UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Amendment No 1)
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: September 30, 2014
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No.: 333-148987
PLEASANT KIDS, INC.
(Exact name of registrant as specified in its charter)
Florida |
| 20-35337265 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
2600 WEST OLIVE AVENUE, 5F, BURBANK, CA 91505
(Address of principal executive offices)
Registrants telephone number, including area code: (855) 710-5437
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]
Indicate by check mark whether the registrant has (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] |
| Non-accelerated filer [ ] |
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Accelerated filer [ ] |
| Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $314,715. (This calculation is based on historical data at March 28, 2014). For purposes of the foregoing calculation only, directors, executive officers, and holders of 10% or more of the issuers common capital stock have been deemed affiliates.
The number of shares outstanding of the Registrants Common Stock as of December 17, 2014, was 4,585,054,232.
Note: The annual report is being amended for the following purposes:
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To correct the way in which the derivative liability and the change in fair value of embedded derivative liability were accounted for.
2.
To write off inventory that was originally reported because it is of little or no value.
3.
To write off accounts receivable against sales. Accounts receivable were six months past due and uncollectible.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
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TABLE OF CONTENTS
ITEM 1. | BUSINESS. | 4 |
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ITEM 1A. | RISK FACTORS | 8 |
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ITEM 1B. | UNRESOLVED STAFF COMMENTS. | 15 |
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ITEM 2. | PROPERTIES. | 15 |
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ITEM 3. | LEGAL PROCEEDINGS. | 16 |
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ITEM 4. | MINE SAFETY DISCLOSURE. | 16 |
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ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. | 17 |
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ITEM 6. | SELECTED FINANCIAL DATA. | 18 |
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ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. | 18 |
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ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 24 |
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ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. | 24 |
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. | 24 |
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ITEM 9A. | CONTROLS AND PROCEDURES. | 25 |
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ITEM 9B. | OTHER INFORMATION. | 25 |
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ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. | 26 |
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ITEM 11. | EXECUTIVE COMPENSATION. | 28 |
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ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. | 29 |
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ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. | 30 |
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ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. | 30 |
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ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. | 31 |
INTRODUCTORY COMMENT
Throughout this Annual Report on Form 10-K (the "Report"), the terms "we," "us," "our," "PLKD" or "our Company" refers to Pleasant Kids, Inc, a Florida corporation, formerly known as NYBD Holding, Inc., together with its wholly owned subsidiary, Pleasant Kids EXTRA, Inc which is also a Florida corporation. Unless otherwise stated or unless the context otherwise requires, the description of our business set forth below is of the operations of Pleasant Kids, Inc.
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PART I
ITEM 1. BUSINESS.
Corporate Overview and History of Pleasant Kids, Inc (Formerly NYBD Holding, Inc.).
Pleasant Kids, Inc (Formerly NYBD Holding, Inc) was incorporated in September 2005 in Florida. Then on September 21, 2005, the Company entered into an Asset Purchase Agreement with Anthony Warner pursuant to which the Company acquired the domain name, www.leaguenow.com, its design, associated copyrights and trademarks and all business related to the website including the customer database. The Company originally intended to operate as an application service provider offering web-based services for the online video gaming industry.
The Company commenced offering services in October 2005 through a subscription basis. During 2007 the Company changed directions by using an advertising model. The Company was unable to generate additional revenue streams by charging registered users for the use of enhanced functionality to be incorporated into the site, access to specialized content, and e-commerce of merchandise related to the video console industry. The inability to generate revenue led to the decision that the Company would have to explore other options regarding the development of a new business plan and direction.
On May 29, 2009, the Company's stockholders approved a 1 for 6 reverse stock split for its common stock. As a result, stockholders of record at the close of business on July 1, 2009, received one share of common stock for every six shares held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.
On January 19, 2010, the Company's stockholders approved a 2 for 1 forward stock split for its common stock. As a result, stockholders of record at the close of business on January 19, 2010, received two shares of common stock for every one share held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.
On April 26, 2010, the Company's stockholders approved a 1 for 3 reverse stock split for its common stock. As a result, stockholders of record at the close of business on June 1, 2010, received one shares of common stock for every three share held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.
On October 4, 2010, the Company's stockholders approved a 16 for 1 forward stock split for its common stock. As a result, stockholders of record at the close of business on October 21, 2010, received sixteen shares of common stock for every one share held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.
On October 6, 2010, the Company entered into a Share Exchange Agreement, dated October 6, 2010 (the Share Exchange Agreement) by and among League Now, James Pregiato, Pure Motion, Inc., a Texas corporation (Pure Motion) and the shareholders of Pure Motion (the Pure Motion Shareholders). Pursuant to the Share Exchange Agreement, the Company acquired 100% of the outstanding shares of common stock of Pure Motion (the Pure Motion Stock), in exchange for the Pure Motion Stock, the Pure Motion Shareholders acquired 24,009,008 shares of the Companys common stock (the Exchange Shares).
Additionally, pursuant to the terms of the Share Exchange Agreement, as consideration for the cancellation of 38,048,000 of the 39,111,136 shares of League Now common shares owned by James Pregiato (Pregiato), Pure Motion agreed to pay a total cash payment of $250,000 to Pregiato (the Cash Payment) of which $100,000 (the Initial Cash Payment) was paid on the closing date and $150,000 (the Final Cash Payment) was to be paid within twelve weeks of the closing date. The 38,048,000 shares were being held in escrow until receipt of the Final Cash Payment. Mr. Pregiato agreed to extinguish all outstanding debt and liabilities of League Now outstanding as of the closing date upon receipt of the Cash Payment. Upon closing, Pure Motion became a wholly-owned subsidiary of the Company. The transaction was accounted for as a purchase by the Company of Pure Motion, Inc. Upon closing of the transaction, Mr. Pregiato resigned as an officer and director of the Company.
In May, 2011, the transaction with Pure Motion, Inc. was rescinded and the TOMI golf product and the patents and technology of the Company were returned to the Shareholders of Pure Motion, in exchange for the cancellation of shares that were to have been issued to them. The shares outstanding, at the present time, reflect the absence of any
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shares ever being issued to the Pure Motion, Inc. Shareholders, by the Company, either upon or subsequent to the closing of the transaction on October 6, 2010, since no such shares were ever issued by the Board following the acquisition of control by Pure Motions shareholders of the Company and its affairs. Simultaneously with the withdrawal and rescission of the acquisitive transaction of October 6, 2010, the Company entered into a license agreement (the License Agreement) with Pure Motion for the exclusive right to use and exploit its motion capture technology with respect to all medical applications (the Licensed Technology). In addition to the License Agreement, the Company entered into a consulting agreement (the Consulting Agreement) with the former Chief Executive Officer, Mario Barton (who is also the CEO of Pure Motion, Inc.) to stay with the Company as a consultant with regard to the deployment of the medical applications licensed by Pure Motion to the Company, as well as an employment agreement (the Employment Agreement) which secure the continuation of his services as President and Chief Executive Officer of the Company for a period of twelve (12) months from the date thereof. The Consulting Agreement and the Employment Agreement provide for no payment of any compensation to Mr. Barton, other than payments which may be due him based upon the successful marketing and deployment of the Licensed Technology.
On January 20, 2012, the Company entered into a Stock Purchase Agreement and Share Exchange (the Agreement) with Infiniti Systems Group, Inc. (Infiniti). Pursuant to the Agreement, the Company agreed to issue 30 million common shares of the Companys stock to the shareholders of Infiniti in exchange for 100% of the issued and outstanding capital stock of Infiniti. The shares issued to the shareholders of Infiniti represent 60% of our issued and outstanding capital stock on a fully diluted basis (the Stock Consideration). In addition, the Companys Chief Executive Officer and Chief Financial Officer, Mario Barton, resigned. John Bianco, the Chief Executive Officer of Infiniti, agreed to serve as the Companys new President and Chief Executive Officer. The Companys new Treasurer and Chief Financial Officer is Lisa Bischof, and the new Secretary and Chief Operating Officer is D. Bruce Veness. The transactions contemplated by the Agreement were closed on January 31, 2012, with the Company issuing 30 million shares to Bianco, Veness and Bischof. Contemporaneously with the closing, Pregiato agreed to cancel 25,803,288 shares of the Companys common stock which were held by him.
On February 27, 2013, the Company, then known as League Now Holdings, Inc. consummated a share exchange with NYBD Holdings, Inc. (NYBD) pursuant to which 100% of the equity in NYBD was exchange for 28,500,000 shares of the Companys common stock, which was previously held by the Companys former CEO, John Bianco. As a result of the transaction, the shareholders of NYBD became the majority owners of the Company and NYBD became a wholly owned subsidiary. The Company concurrently agreed to sell the operations of League Now to Mr. Bianco in exchange for the assumption by Mr. Bianco of all associated liabilities with the exception the notes payable due Asher Enterprises, Inc. For accounting and reporting purposes, this transaction will be treated as a reverse merger with NYBD being the surviving entity. All balances as of and for the period ended December 31, 2012 are those of League Now exclusive of NYBD. The financial statements for March 31, 2013 and thereafter will reflect the historical balances and results of operations for NYBD, exclusive of League Now. The details of this transaction were previously reported on Form 8-K, filed March 6, 2013, and an 8K/A filed on May 2, 2013.
NYBD Holding, Inc. was incorporated in March 16, 2012 with a Fiscal Year ending of December 31. NYBD Holding, Inc. operates two deli restaurants that specialize in providing a wide variety of Bagels and cream cheese spread toppings along with a full service juice bar and large salad bar. The restaurants are located in downtown Miami located at 350 NE 24th St. and at 155 E. Flagler St.
On September 20, 2013, NYBD Holding, Inc entered into a share exchange agreement with Pleasant Kids, Inc. and all of its stockholders, and as a result of the closing of this agreement, Pleasant Kids, Inc. became the surviving Company. NYBD Holding, Inc will close both of its deli restaurants at the closing of this agreement and adopt the operation of Pleasant Kids. Based on the terms of the share exchange agreement, the controlling stockholder of Pleasant Kids sold all 1,000 issued and outstanding shares of common stock and 10,000,000 million shares of Class A Preferred stock of Pleasant Kids, Inc. to NYBD Holding, Inc. in consideration for the issuance of 1,000 shares of the common shares and 10,000,000 of the Preferred A shares of NYBD Holding, Inc.
Following the closing of the share exchange agreement on September 20, 2013, control and management of the Company is that as Pleasant Kids, Inc. For accounting and reporting purposes, this transaction will be treated as a reverse recapitalization, with Pleasant Kids as the acquirer. As such, the financial information, including the operating and financial results, included in this 10K are that of Pleasant Kids rather than that of NYBD Holding, Inc. prior to the completion of the transactions described herein.
On June 18, 2004, the board of directors of Pleasant Kids, Inc., officially changed its name from NYBD Holding, Inc. to Pleasant Kids, Inc. The name change became effective August 9, 2014 with FINRA but did not become
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effective until October 7, 2014 in the state of Florida. The Company also changed the symbol from NYBD to PLKD effective August 18, 2014.
OVERVIEW
Pleasant Kids, Inc. (Formerly NYBD Holding, Inc) was incorporated in July 17th, 2013 with a Fiscal Year Ending of September 30th. Pleasant Kids is a Florida Corporation engaged in the business of producing, marketing and distributing naturally balanced alkalized water for children, including and not limited to organic natural juices.
PRINCIPAL PRODUCTS
The Company offers retail consumers naturally balanced alkalized spring bottled water for children in an 8oz. bottle through our brand Pleasant Kids.
The Company sources our naturally balanced alkalized spring water, throughout the United States. The product requirements are to bottle naturally balanced alkalized spring water with a minimum of 8.0 of pH, without the use of any chemicals, or ionize machinery.
The main reason parents and consumers drink the Companys product is for the perceived benefit that a proper pH balance helps fight disease and boosts the immune system and the perception that alkaline water helps to maintain a proper body pH and keeps cells young and hydrated.
OPERATIONS
Pleasant Kids, will operate primarily as a manufacturing, marketing and distribution company. The Company has created a branding company called Pleasant Kids Extra, Inc. that will be branding and managing the Pleasant Kids Characters in merchandizing and promotional products including licensing/branding agreements with other manufactures. The Pleasant Kids Characters where created by PowerHouse Creative, Inc. a computer consulting team focused on the internet, mobile apps and graphic designs. Pleasant Kids, Inc. logo and characters are presently pending trademark and copyright approval from the USPTO and the US Copyright.
Sample production, market research and consumer product acceptance of our product began in mid 2012. The Company has focused on pre-launch market evaluation of our product in California and Orlando/South Florida for year 2014. The product is currently at the introduction phase of its lifecycle. In April of 2013 Pleasant Kids did market research on the demand for naturally balance alkalized bottle water in Los Angeles, California. In June of 2013 the Company repeated the processes in Orlando, Florida. Pleasant Kids launched its online store in August of 2014 on Amazon.com. The Company intends enter the California market some time in 2015.
OUR MARKET
The Company plans to target the parents of children between the ages of newborn to 9 years of age in the continental United States primarily through independent brokers and distributors. At present the sales efforts are focused in Orlando/South Florida.
HEALTH ISSUES, CONCERNS AND SIMPLE SOLUTIONS
Children need plenty of water to stay hydrated and healthy. Water makes up more than half of a child's weight and a steady supply is necessary to keep the body working properly. It can be challenging to get children to drink enough water because most children prefer the sweet taste of juice, chocolate milk or soda to the plain taste of water. Teaching children to drink plenty of water is so important and Pleasant Kids characters have been created to entertain and motivate them to consume more of the natural alkalized spring water.
Kids need to drink as much or more water than adults do because they're growing and at greater risk of dehydration. Kids should drink at least eight to ten glasses of water per day. Even the best tap water has toxins in it that give water a chemical aftertaste and present short- and long-term health risks. The Companys natural alkalized spring water provides a very healthy alternative.
U.S. CHILD POPULATION NEWBORNS TO 9 YEARS OF AGE
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There is an average of 4 million children born every year in America. The US Census estimates 64,000,000 million children from the ages of 0 to 9 years old. California and Texas are the most populous states and New York City the most populous city in the United States. The average child population has increased 40% compared to a decade ago.
CHILDREN FOOD AND BEVERAGE ADVERTISING INITIATIVE
The Council of Better Business Bureaus and 10 leading food and beverage companies launched the Children's Food and Beverage Advertising Initiative in November 2006. The goal of the Initiative is to shift the mix of advertising primarily directed to children (child-directed advertising) to encourage healthier dietary choices and healthy lifestyles. On December 31, 2013, new CFBAI-developed uniform nutrition criteria will go into effect and become the new foundation for child-directed food advertising. The Initiative covers child-directed advertising on traditional media (TV, radio, print and Internet) as well as on new and emerging media, such as mobile media and video games. The promotion of a healthy diet will of course help promote the Companys product.
DISTRIBUTION METHOD FOR OUR PRODUCT
The Company expects that its distribution network will be a broker-distributor-retailer network, whereby brokers represent the Companys products to distributors and retailers. Our target retail markets are: (a) chain and independent health food stores; (b) grocery stores; (c) convenience stores; (d) drug stores; and the mass online retail market.
MARKETING
Taking advantage of our USP Unique Selling Position, The Company intends to avail its self of the promotional activities of the competition and expand throughout the same retail markets that they establish. The Company anticipates that the initial marketing thrust will be to support the retailers and distribution partners with point of sales displays and other marketing materials, strategically adding an extensive PR program as circumstances dictate.
COMPETITION
Even though the Company has a USP Unique Selling Position in the market and expects to be first in the market for this unique niche, the beverage industry is extremely competitive. The principal areas of competition include pricing, packaging, development of new products and flavors, and marketing campaigns. Our product will be competing directly with a wide range of drinks produced by a relatively large number of manufacturers. Most of these brands have enjoyed broad, well-established national recognition for years, through well-funded ads and other marketing campaigns. In addition, companies manufacturing these products generally have far greater financial, marketing, and distribution resources than that of our Company.
Important factors that will affect the Companys ability to compete successfully include the uniqueness of our product, our trademark characters, trade and consumer promotions, the development of new, unique and cutting edge products, attractive and unique packaging, branded product advertising, pricing, and the success of our distribution network
The Company will also be competing to secure distributors who will agree to market our product over those of the competition, provide stable and reliable distribution, and secure adequate shelf space in retail outlets. The extremely competitive pressures within the beverage categories could result in our product never even being introduced beyond what can be marketed locally.
