Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Indicate by check mark whether the registrant
is large accelerated filer, and accelerated filer, or a non-accelerated filer. See definition of “accelerated filer”
and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
The aggregate market value of the shares
of Common Stock held by non-affiliates of the Company, based upon the closing price of the Common Stock on February 29, 2016 as
reported on the Nasdaq National Market, was approximately $30,000,000. Shares of Common Stock held by each executive officer and
director and by each person who owned 10% or more of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The determination of who was a 10% stockholder and the number of shares held by such person is based on Schedule 13G filings with
the Securities and Exchange Commission, or SEC, as of February 29, 2016.
As of August 31, 2016, there were 331,953,592
shares of the Registrant’s Common Stock outstanding.
The Annual Report on Form 10-K contains forward-looking statements
within the meaning of the federal securities laws. These forward-looking statements are based on Wholehealth Products, Inc.’s
current expectations, assumptions, estimates and projections about its business and industry. Words such as “believe,”
“expect,” “intend,” “plan,” “may” and other similar expressions identify forward-looking
statements. In addition, any statements referring to expectations, projections or other characterizations of future events or circumstances
are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those stated in the forward-looking statements. Investors should further understand these
forward-looking statements are based on the limited knowledge currently available to everyone concerned. Since many assumptions
herein are likely to vary from what will actually occur, investors should treat all forward-looking statements only as illustrations
based upon the assumptions and not as the operating results of Wholehealth Products, Inc. Therefore, investors are cautioned not
to place undue reliance on forward-looking statements, which relate only to the beliefs, expectations or intentions as of the date
on which the statements are made. Wholehealth Products, Inc. undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances arising after the date hereof. Thus, investors should refer to and carefully review
information in future documents Wholehealth Products, Inc. files with the Securities and Exchange Commission.
PART I
ITEM 1. BUSINESS
Corporate History
Wholehealth Products, Inc. formerly Gulf Western Petroleum
Corporation (the Company) was incorporated on February 21, 2006 in the State of Nevada as Georgia Exploration, Inc. The name was
originally changed on March 8, 2007 and recently in July 2012 to WholeHealth Products, Inc. The Company was engaged in the acquisition,
exploration and development of oil and natural gas reserves in the United States.
General Overview
The Company today is in the business of developing, manufacturing
and marketing in vitro diagnostic (IVD) tests for over-the-counter (OTC or consumer) and point-of-care (POC or professional) use
markets. The Company currently manufactures and markets a range of diagnostic test kits for consumer use through over-the-counter
(OTC) sales, and for use by health professionals, generally located at medical clinics, physician offices and hospitals known as
Points-of-Care (POC), in the United States. These test kits are known as in vitro diagnostic test kits or “IVD” products.
Research and Development
Our business plan is focused on expanding in the medical
field but we do not anticipate that we will expend any significant funds on research and development.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment over
the next twelve months, other than in the ordinary course of business.
Employees
We currently have four full-time and part-time
employees. We generally utilize short term contractors, consultants and professional service providers, as necessary. Our
directors and officers provide services on a month to month basis pursuant to contractual and oral arrangements, and have
signed both employment and consulting agreements covering their activities. We do not expect any material changes in the
number of employees over the next twelve months subject to business conditions and activity. We expect to utilize contractors
and consultants as needed to meet our staffing needs, and will continue to periodically evaluate costs and benefits of
staffing our resource requirements externally or internally. We expect the level of success of our business will drive the
timing and level of employees that we may retain in the future.
Going Concern
Our financial statements have been prepared assuming we will
continue as a going concern. We are in our development stage and, accordingly, have several capital initiatives but no revenues.
We have raised limited financing and have incurred operating losses since our inception. These factors raise substantial doubt
about our ability to continue as a going concern, and our ability to achieve and maintain profitability and positive cash flows
are dependent on our ability to secure sufficient financing to fund our business activities. We are actively pursuing financing
options which we believe would allow us to continue to expand our business opportunities. There are no assurances that we will
be able to obtain additional financing from investors or private lenders and, if available, such financing may not be on commercial
terms acceptable to us or our stockholders. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty. We intend to raise financing sufficient to fund our capital expenditure and working capital requirements
for the next twelve months principally through private placements and possibly public offerings.
ITEM 1A. RISK FACTORS
You should carefully consider these factors that may affect
future results, together with all of the other information included in this Form 10-K, in evaluating the business and the Company.
The risks and uncertainties described below are those that the Company currently believes may materially affect its business and
results of operation. Additional risks and uncertainties that the Company is unaware of or that it currently deems immaterial also
may become important factors that affect its business and result of operations. The Company’s common shares involve a high
degree of risk and should be purchased only by investors who can afford a loss of their entire investment. Prospective investors
should carefully consider the following risk factors concerning the Company’s business before making an investment.
In addition, you should carefully consider these risks
when you read “forward-looking” statements elsewhere in this Form 10-K. These are statements that relate to the Company’s
expectations for future events and time periods. Generally, the words “anticipate,” “expect,” “intends,”
and similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, and future
events and circumstances could differ significantly from those anticipated in the forward-looking statements.
Early Revenue Stage Company: Generation of Revenues
The Company is an early revenue stage company and an investor
cannot readily determine if the Company will become profitable. The Company is likely to continue to experience financial difficulties
during this early revenue stage and beyond. The Company may be unable to operate profitably, even if it generates additional revenues.
