UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the Fiscal Year Ended:
December 31, 2015
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
VALLEY
HIGH MINING COMPANY
|
|
(Exact
name of registrant as specified in its charter)
|
|
Wyoming
|
|
000-51232
|
|
68-0582275
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(Commission
File Number)
|
|
(I.R.S.
Employer
Identification Number)
|
|
1325
Cavendish Drive
Suite
201
Silver
Spring, MD 20905
|
|
(Address
of principal executive offices, including zip code)
|
|
(301)
202-7762
|
|
(Registrant’s
telephone number, including area code)
|
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes ☐ No
þ
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No
þ
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 last 90 days. Yes
þ
No ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes
þ
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.
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
|
Large
Accelerated Filer ☐
|
Accelerated
Filer ☐
|
|
|
Non-Accelerated
Filer ☐
|
Smaller
reporting company
þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
þ
The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on May 4, 2016, based
on a closing price of $0.0045 was approximately $1,680,939. As of May 4, 2016, the registrant had 373,542,046 shares of its common
stock, par value $0.00001 per share, outstanding.
Documents
Incorporated By Reference: None.
VALLEY
HIGH MINING COMPANY
FOR
THE FISCAL YEAR ENDED
DECEMBER
31, 2015
TABLE
OF CONTENTS
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Included
in this Annual Report on Form 10-K are “forward-looking” statements, as well as historical information. Although we
believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the expectations
reflected in these forward-looking statements will prove to be correct. Our actual results could differ materially from those
anticipated in forward-looking statements as a result of certain factors, including matters described in the section titled “Risk
Factors.” Forward-looking statements include those that use forward-looking terminology, such as the words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “project,”
“plan,” “will,” “shall,” “should,” and similar expressions, including when used
in the negative. Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable,
these statements involve risks and uncertainties and we cannot assure you that actual results will be consistent with these forward-looking
statements. Important factors that could cause our actual results, performance or achievements to differ from these forward-looking
statements include the following:
|
|
●
|
the
availability and adequacy of our cash flow to meet our requirements;
|
|
|
●
|
economic,
competitive, demographic, business and other conditions in our local and regional markets;
|
|
|
●
|
changes
in our business and growth strategy;
|
|
|
●
|
changes
or developments in laws, regulations or taxes in the entertainment industry;
|
|
|
●
|
actions
taken or not taken by third-parties, including our contractors and competitors;
|
|
|
●
|
the
availability of additional capital; and
|
|
|
●
|
other
factors discussed under the section entitled “Risk Factors” or elsewhere in this Annual Report.
|
All
forward-looking statements attributable to us are expressly qualified in their entirety by these and other factors. We undertake
no obligation to update or revise these forward-looking statements, whether to reflect events or circumstances after the date
initially filed or published, to reflect the occurrence of unanticipated events or otherwise unless required by applicable law.
PART
I
Item
1. Business.
Company
History
Valley
High Mining Company (“we,” “us,”, “our,” or the “Company”) was incorporated in
the State of Utah on November 14, 1979, under the name Valley High Oil, Gas & Minerals, Inc. (“Valley High Oil”),
for the purpose of engaging in the energy, mining and natural resources business. In order to raise the money necessary to acquire,
explore and develop oil and gas properties and other natural resource-related ventures or projects, we undertook an offering of
our common stock pursuant to the Regulation A exemption from registration afforded under the Securities Act of 1933, as amended,
wherein we offered and sold a total of 25 million common shares at a price of two cents ($0.02) per share and received gross proceeds
of $500,000 from over 1,000 subscribers. These funds were utilized in our attempt to acquire and explore for oil and gas, uranium,
coal, geothermal, and other mineral (metallic and nonmetallic) properties.
Between
1980 and 1985, we spent nearly all of our capital on several natural resource and mining ventures. In 1985, we effectuated a 10:1
reverse split. By 1986, after engaging in several unsuccessful ventures, we exhausted our capital reserves. From April 1989 through
2003, we were dormant, doing only those actions necessary to allow the Company to remain as an active entity. In April 2004, pursuant
to the affirmative vote of our shareholders we reincorporated into the State of Nevada by merging with a wholly owned Nevada subsidiary
company under the name Valley High Mining Company (the “Merger”). Pursuant to the Merger, among other things, for
every 35 shares of Valley High Oil, a shareholder was entitled to receive one (1) share of Valley High Mining Company, a Nevada
corporation, the surviving entity in the Merger.
On
April 19, 2004, the day that the Merger was effective, we entered into a mining lease agreement with North Beck Joint Venture,
LLC, a Utah limited liability company (”North Beck”), an entity owned and controlled by our then principal shareholder
and officer/director. The terms of the lease consideration were based upon prior lease agreements that North Beck Joint Venture
had entered into with other mining companies in the past. As a result, we acquired control of over 470 acres of patented precious
metals mining claims located adjacent to, and just west of, the town of Eureka in Juab County, Utah, in the so-called “Tintic
Mining District” (the “North Beck Claims”). The Tintic Mining District of Juab County, Utah, is located approximately
100 miles south of Salt Lake City. The North Beck Claims have an extensive history and contain several mines, mining shafts or
"prospecting pits," two of which are over 1,000 feet deep. This project also proved to be unsuccessful. As a result,
in February, 2010, control of our Company changed again, with the business objective to seek a suitable acquisition candidate
through acquisition, merger, reverse merger or other suitable business combination method. We disposed of the North Beck Claims
in connection with the change in control.
Until
September 2012, our then management continued to seek a suitable acquisition candidate, without success. On September 8, 2012,
we executed a Joint Venture Agreement (the “Joint Venture”) with Corizona Mining Partners LLC, a Minnesota limited
liability company (“Corizona”). Prior, on July 20, 2012, the Company and Corizona formed a limited liability company,
Minera Carabamba S.A. pursuant to the laws of Peru. The Joint Venture acquired a 50% leasehold interest in a property of approximately
966 hectares, located in La Libertad, Peru, in order to conduct gold mining operations on the property under the project name
of Machacala. On March 1, 2013, the Company advised Corizona that we were no longer interested in continuing with our role in
the Joint Venture due to the inability to gain access to the property.
Also
during our fiscal year ended December 31, 2012, we reviewed a second possible venture with Corizona. They introduced
us to a second property located in Peru and on October 5, 2012, we executed a letter of intent (“LOI”) to develop
this project, which consisted of a 50% aggregate interest. The LOI provided for us to initially own 80% of the venture,
with Corizona owning the remaining 20%. We agreed to pay the costs of developing the project, which was estimated to
be approximately $500,000, subject to our due diligence. We performed our due diligence on this project and discovered
that it was not in production, despite representations to the contrary. We also could not reach an agreement with Corizona
on a budget for this project. As a result, we elected to terminate this venture.
During
the year ended December 31, 2013, we also formed a wholly owned subsidiary, VH Energy, Inc., a Texas corporation, which was formed
with the intention of engaging in the oil and gas industry. We initially engaged in a venture which involved
the brokerage of diesel fuel, which failed to close. We have commenced legal action against various parties involved
in this transaction, however the matter is closed. See “Part II, Item 1, Legal Proceedings,” below.
During
the year ended December 31, 2014, the Company began to identify new underserved and emerging industries to move into and discovered
an increasing demand for fresher locally grown organic foods. The demand for organic food rose 11% between 2011 and 2012, reaching
$28 billion and the market is now predicted to grow at a 14% annual rate for the next four years. As a result, the Company determined
to transition into the organic foods market and on December 4, 2014, the Company completed the purchase of a fully contained grow
environment, or grow pod, pursuant to that certain Agreement and Bill of Sale. This grow pod is a template for many to be built
and deployed into culture centers (between 20 and 40 pods). The grow pod is a steel shipping container converted to be self-contained,
insulated, solarized, bug free, pesticide free, heated, cooled, LED lighted hydroponic growing facilities that can be managed
from a computer or phone. Each of our pods requires only seven to ten hours of attending weekly. Our pods are capable of growing
leafy green vegetables, herbs, mushrooms, cherry tomatoes and certain types of berries all year without regard to weather and
free from pests and disease. These crops may be harvested up to thirty times a year. The Company has tried unsuccessfully throughout
fiscal year ended December 31, 2015 to adequately capitalize its transition to the organic food market. As such, we will continue
to explore this market and others moving into 2016.
Our
principal place of business is located at 1325 Cavendish Drive, Suite 201, Silver Spring, MD 20905. Our phone number is (301)
202-7762 and our website address is
www.valleyhighmining.com
.
Government
Regulations
Domestic
mineral exploration operations are subject to extensive federal regulation and, with respect to federal leases, to interruption
or termination by governmental authorities on account of environmental and other considerations. The trend towards stricter
standards in environmental legislation and regulation could increase our costs and others in the industry. Mineral lessees
are subject to liability for the costs of clean-up of pollution resulting from a lessee’s operations, and may also be subject
to liability for pollution damages. We do not intend to obtain insurance against costs of clean-up operations as we do not
intend to continue in the mining industry, rather, we are transitioning to organic food and nutraceutical.
Estimate
of the Amount Spent on Research and Development
Research
and development expenses were $0 and $0 in 2015 and 2014, respectively.
Employees
As
of December 31, 2015, we have two (2) full-time employees, our Chief Executive Officer and President. For the foreseeable future,
we intend to use the services of independent consultants and contractors to perform various professional services.
Competition
Growth
in organic agricultural production is taking place in both developed and developing countries worldwide, and the competition for
major consumer markets in developed countries is increasing. U.S. producers have been challenged to keep pace with growing consumer
demand for organic products for over a decade, and new statistics from the U.S. Department of Commerce show that organic imports
play a key role in meeting U.S. demand. Many of the top imported organic products are tropical and subtropical crops, including
bananas and coffee, which the U.S. does not produce in large quantities. However, among all organic product imports lettuce, a
primary crop we are targeting, is the fastest growing.
Patents,
Trademarks, Licenses, Royalty Agreements or Labor Contracts
None.
Available
information
Our
website address is www.valleyhighmining.com. We do not intend our website address to be an active link or to otherwise incorporate
by reference the contents of the website into this Report. The public may read and copy any materials the Company files with the
U.S. Securities and Exchange Commission (the “SEC”) at the SEC’s Public Reference Room at 100 F Street, NE,
Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0030.
The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC.
Item
1A. Risk Factors.
Risks
Relating to Our Business and Company
WE
HAVE A LIMITED OPERATING HISTORY FROM WHICH YOU CAN EVALUATE OUR PERFORMANCE.
