UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
[X] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2015
or
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ___________ to ___________
Commission
file number: 000-54540
WeedHire
International, Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
|
22-3767312 |
(State
or other jurisdiction of
incorporation or organization) |
|
(I.R.S.
Employer
Identification No.) |
17-09
Zink Place, Unit 1, Fair Lawn, NJ |
|
07410 |
(Address
of principal executive offices) |
|
(Zip
Code) |
(877)
766-3050
(Registrant’s
telephone number, including area code)
not
applicable
(Former
name, former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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). [X] Yes [ ]
No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer |
[ ] |
Accelerated
filer |
[ ] |
Non-accelerated
filer |
[ ] |
Smaller reporting
company |
[X] |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) [ ] Yes [X]
No
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 4,671,893,989
shares of common stock are issued and outstanding as of May 12, 2015.
TABLE
OF CONTENTS
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Various
statements in this report contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties
and other factors which may cause actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based
on various factors and were derived from utilizing numerous assumptions and other factors that could cause our actual results
to differ materially from those in the forward-looking statements. These factors include, but are not limited to:
|
● |
our ability to
continue as a going concern, |
|
|
|
|
● |
our history of
losses, declining net sales and uncertainty if we will ever report profitable operations, |
|
|
|
|
● |
our need to raise
additional working capital and the uncertainties surrounding our ability to raise the capital, |
|
|
|
|
● |
fluctuations in
inventory value, |
|
|
|
|
● |
declining prices
of new computer equipment, |
|
|
|
|
● |
our ability to
effectively compete, |
|
|
|
|
● |
our dependence
on a few significant customers, |
|
|
|
|
● |
our ability to
hire and retain sufficient qualified personnel |
|
|
|
|
● |
risks of integrating
acquisitions into our company and integrating new business activities, |
|
|
|
|
● |
outstanding warrants
which are exercisable on a cashless basis, |
|
|
|
|
● |
the lack of a
liquid market for our common stock, |
|
|
|
|
● |
possible anti-takeover
effects of our certificate of incorporation and bylaws, |
|
|
|
|
● |
the impact of
penny stock rules on trading in our common stock, |
|
|
|
|
● |
future dilution
if outstanding options, warrants and convertible notes are exercised or converted, and |
|
|
|
|
● |
our system implementation
may not be effective. |
Most
of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk
described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue
reliance on these forward-looking statements and readers should carefully review this report, our Annual Report on Form 10-K for
the year ended June 30, 2014 and our other filings with the Securities and Exchange Commission in their entirety. Except for our
ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release
publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without
also considering the risks and uncertainties associated with these statements and our business.
OTHER
PERTINENT INFORMATION
We
maintain our web site at www.weedhire.com. Information on this web site is not a part of this report.
Unless
specifically set forth to the contrary, when used in this report the terms “WeedHire International” “AnythingIT”,
the “Company,” “we”, “us”, “our” and similar terms refer to WeedHire International,
Inc., a Delaware corporation, “fiscal 2015” refers to the year ending June 30, 2015 and “fiscal 2014”
refers to the year ended June 30, 2014.
PART
1 - FINANCIAL INFORMATION
Item
1. Financial Statements.
WEEDHIRE
INTERNATIONAL, INC.
Balance
Sheets
| |
March
31, 2015 | | |
June
30, 2014 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 314,622 | | |
$ | 192,086 | |
Restricted cash | |
| 4,503 | | |
| 20,464 | |
Accounts receivable, net of allowance for doubtful accounts | |
| 143,914 | | |
| 144,014 | |
Inventories | |
| 67,310 | | |
| 41,043 | |
Prepaid expenses and other current assets | |
| 75,018 | | |
| 50,588 | |
Total current assets | |
| 605,367 | | |
| 448,195 | |
| |
| | | |
| | |
Property and equipment, net | |
| 86,939 | | |
| 142,636 | |
Deferred financing cost | |
| 21,334 | | |
| 45,211 | |
Security deposits | |
| 9,151 | | |
| 9,151 | |
Total assets | |
$ | 722,791 | | |
$ | 645,193 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’
DEFICIT | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable | |
$ | 393,407 | | |
$ | 558,114 | |
Accrued expenses | |
| 192,209 | | |
| 309,519 | |
Customer deposits | |
| 388,199 | | |
| 424,684 | |
Current portion of capital lease payable | |
| 15,214 | | |
| 19,255 | |
Deferred revenues | |
| 84,130 | | |
| 100,928 | |
Convertible notes payable - current, net of debt discount | |
| 828,448 | | |
| 546,358 | |
Current portion of notes payable | |
| 40,720 | | |
| 95,845 | |
Derivative liability | |
| 149 | | |
| - | |
Total current liabilities | |
| 1,942,476 | | |
| 2,054,703 | |
| |
| | | |
| | |
Long term debt: | |
| | | |
| | |
Convertible notes payable - long-term, net of debt discount | |
| 23,605 | | |
| - | |
Notes payable | |
| 22,821 | | |
| 24,640 | |
Capital lease payable | |
| 10,471 | | |
| 20,720 | |
Total long-term debt | |
| 56,897 | | |
| 45,360 | |
| |
| | | |
| | |
Total Liabilities | |
| 1,999,373 | | |
| 2,100,063 | |
| |
| | | |
| | |
Stockholders’ Deficit | |
| | | |
| | |
Preferred stock - $0.000001 par value, 20,000,000 shares authorized; none
issued and outstanding | |
| - | | |
| - | |
Series A Preferred stock ($0.000001 Par Value; 1,000,000 Shares Authorized;
110,000 shares and none issued and outstanding as of March 31, 2015 and December 31, 2014, respectively) | |
| - | | |
| - | |
Common stock - $0.000001 par value, 30,000,000,000 shares authorized; 2,728,281,122 and 48,324,113
shares issued and outstanding as of March 31, 2015 and June 30, 2014, respectively | |
| 2,728 | | |
| 48 | |
Additional paid-in capital | |
| 13,537,173 | | |
| 9,358,679 | |
Accumulated deficit | |
| (14,816,483 | ) | |
| (10,813,597 | ) |
Total stockholders’ deficit | |
| (1,276,582 | ) | |
| (1,454,870 | ) |
Total liabilities and stockholders’ deficit | |
$ | 722,791 | | |
$ | 645,193 | |
See
accompanying notes to unaudited financial statements.
WEEDHIRE
INTERNATIONAL, INC.
Statements
of Operations
| |
For the Three Months | | |
For the Nine Months | |
| |
Ended
March 31, | | |
Ended
March 31, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| |
| | |
| | |
| | |
| |
Net sales | |
$ | 1,061,360 | | |
$ | 938,142 | | |
$ | 2,981,434 | | |
$ | 2,970,037 | |
Cost of sales | |
| 416,018 | | |
| 451,076 | | |
| 1,288,395 | | |
| 1,845,220 | |
Gross profit | |
| 645,342 | | |
| 487,066 | | |
| 1,693,039 | | |
| 1,124,817 | |
| |
| | | |
| | | |
| | | |
| | |
Operating Expenses | |
| | | |
| | | |
| | | |
| | |
Selling, general and administration | |
| 510,086 | | |
| 645,345 | | |
| 1,924,159 | | |
| 2,337,199 | |
Operating loss | |
| s135,256 | | |
| (158,279 | ) | |
| (231,120 | ) | |
| (1,212,382 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Gain from settlement of accounts payable | |
| - | | |
| 170,975 | | |
| - | | |
| 170,975 | |
Derivative liability expense | |
| - | | |
| - | | |
| (1,459,616 | ) | |
| - | |
Gain (loss) from change in fair value of derivatives | |
| 1,318 | | |
| - | | |
| 731,785 | | |
| - | |
Loss from extinguishment of debt | |
| (124,850 | ) | |
| (132,357 | ) | |
| (1,619,472 | ) | |
| (132,357 | ) |
Interest expense, net of interest income of $59, $25,
$542 and $362, respectively | |
| (470,247 | ) | |
| (45,780 | ) | |
| (1,424,463 | ) | |
| (82,643 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total other expense - net | |
| (593,779 | ) | |
| (7,162 | ) | |
| (3,771,766 | ) | |
| (44,025 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| (458,523 | ) | |
| (165,441 | ) | |
| (4,002,886 | ) | |
| (1,256,407 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Net Loss | |
$ | (458,523 | ) | |
$ | (165,441 | ) | |
$ | (4,002,886 | ) | |
$ | (1,256,407 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per common share: | |
| | | |
| | | |
| | | |
| | |
Basic: | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.03 | ) |
Diluted: | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.03 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding basic | |
| 1,217,239,489 | | |
| 41,097,447 | | |
| 459,131,289 | | |
| 38,340,757 | |
Weighted average common shares outstanding diluted | |
| 1,217,239,489 | | |
| 41,097,447 | | |
| 459,131,289 | | |
| 38,340,757 | |
See
accompanying notes to unaudited financial statements.
WEEDHIRE
INTERNATIONAL, INC.
