Viratech Corp. and Subsidiaries

Transcription

1 Viratech Corp. and Subsidiaries Consolidated Financial Statements as of December 31, 2018 and 2017 and the Periods Ended December 31, 2018 and 2017

2 VIRATECH CORP. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) TABLE OF CONTENTS Page Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Consolidated Statements of Cash Flows 4 Consolidated Statement of Stockholders Equity(Deficit) 5 Consolidated Notes to the Financial Statements 6-19

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7 VIRATECH CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2018 and 2017 NOTE 1 Organization, History and Business Activity Viratech Corp., formerly known as Imperia Entertainment, Soleil Film and Television, Inc. Ameridream Entertainment, Inc. and Mc Smoothie s, Inc. (the Company) was incorporated under the laws of the state of California as Acquisition Solutions on March 21, It became a Nevada corporation on July 18, It has acquired an extensive library of intellectual property focused on cancer prevention, detection and treatment and runs a social networking website focused on cancer research. In February 2017, the Company signed a Stock Purchase Agreement to acquire an additional thirty five percent of Newswire, Inc. for the one hundred percent of common stock it held in Cancer.im, Inc. This allowed the Company to hold a fifty percent ownership of Newswire, Inc. This agreement became effective for financial purposes on April 1, On June 10, 2018, the Company amended this agreement and transferred all related Intellectual Property and the Social Network Wiki on the Cancer.im, Inc. project for the release of any claims by the parties for time, money and any other claims for service agreements. On June 4, 2018, the Company signed an agreement to acquire Cambridge Golf, LLC and its subsidiaries Body Symphony, LLC and Medori, LLC, an innovative producer of golf products, fitness and lifestyle products. Cambridge merged with Viratech Corp. with an effective date of July 1, 2018 even though certain parts of the transaction were not completed until August 6, Cambridge Golf will be the operating company. Cambridge Golf is targeting the multi-billion-dollar US market for golf, nutrition and lifestyle products. Specifically, the company is targeting the US golf market. Through its unique approach, Cambridge Golf is positioned to participate in this massive market through its strategic and targeted line of products tailored for the golf and sports enthusiast. Cambridge Golf is poised to bring innovation to the golfing market with creative performance nutrition products, golf balls, equipment, clothing, accessories and more. Cambridge Golf is a platform to accelerate innovation for the golfing market and bring additional innovation, growth and technologically advanced products to market. Post-merger, the company will exclusively focus on Cambridge Golf products. Cambridge Golf will be announcing the launch of a newly revamped website as well in an effort to create a richer and more interactive user experience. Once live, the new website will be updated on a regular basis with news of product launches, business activity, corporate milestones, acquisitions, events, and investor and financial information. About Cambridge Golf:

8 6 The Company plans on continuing to extend and deepen its product lines to include other progressive market segments through acquisitions and organic growth of existing product lines. Cambridge NOTE 2 Summary of Significant Accounting Policies This summary of significant accounting policies of Viratech is presented to assist in understanding Viratech s financial statements. The financial statements and notes are representations of Viratech s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Risk Viratech places its cash and temporary cash investments with established financial institutions. Management feels this risk is mitigated due to the longstanding reputation of these banks. In the normal course of business, the Company extends unsecured credit to the majority of its customers. Management periodically reviews its outstanding accounts receivable and establishes an allowance for doubtful accounts based on historical collection trends and other criteria. The Company currently does not have any open accounts receivable. Cash and Cash Equivalents Viratech considers all highly liquid investments with maturities of three months or less to be cash equivalents. Principles of Consolidation The consolidated financial statements include the accounts of Viratech Corp and its fifty percent owned subsidiary Newswire, Inc. All intercompany transactions are eliminated in consolidation. 7

9 Fair Value of Financial Instruments Effective January 1, 2008, the Company adopted FASB ASC 820, Fair Value Measurements and Disclosures, Pre Codification SFAS No. 157, Fair Value Measurements, which provides a framework for measuring fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 Quoted prices for identical assets and liabilities in active markets; Level 2 Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3 Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The Company designates cash equivalents (consisting of money market funds) and investments in securities of publicly traded companies as Level 1. The total amount of the Company s investment classified as Level 3 is de minimis. The fair value of the Company s debt as of December 31, 2018 and 2017 approximated fair value at those times. Fair value of financial instruments: The carrying amounts of financial instruments, including cash and cash equivalents, short-term investments, accounts payable, accrued expenses and notes payables approximated fair value as of December 31, 2018 and 2017 because of the relative short term nature of these instruments. At December 31, 2018 and 2017, the fair value of the Company s debt approximates carrying value. Goodwill and other indefinite-lived intangibles The Company records the excess of purchase price over the fair value of the identifiable net assets acquired as goodwill and other indefinite-lived intangibles. The FASB standard on goodwill and other intangible assets, prescribes a two-step process for impairment testing of goodwill and indefinite-lived intangibles, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment.