The Company may not obtain the necessary working capital to continue developing and marketing its products. Furthermore, the present
products may not receive sufficient interest to generate revenues or achieve profitability.
Need for Future Capital: Long-Term Viability of Company
The Company will need additional capital to continue its
operations.
There can be no assurance that the Company will
generate revenues from present operations of obtain sufficient capital on acceptable terms, if at all. Failure to obtain such
capital or generate such operating revenues would have an adverse impact on the Company’s financial position,
operations and ability to continue as a going concern. The Company’s operating and capital requirements during the next
fiscal year and thereafter will vary based on a number of factors, including the level of sales and marketing activities for
its services and products. There can be no assurance that additional private or public financing, including debt or equity
financing may be dilutive to stockholders present ownership levels and such additional equity securities may have rights,
preferences, or privileges that are senior to those of the Company’s existing common stock.
Furthermore, debt financing, if available, may require payment
of interest and potentially involve restrictive covenants that could impose limitations on the flexibility of the Company to operate.
The Company’s difficulty or failure to successfully obtain additional financing may jeopardize its ability to continue the
business and its operations.
Unpredictability of Future Revenues: Potential Fluctuation
in Operating Results
As a result of the Company’s limited operating history;
the Company is currently unable to accurately forecast its revenues. Current and future expense levels are based largely on the
Company’s marketing and development plans and estimates of future revenue. Sales and operating results generally depend on
the volume and timing of orders and on the Company’s ability to fulfill such orders, both of which are difficult to forecast.
The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly,
any significant shortfall in revenues in relation to planned expenditures could have an adverse response to changes in the competitive
environment, the Company may from time to time make certain pricing, service or marketing decisions that could have a material
adverse effect on its business, prospects, financial condition and results of operations.
Flaws and Defects in Products
Products offered by the Company may contain undetected flaws
or defects when first introduced or as new versions are released. Any inaccuracy or defects may result in adverse product reviews
and a loss or delay in market acceptance. There can be no assurance that flaws or defects will not be found in the Company’s
products. Flaws and defects, if found, could have a materially adverse effect upon the business operations and financial condition
of the Company. Marketing of any of the Company’s potential products may expose the Company to liability claims resulting
from the use of the Company’s products. These claims might be made by consumers, health care providers, sellers of the Company’s
products or others. A claim, particularly resulting from a clinical trial, or a product recall could harm the Company’s business,
results of operations, financial condition, cash flow and future prospects.
Stock Price Volatility
The market price of the Company’s stock has fluctuated
in the past and may continue to fluctuate in the future. The Company believes such fluctuations will continue as a result of many
factors, including US and World markets, financing plans, future announcements concerning the Company, the Company’s competitors,
principal customers regarding financial results or expectations, industry supply or demand dynamics, new product introductions,
governmental regulations, the commencement or results of litigation or changes in earnings estimates by analysts. In addition,
in recent years the stock market has experienced significant price and volume fluctuations often for reasons outside the control
of the particular companies. These fluctuations as well as general economic, political and market conditions may have an adverse
affect on the market price of the Company’s common stock.
Worldwide Economic Conditions
The Company’s financial performance depends significantly
on worldwide economic conditions and the related impact on levels of consumer spending, which has recently deteriorated significantly
in many countries and regions, including the U.S., and may remain depressed for the foreseeable future. Demand for the Company’s
products may be adversely affected by negative macroeconomic factors affecting consumer spending. Substantial tightening of consumer
credit, low consumer liquidity, and extreme volatility in credit and equity markets have weakened consumer confidence and decreased
consumer spending. These and other economic factors can reduce demand for the Company’s products and harm the Company’s
business, financial condition and results of operations, and to the extent such economic conditions continue, they could cause
further harm to the Company’s business, financial condition and operations.
Dependence on Sales through Retailers and Distributors
The Company’s business that depends
significantly upon sales through retailers and distributors may be affected if the Company’s retailers and distributors
are not successful. As a result, the Company could experience reduced sales, substantial product returns or increased price
protection, any of which would negatively impact the Company’s business, financial condition and results of operations.
A significant portion of the Company’s sales are made through retailers, either directly or through distributors. If
the Company’s retailers and distributors are not successful, due to weak consumer retail demand caused by the current
worldwide economic downturn, decline in consumer confidence, or other factors, the Company could continue to experience
reduced sales as well as substantial product returns or price protection claims, which could harm the Company’s
business, financial condition and operations.
Limited Management Personnel
Under the Company’s business plan, significant and
material matters of business must be conducted and concluded in a timely fashion. The execution of the Company’s business
plan places a significant strain on the Company’s management while providing little or no immediate compensation.
There can be no assurance that the Company’s planned
personnel, systems, procedures and controls will be adequate to support its future operations, management will be able to hire,
train, retain, motivate and manage personnel or that its management will be able to successfully identify, manage and exploit existing
and potential market opportunities. If the Company is unable to manage growth effectively, the Company’s business, prospects,
financial condition, results and operations could be adversely affected.
Competition
The market in which Wholehealth Products, Inc. competes is
highly competitive, and the Company has no assurance that it will be able to compete effectively, especially against established
industry competitors with significantly greater financial resources. The Company expects it may face competition from a few competitors
with potentially greater financial resources, well-established brand names and large, pre-existing customer base.