Statements
of Cash Flows
| |
For the Nine Months | |
| |
Ended
March 31, | |
| |
2015 | | |
2014 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
| | |
| |
OPERATING ACTIVITIES | |
| | | |
| | |
Net Loss | |
$ | (4,002,886 | ) | |
$ | (1,256,407 | ) |
Adjustments to reconcile net loss from operations to net cash used in operating
activities | |
| | | |
| | |
Depreciation | |
| 55,697 | | |
| 65,904 | |
Amortization of debt discount | |
| 1,170,853 | | |
| 19,732 | |
Amortization of deferred financing costs | |
| 87,427 | | |
| 4,874 | |
Loss from extinguishment of debt | |
| 1,619,472 | | |
| 132,357 | |
Gain from settlement of debt | |
| - | | |
| (170,975 | ) |
(Reduction) increase in allowance for doubtful account | |
| (25,167 | ) | |
| 46,728 | |
Derivative Liability Expense | |
| 1,459,616 | | |
| - | |
Gain from change in fair value of derivatives | |
| (731,785 | ) | |
| - | |
Stock based compensation | |
| 101,828 | | |
| 178,158 | |
Change in operating assets and liabilities | |
| | | |
| | |
Accounts receivable | |
| 25,267 | | |
| 452,654 | |
Inventories | |
| (26,267 | ) | |
| 18,618 | |
Prepaid expenses and other current assets | |
| (24,430 | ) | |
| (7,588 | ) |
Accounts payable | |
| (164,707 | ) | |
| 177,955 | |
Accrued expenses | |
| (54,376 | ) | |
| (8,596 | ) |
Deferred rent | |
| - | | |
| (1,293 | ) |
Deferred revenue | |
| (16,798 | ) | |
| 8,054 | |
Customer deposits | |
| (36,485 | ) | |
| 246,446 | |
Net cash used in operating activities | |
| (562,741 | ) | |
| (93,379 | ) |
| |
| | | |
| | |
INVESTING ACTIVITIES | |
| | | |
| | |
Purchases of property and equipment | |
| - | | |
| (11,742 | ) |
Decrease (increase) in restricted cash | |
| 15,961 | | |
| 30,080 | |
Net cash provided by investing activities | |
| 15,961 | | |
| 18,338 | |
| |
| | | |
| | |
FINANCING ACTIVITIES | |
| | | |
| | |
Net proceeds from issuance of convertible notes payable | |
| 847,950 | | |
| 124,000 | |
Net proceeds from sale of common stock | |
| 2,500 | | |
| - | |
Net proceeds from sale of preferred stock | |
| 1,100 | | |
| - | |
Payments on capital leases | |
| (14,290 | ) | |
| (13,525 | ) |
Payments on notes payable | |
| (167,944 | ) | |
| (5,752 | ) |
Net cash provided by financing activities | |
| 669,316 | | |
| 104,723 | |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 122,536 | | |
| 29,682 | |
| |
| | | |
| | |
Cash and cash equivalents at beginning of year | |
| 192,086 | | |
| 128,723 | |
| |
| | | |
| | |
Cash and cash equivalents at end of period | |
$ | 314,622 | | |
| 158,405 | |
| |
| | | |
| | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
| | | |
| | |
Cash payments during the period for : | |
| | | |
| | |
Interest | |
$ | 68,629 | | |
$ | 12,284 | |
Income taxes | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING: | |
| | | |
| | |
Common stock issued for conversion of principal amount
of debt and accrued interest | |
$ | 527,142 | | |
$ | - | |
Reclassification of derivative liability to equity | |
$ | 2,994,132 | | |
$ | 7,000 | |
See
accompanying notes to unaudited financial statements.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
NOTE
1. – DESCRIPTION OF OUR BUSINESS.
WeedHire
International, Inc. (the “Company”) formerly known as AnythingIT, Inc. is a provider of green technology solutions,
managing the equipment disposition needs of the Federal government and commercial clients by buying, reselling, or recycling,
in an environmentally and regulatory compliant manner, computers and other technology hardware. By delivering cost effective asset
management solutions and capitalizing on our knowledge and relationships in the industry, we believe that we are able to maximize
the technology dollars of our clients. In addition, in May 2014 we launched Weedhire.com (“WeedHire”), a career website
specifically targeting employment within the legal cannabis industry as part of diversification plan to meet the perceived underserved
market for employer and employee candidates to connect within the legal marijuana industry. In order to support the Company’s
diversification, the Company changed its name to WeedHire International, Inc. effective as of November 20, 2014. Currently, the
Company is still in the IT asset management and disposition services business.
The
Company maintains its principal office and operating facility in Fair Lawn, New Jersey.
NOTE
2. – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Basis
of Presentation
The
unaudited financial statements included in this report have been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission for interim reporting and include all adjustments (consisting only of normal recurring
adjustments) that are, in the opinion of management, necessary for a fair presentation. These financial statements have not been
audited.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations for interim reporting. The Company believes that
the disclosures contained herein are adequate to make the information presented not misleading. These financial statements should
be read in conjunction with the financial statements and notes thereto for the year ended June 30, 2014 on the Company’s
Annual Report on Form 10-K. The financial data for the nine month period presented may not necessarily reflect the results to
be anticipated for the complete year ending June 30, 2014.
For
the nine months ended March 31, 2015, the Company reported a net loss of approximately $4 million and net cash used in operating
activities of approximately $563,000. At March 31, 2015 the Company had an accumulated deficit of approximately $14.8 million.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s
financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances
the Company will be successful in its efforts to increase sales and report profitable operations or to continue as a going concern,
in which event investors would lose their entire investment in the Company.
The
accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”).
Significant
Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the amounts reported for assets and liabilities as of the date of the financial statements and the reported amounts of sales and
expenses in the reporting period. We regularly evaluate estimates and assumptions related to allowances for doubtful accounts,
inventory valuation, useful lives of property and equipment, deferred income tax asset valuation allowances, stock compensation,
valuation of derivative liabilities and valuation of stock options and warrants. We base our estimates and assumptions on current
facts, historical experience and on various other factors that we believe 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. The actual results experienced by us may differ materially and adversely from management’s estimates.
To the extent there are material differences between the estimates and the actual results, future results of operations will be
affected.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The
credit risk associated with cash equivalents is considered low due to the credit quality of the issuers of the financial instruments.
Restricted
Cash
The
Company maintains certain cash accounts that are restricted from general use. In accordance with our E-Stewards certification
we need to have a separate account to ensure a proper winding down of any facility, should that ever be necessary. As of March
31, 2015 and June 30, 2014, the balance in that restricted account was $4,503 and $20,464, respectively.
Concentration
of Credit Risk
The
Company places its cash with high credit quality financial institutions. The Company’s account at this institution is insured
by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of March 31, 2015, the Company has reached
bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution,
the Company evaluates at least annually the rating of the financial institutions in which it holds deposits.
Significant
Customers
During
the nine months ended March 31, 2015 sales to 3 customers represented approximately $1.4 million or 45% (10%, 21% and 14%) of
the Company’s net sales. During the nine months ended March 31, 2014 sales to 1 customer represented approximately $345,000
(12%) of the Company’s net sales. As of March 31, 2015 and June 30, 2014, the Company had 3 customers representing approximately
60% of gross accounts receivable and 4 customers representing approximately 54% of gross accounts receivable, respectively.
Allowance
for Doubtful Accounts
The
Company maintains an allowance for doubtful accounts based on the expected collectability of its accounts receivable. The Company
performs credit evaluations of significant customers and establishes an allowance for doubtful accounts based on the aging of
receivables, payment performance factors, historical trends and other information. However, if the financial condition of our
customers were to deteriorate, additional allowances may be required. The Company evaluates and revises the reserve on a quarterly
basis based on a review of specific accounts outstanding and our history of uncollectible accounts. As of March 31, 2015 and June
30, 2014, our allowance for doubtful accounts totaled $1,244 and $28,097, respectively.
Inventories
Inventories,
consisting of used computer equipment, are stated at the lower of cost or market. Cost is determined by the amount the Company
pays for each specific unit in inventory. The Company reviews inventory for excess or obsolete inventory and writes-down obsolete
or otherwise unmarketable inventory to its estimated net realizable value. No allowance is necessary at March 31, 2015 and June
30, 2014.
Unprocessed
inventory is shipped to the Company’s facilities and is considered to be end-of-life. The Company does not place a valuation
on unprocessed inventory until it is received into the processing queue whereby it is tested and inventoried. Only after this
process occurs can the Company provide final valuation in the form of purchase orders for equipment acquisitions and issue a Certificate
of Indemnification confirming transfer of ownership and liability. This process usually takes between 30 to 60 days from the time
of receipt at the Company’s warehouse. Due to the implementation of a new fully automated management system, we experienced
certain process slowdowns during the earlier stages of fiscal 2013 that caused a buildup of orders to be processed in our operation.
We resolved our process challenges and have increased throughput to targeted levels.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Property
and equipment
The
Company records property, equipment and leasehold improvements at historical cost. Expenditures for maintenance and repairs are
recorded to expense; additions and improvements are capitalized. The Company generally provides for depreciation using the straight-line
method at rates that approximate the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line
basis over remaining term of the lease of four years.
Asset
Classification |
|
Estimated
Useful
Life (years) |
Computers and
software |
|
3 |
Equipment |
|
3
to 5 |
Furniture and
fixtures |
|
5
to 7 |
| |
March
31, 2015 | | |
June
30, 2014 | |
Software | |
$ | 214,168 | | |
$ | 214,168 | |
Furniture and fixtures | |
| 111,297 | | |
| 111,297 | |
Equipment | |
| 96,740 | | |
| 92,740 | |
Capital leased equipment | |
| 169,877 | | |
| 169,877 | |
Leasehold improvements | |
| 91,208 | | |
| 91,208 | |
Less: Accumulated depreciation | |
| (596,351 | ) | |
| (540,654 | ) |
Property and Equipment, net | |
$ | 86,939 | | |
$ | 142,636 | |
Depreciation
expense for the nine months ended March 31, 2015 and 2014 was $55,697 and $65,904, respectively.
Revenue
Recognition
The
Company is an equipment recycler. The Company generates sales from services that are provided on recycled equipment or for the
sale of used equipment. The customers who are providing the equipment are referred to as upstream customers. The Company charges
services fees for data wiping, auditing, inventory management and logistics. If the equipment being provided by the upstream customer
still has a value, the Company will credit the customer for the equipment purchased, which is an offset to the service fees. If
the equipment is worth more than the service fees, the result is a credit memo that is booked into accounts receivable, with the
net credit memos reclassified to customer deposits at each quarter end.
The
Company sells the equipment to a downstream customer, primarily a wholesaler. If the equipment is not valuable in its current
form, the Company will sell the equipment either to a refurbisher or a demanufacturer, depending on where the Company can realize
the greatest value for the equipment.
