Inventory is valued at the lower of cost or market, and is determined by the first-in, first-out method.
In November 2016, the Company issued a convertible note payable to a third party investor for cash proceeds in the amount of $35,000 (the “November 2016 Convertible Note”. The November 2016 Convertible Note was originally due 90 days from the date of the note. In May 2017, the maturity date was extended to June 30, 2017. In June 2017, the maturity datenote, but was further extended to SeptemberDecember 1, 2017. At the discretion of the investor, this note is also convertible into common stock of the Company 90 days after issuance at a rate of $0.002 per share, or a total of 17,500,000 shares. Since the conversion price of the November 2017 Convertible Note was above the stock price of $0.001 established in recent transactions, there was no beneficial conversion feature or discount associated with this note. The Company calculated imputed interest at the rate of 8% per year on this note, and charged the amount of $690$706 and $1,388$2,093 to operations and credited additional paid-in capital during the three and sixnine months ended JuneSeptember 30, 2017.
In January 2017, the Company issued a convertible note payable in the amount of $34,600 (the “January 2017 Convertible Note”). This note was originally due 90 days from the date of the note. In May 2017, the maturity date was extended to June 30, 2017. In June 2017, the maturity datenote, but was further extended to SeptemberDecember 1, 2017. At the discretion of the investor, this note is also convertible into common stock of the Company 90 days after issuance at a rate of $0.002 per share, or a total of 17,300,000 shares. Since the conversion price of the January 2017 Convertible Note was above the stock price of $0.001 established in recent transactions, there was no beneficial conversion feature associated with this note. The January 2017 Convertible Note was not funded until January 13, 2017, and therefore was recorded on the books on January 13, 2017. The Company calculated imputed interest at the rate of 8% per year on this note, and charged the amount of $584$697 and $1,274$1,972 to operations and credited additional paid-in capital during the three and sixnine months ended JuneSeptember 30, 2017.
Note 56 – Related Party Transactions
During the sixnine months ended JuneSeptember 30, 2017, the Company’s CEO, Gene Nelson, was paid the net amount of $30,000 as partial payment of accrued salary. At September 30, 2017, Mr. Nelson is owed the amount of $53,958 for accrued salary.
During the nine months ended September 30, 2017, the Company’s CEO, Gene Nelson, advanced the company $16,400 to fund operations. These amounts bear interest at the rate of 3% per annum, and are due on demand.
Note 67 – Stockholders’ Equity
The Company is authorized to issue 50,000,000 shares of $0.001 par value common stock. The Company has 10,000,000 common shares issued and outstanding as of JuneSeptember 30, 2017 and December 31, 2016.
During the sixnine months ended June 30, 2017, the Company received cash of $95 in satisfaction of common stock subscriptions receivable.
During the six months ended JuneSeptember 30, 2017, the Company calculated imputed interest expense on its notes payable in the aggregate amount of $2,662;$4,065; this amount was charged to additional paid-in capital.
Note 78 – Revenue
The Company has recorded one salerevenue of $7,022 during the sixnine months ended JuneSeptember 30, 2017. This sale,These sales were to an unaffiliated third party, wasparties for 400 bottles of Creatinine Gel, and occurred in January 2017. There were no similar salesGels. The Company has sold approximately 407 units during the sixnine months ended JuneSeptember 30, 2016.
2017.
Note 89 – Subsequent Events
None.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW AND OUTLOOK
For the sixnine months ended JuneSeptember 30, 2017, we had a net loss of $39,231,$68,290, compared to a net loss of $45,091$69,373 for the sixnine months ended JuneSeptember 30, 2016, respectively. Our accumulated deficit as of JuneSeptember 30, 2017 was $130,014.$159,073. These conditions raise substantial doubt about our ability to continue as a going concern over the next twelve months.
Results of Operations for the Three Months Ended JuneSeptember 30, 2017 and JuneSeptember 30, 2016
Revenues
The Company had $272 of revenue during the three months ended September 30, 2017; the Company had no revenue during the three months ended JuneSeptember 30, 2017 and2016.