The Companys product will compete generally with all liquid refreshments, including bottled water and numerous specialty beverages, such as: SoBe; Snapple; Arizona; Vitamin Water; Gatorade; and Powerade. The Company will compete directly with other alkaline water producers and brands focused on the emerging alkaline beverage market including: Eternal; Essentia; Icelandic; Real Water; Aqua Hydrate; Mountain Valley; Qure; Penta; and Alka Power.
Products offered by our direct competitors are sold in various volumes and prices with prices ranging from approximately $0.75 for to $1.00 for our 8oz. BPA-Free PETE Bottle.
INTELLECTUAL PROPERTY
The Company intends to seek, as dictated by branding experts, to have trademark protection in the United States for a number of trademarks for slogans and product designs.
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The Company intends to aggressively assert the Companys rights under trade secret, unfair competition, trademark and copyright laws to protect the Companys intellectual property, including product design, product research and concepts and recognized trademarks. These rights are protected through the acquisition of patents and trademark registrations, the maintenance of trade secrets, the development of trade dress, and, where appropriate, litigation against those who are, in our opinion, infringing upon these rights.
While there can be no assurance that registered trademarks will protect the Companys proprietary information, the Company intends to assert our intellectual property rights against any infringer. Although any assertion of the Companys rights could result in substantial cost to, the company, management believes that the protection of the Companies intellectual property rights will be a key component of our operating strategy.
SEASONALITY OF BUSINESS
The sales of the Companys products are influenced to some extent by weather conditions in the markets in which the Company operates. Unusually cold or rainy weather during the summer months may have a temporary effect on the demand for product and contribute to lower sales, which could have an adverse effect on the results of operations for such periods.
GOVERNMENT REGULATION
The advertising, distribution, labeling, production, safety, sale, and transportation in the United States of the Companys product will be subject to: the Federal Food, Drug, and Cosmetic Act; the Federal Trade Commission Act; the Lanham Act; state consumer protection laws; competition laws; federal, state and local workplace health and safety laws; various federal, state and local environmental protection laws; and various other federal, state and local statutes and regulations.
Bottles or containers for the Companys product are non-refillable, BPA-Free, recyclable containers. Legal requirements apply in many jurisdictions in the United States requiring that deposits or certain ecotaxes or fees be charged for the sale, marketing, and use of certain non-refillable beverage containers. The precise requirements imposed by these measures vary. Other types of statutes and regulations relating to beverage container deposits, recycling, ecotaxes and/or product stewardship also apply in various jurisdictions in the United States. The Company anticipates that additional, similar legal requirements may be proposed or enacted in the future at the local, state and federal levels in the United States.
Any third-party bottling facility that we may choose to utilize in the future and any other such operations will be subject to various environmental protection statutes and regulations, including those relating to the use of water resources and the discharge of wastewater. It will be the Companys policy to comply with any and all such legal requirements. Compliance with these provisions has not had, and we do not expect such compliance to have, any material adverse effect on capital expenditures, net income or competitive position.
EMPLOYEES
The Company currently employs one full time social media manager and three part-time beverage and retail experts who work in the United States on a contract basis. The operations are overseen directly by management. Management oversees all responsibilities in the areas of corporate administration, business development, and research. The Company intends to expand current management and to obtain additional skilled directors, officers, and employees with experience relevant to the Companys business focus.
Managements relationships with manufacturers, distillers, development research companies, bottling concerns, and certain retail customers provides the foundation through which the Company expect to grow our business in the future. The Company believes that the skill-set of the management team will be a primary asset in the development of the Companys brands and trademarks. The Company also plans to form an independent network of contract sales and regional managers, a promotional support team, and several market segment specialists who will be paid on a variable basis.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in or
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incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment.
Risks Relating to Our Business
If the Company fails to develop and maintain an effective system of internal controls, the Company may not be able to accurately report financial results or prevent fraud; as a result, current and potential shareholders could lose confidence in the financial reports, which could harm our business and the trading price of our common stock.
Effective internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002 requires Companies to evaluate and report on internal controls over financial reporting. The Company plans to prepare for compliance with Section 404 by strengthening, assessing and testing our system of internal controls to provide the basis for our reporting. The process of strengthening internal controls and complying with Section 404 is expensive and time consuming, and requires significant management attention, especially given that the Company has not yet undertaken any efforts to comply with the requirements of Section 404. The Company cannot be certain that the measures taken will ensure that the Company will maintain adequate controls over the financial processes and reporting in the future. Furthermore, if the Company is able to rapidly grow our business, the internal controls that are needed will become more complex, and significantly more resources will be required to ensure internal controls remain effective. Failure to implement required controls, or difficulties encountered in their implementation, could harm operating results or cause the Company to fail to meet reporting obligations. If the Company or its auditors discover a material weakness in internal controls, the disclosure of that fact, even if the weakness is quickly remedied, could diminish investors confidence in the financial statements and harm the stock price. In addition, non-compliance with Section 404 could subject us to a variety of administrative sanctions, including the suspension of trading, ineligibility for listing on one of the Nasdaq Stock Markets or national securities exchanges, and the inability of registered broker-dealers to make a market in the Companys common stock, which would further reduce the stock price of the Company.
We will incur increased costs as a public company which may affect our profitability and an active trading market.
As a public company, the Company will incur significant legal, accounting and other expenses that it did not incur as a private company. SEC disclosures generally involve a substantial expenditure of financial resources. In addition, the Sarbanes-Oxley Act of 2002 and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. The Company expects that full compliance with these new rules and regulations will significantly increase legal and financial compliance costs and make some activities more time-consuming and costly. For example, the Company will be required to create additional board committees and adopt policies regarding internal controls and disclosure controls and procedures. Such additional reporting and compliance costs may negatively impact the financial results. To the extent earnings suffer as a result of the financial impact of SEC reporting or compliance costs, the ability to develop an active trading market for the Companys securities could be harmed.
There is no guarantee the Company can achieve or maintain profitability, and if the Company cannot generate sufficient revenues and profitability, it will be unable to build a sustainable business and you could lose your entire investment.
The Companys ability to successfully develop its products, and to realize consistent, meaningful revenues and profit has not been established and cannot be assured. Pleasant Kids, has not realized any significant revenues and does not expect to do so in the near future. For The Company to achieve success, our products must receive broad market acceptance by consumers. Without this market acceptance, we will not be able to generate sufficient revenue to continue our business operation. If the Companys products are not widely accepted by the market, the business may fail. The Companys ability to achieve and maintain profitability and positive cash flow is dependent upon the ability to generate revenues, manage development costs and expenses, and compete successfully with our direct and indirect competitors.
Potential investors should be aware of the problems, delays and expenses encountered by an enterprise in its development stage, many of which are beyond the Companys control. These include unanticipated manufacturing, marketing, operational and/or competitive problems, among others. Revenues may be substantially lower, and costs
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and expenses may be substantially higher, than current estimates. Potential investors should be aware of the difficulties normally encountered by new enterprises and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the expenses, difficulties, complications, delays and competition encountered in connection with the development of a business in the specialty beverage business.
The Company needs significant additional financing to fund its operations, and if adequate funds are not available or are not available on acceptable terms, the Companys ability to fund its expansion, take advantage of potential opportunities, develop or enhance products or otherwise respond to competitive pressures would be limited significant.
To date, the Company has financed its operations principally through the issuance of convertible debentures. The Company needs to raise additional funds through financing in order to be able to fully implement its business plan. There is no assurance that such financing will be available on commercially acceptable terms, or at all. If additional funds are raised through the issuance of shares, convertible debt or similar securities of the Company, the percentage of ownership of the Companys shareholders will be reduced, and such securities may have rights or preferences superior to those of the Companys securities issued pursuant to a new offering. If adequate funds are not available or are not available on acceptable terms, the Companys ability to fund its expansion, take advantage of potential opportunities, develop or enhance products or otherwise respond to competitive pressures would be limited significantly.
The Companys products and services may not achieve market acceptance and the failure of the Company to achieve broad acceptance of its products and services would have a material adverse effect on the Companys business, financial condition and results of operations
The nonalcoholic beverage business environment is rapidly evolving as a result of, among other things, changes in consumer preferences, including changes based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures. In addition, the nonalcoholic beverage retail landscape is very dynamic and constantly evolving, not only in emerging and developing markets, where modern trade is growing at a faster pace than traditional trade outlets, but also in developed markets, where discounters and value stores, as well as the volume of transactions through e-commerce, are growing at a rapid pace. If the Company is unable to successfully adapt to the rapidly changing environment and retail landscape, our share of sales, volume growth and overall financial results could be negatively affected.
Current and potential competitors, some of whom have greater resources and experience than the Company, may develop products and services that may cause demand for, and the prices of, its products to decline.
The commercial retail beverage industry, and in particular its nonalcoholic beverage segment is highly competitive. Market participants are of various sizes, with various market shares and geographical reach, some of whom have longer operating histories, significantly greater financial, technical, product development and marketing resources, greater name recognition and larger customer bases than Pleasant Kids. We will compete generally with all liquid refreshments, including bottled water and numerous specialty beverages, such as: SoBe; Snapple; Arizona; Vitamin Water; Gatorade; and Powerade.
The Company will compete indirectly with major international beverage companies including but not limited to: the Coca-Cola Company; PepsiCo, Inc.; Nestlé; Dr Pepper Snapple Group; Groupe Danone; Kraft Foods Group, Inc.; and Unilever. These companies have established market presence in the United States, and offer a variety of beverages that are substitutes for our product. The Company faces potential direct competition from such companies, because they have the financial resources, and access to manufacturing and distribution channels to rapidly enter the alkaline water market.
The Company will compete directly with other alkaline water producers and brands focused on the emerging alkaline beverage market including: Eternal; Essentia; Icelandic; Real Water; Aqua Hydrate; Mountain Valley; Qure; Penta; and Alka Power. These companies could bolster their position in the alkaline water market through additional expenditure and promotion.
As a result of both direct and indirect competition, the Companys ability to successfully distribute, market and sell our product, and to gain sufficient market share in the United States to realize profits may be limited, and our business plan may not succeed.
10
The Company relies on the services of key personnel, and the failure to attract, motivate and retain these employees could harm the Companys business.
The Companys future performance depends to a significant degree on the continued service of a few full and part time key technical and managerial personnel, including without limitation its Chief Executive, Vice President and Chief Operating Officer. If the Company loses the services of any of these individuals, its business, operating results and financial condition could be materially and adversely effected. The Companys future success also depends on its continuing ability to attract and retain highly qualified sales, technical, customer support, and managerial personnel. There can be no assurance that the Company will be able to retain its key employees, or that it can attract, assimilate and retain other highly qualified personnel in the future. The failure to attract, motivate and retain these employees could harm the Companys business.
Adverse general economic conditions also could reduce sales of our products and adversely affect our business.
Unfavorable general economic conditions, such as a recession or economic slowdown, in the United States could negatively affect the affordability of, and consumer demand for our product in the United States. Under difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing purchases of our products or by shifting away from our beverages to lower-priced products offered by other companies, including non-alkaline water. Consumers may also cease purchasing bottled water and consume tap water. Lower consumer demand for our product in the United States could reduce our profitability. A prolonged economic downturn could have a material adverse effect on our business, financial condition, and results of operations.
The Company relies upon third-parties, and the Company may not be able to maintain these relationships. The failure of the Company to maintain and renew these relationships on terms favorable to the Company could adversely affect its business, operating results and financial condition.
The Companys distribution network and its success depend on the performance of third parties. Any non-performance or deficient performance by such parties may undermine our operations, profitability, and result in total loss to your investment. To distribute our product, we will use a broker-distributor-retailer network whereby brokers represent our products to distributors and retailers who will in turn sell our product to consumers. The success of this network will depend on the performance of the brokers, distributors and retailers of this network. There is a risk that a broker, distributor, or retailer may refuse to or cease to market or carry our product. There is a risk that the mentioned entities may not adequately perform their functions within the network by, without limitation, failing to distribute to sufficient retailers or positioning our product in localities that may not be receptive to our product. Furthermore, such third parties financial position or market share may deteriorate, which could adversely affect the Companys distribution, marketing and sale activities. The Company also needs to maintain good commercial relationships with third-party brokers, distributors and retails so that they will promote and carry our product. Any adverse consequences resulting from the performance of third parties or our relationship with them could undermine our operations, and have a materially adverse effect on the Companys business plan.
The Company may encounter difficulties in managing its growth, which could prevent it from executing its business strategy.
If the Company achieves its growth objectives, such growth would place a strain on its management systems and resources. The Companys ability to compete effectively and to manage future growth, if any, will require it to continue to improve its financial and management controls, reporting systems and procedures on a timely basis, and to expand, train and manage its employee work force. There can be no assurance that the Company will be able to successfully do so, which could adversely affect its business, operating results and financial condition.
Health benefits of alkaline water is not guaranteed or proven, rather it is perceived by consumers.
Health benefits of alkaline water are not guaranteed and have not been proven. There is a perception that consuming alkaline water has beneficial health effects. Consequently, negative changes in consumers perception of the benefits of alkaline water or negative publicity surrounding alkaline water may result in loss of market share or potential market share and have a materially adverse effect on operating results .
Expansion of the alkaline beverage market or sufficient consumer demand in that market is not guaranteed.
11
The alkaline water market is an emerging market and there is no guarantee that this market will expand or that consumer demand will be sufficiently high to allow the company to successfully market, distribute and sell our product, or to successfully compete with current or future competition, all of which may result in total loss of your investment
Water scarcity and poor quality could negatively impact the Companys production costs.
Water is the main ingredient in the Companys product. It is also a limited resource, facing unprecedented challenges from overexploitation, increasing pollution, poor management, and climate change. As demand for water continues to increase, as water becomes scarcer, and as the quality of available water deteriorates, the company may incur increasing production costs or face capacity constraints that could adversely affect our profitability or net operating revenues in the long run.
Increase in the cost, distribution of supply or shortage of ingredients, other raw materials or packaging materials could harm the Companys business.
The Company and its bottling partners, will use water, packaging materials for bottles such as plastic and paper products. The prices for these ingredients, other raw materials and packaging materials fluctuate depending on market conditions. Substantial increases in the prices of our or our bottling partners ingredients, other raw materials and packaging materials, to the extent they cannot be recouped through increases in the prices of finished beverage products, would increase our operating costs and could reduce our profitability. Increases in the prices of our finished products resulting from a higher cost of ingredients, other raw materials and packaging materials could affect the affordability of our product and reduce sales.
An increase in the cost, a sustained interruption in the supply, or a shortage of some of these ingredients, other raw materials, or packaging materials and containers that may be caused by a deterioration of our or our bottling partners relationships with suppliers; by supplier quality and reliability issues; or by events such as natural disasters, power outages, labor strikes, political uncertainties or governmental instability, could negatively impact our net revenues and profits.
Significant additional labeling or warning requirements or limitations on the availability of the Companys product may inhibit sales of affected products.
Various jurisdictions may seek to adopt significant additional product labeling or warning requirements or limitations on the availability of our product relating to the content or perceived adverse health consequences of our product. If these types of requirements become applicable to our product under current or future environmental or health laws or regulations, they may inhibit sales of our product.
Changes in, or failure to comply with, the laws and regulations applicable to the Companys products or the Companys business operations could increase costs or reduce net operating revenues.
The advertising, distribution, labeling, production, safety, sale, and transportation in the United States of the Companys product will be subject to: the Federal Food, Drug, and Cosmetic Act; the Federal Trade Commission Act; the Lanham Act; state consumer protection laws; competition laws; federal, state, and local workplace health and safety laws, such as the Occupational Safety and Health Act; various federal, state and local environmental protection laws; and various other federal, state, and local statutes and regulations. Legal requirements also apply in many jurisdictions in the United States requiring that deposits or certain ecotaxes or fees be charged for the sale, marketing, and use of certain non-refillable beverage containers. The precise requirements imposed by these measures vary. Other types of statutes and regulations relating to beverage container deposits, recycling, ecotaxes and/or product stewardship also apply in various jurisdictions in the United States. The Company anticipates that additional, similar legal requirements may be proposed or enacted in the future at the local, state and federal levels in the United States. Changes to such laws and regulations could increase our costs or reduce or net operating revenues.
