Gulf West Security Network, Inc. - Quarter Report: 2017 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the transition period from ______to______

Commission File Number: 000-54163

 (949) 973-0684

(Registrant’s telephone number, including area code)

Not Applicable

 (Former Name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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  ☒   No  ☐

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:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☒ No☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: As of July 31, 2017, there were 37,261,049 shares of $0.001 par value common stock, issued and outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

NuLife Sciences, Inc. (fka “SmooFi, Inc.”)

Consolidated Balance Sheets

Share and per share amounts have been retroactively adjusted to reflect the increased number of shares resulting from a stock split.

The accompanying notes are an integral part of these financial statements.

NuLife Sciences, Inc. (fka “SmooFi, Inc.”)

Consolidated Statements of Operations

For the Three and Nine Months Ended June 30, 2017 and 2016

(Unaudited)

Share and per share amounts have been retroactively adjusted to reflect the increased number of shares resulting from a stock split. 

The accompanying notes are an integral part of these financial statements.

NuLife Sciences, Inc. (fka “SmooFi, Inc.”)

Consolidated Statement of Cash Flows

For the Nine Months Ended June 30, 2017 and 2016

(Unaudited)

The accompanying notes are an integral part of these financial statements.

NULIFE SCIENCES, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2017 and 2016

(Unaudited)

NOTE 1 - ORGANIZATION

NuLife Sciences Inc., formerly SmooFi, Inc. (the "Company") was incorporated under the laws of the State of Nevada on October 15, 2013. The Company issued 7,250,000 shares of its common stock to our founder, Derek Cahill, as consideration for the purchase of a business plan along with a website. On April 21, 2015, the Board of Directors of the Company approved a three-for-one forward stock split of the Company's common stock (the “Forward Split”). Accordingly, shareholders owning shares of the Company's common stock received two additional shares of the Company for each share they owned, and Mr. Cahill’s 7,250,000 shares became 21,750,000 shares. Prior to the Forward Split the Company had 10,128,600 shares issued and outstanding and following the Forward Split the Company has 31,085,800 shares issued and outstanding.  

Online marketplace and community

The Company's initially-defined business strategy is to acquire and/or develop and market software and services that will significantly enhance the performance and functionality of the Internet services used by individuals and by small to medium sized businesses. The Company's products and services, essentially an online marketplace and community, will use proprietary technology that will enable users, both service requestors and service providers, to work collaboratively to obtain substantial improvements in performance, reliability and usability. Service requestors (people or companies requesting a service) name their own price, date and time for any service. A service requestor can also select qualifying criteria such as number of reviews or review rankings of a service provider. The first service provider who can provide that service, on that date, at that time and meets the service ranking requirements will get the project. The web site and the platform, originally titled www.AnytimeJobs.com experienced security issues shortly after it was launched and had to be taken down to correct the security problems. At the present time, the additional programming to eliminate the security problem has not been completed and the platform is not available online.

Once the security issues with the platform are resolved, the Company's online marketplace and online community will match up daily job or service requests and fill market demand for service requests throughout a particular local community, county or city and will connect local resources with local needs. A goal is to create jobs and provide market value for basic services by aggregating these low-cost services within each local market. This will maximize value for either the person or company requesting the service and for the person or company providing the service. In other words, service providers will get the best possible price for their service and the party requesting the service will pay the lowest possible price.

Operations, Consulting and Advisory Services in the Organ Transplant segment of the Healthcare Industry

On November 1, 2016, pursuant to, and in preparation for, the fulfillment of the Asset Purchase Agreement to acquire all of the assets of GandTex LLC, A Texas Limited Liability Company (“GandTex”), the Company formed 2 subsidiaries in the state of Nevada, NuLife BioMed, Inc., and NuLife Technologies, Inc. GandTex is a biomedical company focused on advancing human organ transplant technology and medical research. The assets being transferred consist of certain proprietary patents for eliminating the need for an organ or tissue match, and the necessity for anti-rejection drugs, as well as management of, and historical data for, animal trials conducted by GandTex.

On January 29, 2017, the Company announced the completion of an Asset Purchase Agreement to acquire all of the assets (the “Asset Purchase”) of GandTex was the owner of certain patents and licensed rights related to biomedical company focused on advancing human organ transplant technology and medical research. The assets consisted of certain proprietary patents for eliminating the need for an organ or tissue match, and the necessity for anti-rejection drugs, as well as management of, and historical data for, animal trials (the “Animal Trials”) conducted by a third party operating under the GandTex Assets (collectively, the “GandTex Assets”). Pursuant to the terms of the Asset Purchase, and upon achieving certain pro-forma goals, the Company agreed to provide additional funding for the Trials in the aggregate amount of $300,000. In exchange for the GandTex Assets, the Company issued to GandTex 10,000,000 shares of its Series B Convertible Preferred Stock. GandTex is owned and controlled by a single individual Managing Member who beneficially owns 70% of GandTex. The Asset Purchase was approved by a majority of the Company’s disinterested directors.

On June 26, 2017, the Company’s wholly owned subsidiary, NuLife Technologies Inc., formed and serves as the current Managing Member of NuLife Oncology Services LLC, a Wyoming limited liability company (“NuLife Ocnology”).

We intend to have NuLife Oncology operate as a stand-alone joint venture between NuLife Technologies Inc. as a Co-Managing Member and one other recognized consulting organization in the healthcare patient, clinical & genomic data collection, and the pharmaceutical / diagnostic industries serve as a Co-Managing Member. AS of the date of this Report we do not have any agreements or letters of Intent signed with the prospective Co-Managing Member.

NuLife Oncology was created to address the Healthcare Professional Services Group focused on optimizing oncological data exchange for the pharmaceutical / diagnostic industries betterment of oncology patients, medical practices, and the pharmaceutical / diagnostic industries. It is our current intent to have NuLife Oncology focus on addressing the following Healthcare marketplace dynamics:

In short, NuLife Oncology aims to solve the data-exchange gap through:

o    Democratization of appropriate low-cost diagnostic testing services

o    Integration of molecular data for improved patient outcomes

o    Brokering data relationships between Pharma and oncology practices

o    Monetization of data with benefit to all Oncology Care stakeholders

o    Creating genomics-based research opportunities for oncology practices

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a September 30 fiscal year-end. These financial statements present the consolidated financial statements of NuLife Sciences, Inc. and its two wholly owned subsidiaries, NuLife Biomed, Inc. and NuLife Technologies, Inc., and NuLife Oncologies LLC, a newly formed Wyoming limited liability company for which NuLife Technologies Inc. currently serves as the Managing Member.

The unaudited interim financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes for the year ended September 30, 2016 included in our Annual Report on Form 10-K. The results of the nine-month periods ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year ending September 30, 2017.

Cash Equivalents

For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. The Company does not have any cash equivalent as of June 30, 2017 and September 30, 2016.

Stock-based Compensation

The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company adopted a Non-Qualified Incentive Stock Compensation Plan pursuant to which the Company is reserving seven million (7,000,000) shares of Common Stock for issuance for services and the exercise of stock options. As of June 30 ,2017 the Company has only issued one Stock Option for One Million Five Hundred Thousand (1,500,000) shares to its President, Fred G. Luke and has an agreement to issue One Million Five Hundred Thousand (1,500,000) shares to its CEO, John Hollister, but has not yet provided Mr. Hollister with the Option Agreement. Nonemployee share-based payments are measured at fair value, based on either the fair value of the equity instrument issued or on the fair value of the services received. We determine the fair value of common stock grants based on the price of the common stock on the measurement date (which is the earlier of the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, if there are sufficient disincentives to ensure performance, or the date at which the counterparty's performance is complete). We determine the fair value of preferred stock grants based on the price of the preferred stock as potentially converted into common stock and based on the underlying common stock on the measurement date (which is the earlier of the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, if there are sufficient disincentives to ensure performance, or the date at which the counterparty's performance is complete).

Use of Estimates and Assumptions

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company has adopted the provisions of ASC 260.

Loss per Share

The basic loss per share is calculated by dividing the Company's net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company's net loss 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. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company.

