Zhong Ya International Ltd - Annual Report: 2016 (Form 10-K)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
Commission file number: 1-34714
Western Lucrative Enterprises, Inc.
(Exact Name of Registrant as Specified in its Charter)
Iowa 26-3045445
______________________ _______________
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
64 North Pecos, Suite 900
Henderson, NV 89012
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (702) 472-5066
Securities registered pursuant to Section 12(b) of the Act: None
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X} No [ ]
Indicate by check 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 (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one)
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
For the year ended December 31, 2016, the issuer had no revenues.
As of June 30, 2016, there was no active trading market for the issuer's common stock, $.001 per value, and therefore the value of shares held by non-affilaites cannot be ascertained.
The number of shares outstanding of the issuer's common stock, $.001 par value, as of December 31, 2016 was 8,505,000 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Western Lucrative Enterprises, Inc.
Form 10-K Annual Report
Table of Contents
PART I
Item 1. Business 5
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 9
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Removed and Reserved 9
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 9
Securities.
Item 6. Selected Financial Data 9
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 9
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 11
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 11
Item 9A. Controls and Procedures 11
Item 9B. Other Information 11
PART III
Item 10. Directors, Executive Officers, and Corporate Governance 12
Item 11. Executive Compensation 12
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Western Lucrative Enterprises, Inc.
Form 10-K Annual Report
Table of Contents
(Continued)
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 12
Item 13. Certain Relationships and Related Transactions, and Director Independence 12
Item 14. Principal Accounting Fees and Services. 12
PART IV
Item 15. Exhibits and Financial Statement Schedules 15
FORWARD LOOKING STATEMENT INFORMATION
Certain statements made in this Annual Report on Form 10-K are 'forward-looking statements "regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. in light of the significant uncertainties inherent in the forward looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth herein under the headings "Business, " "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors ". We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The terms "we ", "our ", "us ", or any derivative thereof, as used herein refer to Western Lucrative Enterprises, Inc.
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PART 1
ITEM 1.BUSINESS.
CORPORATE BACKGROUND
Western Lucrative Enterprises, Inc. was incorporated pursuant to the laws of the State of Iowa on July 14, 2008.
Our Business
We are a development stage company whose business plan is to develop an online landscape design construction and consulting business to service do-it-yourself individuals and companies who want to beautify their home or business without the cost and disruption of designers/architects/construction workers.
Our current business model is built around online delivery using the Internet. The World Wide Web has become an economical distribution channel. We plan to leverage the technological innovations of the Internet to offer our services to clients, to communicate directly with them, to provide consulting and design services, to advertise our designs books, to sell designs, and to perform all necessary financial transactions electronically. We plan to use the online services of Pay Pal for customer orders.
Our plan is to outsource the development of the website and to launch our marketing plan. Initially, we plan to commence marketing of our services using Google and Yahoo website CPC programs and through viral marketing, such as blogs, postings on online communities such as Yahoo!(R) Groups and amateur websites such as YouTube.com, and other methods of getting Internet users to refer others to our website by e-mail or word of mouth. We also intend to use search engine optimization, the marketing of our website via search engines by purchasing sponsored placement in search result, and to enter into affiliate marketing relationships with website providers to increase our access to Internet consumers. In our management's opinion there will be a need for design consulting in the do-it-yourself sector of the market once the current housing market returns to more normal levels of activity.
Due to financial limitations, our operations to date have been limited to conceptual planning. We are now considering alternative business directions that can maximize shareholder value such as acquisitions. To date the Company and its officers and directors have not had any contract or discussions with any target acquisition or with the owners or representatives of any target acquisitions
Our Competition
See the Risk Factors section of this prospectus for a discussion on the competition we currently face or may face in the future.
Proprietary Rights
We currently have no proprietary rights.
Our Research and Development
We are not currently conducting any research and development activities.
Government Regulation
See the Risk Factors section of this prospectus for a discussion relevant government regulation and the legal uncertainties related to our business activities.
Employees
As of December 31, 2016 we have no employees other than our sole officer and director and one additional director. We anticipate that we will not hire any employees in the next twelve months, unless we generate significant revenues, raise capital, or make a complete change of course from our current business plan.
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Item 1A. Risk Factors
Our auditor has issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months. As such we may have to cease all operations and our shares could become wholly worthless.
We lack an operating history and have losses that we expect to continue into the future. There is no assurance that future operations will result in profits .If we cannot generate sufficient revenues or raise capital, we could cease operations and our shares could become wholly worthless.
We were incorporated on July 14, 2008 and we have not started our proposed business operations or realized any revenues.
We have no operating history upon which an evaluation of our future success or failure can be made.
Our ability to achieve profits is dependent on
• our ability to raise capital and develop and continually update a functional, user-friendly website;
• our ability to procure and maintain on commercially reasonable terms relationships with third parties to develop and
maintain
• our website, network infrastructure, and transaction processing systems;
• our ability to identify and pursue mediums through which we will be able to market our products;
• our ability to attract customers to our website;
• our ability to generate revenues through sales on our website; and
• our ability to complete an alternative plan such as an acquisition
To date we do not have any customers. We cannot guarantee that we will ever have any customers. Even if we obtain customers, there is no guarantee that we will generate a profit. If we cannot generate a profit and cannot raise additional capital, we may have to suspend or cease operations.
The landscape design industry is highly competitive. Many competitors have longer operating histories, greater brand recognition, broader product lines and greater financial resources and advertising budgets than we do. Many of our competitors offer similar products or alternatives to our products. There can be no assurance that we will be able to compete effectively in this marketplace.
We have not developed our website, network infrastructure, or transaction processing systems, and if we fail to raise sufficient capital, we may fail to complete our website or become fully operational. We are contemplating other possible business directions including acquisitions. There can be no assurance that either our original business plan or a possible acquisition will take place. If we are unable to accomplish our plan or an alternative such as an acquisition, our shares could become wholly worthless.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable since the Company is a smaller reporting company.