Dependence on Management
The Company’s performance will be substantially dependent
on the continued services and on the performance of the current senior management and other key personnel of the Company. The Company’s
performance will also depend on the Company’s ability to retain and motivate its other officers and key employees. The Company’s
inability to retain its executive officers or other key employees could have a material adverse effect on the Company’s business,
prospects, financial condition and results of operations. The Company’s future success depends to a great extent on its ability
to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, merchandising, marketing and
customer service personnel. Competition for such personnel can be intense and there is no assurance the Company will be able to
successfully attract, assimilate and retain sufficiently qualified personnel. The failure to retain and attract the necessary technical
and managerial personnel could have a material adverse effect on the Company’s business, prospects, financial condition and
results of operations.
Development of Brand Awareness
For certain market segments that the Company plans to pursue,
the development of its brand awareness is essential for it to reduce its marketing expenditures over time and realize greater
benefits from marketing expenditures. If the Company’s brand-marketing efforts are unsuccessful, growth prospects, financial
condition and results of operations would be adversely affected. Wholehealth Products, Inc. brand awareness efforts have required,
and will most likely continue to require additional expenditures.
Intellectual Property Protection: Uncertainty of Protection
of Proprietary Rights
Wholehealth Products, Inc. currently relies on a combination
of patents, trademarks, trade secret protection, non-disclosure agreements and licensing arrangements to establish and protect
its proprietary rights. Despite efforts to safeguard and maintain the Company’s proprietary rights, there can be no assurance
the Company will be successful in doing so or its competitors will not independently develop products substantially equivalent
or superior.
The Company also relies on trade secrets and proprietary
know-how, which the Company seeks to protect by confidentiality and non-disclosure agreements with its employees, consultants,
and third parties. There can be no assurance that these agreements will not be breached, that the Company will have adequate remedies
for any breach, or that certain of the Company’s trade secrets and proprietary know-how will not otherwise become known or
be discovered by competitors.
Protecting or defending the Company’s IP rights, to
protect trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of
infringement or invalidity may require litigation. Such litigation, whether successful or unsuccessful, could result in substantial
costs and diversions of management resources, either of which could have a materially adverse effect on the Company’s business,
prospects, financial condition or operating results.
Availability and Coverage of Insurance
For certain risks, the Company does not maintain insurance
coverage because of cost and/or availability. Because the Company retains some portion of its insurable risks, and in some cases
self-insures completely, unforeseen or catastrophic losses in excess of insured limits could have a material adverse effect on
the Company’s financial condition and operating results.
Penny Stock Regulation
The Company’s securities sold as part of financing
provided to the Company may be subject to “penny stock rules” that impose additional sales requirements on broker-dealers
who sell such securities to persons other than established customers and accredited investors, the latter of which are generally
people with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly. For transactions covered by
these rules, the Company and/or broker-dealer must make a special suitability determination for the purchase of such securities
and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the “penny stock rules” require the delivery, prior to the transaction, of
a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer
must also disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks.
Consequently, the “penny stock rules” may restrict the ability of broker-dealers to sell the Company’s securities.
The foregoing required penny stock restrictions will not apply to the Company’s common stock if such securities maintain
a market price of $5.00 or greater. Therefore the challenge for the Company is that the market price of the Company’s common
stock may not reach or remain at such a level.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. PROPERTIES
The Company is located in Anaheim Hills, California.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. MINING SAFETY DISCLOSURES
None
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES.
Shares of the Company’s common stock are quoted on
the OTC Markets (www.otcmarkets.com) via the trading symbol “GWPC.”
The following table sets forth the high and low bid prices
for the Company’s shares for each quarter during the two fiscal years ended August 31, 2015 and 2014. The prices reflect
inter-dealer prices, without retail mark-up, mark-down or commission and are not intended to represent actual transactions.
|
|
Date
|
|
Bid Price
|
|
|
|
|
|
|
|
|
|
FY 2015
|
HIGH
|
|
LOW
|
|
|
|
|
|
|
|
First Quarter
|
|
.00
|
|
.00
|
|
|
|
|
|
|
|
Second Quarter
|
|
.00
|
|
.00
|
|
|
|
|
|
|
|
Third Quarter
|
|
.00
|
|
.00
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
.00
|
|
.00
|
|
|
|
|
|
|
|
|
FY 2014
|
HIGH
|
|
LOW
|
|
|
|
|
|
|
|
First Quarter
|
|
.28
|
|
.03
|
|
|
|
|
|
|
|
Second Quarter
|
|
.05
|
|
.00
|
|
|
|
|
|
|
|
Third Quarter
|
|
.01
|
|
.00
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
.02
|
|
.00
|
As of August 31, 2016, the market price of the Company’s
common stock was .005 per share.
As of August 31, 2016, there were 331,953,592 issued and
outstanding shares of common stock held by an estimated 211 holders of record.
DIVIDEND POLICY. The Company has not paid and does not plan
to pay cash dividends at this time.
ISSUER PURCHASE OF EQUITY SECURITIES. The Company did not
repurchase any of its securities during the year ended August 31, 2016.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS. The Company currently does not maintain any equity compensation plans.
ITEM 6. SELECT FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUES
Total revenue was $0 for the year ended August 31, 2016 and
2015.
RESEARCH AND DEVELOPMENT
There were no research and development cost during the fiscal
year ended August 31, 2016 and August 31, 2015.