For
product sales, the Company recognizes revenue at the time products are shipped and title is transferred, which is in accordance
with the stated shipping terms. Revenue is recognized in accordance with these shipping terms so long as a purchase order, electronic,
written or phone commitment has been received or a contract has been executed, there are no uncertainties regarding customer acceptance,
the sales price is fixed and determinable and collectability is deemed probable. If uncertainties exist regarding customer acceptance
or collectability, revenue is recognized when those uncertainties have been resolved. The Company provides a limited as-is warranty
on some of its products. The Company analyzes its estimated warranty costs and provides an allowance as necessary, based on experience.
At March 31, 2015 and June 30, 2014, a warranty reserve was not considered necessary.
The
Company is party to brokered transactions whereby an upstream customer provides product to the Company if the parameters of the
transactions can be satisfied. Based upon the upstream customer parameters and the nature of the risk and control of the transaction
by the Company these sales may be recorded on a gross or net basis.
For
certain customers, the Company provided consigned inventory, either at the customer’s facility or at a third-party warehouse.
Revenues from sales of consigned inventory are recognized upon sale of the product by the consignee. At March 31, 2015 and June
30, 2014, there were no used equipment on consignment.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Service
fees are recognized once the lot of equipment has been received, audited, inventoried, data wiped and the equipment has been valued
and the results reported to the upstream customer. In those circumstances where the Company disposes of the upstream customer’s
product, or purchases the product from the upstream customer for resale, revenue is recognized as a “product sale”
described above.
The
Company has not generated any significant revenues related to the Company’s WeedHire business.
Shipping
and Handling Costs
Shipping
costs paid to carriers for logistics that we arrange are included in cost of sales, whereas the corresponding amounts that we
charge to customers for shipping that we arrange is included in net sales.
Cost
of Sales
Cost
of sales includes cost of equipment, testing, freight, warehouse salaries, and technicians.
Earnings
Per Share
The
Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 260, Earnings Per
Share. Basic earnings (loss) per share is based on the weighted effect of all common shares issued and outstanding and is
calculated by dividing net income (loss) available to common stockholders by the weighted average shares outstanding during the
period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average
number of common shares used in the basic earnings per share calculation plus the number of common shares, if any, that would
be issued assuming conversion of all potentially dilutive securities outstanding. Shares potentially issuable were as follows:
| |
March
31, 2015 | | |
March
31, 2014 | |
Stock Options | |
| 8,665,005 | | |
| 5,565,005 | |
Warrants | |
| 2,100,000 | | |
| - | |
Convertible notes including accrued interest | |
| 18,026,807,087 | | |
| 12,154,716 | |
| |
| 18,037,572,092 | | |
| 17,719,721 | |
For
the nine months ended March 31, 2015 and 2014 the Company reported a net loss. The impact of additional shares would be anti-dilutive,
and, as such, the basic and diluted shares are the same for those periods.
Income
Taxes
Under
the asset and liability method prescribed under ASC 740, Income Taxes, The Company uses the liability method of accounting
for income taxes. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance
sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements.
The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance
is provided when it is more likely than not that a deferred tax asset will not be realized.
The
Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a
tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold,
the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority.
For tax positions not meeting the threshold, no financial statement benefit is recognized. As of March 31, 2015 and June 30, 2014,
the Company has had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax
positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had
any federal or state examinations since its inception. The Company’s 2013, 2012, and 2011 tax years may still be subject
to federal and state tax examination.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Share-Based
Payments
The
Company recognizes share-based compensation expense in connection with our share-based awards, net of an estimated forfeiture
rate and therefore only recognizes compensation cost for those awards expected to vest over the service period of the award. The
Company accounts for the grant of stock and option awards to employees in accordance with ASC Topic 718, Compensation –
Stock Compensation. ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of warrants
and stock options and other equity based compensation. The Company utilizes a Black-Scholes option pricing model to estimate the
fair value of our stock options. Calculating share-based compensation expense requires the input of highly subjective judgment
and assumptions, including estimates of expected life of the award, stock price volatility, forfeiture rates and risk-free interest
rates. The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates
involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses
different assumptions, our share-based compensation expense could be materially different in the future.
The
Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50, Equity Based Payments to Non-Employees.
The Company estimates the fair value of stock options by using the Black-Scholes option pricing model.
For
the nine months ended March 31, 2015 and 2014, total stock-based compensation was $101,828 and $178,158, respectively.
Financial
Instruments
In
January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Fair Value Measurements and Disclosures (Topic
820), “Improving Disclosures about Fair Value Measurements” (“ASU No. 2010-06”). ASU No. 2010-06
requires new disclosures about significant transfers in and out of Level 1 and Level 2 fair value measurements and the reasons
for such transfers and in the reconciliation for Level 3 fair value measurements, the requirement to disclose separately information
about purchases, sales, issuances and settlements. The Company adopted the provisions of ASU No. 2010-06 on January 1, 2010, except
for disclosures about purchases, sales, issuances and settlements in the reconciliation for Level 3 fair value measurements. Those
disclosures were effective for financial statements issued for fiscal years beginning after December 15, 2010. The impact of its
adoption on the Company’s financial statements was not material.
Cash
and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, and
customer deposits are reflected in the balance sheets at cost, which approximates fair value because of the short-term maturity
of these instruments. The carrying amount of the notes payable at March 31, 2015 approximate their respective fair value based
on the Company’s incremental borrowing rate.
The
following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant
unobservable input (Level 3) from July 1, 2014 to March 31, 2015:
| |
Conversion
feature derivative liability | |
Balance at July 1, 2014 | |
$ | - | |
Recognition of debt discount on convertible notes | |
| 1,108,950 | |
Recognition of derivative liability expense | |
| 1,459,616 | |
Recognition of extinguishment of debt upon assignment of a convertible note | |
| 1,157,500 | |
Reclassification of derivative liability to equity | |
| (2,994,132 | ) |
Change in fair value included in earnings | |
| (731,785 | ) |
Balance at March 31, 2015 | |
$ | 149 | |
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Derivative
Instruments
The
Company enters into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that
contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification
topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretations
of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the
balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly
and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized
as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based
on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument.
The
Company estimates fair values of derivative financial instruments using the Black-Scholes model, adjusted for the effect of dilution,
because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates)
necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development
of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes
in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile
and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially
and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and
assumption changes. Under the terms of the new accounting standard, increases in the trading price of the Company’s common
stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely,
decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial
quarter result in the application of non-cash derivative income.
The
Company has equity instruments including convertible promissory notes (see Note 8) that are accounted for as derivative liabilities
that are evaluated quarterly for potential reclassification as liabilities pursuant to ASC 815. Based upon ASC 815-25 the Company
has adopted a sequencing approach regarding the application of ASC 815 to its outstanding convertible debentures. Pursuant to
the sequencing approach, the Company evaluates its contracts based upon earliest issuance date. The Company did not enter into
any contracts for warrants or other equity instruments subject to reclassification to liabilities as prescribed by ASC Topic 815
until July 8, 2014, when it entered into a convertible promissory note of $105,000 with a conversion price of 40% of the lowest
trading price of the common stock as reported on the relevant exchange for the fifteen trading days prior to conversion and floor
conversion price of $0.00001 per share which resulted to the Company’s outstanding shares of common stock and common stock
equivalents to exceed over the number of authorized shares. Using this sequencing policy, all instruments convertible into common
stock, including the conversion feature of notes payable, issued on and subsequent to July 8, 2014 had been accounted for as derivative
liabilities. In January 2015, the Company’s Board of Directors and holders of the required majority of the voting power
of its voting stock approved an amendment to the Company’s Articles of Incorporation effectuating an increase in the total
number of authorized stock of the Company for common stock from 3,000,000,000 to 30,000,000,000 shares. Due to the increase in
authorized number of shares, the Company has sufficient unissued shares to satisfy the maximum numbers of shares that could be
required to convert or settle all the outstanding convertible promissory notes as of March 31, 2015. Accordingly, the Company
has reclassified as equity all derivative liabilities pertaining to the convertible notes payable except for the warrants issued
in October 2014.
Advertising
Advertising
costs are charged to operations when incurred. During the nine months ended March 31, 2015 and 2014, the Company incurred approximately
$89,000 and $2,800, respectively in advertising expense.
New
Accounting Standards
The
Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those
not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
NOTE
3. – ACCOUNTS RECEIVABLE.
Accounts
receivable consisted of the following:
| |
March
31, 2015 | | |
June
30, 2014 | |
Accounts Receivable | |
$ | 145,158 | | |
$ | 172,111 | |
Less: Allowance for doubtful accounts | |
| (1,244 | ) | |
| (28,097 | ) |
Accounts receivable, net | |
$ | 143,914 | | |
$ | 144,014 | |
NOTE
4. – INVENTORIES.
Inventories
consisted of finished goods at March 31, 2015 and June 30, 2014. At March 31, 2015 and June 30, 2014, the balance is $67,310 and
$41,043, respectively. We had consigned inventory to customers who refurbish and sell the used equipment. At March 31, 2015 and
June 30, 2014, there were no used equipment on consignment.
NOTE
5. – CAPITAL LEASE OBLIGATIONS.