ITEM 2. PROPERTIES
The Company does not own any property at the present time and has no agreements to acquire any property. Our executive offices are located at 78625 Avenida Ultimo, La Quinta, CA 92253. This address is the personal residence of our Sole Officer who makes no charge for providing office space to The Company. We believe that this space is adequate for our needs at this time, and we believe that we will be able to locate additional space in the future, if needed, on commercially reasonable terms.
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ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. MINING SAFETY DISCLOSURES
PART II
ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Information. Our Common Stock has been approved to trade on the OTC Bulletin Board. To date there has been no trading in our shares. No assurance can be given that any market for our Common Stock will ever develop.
(b)Increase in Authorized Share Capital. On November 23, 2010 the Shareholders approved an increase in the Authorized Share Capital from 75,000,000 to 750,000,000. A Definitive Form 14C report was filed with the SEC on December 17, 2010.
(c) Holders. As of, December 31, 2016 there were 42 shareholders of all of our issued and outstanding shares of Common Stock.
ITEM 6. SELECTED FINANCIAL DATA.
As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we are not required to provide the information required by this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Certain statements in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission ("SEC"), press releases, presentations by the Company of its management and oral statements) may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. Actual results may materially differ from any forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures and constantly changing technology and market acceptance of the Company's products and services. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Western Lucrative Enterprises, Inc. was incorporated on July 14, 2008. As of the date of this document, we have generated no revenues and substantial expenses. This resulted in a net loss of $111,127 since inception, which is attributable to general and administrative expenses.
On August 17, 2010, Due to his impending retirement, Mr. Randall Baker resigned his position as the sole officer of the company and moved to a different State, although unable to participate in any day to day duties he remained as a director. Mr. Neville Pearson replaced Mr. Baker as the sole officer, and was also appointed a director. This information was previously reported on a Current Report on Form
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8-K.
Since incorporation, we have financed our operations primarily through minimal initial capitalization.
To date we have not implemented our planned principal operations.
We do not expect to conduct any research and development.
We do not own any plant or equipment.
Our management does not anticipate any significant changes in the number of employees in the next 12 months. Currently, we believe the services provided by our officers and directors are sufficient at this time.
We have not paid for expenses on behalf of any director. Additionally, we believe that this practice will not materially change.
In 2010, we engaged Millennium Group, Inc. to assist the Company with new business strategies and options. Millennium Group is a consulting services firm owned and managed by Jonathan Mork, 51. A pension plan of which his father, Dempsey Mork, is a beneficiary is the owner of Orion Investment, which owns more than 5% of our stock. We issued to Millennium Group a $10,000 convertible note as a non-refundable retainer to Millennium Group. We also agreed to pay $400,000 to Millennium if it is able to introduce a major acquisition to the Company. The note is due and payable to Millennium in two years, and bears a 5% interest rate which shall accrue annually and be payable at maturity. At Millennium’s election, this note and any accrued interest can be retired at any earlier time by conversion into common shares. The note is convertible into 4.0% of the Company’s fully diluted common shares at the time of conversion, with full anti-dilution protection (not adjusted for splits or new issuances). The Company has also agreed that any shares issued under this note will have piggyback registration rights. The Board of Directors of the Company has approved and ratified the terms of this note.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
(ii) RESULTS OF OPERATIONS
The Company has earned no significant revenue or profits to date, and the Company anticipates that it will continue to incur net losses for the foreseeable future. The Company incurred a net loss of $6,430 for the year ended Dec. 31, 2016, as compared to a net loss of $6,432 for 2015. From the date of inception July 14, 2008, to Dec. 31, 2016 the Company lost a total of $117,807. Most labor and services have been compensated with issuances of stock and convertible notes payable.
Liquidity and Capital Resources
The Company has financed its expenses and costs thus far through financing and through the increase in its accounts payable, payments made by others for the company and by the settlement of the payable amounts with shares of common stock of the Company. As of December 31, 2016, the Company had a cash of $0 compared to cash of $0 as of December 31, 2015.
For the most recent fiscal year, 2016, the Company showed a loss in the amount of $6,430 and a loss of $6,432 for 2015. The loss in the current year arose from the accrual of interest on the Notes Payable and the accrued Audit Fee. The earlier years’ losses are a result of organizational expenses, professional fees and expenses associated with setting up a Company structure in order to begin implementing its business plan.
The 2012, 2013, 2014, 2015 and 2016 audit fees are also accrued and payable to the major shareholder and/or The Company’s Auditor (if not yet paid directly by the major shareholder.
During the period from July 14, 2008 (date of inception) through Dec. 31, 2016, the Company has incurred an
accumulated net loss of $117,807 and has not attained profitable operations. The Company is dependent upon obtaining
adequate financing to enable it to pursue its business plan and manage its operations so that they are profitable.
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(iii) The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely affected the Company's ability to obtain certain projects and pursue additional business. There is no assurance that the Company will be able to raise sufficient funding to enhance the Company's financial resources sufficiently to generate volume for the Company, or to engage in any significant research and development, or purchase plant or significant equipment.
Management has been successful in raising sufficient funds to cover the Company's compliance expenses including the cost of auditing and filing required documents for 2016.
The Company as a whole may continue to operate at a loss for an indeterminate period thereafter, depending upon the
performance of its new businesses. In the process of carrying out its business plan, the Company will continue to
identify new financial partners and investors. However, it may determine that it cannot raise sufficient capital to
support its business on acceptable terms, or at all. Accordingly, there can be no assurance that any additional funds will be available on terms acceptable to the Company or at all. As of Dec. 31, 2016, the company was authorized to issue 750,000,000 shares of common stock.
Commitments. We do not have any commitments which are required to be disclosed in tabular form as of Dec. 31, 2016.