Investor Relations
For the twelve month period ended August 31, 2016 investor
relation costs were $2,972,851 compared to $1,970,058 for the preceding twelve month period ended August 31, 2015 an increase of
$1,002,793. The reason for the increase was the fact that the company issued more shares for services to increase market awareness
of the company.
Consulting Expenses
For the twelve month period ended August 31, 2016 the
Company incurred $167,832 consulting fees as opposed to the twelve months ended August 31, 2015 in which $59,499 was incurred,
an increase of $108,333. The increase was due to the Company employing outside services in the period to implement their product.
General and Administrative Expenses
General and Administrative costs for the twelve months
was $15,128 compared to $512,006 for the period ended August 31, 2015, a reduction of $496,878. The main areas of reduction was
officer accrued consulting fees which decreased $117,915 as the Company directors ceased accruing salary and professional fees
decreased by $55,257 as the Company decreased its reliance on outside professionals.
Net Loss
During the nine months ended August 31, 2016 compared
to 2015 the Company lost $3,189,063 as compared to $2,593,668, a reduction of $595,395. The lost was predominately caused by stock
for services expense for investor relations.
Liquidity and Capital Resources
As of August 31, 2016, the Company had a deficiency
in working capital of $1,257,886, with no cash or assets which was an increase in the period from $1,042,674 or $214,212.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements, special
purpose entities, financing partnerships or guarantees.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Not applicable
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company and supplementary
data are included beginning immediately before the signature page to this report.
ITEM 9A. CONTROLS AND PROCEDURES
The Company’s upper Management, including the Chief
Executive, Chief Financial, and Chief Operating Officers, as of the end of the period covered by this Annual Report on Form 10-K,
have concluded our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange
Act of 1934) were not effective as described in the act, although efforts were made to do so and to ensure information required
to be disclosed in reports we file or submit under the Exchange Act are recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms. As we continue to expand, we aim to become effective in the areas of disclosure
controls and procedures in order to move the Company forward successfully.
Management, including the Chief Executive Officer,
Chief Financial Officer and Chief Operating Officer, do not expect its present disclosure controls and procedures nor will
its internal controls allow nor prevent all error or fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute assurance the objectives of the control system are met. Further, the design of a
control system must reflect the fact that resource constraints and the benefits of controls must be considered relative to
their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance
all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, management
performed additional analysis and other post-closing procedures in an effort to ensure its consolidated financial statements
included in this annual report have been prepared in accordance with generally accepted accounting principles and are as free
of fraud as best can be determined. Accordingly, management believes the financial statements included in this report fairly
present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Controls.
There were no significant changes in our internal controls
or other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no deficiencies
or material weaknesses recognized as of August 31, 2016, and therefore no corrective actions were deemed necessary. However, the
design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there is no
certainty that any design will succeed in achieving its stated goal under all potential future considerations, regardless of how
remote. It is management’s plan, however, to work toward better assessment of any and all necessary internal controls and
thereby to increase the capability to recognize errors and prevent fraud as the Company strives for bettering itself from this
point. We have already initiated discussions to study, assess and create everything necessary throughout the remainder of the year
to achieve effective disclosure controls and procedures. Nonetheless, this will remain a potential material weakness until such
activities have been fully integrated.
Management’s Report on Internal Control Over Financial
Reporting.
Management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended.
Internal control over financial reporting refers to a process designed by, or under the supervision of, our Chief Executive, Chief
Financial and Chief Operating Officers, effected by our Board, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in connection
with GAAP, including those policies and procedures that:
|
|
·
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets;
|
|
|
·
|
Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
|
|
·
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
|
Because of its inherent limitations, internal control
over financial reporting cannot provide absolute assurance of the prevention or detection of misstatements. In addition,
projections of any evaluation of effectiveness to future periods are subject to risk that controls may have become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In connection with the preparation of this Annual
Report on Form 10-K for the year ended August 31, 2016, management, with the participation of our Chief Executive Officer,
Chief Financial Officer, and Chief Operating Officer, have evaluated the effectiveness of our internal controls
over financial reporting, pursuant to Rule 13a-15 under the Exchange Act, as of August 31, 2016 in order to determine
the potential for or the existence of material weaknesses, defined as a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable possibility a material misstatement of the
Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Our Chief
Executive, Chief Financial, and Chief Operating Officers, have concluded the design and operation of our internal controls
and procedures are not effective as of August 31, 2016.
Because of these material weaknesses, Management has concluded
the Company did not maintain effective internal control over financial reporting as of August 31, 2016, based on the criteria established
in “Internal Control-Integrated Framework” issued by the COSO, criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. It is the intention of the present Management
to continue to study and establish COSO Control-Integrated Framework within Wholehealth Products, Inc. during the coming year as
we begin to expand our present number of personnel and activities.
There were no significant changes previously in our internal
controls over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal controls over financial reporting.
This Annual Report on Form 10-K does not include an attestation
report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10K.
ITEM 9B. OTHER INFORMATION
Legal Proceedings.
There are not presently any material pending legal
proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known
to the Registrant to be threatened or contemplated against it.
Unregistered Sales of Equity Securities and Use of
Proceeds.
On June 29, 2016 the Company issued 16,675,000 shares
of stock for services of $300,150.
On August 4, 2016 the Company issued 23,090,909 shares
of stock for services of $415,636.
On August 4, 2016 the Company issued 300,000 shares
of stock for services of $700.
