1) 170,000
Rent 18,000
Sales, Travel and Marketing(1) 120,000
Other general administrative expenses(1) 90,000
---------
TOTAL 1,000,000
=========
(1) On January 1, 2013, LSG South Dakota entered into an implementation and
management agreement with Lexington Management Inc. Pursuant to this
agreement, Lexington is to oversee management, administrative and
implementations services to LSG South Dakota, such duties will include
arranging and monitoring legal and accounting services, developing public
relation campaigns and arranging financing. As compensation to Lexington
for its service, LSG South Dakota agreed to pay Lexington $20,000 per
month. Over the next 12 months, Lexington will be paid $240,000 which
includes $92,000 for consulting fees for research and development, $26,000
in professional fees, $72,000 for sales, travel and marketing, and $50,000
in general and administrative fees.
14
We will require funds of approximately $500,000 over the next twelve months to
operate our business. These funds may be raised through equity financing, debt
financing, or other sources, which may result in further dilution in the equity
ownership of our shares. There is no assurance that we will be able to maintain
operations at a level sufficient for an investor to obtain a return on their
investment in our common stock. Further, we may continue to be unprofitable.
RESULTS OF OPERATIONS
OPERATING EXPENSES
Our operating expenses for the three month period ended September 30, 2013 and
2012 and for the period from November 30, 2012 (inception) to September 30, 2013
are outlined in the table below:
Cumulative From
Three Months November 30, 2012
Ended (Inception) to
September 30, September 30,
2013 2013
---------- ----------
Revenues $ Nil $ Nil
Operating Expenses $ 109,363 $ 259,500
Net Loss $ (109,363) $ (259,500)
From our inception on November 30, 2012 to September 30, 2013, we did not have
any operating revenues.
Cumulative From
Three Months November 30, 2012
Ended (Inception) to
September 30, September 30,
2013 2013
---------- ----------
General and administrative $ 3,503 $ 8,640
Professional fees $ 26,160 $ 36,160
Professional fees - related party $ 72,200 $ 192,200
Executive compensation - related party $ 7,500 $ 22,500
---------- ----------
Total operating expenses $ 109,363 $ 259,500
========== ==========
During the three months ended September 30, 2013, our company incurred operating
expenses of $109,363 compared with $259,500 for the period from November 30,
2012 (inception) to September 30, 2013. The decrease in operating expenses was
attributed to decreases in general and administrative expenses, professional
fees, professional fees - related party and executive compensation - related
party.
For the three months ended September 30, 2013, our company incurred a net loss
of $109,363 or $0.00 loss per share compared with a net loss of $259,500 for the
period from November 30, 2012 (inception) to September 30, 2013.
15
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
At At
September 30, June 30,
2013 2013
---------- ----------
Current Assets $ 19,898 $ 192
Current Liabilities $ 240,323 $ 139,329
Working Capital (Deficit) $ (220,425) $ (139,137)
Cash Flows
From
November 30, 2012
At (Inception) to
September 30, September 30,
2013 2013
---------- ----------
Net Cash Provided by (Used in) Operating Activities $ (60,031) $ (65,168)
Net Cash Provided by (Used In) Investing Activities $ (150,000) $ (150,000)
Net Cash Provided by Financing Activities $ 229,737 $ 235,066
Net Increase (Decrease) In Cash During The Period $ 19,706 $ 19,898
CASH FLOW FROM OPERATING ACTIVITIES
During the three months ended September 30, 2013, our company used $60,031 of
cash for operating activities compared with the use of $65,168 during the period
from November 30, 2012 (inception) to September 30, 2013. The decrease in the
use of cash for operating activities was due to decreases in shares issued for
services, accounts payable - related party and accrued executive compensation -
related party.
CASH FLOW FROM INVESTING ACTIVITIES
During the three months ended September 30, 2013, our company used $150,000 with
respect to investing activities compared with $150,000 during the period from
November 30, 2012 (inception) to September 30, 2013.
CASH FLOW FROM FINANCING ACTIVITIES
During the three months ended September 30, 2013, our company received $229,737
from financing activities compared with $235,066 during the period from November
30, 2012 (inception) to September 30, 2013.
At September 30, 2013, our company had a cash balance and total assets of
$19,898 compared with cash balance and total assets of $192 as at June 30, 2013.
The increase in cash and total assets were attributed to increase in cash from
the sale of common stock which allowed our company to purchase the database for
$150,000.
As at September 30, 2013, our company had total liabilities of $240,323 compared
with $139,329 as at June 30, 2013. The increase was attributed to increases in
accounts payable, accounts payable - related party, accrued executive
compensation - related party and notes payable - related party.
As at September 30, 2013, our company had a working capital deficit of $220,425
compared with a working capital deficit of $139,136 as at June 30, 2013.
