NOTES TO CONDENSED UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER
30, 2013 AND 2012 AND THE PERIOD FROM
DECEMBER 19, 2007 (INCEPTION) TO SEPTEMBER
30, 2013
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1.
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Summary of Significant Accounting Policies
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Basis of Presentation and Organization
Modern Mobility Aids, Inc. (the “Company”)
is a Nevada corporation in the development stage. The Company was incorporated under the laws of the State of Nevada on December
19, 2007 (“Inception”) under the name Glider Inc. with a business plan to sell and distribute products for mobility
challenged individuals. The Company changed its name to Modern Mobility Aids, Inc. on April 22, 2010 with an initial plan to distribute
products for mobility challenged individuals.
In May of 2011, the business focus of the Company
evolved with a rapid expansion strategy in the life sciences and healthcare industry. A mandate was created to acquire companies
within the biopharma sector, targeting innovative research and development as well as scalable manufacturing capacity in three
niche market segments:
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1.
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CRAM – Contract Research and Manufacturing for Life Sciences Companies
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2.
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HEALTHCARE INNOVATION – Novel Drug and Device Delivery Format Packaging
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3.
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BIOPHARMA PARTNERSHIPS – Strategic Development and Production Alliances
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The Company has abandoned its historic
business of distributing products for mobility challenged individuals which has generated little operating revenue and has had
limited operations to date. Its Board of Directors has determined that the Company will seek to acquire business assets or stock
in companies in the biopharma sector that either have existing operations or are in the development stage with the potential for
successful operations.
Unaudited Financial
Statements
The accompanying unaudited financial statements
of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion the financial
statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements
not misleading. Operating results for the three months ended September 30, 2013 are not necessarily indicative of the results that
may be expected for the year ended June 30, 2014. For more complete financial information, these unaudited financial statements
should be read in conjunction with the audited financial statements for the year ended June 30, 2013 included in our Form 10-K
filed with the SEC.
Principles of Consolidation
The Company's consolidated financial statements
for the three months ended September 30, 2013, include the accounts of its wholly owned subsidiaries Modern Mobility Aids,
Inc. and MDRM Group (Canada) Ltd. both Ontario, Canada based company. Modern Mobility Aids, Inc. was incorporated on September
2, 2009 and MDRM Group (Canada) Ltd. was incorporated on July 14, 2011. All significant intercompany balances and transactions
have been eliminated on consolidation.
Development Stage Company
The Company is a development stage company
in accordance with Financial Accounting Standards Codification (“ASC”) 915 "Development Stage Entities".
Among the disclosures required as a development stage company are that our financial statements are identified as those of a development
stage company, and that the statements of operations, stockholders' deficit and cash flows disclose activity since the date of
our Inception (December 19, 2007) as a development stage company.
Cash and Cash Equivalents
For purposes of reporting within the statements
of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all
highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Revenue Recognition
The Company is in the
development stage and has realized minimal revenues from operations. The Company recognizes revenues when the sale and/or distribution
of products is complete, risk of loss and title to the products have transferred to the customer, there is persuasive evidence
of an agreement, acceptance has been approved by its customer, the fee is fixed or determinable based on the completion of stated
terms and conditions, and collection of any related receivable is probable. Net revenues are comprised of gross revenues less
expected returns, trade discounts, and customer allowances that include costs associated with off-invoice markdowns and other
price reductions, as well as trade promotions and coupons. These incentive costs are recognized at the later of the date on which
the Company recognized the related revenue or the date on which the Company offers the incentive.
Loss per Common Share
Basic loss per share is computed by dividing
the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during
the periods. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. There were no potentially dilutive debt or equity instruments issued or outstanding for
the three month periods ended September 30, 2013 and 2012.
Income Taxes
The Company accounts for income taxes pursuant
to SFAS No. 109,
“Accounting for Income Taxes”
(“SFAS No. 109”). Under SFAS No. 109, now encompassed
under ASC 740,
deferred tax assets and liabilities are determined based on temporary differences
between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and
liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
Income Taxes continued
The Company maintains a valuation allowance
with respect to deferred tax assets. Modern Mobility Aids establishes a valuation allowance based upon the potential likelihood
of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations
for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within
the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company
generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change
in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value of Financial Instruments
The Company estimates the fair value of financial
instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair
value. Accordingly, the estimates of fair value may not be indicative of the amounts Modern Mobility Aids could realize in a current
market exchange. As of September 30, 2013, the carrying value of the Company’s financial instruments comprising bank overdraft,
accounts payable and accruals, due to related parties and loan from shareholders approximated fair value due to the short-term
nature and maturity of these instruments.
Deferred Offering Costs
The Company defers as other assets the direct
incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering,
the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations
during the period in which the offering is terminated.