Since
we have a limited operating history, it will be difficult for investors and securities analysts to evaluate our business and prospects
and predict future revenue. Because we have a limited operating history, we will encounter risks, expenses and difficulties of
which we are unaware, and may be challenging to overcome. There can be no assurance that our efforts will be successful or that
we will reach profitability.
OUR
CURRENT CASH WILL NOT BE SUFFICIENT TO FUND OUR BUSINESS AS CURRENTLY PLANNED FOR THE NEXT 12 MONTHS. WE WILL NEED ADDITIONAL
FUNDING, EITHER THROUGH EQUITY OR DEBT FINANCINGS OR PARTNERING ARRANGEMENTS THAT COULD NEGATIVELY AFFECT US AND OUR STOCK PRICE.
We
will need significant additional funds to continue operations, which we may not be able to obtain. We estimate that we must raise
approximately $500,000 over the next 12 months to fund our anticipated capital requirements and obligations. Although we
have entered into an equity line which may provide a substantial portion of the funds needed, there is no assurance that all of
such funds will be available when needed for our operations.
We
have historically satisfied our working capital requirements through the private issuances of equity securities and convertible
notes. We will continue to seek additional funds through such channels and from collaboration and other arrangements with
corporate partners. However, we may not be able to obtain adequate funds when needed or funding that is on terms acceptable
to us. If we fail to obtain sufficient funds, we may need to delay, scale back or terminate some or all of our mining exploration
programs.
BECAUSE
WE ARE HIGHLY DEPENDENT ON OUR KEY EXECUTIVE OFFICERS FOR THE SUCCESS OF OUR BUSINESS PLAN AND MAY BE DEPENDENT ON THE EFFORTS
AND RELATIONSHIPS OF THE PRINCIPALS OF FUTURE ACQUISITIONS AND MERGERS, IF ANY OF THESE INDIVIDUALS BECOME UNABLE TO CONTINUE
IN THEIR ROLE, OUR BUSINESS COULD BE ADVERSELY AFFECTED.
We
believe our success will depend, to a significant extent, on the efforts and abilities of President and Chief Executive Officer.
If we lost our President and/or Chief Executive Officer, the Company would be forced to expend significant time and money in the
pursuit of a replacement(s), which would result in both a delay in the implementation of our business plan and the diversion of
limited working capital. We can give you no assurance that we could find a satisfactory replacement for President and Chief Executive
Officer at all, or on terms that are not unduly expensive or burdensome.
If
we grow and implement our business plan, we will need to add managerial talent to support our business plan. There is no guarantee
that we will be successful in adding such managerial talent. These professionals are regularly recruited by other companies and
may choose to change companies. Given our relatively small size compared to some of our competitors, the performance of our business
may be more adversely affected than our competitors would be if we lose well-performing employees and are unable to attract new
ones.
JOINT
VENTURES AND OTHER PARTNERSHIPS IN RELATION TO OUR PROPERTIES MAY EXPOSE US TO RISKS.
In
the future we may enter into joint ventures or other partnership arrangements with other parties in relation to the exploration,
development and production of the properties in which we have an interest. Joint ventures can often require unanimous approval
of the parties to the joint venture or their representatives for certain fundamental decisions such as an increase or reduction
of registered capital, merger, division, dissolution, amendments of documents, and the pledge of joint venture assets, which means
that each joint venture party may have a veto right with respect to such decisions which would lead to deadlock in the operations
of the joint venture or partnership. Further, we may be unable to exert control over strategic decision made in respect
of such properties. Any failure of such other companies to meet their obligations to us or to third parties, or any disputes with
respect to the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures or
their properties and, therefore, could have a material adverse effect on our results of operations, financial performance, cash
flows and share price.
WE
NEED TO MANAGE GROWTH IN OPERATIONS TO MAXIMIZE OUR POTENTIAL GROWTH AND ACHIEVE OUR EXPECTED REVENUES. OUR FAILURE TO MANAGE
GROWTH CAN CAUSE A DISRUPTION OF OUR OPERATIONS THAT MAY RESULT IN THE FAILURE TO GENERATE REVENUES AT LEVELS WE EXPECT.
In
order to maximize potential growth in our current markets, we may have to expand our operations. Such expansion will place a significant
strain on our management and our operational, accounting, and information systems. We expect that we will need to continue to
improve our financial controls, operating procedures and management information systems. We will also need to effectively train,
motivate, and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from
generating the revenues we expect.
INSIDERS
HAVE SUBSTANTIAL CONTROL OVER US, AND THEY COULD DELAY OR PREVENT A CHANGE IN OUR CORPORATE CONTROL EVEN IF OUR OTHER STOCKHOLDERS
WANT IT TO OCCUR.
As
of the date of this filing, our executive officers, directors, and principal stockholders who beneficially own 5% or more of our
outstanding common stock, own in the aggregate, approximately 60% of our outstanding common stock. These stockholders are able
to exercise significant control over all matters requiring stockholder approval, including the election of directors and approval
of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with our Company
even if our other stockholders want it to occur.
Risks
Relating to the Industry
PLANNED
EXPANSION AND LEASING OF EQUIPMENT OUT OF OUR CONTROL INVOLVE A HIGH DEGREE OF RISK.
We
cannot assure you of the success of our planned operations. The costs of purchasing, building, development and leasing
activities are subject to numerous variables that could result in substantial cost overruns. The deployment and leasing
of grow pods for organic farming may involve unprofitable efforts, and may not produce sufficient net revenues to return a profit
after accounting for development, operating and other costs.
Our
operations may be curtailed, delayed or cancelled as a result of numerous factors, many of which are beyond our control, including
economic conditions, mechanical problems, title problems, weather conditions, compliance with governmental requirements and shortages
or delays of equipment and services. If our activities are not successful, we will experience a material adverse effect
on our future results of operations and financial condition.
There
is a substantial risk that the properties and pods that we produce will not eventually be productive or may decline in productivity
over time. We do not insure against all risks associated with our business because insurance is either unavailable or its cost
of coverage is prohibitive. The occurrence of an event that is not covered by insurance could have a material adverse effect
on our financial condition.
DECLINE
IN FOOD PRICES MAY MAKE IT COMMERCIALLY INFEASIBLE FOR US TO DEVELOP OUR PODS AND MAY CAUSE OUR STOCK PRICE TO DECLINE.
The
value and price of your investment in our common shares, our financial results, and our exploration, development and leasing activities
may be significantly adversely affected by declines in the price of produce and other organic material. Produce prices can fluctuate
widely and are affected by numerous factors beyond our control such as interest rates, exchange rates, inflation or deflation,
fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political
and economic conditions of farming countries throughout the world. The price of produce fluctuates in response to many factors,
which are beyond anyone’s prediction abilities. The prices used in making the estimates in our plans differ from daily
prices quoted in the news media. Because farming occurs over a number of years, it may be prudent to continue producing
for some periods during which cash flows are temporarily negative for a variety of reasons. Such reasons include a belief
that the low price is temporary, and/or the expense incurred is greater when permanently closing production.
Risks
Relating to Being a Public Company
WE
WILL INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS.
We
will incur significant costs associated with our public company reporting requirements and costs associated with corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC. We expect all
of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some
activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult
and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits
and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult
for us to attract and retain qualified individuals to serve on the Company’s board of directors (the “Board”)
or as executive officers. We may be wrong in our prediction or estimate of the amount of additional costs we may incur or the
timing of such costs.
IF
WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROL OVER FINANCIAL REPORTING, OUR ABILITY TO ACCURATELY AND TIMELY REPORT
OUR FINANCIAL RESULTS OR PREVENT FRAUD MAY BE ADVERSELY AFFECTED AND INVESTOR CONFIDENCE MAY BE ADVERSELY IMPACTED.
As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include
a report of management on the Company’s internal controls over financial reporting in their annual reports. Under current
SEC rules, our management may conclude that our internal controls over our financial reporting are not effective. Even if our
management concludes that our internal controls over financial reporting are effective, our independent registered public accounting
firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented,
designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In the event that we are unable
to have effective internal controls, investors and others may lose confidence in the reliability of our financial statements and
our ability to obtain equity or debt financing as needed could suffer.
Risks
Related to Our Common Stock
OUR
COMMON STOCK IS CURRENTLY QUOTED ON THE OTC MARKETS, WHICH MAY HAVE AN UNFAVORABLE IMPACT ON OUR STOCK PRICE AND LIQUIDITY.
Our
common stock is quoted on the OTC Pink. The quotation of our shares on the OTC Pink may result in a less liquid market available
for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock
and could have a long-term adverse impact on our ability to raise capital in the future.
THERE
IS LIMITED LIQUIDITY ON THE OTC PINK, WHICH ENHANCES THE VOLATILE NATURE OF OUR EQUITY.
When
fewer shares of a security are being traded on the OTC Pink, volatility of prices may increase and price movement may outpace
the ability to deliver accurate quote information. Due to lower trading volumes in shares of our common stock, there may be a
lower likelihood that orders for shares of our common stock will be executed, and current prices may differ significantly from
the price that was quoted at the time of entry of the order.
OUR
COMMON STOCK IS CONSIDERED A “PENNY STOCK,” AND IS SUBJECT TO ADDITIONAL SALE AND TRADING REGULATIONS THAT MAY MAKE
IT MORE DIFFICULT TO SELL.
Our
common stock is considered to be a “penny stock” since it does not qualify for one of the exemptions from the definition
of “penny stock” under Section 3a51-1 of the Exchange Act. Our common stock is a “penny stock” because
it meets one or more of the following conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded
on a “recognized” national exchange; (iii) it is not quoted on the Nasdaq Stock Market, or even if so, has a price
less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets
less than $5 million.
The
principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in
sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated
under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors
with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document
at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule
15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling
any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning
his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience
as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy
of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our
common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.
WE
ARE SUBJECT TO THE PENNY STOCK RULES WHICH WILL MAKE OUR SECURITIES MORE DIFFICULT TO SELL.
We
are subject to the SEC’s “penny stock” rules because our securities sell below $5.00 per share. The
penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC, which provides
information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must
also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and
its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. In
addition, the bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer
orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s
confirmation.
Furthermore,
the penny stock rules require that prior to a transaction; the broker dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The
penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for our securities. As
long as our securities are subject to the penny stock rules, the holders of such securities will find it more difficult to sell
their securities.
IN
ORDER TO RAISE SUFFICIENT FUNDS TO EXPAND OUR OPERATIONS, WE MAY HAVE TO ISSUE ADDITIONAL SECURITIES AT PRICES WHICH MAY RESULT
IN SUBSTANTIAL DILUTION TO OUR SHAREHOLDERS.