Fair Value Measurements and Disclosures

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2017 and 2016. The respective carrying value of certain on-balance-sheet financial instruments, approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses and notes payable. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand.

The Company uses fair value measurements under the three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure for fair value measures. The three levels are defined as follows:

The following table provides a summary of the changes in fair value of the Company’s Promissory Notes, which are both Level 3 liabilities as of June 30, 2017:

The Company determined the value of its convertible notes using a market interest rate and the value of the derivative liability issued at the time of the transaction less the accretion. There is no active market for the debt and the value was based on the delayed payment terms in addition to other facts and circumstances at the end of June 30, 2017 and 2016.

Derivative Financial Instruments

The Company evaluates our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based financial instruments, the Company uses the Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date. 

The Company estimates the fair value of these instruments using the Black-Scholes option pricing model and the intrinsic value if the convertible notes are due on demand.

We have determined that certain convertible debt instruments outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of the convertible debentures have a variable exercise price, thus are convertible into an indeterminate number of shares for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. Any change in fair value during the period recorded in earnings as “Other income (expense) - gain (loss) on change in derivative liabilities.” Please refer to Note 8 below. 

Income Taxes

Income taxes are provided in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

No provision was made for Federal or State income taxes.

Advertising

Advertising will be expensed in the period in which it is incurred. There have been no advertising expenses for the reporting periods presented.

Intangible Assets

Intangible assets with finite lives are amortized over their estimated useful life. The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment.

Reclassification

In order to present comparable financial sheets, accrued expenses and due to related parties were reclassified as of September 30, 2016. This reclassification did not affect the amount of liabilities in total.

Recently Issued Accounting Pronouncements

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements — Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". Continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. Currently, there is no guidance under U.S. GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued).

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its financial statements. 

The Company reviewed all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and they did not or are not believed by management to have a material impact on the Company's present or future financial statements.

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying financial statements, the Company had negative working capital of $651,221 and, having incurred net losses since inception, an accumulated deficit of $4,888,030 at June 30, 2017.

For the period ended June 30, 2017, management evaluated the Company's ability to continue as a going concern and concluded that substantial doubt has not been alleviated about the Company's ability to continue as a going concern. While the Company continues to explore further significant sources of financing, management's assessment was based on the uncertainty related to the amount and nature of such financing over the next twelve months.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 – NOTES RECEIVABLE

On January 15, 2016, the Company entered into a secured promissory note in the amount of $46,400 to advance funds to the sellers of certain farm property in Colorado the Company was seeking to purchase. Closing was subject to financing and other contingencies per a non-binding Letter of Intent. This note had an interest rate of 8% per annum, with principal and unpaid and accrued interest originally due on June 30, 2016. On March 31, 2016, the Company entered into Amendment #1 to this note to (i) extend the due date to June 30, 2016, unless the contemplated transaction closes prior thereto, in which case the note will be cancelled, (ii) reduce the principal to $31,400 to characterize $15,000 of the funds transferred to sellers as a non-refundable earnest money payment and (iii) stipulate that interest is to accrue on the lower $31,400 principal since inception. On June 30, 2016, the Company entered into Amendment #2 to this note to (i) extend the due date to September 30, 2016, unless the contemplated transaction closes prior thereto, in which case the note will be cancelled. On September 30, 2016, the Company determined this note to no longer be collectible. As such, the principal amount of $31,400, the non-refundable deposit amount of $15,000 and accrued interest in the amount of $2,228 was written off and included in operating expense for the year ended September 30, 2016.

On August 17, 2016, the Company entered into a secured promissory note in the amount of $25,000 to advance funds to the sellers of assets in regards to the Asset Purchase Agreement referenced in Note 1. This note has an interest rate of 8% per annum, with principal and unpaid and accrued interest due on February 17, 2017. On January 29, 2017, the note was deemed uncollectible, the principal amount of $25,000 and accrued interest in the amount of $904 was written off and included in operating expense for the nine months ended June 30, 2017. As of June 30, 2017, the total outstanding under this note including accrued interest is $-0-.

NOTE 5 - INVESTMENT

On November 1, 2016, pursuant to, and in preparation for, the fulfillment of the Asset Purchase Agreement to acquire all of the GandTex Assets the Company formed two subsidiaries in the state of Nevada, NuLife BioMed, Inc., and NuLife Technologies, Inc. GandTex is a biomedical company focused on advancing human organ transplant technology and medical research. The assets being transferred consist of certain proprietary patents for eliminating the need for an organ or tissue match, and the necessity for anti-rejection drugs, as well as management of, and historical data for, animal trials conducted by GandTex.

On January 29, 2017, the Company announced the completion of an Asset Purchase Agreement to acquire the assets (the “Asset Purchase”) of GandTex, LLC, a Texas limited liability company (“GandTex”). GandTex was the owner of certain patents and licensed rights related to biomedical company focused on advancing human organ transplant technology and medical research. The assets consisted of certain proprietary patents for eliminating the need for an organ or tissue match, and the necessity for anti-rejection drugs, as well as management of, and historical data for, animal trials (the “Animal Trials”) conducted by a third-party operating using the GandTex Assets. Pursuant to the terms of the Asset Purchase, and upon achieving certain pro-forma goals, the Company agreed to provide additional funding for the Trials in the aggregate amount of $300,000. In exchange for the Assets, the Company issued to GandTex 10,000,000 shares of its Series B Convertible Preferred Stock. GandTex is owned and controlled by a single individual Managing Member who beneficially owns 70% of GandTex. The Asset Purchase was approved by a majority of the Company’s disinterested directors.

The fair value of the preferred stock amounted $2,500,000 is being treated as an expense instead of investment because it is deemed as Stock Based Compensation, not an Investment.

NOTE 6 - CONSULTING AGREEMENT

On April 1, 2015, the Company entered into a twelve-month consulting agreement with an investor relations firm. Per the agreement, the Company will pay the consultant a monthly fee of $8,500 on the first day of each month with the payment deferred until the Company closes financing in the amount of $3 million or greater. Additionally, the Company was required to issue the consultant 200,000 shares of common stock on October 1, 2015. During the nine months ended June 30, 2017 and 2016, the Company recorded stock based compensation expense in the amount of $-0- and $30,500 associated with the vesting of the common stock, respectively.

On February 28, 2017 the Company entered into an Advisory Agreement with Global Business Strategies Inc.(“Global“), a Company owned by the Company’s President Fred G. Luke (“the “Global Agreement”), pursuant to which the Company retained Global to provide management advice and corporate development strategies, and to make Mr. Luke available to serve as the Company’s President, for an aggregate of $8,500 per month and, subject to the condition that Global effected filing of the Company’s its Quarterly Report for the period ending December 31, 2016 on Form 10-Q on a timely basis, Global received an aggregate of 55,000 shares of restricted Series A Convertible Preferred Stock.

NOTE 7 – NOTES PAYABLE

As of June 30, 2017, the Company had one note payable issued and outstanding to third party lenders with a total principle of $25,000 and accrued interest of $14,400. The note was due on June 30, 2015, has an interest rate of 12%. This note remains unpaid. The note is in default as of June 30, 2017.

As of June 30, 2017, the Company had three notes payable issued and outstanding with a former director with a total principle of $74,500 and accrued interest of $10,611. The three notes, in the amount of $47,000, $15,000 and $12,500, were issued on January 14, 2016. February 10, 2016 and February 29, 2016, respectively. The three notes are due on the earlier of one week after the closing of a certain contemplated farm property acquisition or July 31, 2016, and have an interest rate of 10%. The former director for all three notes is East West Secured Developments, LLC, an Arizona Limited Liability Company (“EWSD”) of which Mr. Brian Loiselle, a former director of and consultant to the Company, was a managing member. On June 30, 2016, the Company entered into Amendment #1 to these three notes to extend the due date to the earlier of one week after the closing of a certain contemplated farm property acquisition or October 31, 2016. The three notes are currently in default. However, the default interest demand of 18% per month by Mr. Loiselle is being disputed by the Company due to the lack of provision for default interest in the notes. The three notes have been reclassified to non-related party debt. See also Note 11.

