NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2017
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
REMSleep Holdings, Inc., (the “Company”) was incorporated in the State of Nevada on June 6, 2007. Following its acquisition of Handcamp on June 4, 2010, a gold property located in the Province of Newfoundland and Labrador, Canada (“Handcamp”), the Company changed its business model to that of a mineral acquisition, exploration and development company focused primarily on gold properties. On August 26, 2010, the Company’s name was changed from Bella Viaggio, Inc. to Kat Gold Holdings Corp. On January 5, 2015 the name of the Company was changed to REMSleep Holdings, Inc. and the business model was changed to reflect the new direction of the Company; to develop and distribute products to help people affected by sleep apnea. On May 30, 2015 REMSleep LLC was formerly merged into REMSleep Holdings, Inc.
Basis of Presentation
These restated unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). These restated financial statements and the notes attached hereto should be read in conjunction with the financial statements and notes included in the Company’s 10-K for its fiscal year ended December 31, 2016 as filed with the SEC on April 17, 2017. In the opinion of the Company, all adjustments, including normal recurring adjustments necessary to present fairly the financial position of the Company, as of June 30, 2017 and the results of its operations and cash flows for the three-month periods then ended have been included. The results of operations for the interim period are not necessarily indicative of the results for the full year.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the restated financial statements for the six months ended June 30, 2017.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will cause a material impact on its financial condition or the results of its operations.
NOTE 2 - GOING CONCERN AND UNCERTAINTY
The accompanying restated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $529,069 at June 30, 2017, had a net loss of $153,555 and net cash used in operating activities of $51,961 for the six months ended June 30, 2017. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors over the next twelve months raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
8
REMSLEEP HOLDINGS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2017
NOTE 3 – PREPAID ASSET
On January 15, 2017, the Company issued, as compensation for services provided, 5,000 common shares with a fair value of $1.04 for total non-cash expense of $5,200. The $5,200 is being recognized over the six-month term of the contract. As of June 30, 2017, $4,767 has been expensed and $433 has been debited to prepaid stock for services.
NOTE 4 - PROPERTY & EQUIPMENT
Long lived assets, including property and equipment, to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Property and Equipment are first recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between three and five years.
Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Assets stated at cost, less accumulated depreciation consisted of the following:
|
|
June 30, 2017
|
|
|
December 31, 2016
|
Equipment
|
$
|
14,905
|
|
$
|
14,905
|
Less: accumulated depreciation
|
|
(5,387)
|
|
|
(2,059)
|
Fixed assets, net
|
$
|
9,518
|
|
$
|
12,845
|
Depreciation
expense
Depreciation expense for the six months ended June 30, 2017 and 2016 was $3,327 and $459, respectively.
NOTE 5 - COMMON STOCK
On January 5, 2016, the Company issued 150,000 common shares with a fair value of $30,000 to an investor in exchange for a like amount of expenses that the investor paid on behalf of the Company. The fair value of the shares was based on the price quoted on the OTC bulletin board on the grant date.
On January 20, 2016, the Company issued, as compensation for services provided, a total of 50,000 common shares with a fair value of $15,000 to a third party. The fair value of the shares was based on the price quoted on the OTC pink sheets on the grant date.
On February 23, 2016, the Company issued, as compensation for services provided, a total of 10,000 common shares with a fair value of $3,000 to a third party. The fair value of the shares was based on the price quoted on the OTC pink sheets on the grant date.
On October 5, 2016, the Company issued, as compensation for services provided, a total of 12,500 common shares with a fair value of $40,000 to a third party. The fair value of the shares was based on the price quoted on the OTC pink sheets on the grant date.
On January 15, 2017, the Company issued, as compensation for services provided, 5,000 common shares with a fair value of $1.04 for total non-cash expense of $5,200. The value of the shares ($0.052 pre-split) was determined by
a third-party business valuation firm engaged by the Company to calculate the fair value of one share of the Company’s common stock based on various valuation approaches. The $5,200 is being recognized over the six-month term of the contract. As of June 30, 2017, $4,767 has been expensed and $433 debited to prepaid stock for services.
On March 6, 2017, the Company issued, as compensation for services provided, 32,500 common shares with a fair value of $1.04 for total non-cash expense of $33,800. The value of the shares ($0.052 pre-split) was determined by a third-party business valuation firm engaged by the Company to calculate the fair value of one share of the Company’s common stock based on various valuation approaches.
9
REMSLEEP HOLDINGS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2017
NOTE 5 - COMMON STOCK (continued)
On June 15, 2017, the Company filed a Certificate of Amendment to its Articles of Incorporation (the "Certificate of Amendment"), with the Secretary of State of the State of Nevada to affect a 1-for-20 reverse stock split of its common stock, whereby every twenty shares of existing common stock will be converted into one share of new common stock.
