LJR Security Services,
Inc.
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
Net
loss
|
$
(43,033
)
|
$
(82,494
)
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
and amortization
|
399
|
274
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Increase
in prepaid expenses
|
(3,538
)
|
(26,751
)
|
|
Increase
in accounts payable and accrued liabilities
|
4,892
|
4,362
|
|
Net
cash used in operating activities
|
(41,280
)
|
(104,609
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
Purchases
of fixed assets
|
-
|
(1,993
)
|
|
Net
cash used in investing activities
|
-
|
(1,993
)
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
Contributions,
net
|
46,004
|
66,458
|
|
Net
cash provided by financing activities
|
46,004
|
66,458
|
|
|
|
|
|
Net
Increase/(Decrease) in cash
|
4,724
|
(40,144
)
|
|
|
|
|
|
Cash,
beginning of year
|
1,414
|
41,558
|
|
|
|
|
|
Cash, end of year
|
$
6,137
|
$
1,414
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
Interest
paid
|
$
-
|
$
-
|
|
Income
tax paid
|
$
-
|
$
-
|
The
accompanying notes are an integral part of these
consolidated financial
statements.
LJR Security Services, Inc.
Notes to Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
Note 1 – Nature of the Business
LJR
Security Services, Inc., a company incorporated in the state of
Louisiana, and its wholly owned subsidiaries (collectively, the
“Company”), are principally engaged in the sale,
installation, servicing, and monitoring of electronic home and
business security and automation systems in the United
States.
During
2018, the Company was reorganized from a Limited Liability Company
to a corporation (the “Reorganization”). In connection
with the Reorganization, Gulf West Security Network, Inc., an
entity under common ownership, was merged into the Company. The
merger transaction was accounted for retrospectively as a merger
between entities under common control tantamount to a corporate
reorganization. These consolidated financial statements are
presented on the basis of the newly reorganized
entity.
Note 2 – Summary of Significant Accounting
Policies
Use of Estimates
The
preparation of the consolidated 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 liabilities at the date of the consolidated financial
statements and the reported amounts of expenses during the
reporting period. Actual results could differ from those
estimates.
Management
makes estimates that affect certain accounts including deferred
income tax assets, accrued expenses, fair value of equity
instruments and reserves for any other commitments or
contingencies. Any adjustments applied to estimates are recognized
in the period in which such adjustments are
determined.
Principles of Consolidation
The Company’s consolidated financial statements include all
accounts of LJR Security Services, Inc. and Gulf West Security
Network, Inc. for all periods presented. All inter-company balances
and transactions have been eliminated in
consolidation.
Basis of Presentation
The accompanying consolidated financial statements and related
notes have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission.
Cash and Cash Equivalents
The Company considers all cash on hand and in banks, including
accounts in book overdraft positions, certificates of deposit and
other highly-liquid investments with maturities of one year or
less, when purchased, to be cash and cash equivalents. The Company
had no cash equivalents at December 31, 2017 and 2016. The Company
maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits.
Capitalization of Fixed Assets
The Company capitalizes material expenditures related to property
and equipment, that have a useful life greater than one year.
Maintenance and repair costs are expensed as incurred.
Revenue Recognition
The
Company generates revenue primarily through contractual monthly
recurring fees received for monitoring and related services
provided to customers. In transactions involving security
systems that are sold outright to the customer, or where equipment
is already owned by the customer, the Company’s performance
obligations include monitoring, related services, and the sale and
installation, or refurbish and repair, of the security systems.
Revenue associated with the sale and installation of security
systems is recognized once installation is complete, and is
reflected in installation and repair revenue in the Consolidated
Statements of Operations. Revenue associated with monitoring and
related services is recognized as those services are provided, and
is reflected in monitoring and related services revenue in the
Consolidated Statements of Operations.
Early
termination of the contract by the customer results in a
termination charge in accordance with the contract terms. Contract
termination charges are recognized in revenue when collectability
is probable, and are reflected in monitoring and related revenue in
the Consolidated Statements of Operations. Amounts collected from
customers for sales and other taxes are reported net of the related
amounts remitted.