As of the date of this report, the Company has not engaged
an independent certified accounting firm and is considered self-reporting.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The Company’s directors and executive officers and
their ages as of August 31, 2016 are as follows:
|
Name
|
|
Age
|
|
Position(s)
|
|
Charles A. Strongo
|
|
54
|
|
Chairman of the Board of Directors, Chief Executive Officer and President
|
|
Richard A. Johnson
|
|
84
|
|
Chief Financial Officer and Director
|
|
Shujie Cui, M.D.
|
|
54
|
|
Director
|
|
F. Rene Alvarez, Jr.,
|
|
78
|
|
Director
|
|
Wolfgang Groeters, BS,
|
|
79
|
|
Director
|
Charles A. Strongo, Chief Executive Officer, President,
Chairman
–
Mr. Strongo has superior knowledge and business relationships,
exceeding 25 years experience in business management, operations, and increasing profitability, with particularity in the in vitro
diagnostic business. Mr. Strongo has been in the in vitro diagnostic business for the past fifteen years, having begun in 1995,
the beginning of the “over-the counter” in-vitro diagnostic industry. He has served as President and Chief Executive
Officer of EarlyDETECT, Inc. (EDI) since March, 2004. He was a member of the EDI Board of Directors from June 2002 until June 2009.
Prior to that, Mr. Strongo served as the Chief Financial Officer for two years. Mr. Strongo has a comprehensive knowledge of ISO
and FDA regulations and has prepared several companies for the ISO inspections. Mr. Strongo has filed more than twenty FDA 510K
filings; he has also worked on countless pharmaceutical filings. Mr. Strongo has prepared EDI as well as several other companies
for FDA inspections, under FDA regulatory guidelines. He cleared EarlyDETECT for the ISO 13485 CDM in less than 6 weeks, a process
that usually takes six months to a year. His dynamic personality and solid business model, along with his keen understanding, extensive
professional consultation and expertise, have increased profitability for multiple companies here and abroad. He has also opened
businesses in foreign countries, including Russia, Taiwan, Mexico, Malaysia, Thailand, and the Philippines. Mr. Strongo holds a
BA/MBA in Business Management from National University.
Richard A. Johnson – Chief Financial Officer, Director
To the position of Chief Financial
Officer Richard Johnson brings a wealth of experience at the senior executive levels in the areas of Corporate Finance, Business
Planning & Operations, R&D and Administration. His considerable strengths in the areas of Finance and Corporate Administration
will greatly assist the Company as it advances towards planned sales volume and expansion of the Company strategic goals.
Mr. Johnson’s enviable
record of achievements at the executive level includes, latterly, CFO at Early Detect Inc. where he supervised the financial activities
of the Company and its subsidiaries over a span of 4.5 years. Previously, he held positions of Chief Financial Officer, General
Manager and Director in industry and also was a Senior Management and Finance Consultant to the manufacturing, retail, agriculture
and service industries for fifteen years as well as Program Control Director and Management Consultant with a major international
Engineering and Construction Corporation. Early in his career, Mr. Johnson spent eleven years with the U.S. Department of Energy,
Las Vegas, where he had the responsibilities of financial analysis, budgeting and Safety analysis in the areas of nuclear explosives
internationally
Shujie Cui, M.D., Ph.D., Director
–
Dr. Cui has over 30 years of
experience in the Medical Diagnostic Industry and was instrumental in the testing for the H1N1 bird test and vaccine used in
China. Dr. Cui worked with the Chinese government on the SARS project and was the diagnostic company chosen to lead the
research with the University of Beijing Medical School. Dr. Cui is noted as the father of the “Strep A” test and
the perfection of the development of lateral flow rapid diagnostics and sandwich flow rapid diagnostics. Dr. Cui developed
the only multi result Ng PSA test using 1 strip to determine the PSA level. Dr. Cui holds several patents in the medical
diagnostic industry and is considered a foremost expert in the medical diagnostic industry in the US and in China.
F. Rene Alvarez, Jr., Director
Mr. Alvarez holds a law degree and has been admitted to the
New York State Bar Association. He also has a Bachelor’s degree in Accounting from Canisius College in New York. He held
a variety of audit positions with a variety of Ford Motor Company subsidiaries with titles such as Senior Vice President, CFO and
Director of Internal Audit, Internal Audit Director, and Manager of Audit Operations with oversight responsibilities for Mexico,
Latin America and South Africa. Since retiring from Ford, he has served in high level positions in several diverse companies, serving
in such capacities as Corporate Vice President and Board Member.
Wolfgang Groeters, BS, Director
Wolfgang brings several decades of experience in health care
and diagnostics as an engineer. He started Bentley Labs which was sold to American Hospital Supply, then to Baxter International,
Ellay, Inc and from there to Meditronic Inc. At one time Edwards and Bentley were together under Baxter. He then became President
of Orange Empire Building Services from 1975 to 1980.
Compliance With Section 16(a) of the Exchange Act
The Company does not have a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of
1934. Accordingly, the Company’s executive officers
and directors and persons who own more than 10% of its equity securities are not subject to the beneficial ownership reporting
requirements of Section 16(a) of that Act. However, although not required, certain of such persons voluntarily file beneficial
ownership reports with the Securities and Exchange Commission.