Cost of goods sold
The Company had cost of goods sold of $20 during the three months ended September 30, 2017; the Company had no cost of goods sold during the three months ended September 30, 2016.
General and administrative expenses
General and administrative expenses were $18,468$27,908 for the three months ended JuneSeptember 30, 2017 compared to $24,537$24,282 for the three months ended JuneSeptember 30, 2016. General and administrative expense for the three months ended JuneSeptember 30, 2017 and JuneSeptember 30, 2016 consisted primarily of officer salary, legal and accounting fees, filing fees and bank service charges.
Interest expense
The Company had interest expense of $1,388$1,403 during the three months ended JuneSeptember 30, 2017; the Company had no interest expense during the three months ended JuneSeptember 30, 2016. Interest expense is attributable to interest on the company’sCompany’s convertible debt.
Net loss
For the reasons above, our net loss for the three months ended JuneSeptember 30, 2017 was $19,856$29,059 compared to $24,537$24,282 for the three months ended JuneSeptember 30, 2016.
Results of Operations for the SixNine Months Ended JuneSeptember 30, 2017 and JuneSeptember 30, 2016
Revenues
The Company had revenue of $6,750$7,022 during the sixnine months ended JuneSeptember 30, 2017; the Company had no revenue during the six months ended JuneSeptember 30, 2016.
Cost of goods sold
The Company had cost of goods sold of $1,140$1,160 during the sixnine months ended JuneSeptember 30, 2017; the Company had no cost of goods sold during the sixnine months ended JuneSeptember 30, 2016.
General and administrative expenses
General and administrative expenses were $42,179$70,087 for the sixnine months ended JuneSeptember 30, 2017 compared to $45,091$69,373 for the sixnine months ended JuneSeptember 30, 2016. General and administrative expense for the sixnine months ended JuneSeptember 30, 2017 and JuneSeptember 30, 2016 consisted of primarily of officer salary, legal and accounting fees, filing fees and bank service charges.
Interest expense
The Company had interest expense of $2,662$4,065 during the sixnine months ended JuneSeptember 30, 2017; the Company had no interest expense during the sixnine months ended JuneSeptember 30, 2016. Interest expense is attributable to interest on the company’s convertible debt.
Net loss
For the reasons above, our net loss for the sixnine months ended JuneSeptember 30, 2017 was $39,231$68,290 compared to $45,091$69,373 for the sixnine months ended JuneSeptember 30, 2016.
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working capital at JuneSeptember 30, 2017 compared to December 31, 2016.
| | June 30, 2017 | | | December 31, 2016 | | | September 30, 2017 | | | December 31, 2016 | |
| | | | | | | | | | | | |
Current Assets | | $ | 2,381 | | | $ | 3,580 | | | $ | 2,377 | | | $ | 3,580 | |
| | | | | | | | | | | | | | | | |
Current Liabilities | | $ | 119,495 | | | $ | 84,220 | | | $ | 147,147 | | | $ | 84,125 | |
| | | | | | | | | | | | | | | | |
Working Capital (Deficit) | | $ | (117,114 | ) | | $ | (80,640 | ) | | $ | (144,770 | ) | | $ | (80,545 | ) |
During the sixnine months ended JuneSeptember 30, 2017, the Company had cash used in operating activities of $34,754.$51,100. This consisted of Company'sCompany’s net loss of $39,231,$68,290, increased by imputed interest expense of $2,662$4,065 and by net change in the components of working capital in the net amount of $1,815.$13,125. Also during the sixnine months ended JuneSeptember 30, 2017, we had cash flow from financing activities in the amount of $34,695$51,000 consisting of $34,600 from the issuance of convertible notes payable, and $95$16,400 from advances from the collection of a subscription receivable.Company’s CEO Gene Nelson. There was no cash flow from investing activities during the sixnine months ended JuneSeptember 30, 2017.
During the sixnine months ended JuneSeptember 30, 2016, the Company had cash used in operating activities of $3,825.$50. This consisted of Company'sCompany’s net loss of $45,091,$69,373, decreased by net change in the components of working capital in the net amount of $41,266. Also during the six months ended June 30, 2016, we had cash flow from financing activities in the amount of $3,905 from the sales of treasury stock.$69,423. There was no cash flow from financing or investing activities during the sixnine months ended JuneSeptember 30, 2016.