NOTE 8 – CONVERTIBLE NOTES

Convertible notes consist of the following:

On September 2, 2016, the Company amended and restated that certain outstanding promissory note of the Company, dated July 3, 2015, in the principal amount of $50,025. The replacement convertible promissory note matures on December 31, 2017 and bears interest at the rate of 8% per annum, and the principal and interest due thereunder may be prepaid at any time. The note, together with all interest as accrued, is convertible into shares of the Company’s common stock at 50% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. As of June 30, 2017, the note balance and accrued interest is $50,025 and $8,026, respectively.

On August 1, 2016, the Company entered into those four (4) Note Purchase Agreements (collectively, the “Purchase Agreements”) in connection with the issuance of certain convertible promissory notes, dated August 1, 2016 (collectively, the “Purchase Notes”) in the aggregate principal amount of $50,000. All of the Purchase Notes are due in 36 months. The Purchase Notes bear interest at the rate of 8% compounded monthly. The Purchase Notes, together with all interest as accrued, is convertible into shares of the Company’s common stock at 50% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. Due to the beneficial conversion feature of these notes, the Company recorded $50,000 of debt discount as a contra liability and amortized $15,205 of the discount during the nine months ended June 30, 2017. As of June 30, 2017, the Purchase Notes balance and accrued interest is $50,000 and $3,649, respectively.

During the nine months ended June 30, 2017, the Company entered into certain Note Purchase Agreements (collectively the “Purchase Agreements”) in connection with the issuance of certain convertible promissory notes, in the aggregate principal amount of $685,000. The Purchase Notes are due in 36 months. The Purchase Notes bear interest at the rate of 8% compounded monthly. The Purchase Notes, together with all interest as accrued, are each convertible into shares of the Company’s common stock at a conversion price of Eleven cents ($0.11) per share. Due to the beneficial conversion feature of these notes, the Company recorded $635,545 of debt discount as a contra liability and amortized $119,446 of the discount during the nine months ended June 30, 2017. As of June 30, 2017, the note balances and accrued interest are $685,000 and $31,506, respectively.

On June 26, 2017, the Company entered into a Securities Purchase Agreement (“SAP”) in connection with the issuance of a convertible promissory note (“Note”) in the aggregate principal amount of $78,000. The Note matures on June 30, 2018 (the “Maturity Date”), and bears interest at the rate of 12% per annum. After 180 days, the Note may not be prepaid. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date. The Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at a 35% discount to the lowest trading price in the 10-day period ending on the latest complete Trading Day prior to the Conversion Date. Due to the beneficial conversion feature of this note, the Company recorded $78,000 of debt discount as a contra liability and amortized $846 of the discount during the nine months ended June 30, 2017. As of June 30, 2017, the note balance and accrued interest is $78,000 and $103, respectively.

NOTE 9 – DERIVATIVE LIABILITY

During August 2016, the Company entered into a Loan Agreement with an investor pursuant to which the Company issued a convertible promissory note in the principal amount of $50,025. The Note is convertible into shares of common stock at an initial conversion price subject to adjustment as contained in the Note. The note, together with all interest as accrued, is convertible into shares of the Company’s common stock at 50% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. The Note accrues interest at a rate of 8% per annum and matures on December 31, 2017.

During August 2016, the Company entered into Loan Agreements with investors pursuant to which the Company issued convertible promissory notes in the principal amount of $50,000. The Notes are convertible into shares of common stock at an initial conversion price subject to adjustment as contained in the Note. The note, together with all interest as accrued, is convertible into shares of the Company’s common stock at 50% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. The Notes accrue interest at a rate of 10% per annum and mature on August 1, 2019.

During June 2017, the Company entered into a Loan Agreement with an investor pursuant to which the Company issued a convertible promissory note in the principal amount of $78,000. The Note is convertible into shares of common stock at an initial conversion price subject to adjustment as contained in the Note. The note, together with all interest as accrued, is convertible into shares of the Company’s common stock at 65% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. The Note accrues interest at a rate of 12% per annum and matures on June 30, 2018.

Due to the variable conversion price associated with these convertible promissory notes, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date.

The initial fair value of the embedded debt derivative of $298,140 was allocated as a debt discount in the amount of $175,025 and excess $123,115 was charged to interest expenses, loss on derivative. The fair value of the described embedded derivative was determined using the Black-Scholes Model with the following assumptions:

During the nine months ended June 30, 2017 and 2016, the Company recorded the loss in fair value of derivative and derivative expense in the amount of $39,579 and $-0-, respectively. 

For the nine months ended June 30, 2017, $39,727 and $-0-, were expensed in the statement of operation as amortization of debt discount related to above notes and shown as interest expenses, respectively.

The following table represents the Company’s derivative liability activity for the period ended:

NOTE 10 – SHARE CAPITAL

The Company is authorized to issue 475,000,000 shares of common stock and 25,000,000 shares of preferred stock.

On April 1, 2015, the Company entered into a twelve-month consulting agreement with an investor relations firm. Per the agreement, the Company granted 200,000 shares of restricted common stock to the investor relations firm which fully vested on October 1, 2015. The final issuance resulted in 600,000 shares of restricted common stock due to the three-for-one forward stock split. On the date of the consulting agreement was entered into, April 1, 2015, the shares were valued at $1.00 per share which was the unadjusted share price prior to three-for-one forward stock split. The subject shares of common stock were issued on March 29, 2016. During the year ended September 30, 2015, the Company recorded share based compensation expense in the amount of $200,000 associated with the vesting of the common stock granted. On March 31, 2016, the Company and the investor relations firm entered into Amendment #1 to the consulting agreement to suspend the monthly fee indefinitely until such time as the Company requests that the services resume.

On April 21, 2015, the Board of Directors of the Company approved a three-for-one forward stock split of the Company's common stock. Accordingly, shareholders owning shares of the Company's common stock will receive two additional shares of the Company for each share they own. The Company had 10,128,600 shares issued and outstanding prior to the forward stock split. At September 30, 2016 and September 30,2015 the Company has 31,085,800 shares and 30,385,800 shares, respectively, of common stock issued and outstanding. The Company received notification from the Financial Industry Regulatory Authority (FINRA) on May 7, 2015, that it could proceed with the three-for-one forward stock split. Additional funds were reallocated from Additional Paid in Capital to the Common Stock account in an amount equal to the additional par value represented by the additional shares issued under the stock split. All share information presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the increased number of shares resulting from this transaction.

On August 7, 2015, the Company granted 100,000 shares of restricted common stock to its chief operating officer. On the date of grant, the shares were valued at $.61 per share which was the unadjusted closing share price on that date for a fair value of $61,000. The shares vested over a six-month period; accordingly, during the six months ended March 31, 2016, the Company recorded stock based compensation expense in the amount of $61,000 associated with vesting of the common stock granted. The subject shares of common stock were issued on March 29, 2016. During the year ended September 30, 2016, the Company recorded stock based compensation expense in the amount of $43,098, associated with vesting of common stock granted.

On October 31, 2016, the Company amended and restated its Articles of Incorporation. The purpose of the amendment and restatement of the Articles of Incorporation was to:

Concurrent with the Company’s increase of its authorized common and preferred stock, the Company requested and received from, the Financial Industry Regulatory Authority, approval for a name change from Smoofi, Inc. to NuLife Sciences, Inc., and a symbol change from “SMFI” to “NULF”.

Also on October 31, 2016, the Company adopted a 2016 Non-Qualified Incentive Stock Compensation Plan (the “Compensation Plan”), and reserved 7,000,000 shares for issuance from the Compensation Plan. As of the date of this report no shares have been issued from the Compensation Plan.

On November 1, 2016, the Company amended and restated its Bylaws, providing for a change in the Company’s name from “SmooFi, Inc.” to “NuLife Science, Inc.”

On November 1, 2016, the Board approved the Certificates of Designation to create and provide for the rights, preferences, and privileges of 2,000,000 shares of the Company’s Series A Convertible Preferred Stock and 10,000,000 shares of the Company’s Series B Convertible Preferred Stock.

Description of Preferred Stock:

Series A Preferred Stock

(collectively, “Derivative Securities”), issued by the Corporation and outstanding as of the Date of Conversion, by .000001, then multiplying that number of shares of Series A Stock to be converted.