Barter Transactions
The
Company conducts certain barter sales through trade organizations.
These transactions are recorded at fair value.
Income Taxes
During
2016 and 2017, the Company was organized as a limited liability
company (“LLC”) and, as such, was not taxable for
federal and state tax purposes. The Company reports taxable results
and other tax attributes to its Members, who are responsible for
reporting these results and attributes on their individual tax
returns. Accordingly, the consolidated financial statements do not
reflect a provision for federal and state income
taxes.
As a
result of the Reorganization the Company will begin accounting for
taxes as a Corporation for the newly reorganized entity. The U.S.
tax reform bill that Congress voted to approve Dec. 20, 2017, also
known as the “Tax Cuts and Jobs Act”, made sweeping
modifications to the Internal Revenue Code, including a much lower
corporate tax rate, changes to credits and deductions, and a move
to a territorial system for corporations that have overseas
earnings. The act replaced the prior-law graduated corporate tax
rate, which taxed income over $10 million at 35%, with a flat rate
of 21%.
The
Company accounts for income taxes in accordance with ASC 740,
Income Taxes. The Company records a liability for uncertain tax
positions when it is probable that a loss has been incurred and the
amount can be reasonably estimated. As of December 31, 2017 and
2016, the Company has not reported a liability for uncertain tax
positions. Any liability for federal or state income taxes is not
anticipated to be material to the consolidated financial
statements. The Company's policy is to recognize interest and
penalties related to income tax matters as a component of income
tax expense. The Company continually evaluates expiring statutes of
limitations, audits, proposed settlements, and changes in tax law
and new authoritative rulings. Generally, the Company is not
subject to examinations by federal income tax authorities prior to
2015.
The
Company utilizes ASC 740, “Income Taxes,” which
requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on
the difference between the tax basis of assets and liabilities and
their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. A valuation
allowance is recorded when it is “more likely-than-not”
that a deferred tax asset will not be realized.
Fair Value Measurements
Disclosures about fair value of financial instruments require
disclosure of the fair value information, whether or not recognized
in our balance sheet, where it is practicable to estimate that
value. As of December 31, 2017 and 2016, the amounts reported for
cash and accrued liabilities approximated fair value because of
their short maturities.
In accordance with ASC Topic 820, “Fair Value Measurements
and Disclosures,” the Company measures certain financial
instruments at fair value on a recurring basis. ASC Topic 820
defines fair value, established a framework for measuring fair
value in accordance with accounting principles generally accepted
in the United States, and expands disclosures about fair value
measurements.
Fair value is defined as 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. ASC Topic 820
established a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements).
These tiers include:
|
|
●
|
Level
1, defined as observable inputs such as quoted prices for identical
instruments in active markets;
|
|
|
|
|
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets
that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices
for identical or similar instruments in markets that are not
active; and
|
|
|
|
|
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own
assumptions, such as valuations derived from valuation techniques
in which one or more significant inputs or significant value
drivers are unobservable.
|
Financial
assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar
techniques and at least one significant model assumption or input
is unobservable.
Going Concern
The
Company’s consolidated financial statements are prepared
using accounting principles generally accepted in the United States
(“U.S. GAAP”) applicable to a going concern, which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has
limited commercial experience and had a net loss of approximately
$43,000 for the year ended December 31, 2017 and an accumulated
deficit of approximately $156,000 at December 31, 2017. The Company
has not yet established an ongoing source of revenue sufficient to
cover its operating costs and to allow it to continue as a going
concern. The accompanying consolidated financial statements for the
years ended December 31, 2017 and 2016 have been prepared assuming
the Company will continue as a going concern. The Company’s
cash resources will likely be insufficient to meet its anticipated
needs during the next twelve months. The Company will require
additional financing to fund its future planned operations,
including research and development and commercialization of its
products.
The
ability of the Company to continue as a going concern is dependent
on the Company obtaining adequate capital to fund operating losses
until it establishes a revenue stream and becomes profitable.