As of JuneSeptember 30, 2017 we had cash of $101$60 and had working capital deficit of ($117,114)144,770). We do not have sufficient working capital to pay our expenses for the next 12 months. Our plan for satisfying our cash requirements and to remain operational for the next 12 months is through sale of shares of our capital stock or convertible debt. We anticipate revenue during that same period of time, but do not anticipate generating sufficient amounts of revenues to meet our working capital requirements. We cannot assure you we will be successful in meeting our working capital needs.
Should we not be able to continue to secure additional financing when needed, we may be required to slow down or suspend our business activities or reduce the scope of our current operations, any of which would have a material adverse effect on our business.
Our future capital requirements will depend on many factors, including the development of our business; the cost and availability of third-party financing for development; and administrative and legal expenses.
We anticipate that we will incur operating losses in the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, an evolving and unpredictable business model; recognition of revenue sources; and the management of growth. To address these risks, we must, among other things, expand our customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.
Satisfaction of our cash obligations for the next 12 months.
As of JuneSeptember 30, 2017, we had cash of $101.$60. Our plan for satisfying our cash requirements for the next twelve months is through sales-generated income, sale of shares of our common stock, third party financing, and/or traditional bank financing. We anticipate sales-generated income during that same period of time, but do not anticipate generating sufficient amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to secure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.
Going concern.
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $130,014,$159,073, and have working capital deficit of ($117,114)144,770) as of JuneSeptember 30, 2017, and have reported negative cash flows from operations since inception. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months. The Company’s ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by entrance into established markets and the competitive nature in which we operate.
Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. There can be no assurance, however, that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our future operations will be adequate to meet our needs. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.
Summary of product and research and development that we will perform for the term of our plan.
We are not anticipating significant research and development expenditures in the near future.
Expected purchase or sale of plant and significant equipment.
We do not anticipate the purchase or sale of any plant or significant equipment as such items are not required by us at this time.
Significant changes in the number of employees.
Assuming we are able to pursue revenue through the commencement of sales of products, we anticipate an increase of personnel and may need to hire employees. In the interim, we intend to use the services of independent consultants and contractors to perform various professional services when appropriate. We believe the use of third-party service providers may enhance our ability to control general and administrative expenses and operate efficiently.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that are material to investors.
Recently Issued Accounting Standards
There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
This item is not applicable as we are currently considered a smaller reporting company.
Item 4. Controls and Procedures.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit pursuant to the requirements of the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, among other things, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer, Gene Nelson, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on the evaluation, Mr. Gene Nelson concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure, for the following reasons:
● | The Company does not have an independent board of directors or audit committee or adequate segregation of duties; |
● | All of our financial reporting is carried out by our financial consultant; |
● | We do not have an independent body to oversee our internal controls over financial reporting and lack segregation of duties due to the limited nature and resources of the Company. |
We plan to rectify these weaknesses by implementing an independent board of directors and hiring additional accounting personnel once we have additional resources to do so.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of their property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.
We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.
This item is not applicable as we are currently considered a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
| | | | | | Incorporated by reference |
Exhibit | | Exhibit Description | | Filed herewith | | Form | | Period ending | | Exhibit | | Filing date |
| | | | | | | | | | | | |
31.1 | | | | X | | | | | | | | |
31.2 | | | | X | | | | | | | | |
32.1 | | | | X | | | | | | | | |
101.INS | | XBRL Instance Document | | X | | | | | | | | |
101.SCH | | XBRL Taxonomy Extension Schema Document | | X | | | | | | | | |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document | | X | | | | | | | | |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document | | X | | | | | | | | |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document | | X | | | | | | | | |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document | | X | | | | | | | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ALL SOFT GELS INC. | |
| | | |
Date: August 11,November 14, 2017 | By: | /s/ Gene Nelson | |
| | Gene Nelson | |
| | President, Chief Executive Officer |
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