Series B Preferred Stock

In conjunction with the Asset Acquisition with GandTex, as authorized in the Company’s Amended and Restated Articles of Incorporation, the Company initially filed a Certificate of Designation creating a series A Preferred Stock consisting of 10,000,000 shares of Series B Preferred Stock with the following characteristics:

o    Holders of shares of Series B Preferred Stock, upon Board of Directors approval, may convert at any time following the issuance upon sixty-one (61) day written notice to the Corporation. Each share of Series B Preferred Stock shall be convertible into such number of fully paid and non-assessable shares of Common Stock as is determined by

percentage of the net income which is achieved by SMFI and its subsidiaries (the “Actual Net Income “) versus the projections (detailed in Exhibit A to this Certificate of Designation of Series B Convertible Preferred) provided by GandTex (the “Projected Net Income”) at any time during the two (2) year term following the Closing of the Purchase Agreement. This calculation will be made by dividing the Actual Net Income achieved by SMFI and its subsidiaries related to the development and commercialization of the GandTex Assets by the Projected Net Income (attached hereto as Exhibit A to this Certificate of Designation of the Series B Convertible Preferred Stock) on the Notice to Convert (as defined below), then dividing that product into 1 share of Series B Stock. The formula of this calculation is:

As described in Footnote 5 above, pursuant to the terms of the Asset Purchase Agreement with GandTex, on December 30, 2016 the Board approved the issuance of 10,000,000 shares of the Company’s Series B Convertible Preferred Stock to GandTex. The shares were released to GandTex concurrent with the closing on January 29, 2017.

On January 20 , 2017, the Company entered into a Debt Conversion Agreement (the “Conversion Agreement”) in respect of $13,750 of the accruing monthly fees due to MZHCI, LLC(“MZ”) by the Company pursuant to the Investor Relations Consulting Agreement between MZ and the Company dated April 1, 2015 (the “Released Debt”) together with a release by MZ in favor of the Company for any claims for reimbursement of any and all due diligence expenses, investigative costs or any other type of fees or costs incurred by MZ related to the recent purchase by the Company of the GandTex Assets. Pursuant to the terms of the Conversion Agreement, and in exchange for the release, the Company issued to MZ an aggregate of 55,000 shares of restricted Series A Convertible Preferred Stock.

Valuation of Series A and Series B Preferred Stock.

The initial Certificate of Designation for both the Series A Stock and the Series B Stock had very similar characteristics and the same requirement that any conversion must be approved by the Company’s Board of Directors limits the ability of the holders to convert both the Series A Stock and the Series B Stock. In part, each of the two Certificates of Designation initially had the following requirements,”3.1 Conversion. Upon Board of Directors approval, each share of Series A [B] Preferred Stock shall be convertible, subject to notice requirements of paragraph 3.2, at any time following the issuance of such shares Series A [B] Stock, into such number of fully paid and non-assessable shares of Common Stock…”. This limiting ability to convert the Series A [B] Stock significantly reduces their Fair Market Value. However, by utilizing the most readily available information and analogy, in the case of both the Series A Stock and Series B　Stock this would be the issuance of the Series A Stock to MZHCI, a non-affiliate, for the extinguishment of debt of $13,750 for 55,000 shares of Series A Stock, or $.25/share. By analogy, the 55.000 shares of Series A stock issued to Global Business Strategies Inc. (“GBSI”) were also valued at $.25 per share: The Series B Stock issued to GandTex, again by analogy, was also valued at $.25 per share.

Utilizing this model, the Series A shares issued to MZHCI and GBSI were valued in the aggregate at $13,750 each, and the Series B shares issued to GandTex were initially valued at $2,500,000 and its being treated as an expense.

Further, as a result of the delayed onset of revenue and the regulatory approval timelines, the original estimates as to the timelines for the Animal Trials, making it impact able for the Company to proceed, or to achieve the projected benchmarks as to the completion date of the Animal Trials and obtaining approval from the requisite regulatory bodies as originally represented at Closing. As a result, the Company agreed to amend certain aspects of the GandTex Asset Acquisition Agreement, including the conversion formula of the Series B Convertible Preferred Stock issued to GandTex. The Amended and Restated Certificate of Designation creating a Series B Preferred Stock is to be amended to change the terms of conversion, and eliminated the requirement that GandTex, or any assignee of any of the Series B Stock, obtain approval that any conversion must be approved by the Company’s Board of Directors, with all other of the original terms remaining unchanged. The Amended and Restated Certificate of Designation for the Series B Stock has not yet been filed with the state of Nevada, but will be shortly after we receive fully the executed Amendment Documents -see NOTE 13 - SUBSEQUENT EVENTS. Pursuant to the proposed amended conversion features, the 10,000,000 shares of Series B Preferred Stock can be converted as follows:

.

“3.0 Conversion into Common Stock.

3.1       Conversion. One million shares of Series B Preferred Stock shall be convertible into two million shares (l-for-2 ratio) of common stock of the Corporation, subject to notice requirements of paragraph 3.2, one year from the date the holder receives its shares of Series B Preferred Stock, into such number of fully paid and non-assessable shares of Common Stock.

Nine million shares of Series B Preferred Stock shall be convertible into twenty-seven million shares (l-for-3 ratio) of Common Stock, subject to notice requirements of paragraph 3.2, at such time only when the Corporation has annual gross revenues of $60,000,000 deriving from the Gandy/Gandtex patents or processes, into such number of fully paid and non-assessable shares of Common Stock.”

Stock Options

Pursuant to the Employment Agreement with Mr. Hollister, Mr. Hollister is to be granted option to purchase up to 1,500,000 shares of the Company’s Common Stock. However, as of the date of this report the option price of the underlying shares has not been calculated, and the Option Agreement has not been executed – see Footnote 13. Subsequent Events.

On November 15, 2016, the Board approved the grant of 1,500,000 common stock purchase options to Fred Luke, the Company’s President, at an exercise price of not less than One Hundred Ten percent (110%) of the ten (10) day lowest trailing average closing bid price of such shares on the date of execution of the Option Agreement (the “Option Agreement”) which was Fourteen cents ($0.14) per share and subject to certain adjustments on November 15, 2016. The options vested immediately.

Stock option transactions for the nine months ended June 30, 2017 are summarized as follows:

The initial fair value of the option was $186,904 charged to operating expense during the nine months ended June 30, 2017. The fair value of the option was determined using the Black-Scholes Model with the following assumptions:

The fair value of options exercised in the three and nine months ended June 30, 2017 and 2016 was $0 and $0, and $0 and $0, respectively.

The Company recorded $0 and $43,098, and $2,700,654 and $43,098 of stock compensation expense in the statements of operations for the three and nine months ended June 30, 2017 and 2016, respectively, related to non-vested share-based compensation arrangements granted under existing stock option plans.

As of June 30, 2017, there was $0 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under existing stock option plans.

NOTE 11 - RELATED PARTY TRANSACTIONS

In April of 2015 Mr. Brian Loiselle, a former director of the Company, agreed to transfer his ownership interest in a cannabis farm and related equipment known as the "Tamarack Project", which was the subject of a certain Letter of Intent to which the Company was a party. In addition, it was proposed that Mr. Cahill sell all of his 21,750,000 shares of the Company to Blue River Equity LLC, an Arizona Limited Liability Company (“Blue River”), a company controlled by Mr. Loiselle. The transfer of the Tamarack Project, and other projects which Mr. Loiselle offered in substitution for the Tamarack Project were never acquired by Mr. Loiselle and, therefore could not be transferred to the Company, resulting in a breach of the representations by Mr. Loiselle, for himself and on behalf of Blue River, and the failure of Mr. Loiselle and/or Blue River to cause any property to be transferred into

the Company. Consequently, as a result of the breach and failure to deliver the primary consideration for the shares held by Mr. Cahill. Mr. Cahill never transferred the subject shares thereby voiding the agreement between himself and Blue River, and retained Beneficial Ownership of the subject shares as evidenced by Mr. Cahills filing of a Beneficial Ownership Report on Form SC-13G on October 4, 2016.

