The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
Notes to Condensed Consolidated Financial
Statements
For the three months ended March 31, 2019
and 2018
(Unaudited)
Note 1 – Nature of the Business
Gulf West Security
Network, Inc. (a Nevada Corporation), and its wholly-owned subsidiaries, formerly known as “NuLife Sciences, Inc.”
(“we”, “us”, “our”, “Gulf West”, “GWSN”, or the “Company”),
are principally engaged in providing residential and commercial electronic security, home automation, and systems integration services
on both a retail and wholesale basis.
The Company’s
retail division, which includes its wholly-owned subsidiary LJR Security Services, Inc. (a Louisiana Corporation) (“LJR”),
is actively engaged in the hands-on design, engineering, sales, installation, after-market servicing, inspection and remote electronic
monitoring of home (residential) burglar, fire and medical alarm systems as well as fully-integrated business (commercial) security
and automation systems in the United States.
The Company’s
wholesale division, which operates under the name Gulf West Security Network (or “Gulf West”), is further engaged in
the development and expansion of a proprietary coalition (alliance or network) of independently-branded life safety and property
protection providers, fire alert and suppression system installers, electronic remote monitoring and video surveillance specialists,
smart home designers, commercial systems integrators, structured wiring professionals and electrical contractors.
Merger
On August 9, 2018,
the Board of Directors of the Company through its wholly-owned subsidiary NuLife Acquisition Corp. (“NuLife Sub”) approved
and executed an agreement of merger and plan of reorganization (the “Merger Agreement”), to become effective at such
time as the articles of merger have been filed with the Secretary of State of Louisiana (the “Effective Time”), and
after the satisfaction or waiver by the parties thereto of the conditions set forth in Article VI of the Merger Agreement. Pursuant
to the terms of the Merger Agreement, and in exchange for all one hundred (100) issued and outstanding shares of LJR Security Services,
Inc. (“LJR”), LJR received one thousand (1,000) shares of series D senior convertible preferred stock, par value $.001
per share (the “Series D Preferred Stock”) of the Company, convertible into fifty million two hundred thirty-nine thousand
five hundred forty-one (50,239,541) shares of common stock of the Company. In addition, the LJR shareholder received one share
of series C super-voting preferred stock of NuLife which granted the holder 50.1% of the votes of NuLife at all times.
The merger was accounted
for as a reverse merger, whereby LJR was considered the accounting acquirer and became our wholly-owned subsidiary. In accordance
with the accounting treatment for a “reverse merger”, the Company’s historical financial statements prior to
the reverse merger has been replaced with the historical financial statements of LJR prior to the reverse merger. The consolidated
financial statements after completion of the reverse merger include the assets, liabilities, and results of operations of the combined
company from and after the closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’
equity remaining in the consolidated financial statements.
Restatement of
Articles of Incorporation
On September 19, 2018,
LJR Security Services, Inc. amended and restated its articles of incorporation providing for a change in the Company’s name
to “Gulf West Security Network, Inc.” The Company’s authorized shares of common stock, preferred stock and the
par value of the stock will remain unchanged. The Company also amended and restated its bylaws to reflect the name change.
On September 20, 2018,
the Board of Directors of the Company designated one (1) share of Series C Preferred Stock (the “Series C Stock”) and
one thousand (1,000) shares of Series D Preferred Stock (the “Series D Stock”). The classes of Series C Stock and Series
D Stock were created in anticipation of the closing of the Merger Agreement.
Change of Fiscal
Year
On September 28, 2018,
the Company’s Board approved a change in fiscal year end from September 30th to December 31st. The decision to change the
fiscal year end was related to the recent merger of the Company with LJR to closely align its operations and internal controls
with that of its wholly owned subsidiary LJR.
Note 2 – Summary of Significant Accounting
Policies
Use of Estimates
The preparation of the condensed consolidated
financial statements in conformity 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, and disclosure of contingent liabilities
at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could
differ from those estimates.
Management makes estimates that affect certain
accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments
or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.
Principles
of Consolidation
The Company’s
condensed consolidated financial statements include all accounts of
Gulf West Security Network, Inc., LJR, and NuLife
Sciences, Inc. from September 28, 2018, the consummation of the Merger Agreement.
All
inter-company balances and transactions have been eliminated in consolidation.
Basis
of Presentation
The
accompanying consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the “SEC”).