If
we raise additional funds through the sale of equity or convertible debt, our current stockholders’ percentage ownership
will be reduced. In addition, these transactions may dilute the value of our common shares outstanding. We may also have to issue
securities that may have rights, preferences and privileges senior to our common stock.
WE
ARE NOT LIKELY TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
We
currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not
expect to pay any cash dividends in the foreseeable future, but will review this policy as circumstances dictate.
Item
1B. Unresolved Staff Comments.
Not
applicable.
Item
2. Properties.
During
the fiscal year ended December 31, 2014, the Company subleased, from a company under the control of our then current Chief Financial
Officer, approximately 1,000 square feet of executive office space located at 4550 NW Newberry Hill Road, Suite 202, Silverdale,
WA 98383, at a rate of $1,000 per month on a month to month basis. Effective December 1, 2014, the monthly rent was reduced to
$500 and subsequently discontinued in 2015.
Effective
December 1, 2014, the Company relocated its headquarters to 10777 Westheimer Road, Suite 1100, Houston, TX 77042, where we rent
executive suites on a monthly basis at $1,600 per month.
Effective
December 1, 2014, the Company rents yard space in Houston, Texas for its grow pods from an individual on a month to month basis
at a rate of $450 per month.
As
of this filing, the Company has relocated its headquarters to 1325 Cavendish Drive, Suite 201, Silver Spring, MD 20905
Item
3. Legal Proceedings.
In
March 2014, the Company entered into a settlement agreement with one of its former CEO, Andrew Telsey. A dispute arose with
respect to the Company’s performance under such settlement agreement and, in accordance with the terms of such agreement,
such party moved for arbitration to resolve such dispute. An agreement was reached in April 2015 during arbitration, however,
the Company was unable to perform under the settlement agreement. The Company has recorded a liability in the amount of $125,000,
plus accrued interest and fees, to account for liability they will likely incur.
On
February 24, 2015, the Company was named a defendant in a complaint filed by John Michael Coombs in the Third Judicial District
Court in and For Salt Lake County, State of Utah, alleging, among other things, Breach of Contract, in connection with a Warrant
Agreement issued by the Company to Mr. Coombs in 2010. Management has informed Mr. Coombs that it fully intends to honor the Warrant
Agreement and is in discussions to settle this matter. The Company carries this liability on its balance sheet as a derivative
liability, which amounted to $681 at the fiscal year ended December 31, 2015.
Item
4. Mine Safety Disclosures.
Not
Applicable.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(a)
Market Information
Our
shares of common stock are currently quoted on the OTC Pink under the symbol “VHMC”.
The
following table sets forth the high and low bid price for our common stock for each quarter during the past two fiscal years.
The prices reflect inter-dealer quotations, do not include retail mark-ups, markdowns or commissions and do not necessarily reflect
actual transactions.
|
Quarter Ended
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
|
|
March 31, 2014
|
|
$
|
1.02
|
|
|
$
|
0.30
|
|
|
June 30, 2014
|
|
$
|
0.75
|
|
|
$
|
0.05
|
|
|
September 31, 2014
|
|
$
|
0.036
|
|
|
$
|
0.013
|
|
|
December 31, 2014
|
|
$
|
0.0179
|
|
|
$
|
0.0081
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2015
|
|
$
|
0.0181
|
|
|
$
|
0.0080
|
|
|
June 30, 2015
|
|
$
|
0.0290
|
|
|
$
|
0.0080
|
|
|
September 31, 2015
|
|
$
|
0.0120
|
|
|
$
|
0.0045
|
|
|
December 31, 2015
|
|
$
|
0.0050
|
|
|
$
|
0.0013
|
|
(b)
Holders
As
of May 4, 2016, a total of 373,542,046 shares of the Company’s common stock are currently outstanding held by 1,102 shareholders
of record. This figure does not take into account those shareholders whose certificates are held in the name of broker-dealers
or other nominees.
(c)
Dividends
We
have not declared or paid any dividends on our common stock and intend to retain any future earnings to fund the development and
growth of our business. Therefore, we do not anticipate paying dividends on our common stock for the foreseeable future. The payment
of dividends in the future will depend upon, among other factors, our earnings, capital requirements, and operating financial
conditions.
(d)
Securities Authorized for Issuance under Equity Compensation Plan
We
have not adopted any stock option or other employee plans as of the date of this Report. We may adopt such plans in the future.
Transfer
Agent
Our
transfer agent is Pacific Stock Transfer Company. Their address is 6725 Via Austi Pkwy, Suite 300, Las Vegas, NV 89119. Their
phone number is (702) 361-3033.
Recent
Sales of Unregistered Securities
During
the fiscal year ended December 31, 2015, we have issued the following securities which were not registered under the Securities
Act and not previously disclosed in the Company’s Quarterly Reports on From 10-Q or Current Reports on Form 8-K. Unless
otherwise indicated, all of the share issuances described below were made in reliance on the exemption from registration provided
by Section 4(2) of the Securities Act for transactions not involving a public offering:
The
Company retired 20,000,000 shares of common stock pursuant to a failed Regulation S Stock Purchase Agreement.
The
Company issued 27,965,227 shares of common stock for the retirement of debt and accrued interest totaling $49,452. The Company
recognized a loss of $216,234 on the transactions.
The
Company issued 6,000,000 shares of common stock for services in the amount of $27,000.
Rule
10B-18 Transactions
During
the years ended December 31, 2014 and 2015, there were no repurchases of the Company’s common stock by the Company
Item
6. Selected Financial Data.
Not
applicable.
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
THE
FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS
AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING
STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING
STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND
“RISK FACTORS” AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.
Plan
of Operation
As
of the date of this Report, the Company has been positioning itself as an incubator for companies in the pharmaceutical, nutraceutical
and medical spaces offering products for all ages from newborns to seniors. The Company’s goal is to identify revolutionary
products and create a corporate infrastructure, set up management teams, bring in design professionals both on the development
side and marketing side to introduce these offerings to the marketplace. Being part of the new Company team will allow entrepreneurs
to flourish without having the constraints of day to day corporate issues, as well provides an easier access to capital and credit
lines for growth and expansion of the business. The Company is working to build a strong portfolio of companies to drive revenues
and value with an intent that once these companies mature from all aspects inclusive of management, revenues and controls they
will have the ability to operate independent of the conglomerate. We are not limiting our search to any specific geographic region.
Our plan of operation for the twelve months following the date of this annual report is to continue to review potential acquisitions
in the pharmaceutical, nutraceutical and medical sectors. Currently, we are in the process of completing due diligence investigation
of various opportunities in the pharmaceutical, nutraceutical and medical sector. We do not have enough funds on hand to cover
our administrative expenses for the next 12 months. We will need to raise funds for administration as well as additional funding
for the review, acquisition and development of the business once the same is identified. We anticipate that additional funding
will be required in the form of equity financing from the sale of our common stock or debt financing.
Results
of Operations
Comparison
of Results of Operations for the fiscal years ended December 31, 2015 and 2014
Total
expenses, which included general and administrative expenses for our fiscal year ended December 31, 2015 were $617,755, compared
to $514,001 during our fiscal year ended December 31, 2014, an increase of $103,754. This increase included increases in depreciation
expense of $3,000 (in addition to depreciation expense, there was an additional $48,000 Other expense for Impairment on the asset
due to the currently unknown whereabouts of the Pod), management expense of $97,000, professional fees of $35,165, travel and
entertainment of $843, and general and administrative expense of $8,265. This was offset by decreases in administrative expense
of $25,000, and payroll expense of $15,519. Additionally, the Company experienced net other income and expense of ($400,282).
As
a result, we incurred a net loss of $1,018,036 (approximately $0.01 per share) for the fiscal year ended December 31, 2015,
compared to a net loss of $692,723 during our fiscal year ended December 31, 2014 (approximately $0.03 per share).
Liquidity
and Capital Resources
As
of December 31, 2015, we had cash or cash equivalents of $119.
Net
cash used in operating activities was $84,700 during our fiscal year ended December 31, 2015, compared to $253,888 during our
fiscal year ended December 31, 2014.
Cash
flows provided or used in investing activities were $1,000 provided for the year ended December 31, 2015 and $129,000 used during
our fiscal year ended December 31, 2015. Net cash flows provided by financing activities was $83,756 during our fiscal year ended
December 31, 2015, compared to $382,951 during our fiscal year ended December 31, 2014.
During
our fiscal year ended December 31, 2015, net borrowing from related parties totaled ($15,504). During our fiscal year ended December
31, 2014 certain of our shareholders provided us with loans aggregating $53,919. These loans carry interest of between 6% and
8% and are due upon demand within the next 12 months. We utilized these funds from these loans to cover operating expenses during
the fiscal year.
Inflation
Although
our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results
of operations during our fiscal year ended December 31, 2015.
Critical
Accounting Policies and Estimates
Critical
Accounting Estimates
The
discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of
our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial
condition and results of operations and that require management’s most difficult, subjective or complex judgments, often
as a result of the need to make estimates about the effects of matters that are inherently uncertain.
Leases
– We follow the guidance in SFAS No. 13 “
Accounting for Leases
,” as amended, which requires
us to evaluate the lease agreements we enter into to determine whether they represent operating or capital leases at the inception
of the lease.
Recently
Adopted Accounting Standards –
As of November 1, 2011, we adopted new guidance on the testing of goodwill impairment
that allows the option to assess qualitative factors to determine whether performing the two step goodwill impairment assessment
is necessary. Under the option, the calculation of the reporting unit's fair value is not required to be performed unless as a
result of the qualitative assessment, it is more likely than not that the fair value of the reporting unit is less than the unit's
carrying amount. The adoption of this guidance impacts testing steps only, and therefore adoption did not have an impact on our
consolidated financial statements. As of November 1, 2011, we adopted new guidance regarding disclosures about fair value measurements.
The guidance requires new disclosures related to activity in Level 3 fair value measurements. This guidance requires purchases,
sales, issuances, and settlements to be presented separately in the rollforward of activity in Level 3 fair value measurements.
There were various other accounting standards and interpretations issued during 2010 and 2011, none of which are expected to have
a material impact on our consolidated financial position, operations or cash flows.
Off-Balance
Sheet Arrangements
We
have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect
on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources and would be considered material to investors.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk.
We
hold a derivative warrant instruments which is accounted for on a quarterly basis and reflected as a loss or gain on our income
statement with the balance of the liability reflected on our balance sheet. We do not engage in any other hedging activities.