In addition, Mr. Loiselle induced the Company to make a non-refundable payment of $50,000 in connection with his attempt to purchase a replacement cannabis farm and property, the “Stroud Farm”, which never closed and the $50,000 was written off in the year ended September 30, 2015. After giving Mr. Loiselle several extensions of time to perform on his proposed multi-part transaction, we severed relations with Mr. Loiselle in August 2016. As of September 30, 2016, $53,200 was due to Mr. Loiselle and included as Due to Related Party which is in dispute as described below.

Effective January 1, 2016, in recognition of the absence of employment and consulting agreements and the time commitment to the Company on the part Mr. Sean Clarke, the Company's Chief Financial Officer and sole director, and Brian Loiselle, a former member of the Board of Directors, respectively, the Board of Directors on March 31, 2016 approved monthly compensation in the amount of $10,000 to be paid to Mr. Sean Clarke and Brian Loiselle, to be deferred and accrued and only paid following the Closing of the purchase of the Stroud Farm and at such time as the Company has the necessary financial resources. Effective April 1, 2016, such monthly compensation was revised from $10,000 to $5,000, but the Board of Directors reaffirmed that such payment was to be deferred and accrued, and only paid following the Closing of the purchase of the Stroud Farm and at such time as the Company has the necessary financial resources At September 30, 2016, $53,200 has been accrued and is included in accrued expenses. However, the Company severed the relationship with Mr. Loiselle in August 2016 following the failure of close on the purchase the Stroud Farm and, therefore, the Company is disputing the obligation for payment of these accrued consulting fees.

As of June 30, 2017, the Company had three notes payable issued and outstanding with an entity controlled by Mr. Loiselle with a total principle of $74,500 and accrued interest of $10,611. The three notes, in the amount of $47,000, $15,000 and $12,500, were issued on January 14, 2016. February 10, 2016 and February 29, 2016, respectively. The three notes are due on the earlier of one week after the closing of a certain contemplated farm property acquisition or July 31, 2016, and have an interest rate of 10%. The related party for all three notes is EastWest Secured Developments, LLC; an Arizona Limited Liability Company (“EWSD”) of which Mr. Brian Loiselle, a director of and consultant to the Company, is a managing member. On June 30, 2016, the Company entered into Amendment #1 to these three notes to extend the due date of the three notes is October 31, 2016. As of March 31, 2017, the Company owed EWSD $53,200 of accrued and unpaid services which is reported as accrued expenses. Mr. Loiselle’s services terminated in July 2016 ending his affiliation with the Company and therefore neither he nor EWSD were considered a Related Party at June 30, 2017.

On April 22, 2015, the Company and Newport Board Group entered into an Advisory Services Agreement whereby Mr. Donahue would serve as the Company's Chief Operating Officer. The term of the initial agreement was for 60 days. The Board of Directors approved by resolution to extend the Agreement with the Newport Board Group on June 9, 2015, but no definitive agreement was signed and no set termination date was set; however, the resolutions provided for either party to terminate the extension at any time with 30 days' written notice. The monthly fee under the original agreement was $4,000 to be paid monthly for Mr. Donahue to serve as the Chief Operations Officer and was negotiated and connected to the original proposed transfer of the Tamarack Project to the Company by Mr. Loiselle.

During the nine months ended June 30, 2017, the Company paid $-0- to Newport Board Group, with an additional $59,633 of monthly fees deferred and included as accrued expenses at June 30, 2017. During the nine months ended June 30, 2016, the Company paid $-0- to Newport Board Group, with an additional $21,500 of monthly fees deferred and included as Due to Related Party at September 30, 2016. The Company terminated the extension in September 2016, effective October 15, 2016. The Company has continued to defer and accrue all additional fees through October 15, 2016. On August 7, 2015, the Company granted 100,000 shares of restricted common stock to Mr. John Donahue, the Company’s former Chief Operations Officer. As of June 30, 2017, the Company owed Newport Board Group $59,633 of accrued and unpaid services which is reported as accrued expenses, but Mr. Donahue’s services terminated in September 2016 ending his affiliation with the Company and therefore was not considered a Related Party at June 30, 2017.

As of June 30, 2017, the Company owed Mr. Clarke and Mr. Luke $52,500 and $-0-, respectively, of accrued and unpaid compensation. These amounts are included as Due to Related Party at June 30, 2017.

On September 16 2016 we asked Mr. John Hollister to join our management team as our Chief Executive Officer. Due to the financial constraints of the Company Mr. Hollister did not accept the offer. However, in October 2016 Mr. Hollister agreed to serve as a consultant, then as our interim our Chief Executive Officer, pending the completion of the sale the Purchase Notes. A definitive agreement was agreed upon and executed between the Company and Mr. Hollister on May 15, 2017, and contained the agreement for the Company to grant Mr. Hollister Options to purchase up to 1,500,000 shares of the Company’s Common Stock, vesting upon certain events. The Option Agreement has not yet been executed. A copy of the Employment Agreement with Mr. Hollister was filed on Form 8-K on May 17, 2017-

On November 15, 2016, the Board approved the grant of 1,500,000 common stock purchase options to Fred Luke, the Company’s President, at an exercise price of not less than One Hundred Ten percent (110%) of the ten (10) day lowest trailing average closing bid price of such shares on the date of execution of the Option Agreement (the “Option Agreement”) which was Fourteen cents ($0.14) per share and subject to certain adjustments on November 15, 2016. The options are valued at $186,904 and recorded as expense during the nine months ended June 30, 2017.

On May 15,2017 the Company entered into an Employment Agreement with Mr. John Hollister to serve as the CEO of the Company. In addition to his role as CEO, Mr. Hollister will serve as the President of NuLife BioMed and be in charge of all aspects of the Animal Trials, review of the data submitted to the Food and Drug Association (“FDA”), and the Clinical Trials, subject to the approval by the FDA of our Animal Trial results and conclusions.

In March, 2017, we retained Dr. Youxue Wang MD, PhD to serve as the Director of Research for NuLife Biomed Inc. Doctor Wang has been working for several months for us in the development of the pre-clinical pig study protocol, which was recently up-loaded to the review board at Florida International University (“FIU”) for approval. We currently finalized the terms of an Advisory Agreement with South Broward Hospital District d/b/a Memorial Healthcare System (“Memorial”), the current employer of Doctors Arenas and Hranjec, both transplant surgeons, to perform the actual organ removal and replacement during the Animal Trials. Doctors Wang, Arenas, and Hranjec have recently received medical clearance from FIU to conduct the surgeries. 

NOTE 12 – LEASE AGREEMENT

During May 2017, the executed a 5-year lease for a laboratory at NOVA Southeastern University at which the Company will be utilizing the NuLife Technique to process organs, as well as conducting bench research to better characterize and assess the impact of the technique. The lease calls for monthly payments of $2,582, which includes the initial base rent of $1,925 along with applicable taxes and shared operating expenses. The lease required a security deposit in the amount of $4,871 and requires a 4% increase in base rent annually. Rent expense for the nine months ended June 30, 2017 and 2016 was $2,742 and $-0-, respectively.

Future minimum lease payments are as follows for the years ending:

NOTE 13 - CONTINGENCY

As of June 30, 2017, as described in Note 11, the Company has accrued $53,200 in Due to Related party - Mr. Loiselle, note payable of $74,500 and accrued interest of $10,611 due EWSD. At June 30,2017 the Company owed EWSD the aggregated amount of $138,311, which is past due and has been in default since October 31, 2016. On top of the amount accrued by the Company, Mr. Loiselle had demanded for a penalty fee of $101,235, which is approximately 18% monthly default rate on the amount past due. We believe the penalty fee imposed is invalid and are currently in dispute with Mr. Loiselle.