Management’s plans to continue as a going concern include
raising additional capital through sales of equity securities and
borrowing. However, management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans.
If the Company is not able to obtain the necessary additional
financing on a timely basis, the Company will be forced to delay or
scale down some or all of its development activities or perhaps
even cease the operation of its business. The ability of the
Company to continue as a going concern is dependent upon its
ability to successfully secure other sources of financing and
attain profitable operations. There is substantial doubt about the
ability of the Company to continue as a going concern within one
year after the date that the consolidated financial statements are
issued. The accompanying consolidated financial statements do not
include any adjustments that might be necessary if the Company is
unable to continue as a going concern.
Recent Accounting Pronouncements
In May
2014, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with Customers. ASU 2014-09 is a
comprehensive revenue recognition standard that will supersede
nearly all existing revenue recognition guidance under current U.S.
GAAP and replace it with a principle based approach for determining
revenue recognition. Under ASU 2014-09, revenue is recognized when
a customer obtains control of promised goods or services and is
recognized in an amount that reflects the consideration which the
entity expects to receive in exchange for those goods or services.
In addition, the standard requires disclosure of the nature,
amount, timing, and uncertainty of revenue and cash flows arising
from contracts with customers. The FASB has recently issued ASU
2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20,
all of which clarify certain implementation guidance within ASU
2014-09. ASU 2014-09 is effective for interim and annual periods
beginning after December 15, 2017. The standard can be adopted
either retrospectively to each prior reporting period presented
(full retrospective method), or retrospectively with the cumulative
effect of initially applying the guidance recognized at the date of
initial application (the cumulative catch-up transition method).
The Company has reviewed ASU 2014-09 and has determined that its
adoption will not have a material impact on its financial position,
results of operations or cash flows.
In
February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02
requires a lessee to record a right of use asset and a
corresponding lease liability on the balance sheet for all leases
with terms longer than 12 months. ASU 2016-02 is effective for all
interim and annual reporting periods beginning after December 15,
2018. Early adoption is permitted. A modified retrospective
transition approach is required for lessees for capital and
operating leases existing at, or entered into after, the beginning
of the earliest period presented in the consolidated financial
statements. The Company is currently evaluating the expected impact
that the standard could have on its consolidated financial
statements and related disclosures.
Other
recent accounting pronouncements issued by the FASB, including its
Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission did
not or are not believed by management to have a material impact on
the Company’s present or future consolidated financial
statements.
Note 3 – Prepaid Expenses
The
Company has available to it credit through certain trade
organizations as a result of barter transactions for services.
These amounts are available for Company use with certain vendors
and establishments who are part of the same trade organization.
These balances do not represent cash available to the Company, and
as such are recorded as the prepaid expenses account as
incurred.
As of
December 31, 2017 and December 31, 2016 the available barter credit
balances were $30,289 and $26,751, respectively.
Note 4 – Fixed Assets
As of
December 31, 2017 and December 31, 2016, fixed assets consisted of
the following:
|
|
|
|
|
Computer equipment
and fixtures
|
$
1,993
|
$
1,993
|
|
Accumulated
depreciation
|
(673
)
|
(274
)
|
|
Fixed assets,
net
|
$
1,320
|
$
1,719
|
Depreciation
expense for the years ended December 31, 2017 and 2016 was $399 and
$274, respectively.
Note 5 – Capital Stock
At
December 31, 2017, the authorized capital of the Company consisted
of 1,000 shares of capital stock, consisting of 1,000 shares of
common stock with no par value. As a result of the Reorganization
there were 1,000 shares of common stock issued and
outstanding.
Note 6 – Commitments & Contingencies
Office Lease
Subsequent
to December 31, 2017 the Company rented space on a month-to-month
basis in a Class 1 office in Lafayette, LA which it currently
occupies. The monthly rent is $3,000. For the years ended December
31, 2017 and 2016, the Company incurred no rent
expense.
Litigation
From time to time the Company may become a party to litigation in
the normal course of business. Management believes that there are
no current legal matters that would have a material effect on the
Company’s financial position or results of
operations.