In addition, failure to comply with environmental, health or safety requirements and other applicable laws or regulations could result in the assessment of damages, the imposition of penalties, suspension of production, changes to equipment or processes, or a cessation of operations at our or our bottling partners facilities, as well as damage to our image and reputation, all of which could harm our profitability.
12
The Company has never declared or paid a dividend, and does not anticipate paying cash dividends for the foreseeable future.
The Company has never declared or paid any cash dividends on its stock. The Company currently intends to retain any future earnings for funding growth and, therefore, the Company does not currently anticipate paying cash dividends on its stock in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of the Board of Directors and will depend upon the Companys results of operations, financial condition, and such other factors as the Board of Directors, in its discretion, deems relevant.
Legislative actions, higher insurance costs and potential new accounting pronouncements may impact our future financial position and results of operations.
There have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and there may potentially be new accounting pronouncements or additional regulatory rulings that will have an impact on our future financial position and results of operations. The Sarbanes-Oxley Act of 2002 and other rule changes, as well as proposed legislative initiatives, are likely to increase general and administrative costs and expenses. In addition, insurers are likely to increase premiums as a result of high claims rates over the past several years, which we expect will increase our premiums for insurance policies. Further, there could be changes in certain accounting rules. These and other potential changes could materially increase the expenses we report under generally accepted accounting principles, and adversely affect our operating results.
Future sales of shares of our common stock may decrease the price for such shares.
Actual sales, or the prospect of sales by our shareholders, may have a negative effect on the market price of the shares of our common stock. The Company may also register certain shares of common stock that are subject to outstanding convertible securities, if any, or reserved for issuance under Company stock option plans, if any. Once such shares are registered, they can be freely sold in the public market upon exercise of the options. If any of the Companys shareholders either individually or in the aggregate cause a large number of securities to be sold in the public market, or if the market perceives that these holders intend to sell a large number of securities, such sales or anticipated sales could result in a substantial reduction in the trading price of shares of our common stock and could also impede the Companys ability to raise future capital.
Other Risks
Mergers of the type we just completed with Pleasant Kids are often heavily scrutinized by the SEC and the Company may encounter difficulties or delays in obtaining future regulatory approvals which would negatively impact the financial condition and the value and liquidity of your shares of common stock.
On June 29, 2005, the SEC adopted rules dealing with private company mergers into dormant or inactive public companies. As a result, it is likely that the Company will be scrutinized carefully by the SEC and possibly by the Financial Industry Regulatory Authority (FINRA) which could result in difficulties or delays in achieving SEC clearance of any future registration statements or other SEC filings that the Company may pursue, in attracting FINRA-member broker-dealers to serve as market-makers in our common stock, or in achieving admission to one of the Nasdaq stock markets or any other national securities market. As a consequence, financial condition and the value and liquidity of your shares of our common stock may be negatively impacted.
The elimination of monetary liability against our directors, officers and employees under Florida law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.
Our Amended and Restated Bylaws contain specific provisions that eliminate the liability of our directors for monetary damages to the company and shareholders, and the Company is prepared to give such indemnification to the directors and officers to the extent provided by Florida law. The Company may also have contractual indemnification obligations under employment agreements with our officers. The foregoing indemnification obligations could result in the company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which the Company may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit the company and shareholders.
13
The Companys common stock is currently quoted on the OTCQB. Since none of our securities are registered under Section 12 of the Securities Act of 1933, as amended, our stock may be delisted from the OTCQB.
The OTCQB is an automated quotation system. One of the listing requirements for the OTCQB is that the issuer register its securities under Section 12 of the Securities Act of 1933, amended. In view of these factors, our stock may be delisted from the OTCQB. In such an event, we would be required to register our common stock under Section 12 and reapply to the OTCQB for quotation.
The Companys common stock is currently thinly traded. You may be unable to sell at or near asking prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
Currently, our common stock is quoted on the OTCQB market; however it is thinly traded (meaning that there is not a great deal of daily volume in trades). Any trading volume we may develop may be limited by the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy of not investing in OTCQB stocks and certain major brokerage firms restrict their brokers from recommending OTCQB stocks because they are considered speculative, volatile and thinly traded. The OTCQB market is an inter-dealer market much less regulated than the major exchanges and our common stock is subject to abuses, volatility and shorting. Thus, there is currently no broadly followed and established trading market for our common stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there.
The Companys common stock has been thinly trading, and trading is likely to continue to be limited and sporadic. As a result of such trading activity, the quoted price for our common stock on the OTCQB may not necessarily be a reliable indicator of its fair market value. Further, if we cease to be quoted, holders would find it more difficult to dispose of our common stock or to obtain accurate quotations as to the market value of our common stock and as a result, the market value of our common stock likely would decline.
The Companys common stock will be subject to price volatility unrelated to our operations.
The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on the Companys common stock.
The Companys common stock is classified as a penny stock as that term is generally defined in the Securities Exchange Act Of 1934, as amended, to mean equity securities with a price of less than $5.00. Our common stock will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
The Company will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our stockholders to sell their securities.
Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a penny stock, for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.
For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a persons account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a persons account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the
14
transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:
● | the basis on which the broker or dealer made the suitability determination, and |
● | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Bankruptcy Proceedings during the Past Five Years
The Company has not been involved in any bankruptcy, receivership or any similar proceeding, and, except as set forth herein, we have not had or been a party to any material reclassifications, mergers or consolidations during the previous five (5) years.
Domain Names
N/A
Major Customers
The Company is working to diversify its customer base. It does have the potential to have its sales concentrated in just a few customers. The customers are major concerns and have the potential to take all of the product that the Company will be able to produce in the start-up phase.
Research and Development Activities
The Company has not performed any customer-sponsored research and development activities relating to any new products or services during 2014.
Environmental Laws
We do not handle, store or transport hazardous materials or waste products. We abide by all applicable federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous materials and waste products. We do not anticipate the cost of complying with these laws and regulations to be material.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
Office Locations
The Companys headquarters are located at 2600 West Olive Avenue, suite 5F, Burbank, CA 91505. The Company also have a presence in Florida. The lease for the Burbank office at 2600 West Olive Avenue, suite 5F expired on August 1, 2013.The lease has continued on a month to month basis at the same rate as the lease which is $1,000 a month for approximately 1,000 square feet of office space. Our telephone number is 855-710-5437. The Company's management believes that the leased premises are suitable and adequate to meet its needs.
15
ITEM 3. LEGAL PROCEEDINGS.
During the fiscal year ended September 30, 2014, the Company failed to answer a lawsuit from Franjose Yglesias-Bertheau for unpaid salary. The lawsuit was based on the 5 year contract that Mr. Yglesias-Bertheau had with the Company and based on the Company not answering the suit Mr. Ylgesias-Bertheau was awarded a $622,968 judgment. Due to the frivolous nature of the claim the $622,968 judgment was reversed. The Company is in the process of settling the final amount owed Mr. Yglesias-Bertheau but does not think that the claim will be in excess of the accrued salary amount of $45,025 that the Company has accrued on its books.
ITEM 4. MINE SAFETY DISCLOSURE.
Not applicable.
16
PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our Common Stock is traded in the over-the-counter market on the OTCQB under the symbol "PLKD." The following table shows the price range of our Common Stock for each quarter during the years ended September 30, 2014 and 2013. The below quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. Prices listed are historic prices and have been adjusted to reflect the several stock splits as if it had occurred at the beginning of the earliest period presented.
Quarter Ended |
| High |
|
| Low |
| ||
Fiscal Year 2014 |
|
|
|
|
|
| ||
Fourth Quarter |
| $ | 0.60 |
|
| $ | 0.012 |
|
Third Quarter |
| $ | 0.65 |
|
| $ | 0.05 |
|
Second Quarter |
| $ | 0.85 |
|
| $ | 0.10 |
|
First Quarter |
| $ | 1.65 |
|
| $ | 0.25 |
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2013 |
|
|
|
|
|
|
|
|
Fourth Quarter |
| $ | 0.8.05 |
|
| $ | 0.55 |
|
Third Quarter |
| $ | 4.95 |
|
| $ | 0.75 |
|
Second Quarter |
| $ | 12.50 |
|
| $ | 2.50 |
|
First Quarter |
| $ | 67.50 |
|
| $ | 2.50 |
|
Description of Securities
The Companys authorized capital stock consists of 10,000,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, $0.001 par value per share. As of December 27, 2014, an aggregate of 4,585,054,232 shares of our common stock were issued and outstanding.
Common Stock
Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters. Stockholders do not have preemptive rights to purchase shares in any future issuance of our common stock. Upon our liquidation, dissolution or winding up, and after payment of creditors and preferred stockholders, if any, our assets will be divided pro-rata on a share-for-share basis among the holders of the shares of common stock.
The holders of shares of our common stock are entitled to dividends out of funds legally available when and as declared by our board of directors. Our board of directors has never declared a cash dividend and does not anticipate declaring any dividend in the foreseeable future. In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive, ratably, the net assets available to stockholders after payment of all creditors and preferred stockholders.
Preferred Stock.
Our Articles of Incorporation also provide that we are authorized to issue up to 10,000,000 shares of preferred stock with a par value of $.001 per share. As of the date of this report, there are 10,000,000 shares of preferred stock issued and outstanding. Our Board of Directors has the authority, without further action by the shareholders, to issue from time to time the preferred stock in one or more series for such consideration and with such relative rights, privileges, preferences and restrictions that the Board may determine. The preferences, powers, rights and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and purchase funds and other matters. The issuance of preferred stock could adversely affect the voting power or other rights of the holders of common stock.
Holders
As of December 27, 2014, there are approximately 550 shareholders of our common stock.
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Transfer Agent and Registrar
Olde Monmouth Stock Transfer is currently the transfer agent and registrar for our common stock. Its address is 200 Memorial Parkway, Atlantic Highlands, NJ 07716. Its phone number is (732) 872-2727.
Dividend Policy
We have never declared or paid dividends on our common stock. We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.
Securities Authorized for Issuance under Equity Compensation Plans
We did not have any equity compensation plans as of September 30, 2014. Our Board of Directors may adopt an equity compensation plan in the future.
Recent Sales of Unregistered Securities
Based on the share exchange agreement, and on the closing date of September 20, 2013, the controlling stockholder of Pleasant Kids, sold all 1,000 issued and outstanding shares of common stock of Pleasant Kids, Inc. (Formerly NYBD Holding, Inc) to NYBD Holding, Inc. in consideration for the issuance of 1,000 shares of the common shares of NYBD Holding, Inc. Such securities were not registered under the Securities Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance of securities by us did not involve a public offering. The offering was not a public offering as defined in Section 4(2) due to the insubstantial number of persons involved in the transaction, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these shareholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a public offering. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. SELECTED FINANCIAL DATA.
We are a smaller reporting company as defined by Rule 229.10(f)(1) and are not required to provide information under this item.
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Overview
The following discussion and analysis of the results of operations and financial condition of Pleasant Kids, Inc (Formerly NYBD Holding, Inc) should be read in conjunction with the Selected Combined Financial Data, Pleasant Kids financial statements, and the notes to those financial statements that are included elsewhere in this Form 10-K.
On September 20, 2013, the Company entered into a share exchange agreement with Pleasant Kids, Inc. whereby the Company issued 10,000,000 preferred shares and 1,000 common shares for all of the outstanding shares of Pleasant Kids, Inc. As a result of the share exchange, Pleasant Kids, Inc. became the surviving Company. For accounting purposes, the share exchange agreement was treated as a reverse merger whereby the historical financial information presented will be that solely of Pleasant Kids, Inc. Therefore, there is no prior year comparative financial information presented for the year ended September 30, 2013 as the Company was not incorporated till July 15, 2013 under the laws of the State of Florida.
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The following tables set forth key components of our results of operations for the periods indicated, in dollars and key components of our revenue for the period indicated, in dollars. The discussion following the table is based on these results.
Pleasant Kids, Inc. |
| Year Ended |
|
| Year Ended |
| ||
Statement of Operations |
| 30-Sep-14 |
|
| 30-Sep-13 |
| ||
Revenue |
|
| 5,246 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold |
|
| 46,071 |
|
|
| 15,553 |
|
General & Administrative |
|
| 301,191 |
|
|
| 115,850 |
|
|
|
|
|
|
|
|
|
|
Officers Compensation |
|
| 385,962 |
|
|
| 37,500 |
|
|
|
|
|
|
|
|
|
|
Profit/(Loss) from Operations |
|
| (727,978 | ) |
|
| (137,797 | ) |
Other Income or (Loss) |
|
| (1,001,836 | ) |
|
| (404,591 | ) |
Net Loss Before Taxes |
|
| (1,729,814 | ) |
|
| (573,494 | ) |
Income Tax |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| (1,729,814 | ) |
|
| (573,494 | ) |
Net Loss Per Share |
|
| (.00 | ) |
|
| (.00 | ) |
Results of operations for the year ended September 30, 2014 and from July 15, 2013 to September 30, 2014.
Revenue:
Sales for the year ended September 30, 2014, were $5,246 comprised of direct sales to stores and sales on the internet through Amazon.com. In the previous year ended September 30, 2013, the Company had just started operations on July 17, 2013, (inception) and there were no sales.
Cost of Goods Sold:
The Company is reporting Cost of Goods Sold of $46,071 for the year ended September 30, 2014. The cost of goods sold for fiscal year ended 2014 includes inventory write of in the amount of $41,683In the fiscal year ended September 30, 2013 the Company paid $15,553 for raw materials. The costs were originally accounted for as inventory and written off in the restated financials and reported as cost of goods.
Operating Expenses:
Operating expenses for the year ended September 30, 2014 were $687,153 and operating expenses from inception July 15, 2013 to September 30, 2014 were $840,503.
Consulting Fees. For the year ended September 30, 2014, consulting expenses were $65,175 and for the period from July 15, 2013 to September 30, 2014 were $65,175. The Company believes consulting fees will increase as operations expand in 2015.
Professional Fees. For the year ended September 30, 2014, professional fees were $115,228 and for the period from July 15, 2013 to September 30, 2014 were $143,814. The Company believes professional fees such as legal, audit and accounting will increase as operations expand in 2015.
Officer Compensation. For the year ended September 30, 2014, officer compensation was $385,962 and for the period from July 15, 2013 to September 30, 2014 were $423,462. On October 1, 2013, the Company entered into employment agreements with Robert Rico, CEO and Calvin Lewis, VP. The contracts each have a term of 5 years with a base salary plus a bonus of 2% of sales annually. The annual base salaries are as follows:
Robert Rico |
| $ | 175,000 |
|
Calvin Lewis |
| $ | 150,000 |
|
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Selling, General and Administrative Expense. For the year ended September 30, 2014, selling, general and administrative expense were $120,788 and for the period from July 15, 2013 to September 30, 2014 were $208,052.
Loss from Operations:
Loss from operations was $727,978 for the year ended September 30, 2014 bringing the total loss from operations since inception to $839,646.
Interest Expense:
Interest expense for the year ended September 30, 2014, was $59,930, and is derived from the convertible debenture debt carried by the Company. The accumulative cost for interest expense since inception is $69,296.
Net Loss:
Net Loss from operations for the year ended September 30, 2014, was $1,729,814 bringing the total net loss since inception to $2,303,310. The net operating loss for the fiscal year ended September 30, 2014 was made up of a loss from operations of $727,978 plus other expense items of $1,001,836. The loss since inception of $2,303,310 is made up of a loss from operations of $839,646 and non-operating expenses of $877,706.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2014, the Company had net current liabilities of $1,593,649 compared to $844,663 as of September 30, 2013. The increase in net current liability is due mainly to an increase in derivative liability of $469,279, an increase in the convertible notes payable balance of $95,461 and an increase of $186,640 in accrued salary. The Companys balance of cash and cash equivalents at September 30, 2014 is $8,799 compared to $4,658 as of September 30, 2013.
Operational Activities
The Company had cash used in operating activities of $397,927 in the year ended September 30, 2014 and $512,363 from inception July 15, 2013 to September 30, 2014. The Companys primary uses of cash have been for professional support, marketing expenses and working capital. All cash received has been expended in the furtherance of growing future operations.