16
GOING CONCERN
We have not generated any revenue since inception and are dependent upon
obtaining outside financing to carry out our operations. If we are unable to
generate future cash flows, raise equity or secure alternative financing, we may
not be able to continue our operations and our business plan may fail. You may
lose your entire investment.
If our operations and cash flow improve, management believes that we can
continue to operate. However, no assurance can be given that management's
actions will result in profitable operations or an improvement in our liquidity
situation. The threat of our ability to continue as a going concern will cease
to exist only when our revenues have reached a level able to sustain our
business operations.
FUTURE FINANCINGS
We will continue to rely on equity sales of our common shares in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to existing stockholders. There is no assurance that we will
achieve any additional sales of the equity securities or arrange for debt or
other financing to fund our operations and other activities.
CRITICAL ACCOUNTING POLICIES
BASIS OF PRESENTATION
The interim consolidated financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by our company, without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although our
company believes that the disclosures are adequate to make the information
presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
condensed interim consolidated financial statements be read in conjunction with
the financial statements of Life Stem Genetics, Inc. (South Dakota corporation)
for the period of inception (November 30, 2012) to June 30, 2013 and notes
thereto included in the Form 8-K current report and all amendments for Life Stem
Genetic, Inc. (Nevada corporation). Our company follows the same accounting
policies in the preparation of interim reports.
Results of operations for the interim period are not indicative of annual
results.
PRINCIPLES OF CONSOLIDATION
For the period from November 30, 2012 to September 30, 2013, the consolidated
financial statements include the accounts of LSG Nevada and LSG South Dakota.
All significant intercompany balances and transactions have been eliminated. LSG
Nevada and LSG South Dakota will be collectively referred herein to as the
"Company".
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the 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 revenue and expenses during the reporting period. Actual
results could differ significantly from those estimates.
17
CASH AND CASH EQUIVALENTS
For the purpose of the statements of cash flows, all highly liquid investments
with an original maturity of three months or less are considered to be cash
equivalents. The carrying value of these investments approximate fair value.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
Capitalized software costs include costs incurred in connection with the
development of software and purchased software. These costs relate to software
used by subscribers to access, manage and analyze information in our company's
databases. Capitalized costs associated with internally developed software are
amortized over three years which is their estimated economic life.
Our company exercises significant judgment in determining that capitalized
application software costs meet the criteria established in Financial Accounting
Standards Board ("FASB") ASC 350-40, Internal-Use Software. Software production
costs for computer software that is to be used as an integral part of a product
or process shall not be capitalized until both (a) technological feasibility has
been established for the software and (b) all research and development
activities for the other components of the product or process have been
completed.
REVENUE RECOGNITION
Our company recognizes revenue when consulting and placement services are
rendered on the accrual basis of accounting in accordance with generally
accepted accounting principles in ASC 605. Our company does not recognize
revenue until all four of the following criteria are met: (1) Persuasive
evidence of an arrangement exists, (2) Services have been rendered, (3) The
seller's price to the buyer is fixed and (4) Collectability is reasonably
assured.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of September 30, 2013. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
prepaid expenses and accounts payable. Fair values were assumed to approximate
carrying values for cash and payables because they are short term in nature and
their carrying amounts approximate fair values or they are payable on demand.
Level 1: The preferred inputs to valuation efforts are "quoted prices in active
markets for identical assets or liabilities," with the caveat that the reporting
entity must have access to that market. Information at this level is based on
direct observations of transactions involving the same assets and liabilities,
not assumptions, and thus offers superior reliability. However, relatively few
items, especially physical assets, actually trade in active markets.
Level 2: FASB acknowledged that active markets for identical assets and
liabilities are relatively uncommon and, even when they do exist, they may be
too thin to provide reliable information. To deal with this shortage of direct
data, the board provided a second level of inputs that can be applied in three
situations.
Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that
fair value measures of many assets and liabilities are less precise. The board
describes Level 3 inputs as "unobservable," and limits their use by saying they
"shall be used to measure fair value to the extent that observable inputs are
not available." This category allows "for situations in which there is little,
if any, market activity for the asset or liability at the measurement date".
Earlier in the standard, FASB explains that "observable inputs" are gathered
from sources other than the reporting company and that they are expected to
reflect assumptions made by market participants.
18
STOCK-BASED COMPENSATION
Our company records stock based compensation in accordance with the guidance in
ASC Topic 505 and 718 which requires our company to recognize expense related to
the fair value of its employee stock option awards. This eliminates accounting
for share-based compensation transactions using the intrinsic value and requires
instead that such transactions be accounted for using a fair-value-based method.
Our company recognizes the cost of all share-based awards on a graded vesting
basis over the vesting period of the award.
EARNINGS PER SHARE
Our company follows ASC Topic 260 to account for the earnings per share. Basic
earnings per common share ("EPS") calculations are determined by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted earnings per common share calculations are determined
by dividing net income by the weighted average number of common shares and
dilutive common share equivalents outstanding. During periods when common stock
equivalents, if any, are anti-dilutive they are not considered in the
computation.