Note 7 – Subsequent Events
Subsequent
to December 31, 2017, the Company received $471,000 in advances and
other financial support from unrelated third parties for
transaction costs associated with a planned transaction with NuLife
Sciences, Inc.
Subsequent
to December 31, 2017, the Company’s shareholders agreed to a
share exchange (“Merger”) with NuLife Acquisition
Corp., a Louisiana corporation formed by NuLife Sciences, Inc.
(“NULF”) as a wholly owned subsidiary, intended for the
exchange of shares with the Company. The Merger was consummated on
October 5, 2018 with an effective date of September 27, 2018. The
Company shareholder received one thousand (1,000) shares of series
D senior convertible preferred stock, par value $.001 per share of
NULF, convertible into fifty million two hundred thirty-nine
thousand five hundred forty-one (50,239,541) shares of common stock
of NULF. In addition, the sole shareholder of the Company received
one share of series C super-voting preferred stock of NULF which
grants the holder 50.1% of the votes of NULF at all times. Upon
completion of the Merger the Company became a wholly owned
subsidiary of NULF.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
We
prepared the following unaudited pro forma condensed combined
financial statements, which present NuLife Sciences, Inc.
(“NuLife”) pro forma financial position and results of
operations after giving effect to the merger with LJR Security
Services, Inc. (“LJR”) completed in September 2018,
based on the historical financial statements of NuLife and
LJR.
NuLife’s
fiscal year ends September 30. LJRs fiscal year ends December 31.
Preparing the unaudited pro forma condensed combined statements of
operations for the year ended December 31, 2017, the statement of
operations for the twelve-months ended September 30, 2017 for
NuLife was combined with the statements of operations for the
twelve-months ended December 31, 2017 for LJR. In preparing the
unaudited pro forma condensed combined statement of operations for
the nine months ended September 30, 2018, the statement of
operations for the nine months ended June 30, 2018 for NuLife was
combined with the statements of operations for the nine months
ended September 30, 2018 for LJR. The unaudited pro forma
information adjusts the historical consolidated statements of
operations to give effect to the merger as if it occurred on
January 1, 2017.
The
information presented in the unaudited pro forma condensed
consolidated financial statements does not purport to represent
what our financial position or results of operations would have
been had the transaction occurred as of the dates indicated, nor is
it indicative of our future financial position or results of
operations for any period. You should not rely on this information
as being indicative of the historical results that would have been
achieved had the companies always been combined or the future
results that the combined company will experience after the
transaction.
The pro
forma adjustments are based upon available information and certain
assumptions that we believe are reasonable under the
circumstances.
These
unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the accompanying notes and
assumptions and the historical financial statements and related
notes of NuLife.
NuLife Sciences, Inc. and LJR Security Services, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of
Operations
|
|
NULFfor the year ended September 30, 2017
|
LJRfor the year ended December 31, 2017
|
|
|
|
Revenue
|
$
-
|
$
10,743
|
$
-
|
$
10,743
|
|
|
|
|
|
|
|
Cost
of sales
|
-
|
3,041
|
-
|
3,041
|
|
|
|
|
|
|
|
Gross