Investing Activities
The Company had cash used in investing activities of $3,975 in the year ended September 30, 2014 and $3,975 from inception July 15, 2013 to September 30, 2014 which was from the purchase of equipment.
Financing Activities
The Company had cash provided in financing activities of $406,042 in the year ended September 30, 2014 of which $15,000 was from proceeds from loan payable, $52,998 was cash received from sale of stock, $350,511 was from convertible debentures, and $12,467 was paid to notes payable to related parties that are convertible debenture note. The Company had cash provided in financing activities of $525,137 for the period from inception July 15, 2013 to September 30, 2014 of which $15,000 was from proceeds from loan payable, $52,998 was from the sale of stock, $350,511 was from convertible debentures and $106,627 was received from convertible notes payable to related parties.
The Company may not have sufficient resources to fully develop any new products or expand our inventory levels unless it is able to raise additional financing. The Company can make no assurances these required funds will be available on favorable terms, if at all. If additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. Additionally, these conditions may increase costs to raise capital and/or result in further dilution. The failure to raise capital when needed, will adversely affect our business, financial condition and results of operations, and could force the Company to reduce or cease operations.
20
The Company believes that it will be able to meet the costs of growth and public reporting with funds generated from operations and additional amounts generated through debt and equity financing, Although management believes that the required financing to fund product development and increasing inventory levels can be secured at terms satisfactory to the Company, there is no guarantee these funds will be made available, and if funds are available, that the terms will be satisfactory to the Company.
Impact of Inflation
The business will have to absorb any inflationary increases on development costs in the short-term, with the expectation that it will be able to pass inflationary increases on costs on to customers through price increases on the release of these new/enhanced products into the market and hence management does not expect inflation to be a significant factor in our business.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements between the Company and any other entity that have, or are reasonably likely to have, a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. Some of the critical accounting estimates are detailed below.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On November 21, 2013, the PCAOB revoked the registration of the Registrants prior independent accountant, Harris F. Rattray, CPA (Harris), due to Harris violations of PCAOB rules and auditing standards in auditing the financial statements and PCAOB rules and quality control standards with respect to Harris clients; the Registrant was not one of the clients for which Harris was sanctioned.
During the Company's 2012 and 2011 fiscal years and through the date of this Current 10Kreport (1) there were no disagreements with Harris on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Harris, would have caused Harris to make reference to the subject matter of the disagreements in connection with their report, and (2) there were no reportable events as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
On December 27, 2013, the Company engaged Terry L. Johnson, CPA, as the Company's independent accountant to audit the Companys financial statements and to perform reviews of interim financial statements. During the fiscal years ended September 30, 2013 and December 31, 2012 through December 27, 2013 neither the Company nor anyone acting on its behalf consulted with Terry L. Johnson, CPA regarding (i) either the application of any accounting principles to a specific completed or contemplated transaction of the Company, or the type of audit opinion that might be rendered by Terry L. Johnson, CPA on the Company's financial statements; or (ii) any matter that was either the subject of a disagreement with Harris or a reportable event with respect to Harris.
On May 2, 2015, the Registrant accepted the resignation of Danielle M. Adams, CPA of Adams Advisory, LLC (Adams), from her engagement to be the independent certifying accountant for the Registrant. As described below, the change in independent public accounting firms is not the result of any disagreement with Adams Advisory, LLC.
21
Adams was appointed by the Board of Directors to be the auditor on April 19, 2015. There were no disagreements with Adams on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Adams, would have caused Adams to make reference to the subject matter of the disagreements in connection with their report, and (2) there were no reportable events as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
On May 10, 2015, the Registrants Board of Directors approved the engagement of Anton & Chia, LLP (Anton), as Registrant's independent registered public accounting firm. Registrant has not consulted with Anton during its two most recent fiscal years or during any subsequent interim period prior to its appointment as Registrant's auditor with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Registrant's consolidated financial statements, or any other matters or reportable events as defined in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Critical Accounting Estimates and New Accounting Pronouncements
Critical Accounting Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:
● | it requires assumptions to be made that were uncertain at the time the estimate was made, and |
● | changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition. |
The Company bases its estimates and judgments on our experience, our current knowledge, and our beliefs of what could occur in the future, our observation of trends in the industry, information provided by our customers and information available from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the following accounting policies and estimates as those that we believe are most critical to our financial condition and results of operations and that require managements most subjective and complex judgments in estimating the effect of inherent uncertainties: share-based compensation expense, income taxes, and derivative financial instruments.
Share-Based payments. The Company plans to calculate share-based payments to third parties for consulting work based on the intrinsic value of the instrument as determined by the market price of the stock at the time of issuance and recognize the expense based on this value. Although we believe our assumptions used to calculate share-based payments expense are reasonable, these assumptions can involve judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes in timing could significantly impact the amount of expense recorded in a given period.
Income Taxes. As part of the process of preparing our financial statements, the Company will be required to estimate income taxes in each of the jurisdictions in which we operate. Our provision for income taxes is determined using the asset and liability approach to account for income taxes. A current liability is recorded for the estimated taxes payable for the current year. Deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which the timing differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates or tax laws are recognized in the provision for income taxes in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount more-likely-than-not to be realized. Changes in valuation allowances will flow through the statement of operations unless related to deferred tax assets that expire unutilized or are modified through translation, in which case both the deferred tax asset and related valuation allowance are similarly adjusted. Where a valuation allowance was established through purchase accounting for acquired deferred tax assets, any future change will be credited or charged to income tax expense.
The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. In the ordinary course of our business, there are transactions and calculations for which the ultimate tax determination is uncertain. In spite of our belief that we have appropriate support for all the positions taken on our tax returns, we acknowledge that certain positions may be successfully challenged by the taxing authorities. We determine the tax benefits more likely than not to be recognized with
22
respect to uncertain tax positions. Although we believe our recorded tax assets and liabilities are reasonable, tax laws and regulations are subject to interpretation and inherent uncertainty; therefore, our assessments can involve both a series of complex judgments about future events and rely on estimates and assumptions. Although we believe these estimates and assumptions are reasonable, the final determination could be materially different than that which is reflected in our provision for income taxes and recorded tax assets and liabilities.
New Accounting Pronouncements
In December 2011, FASB issued Accounting Standards Update ("ASU") 2011-11, Balance Sheet - Offsetting. This guidance requires disclosures about offsetting and related arrangements for recognized financial instruments and derivative instruments. The standard is effective for us as of January 1, 2013 and will not materially impact our financial statement disclosures.
In September 2011, the FASB issued ASU 2011-08, "Testing Goodwill for Impairment." This guidance provides the option to evaluate prescribed qualitative factors to determine whether a calculated goodwill impairment test is necessary. The standard is effective for us as of January 1, 2012 and will not materially impact on our financial condition, results of operations, or financial statement disclosures.
In May 2011, FASB issued Accounting Standards Update ("ASU") 2011-05, Comprehensive Income: Presentation of Comprehensive Income , to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders equity. The amendments do not change the guidance regarding the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments should be applied retrospectively, and is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption is not expected to have a material impact on the Companys results of operations, financial position or cash flows.
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs . This ASU represents the converged guidance of the FASB and the IASB (the "Boards") on fair value measurement, and results in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term "fair value." These amendments change some of the terminology used to describe many of the existing requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments should be applied prospectively, and they are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption is not expected to have a material impact on the Companys results of operations, financial position or cash flows.
Management does not believe there would be a material effect on the accompanying financial statements had any other recently issued but not yet effective accounting standards been adopted in the current period.
Recent Events
Change in Officers and Directors
On September 20, 2013, the control of the Board of Directors of the Company changed with the share exchange agreement between NYBD Holding, Inc., and Pleasant Kids, Inc. Mordechai Etgar and Charles Neustein left the Board of Directors and Haim Yeffet stayed on. Four new members were appointed to the board; Robert Rico, President/CEO, Calvin Lewis, Vice President, Franjose Yglesias-Bertheau, Secretary/COO and Kenneth C. Wiedrich, Treasurer/CFO.
On January 20, 2014 Franjose Yglesiaa-Bertheau resigned as Secretary/COO and as a member of the Board of Directors.
On April 9, 2014 Haim Yeffet was removed from the Board of Directors for cause
(a) Resignation of Officers
23
On September 20, 2013, Mordechai Etgar and Charles Neustein resigned as members of the board of directors of NYBD Holding, Inc. The resignation was not the result of any disagreement with the Company on any matter relating to our operations, policies or practices, but was due to the change in control of the Company by Pleasant Kids, Inc.
On January 20, 2014 Franjose Yglesias-Bertheau resigned as Secretary/COO and as a member of the Board of Directors.
(b) Appointment of Directors and Officers
No new appointments were made to replace Mr. Yglesias-Bertheau or Mr. Yeffett. The list of Directors and Officers as of September 30, 2014, is as follows:
NAME |
| AGE |
| POSITION |
Robert Rico |
| 39 |
| President/CEO and Director |
Calvin Lewis |
| 44 |
| Vice President and Director |
Kenneth C. Wiedrich |
| 67 |
| Treasurer/CFO and Director |
Off Balance Sheet Arrangements
As of September 30, 2014, the Company had no material off-balance sheet arrangements.
In the ordinary course of business, we enter into agreements with third parties that include indemnification provisions which, in our judgment, are normal and customary for companies in our industry sector. These agreements are typically with business partners, and suppliers. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to our product candidates, use of such product candidates, or other actions taken or omitted by us. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, we have no liabilities recorded for these provisions as of September 30, 2014 or September 30, 2013.
In the normal course of business, we may be confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits, claims, environmental actions or the actions of various regulatory agencies. We consult with counsel and other appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by accounting principles generally accepted in the U.S., an estimate is made of the loss and the appropriate accounting entries are reflected in our financial statements.
Effects of Inflation
During the periods for which financial information is presented, the Companys business and operations have not been materially affected by inflation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements are included and may be found at pages 30 through 44.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There were no changes in or disagreements with accountants on accounting or financial disclosure matters.
ITEM 9A. CONTROLS AND PROCEDURES.
24
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), the Company's Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Companys disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report.
Based upon that evaluation, they concluded that the Companys disclosure controls and procedures were not effective as of September 30, 2014 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Commissions rules and forms, and that such information is accumulated and communicated properly to allow timely decisions regarding required disclosure.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.
The Company recognizes there are that additional personnel and counsel with expertise in the area of SEC, generally accepted accounting principles (GAAP) and tax accounting procedures will have to be added.
Management's Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's internal control over financial reporting includes those policies and procedures that:
● | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may 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 our annual financial statements, we have assessed the effectiveness of internal control over financial reporting as of September 30, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Managements assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls. Based on this evaluation, management has determined that as of September 30, 2014, our internal controls over financial reporting were not effective and that there were material weaknesses in our internal control over financial reporting.
Changes in Internal Controls Over Financial Reporting
During the year ended September 30, 2014, there were no significant changes in internal controls of the Company, or other factors that could significantly affect these controls subsequent to the date of their evaluation.
ITEM 9B. OTHER INFORMATION.
None.
25
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
Directors, Executive Officers, Promoter and Control Persons
The below table lists all current officers and directors of the Company. All officers serve at the discretion of the Board of Directors. The term of office of each of our directors expire at our next Annual Meeting of Shareholders or until their successors are duly elected and qualified.
NAME |
| AGE |
| POSITION |
Robert Rico |
| 39 |
| President/CEO and Director |
Calvin Lewis |
| 44 |
| Vice President and Director |
Kenneth C. Wiedrich |
| 67 |
| Treasurer/CFO and Director |
The business background descriptions of the director and officer are as follows:
ROBERT RICO, President/CEO and Director
Mr. Rico is a high energy, goal-driven executive that approaches each new business challenge with his intrinsic flair for innovation, creative problem solving, and measured risk-taking to drive consistent bottom-line improvements and shareholder returns. Mr. Rico began his career in New Jersey, where he entered the workforce at the age of 13 in the family business. Mr. Ricos experience led him into the investment, mergers and acquisitions business. Mr. Rico has negotiated over $100 million dollars in mergers and acquisitions, and has been CEO and Chairman of a public company for 8 years. Mr. Rico has held various board positions of other private and public entities as well. Mr. Rico has also worked in the licensing and marketing industry with Italian design house Pininfarina Extra. On November of 2009 Mr. Rico was awarded with the Key of the City of Miami for his philanthropic and business achievements.
Until recently Mr. Rico served as President of Pleasant Spring, a mountain spring water bottling company in Tiger, Georgia. This experience in the water bottling industry along with his knowledge of financial investments, has helped to create what today is the Pleasant Kids brand.
CALVIN LEWIS, Vice President and Director
Mr. Lewis is a graduate from Florida International University with a BS in Chemistry and MBA in Finance from Nova Southern University (class of 2014). Mr. Lewis is responsible for managing the financial strategy and Sales of the company. Mr. Lewis is committed to maximizing long-term shareholder value, ensuring a balanced portfolio of growth initiatives, and maintaining the high level of integrity and transparency to ensure that our customers receive the Pleasant Kids product in the purist form. Previously as VSP Global Business Consultant, Lewis was able to bring about profitable growth, disciplined decision-making, and transparency in VSP Global Sales. He led the efforts to create and define the value chain for the sales and services model from which VSP is known for.
KENNETH C. WIEDRICH, Treasurer/CFO and Director
Mr. Wiedrich is a Senior level Executive with extensive hands-on experience in management, operational accounting, reporting for public companies, finance functions and in dealing with Board of Directors, Banks, Attorneys, Audit firms and the SEC. He has been the CFO of a number of small public companies, some of which were start-up companies, which he helped through the start up phase of their operation. He also has experience with government cost accounting methods and all related government acquisition regulations.
There are no arrangements or understandings between our officers and directors and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there are no arrangements, plans or understandings as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings to our knowledge between non-management shareholders that may directly or indirectly participate in or influence the management of our affairs.
Family Relationships
There are no family relationships between any of our officers and directors.
26
Other Directorships
Other than as indicated within this section none of the Company's directors hold or have been nominated to hold a directorship in any company with a class of securities registered pursuant to Section 12 of the Exchange Act (the "Act") or subject to the requirements of Section 15(d) of the Securities Act of 1933 or any or any company registered as an investment company under the Investment Company Act of 1940.
Involvement In Certain Legal Proceedings
During the past five years, the Company's officers and directors have not been involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Committees of the Board
None
Board Meetings and Committees; Annual Meeting Attendance
During the year ended September 30, 2014, the Company had 3 formal board meetings and conducted other business through Written Actions.
During the year ended September 30, 2013, the Company 1 formal Board meetings and conducted other business through Written Actions.
Indemnification
The General Corporation Law of Florida provides that directors, officers, employees or agents of Florida corporations are entitled, under certain circumstances, to be indemnified against expenses (including attorneys' fees) and other liabilities actually and reasonably incurred by them in connection with any suit brought against them in their capacity as a director, officer, employee or agent, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. This statute provides that directors, officers, employees and agents may also be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by them in connection with a derivative suit brought against them in their capacity as a director, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made without court approval if such person was adjudged liable to the corporation.
Our Certificate of Incorporation provides that we shall indemnify any and all persons whom we shall have power to indemnify to the fullest extent permitted by the Florida Corporate Law. Article VII of our By-Laws provides that we shall indemnify our authorized representatives to the fullest extent permitted by the Florida Law. Our By-Laws also permit us to purchase insurance on behalf of any such person against any liability asserted against such person and incurred by such person in any capacity, or out of such person's status as such, whether or not we would have the power to indemnify such person against such liability under the foregoing provision of the by-laws.
The foregoing discussion of indemnification merely summarizes certain aspects of indemnification provisions and is limited by reference to the above discussed sections of the Florida Corporation Law.
The Company's Articles of Incorporation and Bylaws provide that the Company may indemnify to the full extent of its power to do so, all directors, officers, employees, and/or agents. Insofar as indemnification by the Company for liabilities arising under the Securities Act may be permitted to officers and directors of the Company pursuant to the
27
foregoing provisions or otherwise, the Company is aware that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following tables lists the compensation of the Company's principal executive officers for the years ended September 30, 2014 and for the period from inception July 15, 2013 to September 30, 2013. The following information includes the dollar value of base salaries, bonus awards, the number of non-qualified Company Options granted and certain other compensation, if any, whether paid or deferred. The following information includes the aggregated Company Options issued to the Company's executive officers pursuant to the Merger and those issued under the LTIP.