Off-Balance Sheet Arrangements
As of Dec. 31, 2016, we have no off-balance sheet arrangements such as guarantees, retained or contingent interest in assets transferred, obligation under a derivative instrument and obligation arising out of or a variable interest in an unconsolidated entity.
Subsequent Events
There were no reportable subsequent events from Dec. 31, 2016 through the date this report is filed.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the index to the Financial Statements below, beginning on page F-l.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable.
ITEM 9A(T).CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our president and chief financial officer, carried out an evaluation of the
effectiveness of our "disclosure controls and procedures" (as defined in the Exchange Act Rules 13a-15(e) and 15d-15
(e) as of the end of the period covered by this report (the "Evaluation Date"). Based upon that evaluation, the president
and chief financial officer concluded that as of the Evaluation Date, our disclosure controls and procedures are not
effective to ensure that information required to be disclosed by us in the reports that we file or submit under the
Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules
and forms and (ii) is accumulated and communicated to our management, including our president and chief financial
officer, as appropriate to allow timely decisions regarding required disclosure since our auditor had to make audit
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adjustments. Our management intends to work more closely with our auditors to correct this ineffectiveness.
(b) Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as
defined in Rule 13a-I5(f)under the Exchange Act). Our management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2016. In making this assessment, our management used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.
\
Our management has concluded that, as of December 31, 2016, our internal control over financial reporting was not effective
based on these criteria. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2016, we determined that the following deficiencies constituted a material weakness, as described below.
1.
Certain entity level controls establishing a “tone at the top” were considered material weaknesses. The Company has no audit committee. There is no policy on fraud and no code of ethics at this time. A whistleblower policy is not necessary given the small size of the organization.
2.
Management override of existing controls is possible given the small size of the organization and lack of personnel.
3.
There is no system in place to review and monitor internal control over financial reporting. The Company maintains an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.
Management is currently evaluating remediation plans for the above control deficiencies.
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. However, as the Company currently has no business operations of any kind, all "controls" would be theoretical at best. There is no chance of a material misstatement when all the Company does is pay audit fees.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth information concerning our officers and directors as of December 31, 2016:
Name Age Positions(s) Period of Service
Neville Pearson 72 President, Chief Executive Officer and Director August 14, 2010 – to date
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Randall Baker 74 Director Inception – to date
Our officers and directors are elected to hold office until the next annual meeting of shareholders and until their respective successors have been elected and qualified, or until prior resignation or removal.
Business Experience
Mr. Baker has forty years of extensive experience in the securities industry. He has been a series 7 licensed broker/trader, working mainly on the trading side of the industry, managing people, computer systems and was the executive vice president for Wm. Mason & Co., a Los Angeles based Investment Counseling firm for twenty three years through 1993. Since that time he has been CEO and managing Director of several start-up companies. He is very much involved in the administration process of mergers and acquisitions, including the filings as well as the marketing for this process.
Mr. Pearson is a Fellow of the Association of Chartered Certified Accountants, and has gained over 40 years of senior level financial management experience at CFO / Controller level with both Public Multi-National and Private Companies on three continents. Mr. Pearson brings extensive experience in the Real Estate Development and Construction fields, as well as having worked in the Automotive, Mining and Food manufacturing sectors. Mr. Pearson also has recent experience in the execution of mergers and acquisitions.
Compensation and Audit Committees
As we only have two board members and given our limited operations, we do not have separate or independent audit or compensation committees. Our Board of Directors has determined that it does not have an "audit committee financial expert," as that term is defined in Item 407(d)(5) of Regulation S-K. In addition, we have not adopted any procedures by which our shareholders may recommend nominees to our Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of our Common Stock (collectively, the "Reporting Persons") to report their ownership of, and transactions in our Common Stock to the SEC. Copies of these reports are also required to be supplied to us. To our knowledge, during the fiscal year ended Dec. 31, 2016 the Reporting Persons complied with all applicable Section 16(a) reporting requirements.
Code of Ethics
We have not adopted a Code of Ethics given our limited operations. We expect that our Board of Directors following a merger or other acquisition transaction will adopt a Code of Ethics.
ITEM 11. EXECUTIVE COMPENSATION.
Neither of our Directors, including the sole officer receives any compensation for their services rendered on our behalf. They did not receive any compensation during the years ended Dec. 31, 2016 and 2015. No officer or director is required to make any specific amount or percentage of his business time available to us.
Director Compensation
We do not currently pay any cash fees to our sole director, nor do we pay director's expenses in attending board meetings.
Employment Agreements
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We are not a party to any employment agreements.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information as of December 31, 2016 regarding the number and percentage of our Common Stock (being our only voting securities) beneficially owned by each officer, director, each person (including
Any "group" as that term is used in Section 13(d)(3) of the Exchange Act) known by us to own 5% or more of our
Common Stock, and all officers and directors as a group.
Name and Address of Number of
Beneficial Owner Shares Percent of Class
MCC Profit Sharing Plan 6,000,000 70.5%
c/o64 North Pecos, Suite 900
Henderson, NV 89074
Dempsey K. Mork 700,000 8.2%
c/o 64 North Pecos, Suite 900
Henderson, NV 89074
Randall A. Baker 250,000 2.9%
10224RegalOaks Drive, Apt B
Dallas, TX75230
Neville Pearson
125,000
1.47%
1611 E. Racquet Club Road
Palm Springs, CA 92262
All officers and directors as 375,000
4.41%
a group (2 persons)
Unless otherwise indicated, we have been advised that all individuals or entities listed have the sole power to vote and dispose of the number of shares set forth opposite their names. For purposes of computing the number and percentage of shares beneficially owned by a security holder, any shares which such person has the right to acquire within 60 days of Dec. 31, 2016 are deemed to be outstanding, but those shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other security holder.
We currently do not maintain any equity compensation plans.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Our Board of Directors consists of Mr. Neville Pearson and Mr. Randall A. Baker. They are not independent as such term is defined by a national securities exchange or an inter-dealer quotation system.