Cash
and Cash Equivalents
The
Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other
highly-liquid investments with maturities of one year or less, when purchased, to be cash. As of March 31, 2019 and December 31,
2018, the Company had no cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness
of the financial institutions and has determined the credit exposure to be negligible.
Capitalization
of Fixed Assets
The
Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater
than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended;
or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing
less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are
expensed as incurred.
Goodwill
Goodwill is not amortized
but are evaluated for impairment annually or when indicators of a potential impairment are present. The Company intends to perform
its impairment testing of goodwill annually. The annual evaluation for impairment of goodwill is based on management’s assessment
of the carrying values of such assets.
Revenue Recognition
The
Company retrospectively adopted FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts
with Customers”,
on January 1, 2018, which did not have a material impact on the Company’s financial statements. The Company generates
revenue primarily through contractual monthly recurring fees received for monitoring and related services provided to customers.
In transactions involving security systems that are sold outright to the customer, or where equipment is already owned by the customer,
the Company’s performance obligations include monitoring, related services, and the sale and installation, or refurbish and
repair, of the security systems. Revenue associated with the sale and installation of security systems is recognized once installation
is complete, and is reflected in installation and repair revenue in the consolidated statements of operations. Revenue associated
with monitoring and related services is recognized as those services are provided, and is reflected in monitoring and related services
revenue in the consolidated statements of operations.
Early termination
of the contract by the customer results in a termination charge in accordance with the contract terms. Contract termination charges
are recognized in revenue when collectability is probable, and are reflected in monitoring and related revenue in the consolidated
statements of operations. Amounts collected from customers for sales and other taxes are reported net of the related amounts remitted.
Barter Transactions
The Company conducts
certain barter sales through trade organizations for which it is a member, as are some of its customers. The barter transactions
are generally related to the Company providing its security services, and the value of these services is recorded at fair value
which is the contracted for value of the services with the customer, which is the more readily available measure as to its valuation.
Fair Value Measurements
Disclosures
about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in its balance
sheet, where it is practicable to estimate that value.
In
accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” the Company measures certain financial instruments
at fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance
with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
These tiers include:
●
Level
1, defined as observable inputs such as quoted prices for identical instruments in active markets;
●
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not
active; and
●
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
Fair Value Measurement
at March 31, 2019
|
|
|
Carrying Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Derivative liabilities, debt and equity instruments
|
|
$
|
55,461
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
55,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets are
considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
Changes in Level 3 assets measured at fair
value for the three months ended March 31, 2019 were as follows:
Balance, December 31, 2018
|
|
$
|
111,291
|
|
Beneficial conversion derivative liability assumed in Merger
|
|
|
-
|
|
Change in fair value of derivative
|
|
|
(55,830
|
)
|
Balance, March 31, 2019
|
|
$
|
55,461
|
|
Derivative Financial Instruments
The Company evaluates
our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at
its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.
For stock-based financial instruments, the Company uses the Black-Scholes-Merton pricing model to value the derivative instruments.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity,
is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current
or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the
balance sheet date.
The Company estimates
the fair value of these instruments using the Black-Scholes option pricing model and the intrinsic value if the convertible notes
are due on demand.
The
Company determined that certain convertible debt instruments outstanding as of the date of these financial statements include
an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of
ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of
the convertible notes payable have a variable exercise price, thus are convertible into an indeterminate number of shares
for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the
embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting
period. Any change in fair value during the period is recorded in earnings as “Income (loss) from discontinued operations.”
Please refer to Note 3 below.
Going Concern
The Company’s
consolidated financial statements are prepared using accounting principles generally accepted in the United States (“U.S.
GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has limited commercial experience and had a net loss of $221,167 for the three months ended
March 31, 2019, and an accumulated deficit of $1,735,547 and a working capital deficit of $1,553,075 at March 31, 2019. The Company
has not yet established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going
concern. The accompanying consolidated financial statements for the three months ended March 31, 2019, have been prepared assuming
the Company will continue as a going concern. The Company’s cash resources will likely be insufficient to meet its anticipated
needs during the next twelve months. The Company will require additional financing to fund its future planned operations, including
research and development and commercialization of its products.