The following tables sets forth all cash compensation paid by Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.), for the year ended September 30, 2014 and for the period from inception July 15, 2013 to September 30, 2013. The tables below sets forth the positions and compensations for each officer and director of Pleasant Kids, Inc.
Name and Principal Position |
| From 7/15/13 to 9/30/13 |
| Salary |
|
| Bonus |
|
| Stock Awards |
|
| Option Awards |
|
| Non-Equity Incentive Plan Compensation |
|
| Nonqualified Deferred Compensation Earnings |
|
| All Other Comp. |
|
| Total |
| ||||||||
Robert Rico |
| 2013 |
| $ | 0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calvin Lewis, Vice President |
| 2013 |
| $ | 0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franjose Yglesias-Bertheau, COO |
| 2013 |
| $ | 0 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth C. Wiedrich. CFO |
| 2013 |
| $ | 4,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 4,500 |
|
Name and Principal Position |
| Year |
|
| Salary |
|
| Bonus |
|
| Stock Awards |
|
| Option Awards |
|
| Non-Equity Incentive Plan Compensation |
|
| Nonqualified Deferred Compensation Earnings |
|
| All Other Comp. |
|
| Total |
| |||||||||
Robert Rico President/Chief Executive Officer |
|
| 2014 |
|
| $ | 175,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 175,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calvin Lewis, Vice President |
|
| 2014 |
|
| $ | 150,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 150,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franjose Yglesias-Bertheau, COO |
|
| 2014 |
|
| $ | 3,820 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 3,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth C. Wiedrich. CFO |
|
| 2014 |
|
| $ | 18,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 18,500 |
|
28
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
Option Grants Table
There were no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table through to date.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
There were no stock options exercised during periods ending September 30, 2014 and September 30, 2013 by the executive officer named in the Summary Compensation Table.
Long-Term Incentive Plan (LTIP) Awards Table
There were no awards made to a named executive officer in the last completed fiscal year under any LTIP.
Compensation Arrangements with Executive Management
On October 1, 2013, the Company entered into Employment Contracts with Robert Rico, President/CEO and Calvin Lewis, Vice President. The contracts each have a term of 5 years with a base salary plus a bonus of 2% of sales annually. The annual base salaries are as follows:
Robert Rico |
| $ | 175,000 |
|
Calvin Lewis |
| $ | 150,000 |
|
The Company also has a consulting agreement with Kenneth C. Wiedrich. Mr. Wiedrich is to be paid $2,000 per month to provide accounting services, and part time CFO duties.
Not all compensation was paid during the fiscal year ended September 30, 2014. Below is the list of accrued salaries due each of the officers as of September 30, 2014:
Robert Rico |
| $ | 99,697 |
|
Calvin Lewis |
| $ | 75,418 |
|
Franjose Jglesias-Bertheau |
| $ | 45,025 |
|
Kenneth Wiedrich |
| $ | 4,000 |
|
Total |
| $ | 224,140 |
|
Director Compensation
The Company does not pay cash fees to directors who attend regularly scheduled and special board meetings; however, we may reimburse out-of-state directors for costs associated with travel and lodging to attend such meetings.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Beneficial Securities Ownership Table
As of the date of this filing, the following table sets forth certain information with respect to the beneficial ownership of our Common Stock by (i) each shareholder known by us to be the beneficial owner of more than five percent (5%) of our Common Stock, (ii) by each of our current directors and executive officers as identified herein, and (iii) all of the Companys directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of Common Stock, except as otherwise indicated. Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. Shares of Common Stock and non-qualified Company Options, Company Warrants, and
29
convertible securities that are currently exercisable or convertible into shares of the Company's Common Stock within sixty (60) days of the date of this document, are deemed to be outstanding and to be beneficially owned by the person holding the Company Options, Company Warrants, or convertible securities for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
Name and Address |
| Title of Class |
| Amount and Nature of Beneficial Ownership |
|
| Percentage of Class (1) | |
Robert Rico 4775 Collins Ave., Suite 4205 Miami Beach, FL 33140 |
| Preferred Class A Stock Common Stock |
|
| 4,160,000 21,000,000 |
|
| 50% 0.6% |
|
|
|
|
|
|
|
|
|
Calvin Lewis 4779 Collins Ave., Suite 1907 Miami Beach, FL 33140 |
| Preferred Class A Stock Common Stock |
|
| 2,160,000 21,000,000 |
|
| 26% 0.6% |
|
|
|
|
|
|
|
|
|
Haim Yeffet 155 E. Flagler Miami, FL 33131 |
| Preferred Class A Stock Common Stock |
|
| 2,000,000 15,000,000 |
|
| 24% 0.43% |
|
|
|
|
|
|
|
|
|
All Officers and Directors |
| Preferred |
|
| 8,320,000 |
|
| 100% |
(1) | Percentage of ownership is based on the issued and outstanding preferred stock class A shares as of September 30, 2014 which is 8,320,000. |
(2) | Percentage of ownership is based on the issued and outstanding shares of common stock as of September 30, 2014 which is 3,482,654,232. |
Under Rule 144 promulgated under the Securities Act, our officers, directors and beneficial shareholders may sell up to one percent (1%) of the total outstanding shares (or an amount of shares equal to the average weekly reported volume of trading during the four calendar weeks preceding the sale) every three months provided that (i) current public information is available about the Company, (ii) the shares have been fully paid for at least one year, (iii) the shares are sold in a brokers transaction or through a market-maker, and (iv) the seller files a Form 144 with the SEC.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires directors and certain officers of the Company, as well as persons who own more than 10% of a registered class of the Companys equity securities ("Reporting Persons"), to file reports with the Commission. The Company believes that during fiscal 2014, all Reporting Persons timely complied with all filing requirements applicable to them.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Except for the transactions described below, none of our directors, officers or principal shareholders, nor any associate or affiliate of the foregoing, have any interest, direct or indirect, in any transaction or in any proposed transaction, which materially affected us during the year ended September 30, 2013.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
As incurred by Pleasant Kids, Inc.
Audit Fees. Terry L. Johnson, CPA, billed the Company $12,000 for professional services rendered for the annual audit for the year ended September 30, 2014 and $17,000 for professional services rendered for the annual audit for the year ended September 30, 2013, the quarterly review of the Company's financial statements for June 30, 2013, the re-audit of 2012 and 2011, and for other services that are normally provided by an accountant in connection with statutory and regulatory filings or engagements for the fiscal year.
Tax Fees. There were no fees for taxes
30
All Other Fees. There were no other fees for the year ended September 30, 2014 and there were no other fees for the year ended September 30, 2013.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)(1)(2) Financial Statements. See index to financial statements and supporting schedules.
(a)(3)
Exhibits.
The following exhibits are filed as part of this statement:
Exhibit No. |
| Description |
| Location |
2 |
| Articles of Merger- NYBD Holding, Inc/Pleasant Kids, Inc |
| (1) |
3.1 |
| Articles of Incorporation- League Now Holdings, Corporation, dated September 21, 2005 |
| (1) |
3.2 |
| Articles of incorporation Pleasant Kids, Inc, dated July 19, 2013 |
| (1) |
3.3 |
| Amendment to articles of incorporation, dated May 9,2013 |
| (1) |
3.4 |
| Amendment to articles of incorporation, dated September 14, 2014 |
| Filed herewith |
3.5 |
| Amendment to articles of incorporation, dated October 7, 2014 |
| Filed herewith |
3.6 |
| Amendment to articles of incorporation, dated February 4, 2014 |
| Filed herewith |
3.7 |
| Amendment to articles of incorporation, dated May 8, 2014 |
| Filed herewith |
3.8 |
| Amendment to articles of incorporation, dated May 19, 2014 |
| Filed herewith |
4.1 |
| Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and other Special Rights and the Qualifications, Limitations, Restrictions and other Distinguishing Characteristics of Series A Preferred Stock |
| (1) |
4.2 |
| Board minutes amending Series A Preferred Stock |
| (1) |
10.1 |
| Employment Contract Robert Rico, dated October 1, 2013 |
| (1) |
10.2 |
| Employment Contract Calvin Lewis, dated October 1, 2013 |
| (1) |
10.3 |
| Employment Contract Franjose Yglesias- Bertheau, dated October 1, 2013 |
| (1) |
10.4 |
| Convertible Debenture for $153,000 dated 3/19/13 to Asher Enterprises |
| (1) |
10.5 |
| Convertible Debenture for $53,000 dated 5/9/13 to Asher Enterprises |
| (1) |
10.6 |
| Convertible Debenture for $53,000 dated 7/17/13 to Asher Enterprises |
| (1) |
10.7 |
| Convertible debenture for 22,000 dated 11/25/13 issued to LG Capital Funding, LLC |
| Filed herewith |
10.8 |
| Convertible Debenture for 20,000 dated 12/3/13 issued to JMJ Financial |
| Filed herewith |
10.9 |
| Convertible Debenture for $26,000 dated 1/17/14 to Asher Enterprises |
| Filed herewith |
10.10 |
| Convertible Debenture for $125,000 dated 1/17/14 to Redwood Management LLC |
| Filed herewith |
10.11 |
| Convertible Debenture for $50,000 dated 1/17/14 issued to Redwood Management, LLC |
| Filed herewith |
10.12 |
| Convertible Debenture for $32,500 dated 2/20/14 issued to Asher Enterprises |
| Filed herewith |
10.13 |
| Convertible Debenture for $26,000 dated 3/5/14 issued to LG Capital Funding, LLC |
| Filed herewith |
10.14 |
| Convertible Debenture for $53,000 dated 5/8/14 issued to KBM Worldwide, Inc. |
| Filed herewith |
10.15 |
| Convertible Debenture for $22,000 dated 5/27/14 issued to LG Capital Funding, LLC |
| Filed herewith |
10.16 |
| Convertible Debenture for $52,500 dated 7/3/14 issued to LG Capital Funding, LLC |
| Filed herewith |
10.17 |
| Convertible Debenture for $27,500 dated 8/4/14 issued to KBM Worldwide, Inc. |
| Filed Herewith |
10.18 |
| Convertible Debenture for $26,500 dated 9/3/14 issued to LG Capital Funding, LLC |
| Filed herewith |
14 |
| Code of Ethics for Executives and Senior Officers adopted September 30, 2013 |
| (1) |
14.1 |
| Board of Directors Corporate Governance Principals adopted September 30, 2013 |
| (1) |
31.1 |
| Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| Filed herewith |
31.2 |
| Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| Filed herewith |
32.1 |
| Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| Filed herewith |
32.2 |
| Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| Filed herewith |
(1) Incorporated by reference from Pleasant Kids Annual Report on Form 10-KSB for the Fiscal Year Ended September 30, 2013 filed on January 14, 2013.
31
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm | F-1 |
|
|
Balance Sheets As of September 30, 2014 and September 30, 2013 | F-2 |
|
|
Statements of Operations For the year ended September 30, 2014 and from July 15, 2013 to September 30, 2014 | F-3 |
|
|
Statements of Stockholders Equity From July 15, 2013 to September 30, 2014 | F-4 |
|
|
Statements of Cash Flows For the year ended September 30, 2014 and from July 15, 2013 to September 30, 2014 | F-5 |
|
|
Notes to Financial Statements | F-6 |
32
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of
Pleasant Kids, Inc.
We have audited the accompanying balance sheets of Pleasant Kids, Inc. (the Company, formerly NYBD Holdings, Inc.) as of September 30, 2014 and September 30, 2013, and the related statements of operations, changes in stockholders deficit, and cash flows for the year ended September 30, 2014, and from inception (July 15, 2013) through September 30, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that we considered appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2014 and September 30, 2013, and the results of its operations and its cash flows for the year ended September 30, 2014, and the period from inception (July 15, 2013) through September 30, 2013, in conformity with accounting principles generally accepted in the United States of America.
The Company restated its 2014 financial statements as disclosed in Note 12.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a minimum cash balance available for payment of ongoing operating expenses, has experienced losses from operations since inception, and it does not have a source of revenue sufficient to cover its operating costs. These factors raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in this regard are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Anton & Chia, LLP
Newport Beach, California
February 29, 2016
F-1
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) BALANCE SHEETS (As Restated) | ||||||||
|
|
|
|
|
|
| ||
|
| September 30, |
|
| September 30, |
| ||
|
| 2014 |
|
| 2013 |
| ||
ASSETS |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 8,799 |
|
| $ | 4,658 |
|
Inventory |
|
|
|
|
|
| - |
|
Accounts receivable |
|
| 899 |
|
|
| - |
|
Prepaid expense |
|
| - |
|
|
| 7,010 |
|
TOTAL CURRENT ASSETS |
|
| 9,698 |
|
|
| 11,668 |
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS |
|
|
|
|
|
|
|
|
Property, plant, and equipment, net of depreciation |
|
| 3,577 |
|
|
| - |
|
Total Fixed Assets |
|
| 3,577 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ | 13,275 |
|
| $ | 11,668 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expense |
| $ | 16,882 |
|
| $ | 23,915 |
|
Accrued interest |
|
| 745 |
|
|
| 9,366 |
|
Accrued salary |
|
| 224,140 |
|
|
| 37,500 |
|
Loan payable |
|
| 13,260 |
|
|
| - |
|
Convertible notes payable, net of discount |
|
| 223,925 |
|
|
| 128,464 |
|
Derivative liability |
|
| 1,114,697 |
|
|
| 645,418 |
|
TOTAL CURRENT LIABILITIES |
|
| 1,593,649 |
|
|
| 844,663 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock payable |
|
| - |
|
|
| 48,300 |
|
Preferred Stock, (par value $.001, 10,000,000 shares authorized, 8,320,000 and 10,000,000 issued and outstanding as of September 30, 2014 and September 30, 2013 respectively |
|
| 8,320 |
|
|
| 10,000 |
|
Common stock (par value $.001, 10,000,000,000 shares authorized, 3,482,654,232 and 74,207,359 issued and outstanding as of September 30, 2014 and September 30, 2013 respectively |
|
| 3,482,654 |
|
|
| 74,207 |
|
Additional paid in capital |
|
| (2,768,038) |
|
|
| (392,007) |
|
Accumulated deficit |
|
| (2,303,310) |
|
|
| (573,494) |
|
TOTAL STOCKHOLDERS' DEFICIT |
|
| (1,580,374) |
|
|
| (832,994) |
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ | 13,275 |
|
| $ | 11,668 |
|
The accompanying notes are an integral part of these financial statements.
