Notes
To Financial Statements
June
30, 2012
(Unaudited)
1.
BASIS OF PRESENTATION
The
accompanying unaudited financial statements have been prepared in accordance with both generally accepted accounting principles
for interim financial information, and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
The accompanying unaudited financial statements reflect all adjustments (consisting of normal recurring
accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim
periods presented. Interim results are not necessarily indicative of results for a full year.
2.
ORGANIZATION AND BUSINESS BACKGROUND
Exercise
For Life Systems Inc. (the “Company”) was originally incorporated in the State of North Carolina on October 2, 2006
as A.J. Glaser, Inc. On June 12, 2008, the Company filed Articles of Amendment to change the name of the Company to Exercise For
Life Systems Inc
.
On
February 10, 2011, the Company entered into a Plan of Exchange agreement with MediaMatic Ventures Inc., a privately-held company
incorporated under the laws of the Province of Alberta, Canada (“MMV”), and the shareholders of MMV (“MMV Shareholders”).
Pursuant to the agreement, the Company purchased all 15,685,692 of the issued and outstanding common shares of MMV from the MMV
shareholders in exchange for issuing 28,000,000 shares of the Company’s common stock to MMV shareholders, which gave
MMV shareholders an interest in the Company representing approximately 70% of the then issued and outstanding shares of the Company.
The Company and MMV were hereby reorganized, such that the Company acquired 100% the ownership of MMV, and MMV became a wholly-owned
subsidiary of the Company. Subsequent the deal was recinded and the financials have been restored to the pre acquisition phase.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) under the accrual basis of accounting.
Use
of Estimates
Financial
statements prepared in accordance with GAAP require management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, 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
Cash
equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased. The Company
maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits.
Long-Lived
Assets
In
accordance with ASC 350-30 (formerly SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets
), the
Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their then carrying
values may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future
cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying
amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available,
or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’s
management currently believes there is no impairment of its long-lived assets. There can be no assurance however, that market
conditions will not change or demand for the Company’s products under development will continue. Either of these could result
in future impairment of long-lived assets.
Fair
Value of Financial Instruments
ASC
820-10 (formerly SFAS No. 157,
Fair Value Measurements
) requires entities to disclose the fair value of financial instruments,
both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value.
ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. As June 30, 2012 and December 31, 2011, the carrying value of certain financial instruments
such as accounts receivable, accounts payable, accrued expenses, and amounts due to/from related party approximates fair value
due to the short-term nature of such instruments.
Net
(Loss) Income per Common Share – Basic and Diluted
Net
(loss) income per common share is computed based on the weighted average number of shares outstanding for the period
Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in making financial and operating decisions.
Companies are also considered to be related if they are subject to common control or common significant influence.
Recent
Accounting Pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its consolidated financial condition or the consolidated
results of its operations.
Credit
Quality of Financing Receivables and the Allowance for Credit Losses
In
July 2010, the Financial Accounting Standards Board (“FASB”) amended the requirements for
Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit Losses
. As a result of these amendments, an entity is
required to disaggregate by portfolio segment or class certain existing disclosures and provide certain new disclosures about
its financing receivables and related allowance for credit losses. The new disclosures as of the end of the reporting period are
effective for the fiscal year ending December 31, 2010, while the disclosures about activity that occurs during a reporting period
are effective for the first fiscal quarter of 2011. The adoption of this guidance did not impact the Company’s consolidated
results of operations or financial position.
Fair
Value Measurements and Disclosures
In
January 2010, the FASB issued authoritative guidance regarding fair value measures and disclosures. The guidance requires
disclosure of significant transfers between level 1 and level 2 fair value measurements along with the reason for the
transfer. An entity must also separately report purchases, sales, issuances and settlements within the level 3 fair value
roll forward. The guidance further provides clarification of the level of disaggregation to be used within the fair value measurement
disclosures for each class of assets and liabilities and clarified the disclosures required for the valuation techniques and inputs
used to measure level 2 or level 3 fair value measurements. This new authoritative guidance is effective for the Company
in fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this
guidance did not impact the Company’s consolidated results of operations or financial position.
4.
COMMON STOCK
Overall
the Company issued during 2011 issued 28,447,950 shares .
Common
stock issued to settle convertible loan
On
February 10, 2011, the Company issued 2,100,000 shares of its common stock to settle the loan of $21,000 from a third party, which
were accrued expenses due to the services rendered in connection with a reverse merger transaction and SEC compliance 10-K, 10-Q
and Edgarization.
The
loan holder had the option to convert the loan into common stock of the Company at the price of $.01 per share by August 2, 2011.
The
fair value of this stock issuance was $42,000 determined using the fair value of the Company’s common stock on the grant
date, at a market quoted price of $.02. The difference between the fair market value and the conversion price of $.01 per share
was recognized as loss on extinguishment of convertible debt.
In
February the Company issued 18,115,270 shares @.02 the market price for a failed merger resulting in an expense of $362,305.
The shares issued were later transferred to the new president and the Company has expensed these as stock for services.
In
February the Company issued 3,375,734 shares to pay off accrued liabilities of $45,079 and pay $22,436 in consulting fees.
Finally,
the Company issued 4,856,946 for services valued at market @..02 cents per share resulting in an expense of $97,139.
5.
GOING CONCERN UNCERTAINTIES
These
financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization
of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As
of June 30, 2012, the Company had an accumulated deficit of $847,665. Management has taken certain action and continues to implement
changes designed to improve the Company’s financial results and operating cash flows. The actions involve certain
cost-saving initiatives and growing strategies, including (a) reductions in headcount and corporate overhead expenses; and (b)
expansion into new market. Management believes that these actions will enable the Company to improve future profitability
and cash flow in its continuing operations through December 31, 2011. As a result, the 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 outcome of the Company’s ability to continue as a going concern.