On April 1, 2017, the Company entered into a Fee Agreement with Frederick M. Lehrer to provide legal services to the Company. Per the terms of that agreement Mr. Lehrer was granted 5,000 shares of common stock with a fair value of $1.04 for total non-cash expense of $5,200. As of June 30, 2017, the shares have not yet been issued by the transfer agent; so therefore, have been credited to common stock to be issued.
On April 10, 2017, the Company issued, as compensation for services provided, 50,000 common shares with a fair value of $1.04 for total non-cash expense of $52,000.
In April 2017, with the agreement of the executive of the Company's previous management, the Company cancelled 150,000 common shares that had been previously issued to him.
On June 29, 2017, FINRA approved the Company’s Reverse Stock Split. The Reverse Stock Split took effect at the open of business on June 30, 2017. All shares through these restated financial statements have been retroactively adjusted to reflect the reverse.
NOTE 6 - PREFERRED STOCK
The Company is currently authorized to issue 5,000,000 Class A preferred shares, $0.001 per value with 1:25 voting rights.
On February 25, 2016, the Company issued 2,000,000 Class A preferred shares. On April 26, 2016 the Company issued 1,500,000 Class A preferred shares. The fair value of the shares was based on the price quoted on the OTC pink sheets on the grant date for the common shares as the preferred shares have a preference of a 1 to 1 conversion to common stock. The Company recognized compensation expense to its officers.
In April 2017, with the agreement of the executive of the Company's previous management, the Company cancelled 1,500,000 Class A Preferred Shares that had been previously issued to him. As of June 30, 2017, there are 3,500,000 Class A Preferred shares outstanding.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company has received support from parties related through common ownership and directorship. All of the expenses herein have been borne by these individuals on behalf of the Company and are treated as shareholder loans. These loans are unsecured, non-interest bearing and due on demand. As of June 30, 2017, and December 31, 2016, the balance due on these loans is $137,248 and $85,287, respectively.
10
REMSLEEP HOLDINGS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2017
NOTE 8 – RESTATEMENT
The June 30, 2017 financial statements are being restated to revise the accounting for stock for services by using an accurate fair value provided by a third-party business valuation firm engaged by the Company, allocating the associated expense to the proper period according to services performed, correcting accumulated depreciation, prepaids and accounts payable.
The following table summarizes changes made to the June 30, 2017 balance sheet.
|
June 30, 2017
|
Balance Sheet:
|
|
As Reported
|
|
Adjustment
|
|
As Restated
|
Prepaid stock for services
|
$
|
-
|
$
|
433
|
$
|
433
|
Prepaid
|
|
7,190
|
|
(7,190)
|
|
-
|
Property & equipment
|
|
12,387
|
|
(2,869)
|
|
9,518
|
Total assets
|
$
|
19,577
|
|
(9,626)
|
$
|
9,951
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
226,398
|
$
|
2,500
|
$
|
228,898
|
Due to shareholder
|
|
143,748
|
|
(6,500)
|
|
137,248
|
Total liabilities
|
|
370,146
|
|
(4,000)
|
|
366,146
|
|
|
|
|
|
|
|
Preferred Stock
|
|
105,000
|
|
-
|
|
105,000
|
Common stock
|
|
3,210
|
|
-
|
|
3,210
|
Additional paid-in capital
|
|
720,464
|
|
(661,000)
|
|
59,464
|
Common stock to be issued
|
|
-
|
|
5,200
|
|
5,200
|
Accumulated deficit
|
|
(1,179,243)
|
|
650,174
|
|
(529,069)
|
Total Stockholders’ Equity
|
|
(350,569)
|
|
(5,626)
|
|
(356,195)
|
Total liabilities and stockholders’ equity
|
$
|
19,577
|
$
|
(9,626)
|
$
|
9,951
|
The following table summarizes changes made to the three and six months ended June 30, 2017 Statement of Operations.
|
For the three months ended June 30, 2017
|
|
|
As Reported
|
|
Adjustment
|
|
As Restated
|
Operating expenses
|
$
|
389,066
|
$
|
(293,723)
|
$
|
95,343
|
Net Loss
|
$
|
(389,066)
|
$
|
293,723
|
$
|
(95,343)
|
|
For the six months ended June 30, 2017
|
|
|
As Reported
|
|
Adjustment
|
|
As Restated
|
Operating expenses
|
$
|
803,729
|
$
|
(650,174)
|
$
|
153,555
|
Net Loss
|
$
|
(803,729)
|
$
|
650,174
|
$
|
(153,555)
|
NOTE 9 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued, January 26, 2018 and has determined that it does not have any material subsequent events to disclose in these financial statements other then the following.
On August 1 ,2017, the Company issued, as compensation for services provided, 150,000 common shares with a fair value of $0.052 for total non-cash expense of $7,800.
On August 11, 2017, the Company issued, as compensation for services provided, 250,000 common shares with a fair value of $0.52 for total non-cash expense of $13,000.
11