NOTE 14 - SUBSEQUENT EVENTS

Aa result of third-party delays related to the Company (a) gaining approval for its “Protocal” for the Animal Trials, (b) finalizing the terms of the Lease for its Lab facilities at NOVA Southeastern University, (c) finalizing the terms of the agreement with South Broward Hospital District d/b/a Memorial Healthcare System (“Memorial”), the current employer of the two transplant surgeons who the Company intends to retain to carry out the remaining Animal Trials, and (d) other issues out of the control of the Company, the original estimates as to the timelines for the Animal Trials, revenue projections , and other representations by GandTex in the original GandTex Asset Acquisition Agreement, made it impact able for the Company to rely on the original projected benchmarks as to the completion date of the Animal Trials, obtaining approval from the requisite regulatory bodies, or the revenue projections as originally represented by GandTex at Closing. As a result, GandTex agreed to amend certain aspects of the Asset Acquisition Agreement, and agreed to provide us with a Lockup Agreement and an Indemnity Agreement. In consideration for these added agreements (the “Amendment Documents”), we agreed to amend the conversion formula of the Series B Convertible Preferred Stock issued to GandTex and take the GandTex Assets subject to a Royalty Agreement. The Amendment Documents will be included as Exhibits in an Form 8-K filed by the Company concurrently with the countersignature of the documents and the filing of the Amended and Restated Certificate of Designation of the Series B Convertible Preferred Stock.

We finally resolved the majority of the causes of delays and resumed Animal Trials during the first week in August 2017.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended September 30, 2016 and presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report. We strongly encourage investors to carefully read the factors described elsewhere in this report in the section entitled "Risk Factors" for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

Company Overview

As a result of the Company not receiving the working capital promised by certain third parties, development of the two business segments described below has been slow, and generated less than expected revenue since its inception on October 15, 2013. However, in August 2016 we elected to modify our initial business plan to suspend pursuing our online marketing business and the subsequent cannabis activities in favor of the acquisition and development of the patents and other rights owned by GandTex. As part of this new direction into the medical and healthcare industry, subsequent to the date of this report – See Subsequent Events – we acquired the GandTex License and Patent rights related to a proprietary technique for organ transplants, as discussed below.

Online marketplace and community

The Company's initially-defined business strategy is to acquire and/or develop and market software and services that will significantly enhance the performance and functionality of the Internet services used by individuals and by small to medium sized businesses. The Company's products and services, essentially an online marketplace and community, will use proprietary technology that will enable users, both service requestors and service providers, to work collaboratively to obtain substantial improvements in performance, reliability and usability. Service requestors (people or companies requesting a service) name their own price, date and time for any service. A service requestor can also select qualifying criteria such as number of reviews or review rankings of a service provider. The first service provider who can provide that service, on that date, at that time and meets the service ranking requirements will get the project

The Company's online marketplace and online community was designed to match up daily job or service requests and fill market demand for service requests throughout a particular local community, county or city and will connect local resources with local needs. A goal is to create jobs and provide market value for basic services by aggregating these low-cost services within each local market. This will maximize value for either the person or company requesting the service and for the person or company providing the service. In other words, service providers will get the best possible price for their service and the party requesting the service will pay the lowest possible price. Since the acquisition of the organ transplant technology, we have narrowed the focus of our platform to the healthcare industry and intend to include a section in our platform dedicated to providing educational information as to the various options available to those in need of transplants.

Operations, Consulting and Advisory Services in the Organ Transplant segment of the Healthcare Industry

With the acquisition of the GandTex technology the Company intends to move into the Healthcare industry. We intend to modify our online marketplace and community to focus on healthcare professionals and those in need of individual at-home and post-operative care, together with Hospitals and physicians who need part time or additional personnel due to expansion. With this as one form of entry into the Healthcare space we will ultimately transform the company into a biomedical company, initially focused on advancing human organ transplant and tissue repair technology, and medical research which could potentially eliminate the need for organ or tissue match and anti-rejection drugs.

The GandTex technology was developed through 15 years of committed research. The results of the most recent Animal Trials conducted outside the U.S. indicate that this technology may produce dramatic breakthroughs in hematopoietic research and transplant techniques. The goal of the research was to address the issues of organ compatibility and the need for anti-rejection drugs in the donor.

The procedure itself, in its simplified format, follows six (6) steps: First the organ is removed, or the donor organ is examined. Then the Organ is put through a decellularization processes to isolate the extracellular matrix (ECM) of a tissue from its inhabiting cells, leaving an ECM scaffold of the original tissue. Specific cells are then harvested from bone marrow of the intended recipient. Following the bone marrow harvest the Particular hematopoietic cells are used in the process as well as a novel procedure involving temperature and pressure factors (under vacuum). As a result of the vacuum process, specific cells are released from platelets without complete platelet degranulation. The negative pressure created by the vacuum pulls the growth factors out of the platelets and into the plasma. Once processed, the cells are reintroduced into the recipient influencing further growth of an already implanted and recellularized organ. In addition to eliminating the need for tissue matching between donor and recipient, the NuLife Technique may have the potential to limit or eliminate the need for anti-rejection drugs.

Beginning over 3 years ago Pilot Studies were conducted: initially the 1^st surgery was conducted in Ecuador, with 3 additional animal surgeries, one in the United States. Each study involved 2-3 animals per surgery, and all but one – unknown to the study group and the surgeons involved - had a virus prior to the transplant surgery, and did not pass the post-operative examination.

In the U.S. ~31,000 organ transplants occur every year but there are ~123,000 people on the candidate waiting list for a transplant. 22 people die each day in America waiting for transplants that can’t take place because of the shortage of donated organs, due to failed tissue matches. Additionally, the average costs of the immunosuppressive drugs is approximately $17,000 per year (Medicare only covers the first three years): and these drugs can also cause increased infection and cancer rates - ultimately destroying the transplanted organ and other organs. Further, even with the immunosuppression medication, an individual recipient of an organ with the correct tissue match can still suffer rejection.

Kidney transplants will be the Company’s initial target market as most common transplants – about 18,000 in 2015 – are Kidney transplants; most Kidney transplants patients spend years on dialysis while waiting; many Kidney transplants never receive the actual transplant due to the failure in finding the proper tissue match; and, all current Kidney transplant patients require anti-rejection drugs.

It is our intention, and hope, that the GandTex technology will enable us to change the face of organ transplantation as we know it today. This expectation, which has only been conducted in animal trials outside the United States to date, resulted in the recipient animals not having to have tissue match and eliminated the need for anti-rejection drugs post-surgery.

What this means to the individual in need of an organ transplant, a Kidney for example, is that the individual will no longer have to wait, often for years, for a matched organ or have to endure the expensive anti-rejection drugs following the replacement. And, for Kidney transplants, if our human trials are successful and he FDA approves the procedure, the recipients will no longer have to rely dialysis while waiting for a match, or have a need for dialysis post-transplant. If successful during pre-clinical and clinical trials, and approved for public use we intend to brand the technology as the “NuLife Process”.

Commercialization of the NuLife Process requires successful completion of a series of pre-clinical and clinical trials, as well as the demonstration of the reproducibility of the process. The steps include but are not limited to pre-clinical studies, defining the Chemistry, Manufacturing and Controls (CMC), documentation and necessary support about the process, and an escalating series of studies (Phase I, II and III) helping define the safety and efficacy of this process. These data will be evaluated by the FDA and/or other similar health authority. If authorization for marketing is granted, the Company plans to work with the existing Organ Procurement Organization (OPO) and major transplant centers to form a network of regional facilities capable of executing the process. In addition, Phase IV studies are commonly required for ongoing evaluations of safety and efficacy. In parallel with the development, health economics analyses will be conducted, in order to support the ultimate need for reimbursement in the markets it is made available.

The Company will routinely assess options for developing and commercializing the NuLife Process, which could include development or marketing partnerships, licensing of alternate potential uses, or collaborations with existing companies in the transplant field. Further, the Company intends to vigorously pursue non-dilutive grants to aid in the development process.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions. We have identified in Note 2 - "Summary of Accounting Policies" to the Financial Statements contained in this Quarterly Report certain critical accounting policies that affect the more significant judgments and estimates used in the preparation of the financial statements.

Going Concern

Our auditor has issued a "going concern" qualification as part of its opinion in the Audit Report for the fiscal year ended September 30, 2016, and our financial statements as of and for the year then ended include a "going concern" footnote (See Footnote 3 – Going Concern) disclosing that our ability to continue as a going concern is contingent on us to be able to raise working capital to generate revenue by completing and launching our online marketplace and community portal and implementing the new business strategy of developing the NuLife Process.