F-2
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) STATEMENTS OF OPERATIONS | ||||||||
(As Restated) | ||||||||
|
| For the Year Ended |
|
| (From inception July 15, 2013) to |
| ||
|
| September 30, 2014 |
|
| September 30, 2013 |
| ||
NET REVENUES |
| $ | 5,246 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
| 46,071 |
|
|
| 15,553 |
|
GROSS PROFIT |
|
| 40,825 |
|
|
| 15,553 |
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
Consulting fees |
|
| 65,175 |
|
|
| - |
|
Professional services |
|
| 115,228 |
|
|
| 28,586 |
|
Officer compensation |
|
| 385,962 |
|
|
| 37,500 |
|
Selling, general and administrative expenses |
|
| 120,788 |
|
|
| 87,264 |
|
|
|
| 687,153 |
|
|
| 153,350 |
|
(Loss) from continuing operations |
|
| (727,978) |
|
|
| (153,350) |
|
|
|
|
|
|
|
|
|
|
Other (income) expense |
|
|
|
|
|
|
|
|
Interest expense |
|
| (59,930) |
|
|
| (9,366) |
|
Other income |
|
| - |
|
|
| 62 |
|
Loss on assumption of debt |
|
| (75,000) |
|
|
| - |
|
Derivative expense |
|
| (503,392) |
|
|
| (281,096) |
|
Change in fair value of embedded derivative liability |
|
| (363,514) |
|
|
| (114,191) |
|
|
|
|
|
|
|
|
|
|
Total other (income) and expense |
|
| (1,001,836) |
|
|
| (1,404,591) |
|
|
|
|
|
|
|
|
|
|
Net (loss) before income taxes |
|
| (1,729,814) |
|
|
| (573,494) |
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Net (Loss) |
| $ | (1,729,814) |
|
| $ | (573,494) |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share |
|
|
|
|
|
|
|
|
Basic |
| $ | (0.00) |
|
| $ | (0.00) |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
| 427,123,570 |
|
|
| 427,123,570 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements |
F-3
PLEASANT KIDS, INC. (Formerly NYBD Holdings, Inc.) STATEMENTS OF STOCKHOLDERS DEFICIT SEPTEMBER 30, 2014 (As Restated) | ||||||||||||||||||||||||||||||||
|
| Preferred Stock |
|
| Common Stock Payable |
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Stockholders |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| (Deficit) |
|
| (Deficit) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance July 15, 2013 |
|
|
|
|
|
|
|
|
|
| 74,206,359 |
|
| 74,206 |
|
| (74,206 | ) |
|
|
|
|
|
| ||||||||
Stock issued on share exchange |
|
| 10,000,000 |
|
|
| 10,000 |
|
|
| 48,300 |
|
|
| 1,000 |
|
|
| 1 |
|
|
| (317,801 | ) |
|
|
|
|
|
| (259,500 | ) |
Net loss the period from July 15, 2013 to September 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (573,494 | ) |
|
| (573,494 | ) |
Balance September 30, 2013 |
|
| 10,000,000 |
|
| $ | 10,000 |
|
| $ | 48,300 |
|
|
| 74,207,359 |
|
| $ | 74,207 |
|
| $ | (392,007 | ) |
| $ | (573,494 | ) |
| $ | (832,996 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 13,000,000 |
|
|
| 13,000 |
|
|
| 59,800- |
|
|
| - |
|
|
| 72,800 |
|
Stock issued for stock payable |
|
| - |
|
|
| - |
|
|
| (48,300 | ) |
|
| 23,000,000 |
|
|
| 23,000 |
|
|
| 25,300 |
|
|
| - |
|
|
| - |
|
Stock issued for debt refinancing |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,500,000 |
|
|
| 3,500 |
|
|
| 10,150 |
|
|
| - |
|
|
| 13,650 |
|
Stock issue for debt reduction |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,176,946,873 |
|
|
| 3,176,947 |
|
|
| (2,554,819 | ) |
|
| - |
|
|
| 622,128 |
|
Stock issued for Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 150,000,000 |
|
|
| 150,000 |
|
|
| (97,002 | ) |
|
|
|
|
|
| 52,998 |
|
Stock issued for conversion of Preferred |
|
| (1,680,000 | ) |
|
| (1,680 | ) |
|
| - |
|
|
| 42,000,000 |
|
|
| 42,000 |
|
|
| (40,320 | ) |
|
| - |
|
|
| - |
|
Derivative liability adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 220,860 |
|
|
|
|
|
|
| 220,860 |
|
Net loss for year ending Sep 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,729,814 | ) |
|
| (1,729,814 | ) |
Balance September 30, 2014 |
|
| 8,320,000 |
|
| $ | 8,320 |
|
| $ | - |
|
|
| 3,482,654,232 |
|
| $ | 3,482,654 |
|
| $ | (2,768,038 | ) |
| $ | (2,303,310 | ) |
| $ | (1,580,374 | ) |
The accompanying notes are an integral part of these financial statements
F-4
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) STATEMENTS OF CASH FLOWS (As Restated) | ||||||||
|
| For the Year Ended |
|
| (From inception |
| ||
|
| September 30, 2014 |
|
| September 30, 2013 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | (1,729,814 | ) |
| $ | (573,494 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Interest expense |
|
| 59,930 |
|
|
| - |
|
Stock issued for services |
|
| 72,800 |
|
|
| - |
|
Stock issued for debt refinancing |
|
| 13,650 |
|
|
| - |
|
Loss on assumption of debt |
|
| 75,000 |
|
|
| - |
|
Fees on convertible notes |
|
| 7,500 |
|
|
| - |
|
Loss on change in fair value of derivative expense |
|
| 363,514 |
|
|
| 114,191 |
|
Derivative expense |
|
| 503,392 |
|
|
| 281,096 |
|
Depreciation and amortization |
|
| 398 |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) Decrease in: |
|
|
|
|
|
|
|
|
Inventory |
|
|
|
|
|
| - |
|
Prepaid expense |
|
| 7,010 |
|
|
| (7,010 | ) |
Accounts receivable |
|
| (899 | ) |
|
|
|
|
Increase (Decrease) in: |
|
|
|
|
|
|
|
|
Accrued expense |
|
| 229,592 |
|
|
| 70,781 |
|
NET CASH USED IN OPERATING ACTIVITIES |
|
| (397,927 | ) |
|
| (512,363 | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of fixed assets |
|
| (3,975 | ) |
|
| - |
|
NET CASH PROVIDED BY INVESTING ACTIVITIES |
|
| (3,975 | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from loan payable |
|
| 15,000 |
|
|
| - |
|
Stock sold for cash |
|
| 52,998 |
|
|
| - |
|
Proceeds from convertible notes payable |
|
| 350,511 |
|
|
| - |
|
Proceeds from (payments to) convertible notes payable- related parties |
|
| (12,467 | ) |
|
| 119,095 |
|
NET CASH PROVIDED BY FROM FINANCING ACTIVITIES |
|
| 406,042 |
|
|
| 119,095 |
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
| 4141 |
|
|
| 4,658 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS: |
|
|
|
|
|
|
|
|
Beginning of period |
|
| 4,658 |
|
|
| -- |
|
End of period |
| $ | 8,799 |
|
| $ | 4,658 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
| $ | -- |
|
| $ | -- |
|
Cash paid for interest |
| $ | -- |
|
| $ | -- |
|
|
|
|
|
|
|
|
|
|
Non-Cash Financing Activities |
|
|
|
|
|
|
|
|
Stock issued for debt reduction |
| $ | 584,751 |
|
|
| 584,751 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements |
F-5
PLEASANT KIDS, INC
(Formerly NYBD Holdings, Inc)
NOTES TO FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was originally incorporated on September 21, 2005 under the laws of the state of Florida with the name League Now Holdings Corporation. On February 27, 2013, the Company consummated a share exchange with New York Bagel Deli, Inc. (NYBD). Under the terms of the share exchange, NYBD received 28,500,000 shares of the Companys common stock for 100% of the issued and outstanding capital of NYBD. As a result of the transaction, the shareholders of NYBD became the majority owners of the Company and NYBD became a wholly-owned subsidiary. Concurrent with the share exchange, the Company agreed to sell its subsidiary (the operations of League Now) to John Bianco the Companys former CEO. In exchange for the assumption by Mr. Bianco of all associated liabilities with the exception of convertible notes held by Asher Enterprises Inc in the amount of $75,000.
On September 20, 2013, the Company entered into a share exchange agreement with Pleasant Kids, Inc. whereby the Company issued 10,000,000 preferred shares and 1,000 common shares for all of the outstanding shares of Pleasant Kids, Inc. As a result of the share exchange, Pleasant Kids, Inc. became the surviving Company. In connection with the closing of the share exchange agreement, Haim Yeffet, a shareholder, a director of NYBD Holding, Inc. returned 13,000,000 shares of the common stock and 100,000 shares of the Preferred A stock of NYBD Holding, Inc to the treasury of NYBD Holding, Inc. and received 2,000,000 shares of Preferred A stock. Mr. Haim Yeffett assumed the outstanding debt of NYBD Holding, Inc., with the exception of the Asher convertible notes, and kept all of the assets of NYBD Holding, Inc. For accounting purposes, the share exchange was as a reverse merger. The new operations of the Company will be solely those of Pleasant Kids, Inc. The historical balances and results of operations will be those of Pleasant Kids, exclusive of NYBD Holding, Inc. Pleasant Kids, Inc. was incorporated on July 15, 2013 under the laws of the state of Florida.
On June 18, 2004, the board of directors of Pleasant Kids, Inc., officially changed its name from NYBD Holding, Inc. to Pleasant Kids, Inc. The name change became effective August 9, 2014 with FINRA but did not become effective until October 7, 2014 in the state of Florida. The Company also changed the symbol from NYBD to PLKD effective August 18, 2014.
Pleasant Kids, Inc. (Formerly NYBD Holding, Inc) is engaged in the business of producing, marketing and distributing naturally balanced alkalized water for children, including and not limited to organic natural juices.
NOTE 2 - GOING CONCERN
The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company's continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.
NOTE 3 - SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (as Restated)
Basis of Presentation
This summary of accounting policies for Pleasant Kids, Inc is presented to assist in understanding the Companys financial statements. The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting) and have been consistently applied in the preparation of the financial statements.
Fiscal Year End
The Company has adopted a September 30 fiscal year end.
F-6
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. Estimates are used when accounting for allowances for bad debts, collectability of accounts receivable, amounts due to service providers, depreciation and litigation contingencies, among others.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
Revenue recognition
The Company presently derives its revenue from the sale of Bagel and deli products in its South Florida restaurants. The Company will recognize revenue at point of sale or when products are fully delivered or services have been provided and collection is reasonably assured. Revenue is recognized on a gross basis with corresponding costs of goods as a reduction to revenue in cost of sales.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Maintenance and repair costs are expensed as they are incurred while renewals and improvements which extend the useful life of an asset are capitalized. At the time of retirement or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the results of operations.
Inventory
At September 30, 2014, the Companys inventory consists entirely of raw materials. The inventory has little or no value and so the Company elected to write it off.
Impairment of Long-Lived Assets
In accordance with ASC Topic 360, formerly SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be fully recoverable. The assessment of possible impairment is based on the Companys ability to recover the carrying value of its asset based on estimates of its undiscounted future cash flows. If these estimated future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the difference between the asset's estimated fair value and its carrying value. As of the date of these financial statements, the Company is not aware of any items or events that would cause it to adjust the recorded value of its long-lived assets for impairment.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Emerging Growth Company
We qualify as an emerging growth company under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
F-7
Fair Value of Financial Instruments
Fair value of certain of the Companys financial instruments including cash and cash equivalents, accounts receivable, account payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, Fair Value Measurements and Disclosure defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments. Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Companys credit risk.
Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:
Level 1 : Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities; The Company values its available for sale securities using Level 1.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity and that are significant to the fair values.
Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.
|
| Carrying Value |
|
| Fair Value Measurements at | ||||||||||
|
| As of |
|
| September 30, 2014 | ||||||||||
|
| September 30, |
|
| Using Fair Value Hierarchy | ||||||||||
|
| 2014 |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 | ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivative liabilities |
| $ | 1,114,649 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,114,697 |
Total |
| $ | 1,114,697 |
|
| $ | - |
|
| $ | - |
|
| $ | 1,114,697 |
Income Taxes
Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Use of net operating loss carry forwards for income tax purposes may be limited by Internal Revenue Code section 382 if a change of ownership occurs. (see note 10)
Basic Income (Loss) Per Share
F-8
Basic income (loss) per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
At September 30, 2014, the Company has four convertible notes outstanding, net of debt discount totaling $223,925 which if converted at the current stock price would result in 1,520,000,000 new dilutive common shares.
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.
Advertising Costs
The Company's policy regarding advertising is to expense advertising when incurred.
Stock-Based Payments.
The Company plans to calculate share-based payments to third parties for consulting work based on the intrinsic value of the instrument as determined by market price of the stock at the time of issuance and recognize the expense based on this value. Although we believe our assumptions used to calculate share-based payments expense are reasonable, these assumptions can involve judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes in timing could significantly impact the amount of expense recorded in a given period.
New Authoritative Accounting Guidance
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 4 INVENTORY (as Restated)
There is no inventory stated at cost at September 30, 2014 and 2013.
The Company has written off all inventory at the end of fiscal period ending September 30, 2014. The inventory was also written off for the period ended September 30, 2013.
NOTE 5 NOTES PAYABLE (as Restated)
On March 19, 2013, Pleasant Kids, Inc. (Formerly NYBD Holdings, Inc) sold and issued a Convertible Promissory Note to Asher Enterprises, Inc. in the principal amount of $153,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of eight percent (8%), is due on December 22, 2013. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 58% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (10) trading days prior to the conversion date. The Company has the right to prepay the Note at any time from the date of issuance until the 180th day the Note was issued at an amount equal to130% to150% (depending on the time period paid) of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, Asher Enterprises converted this debt along with $10,540 of interest into 214,960,196 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On May 9, 2013, Pleasant Kids Inc. (Formerly NYBD Holdings, Inc) sold and issued a Convertible Promissory Note to Asher Enterprises, Inc. in the principal amount of $53,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of eight percent (8%), is due on February 13, 2014. The Note is convertible into the Company's common stock commencing one hundred
F-9
eighty (180) days from the date of issuance at a conversion price equal to 58% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (10) trading days prior to the conversion date. The Company has the right to prepay the Note at any time from the date of issuance until the 180th day the Note was issued at an amount equal to130% to150% (depending on the time period paid) of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, Asher Enterprises converted this debt along with $2,120 of interest into 187,635,014 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On July 17, 2013, Pleasant Kids, Inc (Formerly NYBD Holdings, Inc.)sold and issued a Convertible Promissory Note to Asher Enterprises, Inc. in the principal amount of $53,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of eight (8%), is due on April 22, 2014.. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 45% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (30) trading days prior to the conversion date. The Company has the right to prepay the Note at any time from the date of issuance until the 180th day the Note was issued at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, Asher Enterprises converted this debt along with $2,120 of interest into 571,761,112 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On November 25, 2013, Pleasant Kids, Inc (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $22,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note is to be discounted by 10% with a $1,500 deduction for legal expense for a net total payout of $18,500. The Note, together with accrued interest at the annual rate of eight (8%), is due on November 25, 2014. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 58% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, LG Capital Funding converted the full $22,000 of the debt plus $1,203 of interest into 200,028,340 shares of the Companys common stock. The balance remaining on this note is now $0.00.
On December 3, 2013, Pleasant Kids, Inc (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to JMJ Financial, for the principal amount of $20,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note has a deduction for legal expense for a net total payout of $14,900. The Note, together with accrued interest at the annual rate of twelve (12%), is due on June 3, 2014. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 60% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, JMJ Financial converted this debt plus $10.67 of interest into 185,106,700 shares of the Companys common stock. The balance remaining on this note is $0.00.
On January 7, 2014, Pleasant Kids, Inc (Formerly NYBD Holdings, Inc.) sold and issued a Convertible Promissory Note to Asher Enterprises, Inc. in the principal amount of $26,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of eight (8%), is due on July 7, 2014. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 45% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (30) trading days prior to the conversion date. The Company has the right to prepay the Note at any time from the date of issuance until the 180th day the Note was issued at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014 Asher Enterprises converted this debt along with $1,040 of interest into 270,400,000 shares of the Companys common stock. The outstanding balance of the note is $0.00.