Impairment of Long-lived Assets
Capital assets are reviewed for impairment
in accordance with SFAS No. 144,
“Accounting for the Impairment of Disposal of Long-lived Assets,”
which was
adopted effective January 1, 2002. Under SFAS No. 144,
now encompassed under ASC 350,
these assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts
may not be recoverable. An impairment charge is recognized for the amount, if any, which the carrying value of the asset exceeds
the fair value. During the three month periods ended September 30, 2013, and 2012, the Company did not own any long-lived assets.
Advertising and Promotion
The Company expenses all advertising and promotion
costs as incurred. The Company did not incur any advertising or promotion costs during the three month periods ended September
30, 2013, and 2012.
Common Stock Registration Expenses
The Company considers incremental costs and
expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date
or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are reflected
in the accompanying financial statements as general and administrative expenses, and are expensed as incurred.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance
with ASC 718,”Compensation – Stock Compensation”, when applicable. To date, the Company has not adopted
a stock option plan and has not granted any stock options. As of September 30, 2013 the Company has not issued any stock-based
payments to its employees.
Estimates
The accompanying financial statements of the
Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because
a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements
for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may vary from
these estimates.
Reclassifications
Certain reclassifications
have been made to the prior period financial statements to conform to the 2014 presentation. The reclassifications had no effect
on net loss, total assets, or total stockholders’ deficit.
Recently Issued Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective,
accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material
impact on our financial condition or the results of its operations.
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2.
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Development Stage Activities and Going Concern
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The Company is in the development stage.
During the period from December 19, 2007 (Inception) through September 30, 2013, the Company was organized and incorporated, conducted
a capital formation activity to raise $47,425 through the issuance of 195,480,000 (post forward split) shares of common stock,
and realized $9,506 in revenues from sales.
During the year ended June 30, 2011, the Company’s
Registration Statement on the Form S-1/A filed with the Securities and Exchange Commission was declared effective. The Company
sold 65,480,000 (post forward split) common shares at $0.000625 per share for total proceeds of $40,925 pursuant to this Registration
Statement. Company intends to conduct additional capital formation activities through the issuance of its common stock and to further
conduct its operations.
The Company has abandoned its historic
business of distributing products for mobility challenged individuals which has generated little operating revenue and has had
limited operations to date. Its Board of Directors has determined that the Company will seek to acquire business assets or stock
in companies in the biopharma sector that either have existing operations or are in the development stage with the potential for
successful operations. The Company will require financing to make such acquisitions. There can be no assurance it can secure such
financing or that it will be able to make such acquisitions even if financing is available. Moreover, even if it acquires business
assets or a business, there can be no assurance that the acquisitions will be successfully accomplished and that our operations
thereafter will be profitable.
While management of the Company believes
that the Company will be successful in its planned operating activities under its new business plan and capital formation activities,
there can be no assurance that it will be successful in implementation of its new business plan or the formation of sufficient
capital such that it will generate adequate revenues to earn a profit or sustain its operations.
The accompanying financial statements have
been prepared in conformity with accounting principles generally accepted in the United State of America, which contemplate continuation
of the Company as a going concern. The Company has not established a source of revenues sufficient to cover its operating costs,
and as such, has incurred an operating loss since inception. Further, as of September 30, 2013, and June 30, 2013, the Company
had a working capital deficiency of $(530,548), and $(519,773), respectively. These and other factors raise substantial doubt about
the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments
or classifications that may result from the possible inability of the Company to continue as a going concern.
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3.
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Due
to Related Parties
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In support of the Company’s efforts and
cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or
attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for
continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances
are considered temporary in nature and have not been formalized by a promissory note.
As of the balance sheet date there was a balance
to related parties in the amount of $19,179 for services provided to the Company.
In November 2013, the Company paid $19,093 to
a Company owned by Mr. Karatella for services rendered to and expenses incurred on behalf of the Company during 2011 and 2012 and
in November 2013, paid directly to Mr. Karatella $4,773 for services rendered to the Company during 2011 and 2012 and expenses
incurred on behalf of the Company.
In support of the Company’s
efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations
or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment
for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances
are considered temporary in nature and have not been formalized by a promissory note.
As of September 30, 2013, the shareholder loan
consisted of $360,998 principal and accrued interest of $Nil. The loans payable is payable on demand, unsecured and bears no interest.
The loan shall be payable on demand within five (5) days from the date of request. In the event payment is not timely made, interest
will accrue on the unpaid balance at the rate of 15% per annum, compounded monthly, from and after the date of such failure to
pay.
The total number of common shares authorized that may be issued
by the Company is 200,000,000 shares with a par value of $0.001 per share, and 1,000,000 shares of preferred stock at par value
of $0.001 per share.