The
Company has entered into several capital lease obligations to purchase equipment for operations. The Company has the option to
purchase the equipment at the end of the lease agreement for one dollar. The underlying assets and related depreciation were included
in the appropriate fixed asset category and related accumulated depreciation account. Property and equipment includes the following
amounts for leases that have been capitalized as of March 31, 2015 and June 30, 2014:
| |
Useful
Life (Years) | | |
March
31, 2015 | | |
June
30, 2014 | |
Equipment | |
| 3
- 5 | | |
$ | 90,663 | | |
$ | 90,663 | |
Software | |
| 5 | | |
| 79,214 | | |
| 79,214 | |
| |
| | | |
| 169,877 | | |
| 169,877 | |
Less: Accumulated Depreciation | |
| | | |
| (160,049 | ) | |
| (152,514 | ) |
Capital Leased Equipment, net | |
| | | |
$ | 9,828 | | |
$ | 17,363 | |
Future minimum
payments required under capital leases at March 31, 2015, are as follows:
| |
March
31, 2015 | |
FY 2015 | |
$ | 16,241 | |
FY 2016 | |
| 9,691 | |
FY 2017 | |
| 1,016 | |
Total future payments | |
| 26,948 | |
Less: Amount representing interest | |
| (1,263 | ) |
| |
| | |
Present value of future minimum payments | |
| 26,585 | |
Less: Current portion | |
| 15,214 | |
| |
| | |
Long term portion | |
$ | 10,471 | |
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
NOTE
6. – RELATED PARTY TRANSACTIONS.
Amounts
outstanding under a loan and line of credit from a bank (see Note 8) are personally guaranteed by officers of the Company.
Effective
as of January 15, 2015, the Company completed the sale of 110,000 shares of its Series A preferred stock at a price of $0.01 per
share, or an aggregate of $1,100.00, to David Bernstein, the Company’s Chief Executive Officer and a member of its board
of directors and Vlad Stelmak, the Company’s Chief Operating Officer and a member of its board of directors. Messrs. Bernstein
and Stelmak each purchased 55,000 shares of the Series A preferred Stock for a purchase price of $550.00. The fair value of the
shares of the common stock were based on the quoted trading price on the date of grant.
In
February 2015, the Company issued 31,865,350 shares of its unregistered shares of common stock to David Bernstein, its Chief Executive
Officer and a member of its board of directors in lieu of $6,373 of deferred compensation owed to Mr. Bernstein and 31,865,350
shares were issued to Vlad Stelmak, the Company’s Chief Operating Officer and a member of its board of directors, in lieu
of $6,373.07 of deferred compensation currently owed to Mr. Stelmak.
NOTE
7. – ACCRUED EXPENSES.
Accrued
expenses represent obligations that apply to the reported period and have not been billed by the provider or paid by the Company.
At March 31, 2015 and June 30, 2014, accrued expenses consisted of the following:
| |
March
31, 2015 | | |
June
30, 2014 | |
Accrued interest | |
$ | 132,864 | | |
$ | 93,419 | |
Wages and vacation | |
| 11,277 | | |
| 89,035 | |
Commissions and bonuses | |
| - | | |
| 28,976 | |
Professional fees | |
| - | | |
| 37,500 | |
Other | |
| 48,768 | | |
| 60,589 | |
| |
$ | 192,909 | | |
$ | 309,519 | |
NOTE
8. – NOTES PAYABLE.
| |
March
31, 2015 | | |
June
30, 2014 | |
Loan payable to TD Bank maturing in October 2028 payable with varying monthly installments
including interest at approximately 5.25% per annum, secured by all assets of the Company | |
$ | 25,380 | | |
$ | 27,403 | |
| |
| | | |
| | |
Line of Credit to American Express with varying monthly installments including interest at approximately
9.49% per annum, secured by all assets of the Company | |
| 25,661 | | |
| 28,082 | |
| |
| | | |
| | |
Promissory note of $60,000 payable at 12 consecutive monthly installments starting in February
2014 and non-interest bearing | |
| - | | |
| 35,000 | |
| |
| | | |
| | |
Promissory note of $30,000 payable at 12 consecutive monthly installments starting in September
2014 and non-interest bearing | |
| 12,500 | | |
| 30,000 | |
| |
| | | |
| | |
Various convertible promissory notes bearing interest from 4% to 12% per annum, aggregating to
$938,793 and $280,000 principal net of debt discount of $261,740 and $206,142 at March 31, 2015 and June 30, 2014, respectively | |
| 677,053 | | |
| 73,858 | |
| |
| | | |
| | |
12% Convertible promissory notes net of debt discount of $0 at March 31,
2015 and June 30, 2014 | |
| 175,000 | | |
| 472,500 | |
| |
| 915,594 | | |
| 666,843 | |
Less : Current portion | |
| 869,168 | | |
| 642,203 | |
Total long-term portion | |
$ | 46,426 | | |
$ | 24,640 | |
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Loan
Payable – TD Bank
On
July 2, 2007 the Company entered into a loan agreement for the principal amount of $100,000, maturing in October 2028 payable
with varying monthly installments including interest at approximately 5.25% per annum, secured by all assets of the Company.
Line
of Credit Payable – American Express
The
Company obtained a business capital line from American Express in the amount of $63,200. The line is payable in varying monthly
installments including interest at approximately 9.49% per annum. The line is secured by all assets of the Company.
Promissory
Note – Settlement of Accounts Payable
On
February 24, 2014, the Company entered into a settlement agreement with a certain vendor pursuant to which the Company has fully
settled an outstanding balance to the vendor amounting to $230,975 by issuing a promissory note of $60,000 payable in 12 monthly
consecutive installments starting on February 28, 2014. Consequently, during the years ended June 30, 2014, the Company recognized
a gain from settlement of accounts payable of $170,975. The Company shall be liable for the entire balance plus 10% interest from
September 2013 and certain collection cost upon a default in payment by the Company. At March 31, 2015, the principal amount of
this promissory note amounted to $0.
Promissory
Note – Termination of lease agreement
On
May 29, 2014, the Company entered into an amended lease agreement with the landlord of the operating facility located in Tampa,
Florida pursuant to which both parties agreed to amend the lease term to an earlier date of (i) 30 days after the amendment effective
date or (ii) the date on which the Company vacates and surrenders to the landlord the lease premises. The lease was terminated
in June 2014. In consideration for the execution of such amendment, the Company issued a promissory note of $30,000 payable in
12 monthly consecutive installments starting in September 2014 and an initial payment of $40,000. Consequently, during the year
ended June 30, 2014, the Company recognized a loss from termination of lease of $55,667 which represents the excess of total consideration
payment of $70,000 over the balance of deferred rent of $14,333 on the date of termination. Pursuant to the amendment agreement,
in the event that the landlord leases the premises to a new tenant under a new lease, then the Company shall be relieved of its
obligation to pay the landlord any remaining installment payments on the promissory note and shall be deemed satisfied. At March
31, 2015, the principal amount of this promissory note amounted to $12,500.
12%
Convertible Promissory Notes
In
January 2011 and February 2011 the Company issued and sold $550,000 principal amount 12% convertible promissory notes in a private
offering resulting in net proceeds of $495,000 after $55,000 fee paid to placement agent. The notes are unsecured and pay interest
at 12% per annum, in arrears, in shares of our common stock valued at $0.30 per share. The notes matured on December 31, 2013,
provided, however, that in our sole option we may extend the maturity date until December 31, 2014 if the note is not converted
by December 31, 2013. The Company has exercised its option to extend the maturity date from December 31, 2013 to December 31,
2014 while all terms and conditions remain the same. The notes are convertible at any time at the option of the holder into shares
of our common stock at a conversion price of $0.30 per share. At any time that the closing price of our common stock on any exchange
on which it might be listed or in the over the counter market equals or exceeds $0.60 per share for 20 consecutive trading days,
we have the right to convert the notes into shares of our common stock at a conversion price of $0.30 per share. The conversion
price of the notes is subject to proportional adjustment in the event of stock splits, dividends, recapitalizations and similar
corporate events. On December 31, 2012, $60,000 of accrued interest was converted to 200,000 shares of common stock at $0.30.
The Company is currently in default due to non-payment of the outstanding balance on the maturity date.
Between
March 5, 2014 and May 13, 2014, the Company issued an aggregate of 11,100,000 shares of common stock to six recipients upon the
assignment and cancellation of $27,500 of principal debt due under one of the Company’s 12% convertible promissory
note which matured on December 31, 2014. The Company’s note holder assigned $27,500 of the note to third parties and the
note was cancelled in exchange for common stock at a price of ranging from $0.005 to $0.001 per share. The Company accounted for
the reduction of the conversion price from $0.30 to a lower price per share and such conversion under ASC 470-20-40 “Debt
with Conversion and Other Options” and accordingly recorded loss from extinguishment of debt of $244,437 which is equal
to the fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Between
July 29, 2014 and September 28, 2014, the Company issued an aggregate of 15,300,000 shares of common stock to four recipients
upon the assignment and cancellation of $38,250 of principal debt due under one of the Company’s 12% convertible
promissory note which matured on December 31, 2014. The Company’s note holder assigned $38,250 of the note to third parties
and the note was cancelled in exchange for common stock at a price of $0.0025 per share. The Company accounted for the reduction
of the conversion price from $0.30 to a lower price per share and such conversion under ASC 470-20-40 “Debt with Conversion
and Other Options” and accordingly recorded loss from extinguishment of debt of $275,188 which is equal to the fair value
of shares issued in excess of the fair value issuable pursuant to the original conversion terms.
On
August 29, 2014, the Company’s note holder assigned $150,000 of the note to a third party and the original note was cancelled
in exchange for an issuance of a 9% convertible promissory note for $150,000 with a conversion price equal to 60% of the lowest
trading prices during the 20 trading day period of the Company’s common stock prior to the date of conversion and matures
on March 29, 2014. In October 2014, the Company amended the note to include a floor conversion price of $0.00005 per share.
Between
October 31, 2014 and December 31, 2014, the Company issued an aggregate of 30,500,000 shares of common stock to three recipients
upon the assignment and cancellation of $6,900 of principal debt due under one of the Company’s 12% convertible promissory
note which matured on December 31, 2014. The Company’s note holder assigned $6,900 of the note to third parties and the
note was cancelled in exchange for common stock at a price ranging from $0.0001 to $0.001 per share. The Company accounted for
the reduction of the conversion price from $0.30 to a lower price per share and such conversion under ASC 470-20-40 “Debt
with Conversion and Other Options” and accordingly recorded loss from extinguishment of debt of $61,934 which is equal to
the fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms.