Profit
|
-
|
7,702
|
-
|
7,702
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
General and
administrative
|
3,617,740
|
50,735
|
-
|
3,668,475
|
|
Related party
compensation
|
602,883
|
-
|
-
|
602,883
|
|
Total operating
expenses
|
4,220,623
|
50,735
|
-
|
4,271,358
|
|
Loss
from operations
|
(4,220,623
)
|
(43,033
)
|
-
|
(4,263,656
)
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
|
|
|
Interest
expense
|
(777,331
)
|
-
|
-
|
(777,331
)
|
|
Interest
income
|
667
|
-
|
-
|
667
|
|
Loss on debt
settlement
|
(98,827
)
|
-
|
|
(98,827
)
|
|
Loss on debt
extinguishment
|
(211,967
)
|
-
|
|
(211,967
)
|
|
Loss on change in
fair value of derivative and derivative expense
|
(86,016
)
|
-
|
-
|
(86,016
)
|
|
Total non-operating
expenses
|
(1,173,474
)
|
-
|
-
|
(1,173,474
)
|
|
|
|
|
|
|
|
Loss
before taxes
|
(5,394,097
)
|
(43,033
)
|
-
|
(5,437,130
)
|
|
|
|
|
|
|
|
Provision for
taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Net
loss
|
(5,394,097
)
|
(43,033
)
|
-
|
(5,437,130
)
|
|
|
|
|
|
|
|
Deemed dividend on
convertible preferred stock
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Net
loss attributable to common shareholders
|
$
(5,394,097
)
|
$
(43,033
)
|
$
-
|
$
(5,437,130
)
|
|
|
|
|
|
|
|
Net loss per common
share — basic and diluted
|
$
(0.17
)
|
$
(43.03
)
|
|
$
(0.17
)
|
|
|
|
|
|
|
|
Weighted
average common shares – basic and diluted
|
32,347,556
|
1,000
|
|
32,347,556
|
NuLife Sciences, Inc. and LJR Security Services, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of
Operations
|
|
NULFfor the nine months ended June 30, 2018
|
LJR
for the nine months ended September 30, 2018
|
|
|
|
|
Revenue
|
$
-
|
$
13,108
|
$
-
|
|
$
13,108
|
|
|
|
|
|
|
|
|
Cost
of sales
|
-
|
4,437
|
-
|
|
4,437
|
|
|
|
|
|
|
|
|
Gross
Profit
|
-
|
8,671
|
-
|
|
8,671
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
General and
administrative
|
848,071
|
396,610
|
(38,000
)
|
(1
)
|
1,206,681
|
|
Sales and
marketing
|
-
|
19,608
|
|
|
|
|
Related party
compensation
|
235,292
|
-
|
-
|
|
235,292
|
|
Total operating
expenses
|
1,083,363
|
416,218
|
(38,000
)
|
|
1,461,581
|
|
Loss
from operations
|
(1,083,363
)
|
(407,547
)
|
38,000
|
|
(1,452,910
)
|
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
|
|
|
|
Interest
expense
|
(278,670
)
|
-
|
-
|
|
(278,670
)
|
|
Forgiveness of
accounts payable
|
261,644
|
-
|
-
|
|
261,644
|
|
Loss on debt
settlement
|
(2,900,964
)
|
-
|
|
|
(2,900,964
)
|
|
Loss on change in
fair value of derivative and derivative expense
|
117,412
|
-
|
-
|
|
117,412
|
|
Total non-operating
expenses
|
(2,800,578
)
|
-
|
-
|
|
(2,800,578
)
|
|
|
|
|
|
|
|
|
Loss
before taxes
|
(3,883,941
)
|
(407,547
)
|
38,000
|
|
(4,253,488
)
|
|
|
|
|
|
|
|
|
Provision for
taxes
|
-
|
-
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Net
loss
|
(3,883,941
)
|
(407,547
)
|
38,000
|
|
(4,253,488
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share — basic and diluted
|
$
(0.10
)
|
|
|
|
$
(0.11
)
|
|
|
|
|
|
|
|
|
Weighted
average common shares – basic and diluted
|
40,275,311
|
|
|
|
40,275,311
|
Notes
:
(1)
Elimination of
nonrecurring charges related to transaction, including legal,
accounting and other costs.
SIGNATURES
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 hereunto duly authorized.
|
GULF WEST SECURITY NETWORK, INC.
|
|
|
|
By:
|
/s/ Louis J. Resweber
|
|
|
|
Louis J. Resweber
|
|
|
Chief Executive Officer
|
|
Date: January 2, 2019
|
Gulf West Security Network (CE) (USOTC:GWSN)
Gráfico Histórico do Ativo
De Dez 2024 até Jan 2025
Gulf West Security Network (CE) (USOTC:GWSN)
Gráfico Histórico do Ativo
De Jan 2024 até Jan 2025