RECENT ACCOUNTING PRONOUNCEMENTS
Our company has evaluated all the recent accounting pronouncements issued
through November 2013 and believes that none of them will have a material effect
on our company's financial statement.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our chief executive officer (our
principal executive officer) and our chief financial officer (our principal
financial officer and principle accounting officer) to allow for timely
decisions regarding required disclosure.
As of the end of our quarter covered by this report, we carried out an
evaluation, under the supervision and with the participation of our chief
executive officer (our principal executive officer) and our chief financial
officer (our principal financial officer and principle accounting officer), of
the effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our chief executive officer (our principal
executive officer) and our chief financial officer (our principal financial
officer and principle accounting officer) concluded that our disclosure controls
and procedures were effective as of the end of the period covered by this
quarterly report.
CHANGES IN INTERNAL CONTROL
During the period covered by this report there were no changes in our internal
control over financial reporting that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
19
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered beneficial shareholder, is an adverse
party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
As a "smaller reporting company" we are not required to provide the information
required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit No. Description
----------- -----------
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
2.1 Share Exchange Agreement among Life Stem Genetics Inc., Life Stem
Genetics, Inc. and the shareholders of Life Stem Genetics, Inc.
dated August 30, 2013 (incorporated by reference to our Current
Report on Form 8-K filed on September 3, 2013)
2.2 Amending Agreement among Life Stem Genetics Inc., Life Stem
Genetics, Inc. and the Shareholders of Life Stem Genetics, Inc.
dated September 19, 2013 (incorporated by reference to our Current
Report on Form 8-K filed on October 8, 2013)
(3) (I) ARTICLES OF INCORPORATION; (II) BY-LAWS
3.1 Articles of Incorporation (incorporated by reference to our
Registration Statement on Form S-1 filed on September 11, 2012).
3.2 Bylaws (incorporated by reference to our Registration Statement on
Form S-1 filed on September 11, 2012).
3.3 Certificate of Amendment filed on September 17, 2013 with the
Nevada Secretary of State with an effective date of September 18,
2013 (incorporated by reference to our Current Report on Form 8-K
filed on September 20, 2013).
3.4 Articles of Merger (incorporated by reference to our Current
Report on Form 8-K filed on June 28, 2013).
20
Exhibit No. Description
----------- -----------
(10) MATERIAL CONTRACTS
10.1 Consulting Agreement between Life Stem Genetics, Inc. and James
Vanden Bosch dated December 18, 2012 (incorporated by reference to
our Current Report on Form 8-K filed on October 8, 2013)
10.2 Amending Consulting Agreement between Life Stem Genetics, Inc. and
James Vanden Bosch dated February 8, 2013 (incorporated by
reference to our Current Report on Form 8-K filed on October 8,
2013)
10.3 Amending Consulting Agreement between Life Stem Genetics, Inc. and
James Vanden Bosch dated September 10, 2013 (incorporated by
reference to our Current Report on Form 8-K filed on October 8,
2013)
10.4 Employment Agreement between Life Stem Genetics, Inc. and Gloria
Simov dated January 1, 2013 (incorporated by reference to our
Current Report on Form 8-K filed on October 8, 2013)
10.5 Facilitation Agreement between Life Stem Genetics, Inc. and Prince
Marketing Group Limited dated March 13, 2013 (incorporated by
reference to our Current Report on Form 8-K filed on October 8,
2013)
10.6 Implementation and Management Agreement between Life Stem
Genetics, Inc. and Lexington Management Inc., dated for reference
January 1, 2013 (incorporated by reference to our Current Report
on Form 8-K filed on October 8, 2013)
10.7 Press Agreement between Life Stem Genetics, Inc. and Contrarian
Press LLC dated September 25, 2013 (incorporated by reference to
our Annual Report on Form 10-K filed on October 29, 2013)
(21) SUBSIDIARIES OF REGISTRANT
21.1 Life Stem Genetics, Inc., a State of South Dakota corporation
(31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
31.1* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of the
Principal Executive Officer
31.2* Section 302 Certifications under Sarbanes-Oxley Act of 2002 of the
Principal Financial Officer and Principal Accounting Officer
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of the
Principal Executive Officer
32.2* Section 906 Certifications under Sarbanes-Oxley Act of 2002 of the
Principal Financial Officer and Principal Accounting Officer
101** INTERACTIVE DATA FILES
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.
21
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LIFE STEM GENETICS INC.
(Registrant)
Dated: November 19, 2013 By: /s/ Gloria Simov
-----------------------------------------------
Gloria Simov
President, Chief Executive Officer and Director
(Principal Executive Officer)
Dated: November 19, 2013 By: /s/ Heather Sharp
-----------------------------------------------
Heather Sharp
Chief Financial Officer and Director
(Principal Financial Officer and Principal
Accounting Officer)
22