Between
November 12, 2014 and December 16, 2014, the Company’s three note holders assigned an aggregate of $101,500 principal and
$13,450 interest of notes to third parties and the original notes were cancelled in exchange for issuance of convertible promissory
notes for a total of $114,950 with a conversion price ranging from 40% to 50% of the lowest trading prices during the 15 to 20
trading day period of the Company’s common stock prior to the date of conversion and have maturity dates from November 2015
to May 2015.
In
January 2015, in connection with the assignment of $25,000 of the Company’s 12% convertible notes to a third party, the
original 12 % note was cancelled in exchange for an issuance of a 10% convertible promissory note for $25,000 with a conversion
price equal to 50% of the lowest trading prices of the Company’s common stock during the 35 trading day period prior to
the date of conversion. During third quarter of fiscal 2015, the principal balance of this note was fully converted into shares
of common stock.
Presently,
the principal amounts of the 12% notes together with the accrued interest are convertible into an aggregate of 830,481 shares
of our common stock at March 31, 2015. At March 31, 2015 and June 30, 2014, the Company had $74,144 and $89,104, respectively
in accrued interest on the notes. At March 31, 2015 and June 30, 2014, the principal amounts of these notes amounted to $175,000
and $472,500, respectively.
Various
convertible promissory notes bearing interest from 4% to 12% per annum
Between
January 2014 and February 2014, the Company issued convertible promissory notes in an aggregate amount of $85,500. The notes bear
interest at 8% per annum and mature in October 2014 and November 2014. The Company paid debt issuance cost of $5,500 and finder’s
fee of $16,000 in connection with these notes payable which are being amortized over the term of the notes and capitalization
in deferred financing cost on the balance sheet. The notes are convertible at the option of the holder into shares of common stock
beginning on the date which is 180 days after the date of the notes, at a conversion price equal to 58% of the average of three
lowest trading prices during the 10 trading day period of the Company’s common stock prior to the date of conversion. On
March 13, 2014 the Company and the note holder entered into an amended agreement to include a floor conversion price of $0.00009.
During the first 180 days following the date of the note the Company has the right to prepay the principal and accrued but unpaid
interest due under the note, together with any other amounts that the Company may owe the holder under the terms of the note,
at a graduating premium ranging from 115% to 145%. After this initial 180 day period, the Company does not have a right to prepay
the note.
In
May 2014, the Company paid a total of $70,213 which consists of payment of the principal amount of $53,000, accrued interest of
$1,208 and prepayment penalty fee of $16,005. In July 2014, the Company paid the remaining balance for a total of $44,908 which
consist of payment of the principal amount of $32,500, accrued interest of $1,083 and prepayment penalty fee of $11,325.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Between
March 2014 and May 2014, the Company issued convertible promissory notes in an aggregate amount of $146,500. The notes bear interest
at 8% per annum and matures between December 2014 and February 2015. The Company paid debt issuance cost of $6,500 and finder’s
fee of $28,000 in connection with these notes, is capitalized in deferred financing cost, and is being amortized over the term
of the note. The note is convertible at the option of the holder into shares of common stock beginning on the date which is 180
days after the date of the notes, at a conversion price ranging between 53% and 58% of the average of three lowest trading prices
during the 10 trading day period of the Company’s common stock prior to the date of conversion. The floor conversion price
is $0.00009 per share. During the first 180 days following the date of the note the Company has the right to prepay the principal
and accrued but unpaid interest due under the note, together with any other amounts that the Company may owe the holder under
the terms of the note, at a graduating premium ranging from 110% to 145%. After this initial 180 day period, the Company does
not have a right to prepay the note. In September 2014, the Company paid a total of $116,819 which consist of payment of the principal
amount of $78,500, accrued interest of $3,114 and prepayment penalty fee of $35,205 leaving a principal balance of $68,000 as
of March 31, 2015.
In
May 2014, the Company issued a convertible promissory note of $101,000. The note bears interest at 10% per annum and matures in
November 2014. The Company paid debt issuance cost of $4,000 and finder’s fee of $15,000 in connection with this note payable
and is being amortized over the term of the note. The note is convertible at the option of the holder into shares of common stock
at a conversion price of 60% of the lowest trading prices during the 20 trading day period of the Company’s common stock
prior to the date of conversion. The floor conversion price is $0.00009 per share.
In
July 2014, the Company issued a convertible promissory note of $42,500. The note bears interest at 8% per annum and matures in
April 2015. The Company paid debt issuance cost of $2,500 in connection with this note payable which is being amortized over the
term of the note. The note is convertible at the option of the holder into shares of common stock at a conversion price of 58%
of the lowest average three day market price of our common stock during the 10 trading days prior to the notice of conversion,
subject to adjustment as described in the note. The floor conversion price is $0.00009 per share.
Between
July 2014 and August 2014, the Company issued convertible promissory notes aggregating $157,500. The note bears interest at 8%
per annum and matures between May 2015 and August 2015. The Company paid debt issuance cost of $7,500 in connection with this
note payable which is being amortized over the term of the note. The notes are convertible at the option of the holder into shares
of common stock at a conversion price of 40% of the lowest trading price of the common stock as reported on the relevant exchange
for the fifteen trading days prior to conversion. The floor conversion price was $0.00001 per share. In October 2014, the Company
amended the note to increase the floor conversion price to $0.00005 per share.
In
August 2014, the Company issued a convertible promissory note of $75,000. The note bears interest at 10% per annum and matures
in August 2016. The Company paid debt issuance cost of $7,500 in connection with this note payable and is being amortized over
the term of the note. The note is convertible to common stock at the lesser of (i) $0.0115 or (ii) sixty percent (60%) of the
lowest trade price in the 25 trading days prior to the conversion. The floor conversion price is $0.00005 per share.
In
August 2014, the Company issued convertible promissory notes aggregating $41,000. The note bears interest at 8% per annum and
matures in June 2015. The Company paid debt issuance cost of $3,000 in connection with this note payable and is being amortized
over the term of the note. The notes are convertible to common stock at the greater of (i) 58% multiplied by the lowest average
three day market price of the common stock during the ten trading days prior to the relevant notice of conversion or (ii) $0.00004.
The floor conversion price is $0.00001 per share.
In
August 2014, the Company issued a convertible promissory note of $50,000. The note bears interest at 8% per annum and matures
in August 2015. The Company paid debt issuance cost of $2,500 and finder’s fee of 5,000 in connection with this note payable
and is being amortized over the term of the note. The note is convertible to common stock at the lesser of (i) $0.0115 or (ii)
sixty percent (60%) of the lowest trade price in the 25 trading days prior to the conversion. The floor conversion price is $0.00005
per share.
In
August 2014, the Company issued a convertible promissory note of $105,000. The note bears interest at 10% per annum and matures
in March 2015. The Company paid debt issuance cost of $2,000, finder’s fee of $9,000 and original issue discount of $5,000
in connection with this note payable and is being amortized over the term of the note. The note is convertible to common stock
at the lower of (i) $0.00009 or (ii) 60% multiplied by the lowest trading price in the previous twenty trading days of the conversion
date. The floor conversion price is $0.00005 per share.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
In
September 2014, the Company issued a convertible promissory note of $40,000. The note bears interest at 4% per annum and matures
in September 2015. The Company paid debt issuance cost of $3,000 and original issue discount of $5,000 in connection with this
note payable and is being amortized over the term of the note. The note is convertible to common stock at the lower of (i) 50%
multiplied by the bid price on the day of the applicable notice of conversion or (ii) 50% multiplied by the lowest trading price
in the previous twenty (20) trading days prior to the relevant notice of conversion. The floor conversion price is $0.00005 per
share.
In
September 2014, the Company issued a convertible promissory note of $156,000. The note bears interest at 10% per annum and matures
in February 2015. The Company paid original issue discount of $6,000 in connection with this note payable and is being amortized
over the term of the note. The note is convertible to common stock at 60% multiplied by the lowest trading price in the previous
twenty (20) trading days prior to the relevant notice of conversion. The floor conversion price is $0.00005 per share.
In
September 2014, the Company issued a convertible promissory note of $32,500. The note bears interest at 8% per annum and matures
in June 2015. The Company paid debt issuance cost of $2,500 in connection with this note payable and is being amortized over the
term of the note. The note is convertible to common stock at the greater of (i) 58% multiplied by the lowest average three day
market price of the our Common Stock during the ten trading days prior to the relevant notice of conversion or (ii) $0.00004.
In
October 2014, the Company issued a convertible promissory note of $65,000. The note bears interest at 12% per annum and matures
in September 2015. The Company paid debt issuance cost of $8,700 in connection with this note payable and is being amortized over
the term of the note. The conversion price for each share is the lower of (i) the closing price of the common stock on the trading
day before the note funding date or (ii) 50% multiplied by the lowest sale price for the common stock during the 15 trading days
prior to the relevant notice of conversion. However, the note conversion price is subject to a floor price of $0.00009 per share.
In connection with the issuance of this note, the Company issued 2,100,000 warrants which expires in September 2019. Each of the
Warrants is exercisable into one share of the Company’s Common Stock. The exercise price for each of the Warrants is $0.031
per share, subject to adjustment for stock splits, dividends, combinations, subsequent equity sales, and subsequent rights offerings.
In
October 2014, the Company issued a convertible promissory note of $33,000. The note bears interest at 12% per annum and matures
in October 2015. The Company paid debt issuance cost of $2,400 in connection with this note payable which is being amortized over
the term of the note. The note is convertible to common stock at the lower of (i) 60% multiplied by the lowest sales price during
the 25 trading days prior to the relevant notice of conversion or (ii) $0.01. The floor conversion price is $0.0004 per share.
In
November 2014, the Company issued a convertible promissory note of $33,000. The note bears interest at 8% per annum and matures
in August 2015. The Company paid debt issuance cost of $3,000 in connection with this note payable which is being amortized over
the term of the note. The note is convertible to common stock at the greater of (i) 58% multiplied by the lowest sales price during
the 10 trading days prior to the relevant notice of conversion or (ii) $0.00004.