Results of Operation

Three Months Ended June 30, 2017 and 2016

Revenue

Revenue was $0 for the three months ended June 30, 2017 and 2016.

Cost of Sales

Cost of sales was $0 for the three months ended June 30, 2017 and 2016.

General and Administrative Expenses

General and administrative expenses and related party compensation were $199,964 and $51,228 for the three months ended June 30, 2017 and 2016, respectively. Expenses for the three months ended June 30, 2017 consisted primarily $171,166 for professional fees and related party compensation. Expenses for the three months ended June 30, 2016 consisted primarily of $50,717 for professional fees.

Interest Expense

Interest expense was $84,989 and $2,699 for the three months ended June 30, 2017 and 2016, respectively, which related to interest accrued on borrowings, which were greater in the fiscal period ended June 30, 2017 as a result of newly issued debt in during October, November and December 2016 and June 2017. Included in interest expense for the three months ended June 30, 2017, was also $66,623 of non-cash interest expense related to the amortization of the debt discount.

Loss on derivative

The Company recorded a net loss on derivative in the amount of $42,903 in the three months ended June 30, 2017. There was no derivative loss during the three months ended June 30, 2016.

Interest Income

Interest income was $2 and $-0- for the three months ended June 30, 2017 and 2016, respectively, which related to interest from bank accounts.

Nine Months Ended June 30, 2017 and 2016

Revenue

Revenue was $0 for the nine months ended June 30, 2017 and 2016.

Cost of Sales

Cost of sales was $0 for the nine months ended June 30, 2017 and 2016.

General and Administrative Expenses

General and administrative expenses and related party compensation were $3,433,027 and $228,637 for the nine months ended June 30, 2017 and 2016, respectively. Expenses for the nine months ended June 30, 2017 consisted primarily of $2,500,000 of non-cash stock based compensation of Preferred B shares regarding the GrandTex acquisition, $836,773 for professional fees and related party compensation. Expenses for the nine months ended June 30, 2016 consisted primarily of $216,068 for professional fees which included $43,098 of non-cash stock-based compensation expense and $60,000 for investor relations expense.

Interest Expense

Interest expense was $204,583 and $6,991 for the nine months ended June 30, 2017 and 2016, respectively, which related to interest accrued on borrowings, which were greater in the fiscal period ended June 30, 2017 as a result of newly issued debt in during October, November and December 2016 and June 2017. Included in interest expense for the nine months ended June 30, 2017, was also $159,173 of non-cash interest expense related to the amortization of the debt discount.

Loss on derivative

The Company recorded a net loss on derivative in the amount of $39,579 in the nine months ended June 30, 2017. There was no derivative loss during the nine months ended June 30, 2016.

Interest Income

Interest income was $667 and $-0- for the nine months ended June 30, 2017 and 2016, respectively, which related to interest due on notes receivable and interest earned in bank accounts, which were greater in the fiscal period ended June 30, 2017 as a result of the two notes receivable issued.

Liquidity and Capital Resources

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the nine months ended June 30, 2017 and 2016:

Since acquiring the business plan and website, most of our resources and work have been devoted to our online marketplace and community portal, that is, planning our business, web site development, mobile application development, and implementing systems and controls. However, this has been suspended for the time being. When those procedures are completed, which we believe will occur over several month period following the receipt of adequate financing, we will primarily work on our intended service offerings as well further internal development of software for which we have developed our initial framework of and completed some coding. We believe that the work needed to initiate and complete the software development for our online marketplace and community portal, attract developers, and initiate our marketing plans, including the development of a saleable product suite, may be in excess of $100,000 if outside contractors and experts are used. If we are able to secure funding to outsource these procedures, of which there are no assurances, we will then commence the launch of our intended services and software products to the public. If we are able to use internal resources only (primarily consisting of the services of our president and chief financial officer), the process will take much longer and our initial launch may be limited to a much smaller target market. If we are unable to raise any funds from third party sources, the development costs would have to be funded by (i) Mr. Brian Loiselle, to whom we issued three notes for funds totaling $74,500, or (ii) our president and chief financial officer to the extent that they are capable and willing to provide such funds. While we have previously engaged the services of an established software development firm which we used on an as "needed basis", their involvement is limited by our ability to raise financing. Our goal would be to have software products available, services available, multiple sales channels and a comprehensive corporate website up and running within one year after receipt of adequate financing, but there is no way of estimating what the likelihood of achieving that goal would be.

In October 2013, following the Company's incorporation on October 15, 2013, the Company issued 21,750,000 shares of our common stock to its founder, Derek Cahill, as consideration for the purchase of a business plan along with a website. The acquisition of the business plan and website was valued at $72,500. To date, we have sold 5,400,000 shares of our common stock at $0.003 per share for $18,000 through a private placement and we sold 1,735,800 shares of our common stock at $0.042 per share for total gross proceeds of $72,325 through a public placement.

If a market for our shares ever develops, of which there can be no assurances, we may continue to use restricted shares of our common stock or stock options to compensate employees/consultants and independent contractors wherever possible. We cannot predict the likelihood or source of raising capital or funds that may be needed to complete the development of our business plan and its stages as outlined above.

As a public company, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year over the next few years and may be significantly higher if our business volume and transactional activity increases, and we would not be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for an opinion on our system on internal controls by our independent audit firm unless and until we exceed $75 million in market capitalization. These obligations may reduce our ability and resources to expand our business plan and activities. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling outstanding obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of these efforts. We will also reduce compensation levels paid to management (if we attract or retain outside personnel to perform this function) if there is insufficient cash generated from operations to satisfy these costs.

We are presently seeking equity and debt financing for both segments of our business. However, these actions, if successful, could result in dilution of the ownership interests of existing shareholders and further dilute common stock book value, and such dilution may be material. The Company may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due them.

As of June 30, 2017, we owed $544,075 in accounts payable, accrued expenses and to related parties, a substantial portion of which are past due. The only formal agreements, written or oral, with any vendors or other providers for payment of services or expenses are with respect to (i) contracted investor relation services, (ii) contracted services of the Company's former chief operating officer and (iii) compensation to the Company's president and chief financial officer and a consultant, one of whom is a director. There are no other significant liabilities at June 30, 2017.

As of June 30, 2017, the Company had one note payable issued and outstanding with a total principle of $25,000 and accrued interest of $14,400. The note was due on June 30, 2015, and has an interest rate of 12%. The note remains unpaid and is in default as of June 30, 2017.

As of June 30, 2017, the Company had three notes payable issued and outstanding with a former related party with a total principle of $74,500 and accrued interest of $10,611. The three notes are due on the earlier of one week after the closing of a certain contemplated farm property acquisition or July 31, 2016, and have an interest rate of 10%. The related party for all three notes is East West Secured Developments, LLC, an Arizona Limited Liability Company (“EWSD”) of which Mr. Brian Loiselle is a managing member. On June 30, 2016, the Company entered into Amendment #1 to these three notes to extend the due date to the earlier of one week after the closing of the contemplated farm property acquisition or October 31, 2016. The acquisition of the various farm properties offered by Mr. Loiselle never occurred, and on August 26, 2016 Mr. Loiselle was notified that his relationship with the Company was terminated. Following that notice EWSD made a demand in October 2016 for repayment of the subject loans and subsequently declared the notes in default. The default interest demand of 18% by Mr. Loiselle is being disputed by the Company due to the lack of provision for default interest in the notes.

As of June 30, 2017, the Company had twenty convertible notes payable issued and outstanding with a total principle of $863,025 and accrued interest of $43,284. The notes are due December 31, 2017 through December 22, 2019 and have interest rates of 8% to 12%. The notes remain unpaid as of June 30, 2017.

Letters of Intent

On April 24, 2015, the Company signed a non-binding Letter of Intent ("LOI") with a licensed cultivator to provide turnkey operations and services to a 150,000-square foot licensed cultivation facility located in Pueblo, Colorado (the "Tamarack Project"). In connection therewith, the first phase of construction was expected to begin in June 2015, with cultivation expected begin in early July; however, none of these events have occurred as of the filing of this Annual Report on Form 10-K. Further progress with respect to this LOI was dependent on, among other matters, the Company obtaining the necessary financing to proceed. The promised financing did not materialize and, consequently, we officially terminate all Letters of Intent related to the Tamarack Project and a related proposed business venture with Generex Biotechnology Corporation.