Various related party transactions are reported throughout the notes to our financial statements and should be
considered incorporated by reference herein.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Yu Certified Public Accountant, P.C. 136-20 38th Avenue, Suite 10i, Flushing, NY 11354 is our independent registered public accounting firm replacing Sam Kan& Associates, 1151 Harbor Bay Parkway, Ste. 101, Alameda CA 94502, (510) 355-0492 who ceased to be a PCAOB audit firm.
Audit Fees
The aggregate fees billed by Yu for professional services rendered for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 1O-Q or services that are normally provided in connection with statutory and regulatory filings was $4000 for the fiscal year ended Dec.31, 2016.
Audit-Related Fees
There were no fees billed by Yu for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements for the fiscal year ended Dec. 31, 2016.
Tax Fees
The aggregate fees billed by Yu for professional services for tax compliance, tax advice, and tax planning were $0 for the fiscal year ended December 31, 2016.
Pre-Approval Policy
We do not currently have a standing audit committee. The above services were approved by our Board of Directors.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Report:
o Report of independent Registered Public Accounting Firm (Yu Certified Public Accountant, P.C.-2015 and 2014)
o Balance Sheets at Dec. 31, 2016 and 2015
o Statements of Operations for the years ended Dec. 31, 2016 and 2015 and for the cumulative period from July 14,
2008 (Date of Inception) to Dec. 31, 2016.
o Statements of Changes in Shareholders' Deficiency for the period from July 14,2008 (Date of Inception) to Dec. 31,
2016.
o Statements of Cash Flows for the years ended Dec. 31, 2016 and 2015, and for the cumulative period from July
14, 2008 (Date of Inception) to Dec. 31, 2016.
o Notes to Financial Statements
1. Financial Statements. The following financial statements and the report of our independent registered public accounting firm are filed herewith.
2. Financial Statement Schedules.
Schedules are omitted because the information required is not applicable or the required information is shown in the financial statements or notes thereto.
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3. Exhibits Incorporated by Reference or Filed with this Report.
Exhibit No. Description
31.1 Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Ox1ey Act of 2002*
31.2 Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of2002*
32.1 Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of2002.*
32.2Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of2002.*
*included herewith
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Western Lucrative Enterprises, Inc.
Date: April 17, 2017
By: lsiNeville Pearson
Neville Pearson, President
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: April 17, 2017
By: lsiNeville Pearson
Neville Pearson, President and Director
(Principal Executive Officer)
Date: April 17, 2017
By: lsiNeville Pearson
Neville Pearson,Chief Financial Officer
(Principal Financial and Accounting Officer)
![[wluc201610kfinal41417001.jpg]](https://www.sec.gov/Archives/edgar/data/0001442101/000166158217000010/wluc201610kfinal41417001.jpg)
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Yu Certified Public Accountant, P.C.
Professionalism, Expertise, Integrity
To the Audit Committee of the
Board of Directors and Shareholders of Western Lucrative Enterprise Inc.
We have audited the accompanying consolidated balance sheets of Western Lucrative Enterprise Inc.(the “Company”) as of December 31, 2016 and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (Untied States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Western Lucrative Enterprise Inc. as of December 31, 2016, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B to the financial statements, the Company has suffered recurring losses and has experienced negative cash flows from operations, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to those matters are also described in Note B to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
![[wluc201610kfinal41417002.jpg]](https://www.sec.gov/Archives/edgar/data/0001442101/000166158217000010/wluc201610kfinal41417002.jpg)
New York, New York April 14, 2017
Certified Public Accountants
149 Madison Avenue, Suite 1128, New York NY 10016
Tel: 347-618-9237,
Email: Info@ywlcpa.com
15
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Financial Statements
December 31, 2016 and 2015
16
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Financial Statements
December 31, 2016 and 2015
Page(s)
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2016 and 2015
Statements of Operations for the Years Ended December 31, 2016 and 2015, and the Period from the
Inception on July 14, 2008 to December 31, 2016
Statement of Changes in Stockholders' (Deficit) Equity for the Period from the Inception on July 14, 2008
To December 31, 2016
Statements of Cash Flows for the Years Ended December 31, 2016 and 2015, and the Period from the
Inception on July 14, 2008 to December 31, 2016
Notes to the Financial Statements 6-13
17
WESTERN LUCRATIVE ENTERPRISES, INC. | |||||
(A Developmental Stage Enterprise) | |||||
Balance Sheets | |||||
|
| ||||
| December 31, | December 31, | |||
| 2016 | 2015 | |||
ASSETS |
|
| |||
Current assets - Cash | $ | -- | $ | -- | |
Total assets |
| -- |
| -- | |
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | |||||
Current liabilities | |||||
Accounts payable | $ | 27,815 | $ | 22,015 | |
Accrued expense | 4,000 | 4,000 | |||
Accrued interest | 3,098 | 2,468 | |||
Related party loan (current portion) | 17,500 | 17,500 | |||
Beneficial conversion feature |
| (17,500) |
| (17,500) | |
Total Current Liabilities |
| 34,913 |
| 28,483 | |
Total long term liabilities |
| -- |
| -- | |
Total Liabilities |
| 34,913 |
| 28,483 | |
Stockholders' Deficit | |||||
Common stock, $.001 par value, 750,000 shares authorized; | |||||
8,505,000 shares issued and outstanding as of |
|
| |||
December 31, 2014 and 2013, respectively | 8,505 | 8,505 | |||
Additional paid-in capital | 74,389 | 74,389 | |||
Deficit accumulated during the development stage |
| (117,807) |
| (111,377) | |
TOTAL SHAREHOLDERS' DEFICIT |
| (34,913) |
| (28,483) | |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ | -- | $ | -- | |