10 Shares for Services and Other Assets 8 The Company accounts for stock-based compensation based on the fair value of all option grants or stock issuances made to employees or directors on or after its implementation date, as well as a portion of the fair value of each option and stock grant made to employees or directors prior to the implementation date that represents the unvested portion of these share-based awards as of such implementation date, to be recognized as an expense, as codified in ASC 718. The Company calculates stock option-based compensation by estimating the fair value of each option as of its date of grant using the Black-Scholes option pricing model. These amounts are expensed over the respective vesting periods of each award using the straight-line attribution method. Compensation expense is recognized only for those awards that are expected to vest, and as such, amounts have been reduced by estimated forfeitures. The Company has historically issued stock options and vested and no vested stock grants to employees and outside directors whose only condition for vesting has been continued employment or service during the related vesting or restriction period. Intangibles with Finite Lives The Company applies the provisions of Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ) , Property, Plant and Equipment, where applicable to all long lived assets. FASB ASC addresses accounting and reporting for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with FASB ASC FASB ASC requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. The Company does not amortize any intangible assets with finite lives. Goodwill and intangible assets are reviewed for potential impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Revenue Recognition The Company applies ASC 606 Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. Advertising Advertising costs are expensed as incurred

11 Income Taxes 9 The Company accounts for income taxes under Section of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date. The Company adopted section of the FASB Accounting Standards Codification ( Section ). Section addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section , the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section Segments The Company operates in one business segment, namely the business of an innovative producer of golf products, fitness and lifestyle products. The Company through its subsidiaries sells certain nutritional and related products, which it considers all to be in the category of lifestyle products. Loss Per Share The Company is required to provide basic and dilutive earnings (loss) per common share information. The basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities.

12 10 For the periods ended September 30, 2018 and December 31, 2017, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. There were no potentially dilutive securities as of December 31, 2018 and Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company s financial statements upon adoption. Reclassifications Certain amounts have been reclassified and represented to conform to the current financial statement presentation. NOTE 3 Financial Condition and Going Concern Viratech s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Viratech has incurred net losses through December 31, 2018 in the amount of $2,102,092. This factor raises doubt as to Viratech s ability to obtain debt and/or equity financing and achieve profitable operations. Viratech s management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors. Ultimately, Viratech will need to achieve profitable operations in order to continue as a going concern. There are no assurances that Viratech will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support Viratech s working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, Viratech will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, Viratech may be required to curtail its operations.

13 NOTE 4 Acquisition 11 Effective July 1, 2018, Viratech acquired all membership interests in Cambridge Golfing, LLC ( CGLLC ). The purchase price for the acquisition of CGLLC was for the assumption of the net liabilities of CGLLC. The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown below. Cash $ 122,719 Inventories 45,940 Note receivable and accrued interest 76,993 Property and equipment, net of accum. depreciation 58,506 Goodwill 206,396 Total assets acquired 510,554 Accounts payable and accrued expenses 972,730 Notes payable 236,033 Total liabilities assumed 1,208,763 Net assets acquired (698,209) Purchase price - Bargain purchase (loss) $ (698,209) The consolidated financial statements herein are presented under predecessor entity reporting and because the acquiring entity had no operations, prior historical information of the acquirer is not presented. On January 1, 2018, Cambridge acquired all membership interests in Body Symphony, LLC ( BSLLC ) for 23,561,312 shares of its common stock. The purchase price for the acquisition of was $206,296 was consisting of the 23,561,312 common shares issued and valued at $ per share which was the price of the Company s common stock in the market place.

14 12 The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown below. Cash $ 4,249 Inventories 12,500 Property and equipment, net of accum. depreciation 41,000 Goodwill 236,039 Total assets acquired 293,788 Accounts payable and accrued expenses 16,459 Notes payable 71,033 Total liabilities assumed 87,492 Net purchase price $ 206,296 On June 14, 2018, the Company additionally acquired the assets of Medori, LLC ( MLLC ) for a commitment of 30,000,000 shares of common stock of the Company to be valued at $125,000. MLLC had limited operations prior to this point in time and the transaction was recorded as an acquisition amount of $114,121, which was the net asset value of the Company. MLLC is a wholly-owned subsidiary of Cambridge. The consolidated financial statements consist of Cambridge, LLC and its wholly-owned subsidiaries, MLLC and BSLLC, collectively referred to herein as the Company or Cambridge. All significant intercompany transactions and balances have been eliminated in consolidation. Cambridge plans on becoming an innovative producer of golf products, fitness and lifestyle products. NOTE 5 Inventories Inventories consist of components and finished goods and are stated at the lower of cost or market. Cost is determined using the first-in first-out method. December 31, December 31, Finish goods $ 89,367 $ 36,782

15 NOTE 6 Property and Equipment 13 At December 31, 2018 and 2017, property and equipment consisted of the following: December 31, December 31, Equipment $ 60,009 $ 19,009 Websites 34,100 15,000 94,109 34,009 Accumulated dep. and amortization 29,328 5,268 Net property, plant and equip. $ 64,781 $ 28,741 Depreciation and amortization expense was $24,060 and $5,268 for the years ended December 31, 2018 and NOTE 7 Note Receivable The Company has a unsecured loan receivable at a rate of 2% per annum, due upon demand. NOTE 8 Goodwill At December 31, 2018 and 2017, intangibles consisted of the following: December 31, December 31, Goodwill $ 308,815 $ 206,396