Item
8. Financial Statements and Supplementary Data.
Our
financial statements are contained in pages F-1 through F-13 which appear at the end of this Annual Report.
Item
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item
9A. Controls and Procedures.
(a)
Evaluation of Disclosure and Control Procedures
Our
management, with the participation of our Chief Executive Officer/ Chief Financial Officer, has evaluated the effectiveness of
our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Report.
These
controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including
our CEO/CFO to allow timely decisions regarding required disclosure.
Based
on this evaluation, our current CEO/CFO has concluded that our disclosure controls and procedures were effective as of December
31, 2015, at the reasonable assurance level. We believe that our financial statements presented in this annual report on Form
10-K fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented
herein.
(b)
Management’s Assessment of Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule
13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
|
|
●
|
Pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
the assets of the company;
|
|
|
|
|
|
|
●
|
Provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and the receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the Company; and
|
|
|
|
|
|
|
●
|
Provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the company’s
assets that could have a material effect on the financial statements.
|
Because
of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management
assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment,
our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
Based
on management’s assessment, management believes that, as of December 31, 2015, our internal control over financial reporting
presented a material weakness. The assessment is based on the nature of the acts taken by the prior CEO, Mr. Johnson, leading
up to his quick departure. We also did not effectively implement comprehensive entity level internal controls and were unable
to adequately segregate duties within the accounting department due to an insufficient number of staff, and implement appropriate
information technology controls.
Inherent
Limitations
Our
management, including our Chief Executive Officer/Chief Financial Officer, does not expect that our disclosure controls and procedures
will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely
upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of
financial data.
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 Securities and Exchange Commission 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 control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act, during our most recently completed fiscal year that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Item
9B. Other Information.
Not
applicable.
PART
III
Item
10. Directors, Executive Officers, and Corporate Governance.
The
following table and biographical summaries set forth information, including principal occupation and business experience, about
our directors and executive officers at April 30, 2016:
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
|
|
Andrew
I. Telsey (1)
|
|
61
|
|
Chief
Executive Officer, President, Secretary, Treasurer, Chairman of the Board
|
|
|
|
|
|
|
|
William
M. Wright, III (2)
|
|
50
|
|
Chief
Financial Officer, President, Secretary, Treasurer, Director
|
|
|
|
|
|
|
|
Richard
Johnson (3)
|
|
63
|
|
Chief
Executive Officer, Chairman of the Board
|
|
|
|
|
|
|
|
Peter
Bianchi (4)
|
|
47
|
|
President,
Director
|
|
|
|
|
|
|
|
Clifford
Pope (5)
|
|
65
|
|
Chief
Executive Officer, Chief Financial Officer, Director
|
|
|
(1)
|
Mr.
Telsey served as the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer
from October 31, 2012 to January 27, 2014. Mr. Telsey served as Chairman from October 31, 2012 until March 2014.
|
|
|
(2)
|
Mr.
Wright was appointed as the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer
on January 27, 2014 and sole director effective as of March 21, 2014. On December 4, 2014 Mr. Wright resigned as Chief Executive
Officer and Chairman of the Board. On January 15, 2015, Mr. Wright resigned as President of the Company – he remained
as Chief Financial Officer and a director of the Company until his resignation of all positions on June 30, 2015.
|
|
|
(3)
|
Mr.
Johnson was appointed as the Company’s Chief Executive Officer and Chairman of the Board effective as of December 4,
2014. Mr. Johnson resigned and was relieved of his duties in January 2016.
|
|
|
(4)
|
On
January 15, 2015, Mr. Bianchi was appointed as the Company’s President and a member of the Board. Mr. Bianchi
was relieved of his duties in January 2016.
|
|
|
(5)
|
Mr.
Pope was appointed to serve as the Company’s Chief Executive Officer, Chief Financial Officer, and sole member of the
Board on January 13, 2016.
|
Following
is biographical information of our current management:
Clifford
Pope
, 65, has over 35 years of experience in Information Technologies (IT), business development and providing a variety
of related services and products. Over the past 25 years as a CEO/President, was the founder of five businesses providing
technical support services and IT products to the USA military and federal government agencies. His background includes marketing
research, developing business plans, creating and establishing business infrastructures, computer manufacturing, managing business
development campaigns; implementing various IT operations from network Operating Centers, Voice over Internet Protocol services,
Help Desk Operations, software development, medical diagnostic testing devices, and business process re-engineering. Mr. Pope
has been the CEO/President of public a company since 2003, very knowledgeable of financial statements, producing disclosure and
financial statements, cost accounting, federal government practices, protocols, and private industry practices. Has
a working experience in corporate mergers, stock exchanges, and the formation of public entities and very knowledgeable of the
corporate governance requirements of the Sarbanes-Oxley Act.
Family
Relationships
There
are no family relationships among our directors, executive officers, or persons nominated or chosen by the Company to become directors
or executive officers. None of our directors or executive officers or their respective immediate family members or affiliates
are indebted to us.
Committees
of the Board of Directors
We
do not have a standing nominating, compensation or audit committee. Rather, our full Board performs the functions of
these committees. Also, we do not have a “audit committee financial expert” on our Board as that term is defined by
Item 401(d)(5)(ii) of Regulation S-K. We do not believe it is necessary for our Board to appoint such committees because the volume
of matters that come before our board of directors for consideration permits the directors to give sufficient time and attention
to such matters to be involved in all decision making. Additionally, because our Common Stock is not listed for trading or quotation
on a national securities exchange, we are not required to have such committees.
Legal
Proceedings
To
the best of our knowledge, during the past ten years, none of the following occurred with respect to our present or former director,
executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in
a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type
of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the
SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more
of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and
regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based
solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the
fiscal year ended December 31, 2015, were timely.
Code
of Business Conduct and Ethics
As
of the date of this Information Statement, we have not adopted a corporate code of business conduct and ethics.
ITEM
11. EXECUTIVE COMPENSATION
SUMMARY
COMPENSATION TABLE
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Stock Awards
($)
|
|
|
All Other Compensation
($)
|
|
|
Total Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew I. Telsey,
|
|
2015
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
CEO/President (1)
|
|
2014
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William M. Wright
|
|
2015
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
CFO (2)
|
|
2014
|
|
$
|
0
|
|
|
$
|
81,000
|
|
|
$
|
132,000
|
|
|
$
|
212,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Johnson
|
|
2015
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
240,000
|
|
|
$
|
240,000
|
|
|
CEO (3)
|
|
2014
|
|
$
|
0
|
|
|
$
|
120,000
|
|
|
$
|
20,000
|
|
|
$
|
140,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Bianchi
|
|
2015
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
President (4)
|
|
2014
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford Pope
|
|
2015
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
CEO (5)
|
|
2014
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
(1)
|
Mr.
Telsey assumed his positions in October 2012 and served until January 27, 2014. As of December 31, 2013, $55,137 of the salary
earned had been accrued.
|
|
|
(2)
|
Mr.
Wright was appointed the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer
on January 27, 2014. Mr. Wright served as the Chief Financial Officer until June 30, 2015. As of December 31, 2015,
$60,000 of the compensation earned had been accrued.
|
|
|
(3)
|
Mr.
Johnson was appointed the Company’s Chief Executive Officer on December 5, 2014. As of December 31, 2015, $240,000 of
the compensation earned had been accrued.
|
|
|
(4)
|
Mr.
Bianchi was appointed as the Company’s President on January 15, 2015. As of December 31, 2015, $150,000 of the compensation
earned had been accrued.
|
|
|
(5)
|
Mr.
Pope was appointed as the Company’s Chief Executive Officer and Chief Financial Officer on January 13, 2016. There
were no accruals or payments for Mr. Pope during either of the fiscal years reported.
|
Employment
Agreements
Mr.
Pope was awarded a six (6) month employment agreement at the beginning of his service, January 13, 2016, which is subsequent to
the two years reported. The agreement is a non-exclusive service agreement that pays Mr. Pope a base salary of $3,500 per month
and entitles him to 1,000,000 shares of restricted common stock per month. Additionally, Mr. Pope is reimbursed for accountable
direct expenses in connection with the performance of his duties.
Outstanding
Equity Awards
The
Company has no stock option, retirement, pension, or profit-sharing programs for the benefit of directors, officers or other employees,
but the Board may recommend adoption of one or more such programs in the future.
No
officer or director holds any unexercised options, stock that had not vested, or equity incentive plan awards as of the date of
this Report.
Director
Compensation
The
Company has not paid compensation to its members of the Board for serving as such. The Board may in the future decide to award
the members of the Board cash or stock based consideration for their services to the Company, which awards, if granted shall be
in the sole determination of the Board.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The
following table sets forth certain information regarding the ownership of common stock as of May X, 2016, by (i) each person known
to us to own more than 5% of our outstanding common stock, (ii) each of our directors, (iii) each of our executive officers, and
(iv) all of our directors and executive officers as a group. Unless otherwise indicated, all shares are owned directly and the
indicated person has sole voting and investment power.
Title of
Class
|
|
Name and Address
Of Beneficial Owner
|
|
Amount and Nature
Of Beneficial Ownership
|
|
|
Percent
Of Class (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Clifford Pope
(4)
|
|
|
0
|
|
|
|
0
|
%
|
|
|
|
1325 Cavendish Drive, Suite 201
|
|
|
|
|
|
|
|
|
|
|
|
Silver Spring, MD 20905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
All Officers and Directors as a group
|
|
|
0
|
|
|
|
0
|
%
|
|
|
|
(1 person)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Peter Scalise
(2)
|
|
|
0
|
|
|
|
0
|
%
|
|
Preferred
|
|
PO Box 66
|
|
|
51
|
|
|
|
100
|
%
|
|
|
|
Oakdale, NY 11769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
GEAR Sports Nutrition, Inc.
(3)
|
|
|
225,000,000
|
|
|
|
60
|
%
|
|
|
|
PO Box 66
|
|
|
|
|
|
|
|
|
|
|
|
Oakdale, NY 11769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
All officers, directors and 5% holders as a group
|
|
|
225,000,000
|
|
|
|
60
|
%
|
|
Preferred
|
|
(3 persons and entities)
|
|
|
51
|
|
|
|
100
|
%
|
|
|
(1)
|
Based
on 373,542,046 shares of common stock issued and outstanding as of May 5, 2016.
|
|
|
(2)
|
Mr.
Scalise is the sole holder of a super voting preferred class of stock.
|
|
|
(3)
|
GEAR
Sports Nutrition, Inc. is being acquired by the Company.
|
|
|
(4)
|
Mr.