The accompanying notes are an integral part of these financial statements. | |||||
18
WESTERN LUCRATIVE ENTERPRISES, INC. | ||||||||
(A Developmental Stage Enterprise) | ||||||||
Statements of Operations | ||||||||
For the Period | ||||||||
Years Ended | July 14, 2008 | |||||||
December 31 | (Inception) | |||||||
2016 |
| 2015 |
| to Dec. 31, 2016 | ||||
|
|
| ||||||
Net Revenue | $ | -- | $ | -- | $ | -- | ||
Expenses | ||||||||
General and administrative | - | - | 37,682 | |||||
Professional fees |
| 5,805 |
| 5,805 |
| 95,347 | ||
Total expenses |
| 5,800 |
| 5,805 |
| 133,029 | ||
Other income (expense) | ||||||||
Other income | -- | -- | 18,937 | |||||
Interest expense |
| (630) |
| (627) |
| (3,715) | ||
Total other income /(expense) |
| (630) |
| (627) |
| 15,222 | ||
Other comprehensive income (loss) | -- | -- | -- | |||||
Net income/(loss) | $ | (6,430) | $ | (6,432) | $ | (117,807) | ||
BASIC AND DILUTED LOSS PER SHARE |
| (0.00) |
| (0.00) |
| |||
Weighted average shares outstanding | ||||||||
OUTSTANDING BASIC | ||||||||
Basic |
| 8,505,000 |
| 8,505,000 | ||||
Diluted |
| 9,595,200 |
| 9,595,200 | ||||
The accompanying notes are an integral part of these financial statements. | ||||||||
19
WESTERN LUCRATIVE ENTERPRISES, INC. | ||||||||||||||
(A Developmental Stage Enterprise) | ||||||||||||||
Statement of Changes in Stockholders' (Deficit) Equity | ||||||||||||||
| Common Stock | Additional | Accumulated | |||||||||||
Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Total | ||||||
Beginning, July 14, 2008 (Inception) | -- | $ | -- | $ | -- | $ | -- | $ | -- | |||||
Common stock issued for cash | 2,000,000 | 2,000 | 2,825 | -- | 4,825 | |||||||||
Common stock issued for services | 250,000 | 250 | -- | -- | 250 | |||||||||
Net loss, period ended December 31, 2008 |
|
|
| -- |
| -- |
| (5,075) |
| (5,075) | ||||
Balance, December 31, 2008 | 2,250,000 | 2,250 | 2,825 | (5,075) | ||||||||||
Common stock issued for cash | 2,005,000 | 2,005 | 18,045 | -- | 20,050 | |||||||||
Net loss, period ended December 31, 2009 |
|
|
| -- |
| -- |
| (20,295) |
| (20,295) | ||||
Balance, December 31, 2009 | 4,255,000 | 4,255 | 20,870 | (25,370) | (245) | |||||||||
Common stock issued for services | 4,250,000 | 4,250 | 35,402 | -- | 39,652 | |||||||||
Beneficial conversion feature | -- | -- | 617 | -- | 617 | |||||||||
Net loss, period ended December 31, 2010 |
|
|
| -- |
| -- |
| (49,861) |
| (49,861) | ||||
Balance, December 31, 2010 | 8,505,000 | 8,505 | 56,889 | (75,231) | (9,837) | |||||||||
Beneficial conversion feature | -- | -- | 10,000 | -- | 10,000 | |||||||||
Net loss, period ended December 31, 2011 |
|
|
| -- |
| -- |
| (25,497) |
| (25,497) | ||||
Balance, December 31, 2011 | 8,505,000 | 8,505 | 66,889 | (100,727) | (25,333) | |||||||||
Beneficial conversion feature | -- | -- | 7,500 | -- | 7,500 | |||||||||
Net loss, period ended December 31, 2012 |
|
|
| -- |
| -- |
| 8,132 |
| 8,132 | ||||
Balance, December 31, 2012 | 8,505,000 | 8,505 | 74,389 | (92,596) | (9,701) | |||||||||
Beneficial conversion feature | -- | -- | -- | -- | -- | |||||||||
Net loss, period ended December 31, 2013 |
|
|
| -- |
| -- |
| (7,975) |
| (7,975) | ||||
Balance, December 31, 2013 | 8,505,000 | 8,505 | 74,389 | (100,571) | (17,676) | |||||||||
Beneficial conversion feature | -- | -- | -- | -- | -- | |||||||||
Net loss, period ended December 31, 2014 |
|
|
| -- |
| -- |
| (4,375) |
| (4,375) | ||||
Balance, December 31, 2014 | 8,505,000 | 8,505 | 74,389 | (104,945) | (22,051) | |||||||||
Beneficial conversion feature | -- | -- | -- | -- | -- | |||||||||
Net loss, period ended December 31, 2015 |
|
|
| -- |
| -- |
| (6,432) |
| (6,432) | ||||
Balance, December 31, 2015 |
| 8,505,000 | $ | 8,505 | $ | 74,389 | $ | (111,377) | $ | (28,483) | ||||
Beneficial conversion feature | -- | -- | -- | -- | -- | |||||||||
Net loss, period ended December 31, 2016 |
|
|
| -- |
| -- |
| (6,430) |
| (6,430) | ||||
Balance, December 31, 2016 | 8,505,000 | $ | 8,505 | $ | 74,389 | $ | (117,807) | $ | (34,913) | |||||
The accompanying notes are an integral part of these financial statements. | ||||||||||||||
20
WESTERN LUCRATIVE ENTERPRISES, INC. | |||||||||
(A Developmental Stage Enterprise) | |||||||||
Statements of Cash Flows | |||||||||
For the Period | |||||||||
Years Ended | July 14, 2008 | ||||||||
December 31 | (Inception) to | ||||||||
2016 |
| 2015 |
| Dec. 31, 2016 | |||||
|
|
| |||||||
Cash Flows from Operating Activities | |||||||||
Net loss | $ | (6,430) | $ | (6,432) | $ | (117,807) | |||
Adjustments to reconcile net loss to net cash used in operating activities | |||||||||
Issuance of common stock in exchange for services | -- | -- |
| 39,652 | |||||
Non-cash interest-beneficial conversion feature | -- | -- | 616 | ||||||
Changes in operating Assets and Liabilities: | |||||||||
Accounts payable | 5,800 | 5,805 | 24,816 | ||||||
Accrued expense | -- | -- | 4,000 | ||||||
Accrued interest |
| 630 |
| 627 |
| 3,098 | |||
Net cash used in operating activities |
| -- |
| -- |
| (45,625) | |||
Cash Flows from Investing Activities |
|
|
| ||||||
Net cash provided by investing activities |
| -- |
| -- |
| -- | |||
Cash Flows from Financing Activities | |||||||||
Proceeds from related partyvloan | -- | -- |
| 17,500 | |||||
Proceeds from issuance of stock |
| -- |
| -- | 28,125 | ||||
Net cash provided by financing activities |
| -- |
| -- | 45,625 | ||||
-- | -- | ||||||||
Net increase (decrease) in cash | -- | -- | -- | ||||||
|
|
|
|
| |||||
Cash beginning of period | $ | -- | $ | 0 | $ | -- | |||
Cash end of period | $ | -- | $ | -- | $ | -- | |||
Supplemental Cash Flow Information: | |||||||||
Interest paid | $ | -- | $ | -- | $ | -- | |||
Taxes paid | $ | -- | $ | -- | $ | -- | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||
Issuance of common stock for professional and consulting services | $ | -- | $ | -- | $ | 40,452 | |||
Issuance of convertible note with beneficial conversion feature | $ | -- | $ | -- | $ | 7,500 | |||
The accompanying notes are an integral part of these financial statements. | |||||||||
21
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