In
November 2014, the Company issued a convertible promissory note of $50,000. The note bears interest at 8% per annum and matures
in November 2015. The Company paid debt issuance cost of $2,500 in connection with this note payable and is being amortized over
the term of the note. The note is convertible to common stock at the greater of (i) 50% multiplied by the lowest sales price during
the 15 trading days prior to the relevant notice of conversion or (ii) $0.00009.
In
December 2014, the Company issued a convertible promissory note of $25,000. The note bears interest at 12% per annum and matures
in November 2015. The Company paid debt issuance cost of $2,450 in connection with this note payable and is being amortized over
the term of the note. The note is convertible to common stock at the greater of (i) 50% multiplied by the lowest sales price during
the 20 trading days prior to the relevant notice of conversion or (ii) $0.00005.
On
August 29, 2014, in connection with the assignment of $150,000 of the 12% convertible note to a third party (the “Assignee”),
the original 12 % note was cancelled in exchange for an issuance of a 9% convertible promissory note for $150,000 with a conversion
price equal to 60% of the lowest trading prices during the 20 trading day period of the Company’s common stock prior to
the date of conversion which matures on March 29, 2014. In October 2014, the Company amended the note to include a floor conversion
price of $0.00005 per share. The Company accounted for the reduction of the conversion price from $0.30 to a lower price per share
and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly recorded loss from
extinguishment of debt of $457,600 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant
to the original conversion terms. In September 2014, the Company issued an aggregate of 9,060,361 shares of common stock to an
Assignee upon the conversion of $55,493 of principal amount of debt.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Between
November 2014 and December 2014, in connection with the assignment of $101,500 principal and $13,450 interest of notes to third
parties, the original 12 % notes were cancelled in exchange for the issuance of convertible promissory notes for a total of $114,950
with a conversion price ranging from 40% to 50% of the lowest trading prices during the 15 to 20 trading day period of the Company’s
common stock prior to the date of conversion with maturity dates from November 2015 to May 2015 with floor conversion prices ranging
from $0.00005 to $0.00009. The Company accounted for the reduction of the conversion price from $0.30 to a lower price per share
and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly recorded loss from
extinguishment of debt of $699,900 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant
to the original conversion terms.
In
January 2015, in connection with the assignment of $25,000 of the Company’s 12% convertible notes to a third party, the
original 12 % note was cancelled in exchange for an issuance of a 10% convertible promissory note for $25,000 with a conversion
price equal to 50% of the lowest trading prices of the Company’s common stock during the 35 trading day period prior to
the date of conversion. The Company accounted for the reduction of the conversion price from $0.30 to a lower price per share
and such conversion under ASC 470-20-40 “Debt with Conversion and Other Options” and accordingly recorded loss from
extinguishment of debt of $124,850 which is equal to the fair value of shares issued in excess of the fair value issuable pursuant
to the original conversion terms. During third quarter of fiscal 2015, the principal balance of this note was fully converted
into shares of common stock.
In
January 2015, the Company issued a convertible promissory note in the principal amount of $31,000 and received gross proceed of
$25,000. The note matures in July 2015 and bears interest at the rate of 10% per annum upon default. The Company recorded a total
of $31,000 of debt discount in connection with this note payable which is being amortized over the term of the note. The note
is convertible to 45% multiplied by the lowest sales price during the 20 trading days prior to the relevant notice of conversion.
The floor conversion price is $0.00009 per share.
Between
October 2014 and December 2014, the Company issued an aggregate of 224,058,224 shares of common stock to various assignees upon
the conversion of $128,697 principal amount of debt and $5,030 accrued interest.
Between
January 2015 and March 2015, the Company issued an aggregate of 2,365,307,705 shares of common stock to various assignees upon
the conversion of $274,367 principal amount of debt and $25,304 accrued interest.
Presently,
the principal amounts of the various notes including accrued interest are convertible into an aggregate of 18,025,976,606 shares
of our common stock at March 31, 2015. At March 31, 2015 and June 30, 2014, the Company had $58,020 and $4,316, respectively in
accrued interest on the notes. At March 31, 2015 and June 30, 2014, the principal amounts of these various notes amounted to $938,793
and $280,000, respectively.
The
Company evaluated whether or not the convertible promissory notes contain embedded conversion features, which meet the definition
of derivatives under ASC 815 and related interpretations. Based upon ASC 815, the Company had adopted a sequencing approach regarding
the application of ASC 815 to its outstanding convertible debentures. Pursuant to the sequencing approach, the Company evaluates
its contracts based upon earliest issuance date. The Company did not enter into any contracts for warrants or other equity instruments
subject to reclassification to liabilities as prescribed by ASC Topic 815 until July 8, 2014, when it entered into a convertible
promissory note of $105,000 with a conversion price of 40% of the lowest trading price of the common stock as reported on the
relevant exchange for the fifteen trading days prior to conversion and floor conversion price of $0.00001 per share which resulted
to the Company’s outstanding shares of common stock and common stock equivalents to exceed over the number of authorized
shares. Using this sequencing policy, all instruments convertible into common stock, including the conversion feature of notes
payable, issued on and subsequent to July 8, 2014 had been accounted for as derivative liabilities. In January 2015, the Company’s
Board of Directors and holders of the required majority of the voting power of its voting stock approved an amendment to the Company’s
Articles of Incorporation effectuating an increase in the total number of authorized stock of the Company for common stock from
3,000,000,000 to 30,000,000,000 shares. Due to the increase in authorized number of shares, the Company has sufficient unissued
shares to satisfy the maximum numbers of shares that could be required to convert or settle all the outstanding convertible promissory
notes as of March 31, 2015. Accordingly, the Company has reclassified as equity all derivative liabilities pertaining to these
convertible notes payable as of March 31, 2015.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Debt
Discounts
In
connection with the convertible promissory notes issued between January 2014 and March 2015, the convertible notes were considered
to have an embedded beneficial conversion feature (BCF) because the effective conversion price was less than the fair value of
the Company’s common stock in accordance with ASC 470-20-25. Therefore the portion of proceeds allocated to the convertible
notes of $1,559,450 was determined to be the value of the beneficial conversion feature and was recorded as a debt discount and
is being amortized over the term of the notes.
For
the nine months ended March 31, 2015 and 2014 the Company recognized $1,170,853 and $19,732, respectively of amortization of debt
discount. As of March 31, 2015 and June 30, 2014 the discount had a carrying value of $261,740 and $206,142, respectively.
For
the nine months ended March 31, 2015 and 2014, the Company recognized $87,427 and $4,874 of amortization of deferred financing
cost, respectively. At March 31, 2015 and June 30, 2014, deferred financing cost amounted to $21,334 and $45,211.
NOTE
9. – DERIVATIVE LIABILITIES.
Under
the provisions of ASC 815, the Company has adopted a sequencing approach regarding the application of ASC 815 to its outstanding
convertible debentures. On July 8, 2014, as a result of the issuance of the 8% convertible promissory note (see Note 8), the Company’s
outstanding shares of common stock and common stock equivalents exceeded the number of authorized shares and therefore all instruments
convertible into common stock, including the conversion feature of notes payable, issued on and subsequent to July 8, 2014 had
been accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting
date. In January 2015, the Company filed an amendment to the Company’s Articles of Incorporation with the Secretary of State
of Delaware effectuating an increase in the total number of authorized stock of the Corporation from 3,000,000,000 to 30,000,000,000
shares. Due to the increase in authorized number of shares, the Company has sufficient unissued shares to satisfy the maximum
numbers of shares that could be required to convert or settle all the outstanding convertible promissory notes as of March 31,
2015. Accordingly, the Company has reclassified as equity all derivative liabilities pertaining to these convertible notes payable
as of March 31, 2015.
In
connection with the issuance of a note in October 2014, the Company issued 2,100,000 warrants which expires in September 2019.
Each of the Warrants is exercisable into one share of the Company’s Common Stock. The exercise price for each of the Warrants
is $0.031 per share, subject to adjustment for stock splits, dividends, combinations, subsequent equity sales, and subsequent
rights offerings. Since the Company determined that the terms of the Warrants include a down-round provisions under which the
exercise price could be affected by future equity offerings undertaken by the Company, under the provisions of FASB ASC Topic
No. 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Stock”, the warrants were accounted for
as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date. In accordance
with ASC 815, the Company has bifurcated the conversion feature of the convertible notes, along with the free-standing derivative
instrument such as warrants and recorded derivative liabilities on their issuance date. The Company uses the Black-Scholes option
pricing model to value the derivative liabilities. These derivative liabilities will then be revalued on each reporting date.
The
derivative expense in connection with the convertible notes and warrants issued was $1,459,616 for the nine months ended March
31, 2015. The gain resulting from the decrease in fair value of these convertible instruments was $731,785 for the nine months
ended March 31, 2015. During the nine months ended March 31, 2015, the Company reclassified $2,994,132 to paid-in capital due
to the conversion of convertible notes into common stock and also as a result of the increase in authorized number of shares.
Derivative liability in connection with the warrants amounted to $149 as of March 31, 2015.
The
Company used the following assumptions for determining the fair value of the convertible instruments under the Black-Scholes option
pricing model:
| |
July
8, 2014 to March 31, 2015 | |
Dividend rate | |
| 0% | |
Term (in years) | |
| 0.40
- 5 Years | |
Volatility | |
| 179%
- 228% | |
Risk-free interest rate | |
| 0.05%
- 1.73 % | |
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
NOTE
10. – STOCKHOLDERS’ EQUITY.
Effective
July 13, 2014, the Company amended its Articles of Incorporation to increase the total number of authorized capital stock from
200,000,000 shares to 3,000,000,000 shares consisting of 3,000,000,000 shares of common stock, par value $0.000001 per share.