F-10
On January 17, 2014, the Company issued a Convertible Promissory Note to Redwood Management, LLC, Inc. in the principal amount of $125,000 pursuant to the terms of an assignment and assumption agreement and Securities Purchase Agreement dated November 29, 2013 between John Bianco and Redwood Management, LLC. The assignment and assumption agreement was based on a $125,000 note written by Haim Yeffet for the benefit of John Bianco at the time of the reverse merger with our previous parent company League Now Holdings, Inc. Based upon non-payment, a motion for default judgment was awarded to Mr. Bianco in November, 2013 by an Ohio court. The Ohio court did not have jurisdiction over this matter based on the fact that the note stated that the State of Florida had jurisdiction and venue for purposes of enforcement. The Company did not recognize this liability at this time based on legal advice that the judgment could not be enforced. However, management was aware that this problem would not go away and proactively negotiated a settlement that culminated in the Securities Purchase Agreement with Redwood Management, LLC concluded in January, 2014. Mr. Bianco received a $50,000 settlement and Redwood Management LLC holds a convertible note in the amount of $125,000that is convertible into the Company's common stock commencing immediately at a conversion price equal to 50% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (30) trading days prior to the conversion date. The Convertible Promissory Note also accrues interest at a rate of 10% per annum and is due on May 29, 2014. During the fiscal year ended September 30, 2014 Redwood Management, LLC converted this debt along with $12,500 of interest into 709,006,166 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On January 17, 2014, Pleasant Kids, Inc (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to Redwood Management, LLC, Inc. in the principal amount of $50,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of ten (10%), is due on July 17, 2014. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 50% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (30) trading days prior to the conversion date. During the fiscal year ended September 30, 2014 Redwood Management, LLC converted this debt along with $5,000 of interest into 209,134,468 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On February 20, 2014, Pleasant Kids, Inc (Formerly NYBD Holdings, Inc.) sold and issued a Convertible Promissory Note to Asher Enterprises, Inc. in the principal amount of $32,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of eight (8%), is due on August 20, 2014. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 45% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (30) trading days prior to the conversion date. The Company has the right to prepay the Note at any time from the date of issuance until the 180th day the Note was issued at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, Asher Enterprises converted this debt along with $1,300 of interest into 140,833,333 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On March 7, 2014, Pleasant Kids, Inc (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $26,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note has a deduction for legal expense for a net total payout of $24,000. The Note, together with accrued interest at the annual rate of ten (10%), is due on March 5, 2015. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 55% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, LG Capital converted this debt along with $315 of interest into 216,379,152 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On May 8, 2014, Pleasant Kids, Inc (Formerly NYBD Holdings, Inc.) sold and issued a Convertible Promissory Note to KBM WORLDWIDE, Inc. in the principal amount of $53,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of eight (8%), is due on November 8, 2014. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 45% of the Market Price of the Company's
F-11
common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (30) trading days prior to the conversion date. The Company has the right to prepay the Note at any time from the date of issuance until the 180th day the Note was issued at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of the year ended September 30, 2014, the balance on the note is $53,000. The Company recorded $1,684.38 of accrued interest pursuant to this convertible note.
On May 27, 2014, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $22,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of ten (10%), is due on May 25, 2015. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 55% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. During the fiscal year ended September 30, 2014, LG Capital converted this debt along with $1,239 of interest into 268,702,392 shares of the Companys common stock. The outstanding balance of the note is $0.00.
On July 3, 2014, Pleasant Kids, Inc (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $52,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note has a deduction for legal expense for a net total payout of $50,000. The Note, together with accrued interest at the annual rate of ten (10%), is due on May 25, 2015. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 55% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of the year ended September 30, 2014, the balance on the note is $52,500. The Company recorded $1,280.14 of accrued interest pursuant to this convertible note.
On August 4, 2014, Pleasant Kids, Inc. (Formerly NYBD Holdings, Inc.) sold and issued a Convertible Promissory Note to KBM WORLDWIDE, Inc. in the principal amount of $27,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of eight (8%), is due on February 4, 2014. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 45% of the Market Price of the Company's common stock on the date of conversion. "Market Price" is defined in the Note as the average of the lowest three (3) trading prices for the Company's common stock during the ten (30) trading days prior to the conversion date. The Company has the right to prepay the Note at any time from the date of issuance until the 180th day the Note was issued at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of the year ended September 30, 2014, the balance on the note is $27,500. The Company recorded $268.50 of accrued interest pursuant to this convertible note.
On September 3, 2014, Pleasant Kids, Inc (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $26,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note has a deduction for legal expense for a net total payout of $25,000. The Note, together with accrued interest at the annual rate of ten (10%), is due on May 25, 2015. The Note is convertible into the Company's common stock commencing one hundred eighty (180) days from the date of issuance at a conversion price equal to 55% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of the year ended September 30, 2014, the balance on the note is $26,500. The Company recorded $89 of accrued interest pursuant to this convertible note.
As of the fiscal year ended September 30, 2014 the Company has a shareholder loan balance of $106,627 from two officers of the Company. Robert Rico is the CEO and his portion of the total due is $90,883. Calvin Lewis is the Vice President and the amount due to him is $15,744. The two notes are 50% convertible notes and are part of the convertible note balance.
F-12
As of September 30, 2013, the Company has two convertible notes due to KBM WORLDWIDE, INC and two convertible notes due LG Capital Funding, LLC for a total amount due of $159,500. The balance of all of the notes net of debt discount are $223,925.
Accrued Interest
As of the year ended September 30, 2014, the Company has accrued interest balance of $745. As of September 30, 2013, the Company had an accrued interest balance of $9,366 pertaining to the outstanding convertible notes.
Derivative Liability
The embedded conversion features of the above convertible notes payable contain discounted conversion price and should be recognized as a derivative instrument. Such embedded conversion features should be bifurcated and accounted for at fair value. As of the year ended September 30, 2014, the Company has a derivative liability balance of $1,114,697. As of September 30, 2013, the Company had a derivative liability of $645,418 pertaining to the outstanding convertible notes. The Company uses the Black Scholes Model to calculate derivate liability.
A summary of the changes in derivative liabilities balance as at September 30, 2014 is as follows:
Fair Value of Embedded Derivative Liabilities: |
|
|
| |
September 30, 2013 |
| $ | 645,418 |
|
Addition |
|
| 281,256 |
|
Settlement |
|
| (457,393) |
|
Changes in fair value of derivative liabilities |
|
| 645,416 |
|
As at September 30, 2014 |
| $ | 1,114,697 |
|
We calculated the derivative liability using the Black Scholes Model which factors in the Companys stock price volatility as well as the convertible terms applicable to the outstanding convertible notes. The following is the range of variables used in revaluing the derivative liabilities at September 30, 2014 and 2013:
|
| September 30, 2014 |
|
| September 30, 2013 |
| ||
Annual dividend yield |
|
| 0 |
|
|
| 0 |
|
Expected life (years) of |
|
| 0.01 .90 |
|
|
| 0.01 .85 |
|
Risk-free interest rate |
|
| 10 | % |
|
| 10 | % |
Expected volatility |
|
| 465.6 | % |
|
| 350.4 | % |
NOTE 6 ACCRUED SALARY (as Restated)
On October 1, 2013, the Company entered into Employment Contracts with Robert Rico, President/CEO and Calvin Lewis, Vice President. The contracts each have a term of 5 years with a base salary plus a bonus of 2% of sales annually. The annual base salaries are as follows:
Robert Rico |
| $ | 175,000 |
|
Calvin Lewis |
| $ | 150,000 |
|
The Company also has a consulting agreement with Kenneth C. Wiedrich. Mr. Wiedrich is to be paid $2,000 per month to provide accounting services, and part time CFO duties.
As of the year ended September 30, 2014 and 2013, the Company has unpaid salaries to the officers of the Company of $224,140 and $37,500 broken down as follows:
|
| September 30, 2014 |
|
| September 30, 2013 |
| ||
Robert Rico |
| $ | 99697 |
|
| $ | 14,583 |
|
Calvin Lewis |
|
| 75418 |
|
|
| 12,500 |
|
Franjose Yglesias-Bertheau |
|
| 45,025 |
|
|
| 10,417 |
|
Kenneth Wiedrich |
|
| 4,000 |
|
|
|
|
|
Total |
| $ | 224,140 |
|
| $ | 37,500 |
|
F-13
NOTE 7 SHAREHOLDER CONVERTIBLE NOTE
As of the fiscal year ended September 30, 2014 the Company has a shareholder convertible note balance of $106,627 from two officers of the Company. Robert Rico is the CEO and his portion of the total due is $90,883. Calvin Lewis is the Vice President and the amount due to him is $15,744. As of September 30, 2013 the total amount of the shareholder loans was $119,095 with the total due to Robert Rico being $97,893 and the amount due to Calvin Lewis being $21,202. The loans are 50% convertible notes (see note5) and as such are part of convertible debentures..No conversions have been made on these notes since they have been issued.
NOTE 8 - RELATED PARTY TRANSACTIONS (as Restated)
Employment agreements with officers
On October 1, 2013, the Company entered into Employment Contracts with Robert Rico, President/CEO and Calvin Lewis, Vice President. The contracts each have a term of 5 years with a base salary plus a bonus of 2% of sales annually. The annual base salaries for Robert Rico is $175,000 and Calvin Lewis is $150,000.
Convertible notes issued to shareholders
As of the fiscal year ended September 30, 2014 the Company has a convertible note balance of $106,627 from two officers of the Company. Robert Rico is the CEO and his portion of the total loan due of $106,627 is $90,883. Calvin Lewis is the Vice President and the amount due to him is $15,744 of the total loan of $106,627. As of September 30, 2013 the total amount of the shareholder loans was $119,095. The breakdown of the total balance due on September 30, 2013, of $119,095 was $97,893 due Robert Rico and $21,202 due to Calvin Lewis. Again these two notes are part of the convertible debentures.
Free office space from its Chief Executive Officer
The Company has been provided office space by its chief executive officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
NOTE 9 CONTINGENCY FOR LEGAL SETTLEMENT
As noted in Item 3 Legal Proceedings: Franjose Yglesias-Bertheau brought a suit for unpaid salary during the fiscal year ended September 30, 2014. The lawsuit was based on the five-year contract that Mr. Yglesias-Bertheau had with the Company and based on the Company not answering the suit brought by Mr. Ylgesias- Bertheau. As a result, Mr. Ylgesias-Bertheau was awarded a $622,968 judgment. Due to the frivolous nature of the claim the $622,968 judgment was reversed. The Company reached a settlement with Mr. Yglesias-Bertheau and still owes $45,025 on that settlement. Because the Company did not have the funds to immediately settle the claim there is a slight possibility that the settlement amount might be increased but it is highly unlikely. The Company believes that the amount accrued for salaries for Mr. Ylgesias-Bertheau will be adequate to settle the claim even if payment is drawn out.
NOTE 10 STOCKHOLDERS EQUITY
Preferred Stock
At the time of incorporation, the Company was authorized to issue 10,000,000 shares of preferred stock with a par value of $.001. On April 1, 2013, the Company amended its corporate articles of incorporation to designate 10,000,000 preferred shares as Series A Preferred Stock. These Series A Preferred Shares shall for a period of 48 months from the date of issuance, be convertible in aggregate into that number of fully paid and non-assessable shares of the common stock of the Corporation, equal to seventy-five percent (75%) of the post conversion issued and outstanding common stock of the Corporation on the date of conversion.
As disclosed in Note 10, on January 8, 2014 the Company drafted a second amendment to replace the first amendment to its corporate articles of incorporation section E (Designation of Series A Preferred Stock). Holders of Series A Preferred Stock shall be entitled to 25 votes per 1 vote of common stock, voting together with the holders of common stock. Holders of Series A Preferred Stock will also be entitled to convert 1 share of Series A Preferred Stock into 25 shares of common stock at any time.
F-14
On May 8, 2013, the Company issued 100,000 shares of Preferred Stock, Series A to Haim Yeffet for services rendered. As part of the merger with Pleasant Kids, Inc., these shares were returned to the Company.
As part of the share exchange agreement between NYBD Holding, Inc and Pleasant Kids, Inc., 10,000,000 shares of Series A Preferred Stock were issued to the principals of Pleasant Kids, Inc. During the fiscal year ended September 30, 2014, the Calvin Lewis converted 840,000 shares of preferred Series A for 21,000,000 of common stock and Robert Rico converted 840,000 shares of preferred Series A for 21,000,000 of common stock. As of September 30, 2014, the remaining balance of preferred Series A is 8,320,000 shares.
Common Stock
On May 10, 2013, the Company amended its articles of incorporation with the state of Florida to increase its authorized shares of common stock from 250,000,000 to 750,000,000. The stock has a par value of $.001.
During the fiscal year ended September 30, 2014, the Company increased the authorized number of Common shares four times: On January 14, 2014 the Company increased the authorized from 750,000,000 to 1,500,000,000 shares of common stock; on March 31, 2014, the Company increased the authorized from 1,500,000,000 common stock to 2,500,000,000 shares of common; on May 16, 2014, the Company increased the authorized from 2,500,000,000 common stock to 4,000,000 shares of common stock; and on September 9, 2014, the Company increased the authorized from 4,000,000 shares of common to 10,000,000,000 shares of common.
From April 2013 to June 2013, the Company issued 30,207,226 common shares to Asher Enterprises, Inc. for the conversion and reduction of $76,100 in convertible debt and $2,120 in accrued interest.
In July 2013, the Company issued 3,553,571 common shares to Asher Enterprises, Inc. for the conversion and reduction of $4,200 in convertible debt.
Pursuant to the share exchange agreement on September 20, 2013, the controlling stockholder of Pleasant Kids sold all 1,000 issued and outstanding shares of common stock of Pleasant Kids, Inc. to NYBD Holding, Inc. in consideration for the issuance of 1,000 common shares and 10,000,000 Series A Preferred shares of NYBD Holding, Inc. The share exchange was accounted for as a reverse merger whereby the stock history presented in the Statement of Stockholders Equity will only show the stock history of the new operating company, Pleasant Kids, Inc., at the time of and just prior to the recapitalization.
During the fiscal year ended September, 2013, the Company issued 13,000,000 for services rendered. The Company has recognized an expense of $72,800 for these services but the services were never rendered. The Company has cancelled this agreement and is in the process of getting the shares back.
During the fiscal year ended September 30, 2013, the Company issued 3,500,000 shares for assuming a portion of the debt that NYBD Holding, Inc. had with John Bianco.
During fiscal year ended September 30, 2014, the Company issued 23,000,000 shares of common stock in payment of a stock payable of $48,300.
During the fiscal year ended September 30, 2014, the Company issued 3,176,946,873 common shares for the conversion and reduction of $583,000 in convertible debt and $39,122 of accrued interest.
During the fiscal year ended September 30, 2014, the Company issued 150,000,000 shares of common stock for cash of $52,998.
During the fiscal year ended September 30, 3014, the Company issued 42,000,000 shares of common stock for the conversion of 1,680,000 shares of Preferred Series A stock.
Based on the share exchange agreement, and on the closing date of September 20, 2013, the controlling stockholder of Pleasant Kids, sold all 1,000 issued and outstanding shares of common stock of Pleasant Kids, Inc. to NYBD Holding, Inc. in consideration for the issuance of 1,000 shares of the common shares of NYBD Holding, Inc. And as a result, at the conclusion of the share exchange on September 20, 2013 the additional common stock of NYBD Holding, Inc was added to the historical balances of Pleasant Kids. The share of common stock reported on the Companys books is the exchanged shares of 1,000 plus 74,206,359 for a total number of shares outstanding of 74,207,359.
F-15
Summary of common stock activity for the last two Years: |
| Outstanding shares |
| |
December 31, 2012 Balance |
|
| 53,445,562 |
|
April thru June 2013 shares issued for debt |
|
| 30,207,226 |
|
July 2013 shares issued for debt |
|
| 3,553,571 |
|
September 20, 2013 shares issued for share exchange |
|
| 1,000 |
|
September 20, 2013 shares cancelled for share exchange |
|
| (13,000,000 | ) |
September 30, 2013 Balance |
|
| 74,207,359 |
|
Oct thru Sep 2014 shares issued for services |
|
| 13,000,000 |
|
Oct thru Sep 2014 shares issued for stock payable |
|
| 23,000,000 |
|
Oct thru Sep 2014 shares issued for debt refinancing |
|
| 3,500,000 |
|
Oct thru Sep 2014 shares issued for debt reduction |
|
| 3,176,946,873 |
|
Oct thru Sep 2014 shares issued for cash |
|
| 150,000,000 |
|
Oct thru Sep 2014 shares issued for conversion of preferred stock |
|
| 42,000,000 |
|
September 30, 2014 Balance |
|
| 3,482,654,232 |
|
Stock Payable
Pursuant to the share exchange, the Company will issue 1,000 shares of common stock and 10,000,000 shares of Series A Preferred Stock. As of the September 30, 2013, the Company has issued the 10,000,000 Series A Preferred Stock but has not yet issued the 1,000 shares of common stock. Therefore the Company recorded as stock payable of $1.
At the time of the share exchange agreement on September 20, 2013, the Company agreed to convert a consulting agreement with JMZ Group into 23,000,000 common shares. The value of these shares at the time of the agreement was $.0021 which resulted in a stock for services expense of $48,300. The services provided by JMZ Group were completed prior to September 20, 2013 yet the shares were not issued. The Company recorded a $48,300 stock payable pertaining to this transaction. During the fiscal year ended September 30, 2014, the JMZ Group received 23,000,000 shares of common stock in full payment of the stock payable.