___________________________________________________________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies of Western Lucrative Enterprises, Inc. (A Development Stage Company) (the “Company”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity. The Company has not realized revenues from its planned principal business purpose and is considered to be in its development state in accordance with ASC 915, “Development Stage Entities”.
Organization, Nature of Business and Trade Name
The Company was incorporated in the State of Iowa on July 14, 2008 and has as a principal business objective of becoming an online landscape design, construction, and consulting service.
The Company intends to develop procedures to make the information given to a prospective purchaser as accurate as possible to lead to the highest percentage of successful Western Lucrative purchases. The Company also intends to focus only on items that can be designed without travel to the location.
Neville Pearson was being appointed as a Director of the Company on August 14, 2010. Subsequently on August 17, 2010, he was appointed as President, Treasurer, and Secretary of the Company.
Concentration of Risk
The Company at times may maintain a cash balance in excess of insured limits. However, as of December 31, 2016, the Company has no cash in excess of insured limits.
Basis of Presentation
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.
Use of Estimates
The preparation of financial statements in accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A change in managements’ estimates or assumptions could have a material impact on the Company’s financial condition and results of operations during the period in which such changes occurred.
Actual results could differ from those estimates. The Company’s financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
22
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
___________________________________________________________________________________________________________
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents.
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable
Accounts receivable, if any, is carried at the expected net realizable value. The allowance for doubtful accounts, when determined, will be based on management's assessment of the collectability of specific customer accounts and the aging of the accounts receivables. If there were a deterioration of a major customer's creditworthiness, or actual defaults were higher than historical experience, our estimates of the recoverability of the amounts due to us could be overstated, which could have a negative impact on operations.
The Company has been in the developmental stage since inception and has no operation to date. The Company currently does not have any accounts receivable. The above accounting policies will be adopted upon the Company carries accounts receivable.
Property and Equipment
Property and equipment are carried at cost. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period.
Depreciation is computed for financial statement purposes on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:
Estimated
Useful Lives
Office Equipment
5-10 years
Copier
5 - 7 years
Vehicles
5-10 years
Website
/ Software
10-15 years
For federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. For financial statements purposes, depreciation is computed under the straight-line method.
The Company has been in the developmental stage since inception and has no operation to date. The Company currently does not have any property and equipment. The above accounting policies will be adopted upon the Company maintains property and equipment.
Accounts Payable and Accrued expense
The Company has accounts payable and accrued expenses in the amount of $26,015, and $26,015 as of December 31, 2016, and 2015 respectively.
During the course of the audit it was pointed out that the annual audit fees for 2012 and 2013 in the amounts of $3,750 for each year had in fact been paid directly by the majority shareholder, and the liability of the company to the shareholder was not yet reflected in the professional fees expenses or the accounts payable balance for those years. This situation has now been corrected.
23
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
___________________________________________________________________________________________________________
Revenue and Cost Recognition
The Company intends to provide a landscape design and consulting service via a web site. The Company reports income and expenses on the accrual basis of accounting, whereby income is recorded when it is earned and expenses recorded when they are incurred. The Company currently does not yet have a working website; therefore, it has not realized any sales that would require recognition of revenue.
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Advertising
Advertising expenses related to specific jobs are allocated and classified as costs of goods sold. Advertising expenses not related to
specific jobs are recorded as general and administrative expenses. No advertising expense was incurred for the years ended December 31, 2016 and 2015.
Stockholders’ Equity: Common Stock
The holders of the Company’s common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends of such times and in such amounts as the board from time to time may determine. Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. There is no cumulative voting of the election of directors then standing for election. The common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of the company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors.
The Company has authorized seven hundred and fifty million shares of common stock with a par value of $.001. As of December 31, 2016 and 2015, there are 8,505,000 shares of common stock issued and outstanding.
Fair Value Measurements
In January 2010, the FASB ASC Topic 825, Financial Instruments, requires disclosures about fair value of financial instruments in quarterly reports as well as in annual reports. For the Company, this statement applies to certain investments and long-term debt. Also, the FASB ASC Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.
Various inputs are considered when determining the value of the Company’s investments and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.
·
Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.
·
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc…).
Fair Value Measurements (Continued)
·
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).
24
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
_______________________________________________________________________________________________________
The Company’s adoption of FASB ASC Topic 825 effectively at the inception did not have a material impact on the Company’s financial statements.
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The
Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company does not have financial assets as an investment carried at fair value on a recurring basis as of December 31, 2016.
The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market
participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment. As of December 31, 2016, the Company has assets and liabilities in cash, various receivables, property and equipment, and various payables. Management believes that they are being presented at their fair market value.
Basic and Diluted Loss per Common Share
Net loss per share is calculated in accordance with SFAS No. 128, "Earnings per Share." The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted average number of shares and dilutive potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised. We do not calculate loss per diluted shares to prevent understating the actual loss per share
Basic net loss per common share is based on the weighted-average number of share of common stock outstanding since inception. As of December 31, 2016 and since inception, the Company had 8,505,000 common shares outstanding and 9,595,200 dilutive potential common shares.
Basic earnings per share are based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share is based on the weighted-average number of shares of common stock outstanding adjusted for the effects of common stock that may be issued as a result of the following types of potentially dilutive instruments:
·
Warrants,
·
Employee stock options, and
Basic and Diluted Loss per common share (Continued)
·
Other equity awards, which include long-term incentive awards.
The FASB ASC Topic 260, Earnings per Share, requires the Company to include additional shares in the computation of earnings per share, assuming dilution.
25
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
_____________________________________________________________________________________________________
Diluted earnings per share are based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options are assumed to be exercised at the time of issuance, and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company does not have diluted
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
effects on common stock as there was no warrant or option issued. Basic and diluted earnings per share are the same as there was no dilutive effect of outstanding stock options for the period ended December 31, 2016. The following is a reconciliation of basic and diluted earnings per share for 2016:
Period Ended December 31, 2016 | |||
Numerator: | |||
Net Loss available to common shareholders | $ | (6,432) | |
Denominator: | |||
Weighted average shares – basic | 8,505,000 | ||
Weighted average shares – diluted 9,595,200 | |||
Net income (loss) per share – basic and diluted | $ | 0.00 | |
Provision for Income Taxes
We are subject to state and federal income taxes in the U.S. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. In accordance with FASB ASC Topic 740, “Income Taxes,” we provide for the recognition of deferred tax assets if realization of such assets is more likely than not.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board issued the following 32 ASU’s (Accounting Standards Updates) during 2016 & 2015.
Due to the fact that The Company is not yet an operating entity none of these pronouncements have any relevance at this time. Should anyone wish to read further detail, then the full text of these pronouncements can be found at http://www.fasb.org
26
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
_____________________________________________________________________________________________________
· Update 2016-19—Technical Corrections and Improvements
· Update 2016-18—Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)
· Update 2016-17—Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control
· Update 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
· Update 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)
· Update 2016-14—Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities
·
Update 2016-13—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
·
Update 2016-12—Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients
·
Update 2016-11 —Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update)
·
Update 2016-10—Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing
·
Update 2016-09—Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
·
Update 2016-08—Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)
·
Update 2016-07 —Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting
27
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
_____________________________________________________________________________________________________
Update 2016-06 —Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force)
·
·
Update 2016-05—Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force)
·
Update 2016-04—Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force)
·
Update 2016-03—Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), Consolidation (Topic 810), Derivatives and Hedging (Topic 815): Effective Date and Transition Guidance (a consensus of the Private Company Council)
Update 2016-02—Leases (Topic 842)
o
Section A—Leases: Amendments to the FASB Accounting Standards Codification®
o
Section B—Conforming Amendments Related to Leases: Amendments to the FASB Accounting Standards Codification®
o
Section C—Background Information and Basis for Conclusions
§
Update 2016-01—Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
28
WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
_____________________________________________________________________________________________________
· Update 2015-16—Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments
Update 2015-15—Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update
·
Update 2015-14—Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date
·
Update 2015-13—Derivatives and Hedging (Topic 815): Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (a consensus of the FASB Emerging Issues Task Force)
·
·
Update 2015-12—Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the Emerging Issues Task Force)
·
Update 2015-11—Inventory (Topic 330): Simplifying the Measurement of Inventory
·
Update 2015-10—Technical Corrections and Improvements
·
·
Update 2015-09—Financial Services—Insurance (Topic 944): Disclosures about Short-Duration Contracts
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Update 2015-08—Business Combinations (Topic 805): Pushdown Accounting—Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (SEC Update)
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Update 2015-07—Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the Emerging Issues Task Force)
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Update 2015-06—Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the Emerging Issues Task Force)
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Update 2015-05—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
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Update 2015-04—Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets
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Update No. 2015-03—Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs
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Update No. 2015-02—Consolidation (Topic 810): Amendments to the Consolidation Analysis
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Update No. 2015-01—Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.
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WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
NOTE B - GOING CONCERN
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.
Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations.
Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
In the coming year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with operations and business developments. The Company may experience a cash shortfall and be required to raise additional capital.
Historically, as the Company has no business revenues, it has mostly relied upon funds contributed by shareholders and associated companies to finance its overheads and research. Management may raise additional capital by retaining net earnings or through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.
NOTE C – NOTES PAYABLE & DEBT DISCOUNTS
On December 31, 2012, the Company issued two new Convertible Notes in the amounts of $6,000 and $1,500 to Magellan Capital Partners, Inc. and Savile Town Investments, Inc. respectively.
The chart below summarizes the term of the Notes Payable & Debt Discounts of the Company as of December 31, 2016. The Company is currently in good standing of its promissory notes to Millenium Group, Inc. (“Millenium”), a California corporation, Magellan Capital Partners (“Magellan”) and Savile Town Investments, Inc. (“Savile Town”).
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WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
___________________________________________________________________________________________________________
Terms | Amount |
| |
Notes Payable to Related Party (Millenium): Effective as of August 20, 2010; principal of $10,000 at 2.5% APR; convertible into 4% of fully diluted common shares; due on August 20, 2017, net of unamortized discount related to the debt accretion of $0. Notes Payable to Related Party (Magellan): Effective as of December 31, 2012; principal of $6,000 at 5.0% APR; convertible into 600,000 fully diluted common shares; due on December 31, 2017, net of unamortized discount related to the debt accretion of $0. Notes Payable to Related Party (Savile Town): Effective as of December 31, 2012; principal of $1,500 at 5.0% APR; convertible into 150,000 fully diluted common shares; due on December 31, 2017, net of unamortized discount related to the debt accretion of $0. | $10,000 $6,000 $1,500 |
Convertible Notes to Magellan Capital Partner, Inc. and Savile Town Investments, Inc.
The Company received service through issuing a total of $7,500 convertible notes to Magellan Capital Partners and Savile Town Investments, Inc. In exchange for the $7,500 notes, the two lenders would have an option to receive a total of 750,000 common shares by fully converting these shares at $0.01 per diluted common shares.
In accordance with ASC 470-20, Debt with conversion and other options, as the conversion price of the share is a fixed price at $0.01 per diluted common shares, the beneficial conversion feature or BCF of Notes were calculated based on the intrinsic value. The fair value of the shares at the issuance date, December 31, 2012was $0.52 and the BCF is $0.51 per share. As the total BCF is greater than the total proceeds of the $7,500 convertible notes, in accordance with ASC 470-20 the BCF is limited to the total proceeds of the convertible notes which is $7,500. We recorded the total convertible value of the notes issued to the Company in the amount of $7,500 as a debt discount upon issuance, and amortized this debt discount as interest expense over the life of the note. We recorded interest expense in the amount of $627 for the year ended December 2016 in connection with these Notes.
Convertible Note to Millenium Group, Inc.
The original beneficial conversion feature was resulted from a note issued to Millenium Group, Inc. in the amount of $10,000 on August 20, 2010. The note is convertible at holder’s option into 4% of the Company’s fully diluted common shares at the time of conversion, with anti-dilution protection (not adjusted for splits or new issuances), and matures on August 20, 2016.
On August 20, 2016, this note was renewed and the mature date is extended to August 20, 2017. No beneficial conversion feature occurs with this note renewal since the beneficial conversion feature had been recognized, and had been completely amortized. As of December 31, 2016, there is $1,592.47 accrued interest which is due on the maturity date of note.
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WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
______________________________________________________________________________________________________________
NOTE C – NOTES PAYABLE & DEBT DISCOUNTS (CONTINUED)
As of December 31, 2016, the carrying values of our short-term and long-term notes payable are as follows:
Effective Interest Rate | Principal | Discount | December 31, 2016 | |||||||||
Current notes payable | ||||||||||||
Magallen Group Inc. |
| 5.00 | % |
|
| 6,000 |
|
| 6,000 |
|
| - |
Savile Town Investments, Inc. |
| 5.00 | % |
|
| 1,500 |
|
| 1,500 |
|
| - |
Millenium Group Inc. |
| 2.50 | % |
|
| 10,000 |
|
| 10,000 |
|
| |
Total short-term notes payable | $ | 17,500 | $ | 17,500 | $ | - | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term and long-term notes payable | $ | 17,500 | $ | 17,500 | $ | - | ||||||
As of December 31, 2016, the future principal payments of the above convertibles notes are as follows:
2016 | 17,500 | |
2017 | 0 | |
Total | $17,500 |
NOTE D – INCOME TAX
The Company did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. Under ACS 740 “Income Taxes,” when it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry-forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry-forward period.
The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the periods ended December 31, 2016 or 2015, applicable under ACS 740. As a result of the adoption of ACS 740, we did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet.
The component of the Company’s deferred tax asset as of December 31, 2016 and 2015 is as follows:
2015 | 2014 | ||
Net operating loss carry forward | 111,377 |
| 104,945 |
Valuation allowance | (111,377) | (104,945) | |
Net deferred tax asset | $ - |
| $ - |
The Company did not pay any income taxes during the periods ended December 31, 2016 or 2015.
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WESTERN LUCRATIVE ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2016 and 2015
______________________________________________________________________________________________________________
The net federal operating loss carry forward will expire in 2032. This carry forward may be limited upon the consummation of a business combination under IRC Section 381.
NOTE E – COMMON STOCK
The Company's articles of incorporation provide for the authorization of seven hundred fifty million shares of common stock with par values of $0.001. Common stock holders have all the rights and obligations that normally pertain to stockholders of Iowa corporations. As of December 31, 201, the Company had 8,505,000 shares of common stock issued and outstanding.
NOTE F – OTHER INCOME
There was no other income during the years ended December 31, 2016 and year ended December 31, 2015.
NOTE G – RELATED PARTY TRANSACTIONS
The holder (Millenium Group, Inc.) of the $10,000 convertible note is owned by Jonathan Mork who is a son of Dempsey Mork, the owner of Orion Investment which holds more than 5% of the common shares from the Company.
The holder (Magellan Capital Partners) of the $6,000 convertible note is owned by Dempsey Mork owner of MCC Profit Sharing Plan which holds more than 5% of the common shares from the Company.
The holder (Savile Town Investments, Inc.) of the $1,500 convertible note is owned by Neville Pearson a Director of The Company and also its current President, Treasurer, and Secretary.
NOTE H - COMMITMENT AND CONTINGENCIES
The Company could become a party to various legal actions arising in the ordinary course of business. Matters that are probable of unfavorable outcomes to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, the Company’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters.
As of the date of this report, there are no material pending legal proceedings to which the Company is a party or of which any of their property is the subject, nor are there any such proceedings known to be contemplated by governmental authorities.
NOTE I – SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred after December 31, 2016 through the date of this filing in accordance with FASB ASC 855 “Subsequent Events”. The Company determined that it does not have any additional subsequent event requiring recording or disclosure.
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