On January 27, 2015, the Company’s Board of Directors and holders of the required majority of the voting power of its voting
stock approved an amendment to the Company’s Articles of Incorporation effectuating an increase in the total number of authorized
stock of the Company from 3,020,000,000 to 30,020,000,000 shares, of which 30,000,000,000 shares will be common stock and 20,000,000
shares will be preferred stock.
As
of March 31, 2015 and June 30, 2014, there are 2,728,281,122 and 48,324,113 shares of common stock issued and outstanding, respectively.
As of March 31, 2015 and June 30, 2014, there are 110,000 and none shares of Series A preferred stock issued and outstanding,
respectively.
Common
stock
Holders
of common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to share in all dividends that the Board of Directors,
in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up, subject
to the preferences of any shares of our preferred stock which may then be outstanding, each outstanding share entitles its holder
to participate in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having
preference over the common stock. Holders of common stock have no conversion, preemptive or other subscription rights, and there
are no redemption provisions for the common stock. The rights of the holders of common stock are subject to any rights that may
be fixed for holders of preferred stock, when and if any preferred stock is authorized and issued. All outstanding shares of common
stock are duly authorized, validly issued, fully paid and non-assessable.
Between
July 2014 and September 2014, the Company issued an aggregate of 24,360,360 shares of common stock to five recipients upon the
assignment and cancellation of $38,250 of principal debt due under the Company’s 12% convertible promissory note
and $55,493 of principal debt due under the Company’s 9% convertible promissory note. The Company recognized loss
from extinguishment of debt of $732,788 which is equal to the fair value of shares issued in excess of the fair value issuable
pursuant to the original conversion terms of the convertible promissory notes (see Note 8).
In
September, 2014 the Company issued 2,500,000 shares of the Company’s common stock with a fair market value of $47,000 in
exchange for a purchase price of $0.001 per share or $2,500 pursuant to a consulting agreement entered into in September 2014
for advisory services rendered. Stock based compensation of $44,500 has been recognized in the accompanying statement of operations.
Between
October 2014 and December 2014, the Company issued an aggregate of 224,058,244 shares of common stock to eight recipients upon
the assignment and cancellation of $128,697 of principal amount of debt and $5,030 accrued interest due under the Company’s
various convertible promissory notes. The Company recognized loss from extinguishment of debt of $61,934 which is equal to the
fair value of shares issued in excess of the fair value issuable pursuant to the original conversion terms of the convertible
promissory notes (see Note 8).
In
February 2015, the Company issued 31,865,350 shares of its unregistered shares of common stock to David Bernstein, its Chief Executive
Officer and a member of its board of directors in lieu of $6,373 of deferred compensation owed to Mr. Bernstein and 31,865,350
shares were issued to Vlad Stelmak, the Company’s Chief Operating Officer and a member of its board of directors, in lieu
of $6,373 of deferred compensation currently owed to Mr. Stelmak. The fair value of the shares of the common stock were based
on the quoted trading price on the date of grant.
Between
January 2015 and March 2015, the Company issued an aggregate of 2,365,307,705 shares of common stock to various assignees upon
the conversion of $274,367 principal amount of debt and $25,304 accrued interest (see Note 8) pursuant to the conversion terms
of the respective convertible notes.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
Preferred
stock
Our
Board of Directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and
fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares
of each series. The rights, preferences, limitations and restrictions of different series of preferred stock may differ with respect
to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions
and other matters. Our Board of Directors may authorize the issuance of preferred stock, which ranks senior to our common stock
for the payment of dividends and the distribution of assets on liquidation. In addition, our Board of Directors can fix limitations
and restrictions, if any, upon the payment of dividends on our common stock to be effective while any shares of preferred stock
are outstanding. The rights granted to the holders of any series of preferred stock could adversely affect the voting power of
the holders of common stock and issuance of preferred stock may delay, defer or prevent a change in our control.
Series
A Preferred Stock
On
January 15, 2015, the Company filed a certificate of designation, preferences and rights of Series A preferred stock (the “Certificate
of Designation”) with the Secretary of State of the State of Delaware to designate 1,000,000 shares of its previously authorized
preferred stock as Series A preferred stock. The Certificate of Designation and its filing was approved by the Company’s
Board of directors on January 7, 2015, without shareholder approval as provided for in the Company’s articles of incorporation
and under Delaware law.
The
holders of shares of Series A preferred stock are not entitled to dividends or distributions. The holders of shares of Series
A preferred stock have the following voting rights:
|
● |
Each
share of Series A preferred stock entitles the holder to 1,000 votes on all matters submitted to a vote of the Company’s
stockholders. In the event that such votes do not total at least 51% of all votes of the Company’s stockholders, then
the votes cast by the holders of the Series A preferred stock shall be equal to 51% of all votes cast at any meeting of the
Company’s stockholders or any issue put to the Company’s stockholders for voting. |
|
|
|
|
● |
Except
as otherwise provided in the Certificate of Designation, the holders of Series A preferred stock, the holders of the Company’s
common stock, and the holders of shares of any other of our capital stock having general voting rights and shall vote together
as one class on all matters submitted to a vote of the Company’s stockholders. |
The
holders of the Series A Preferred Stock do not have any conversion rights and are non-transferrable.
Effective
as of January 15, 2015, the Company completed the sale of 110,000 shares of its Series A preferred stock at a price of $0.01 per
share, or an aggregate of $1,100.00, to David Bernstein, the Company’s Chief Executive Officer and a member of its board
of directors and Vlad Stelmak, the Company’s Chief Operating Officer and a member of its board of directors. Messrs. Bernstein
and Stelmak each purchased 55,000 shares of the Series A preferred Stock for a purchase price of $550.00 each. The Company recorded
$1,100 to additional paid in capital in connection with the issuance of the Series A preferred stock.
NOTE
11. STOCK OPTIONS AND WARRANTS.
Stock
Option Plans
2010
Equity Compensation Plan
On
June 28, 2010, our Board of Directors authorized our 2010 Equity Compensation Plan covering 12,000,000 shares of common stock.
The plan was approved by our stockholders on June 28, 2010. The purpose of the plan is to enable us to offer to our employees,
officers, directors and consultants whose past, present and/or potential contributions to our company have been or will be important
to our success, an opportunity to acquire a proprietary interest in our company. The 2010 Equity Compensation Plan is administered
by our Board of Directors. Plan options may either be (i) incentive stock options (ISOs), (ii) non-qualified options (NSOs), (iii)
awards of our common stock or (iv) rights to make direct purchases of our common stock which may be subject to certain restrictions.
Any option granted under the 2010 Equity Compensation Plan must provide for an exercise price of not less than 100% of the fair
market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee
owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant.
The plan further provides that with respect to ISOs the aggregate fair market value of the common stock underlying the options
which are exercisable by any option holder during any calendar year cannot exceed $100,000.
WEEDHIRE
INTERNATIONAL, INC.
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED MARCH 31, 2015 AND 2014
The
term of each plan option and the manner in which it may be exercised is determined by the Board of Directors or the compensation
committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive
option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the
grant.
In
the event of any stock split of our outstanding common stock, the Board of Directors in its discretion may elect to maintain the
stated amount of shares reserved under the plan without giving effect to such stock split. Subject to the limitation on the aggregate
number of shares issuable under the plan, there is no maximum or minimum number of shares as to which a stock grant or plan option
may be granted.
A summary
of the stock options and changes during the period are presented below:
| |
| | |
Weighted | | |
Average | |
| |
Options | | |
Exercise
Price | | |
Fair
Value | |
Outstanding at June 30, 2014 | |
| 7,065,005 | | |
$ | 0.16 | | |
| 0.11 | |
Granted | |
| 1,600,000 | | |
| 0.03 | | |
| 0.01 | |
Forfeited | |
| - | | |
| - | | |
| - | |
Outstanding at
March 31, 2015 | |
| 8,665,005 | | |
$ | 0.16 | | |
| - | |
| |
| | | |
| | | |
| | |
Options exercisable
at March 31, 2015 | |
| 6,715,005 | | |
$ | 0.16 | | |
| | |
Between
October 2014 and November 2014, the Company appointed three individuals to serve as advisors of the Company. Upon their appointment
as advisors to the Company granted non-incentive options to purchase an aggregate of 1,600,000 shares of the Company’s common
stock under the 2010 Equity Compensation Plan at an exercise prices from $0.03 to $0.05 per share. The options, which vested 275,000
shares upon grant and the balance in arrears quarterly until July 2014 and October 2014, may be exercised on a cashless basis.
These options were valued on the grant date at approximately $12,600 or $0.008 per option using a Black-Scholes option pricing
model with the following assumptions: stock price of approximately $0.08 per share, volatility ranging from 230% to 240%, expected
term of 5 years, and a risk free interest rate from 1.41% to 1.66%. For the nine months ended March 31, 2015 and 2014, total stock-based
compensation related to the options was $44,581 and $156,003, respectively. The total intrinsic value of stock options outstanding
and exercisable as of March 31, 2015 was $0.
Warrants
In
connection with the Company’s October 2014 issuance of its 12% convertible promissory note of $65,000, the Company issued
2,100,000 warrants to purchase shares of the Company’s common stock. Each of the Warrants is exercisable into one share
of the Company’s Common Stock. The exercise price for each of the Warrants is $0.031 per share, subject to adjustment for
stock splits, dividends, combinations, subsequent equity sales, and subsequent rights offerings. These warrants expire in September
2019.
NOTE
12. COMMITMENTS AND CONTINGENCIES.
In
September 2014, the Company entered into a six month consulting agreement whereby such consultant intends to provide advisory
services and including software planning, design and development. The Company shall pay the sum of $30,000 or $5,000 per month.
Additionally, the Company issued to such consultant 2,500,000 shares of the Company’s common stock in exchange for $2,500
(see Note 10).