16 NOTE 9 Notes Payable 14 The Company s long-term debt consists of the following: December 31, December 31, Note payable, 8%, due June 14, 2019 unsecured. $ 10,000 $ 20,000 Note payable, 5%, due July 14, 2019 Unsecured 25,000 75,000 Notes payable, 6-15% interest, unsecured (1) 56,986 - Total due 91,986 95,000 Current portion (91,986) (95,000) Long-term portion $ - $ - Principal repayments for the next years are as follows: December 31, Amount 2019 $ 91,986 Thereafter - $ 91,986 (1) Various notes are being renegotiated as to terms and due date.

17 NOTE 10 Notes Payable-Related Parties 15 The Company s long-term debt consists of the following: December 31, December 31, Note payable, 5%, due June 14, 2019 unsecured. $ - $ 25,000 Note payable, 5%, due July 14, 2019 Unsecured 7,000 32,000 Total due 7,000 57,000 Current portion (7,000) (57,000) Long-term portion $ - $ - Principal repayments for the next years are as follows: December 31, Amount 2019 $ 7,000 Thereafter - $ 7,000 NOTE 11 Advances Payable Non-affiliates Non-affiliates have loaned the Company $70,000, which will be converted to Common Stock at $.01 by June 30, Affiliates A related party loaned $21,819 to the Company. This loan was paid off in October NOTE 12 Due to Capital Partners This is the obligation due for the acquisition of Medori, LLC. The contract calls for 30,000,000 shares of Common Stock to be issued based on benchmarks of the Company s operations. The amount of $125,000 has been recorded for the original capital contributed into Medori by the Members of the LLC.

18 16 NOTE 13 Settlement of Debt from Prior Activities The Company had liabilities of a total of $400,000 from prior activities. The Company settled this obligation for a non-interest bearing note of $40,000, payable in monthly installments of $3,000 until fully paid. The Company believes it owes approximately $67,000 at December 31, 2018 and is currently in default on the agreement. The Company expects to settle this debt by June 30, NOTE 14 Income Taxes The Company adopted the provisions of ASC (formerly known as FIN No. 48, Accounting for Uncertainty in Income Taxes). ASC clarifies the accounting for uncertainty in income taxes recognized in a company s financial statements. ASC requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likelythan-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The application of income tax law is inherently complex. Laws and regulation in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding the income tax exposures. Interpretations and guidance surrounding income tax laws and regulations change over time. As such, changes in the subjective assumptions and judgments can materially affect amounts recognized in the balance sheets and statements of income. The Company has no unrecognized tax benefit, which would affect the effective tax rate if recognized. There has been no significant change in the unrecognized tax benefit during the period ended September 30, We classify interest and penalties arising from the underpayment of income taxes in the statement of income under general and administrative expenses. As of September 30, 2018, we had no accrued interest or penalties related to uncertain tax positions. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

19 17 The components of deferred income tax assets (liabilities) at December 31, 2018, were as follows: Balance Rate Tax Federal loss carryforward $2,102,092 21% $ 441,439 Valuation allowance (441,439) Deferred tax asset $ - Due to the passage of the Tax Cuts and Jobs Act on December 20, 2017 the rate of the U.S. Federal Income Tax dropped from 34% to 21%, which is a flat percentage tax rate used for the calculation of the deferred income tax assets. The new law also changes the rules on NOL carry forward. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However, NOL carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income. NOTE 15 Common Stock The Company issued common stock for the following: 1. The Company issued 52,650,000 shares of its Common Stock for services rendered in the amount of $185, The Company issued 23,561,312 shares of its Common Stock for the acquisition of Body Symphony valued at $206, The Company issued 232,909,090 shares of its Common Stock for various obligations of the Company in the amount of $462, The Company issued 178,023,999 shares of its Common Stock for notes payable in the amount of $180, The Company issued 119,191,995 shares of its Common Stock for Founders interests valued at $191,254.

20 NOTE 16 Preferred Stock 18 Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock as described below: Total Series Authorized Stated Value Voting Annual Dividends per Share Series A 2,000,000 $.0001 Yes As per common stock Convertible Yes Series B 7,000,000 $.0001 Yes As per common Yes (a) stock (a) Each share of Series B Preferred Stock is convertible into fifty shares of common stock. NOTE 16 Commitments and Contingencies Lease Commitments The Company leases office and manufacturing facilities on a month-to-month basis for a monthly base rent of $1,950. The Company leases certain equipment under a Master Lease Agreement that expires February 28, 2020 at a rate of $350 per month. Rent expense totaled $28,466 for the year ended December 31, NOTE 12 Subsequent Events In accordance with ASC , the Company has analyzed its operations subsequent to December 31, 2018 through the date these financial statements were issued and has determined that it does have one material subsequent event to disclose in these financial statement other than the events described above.

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