On September 13, 2016, we entered into a Letter of Intent with GandTex, the owner of patents covering new techniques for organ transplants and tissue repair. We entered into a definitive agreement with GandTex on October 3, 2016 and received assignments related to two (2) of the three (3) patents on November 30, 2016

CRITICAL ACCOUNTING PRONOUNCEMENTS

Our financial statements and related public financial information are based on the application of generally accepted accounting principles in the United States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 2 of our financial statements included in our September 30, 2016 Form 10-K. While all of these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our results of operations, financial position or liquidity for the periods presented in this report. 

Revenue Recognition

We recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

RECENT ACCOUNTING PRONOUNCEMENTS

We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to the Company. We have determined that none had a material impact on our financial position, results of operations, or cash flows for the periods presented in this report.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (“SPE”s).

Item 3. Quantitative and Qualitative Disclosures about Market Risks

Not applicable because we are a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s President (the “President”) and principal Financial Officer, of the effectiveness of the Company’s 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, the Company’s President and principal financial officer concluded that the Company’s disclosure controls and procedures were not effective 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 SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s President and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses (such as the absence of an audit committee and absence of qualified independent directors) in its internal control over financial reporting.

Changes in Internal Controls Over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company owes on promissory notes that have an aggregate principal amount of $74,500 and are simple promissory notes with 10% annual interest to EWSD. The notes are in default, but there is not a default interest provided in the notes. Therefore, the notes continue to accrue interest at 10% per annum until paid or collected. Mr. Loiselle is demanding 18% per month interest for the past four months to the present. The Company has disputed this interest that is not detailed on the notes. Furthermore, Mr. Loiselle is claiming unpaid compensation of $10,000 per month for services without an agreement with the Company. These charges are also being disputed by the Company. These disputes represent a material risk, and may be litigated in the future other than the aforementioned, the Company currently has no other litigation pending, threatened or contemplated, or unsatisfied judgments.

From time to time, we are also a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with contractors and suppliers. While the outcome of these legal proceedings cannot at this time be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

Not applicable because we are a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In October 2013, following the Company's incorporation on October 15, 2013, the Company issued 7,250,00 shares of our common, now 21,750,000 shares following the 3:1 forward stock split, stock to its founder, Derek Cahill, as consideration for the purchase of a business plan along with a website. The acquisition of the business plan and website was valued at $72,500.

On October 29, 2013, the Company completed a private placement whereby it issued 5,400,000 shares of common stock to accredited investors at $0.003 per share for total gross proceeds of $18,000.

On April 16, 2014, the Company completed a public offering whereby it issued 1,735,800 shares of common stock at $0.042 per share for total gross proceeds of $72,325. The Company's Registration Statement on Form S-1 was declared effective March 6, 2014.

On August 7, 2015, the Company granted 100,000 shares of restricted common stock to its chief operating officer. On the date of the grant, the shares were valued at $.61 per share which was the unadjusted closing share price on that date for a fair value of $61,000. The shares vest over a six-month period, with the vested shares recorded on the accompanying balance sheet under equity - shares to be issued. The subject 100,000 shares of common stock will be issued in a subsequent period.

The Company amended and restated that certain outstanding promissory note of the Company, dated July 3, 2015, and in the principal amount of $50,025 (the "Default Note"). The replacement convertible promissory note (the “Exchange Note”) matures on December 31, 2017 (the “Maturity Date”), and bears interest at the rate of 8% per annum, and the principal and interest due thereunder may be prepaid at any time. The Exchange Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11, which amount represents the average trailing average high closing Ask price of the Company’s common stock as of the date of issuance of the Exchange Note.

On September 2, 2016, the Company entered into those certain Note Purchase Agreements (collectively, the “Purchase Agreements”) in connection with the issuance of certain convertible promissory notes (collectively, the “Purchase Notes”) in the aggregate principal amount of $50,000. All of the Purchase Notes mature thirty-six months from the date of issuance (the “Maturity Date”), and bear interest at the rate of 10% per annum. Each of the Purchase Notes may be prepaid until the Maturity Date at 110% of the principal and interest amount outstanding. The Purchase Notes, together with all interest as accrued, are each convertible into shares of the Company’s common stock at 50% of the trailing average highest closing bid price of the Company’s common stock on the date of conversion. The Purchase Agreements and the Purchase Notes contain representations, warranties, conditions, restrictions, and covenants of the Company that are customary in such transactions with smaller companies.

Also on September 2, 2016, the Company amended and restated the Default Note. The Exchange Note matures on December 31, 2017, and bears interest at the rate of 8% per annum, and the principal and interest due thereunder may be prepaid at any time. The Exchange Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at $0.11, which amount represents the average trailing average high closing Ask price of the Company’s common stock as of the date of issuance of the Exchange Note.

The Purchase Notes may be accelerated by the holders thereof in the event of default. In addition, the amounts due and payable under the Purchase Notes (and, consequently, the number of shares of common stock convertible thereunto) may be increased to 150% of the principal and interest amounts of the Purchase Notes. The Purchase Notes are a direct financial obligation of the Company and are considered a current liability of the Company for accounting purposes.

We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above private placement issuances. We believed that Section 4(2) was available because:

• None of these issuances involved underwriters, underwriting discounts or commissions

• We placed restrictive legends on all certificates issued

• No sales were made by general solicitation or advertising

• Sales were made only to accredited investors

In connection with the above transactions, we provided the following to all investors:

• Access to all our books and records

• Access to all material contracts and documents relating to our operation

• The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.

Pursuant to the terms of the Asset Purchase Agreement with GandTex, on December 30, 2016 the Board approved the issuance of 10,000,000 shares of the Company’s Series B Convertible Preferred Stock to GandTex. The shares were released to GandTex concurrent with the closing on January 29, 2017.

On January 20 , 2017, the Company entered into a Debt Conversion Agreement (the “Conversion Agreement”) in respect of $13,750 of the accruing monthly fees due to MZHCI, LLC(“MZ”) by the Company pursuant to the Investor Relations Consulting Agreement between MZ and the Company dated April 1, 2015 (the “Debt”) together with a release by MZ in favor of the Company for any claims for reimbursement of any and all due diligence expenses, investigative costs or any other type of fees or costs incurred by MZ related to the recent purchase by the Company of the GandTex Assets. Pursuant to the terms of the Conversion Agreement, the Company issued to MZ an aggregate of 55,000 shares of restricted Series A Convertible Preferred Stock.

On February 28, 2017 the Company entered into an Advisory Agreement with Global Business Strategies Inc.(“Global“), a Company owned by the Company’s President Fred G. Luke (“the “Global Agreement”), pursuant to which the Company retained Global to provide management advice and corporate development strategies, and to make Mr. Luke available to serve as the Company’s President, for an aggregate of $8,500 per month and, subject to the condition that Global effected filing of the Company’s its Quarterly Report for the period ending December 31, 2016 on Form 10-Q on a timely basis, Global received an aggregate of 55,000 shares of restricted Series A Convertible Preferred Stock.

On June 26, 2017, the Company entered into a Securities Purchase Agreement (“June SPA”) in connection with the issuance of a convertible promissory note (“June Note”) in the aggregate principal amount of $78,000. The June Note matures on June 30, 2018 (the “Maturity Date”), and bears interest at the rate of 12% per annum. After 180 days, the June Note may not be prepaid. Any amount of principal or interest on the June Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date. The June Note, together with all interest as accrued, is convertible into shares of the Company’s common stock at a 35% discount to

the lowest trading price in the 10-day period ending on the latest complete Trading Day prior to the Conversion Date. The June SPA and the June Note contain representations, warranties, conditions, restrictions, and covenants of the Company that are customary in such transactions with smaller companies, and the SPA and June Note were attached as Exhibits to our Form 8-K filed on July 27, 2017.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

(1) Incorporated herein by reference to the Company's Form 10-Q filed with the Securities and Exchange Commission on February 21, 2017.

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 thereunto duly authorized.