Pope is the Chief Executive Officer, Chief Financial Officer, and director of our Company.
|
Changes
in Control
We
are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions
of Item 403(c) of Regulation S-K.
Item
13. Certain Relationships and Related Transactions, and Director Independence.
Related
Transactions
During
the fiscal year ended December 31, 2014, the Company subleased, from a company under the control of our then current Chief Financial
Officer, approximately 1,000 square feet of executive office space located at 4550 NW Newberry Hill Road, Suite 202, Silverdale,
WA 98383, at a rate of $1,000 per month on a month to month basis. Effective December 1, 2014, the monthly rent was reduced to
$500 and subsequently discontinued in 2015.
During
the year ended December 31, 2014, the Company borrowed $15,919 in related party advances.
On
December 4, 2014, the Company entered into an Agreement and Bill of Sale by and between the Company, as purchaser, and our then
current Chief Executive Officer, Richard Johnson, as seller, pursuant to which the Company purchased certain machinery and equipment
in exchange for 16,125,000 shares of the Company’s common stock.
During
the fiscal year ended December 31, 2015, the then current CEO, Richard Johnson, executed what current management has determined
to be Management Fraud and an Illegal Act under SOX 404. During the fiscal year, Johnson issued to himself a Loan in the amount
of $16,000, cash withdrawals of $5,000 and $2,000 during the 4
th
quarter, and additional $5,000 and $2,000 payments
in November to RJM Consulting, a company owned by Johnson. In rebuilding the accounting, management has attributed a net amount
of $14,131 taken as a loan and subsequently has written that off as uncollectable. The Company reserves the right to pursue Johnson
at a later date.
There
are no other related party transactions that are required to be disclosed pursuant to Regulation S-K promulgated under the Securities
Act of 1933, as amended.
Director
Independence
The
common stock of the Company is currently quoted on the OTC Pink, quotation systems which currently do not have director independence
requirements. On an annual basis, each director and executive officer will be obligated to disclose any transactions with the
Company in which a director or executive officer, or any member of his or her immediate family, have a direct or indirect material
interest in accordance with Item 407(a) of Regulation S-K. Following completion of these disclosures, the Board will make an annual
determination as to the independence of each director using the current standards for “independence” that satisfy
the criteria for the Nasdaq. The Board has determined that there are no members that are independent under such standards.
Item
14. Principal Accounting Fees and Services.
The
following table presents fees for professional audit services rendered by BF Borgers, CPA PC during our fiscal year ended December
31, 2015 and to Terry L Johnson, CPA during our fiscal year ended 2014. BF Borgers CPA PC performed a two (2) year audit for the
Company in 2015 that covered both fiscal years ended December 31, 2014 and 2015:
|
|
|
December 31,
2015
|
|
|
December 31,
2014
|
|
|
Audit Fees
|
|
$
|
22,500
|
|
|
$
|
13,000
|
|
|
Audit Related Fees
|
|
|
-
|
|
|
|
-
|
|
|
Tax Fees
|
|
|
-
|
|
|
|
-
|
|
|
All Other Fees
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
$
|
22,500
|
|
|
$
|
10,700
|
|
Audit
Fees
.
Consist of amounts billed for professional services rendered for the audit of our annual financial statements
included in our Annual Reports on Forms 10-K for our fiscal years ended December 31, 2015 and 2014 and reviews of our interim
financial statements included in our Quarterly Reports on Forms 10-Q.
Tax
Fees
. Consists of amounts billed for professional services rendered for tax return preparation, tax planning and tax
advice.
All
Other Fees
.
Consists of amounts billed for services other than those noted above.
We
do not have an audit committee and as a result our entire Board performs the duties of an audit committee. Our Board evaluates
the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The
following exhibits are included herewith:
|
Exhibit
No.
|
|
Description
|
|
|
|
|
|
3.1
(i)
|
|
Articles
of Incorporation of the Company filed with the State of Utah on November 14, 1979 (Incorporated by reference to the registrant’s
Form 10-SB filed on March 31, 2005).
|
|
|
|
|
|
3.1
(ii)
|
|
Certificate
of Amendment to Articles of Incorporation filed with and accepted by the State of Utah on February 21, 1985 (Incorporated
by reference to the registrant’s Form 10-SB filed on March 31, 2005).
|
|
|
|
|
|
3.1
(iii)
|
|
Articles
of Incorporation of the Company's wholly owned Nevada subsidiary filed with the Nevada Secretary of State on February 27,
2004 (Incorporated by reference to the registrant’s Form 10-SB filed on March 31, 2005).
|
|
|
|
|
|
3.1
(iv)
|
|
Articles
of Merger (Incorporated by reference to the registrant’s Form 10-SB filed on March 31, 2005).
|
|
|
|
|
|
3.1
(v)
|
|
Certificate
of Designations, Preferences and Rights of Series B Preferred Stock, $0.001 Par Value Per Share (Incorporated by reference
to the registrant’s Current Report on Form 8-K filed on July 15, 2014)
|
|
|
|
|
|
3.2
|
|
By-Laws
(Incorporated by reference to the registrant’s Form 10-SB filed on March 31, 2005 ).
|
|
|
|
|
|
10.1
|
|
Warranty
Deed to North Beck Joint Venture Mining Claims (Incorporated by reference to the registrant’s Form 10-SB filed on March
31, 2005).
|
|
|
|
|
|
10.2
|
|
Mining
Lease With Option to Purchase Between North Beck Joint Venture, L.L.C. and Valley High Mining Company (Incorporated by reference
to the registrant’s Form 10-SB filed on March 31, 2005).
|
|
|
|
|
|
10.3
|
|
Joint
Venture Agreement between Corizona Mining Partners, LLC and Valley High Mining Company (Incorporated by reference to the registrant’s
Current Report on Form 8-K filed on September 25, 2012).
|
|
|
|
|
|
10.4
|
|
Letter
of Intent with Corizona Mining Partners, LLC concerning Madre de Dios project (Incorporated by reference to the registrant’s
Quarterly Report on Form 10-Q for the period ended September 30, 2012, filed on November 21, 2012)
|
|
|
|
|
|
10.5
|
|
Agreement
and Bill of Sale, dated December 4, 2014, by and between Valley High Mining Company and Richard Johnson (Incorporated by reference
to the registrant’s Current Report on Form 8-K filed on December 5, 2014)
|
|
|
|
|
|
16.1
|
|
Letter
of Pritchett, Siler & Hardy, P.C., dated November 16, 2010 (Incorporated by reference to the registrant’s Current
Report on Form 8-K filed on November 16, 2010).
|
|
|
|
|
|
31.1
|
|
Certification
by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)
or Rule 15d-14(a)) *
|
|
|
|
|
|
31.2
|
|
Certification
by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)
or Rule 15d-14(a))*
|
|
|
|
|
|
32.1
|
|
Certification
by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002*
|
|
|
|
|
|
32.2
|
|
Certification
by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 *
|
|
|
|
|
|
101.INS
|
|
XBRL
Instance Document *
|
|
|
|
|
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema *
|
|
|
|
|
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase *
|
|
|
|
|
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase *
|
|
|
|
|
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase *
|
|
|
|
|
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase *
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
|
VALLEY
HIGH MINING COMPANY
|
|
|
|
|
|
Date:
May 17, 2016
|
By:
|
/s/
Clifford Pope
|
|
|
|
Name:
Clifford Pope
|
|
|
|
Title:
Chief Executive Officer
|
|
Date:
May 17, 2016
|
By:
|
/s/
Clifford Pope
|
|
|
|
Name:
Clifford Pope
|
|
|
|
Title:
Chief Financial Officer
|
|
VALLEY
HIGH MINING COMPANY
|
TABLE
OF CONTENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of Valley High Mining Company:
We
have audited the accompanying balance sheets of Valley High Mining Company (“the Company”) as of December 31, 2015
and 2014 and the related statements of operations, stockholders’ equity (deficit) 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 standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit 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 opinions.
In
our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Valley
High Mining Company, as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles in the United States of America.
The
company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits 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 Company's internal control over
financial reporting. Accordingly, we express no such opinion.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/
B F Borgers CPA PC
B
F Borgers CPA PC
Lakewood, CO
May 17, 2016
VALLEY
HIGH MINING COMPANY
Balance
Sheets
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
119
|
|
|
$
|
63
|
|
|
Other current assets
|
|
|
-
|
|
|
|
-
|
|
|
Total Current Assets
|
|
|
119
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets - Pod
|
|
|
51,000
|
|
|
|
129,000
|
|
|
Accumulated depreciation
|
|
|
(3,000
|
)
|
|
|
-
|
|
|
Impairment of Pod
|
|
|
(48,000
|
)
|
|
|
(79,00
|
)
|
|
Total Fixed Assets
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
119
|
|
|
$
|
50,063
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS DEFICIT
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
383,962
|
|
|
$
|
83,501
|
|
|
Accounts payable and accrued expenses
- related parties
|
|
|
384,060
|
|
|
|
171,281
|
|
|
Contingent liability - legal
|
|
|
167,283
|
|
|
|
125,000
|
|
|
Contingent liability - notes
|
|
|
225,200
|
|
|
|
150,200
|
|
|
Derivative liability - warrants
|
|
|
681
|
|
|
|
6,233
|
|
|
Notes payable
|
|
|
140,964
|
|
|
|
73,951
|
|
|
Notes payable - related parties
|
|
|
-
|
|
|
|
16,577
|
|
|
Total Current Liabilities
|
|
|
1,302,151
|
|
|
|
626,743
|
|
|
Long-Term Liabilities
|
|
|
-
|
|
|
|
-
|
|
|
Total Liabilities
|
|
|
1,302,151
|
|
|
|
626,743
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 500,000,000 shares authorized, 102,210,918 and 88,245,691 shares issued and outstanding, respectively
|
|
|
102,211
|
|
|
|
88,246
|
|
|
Preferred stock (Series B), $0.001 par value, 51 shares authorized, 51 and 0 shares issued and outstanding, respectively
|
|
|
-
|
|
|
|
-
|
|
|
Additional paid-in capital
|
|
|
4,551,088
|
|
|
|
4,272,368
|
|
|
Accumulated deficit
|
|
|
(5,955,330
|
)
|
|
|
(4,937,294
|
)
|
|
Total Stockholders’ Equity (Deficit)
|
|
|
(1,302,031
|
)
|
|
|
(576,680
|
)
|
|
TOTAL LIABILITIES AND EQUITY
|
|
$
|
119
|
|
|
$
|
50,063
|
|
The
accompanying notes are an integral part of these financial statements.