The ability of the
Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it
establishes a revenue stream and becomes profitable. Management’s plans to continue as a going concern include raising additional
capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will
be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely
basis, the Company will be forced to delay or scale down some or all of its development activities or perhaps even cease the operation
of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure
other sources of financing and attain profitable operations. There is substantial doubt about the ability of the Company to continue
as a going concern within one year after the date that the consolidated financial statements are issued. The accompanying consolidated
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Recent Accounting
Pronouncements
In
February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding
lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim
and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition
approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest
period presented in the consolidated financial statements. The Company evaluated the impact that the application of the new standard has on its consolidated financial
statements and related disclosures and determined there has been no impact. The Company adopted the provisions of this standard
in the first quarter of fiscal 2019.
In January 2017, the
FASB issued Accounting Standards Update No. 2017-04,
Simplifying the Test for Goodwill Impairment
(“ASU
2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test,
which requires a hypothetical purchase price allocation and may require the services of valuation experts. ASU 2017-04 is effective
for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and should be applied on a prospective
basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1,
2017. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.
Other recent accounting
pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants,
and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s
present or future consolidated financial statements.
Note 3 –Acquired Assets
and Assumed Liabilities of Discontinued Operations
Assets Acquired
and Liabilities Assumed through Reverse Merger
Pursuant to the terms
of the Merger Agreement, and in exchange for all one hundred (100) issued and outstanding shares of LJR Security Services, Inc.,
LJR received one thousand (1,000) shares of series D senior convertible preferred stock, par value $.001 per share (the “Series
D Preferred Stock”) of the Company, convertible into fifty million two hundred thirty-nine thousand five hundred forty-one
(50,239,541) shares of common stock of the Company. In addition, the LJR shareholder received one (1) share of series C super-voting
preferred stock of the Company which granted the holder 50.1% of the votes of the Company at all times.
As a result of the
Reverse Merger, the Company has acquired the following assets and liabilities which were recorded at fair value. The fair values
of assets acquired and liabilities assumed are as follows:
Security deposit
|
|
$
|
4,871
|
|
Goodwill
|
|
|
612,771
|
|
Accrued expenses
|
|
|
(125,647
|
)
|
Accrued interest
|
|
|
(49,261
|
)
|
Notes payable
|
|
|
(117,500
|
)
|
Convertible notes
|
|
|
(138,500
|
)
|
Derivative liability
|
|
|
(172,532
|
)
|
Total identified net assets
|
|
$
|
14,202
|
|
As a result of the Reverse Merger, we acquired
approximately $0.6 million of liabilities of the former operations of NuLife Sciences, Inc., which have been discontinued. We are
evaluating the means to relieve the Company of these liabilities. The assets and liabilities described below have been classified
as discontinued operations in the consolidated financial statements.
Goodwill
The Company acquired
goodwill through the Reverse Merger described above. The carrying value of $612,771 was impaired as of December 31, 2018.
Notes Payable
As a result of the
Reverse Merger the Company assumed notes payable with total outstanding principal of $117,500 and accrued interest of $36,304,
detailed as follows:
|
·
|
Demand note payable with
outstanding principal of $25,000, and accrued interest of $17,400. The note matured on June 30, 2015 and carries an interest rate
of 12%. This note is in default.
|
|
·
|
Demand notes payable to East West Secured Developments,
LLC, with a combined outstanding principal of $74,500, and accrued interest of $18,061. These notes matured on October 31, 2016
and carry an interest rate of 12%. These notes are in default.
|
|
·
|
Term note payable
with
outstanding principal of
$18,000,
and accrued interest of $843
. The
note is due on July 31, 2019 and carries an interest at the rate of 3%.
|
As of March 31, 2019,
notes payable had total outstanding principal of $117,500 and accrued interest of $43,720. These liabilities have been incorporated
into liabilities from discontinued operations.
Convertible Notes
As a result of the
Reverse Merger the Company assumed convertible notes with total outstanding principal of $138,500 and accrued interest of $11,078,
detailed as follows:
|
|
March 31, 2019
|
(A) Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share and is due December 2019
|
|
$
|
5,000
|
|
(B) Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share and is due August 2020
|
|
|
50,000
|
|
(C) Convertible note payable, annual interest rate of 5%, convertible into common stock at a variable rate per share and was due September 2018 (in default)
|
|
|
63,500
|
|
(D) Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.30 per share and is due October 13, 2020
|
|
|
20,000
|
|
Total convertible debt
|
|
$
|
138,500
|
|
A. Originally made in 2017,
outstanding
principal of
$5,000, and accrued interest of $715.
B. Hayden note was made on August 23, 2017,
outstanding
principal of
$50,000, and accrued interest of $4,538.