Code of Ethics and Corporate Policies
WholeHealth Products, Inc. has created and adopted a Code
of Ethics and Corporate Policy. Since its inception, the policy has been updated and the current policy is presented below:
In all societies, the opportunity to be a successful member
of the community is an important role we must all be a part of. Any company must, therefore, understand its critical role and how
to be a good member of that Community. Like a three-legged stool, of which all three legs must exist in order for it to stand,
we at Wholehealth Products, Inc. see three critical components for our success and ability to be a good member of our community
at large, both here and abroad: The Company, Investors & Shareholders, and our Customers & Patients. In no particular order
do these responsibilities preside, since all are critical, required for success, and important to the Company and our communities
in which we reside, work and play.
Therefore, one of those stool legs stands for our responsibility
to the Company, including employees, near and far, in house and out, research, development, sales, and marketing members through
to our vendors. We recognize their merit and aim for all to engender a sense of well-being and security in their jobs through good
working conditions, relationships, and compensation for a job well done and helping them address and fulfill their family responsibilities.
Furthermore, there is equal opportunity for employment, development, advancement, and allowance for suggestions to advance the
Company. Lastly, we provide management and guidance, through being good leaders and enabling opportunities for redressing issues.
Another leg of the stool stands for the responsibility to
our investors and stockholders. Although the Company must experiment with new ideas and plans, it is tantamount to being to being
successful, for through our success, we are able to return this to our investors and shareholders, without whom we would not exist
as a Company. We will, therefore, utilize research as a means to an end, developing innovative programs and advancing the state
of the Company as a result, with the clear intention to ensure success and appreciation of those who believe in us and in our dreams,
research, plans and our provision of ultimately useful products for the community.
The final leg of the stool represents how we must always
be cognizant of those who use our products and services. In meeting their expectations, for whom we ultimately work, our customers
and patients.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information about all cash
and non-cash compensation awarded to, earned by, or paid to (i) all persons serving as the Company’s principle executive
officer during the last two fiscal years; (ii) all persons serving as the Company’s principle financial officer during the
last two fiscal years; (iii) the Company’s three most highly compensated executive officers (other than principle executive
officers and principle financial officers) serving as such at the end of the last two fiscal years; and (iv) up to two additional
persons for whom disclosure would have been provided pursuant to clause (iii) above but for the fact that the person was not serving
as an executive officer of the Company at the end of the last fiscal year, and each current director of the Company during fiscal
years ended August 31, 2016 and 2015.
|
Name
|
Principal Position
|
Date
|
Salary
|
Shares of Stock Awarded
|
Stock Value
|
Total Compensation
|
|
|
|
|
|
|
|
|
|
Charles Strongo
|
CEO
|
FY 2016
|
150,000
|
20,000,000
|
380,000
|
530,000
|
|
Richard Johnson
|
CFO
|
FY 2016
|
130,000
|
15,000,000
|
285,000
|
415,000
|
The Company did not pay or accrue any other
compensation, in the form of bonus, stock awards, options awards, incentive plan compensation or nonqualified deferred
compensation earnings to any executive officer for services as an executive officer during the fiscal year ended August 31,
2016; neither were there any prerequisites or other personal benefits. During the fiscal year ended August 31, 2015, the
chief executive officer accrued $117,526 in salary and the chief financial officer accrued $107,851 in salary. The Company
does not have any option plan, equity incentive plan or retirement plan at the present time.
During the fiscal year ended August 31, 2016, the chief executive
officer accrued $150,000 in salary and the chief financial officer accrued $130,000.
The Company’s Directors are compensated for their participation
on the Board of Directors for performance of their duties as directed by the Chairman of the Company. The Board of Directors has
not set a fixed compensation fee plan for Directors, but chooses to review Board and individual Director performance on an annual
basis and compensation is earned on a merit-system.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of August 31, 2016 certain
information with respect to the beneficial ownership of the Company’s common stock by each person known by us to be the beneficial
owner of more than five percent (5%) of the Company’s common stock; by each of the Company’s current directors and
named executive officers; and by all executive officers and directors as a group.
|
Name and Address
|
Number of Shares Beneficially
Owned
(1)
|
Percentage of Common Stock
|
|
Charles Strongo
6761 E. Leafwood Dr
Anaheim Hills, CA 92807
|
76,728,291
|
23%
|
|
Richard Johnson
612 Wood Lake Dr
Brea, CA 92821
|
41,800,000
|
13%
|
|
|
(1)
|
Percentages based on 331,953,592 shares of common stock issued and outstanding as of August 31, 2016.
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
None
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2016
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Wholehealth Products, Inc. formerly Gulf Western Petroleum
Corporation (the Company) was incorporated on February 21, 2006 in the State of Nevada as Georgia Exploration, Inc. The name was
originally changed on March 8, 2007 and recently in July 2012 to Wholehealth Products, Inc.
The Company today is in the business of developing,
manufacturing and marketing in vitro diagnostic (IVD) tests for over-the-counter (OTC or consumer), and point-of-care (POC or
professional) use markets. The Company currently manufactures and markets a range of diagnostic test kits for consumer use
through over-the-counter (OTC) sales, and for use by health care professionals, generally located at medical clinics,
physician offices and hospitals known as Points-of-Care (POC), in the United States. These test kits are known as in vitro
diagnostic test kits or “IVD” products.
Starting September 1, 2008, after its change in business
direction from oil and gas revenue company, it entered the development stage which is in effect to the present day.
The Company’s financial statements for generated by
management. The Company has not engaged a qualified PCAOB firm to render an opinion on the financial statements.
The Company is currently suspended from trading and is seeking
to be reinstated.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).The pr
e
p
aration
of f
i
nancial stat
e
m
ents
in confor
m
ity with accounting principles g
e
n
e
r
a
lly
accepted in the United States of A
m
erica r
e
quir
e
s
m
anage
m
ent to
m
ake
est
i
m
a
tes
and
a
ssu
m
p
ti
o
n
s
t
h
at a
ff
ect t
h
e
r
e
p
o
rted a
m
ounts
of assets a
n
d lia
b
i
lities
a
n
d
d
iscl
o
sure
o
f c
on
tin
g
e
n
t
assets a
n
d lia
b
ili
t
ies
at t
h
e
d
ate
o
f
the f
i
n
a
n
cial
stateme
n
ts and t
h
e re
p
o
rt
e
d
a
m
o
u
nts
o
f
r
e
v
e
nu
e
s
a
n
d e
x
p
e
ns
e
s
d
u
ri
n
g
t
h
e
r
ep
o
rti
n
g
p
e
ri
o
d
.
Act
u
al r
e
s
u
lts
could di
f
f
e
r
f
rom
those est
i
m
ates.
M
anage
m
ent
f
u
r
t
her
a
ck
n
o
w
l
edg
e
s
t
h
at it is solely res
po
nsible
f
o
r
ad
opti
n
g
s
o
un
d
acc
ou
nti
n
g practices, esta
b
lis
h
ing
and
m
aintaining a syst
e
m of internal accounting
control and pr
e
v
e
n
ting
and d
e
tecting fraud. The Co
m
p
any
'
s
syst
e
m of
i
n
ternal
ac
c
o
u
nti
n
g
c
o
nt
ro
l is design
e
d
t
o as
s
u
r
e
,
a
m
ong oth
e
r ite
m
s
,
t
h
at
1
) re
c
o
r
d
ed
t
ransact
i
o
ns
are vali
d
;
2
) valid transactions
a
re
re
c
o
rded; and 3) tr
an
sactions
are r
e
c
o
r
d
ed
in t
h
e pro
p
er
p
er
i
o
d
in a t
i
mely
m
a
nn
er
to prod
u
ce fi
n
a
n
cial
stateme
n
ts w
h
ich
p
rese
n
t
fa
i
rly t
h
e fi
n
a
n
cial
c
o
n
d
iti
o
n,
res
u
lts
o
f o
p
erati
on
s
and cash flows
o
f
t
h
e
Co
m
p
any for
t
h
e
respective periods being presented
Development Stage Company
The Company is a development stage company as defined by
section 915-10-20 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification from September
1, 2008 to present. The Company is still devoting substantially all of its efforts on establishing the business and, therefore,
still qualifies as a development stage company. All losses accumulated since September 1, 2008 have been considered as part of
the Company’s development stage activities
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 revenues and expenses during the reporting period. Significant estimates include the estimated
useful lives of property and equipment. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting
Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting
Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States
of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair
value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs
to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
|
|
|
|
|
Level 1
|
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
|
|
Level 2
|
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
|
|
|
|
Level 3
|
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
The carrying amount of the Company’s financial assets
and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity
of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s
best estimate of interest rates that would be available to the Company for similar financial arrangements at August 31, 2016.
The Company does not have any assets or liabilities measured
at fair value on a recurring or a non-recurring basis.
Equipment
Equipment is recorded at cost. Expenditures for major
additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of
equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over
the assets estimated useful life of three (3) or seven (7) years. Upon sale or retirement of equipment, the related cost and
accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Impairment of long-lived assets
The Company follows paragraph 360-10-05-4 of the FASB Accounting
Standards Codification for its long-lived assets. The Company’s long-lived assets, which includes computer equipment is reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
The Company assesses the recoverability of its long-lived
assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived
assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the
excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected
future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but
the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived
assets are depreciated over the newly determined remaining estimated useful lives.
The Company determined that there were no impairments of
long-lived assets as of August 31, 2016.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting
Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims,
assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred
and the amount of the assessment can be reasonably estimated.
Revenue recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting
Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned.
The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence
of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably assured.
Income taxes
The Company follows Section
740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under
this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the fiscal year in which 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 fiscal 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 Income and
Comprehensive Income in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting
Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 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 740-10-25, 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 740-10-25 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 740-10-25.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to
section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing
net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss)
per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially
outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially
outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
There were no potentially dilutive shares outstanding as
of August 31, 2016.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB
Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they
stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or
reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards
Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from
operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all
accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do
not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign
currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on
cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash
and cash equivalents and separately provides information about investing and financing activities not resulting in cash
receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Advertising Costs
The Company expenses the cost of advertising and promotional
materials when incurred. Total Advertising costs were $0 for years ended August 31, 2016 and 2015.
Subsequent events
The Company follows the guidance in Section 855-10-50 of
the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events
through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards
Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users,
such as through filing them on EDGAR.
Recently issued accounting pronouncements
The following accounting standards were issued as
of December 26, 2011:
ASU 2010-06,
Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements.