VALLEY
HIGH MINING COMPANY
Statements
of Operations
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
REVENUE
|
|
$
|
-
|
|
|
$
|
-
|
|
|
COST OF SALES
|
|
|
-
|
|
|
|
-
|
|
|
GROSS PROFIT
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
Administrative expense
|
|
|
-
|
|
|
|
25,000
|
|
|
Depreciation expense
|
|
|
3,000
|
|
|
|
-
|
|
|
Management expense
|
|
|
450,000
|
|
|
|
353,000
|
|
|
Payroll Expenses
|
|
|
-
|
|
|
|
15,519
|
|
|
Professional Fees
|
|
|
138,069
|
|
|
|
102,904
|
|
|
Travel & Ent
|
|
|
843
|
|
|
|
-
|
|
|
General & Administrative
|
|
|
25,843
|
|
|
|
17,578
|
|
|
Total Expenses
|
|
|
617,755
|
|
|
|
514,001
|
|
|
LOSS FROM OPERATIONS
|
|
|
(617,755
|
)
|
|
|
(514,001
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
|
|
|
|
|
|
|
Gain on discharge of debt
|
|
|
-
|
|
|
|
5,952
|
|
|
Gain (Loss) on Derivative Liability
|
|
|
5,552
|
|
|
|
331,564
|
|
|
Total Other Income
|
|
|
5,552
|
|
|
|
337,516
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Expenses
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
10,186
|
|
|
|
4,868
|
|
|
Legal expense contingency
|
|
|
42,283
|
|
|
|
125,000
|
|
|
Loss on Impairment of asset
|
|
|
48,000
|
|
|
|
79,000
|
|
|
Loss on asset - Corizona
|
|
|
-
|
|
|
|
304,870
|
|
|
Loss on issuance of shares for debt
|
|
|
216,234
|
|
|
|
-
|
|
|
Impairment / write off of Illegal Officer loan resulting from Former CEO Fraud / Malfeasance
|
|
|
14,131
|
|
|
|
-
|
|
|
Other Expenses
|
|
|
75,000
|
|
|
|
2,500
|
|
|
Total Other Expenses
|
|
|
405,834
|
|
|
|
516,238
|
|
|
Net Other Income (Expense)
|
|
|
(400,282
|
)
|
|
|
(178,722
|
)
|
|
LOSS BEFORE INCOME TAXES
|
|
|
(1,018,036
|
)
|
|
|
(692,723
|
)
|
|
PROVISION FOR INCOME TAXES
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(1,018,036
|
)
|
|
$
|
(692,723
|
)
|
|
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED LOSS PER COMMON SHARE
|
|
|
(0.01
|
)
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED
|
|
|
88,702,808
|
|
|
|
23,379,495
|
|
The accompanying notes are an integral part
of these financial statements.
|
VALLEY HIGH MINING COMPANY
|
|
Statements of Changes in Stockholders' Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Preferred Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2013
|
|
|
16,951,756
|
|
|
$
|
16,952
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
3,985,743
|
|
|
$
|
(4,244,571
|
)
|
|
$
|
241,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares issued for note payable
|
|
|
-
|
|
|
|
-
|
|
|
|
51
|
|
|
|
0.05
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for Reg S
|
|
|
15,000,000
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
210,000
|
|
|
|
-
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commons shares issued for cash - option exercise
|
|
|
168,935
|
|
|
|
169
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for services
|
|
|
27,500,000
|
|
|
|
27,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
193,750
|
|
|
|
-
|
|
|
|
221,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for assets
|
|
|
16,125,000
|
|
|
|
16,125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
112,875
|
|
|
|
-
|
|
|
|
129,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for debt
|
|
|
7,500,000
|
|
|
|
7,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for Reg S
|
|
|
20,000,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commons shares retired from Reg S
|
|
|
(15,000,000
|
)
|
|
|
(15,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(210,000
|
)
|
|
|
-
|
|
|
|
(225,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2014
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(692,723
|
)
|
|
|
(692,723
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
|
|
88,245,691
|
|
|
$
|
88,246
|
|
|
|
51
|
|
|
$
|
0.05
|
|
|
$
|
4,272,368
|
|
|
$
|
(4,937,294
|
)
|
|
$
|
(576,680
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for services
|
|
|
6,000,000
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,000
|
|
|
|
-
|
|
|
|
27,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for debt
|
|
|
27,965,227
|
|
|
|
27,965
|
|
|
|
-
|
|
|
|
-
|
|
|
|
237,270
|
|
|
|
-
|
|
|
|
265,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares retired from Reg S
|
|
|
(20,000,000
|
)
|
|
|
(20,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,018,036
|
)
|
|
|
(1,018,036
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
102,210,918
|
|
|
$
|
102,211
|
|
|
|
51
|
|
|
$
|
0.05
|
|
|
$
|
4,551,088
|
|
|
$
|
(5,955,330
|
)
|
|
$
|
(1,302,031
|
)
|
The accompanying notes are an integral part of
these financial statements.
|
VALLEY HIGH MINING COMPANY
|
|
Statements of Cash Flows
|
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,018,036
|
)
|
|
$
|
(692,723
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
27,000
|
|
|
|
221,250
|
|
|
Depreciation
|
|
|
3,000
|
|
|
|
-
|
|
|
Loss (gain) in derivative liability
|
|
|
(5,552
|
)
|
|
|
(331,564
|
)
|
|
Loss on impairment of asset
|
|
|
48,000
|
|
|
|
79,000
|
|
|
Loss on disposal of asset
|
|
|
-
|
|
|
|
304,870
|
|
|
Loss on issuance of shares for debt
|
|
|
216,234
|
|
|
|
-
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Notes receivable
|
|
|
-
|
|
|
|
75,000
|
|
|
Loss (gain) on discharge of debt
|
|
|
14,131
|
|
|
|
(5,952
|
)
|
|
Contingent liabilities
|
|
|
117,293
|
|
|
|
(60,200
|
)
|
|
Accounts payable and accrued expenses
|
|
|
513,240
|
|
|
|
156,431
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Operating Activities
|
|
|
(84,700
|
)
|
|
|
(253,888
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
1,000
|
|
|
|
(129,000
|
)
|
|
Refund of payments made for mineral properties
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Investing Activities
|
|
|
1,000
|
|
|
|
(129,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock
|
|
|
-
|
|
|
|
479,232
|
|
|
Proceeds from notes payable, net
|
|
|
99,260
|
|
|
|
38,000
|
|
|
Proceeds from related party advances and notes
|
|
|
(15,504
|
)
|
|
|
15,919
|
|
|
Changes in related party advances and notes
|
|
|
-
|
|
|
|
(150,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
83,756
|
|
|
|
382,951
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
|
|
56
|
|
|
|
63
|
|
|
CASH AT BEGINNING OF PERIOD
|
|
|
63
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
|
$
|
119
|
|
|
$
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Common stock issued to retire debt and accrued interest
|
|
$
|
265,685
|
|
|
$
|
-
|
|
The accompanying notes are an integral part
of these financial statements.
VALLEY
HIGH MINING COMPANY
Notes
to the Financial Statements
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Valley
High Mining Company (“the Company”) was organized under the laws of the State of Utah on November 14, 1979 as Valley
High Oil, Gas & Minerals, Inc. In April 2004, the Company reincorporated into the state of Nevada by merging with
Valley High Mining Company, a Nevada corporation and wholly-owned subsidiary of the Company, which was incorporated on February
27, 2004. The Nevada corporation was the surviving entity. The Company changed its domicile to the state of Wyoming
on February 3, 2016.
Use
of Estimates
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 reporting period. Actual results could differ
from those estimates.
Income
Taxes
The
Company accounts for income taxes in accordance with ASC Topic No. 740, “Accounting for Income Taxes”. This statement
requires an asset and liability approach for accounting for income taxes. The Company adopted the provisions of ASC Topic No.
740, “Accounting for Income Taxes,” on January 1, 2007. As a result of the implementation of ASC Topic No. 740, the
Company recognized no liability for unrecognized tax liabilities. The Company has no tax positions at December 31, 2015 and 2014
for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The
Company recognizes interest accrued related to unrecognized tax liabilities in interest expense and penalties in operating expenses.
During the years ended December 31, 2015 and 2014, the Company recognized interest accruals of $10,186 and $4,868, respectively.
Loss
Per Share
The
computation of loss per share is based on the weighted average number of shares outstanding during the period presented in accordance
with ASC Topic No. 260, “Earnings Per Share.”
Cash
and Cash Equivalents
The
Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
Recently
Issued Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s
management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
On
June 10, 2014, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10,
Development Stage Entities (Topic 915):
Elimination of Certain Financial Reporting Requirements, Including an Amendment
to Variable Interest Entities Guidance in Topic 810, consolidation,
which removes all incremental financial reporting
requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification.
For the first annual period beginning after December 15, 2014, the presentation and disclosure requirements in Topic 915 will
no longer be required for the public business entities. The revised consolidation standards are effective one year later, in annual
periods beginning after December 15, 2015. Early adoption is permitted. The Company has adopted the amendment as of fiscal year
ended December 31, 2014.
There
are several new accounting pronouncements issued by the FASB which are not yet effective. Each of these pronouncements, as applicable,
has been or will be adopted by the Company. As of December 30, 2014, none of these pronouncements is expected to have a material
effect on the financial position, results of operations or cash flows of the Company.
Impact
of New Accounting Standards
The
FASB periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting.
The Company has reviewed the recently issued pronouncements. During this review the Company decided to early adopt ASU 2014-10
which eliminates the definition of a development stage entity, eliminates the development stage presentation and disclosure requirements
under ASC 915, and amends provisions of existing variable interest entity guidance under ASC 810.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist principally of cash, amounts due to a related party, accounts payable and accrued
expenses, and derivative liabilities. ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, establish
a framework for measuring fair value, establish a fair value hierarchy based on the quality of inputs used to measure fair value,
and enhance disclosure requirements for fair value measurements.
The
Company utilizes various types of financing to fund its business needs, including warrants not indexed to the Company’s
stock. The Company is required to record its derivative instruments at their fair value. Changes in the fair value of derivatives
are recognized in earnings in accordance with ASC 815.
The
fair value of the derivative instruments are determined based on “Level 3” inputs, which consist of inputs that are
both unobservable and significant to the overall fair value measurement. We believe that the recorded values of all of our other
financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates
or durations.
The
Company has categorized its financial instruments, based on the priority of inputs to the valuation technique, into a three-level
fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
Financial
assets and liabilities recorded on the balance sheet are categorized based on the inputs to the valuation techniques as follows:
Level
1 Financial assets and liabilities for which values are based on unadjusted quoted prices for identical assets
or liabilities in an active market that management has the ability to access.