C. Current holder acquired the note in
May 2018. Current
outstanding principal of
$63,500, and accrued interest
of $4,295.
D. Escala note was made October 13, 2017,
outstanding
principal of
$20,000, and accrued interest of $1,530.
As of March 31, 2019,
convertible notes had total outstanding principal of $138,500 and accrued interest of $16,450. These liabilities have been incorporated
into liabilities from discontinued operations.
Derivative Liability
As of March 31, 2019,
the derivative liabilities were valued at $55,461, related to a convertible note due September 2018 (listed above). These liabilities
have been incorporated into liabilities from discontinued operations.
The fair value of
the described embedded derivative was determined using the Black-Scholes Model with the following assumptions:
|
March 31,
2019
|
(1) dividend yield of
|
0%;
|
(2) expected volatility of
|
336%;
|
(3) risk-free interest rate of
|
2.18%;
|
(4) expected life of
|
0.33 year;
|
(5) fair value of the Company’s common stock of
|
$0.08 per share.
|
Note 4 –
Prepaid Expenses
The Company has available
to its credit through certain trade organizations as a result of barter transactions for services. These amounts are available
for use with certain vendors and establishments who are part of the same trade organization. These balances do not represent cash
available to the Company, and as such are recorded as the prepaid expenses account as incurred.
As of March 31, 2019
and December 31, 2018, the available barter credit balances were $23,222 and $22,760, respectively.
Note 5 –
Bridge Loan
As of March 31, 2019,
the Company received advances totaling $746,000 from certain unrelated third parties. The formal structure and terms of the advances
have not yet been determined by the Company and the third parties. Subsequent to the period ended March 31, 2019 the Company has received an additional advances totaling $62,080
from the same parties.
Note 6 –
Capital Stock
The Company is authorized
to issue 475,000,000 shares of $.001 par value common stock and 25,000,000 shares of $.001 par value preferred stock.
As of March 31, 2019,
the Company had 4,518,250 shares of its common stock issued and outstanding, with 742,500 shares of its Series A Convertible Preferred
Stock issued and outstanding, 0 shares of its Series B Convertible Preferred Stock issued and outstanding, 1 share of its Series
C Super-Voting Preferred Stock issued and outstanding, and 1,000 shares of its Series D Senior Convertible Preferred Stock issued
and outstanding.
Description of
Preferred Stock:
Series A Preferred
Stock
As authorized in the
Company’s Amended and Restated Articles of Incorporation, the Company has 2,000,000 shares of Series A Preferred Stock (“Series
A Stock”) authorized with the following characteristics:
● Holders of
the Series A Stock are entitled to receive dividends or other distributions with the holders of the common stock on an “as
converted” basis when, as, and if declared by the Board of Directors of the Company.
● Holders of
shares of Series A Stock, upon Board of Directors approval, may convert at any time following the issuance upon sixty-one (61)
day written notice to the Company. Each share of Series A Stock shall be convertible into such number of fully paid and non-assessable
shares of common stock as is determined by multiplying the number of issued and outstanding shares of the Company’s common
stock together with all other derivative securities, including securities convertible into or exchangeable for common stock, whether
or not then convertible or exchangeable (b) subscriptions, rights, options and warrants to purchase shares of common stock, whether
or not then exercisable, but entitled to vote on matters submitted to the shareholders, issued by the Company and outstanding as
of the date of conversion, by .000001, then multiplying that number of shares of Series A Stock to be converted.
● In case of
any consolidation, merger of the Company, or a change of control of the Company’s Board, the holders are entitled, without
any further action required or permission by the Board, to exercise their conversions rights. In the case of any consolidation,
merger of the Company, the Board shall mail to each holder of Series A Stock at least thirty (30) days prior to the consummation
of such event, a notice thereof and each such holder shall have the option to either (i) convert such holder’s shares of
Series A Stock into shares of common stock pursuant to this paragraph and thereafter receive the number of shares of common stock
or other securities or property, or cash, as the case may be, to which a holder of the number of shares of common stock of the
Company deliverable upon conversion of such Series A Stock would have been entitled upon conversion immediately preceding such
consolidation, merger or conveyance, or (ii) exercise such holder’s rights pursuant to Section 8.1(a) hereof; provided however
that the Series A Stock shall not be subject to or affected as to the number of conversion shares or the redemption or liquidation
price by reason of any reverse stock split affected prior or as a result of any reorganization.