Preferred Stock
No shares of preferred stock were issued and outstanding during
the three months ended September 30, 2013 and 2012.
Common Stock
During the year ended June 30, 2010, the Company
issued 130,000,000 (post forward split) shares of common stock at $0.00005 per share to its Directors for total proceeds of $6,500.
During the year ended June 30, 2011 the Company
sold 65,480,000 (post forward split) common shares at $0.000625 per share for total proceeds of $58,767.
On August 18, 2011, the Company implemented
a 20 for 1 forward stock split whereby each shareholder of record received an additional 19 shares of common stock for every 1
share held of record. The total number of common stock issued and outstanding since December 19, 2007 (Inception) have been restated
for this forward stock split.
As at September 30, 2013 there were 195,480,000
shares of common stock issued and outstanding.
As of September 30, 2013, the Company had not issued any shares
nor granted any stock options under share-based compensation transactions.
The provision (benefit) for income taxes for
the three months ended September 30, 2013 and 2012, were as follows (assuming a 15 percent effective tax rate):
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Three Months Ended
September 30,
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2013
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2012
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Current Tax Provision:
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Federal
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Taxable income
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$
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-
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$
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-
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Total current tax provision
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$
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-
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$
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-
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Deferred Tax Provision:
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Federal
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Loss carryforwards
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$
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1,617
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$
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—
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Change in valuation allowance
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(1,617
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)
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(-)
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Total deferred tax provision
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$
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—
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$
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—
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The Company had deferred income tax assets as of September 30, 2013
and June 30, 2013 as follows:
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September 30,
2013
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June 30,
2013
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Loss carryforwards
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$
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595,815
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$
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585,040
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Less - Valuation allowance
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(595,815
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)
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(585,040
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Total net deferred tax assets
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$
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—
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$
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—
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As of September 30, 2013, the Company had approximately $595,815
in tax loss carry forwards that can be utilized in future periods to reduce taxable income, and begin to expire in the year 2028.
The Company provided a valuation allowance
equal to the deferred income tax assets for the three months ended September 30, 2013 and June 30, 2013 because it is not presently
known whether future taxable income will be sufficient to utilize the loss carry forwards.
In November 2013, Mohamed K. Karatella,
formerly the Company’s President, Chief Financial Officer, Treasurer, Principal Accounting Officer and the owner of 66.5%
of its outstanding common stock has agreed to contribute 120,000,000 shares of the Company’s common stock to the Company
to be cancelled. Mr. Karatella will not receive any compensation in connection with this transfer. After the transaction, Mr. Karatella
will own 10,000,000, 13.25%, of 75,480,000 shares of common stock of the Company then outstanding.
The Company has entered into a Memorandum
of Understanding and an agreement to acquire two business in its targeted sector of biopharma partnerships – strategic development
and production alliances within the biopharma sector:
On March 28, 2014, through a wholly-owned
subsidiary incorporated under the laws of Ontario, Canada, we entered into a Memorandum of Understanding to purchase 67% of a private
company with a pending application for a license from Health Canada under the recently enacted Marijuana for Medical Purposes Regulation
(“MMPR”). The facilities are located in the Province of Ontario. In addition, the agreement provides that we will also
acquire a 50% interest in a related private corporation which has received a “ready to build” letter from Health Canada
in conjunction with a pending application for a license to conduct research on marijuana. The closing of this transaction is contingent
on the issuance of the respective licenses by Health Canada.
On May 8, 2014, through a wholly-owned
subsidiary formed in Ontario, Canada, we entered into an agreement to purchase 100% of a private company in the final stage of
obtaining their Medical Marijuana growers license. The company, located in the Province of Ontario, owns a fully functional production
facility, and is awaiting final inspection by Health Canada. The transaction includes real property and related facilities.
Under the terms of the agreement,
the Company will pay CDN$2.5 million at Closing with an additional CDN$2.5 million due at a deferred date. The Company will also
issue a warrant to the sellers to purchase up to 1 million shares of the Company shares at a 25% discount to market. The closing
of the purchase is subject to receipt of a license from Health Canada under MMPR.
The Company is actively and aggressively
pursuing various other opportunities within the biopharma sector which meet its investment criteria. To this end, we have entered
into letters of intent to purchase controlling interests in two other private companies each in the final stages of obtaining their
Medical Marijuana growers license. The actual terms and conditions of these two proposed transactions will be disclosed at such
time as the Company has entered into definitive agreements on the matters.
In accordance with ASC 855, Subsequent Events,
the Company has evaluated events that occurred subsequent to the balance sheet date through June 24, 2014 the date of available
issuance of these unaudited financial statements. The Company determined that other than as disclosed above, there were no material
reportable subsequent events to be disclosed.