Level
2 Financial assets and liabilities for which values are based on quoted prices in markets that are not active
or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (commodity
derivatives and interest rate swaps).
Level
3 Financial assets and liabilities for which values are based on prices or valuation techniques that require
inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s
own assumptions about the assumptions a market participant would use in pricing the asset or liability.
When
the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement
is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. The
Company conducts a review of fair value hierarchy classifications on a quarterly basis. Changes in the observability of
valuation inputs may result in a reclassification for certain financial assets or liabilities.
NOTE
2 – GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting principles 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.
The Company has a working capital deficit and has not yet established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern.
These
factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The ability of the Company
to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it consummates
a business combination. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan
is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet
its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described
in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
3 – RELATED PARTY TRANSACTIONS
Management
Compensation
For
the fiscal year ended December 31, 2014, the Company paid or accrued to its CEOs and President an aggregate of $152,000 in compensation
and $201,000 in stock bonuses.
For
the fiscal year ended December 31, 2015, the Company paid or accrued to its CEO, CFO, and President an aggregate of $420,000 in
compensation and $30,000 in bonuses.
Office
Space
Effective
March 1, 2014, the Company subleased, from a company under the control of our then current CEO/CFO, approximately 1,000 square
feet of executive office space in Silverdale, WA at a rate of $1,000 per month on a month to month basis. Effective December 1,
2014, the rent was reduced to $500 per month and subsequently discontinued at the end of fiscal year ended December 31, 2014.
NOTE
4 – MINERAL PROPERTIES
Effective
September 8, 2012, the Company entered into a Joint Venture Agreement with Corizona Mining Partners, LLC (“Corizona”).
The purpose of the agreement is to operate and develop certain mineral properties in Peru. As of December 31, 2012, the Company
has made a capital contribution of $314,570 as part of its total funding commitment of $2,000,000. During the year ended December
31, 2013, the Company elected to terminate the joint venture.
During
the year ended December 31, 2013, the Company received $20,000 as a refund on payments previously made on mineral properties.
During
the year ended December 31, 2014, the Company recognized the funds provide in the transaction as a receivable per the Joint Venture
Agreement. With little to no communication and no additional funds received, the Company has written off the outstanding amount
as a loss on asset.
Accounting
for the transaction is as follows:
|
Mineral Properties - 12/31/2012
|
|
$
|
314,570
|
|
|
Net changes to asset – fye 12/31/2013
|
|
|
(9,700
|
)
|
|
Mineral Properties – 12/31/2013
|
|
|
304,870
|
|
|
Less: termination of venture
|
|
|
(304,870
|
)
|
|
Mineral Properties – 12/31/2014
|
|
$
|
-
|
|
NOTE
5 – ADVANCES AND NOTES PAYABLE TO RELATED PARTIES
Advances
and notes payable to related parties at December 31, 2015 and 2014 had an outstanding balance of $0 and $16,577, respectively.
The notes bear interest of 6%, and were due on demand.
During
the year ended December 31, 2014, the Company borrowed $15,918.58 in related party advances and the Company accrued interests
for these loans in the amount of $658.60. The Company transferred $150,200 in related party loans to contingent liability during
this same period to account for the potential liability of loans in question by current management from insider transactions in
2012 and 2013.
NOTE
6 – INVESTMENT RECEIVABLE
In
June 2014, the Company entered into a Regulation S Stock Purchase Agreement with a third party for the investment and purchase
of $225,000 in common stock of the Company at $0.015 per share. After the 6-month term of the agreement expired without execution
of the investment by the third party, the Company canceled the agreement and canceled the underlying shares on December 2014.
In
December 2014, the Company entered into a Regulation S Stock Purchase Agreement with a second third party for the investment and
purchase of $350,000 in common stock of the Company at $0.0175 per share. The Company and investor have extended the agreement
an additional 6 months to allow for the deposit and full execution of the agreement. However, the investor was unable to complete
the agreement and the Company canceled the agreement and canceled the underlying shares on December 2015.
NOTE
7 – FIX ASSETS AND IMPAIRMENTS
In
December 2014, the Company acquired a Grow Pod in exchange for 16,125,000 shares of common stock. At the time of the transaction,
the common stock of the Company was valued at $0.008 per share for a total booked asset of $129,000. Subsequently, the Company
impaired the asset to its current replacement cost valued at $50,000 based on estimates from contractors. The difference between
the purchase price and the replacement cost is attributed to the intellectual property applied to the configuration of the asset.
During the fiscal year ended December 31, 2015 the Company added electrical improvements to the Pod in the amount of $1,000. As
of the filing, and in conjunction with the departure of our prior CEO, the Company is not aware of the current location of the
Pod. Therefore, while the Company maintains legal ownership of the Pod, the Company has chosen to fully impair the Pod due to
the unknown whereabouts. The transaction has been accounted for as follows:
|
Purchase of asset
|
|
$
|
129,000
|
|
|
Less: Impairment
|
|
|
(79,000
|
)
|
|
Value of asset as of 12/31/2014
|
|
$
|
50,000
|
|
|
Add: Improvements
|
|
|
1,000
|
|
|
Less: Depreciation
|
|
|
(3,000
|
)
|
|
Less: Impairment
|
|
|
(48,000
|
)
|
|
Value of asset as of 12/31/2015
|
|
$
|
-
|
|
NOTE
8 – NOTES PAYABLE AND DERIVATIVE LIABILITY
Notes
Payable
At
fiscal year ended December 31, 2015, the Company had third party notes payable and accrued interest in the amount of $140,964
compared to $73,951 in the prior fiscal year. The notes included notes to four unaffiliated parties at interest rates of between
6% and 8% per year. The notes expire during the 2015and 2016 fiscal year and are not secured by collateral of the Company. Several
of these note are in default and the Company is in communication with the holders to resolve these outstanding issues. The notes
are convertible into common stock, at the election of the holder, at discounts of between 40% and 50%. Two additional notes, totaling
$11,250 are convertible into common stock of the Company at $0.001. Additionally, the Company is carrying $225,200 in notes payable
contingent liability representing three (3) prior notes that are either in dispute or the Company is unable to substantiate.
Derivative
Liability
The
Company entered into an agreement which has been accounted for as a derivative. The Company has recorded a loss contingency
associated with this agreement because it is both probable that a liability had been incurred and the amount of the loss can reasonably
be estimated. The main factors that will affect the fair value of the derivative are the number of the Company’s
shares outstanding post acquisition or post offering and the resulting market capitalization.
ASC
Topic 815 (“ASC 815”) requires that all derivative financial instruments be recorded on the balance sheet at fair
value. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not
readily available, fair values are determined using market based pricing models incorporating readily observable market data and
requiring judgment and estimates.
The
Company issued warrants and has evaluated the terms and conditions of the conversion features contained in the warrants to determine
whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company determined
that the conversion features contained in the warrants represent freestanding derivative instruments that meet the requirements
for liability classification under ASC 815. As a result, the fair value of the derivative financial instruments in the warrants
is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instruments of the
warrants was measured at the inception date of the warrants and each subsequent balance sheet date. Any changes in the fair value
of the derivative financial instruments are recorded as non-operating, non-cash income or expense at each balance sheet date.
The
Company valued the conversion features in its warrants using the Black-Scholes model. The Black-Scholes model values the embedded
derivatives based on a risk-free rate of return of 0.0131%, grant dates at December 31, 2014 and December 31, 2015, the term of
the warrant extending 3 years from the date of a “reverse merger”, conversion of warrant shares is equal to 0.005%
of the then outstanding common stock of the company, the conversion price is $0.001, current stock prices on the measurement date
ranging from $0.0013 to $0.0290, and the computed measure of the Company’s stock volatility, ranging from 220% to 457%.
Included
in the December 31, 2015 and 2014 financial statements is a derivative liability in the amount of $681 and $6,233, respectively,
to account for this transaction. It is revalued quarterly henceforth and adjusted as a gain or loss to the consolidated statements
of operations depending on its value at that time.
Included
in our Consolidated Statements of Operations for the years ended December 31, 2015 and 2014 are $5,552 and $331,564 in change
of fair value of derivative in non-cash charges pertaining to the derivative liability as it pertains to the gain (loss) on derivative
liability and debt discount, respectively.
Derivative
Liability
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
Estimated number of underlying shares
|
|
|
511,055
|
|
|
|
441,228
|
|
|
Estimated market price per share
|
|
$
|
0.0014
|
|
|
$
|
0.0142
|
|
|
Exercise price per share
|
|
$
|
0.001
|
|
|
$
|
0.001
|
|
|
Expected volatility
|
|
|
220
|
%
|
|
|
457
|
%
|
|
Expected dividends
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Expected term (in years)
|
|
|
3.00
|
|
|
|
3.00
|
|
The
following presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis
at December 31, 2015. These items are included in “derivative liability” on the consolidated balance sheet.
|
|
|
Fair Value Measurements on a Recurring Basis
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,233
|
|
|
$
|
6,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,233
|
|
|
$
|
6,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
681
|
|
|
$
|
681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
681
|
|
|
$
|
681
|
|
The
main factors that will affect the fair value of the derivative are the number of shares outstanding post acquisition or post offering
and the resulting market capitalization. In order to estimate a range for the potential contingent liability, the Company estimated
the future number of surviving shares and resulting market cap from a reverse merger based on a sample of reverse mergers completed
by OTCBB companies during 2014 and 2015.
The
following is a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring
basis using significant unobservable inputs (Level 3) during the years ended December 31, 2015 and 2014:
|
|
|
2015
|
|
|
2014
|
|
|
Beginning balance, January 1,
|
|
$
|
(6,233
|
)
|
|
$
|
(337,797
|
)
|
|
Total gains (losses) included in earnings
|
|
|
5,552
|
|
|
|
331,564
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance, December 31,
|
|
$
|
(681
|
)
|
|
$
|
(6,233
|
)
|
NOTE
9 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
For
the fiscal year ended December 31, 2015 and 2014, the Company recorded accounts payable and accrued expenses in the amounts of
$768,022 and $254,782, respectively. The accounts payable and accrued expenses include $379,522 in legal, professional, and prior
management fees, $4,500 to a third party for rents, and $384,060 to related parties for work performance ($245,060 to Richard
Johnson, the former CEO and $139,000 to Peter Bianchi, the former President).
NOTE
10 – CAPITAL STOCK
The
Company has authorized 500,000,000 shares of common stock with a par value of $0.001. At December 31, 2015 and 2014,
the Company had 102,210,918 and 88,245,691 shares issued and outstanding, respectively.