This
ASU affects all entities that are required to make disclosures about recurring and nonrecurring fair value measurements under
FASB ASC Topic 820, originally issued as FASB Statement No. 157,
Fair Value Measurements
. The ASU requires certain new
disclosures and clarifies two existing disclosure requirements. The new disclosures and clarifications of existing disclosures
are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases,
sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective
for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.
ASU
2011-04,
Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements
in U.S. GAAP and IFRSs
This ASU
supersedes most of the guidance in Topic 820, although many of the changes are clarifications of existing guidance or wording
changes to align with IFRS 13. In addition, certain amendments in ASU 2011-04 change a particular principle or requirement for
measuring fair value or disclosing information about fair value measurements. The amendments in ASU 2011-04 are effective for
public entities for interim and annual periods beginning after December 15, 2011.
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the
Company had a net loss of $3,189,063 for the year ended August 31, 2016.
While the Company is attempting to commence operations and
generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations.
Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently
being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as
a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional
funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the
Company’s ability to further implement its business plan and generate revenues.
The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
Included in general and administrative costs were amounts
accrued to its chief operating officer of $50,000 and its chief financial officer of $43,326.
Included in Accounts Payable and Accrued Expenses are amounts
owed to its officers and directors for salaries and benefits of $762,828.
Included in notes payable is an amount of $30,089 owed to
the CEO for a loan. The loan is without interest and is secured by a stock issuance of 30,000,000 shares in the event of nonpayment.
NOTE 5 - NOTE PAYABLE
The Company is obligated on eight short term loans, all past
due, with six bearing interest at 15% and two with interest at 5% totaling $319,603. A tenth note for $30,089 without interest
is owed to the Company’s CEO. The total note payable liability is $349,692 and is shown on the balance sheet under notes
payable. Interest owed at May 31, 2016 equals $113,920 and is shown on the balance sheet. Total interest expense for the year ended
August 31, 2016 was $33,252 which is shown on the statement of operations.
NOTE 6 - EQUITY
During the quarter ended November 30, 2014 the Company issued
40,986,100 shares of stock. Of this amount 30,000,000 was issued as security for a loan made by the CEO of the Company and valued
at present at par. 10,243,676 shares were issued for services valued at market which equaled $1,757,442. 742,242 shares were issued
for cash of $24,500. In addition the Company received $87,923 of cash for shares to be issued pursuant to subscription agreements.
Total shares to be issued for this amount will be approximately 2,664,333.
For the three months ended February 28, 2015 the Company
issued 11,375,580 shares of stock of which 7,087,200 shares were issued for services valued at $212,616. 1,201,157 shares were
issued for cash of $21,750 from 5 investors and the balance of 3,087,223 shares for cash of $87,923 previously contributed.
During the three months ended November 30, 2015 the
Company issued one certificate of 15,000,000 shares of stock for investor relations valued at market resulting in an expense of
$285,000.
During the quarter ended February 29, 2016 the Company
issued 94,200,000 shares of stock for services from 17 consultants and officers valued at $1,789,799 which was the market price
of the shares on the date of issuance.
During the quarter ended May 31, 2016 the Company issued
7,500,000 shares of stock to two consultants for services valued at $147,500.
Commencing the quarter ended May 31, 2016, the officers
agreed to not accrue any additional compensation until such time as the Company is in full operation.
During the three months ended August 31, 2016, the Company
issued 40,065,909 shares of which 39,765,909 was for services from various consultants valued at market of $755,552 and 300,000
shares issued for debt reduction of $1,000.
The Company as part and parcel of the stock issued for cash
attached 1 warrant for each stock issuance. The warrant has a strike price of .70 and is exercisable anytime within 5 years of
September 2012.
NOTE 7 – EMPLOYMENT AGREEMENTS
The Company has entered into employment contracts with the
CEO and CFO in November 2015 for $150,000 and $130,000 respectively for two years. Commencing the quarter ended May 31, 2016, the
officers agreed to not accrue any additional compensation until such time as the Company is in full operation.
NOTE 8 – INCOME TAX
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.
Net deferred tax assets consist of the following components
as of August 31, 2016 and 2015:
|
|
|
August 31,
2016
|
|
August 31, 2015
|
|
Deferred Tax Assets – Non-current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOL Carryover
|
|
$
|
(360,958
|
)
|
|
$
|
(360,958
|
)
|
|
|
|
|
|
|
|
|
—
|
|
|
Less valuation allowance
|
|
|
360,958
|
|
|
|
360,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net of valuation allowance
|
|
$
|
—
|
|
|
$
|
—
|
|
The income tax provision differs from the amount of income
tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended August
31, 2016 and 2015 due to the following:
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Book Income
|
|
|
(3,189,063
|
)
|
|
$
|
(2,593,668
|
)
|
|
Meals and Entertainment
|
|
|
—
|
|
|
|
—
|
|
|
Stock for Services
|
|
|
2,972,851
|
|
|
|
1,970,058
|
|
|
Accrued Payroll
|
|
|
622,109
|
|
|
|
406,141
|
|
|
Valuation allowance
|
|
|
(405,897
|
)
|
|
|
217,469
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
At August 31, 2016, the Company had
net operating loss carry forwards of approximately $975,500 that may be offset against future taxable income from the year 2014
to 2034. No tax benefit has been reported in the August 31, 2012 financial statements since the potential tax benefit is offset
by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform
Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should
a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
NOTE 9 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the
requirements of ASC Topic 855 and has determined that no material subsequent events exist.