11. INCOME TAXES
The provision for income taxes consists of the following for the year ended September 30, 2014 and 2013:
|
| Year Ended September 30, |
| |||||
|
| 2014 |
|
| 2013 |
| ||
Current: |
|
|
|
|
|
| ||
Federal |
| $ | 324,105 |
|
| $ | 67,719 |
|
|
|
|
|
|
|
|
|
|
Deferred: |
|
|
|
|
|
|
|
|
Federal |
|
|
|
|
|
|
|
|
Increase in valuation allowance |
|
| (324,105 | ) |
|
| (67,719 | ) |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
| $ | 0 |
|
| $ | 0 |
|
The actual income tax provision differs from the expected tax computed by applying the Federal corporate tax rate of 38% to the loss before income taxes as follows:
F-16
|
| Year Ended September 30 |
| |||||
|
| 2014 |
|
| 2013 |
| ||
Expected income tax benefit |
| $ | (852,908 | ) |
| $ | (178,207 | ) |
State tax expense, net of Federal benefit |
|
|
|
|
|
|
|
|
Increase in valuation allowance |
|
| 852,908 |
|
|
| 178,207 |
|
Other |
|
|
|
|
|
|
|
|
Income tax provision |
| $ | .0 |
|
| $ | 0 |
|
The tax effects of temporary differences which give rise to significant portions of the deferred taxes are summarized as follows:
|
| September 30, |
| |||||
|
| 2014 |
|
| 2013 |
| ||
Deferred tax assets: |
|
|
|
|
|
| ||
Inventory reserves |
| $ |
|
|
| $ |
|
|
Section 263a adjustment |
|
|
|
|
|
|
|
|
Allowances for bad debts and returns |
|
|
|
|
|
|
|
|
Accrued expenses |
|
| 241,767 |
|
|
| 70,781 |
|
Asset valuation reserve |
|
|
|
|
|
|
|
|
State net operating loss carry forward |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
| 241,767 |
|
|
| 70,781 |
|
Valuation allowance |
|
| (241,767) |
|
|
| (70,781) |
|
|
|
| 0 |
|
|
| 0 |
|
Deferred income taxes are provided for the temporary differences between the carrying values of the Company's assets and liabilities for financial reporting purposes and their corresponding income tax basis. The temporary differences give rise to either a deferred tax asset or liability in the consolidated financial statements, which is computed by applying current statutory tax rates to taxable and deductible temporary differences based upon the classification (i.e. current or non-current) of the asset or liability in the consolidated financial statements which relates to the particular temporary difference. Deferred taxes related to differences which are not attributable to a specific asset or liability are classified in accordance with the future period in which they are expected to reverse and be recognized for income tax purposes. The long-term deferred tax assets are fully valued as of September 30, 2014.
NOTE 12 RESTATEMENT
The financial statements for the year ended September 31, 2014 and 2013, have been restated to correct the way in which the Company accounts for derivative liabilities. The derivative liability that was originally recorded for the period ended September 30, 2014 and 2013, was arrived at by using the Black Scholes analysis to measure the embedded conversion features of the open balances only of the convertible notes at the end of the year. By using this accounting method the Companys loss was understated by $1,104,334 for the year ended 2014, and overstated by $974,879 for the period from July 31, 2013 (inception) to September 30, 2013. The accounting method used in the restated financials are based on calculating the fair value of each of the note conversions as well as the ending period values using the Black Scholes analysis. The embedded conversion features of each of the notes is bifurcated and accounted for at fair value. The Company also has written off the inventory recorded at the end of September 30, 2013 and 2014, and also written off accounts receivable against sales for 2014 and recorded officer compensation for 2013 that was not originally recorded. As a result of these changes, the Company has recorded adjustments to the Companys financial statements for the period. The following statements reflect the adjustments and the restated values:
F-17
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) RESTATED BALANCE SHEETS September 30, 2014 | |||||||
|
|
|
|
|
|
|
|
ASSETS | Previously |
|
|
|
| ||
|
|
| Reported |
| Adjustments |
| As Restated |
Current Assets |
|
|
|
|
|
| |
| Cash | $ | 8,799 | $ | - | $ | 8,799 |
| Inventory |
| 39,560 |
| (39,560) |
| - |
| Accounts receivable, net |
| 899 |
| - |
| 899 |
Total Current Assets |
| 49,258 |
| (39,560) |
| 9,698 | |
Fixed Assets |
|
|
|
|
|
| |
| Property, plant and equipment, net |
| 3,577 |
| - |
| 3,577 |
| Total Fixed Assets |
| 3,577 |
| - |
| 3,577 |
| Total Assets | $ | 52,835 | $ | (39,560) | $ | 13,275 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
| |||
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
| |
| Accrued expense |
| 16,882 |
| (1) |
| 16,881 |
| Accrued interest |
| 3,402 |
| (2,657) |
| 745 |
| Accrued salary |
| 186,641 |
| 37,500 |
| 224,141 |
| Loan payable |
| 13,260 |
| - |
| 13,260 |
| Shareholder loan |
| 106,627 |
| (106,627) |
| - |
| Convertible notes payable, net of debt discount |
| 159,500 |
| 64,425 |
| 223,925 |
| Derivative liability |
| 1,057,005 |
| 57,692 |
| 1,114,697 |
| Total Current Liabilities |
| 1,543,317 |
| 50,332 |
| 1,593,649 |
|
|
|
|
|
|
|
|
| Total Liabilities |
| 1,543,317 |
| 50,332 |
| 1,593,649 |
|
|
|
|
|
|
|
|
Stockholders' Deficit |
|
|
|
|
|
| |
| Preferred stock, authorized 10,000,000 shares, series A, $0.001 par value, 8,320,000 issued and outstanding as of September 30, 2014 |
| 8,320 |
| - |
| 8,320 |
| Common stock, authorized 10,000,000,000 shares, $0.001 par value, 3842,654,232 issued and outstanding as of September 30, 2014 |
| 3,482,654 |
| - |
| 3,482,654 |
| Additional paid in capital |
| (2,859,333) |
| 91,295 |
| (2,768,038) |
| Accumulated deficit |
| (2,122,123) |
| (181,187) |
| (2,303,310) |
Total Stockholders' Deficit |
| (1,490,482) |
| (89,892) |
| (1,580,374) | |
| Total Liabilities and Stockholders' Deficit | $ | 52,835 | $ | (39,560) | $ | 13,275 |
F-18
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) RESTATED STATEMENTS OF OPERATIONS SEPTEMBER 30, 2014
| ||||||
|
| Previously Reported |
| Adjustments |
| As Restated |
Revenues | $ | 5,246 | $ | - | $ | 5,246 |
Cost of Revenues |
| 10,164 |
| (5,776) |
| 4,388 |
Gross Profit |
| (4,918) |
| 5,776 |
| 858 |
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
Consulting fees |
| 65,175 |
| - |
| 65,175 |
Professional services |
| 115,228 |
| - |
| 115,228 |
Officer compensation |
| 385,962 |
| - |
| 385,962 |
General and administrative expense |
| 132,691 |
| (11,903) |
| 120,788 |
Total Operating Expenses |
| 699,056 |
| (11,903) |
| 687,153 |
|
|
|
|
|
|
|
Loss from continuing operations |
| (703,974) |
| 17,679 |
| (686,295) |
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
Interest expense |
| (32,204) |
| (27,726) |
| (59,930) |
Loss on assumption of debt |
| (75,000) |
| - |
| (75,000) |
Loss on inventory adjustment |
| - |
| (41,683) |
| (41,683) |
Change in fair value of embedded derivative liability |
| - |
| (363,514) |
| (363,514) |
Derivative expense |
| 237,428 |
| (740,820) |
| (503,392) |
Total other income (expenses) |
| 130,224 |
| (1,173,743) |
| (1,043,519) |
|
|
|
|
|
|
|
Net loss before income taxes |
| (573,750) |
| (1,156,064) |
| (1,729,814) |
|
|
|
|
|
|
|
Income taxes |
| - |
| - |
| - |
|
|
|
|
|
|
|
Net Loss | $ | (573,750) | $ | (1,156,064) | $ | (1,729,814) |
F-19
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) RESTATED STATEMENTS OF CASH FLOWS SEPTEMBER 30, 2014 | ||||||
|
|
|
|
|
|
|
|
| Previously |
|
|
|
|
|
| Reported |
| Adjustments |
| As Restated |
Cash Flows from Operating Activities: |
|
|
|
|
|
|
Net Loss | $ | (573,750) | $ | (1,156,064) | $ | (1,729,814) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Interest expense |
| - |
| 59,930 |
| 59,930 |
Stock issued for services |
| 72,800 |
| - |
| 72,800 |
Stock issued for debt refinancing |
| 13,650 |
| - |
| 13,650 |
Loss on assumption of debt |
| 75,000 |
| - |
| 75,000 |
Fees on convertible notes |
| 7,500 |
| - |
| 7,500 |
Depreciation and amortization |
| 398 |
| - |
| 398 |
Change in fair value of derivative liability |
| (237,428) |
| 1,104,322 |
| 866,894 |
Changes in Operating Assets and Liabilities: |
|
|
|
|
| - |
(Increase) Decrease in Inventory |
| (24,007) |
| 24,007 |
| - |
Decrease in prepaid |
| 7,010 |
| - |
| 7,010 |
(Increase) decrease in accounts receivable |
| (899) |
| - |
| (899) |
Increase in accrued expenses |
| 261,800 |
| (32,195) |
| 229,605 |
Net Cash Used by Operating Activities |
| (397,926) |
| - |
| (397,926) |
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
Purchase of fixed assets |
| (3,975) |
| - |
| (3,975) |
Net Cash Provided by Investing Activities |
| (3,975) |
| - |
| (3,975) |
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
Proceeds from loan payable |
| 15,000 |
| - |
| 15,000 |
Stock sold for cash |
| 52,998 |
| - |
| 52,998 |
Proceeds from Convertible notes |
| 350,511 |
| - |
| 350,511 |
Proceeds from/(payments to) notes payable-related parties |
| (12,468) |
| 1 |
| (12,467) |
Net Cash Provided by Financing Activities |
| 406,041 |
| 1 |
| 406,042 |
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash |
| 4,140 |
| 1 |
| 4,141 |
Cash at Beginning of Period |
| 4,659 |
| - |
| 4,658 |
Cash at End of Period | $ | 8,799 | $ | 1 | $ | 8,799 |
F-20
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) RESTATED BALANCE SHEETS September 30, 2013 | |||||||
|
|
|
|
|
|
|
|
ASSETS | Previously |
|
|
|
| ||
|
|
| Reported |
| Adjustments |
| As Restated |
Current Assets |
|
|
|
|
|
| |
| Cash | $ | 4,659 | $ | (1) | $ | 4,658 |
| Inventory |
| 15,553 |
| (15,553) |
| - |
| Prepaid expense |
| 7,010 |
| - |
| 7,010 |
Total Current Assets |
| 27,222 |
| (15,554) |
| 11,668 | |
| Total Assets | $ | 27,222 | $ | (15,554) | $ | 11,668 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
| ||||
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
| |
| Accrued expense |
| 23,915 |
| - |
| 23,915 |
| Accrued interest |
| 8,587 |
| 779 |
| 9,366 |
| Accrued salary |
| - |
| 37,500 |
| 37,500 |
| Shareholder loan |
| 119,095 |
| (119,095) |
| - |
| Convertible notes payable, net of debt discount | 259,500 |
| (131,036) |
| 128,464 | |
| Derivative liability |
| 1,423,998 |
| (778,580) |
| 645,418 |
| Total Current Liabilities |
| 1,835,095 |
| (990,432) |
| 844,663 |
| Total Liabilities | $ | 1,835,095 | $ | (990,432) | $ | 844,663 |
|
|
|
|
|
|
|
|
Stockholders' Deficit |
|
|
|
|
|
| |
| Common stock payable |
| 48301 |
| (1) |
| 48300 |
| Preferred stock, authorized 10,000,000 shares, series A, $0.001 par valu10,000,000 issued and outstanding as of September 30, 2013 | 10,000 |
| - |
| 10,000 | |
| Common stock, authorized 750,000,000 shares, $0.001 par value, 74,206,359 issued and outstanding as of September 30, 2013 |
| 74,206 |
| - |
| 74,206 |
| Additional paid in capital |
| (392,007) |
| - |
| (392,007) |
| Accumulated deficit |
| (1,548,373) |
| 974,879 |
| (573,494) |
Total Stockholders' Deficit |
| (1,807,873) |
| 974,878 |
| (832,995) | |
| Total Liabilities and Stockholders' Deficit | $ | 27,222 | $ | (15,554) | $ | 11,668 |
F-21
PLEASANT KIDS, INC (Formerly NYBD Holdings, Inc.) RESTATED STATEMENTS OF OPERATIONS SEPTEMBER 30, 2013
| ||||||
|
| Previously Reported |
| Adjustments |
| As Restated |
Revenues | $ | - | $ | - | $ | - |
Cost of Revenues |
| - |
| - |
| - |
Gross Profit |
| - |
| - |
| - |
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
Professional services |
| 28,586 |
| - |
| 28,586 |
Officer compensation |
| - |
| 37,500 |
| 37,500 |
General and administrative expense |
| 87,264 |
| - |
| 87,264 |
Total Operating Expenses |
| 115,850 |
| 37,500 |
| 153,350 |
|
|
|
|
|
|
|
Loss from continuing operations |
| (115,850) |
| (37,500) |
| (153,350) |
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
Interest expense |
| (8,587) |
| (779) |
| (9,366) |
Other income |
| 62 |
| - |
| 62 |
Loss on inventory adjustment |
| - |
| (15,553) |
| (15,553) |
Change in fair value of embedded derivative liability |
| - |
| (114,191) |
| (114,191) |
Derivative expense |
| (1,423,998) |
| 1,142,902 |
| (281,096) |
Total other income (expenses) |
| (1,432,523) |
| 1,012,379 |
| (420,144) |
|
|
|
|
|
|
|
Net loss before income taxes |
| (1,548,373) |
| 974,879 |
| (573,494) |
|
|
|
|
|
|
|
Income taxes |
| - |
| - |
| - |
|
|
|
|
|
|
|
Net Loss | $ | (1,548,373) | $ | 974,879 | $ | (573,494) |
NOTE 13 SUBSEQUENT EVENT
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than listed below, no material subsequent events exist through the date of this filing.
1.
In November through December of 2014, KBM WORLDWIDE, Inc. converted the note dated May 8, 2014 in the amount of $53,000 along with interest of $2,120 into 1,102,400,000 shares of restricted common stock.
2.
Subsequent to the year ending September 30, 2014 the Company reduced the authorized Common stock to from 10,000,000,000 to 5,000,000,000.
3.
Subsequent to the year ending September 30, 2014 the Company authorized a BUYBACK program wherein the Company will buyback common stock of the Company using 10% of revenues from January 1, 2015 to December 31, 2015.
4.
In October, 2015, through November 2015, the Company issued convertible debenture to several groups in the total amount of $429,000
F-22
5.
On November 9, 2015 the Company entered into a consulting agreement with three individuals wherin the Company issued 7,000,002 post reverse shares valued at $856,000.
6.
In October and November of 2015, two different groups converted the notes in the amount of $155,450 along with interest of $4,711 into 9,350,719 post reverse shares of common stock.
7.
During October, November and December the Company has loaned an additional $288,149 to Next Group bringing the total amount Due from Next Group to $384,060.
8.
On December 28, 2015, the Company issued 177,539,180 shares of restricted common stock, and 8,600,000 shares of the Companys Series B preferred stock for 100% of Next Group Holdings, Inc. As a result of the agreement, Next Group Holdings, Inc. will become a wholly owned subsidiary of the Company.
9.
On December 28, 2015, Robert Rico resigned as Chief Executive Officer and Director, Calvin Lewis resigned as President and Director, and Kenneth Wiedrich resigned as Director. Arik Maimon was appointed President, Chief Executive Officer, and Director of the Company.
F-23
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Pleasant Kids, Inc. |
| (Registrant) |
|
|
Date: February 29, 2016 | /s/ Robert Rico |
| Chief Executive Officer |
|
|
| /s/ Kenneth C. Wiedrich |
| Chief Financial Officer |
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EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Robert Rico, Chief Executive Officer certify that:
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Kenneth C. Wiedrich, Chief Financial Officer certify that: