NOTES TO FINANCIAL STATEMENTS
NOTE
1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION
Company, formerly Olivia Inc., is a Delaware
company, incorporated under the laws of the State of Delaware on August 2, 2011.
Effective August 21, 2014, the Company
filed with the State of Delaware a Certificate of Amendment to the Articles of Incorporation changing the Company’s name
from Olivia, Inc. to Bio-En Holdings Corp.
On August 21, 2014, Bio-En Corp. merged
with, and into Company with Company being the surviving entity of the merger.
Basis of Presentation
The Company maintains its accounting records
on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
These financial statements are presented
in US dollars.
Fiscal Year End
The Corporation has adopted a fiscal year
end of December 31.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies are
set out below, these policies have been consistently applied to the period presented, unless otherwise stated:
Going Concern
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the
liquidation of liabilities in the normal course of business. As at December 31, 2019, the Company has a working capital deficit
of $187,731 and has not earned any revenues to cover its operating costs. The Company intends to fund future operations through
equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements
for the year ending December 31, 2019.
The ability of the Company to realize its
business plan is dependent upon, among other things, obtaining additional financing to continue operations, and development of
its business plan. In response to these problems, management intends to raise additional funds through public or private placement
offerings.
These factors, among others, raise substantial
doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts or revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Risks and Uncertainties
The Company may operate in industries that
are subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial,
operational, technological, regulatory and other risks, including the potential of business failure.
Business Segments
The Company operates in one segment and
therefore segment information is not presented.
Cash and cash equivalents
Cash and equivalents include investments
with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions
that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000.
Property, Plant and Equipment
The Company does not own any property,
plant and equipment.
Intangible Assets
Identifiable intangible assets with indefinite
lives are not amortized, but instead are tested for impairment annually, or more frequently if circumstances indicate a possible
impairment may exist. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives,
generally on a straight-line basis, and are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable.
Impairment of Long-Lived Assets
Under Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") 310, “Accounting for the Impairment or Disposal of
Long-lived Assets”, the Company periodically reviews whether changes have occurred that would require revisions to the carrying
amounts of its definite lived, long-lived assets. When the sum of the expected future cash flows is less than the carrying amount
of the asset, an impairment loss is recognized based on the fair value of the asset.
Accounts payable and accrued expenses
Accounts payable and accrued expenses are
carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the financial
year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods
and services.
Share Based Payments
The Company recognizes compensation expense
for all equity–based payments in accordance with ASC 718 “Share-Based Payments". Under fair value recognition
provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation
cost only for those shares expected to vest over the requisite service period of the award.
Share-Based Payments to employees, including
grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values.
That expense is recognized over the period during which an employee is required to provide services in exchange for the award,
known as the requisite service period (usually the vesting period).
The Company accounts for share–based
payments granted to non–employees in accordance with ASC 505, “Equity Based Payments to Non–Employees”.
The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or
the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments
issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date
at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the
counterparty’s performance is complete.
Earnings per share
The Company computes net loss per share
in accordance with ASC 260, "Earnings Per Share" ASC 260 requires presentation of both basic and diluted earnings per
share (“EPS”) on the face of the income statement. Basic EPS is calculated by dividing the profit or loss attributable
to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS
is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares
outstanding for the effects of all potential dilutive common shares, which comprise convertible compensation to employees.
Income taxes
The Company accounts for income taxes under
FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC
740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Fair Value of Financial Instruments
The Company measures assets and liabilities
at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents
the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction
between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset
or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value
on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels
of inputs to measure fair value:
- Level 1: Quoted prices in active markets
for identical instruments;
- Level 2: Other significant observable
inputs (including quoted prices in active markets for similar instruments);
- Level 3: Significant unobservable inputs
(including assumptions in determining the fair value of certain investments).
NOTE 3 – PURCHASED INTANGIBLE
ASSETS, NET
On March 23, 2014, the Company entered
into an Exclusive License Agreement with GeneSyst International, Inc., a Delaware corporation (“Genesyst”), for the
acquisition of the rights to patents for the conversion of cellulose material into energy producing Ethanol. The purchase price
included a partial initial payment of 10% of the common stock of the Company and $330,000 (including VAT) payable in cash.
On November 16, 2017 the Exclusive License
Agreement was cancelled by mutual consent. Consequently, the Net Carrying Amount was written off and the Accumulated Amortization
up to that date was written back. In addition, a loan repayable to GeneSyst was also cancelled. This resulted in a net overall
profit of $53,573.
On November 26, 2019, the Company entered into a binding term
sheet to merge with Leo Riders Company (“Leo”). Pursuant to the Agreement, Leo would become a wholly-owned subsidiary
of Bio.
Under the Agreement, Bio would acquire all of the outstanding
capital stock of Leo in exchange for shares of Bio common stock to be issued to the shareholders of Leo in an amount equal to up
to 40% of the post-transaction outstanding capital stock the Company. The Company would also provide interim financing to Leo and
will assist Leo in additional capital raising efforts. The combined company, to be led by Barry Adika, CEO of Bio-En Holdings,
would be headquartered in Secaucus, New Jersey. In accordance with the Term Sheet, Leo was to raise up to $2,000,000 within 120
days of the merger contemplated by the Agreement.
After signing the final agreement and before raising the funds,
Bio would transfer to Leo up to $460,000 as a loan (the “Loan”), which will be paid back by Leo upon raising the funds.
If Leo would like to terminate the Agreement for any reason, Leo will transfer 50% of the Leo company shares to Bio as a penalty.
If Bio is unable to raise the $2,000,000 for Leo, the $400,000 which has been given to Leo as a loan will be transferred repaid
with the transfer of 5% of the outstanding capital stock of Leo at a $9,000,000 valuation.
$185,000 of the Loan had been already transferred prior to signature
of the Agreement and a further $50,000 was transferred prior to December 31, 2019 resulting in a total advanced of $235,000.
Prior to the date of the Agreement, Bio had no interactions
with Leo, other than the negotiation of the Term Sheet and the Amendment. The agreement was entered into at an arm’s-length.
However, due to certain information regarding
the financial position of Leo, which has come to light since the announcement of the Term Sheet, Bio has informed Leo that it is
terminating the Term Sheet, and the merger with Leo is not expected to take place. Bio is taking steps to recover from Leo the
monies it has advanced to date.
NOTE 4 – LOAN FROM RELATED PARTY
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December 31,
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December 31,
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2019
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2018
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$
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$
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Loan from related party
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380,287
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35,845
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The above loans are unsecured and have no set terms of repayment.
These loans are repayable on demand.
NOTE 7 – STOCKHOLDER’S EQUITY
Merger
On August 21, 2014 the Company entered
into a Share Exchange/Merger Agreement, between Company, Serena B. Potash (the “Principal Shareholder”) and Bio-En
Corp., a Delaware corporation. On August 21, 2014, we filed a Certificate of Merger in the State of Delaware whereby Bio-En Corp.
merged with Company, with Company the surviving entity.
In conjunction with the Share Exchange/Merger
Agreement, all of the issued and outstanding shares of Bio-En Corp. at August 21, 2014 were exchanged for 28,980,000 shares of
Company common stock.
Common Stock
For the period from January 6, 2014 to
March 31, 2014, the Company issued 4,409,196 shares of common stock at $0.0001 per share for $441.00, for professional services.
On March 23, 2014 the Company issued 2,548,853
shares of common stock at $0.0001 per share for $255.00, as consideration to purchase license rights to develop and use patented
intellectual property as described in note 3.
For the period between January 6, 2014
and March 31, 2014 the Company issued 23,041,951 shares of common stock to related parties at $0.0001 per share for $2,304.00 to
related parties for services.
On March 12, 2018 the Company completed
the issuance of 45,000,000 shares of common stock to related parties at $0.00525 per share for $236,250.
Cancellation of Shares
On August 21, 2014, pursuant to the Share
Exchange/Merger Agreement, Ms. Potash, the then principal shareholder of Company owning an aggregate of 7,894,625 shares of Company
common stock, agreed to cancel 6,024,601 of her shareholdings. All cancelled shares of common stock were returned to the Company’s
pool of authorized but unissued shares.
NOTE 8 – INCOME TAXES
The provision/benefit for income taxes
for the year ended December 31, 2019 differs from the amount which would be expected as a result of applying the statutory tax
rates to the losses before income taxes due primarily to changes in the valuation allowance to fully reserve net deferred tax assets.
Realization of deferred tax assets is dependent
upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to
be available to reduce taxable income.
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December 31,
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December 31,
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2019
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2018
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$
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$
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Deferred tax assets:
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Pre-tax profit/(loss) as reported
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(548,147)
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(421,991
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)
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U.S. statutory tax rate
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34%
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34
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%
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Expected tax expense (benefit)
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186,370
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143,477
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Total deferred tax assets
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186,370
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143,477
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Less: Valuation allowance
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(186,370)
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(143,477
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)
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Net deferred tax assets
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-
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-
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The Company has provided a valuation allowance
against the full amount of the deferred tax asset due to management’s uncertainty about its realization. As of December 31,
2019, the Company had approximately $548,147 in tax loss carryforwards that can be utilized in future periods to reduce taxable
income, and expire by the year 2038.
NOTE 9– RELATED PARTY TRANSACTIONS
Details of transactions between the Company
and related parties are disclosed below:
The following entities, as of December
31, 2019, have been identified as related parties:
Mr. Baruch Adika
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- President/Director and greater than 10% stockholder
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Mr. Alon Shany
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- Director
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Mr. Shlomi Shany
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- Greater than 10% stockholder
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December 31,
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December 31,
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2019
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2018
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$
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$
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The following transactions were carried out with related parties:
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Balance sheets:
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Loan from related party – Director
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380,287
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35,845
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From time to time, the president and stockholder of the Company provides advances to the Company for its working capital purposes. These advances bear no interest and are due on demand.
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