● In the event
of a liquidation, the holders of shares of the Series A Stock shall be entitled to receive, prior to the holders of the other series
of preferred stock and prior and in preference to any distribution of the assets or surplus funds of the Company to the holders
of any other shares of stock of the Company by reason of their ownership of such stock, an amount equal to five dollars ($5.00)
per share with respect to each share of Series B Stock owned as of the date of Liquidation, plus all declared but unpaid dividends
with respect to such shares, and thereafter they shall share in the net Liquidation proceeds on an “as converted basis”
on the same basis as the holders of the common stock.
● The holders
of each share of Series A Stock shall have that number of votes as determined by multiplying the number of issued and outstanding
shares of the Company’s common Stock together with all other derivative securities issued by the Company and outstanding
as of the date of conversion, whether or not then convertible or exchangeable, entitled to vote on matters submitted to the shareholders,
by .000001, then multiplying that number of shares of Series A Stock to be converted.
● The Corporation
shall have the option to redeem all of the outstanding shares of Series A Stock at any time on an “all or nothing”
basis, unless otherwise mutually agreed in writing between the Corporation and the holders of shares of Series A Stock holding
at least 51% of such Series A Stock, beginning ten (10) business days following notice by the Company, at a redemption price the
higher of (a) five dollars ($5.00) per share, or (b) fifty percent (50%) of the trailing average highest closing bid price of the
Company’s common stock as quoted on www.OTCMarkets.com or the Company’s primary listing exchange on the date of notice
of redemption, unless otherwise modified by mutual written consent between the Company and the holders of the Series A Stock (the
"Conversion Price"). Redemption payments shall only be made in cash within sixty (60) days of notice by the Company to
redeem.
● The shares
of Series A Stock acquired by the Company by reason of conversion or otherwise can be reissued, but only as an amended class, not
as shares of Series A Stock.
Series C Preferred
Stock
● 1 share of
the Company’s authorized Series C Preferred Stock is issued and outstanding. Although the Series C Preferred Stock carries
no dividend, distribution, liquidation or conversion rights, each share of Series C Preferred Stock grants the holder 50.1% of
the total votes of all classes of capital stock of the Company and are able to vote together with the common stockholders on all
matters. Consequently, the holder of the Company’s Series C Preferred Stock is able to unilaterally control the election
of its board of directors and, ultimately, the direction of the Company.
Series D Preferred
Stock
● 1,000 of the
Company’s authorized 25,000,000 shares of preferred stock are designated as Series D Preferred Stock. Although the Series
D Preferred Stock have no voting rights, shares of Series D Preferred Stock in the aggregate are convertible into fifty million
two hundred thirty-nine thousand five hundred forty-one (50,239,541) shares of common stock of the Company. Additionally, the Series
D Preferred Stock has pari passu dividend, distribution and liquidation rights with the common stock.
Stock Options
As a result of the Reverse Merger the Company has outstanding the
following stock options as of the period ended March 31, 2019
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Term
|
|
Aggregate
Intrinsic Value
|
|
Outstanding,
March 31, 2019
|
|
|
|
2,120,000
|
|
|
$
|
0.17
|
|
|
|
1.00
|
|
|
$
|
355,200
|
|
|
Exercisable, March 31, 2019
|
|
|
|
2,120,000
|
|
|
$
|
0.17
|
|
|
|
1.00
|
|
|
$
|
355,200
|
|
Note 8 – Commitments & Contingencies
Office Lease
During the three months
ended March 31, 2019, the Company rented space on a month-to-month basis in a Class 1 office in Lafayette, LA which it currently
occupies. The monthly rent is $3,000. For the three months ended March 31, 2019 and 2018, the Company incurred $9,000 and $0 in
rent expense, respectively.
Laboratory Lease
During 2017, the Company
executed a 5-year lease for a laboratory located at NOVA Southeastern University to be used by NuLife for conducting bench research.
The lease calls for monthly payments of base rent of $1,925 along with applicable taxes and shared operating expenses. The lease
required a security deposit in the amount of $4,871 and requires a 4% increase in base rent annually. During the year ended December
31, 2018, the agreement was terminated, with rent declared due and payable immediately in the amount of $142,944, including $46,052
past due rent, $92,850 estimated future rent payments, and $4,042 brokerage fees. These liabilities have been incorporated into
liabilities from discontinued operations.
Litigation
From
time to time the Company may become a party to litigation in the normal course of business. Management believes that there are
no current legal matters that would have a material effect on the Company’s financial position or results of operations.