During
the year ended December 31, 2014, the Company issued 27,500,000 shares of common stock for services rendered with a fair value
of $221,250, which was recorded to professional fees expense and management expense.
During
the year ended December 31, 2014, the Company issued 7,500,000 shares of common stock for debt reduction of $7,500.
During
the year ended December 31, 2014, the Company issued 15,000,000 shares of common stock towards an investment receivable in the
amount of $525,000 pursuant to a Regulation S Stock Purchase Agreement. Due to non-performance of the Agreement, the Company has
cancelled the shares.
During
the year ended December 31, 2014, the Company issued 168,935 shares of common stock for cash of $168.94, pursuant to the exercise
of options.
During
the year ended December 31, 2014, the Company issued 16,125,000 shares of common stock for the purchase of assets valued at $129,000.
During
the year ended December 31, 2015 the Company issued 27,965,227 shares of common stock for debt reduction of $49,452. The Company
recognized a loss of $216,234 on the transactions.
On
October 8, 2015, the Company issued 6,000,000 shares of common stock for services rendered with a value of $27,000, which was
recorded to professional fees expense.
During
the year ended December 31, 2015, the Company issued 20,000,000 shares of common stock towards an investment receivable pursuant
to a Regulation S Stock Purchase Agreement. Due to non-performance of the Agreement, the Company has cancelled the shares.
NOTE
11 – INCOME TAXES
ASC
740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is
more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain
whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a
valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is calculated by multiplying
a 34% marginal tax rate by the cumulative net operating losses of $1,744,028. The total valuation allowance is equal to the total
deferred tax asset.
The
tax effects of significant items comprising the Company's net deferred taxes as of December 31, 2015 and 2014 were as follows:
|
|
|
2015
|
|
|
2014
|
|
|
Cumulative net operating losses
|
|
$
|
1,744,028
|
|
|
$
|
942,225
|
|
|
Deferred tax assets: (34% Federal, 0% Nevada)
|
|
|
|
|
|
|
|
|
|
Net operating loss carry forwards
|
|
|
592,969
|
|
|
|
320,357
|
|
|
Valuation allowance
|
|
|
(592,969
|
)
|
|
|
(320,357
|
)
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
The
income tax provision differs from the amount of income tax determined by applying the combined U.S. federal and state income tax
rates of 34% to pretax income from continuing operations for the years ended December 31, 2015 and 2014 due to the following:
|
|
|
2015
|
|
|
2014
|
|
|
Tax benefit at statutory rate
|
|
$
|
(4,164
|
)
|
|
$
|
(248,738
|
)
|
|
Common stock for services
|
|
|
27,000
|
|
|
|
221,250
|
|
|
(Gain) loss on derivative liability
|
|
|
(5,552
|
)
|
|
|
(331,564
|
)
|
|
Debt discount
|
|
|
-
|
|
|
|
-
|
|
|
Change in valuation allowance
|
|
|
(17,284
|
)
|
|
|
359,052
|
|
|
Actual tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company’s net operating loss carry forwards of approximately $1,744,028 expire in various years through 2034. The Company
has not evaluated the impact of possible limitations on the utilization of its net operating loss carry forwards in future years
under Section 382, if any, as a result of any changes in control.
NOTE
12 – COMMITMENTS AND CONTINGENCIES
Contingent
Liabilities
The
Company recorded contingent liabilities for the fiscal year ended December 31, 2015 in the amount of $242,283. The contingent
liability includes $167,283 for settlement of an arbitration dispute plus accrued interest and fees, and a $75,000 note payable,
as further defined below, and two additional prior notes payable in the amount $10,000 and $140,200.
The
Company recorded contingent liabilities for the fiscal year ended December 31, 2014 in the amount of $275,200. The contingent
liability includes $125,000 for settlement of an arbitration dispute as further defined below. Additional contingent liabilities
has been accounted for in the amount of $150,200 for notes payable. These notes date back to the purchase of the mineral properties
with a related party. The Company believes that these notes are to be discharged, however, until additional research and agreements
have been reached, the Company is treating the amount as a contingent liability.
In
March 2014, the Company entered into a settlement agreement with one of its former CEO’s Andrew Telsey. A dispute
arose with respect to the Company’s performance under such settlement agreement and, in accordance with the terms of such
agreement, such party moved for arbitration to resolve such dispute. An agreement was reached in April 2015 during arbitration,
however, the Company was unable to perform under the settlement agreement. The Company has recorded a liability in the amount
of $125,000, plus accrued interest and fees of 42,283, to account for a total liability of $167,283, they will likely incur.
Former
CEO Fraud / Maleficence
In
October 2015, the Company entered into an agreement with Iconic Holdings (“Iconic”) with our then current CEO, Richard
Johnson (“Johnson”). The note on the books for $30,000 was intended to go to a law firm for preparing an S-1
in the amount of $5,000,000, according to the executed term sheet. It is known that based on the financial status of Valley
High Mining at the time, there was no way a $5,000,000 S-1 was going to get approved. Two thing happened during that transaction,
1) Iconic did not send the funds to the law firm as was stated in the Term Sheet, it was sent to the Company whereby Johnson paid
some of the funds to himself; and 2) Iconic executed a "2nd Note" of $75,000 as consideration for the S-1, but no real
consideration was given, except to say that Iconic would provide the S-1 funding, which was not possible. The events were all
presented to Iconic, including the fact that Johnson signed it as sole director and never had Board consent (from Peter Bianchi,
the second director at the time). Iconic agreed that it did not add up. The Company stated that Iconic should not be held
accountable for Johnson's potential fraudulent act and that the Company would honor the $30,000 ($25,000 net amount) that Iconic
wired to the Company. However, assuming that Iconic is familiar with S-1 filings and the funding in the amount of $5,000,000,
they should know that the deal structure was not plausible, and therefore no consideration was being given for the $75,000 second
note. Therefore, Iconic should have no claim to the second note and the Company will take legal action to defend (including both
notes for fraud if needed). However, an additional second contingency for the face value of the $75,000 note is being added as
a legal contingency until the matter is resolved.
During the fiscal year ended December 31, 2015, the then current CEO,
Richard Johnson, executed what current management has determined to be Management Fraud and an Illegal Act under SOX 404. During
the fiscal year, Johnson issued to himself a Loan and withdrawals netting to $14,131 during the 4
th
quarter to RJM
Consulting, a company owned by Johnson. In rebuilding the accounting, management has attributed a net amount of $14,131 taken
as a loan and subsequently has written that off as uncollectable. The Company reserves the right to pursue Johnson at a later
date.
Legal
proceedings
On
February 24, 2015, the Company was named a defendant in a complaint filed by John Michael Coombs in the Third Judicial District
Court in and For Salt Lake County, State of Utah, alleging, among other things, Breach of Contract, in connection with a Warrant
Agreement issued by the Company to Mr. Coombs in 2010. Management has informed Mr. Coombs that it fully intends to honor the Warrant
Agreement and is in discussions to settle this matter. The Company carries this liability on its balance sheet as a derivative
liability.
Derivative
Liability
As
described in Note 6, the Company entered into a warrant agreement which has been accounted for as a derivative. The
Company has accrued a loss contingency associated with this agreement because it is both probable that a liability had been incurred
and the amount of the loss can reasonably be estimated. The fair value of this liability is closely linked to whether
the Company enters a reverse merger, initiates a public offering of stock or engages in a similar transaction. The
Company believes that the realization of one or more of these events in the near future is probable and when realized, it could
have a material effect on the value of the derivative liability recorded.
The
main factors that will affect the fair value of the derivative are the number of shares outstanding post acquisition or post offering
and the resulting market capitalization. In order to estimate a range for the potential contingent liability, the Company
utilized the Black-Scholes method in calculating the value of the warrant derivative.
NOTE
13 – SUBSEQUENT EVENTS
The
Company evaluated subsequent events through the date these financial statements were issued and determined that there were no
material subsequent events that required recognition or additional disclosure in these financial statements, except as follows.
Effective
January 13, 2016, Clifford Pope was appointed the Company’s Chief Executive Officer, Chief Financial Officer, and sole director
as filed in our Form 8-K on January 14, 2016. In conjunction with Mr. Pope’s appointment, our other two officers and directors,
Johnson and Bianchi, either resigned or where relieved of their duties with the Company.
Effective
February 3, 2016, the Company changed its domicile from the state of Nevada to the State of Wyoming as filed in our Form 8-K on
March 1, 2016.
On
February 24, 2016, the Company enter into a non-binding Letter of Intent to acquire all of the shares of GEAR Sports Nutrition
Inc. (GEAR) and substantially all of the assets and certain liabilities of GEAR, which was subject to certain conditions. Subject
to the Definitive Agreement and in connection with the Acquisition, the Company will acquire all of the outstanding capital stock
of GEAR in exchange for shares of the Company’s common stock (Common Stock). Upon the closing, the Company will own 100%
of GEAR common stock issued and outstanding along with all assets and liabilities of GEAR. GEAR will become a 100% owned subsidiary
of the Company. In consideration of the Acquisition, the shareholders of GEAR shall exchange their shares for shares of the Company.
In consideration of the execution of the Letter of Intent, the Company has caused to be issued Two Hundred Twenty-Five Million
Restricted Shares (225,000,000) of the Company’s common stock on March 8, 2016, which marked the final conditional fulfillment
of the Letter of Intent. The final number of shares to be issued is yet to be determined in the Definitive Agreement. The anticipated
closing date for the Transactions shall be upon completion of GEAR audited Financial Statements and the filing of an Amended 8-K
estimated to be complete within 72 days of the execution of this Letter of Intent or sooner (the Closing Date). Following the
Closing Date, the Company will change its name to a mutually agreeable name, or such other name as shall be determined by the
Company. In addition, the Company shall take any necessary action to amend and restate its organizational documents and bylaws
prior to the Closing as may be required to complete the GEAR acquisition.
In
January 2016, the Company’s former CEO, Richard Johnson, converted his accrued payables into a note payable and subsequently
sold the note to a third party. In February 2016, the Company entered into Novation Agreement with the third party which returned
the note payable to the Company and the Company concurrently extinguished the note. The face value of the note was for $300,000
and the discharge of it will be reflected in our 1
st
quarter 2016 filing.
F
-13
Premier Products (CE) (USOTC:PMPG)
Historical Stock Chart
From Dec 2024 to Jan 2025
Premier Products (CE) (USOTC:PMPG)
Historical Stock Chart
From Jan 2024 to Jan 2025