NOTE
13. SUBSEQUENT EVENTS.
Between
April 1, 2015 and May 12, 2015, the Company issued an aggregate of 1,943,612,867 shares of common stock to various recipients
upon the assignment and cancellation of $101,758 of principal amount of debt and $1,305 accrued interest due under the
Company’s various convertible promissory notes.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The
following discussion of our financial condition and results of operations for the nine months ended March 31, 2015 and 2014 should
be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report.
Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such
as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk
Factors” in our Annual Report on Form 10-K for the year ended June 30, 2014 as filed with the Securities and Exchange Commission.
We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,”
“should,” “could,” and similar expressions to identify forward-looking statements.
Overview
We
are a provider of green technology solutions, managing the equipment disposition needs of our government and commercial clients
by buying, reselling, or recycling, in an environmentally and regulatory compliant manner, computers and other technology hardware.
We operate in one segment. We generate revenues from:
|
● |
fees
for logistics, inventory management and data destruction services, |
|
|
|
|
● |
sales
of used equipment to wholesalers providing a second life to IT equipment that may otherwise be discarded, and |
|
|
|
|
● |
sales
to companies that specialize in removing recyclable or remarketable parts of electronics from equipment that no longer has
a usable life. |
Our
industry is relatively new and has grown during the past few years. We believe that this growth has been driven by both the increasing
rate of changes in IT which accelerates the rate at which IT equipment becomes obsolete, the expansion of the remarketing and
demanufacturing segments of our industry and a general increased awareness of the “green” aspect of information technology
asset disposition, or ITAD. We expect the growth of our industry, as well as the growth of our company, to continue in the future.
Our business strategy is based upon leveraging our experience and building on our existing business model by expanding our relationships
and resources and includes:
|
● |
expanding our
sources of technology equipment; |
|
|
|
|
● |
expanding our
resources for environmentally compliant recycling, reuse and data storage and destruction; |
|
|
|
|
● |
expanding our
geographical footprint; |
|
|
|
|
● |
expanding the
demanufacturing and recycling services we provide; and |
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|
|
● |
further penetrating
the large global market for the resale of useful equipment. |
Weedhire.com
In
May 2014, we launched Weedhire.com, a career website specifically targeting employment within the legal cannabis industry. In
order to support our transition into this business, we have changed our corporate name to WeedHire International, Inc. We made
the decision to diversify into this space due to the perceived underserved market for employer and employee candidates to connect
within the legal marijuana industry. As marijuana legislation continues to pass, we believe that more career opportunities will
be created. Although Weedhire.com is to be an online portal and social media source for job seekers and providers, it will not
be involved with the growth, sale, or distribution of marijuana.
Currently,
23 states including the District of Columbia have approved medical marijuana and more are expected to follow. Industry analysts
predict the current trend will accelerate and that the regulated domestic cannabis industry will grow from its current $1.5 billion
market to over $20 billion by 2019. Our expected capital requirements for this segment initially are in the area of $250,000 which
we will need to raise through the sale of debt or equity securities. We do not have any commitments for this additional capital,
however, at this time and there are no assurances we will be able to raise the necessary capital. In that event, our ability to
expand our operations through this new venture will be limited. During the nine months ended March 31, 2015, we did not have any
significant activities related to our WeedHire business.
Management
recognizes that the legal marijuana industry is still in its very early stages, and that we face many unique and challenging obstacles
starting and running a business in this industry. We are sensitive to the challenges both employers and job seekers face in trying
to build an industry that is not recognized at the federal level. Despite these challenges, we have achieved a considerable number
of milestones as listed below and expect that our expansion will continue:
|
● |
Alexa.com
(Amazon owned company) recognized WeedHire.com as the leading marijuana jobs site, despite less than 1 year of operation |
|
|
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|
● |
Generation
of marijuana job posting revenues |
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|
● |
Developed
and launched first iPhone app for the marijuana jobs industry |
|
|
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|
● |
Developed
and launched first Android app for the marijuana jobs industry |
|
|
|
|
● |
Received
recognition and press coverage from established media sources such as Yahoo! Finance, Forbes, Inc., Esquire, CNN, Comedy Central
and High Times AO |
|
|
|
|
● |
Our
jobs report has been cited in many major publications |
|
|
|
|
● |
We
have invested additional capital into development of our website and implemented certain updates designed to increase search
engine optimization and site traffic |
|
|
|
|
● |
Growing
social media following |
|
|
|
|
● |
Industry
sponsorships and educational seminars |
|
|
|
|
● |
Partnerships
and tools within the legal marijuana industry, as well as in the mainstream employment services industry |
|
● |
Hireology
– We use Hireology’s recognized, web-based, data-driven hiring management software used by businesses internationally.
This software allows hiring managers to consistently make educated hiring decisions, leading to lower turnover and increased
staffing efficiency. |
|
|
|
|
● |
WeedHire
Cannabis Advisory Council (the “WCAC”) – We formed the WCAC, which works with industry participants
who possess what we believe to be unique skill-sets that can help us develop strategies for future growth within the legal
cannabis industry. |
We
believe that brand recognition and loyalty are the vital building blocks for our long-term success. These and other developments
have required significant capital and time investments, but we expect that such efforts will lead to a stronger brand and following.
Traditional marketing and business development strategies may not apply in the emerging legal cannabis industry. Accordingly,
we will continue to develop a long-term strategy that will grow with the legal cannabis industry.
Our
Performance and Outlook
The
biggest challenges we are facing in our organic growth efforts are our ability to sustain growth and increase sales, our access
to sufficient qualified employees, extensive competition and sufficient capital to support our efforts, all of which are necessary
to support the expansion of our business. We have hired additional management personnel and are using a staffing company to provide
qualified personnel to fill our technical and labor needs. This approach allows us to control our overhead expenses. While we
are located in an area with a good supply of qualified candidates, the process, however, of evaluating the candidates is time
intensive for our management and maintaining a sufficiently qualified workforce will continue to be a challenge for us in the
near future. We have implemented a new, fully automated, management system to support our operations. We went live on the new
system in the first quarter of fiscal 2013 in our main warehouse in NJ, went live in Tampa in the fourth quarter of fiscal 2013
and went live in the second NJ warehouse in the first quarter of fiscal 2014. This new system provides operating and reporting
efficiencies to enable us to grow our business while minimizing the need to expand warehouse space and personnel. In May 2014,
we discontinued using the operating facility in Tampa, Florida.
During
the nine months ended March 31, 2015, our net sales increased by 0.4% from the nine months ended March 31, 2014, our gross profit
margins increased by 19% and our operating expenses decreased by 18% from the nine months ended March 31, 2014. While we do not
have any commitments for capital expenditures, in order for us to sustain our current operations and grow our business we will
need to raise additional working capital. As a small public company with a limited market for our common stock, we face a number
of challenges in accessing the capital markets, and the number of sources to raise working capital is limited. During fiscal 2014
and the nine months ended March 31, 2015 we explored a number of options to provide additional capital to our company and we are
continuing our efforts to raise additional working capital, either in the form of equity, debt or a combination of the two. During
the nine months ended March 31, 2015 we have raised net proceeds of $848,000 primarily through the sale of convertible notes which
mature between October 2014 and August 2016, and are convertible at the option of the holders into shares of our common stock
based upon a disclosure to the market price. In addition, we have $175,000 principal amount of 12% convertible notes which matured
in December 2014 and are currently in default. These notes are convertible at the option of the holders into shares of our common
stock at a conversion price of $0.30 per share. We do not presently have sufficient funds to satisfy these obligations and will
need to raise additional capital should the holders not elect to convert the notes. However, we do not have any commitments for
additional capital, and there are no assurances we will be successful in raising capital upon terms acceptable to us, if at all.
If we are unable to raise additional working capital, absent a significant increase in our net sales, we will have to reduce certain
operating expenses, which may not be sufficient to sustain our operations.
In
order to reduce our operating expenses we have opted out of the second warehouse lease in New Jersey, effective November 1, 2013,
and in May 2014, we entered into a lease amendment agreement with the landlord of the Tampa, Florida facility to terminate that
lease. We have also made some personnel reductions in accordance with the sales decline during the prior fiscal year. If we are
unable to grow sales we will potentially have to make additional personnel reductions. If we are unable to raise additional capital
as needed, increase sales or significantly reduce costs, our current cash position will only sustain operations for approximately
three months and we will not have the funds necessary to satisfy our obligations as they become due. In that event, our ability
to continue as a going concern is in jeopardy.
Going
Concern
For
the nine months ended March 31, 2015 the Company reported a net loss of approximately $4 million and at March 31, 2015 we had
an accumulated deficit of approximately $14.8 million. The report of our independent registered public accounting firm on our
financial statements for the year ended June 30, 2014 contains an explanatory paragraph regarding our ability to continue as a
going concern based upon the loss for the current year, the accumulated deficit and the net cash used in operating activities.
These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements
do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful
in our efforts to increase our sales and report profitable operations or to continue as a going concern, in which event investors
would lose their entire investment in our company.
Results
of Operations
Our
business is driven by either businesses or the government entities updating older equipment or partnering with our company to
dispose of old or unused equipment. As such, the timing of equipment inflow is not consistent or predictable. Sales for the three
and nine months ended March 31, 2015 increased 13% and 0.4% as compared to the three and nine months ended March 31, 2014, respectively.
Our sales increased for both periods as a result of the increase in equipment volume sales to three significant retail customers
during the nine months ended March 31, 2015 as compared to only one customer during the nine months ended March 31, 2014. Our
sales represented approximately 100% from our IT asset management and disposition services business.
In
order to further increase our sales, we are marketing our services with a focus managed services on building our existing Department
of Defense data destruction platform of services to new and existing customers as well as hosting webinars and sales training
sessions for existing customers with a view towards leveraging those existing relationships. Depending on the outcome of our evaluation
of strategic alternatives for our IT asset recycling operations, we expect revenues to remain constant during the remainder of
the fiscal year.
Our
gross profit margin depends on various factors, including product mix, pricing strategies, market conditions, personnel levels
and other factors, any of which could result in changes in gross margins from period to period. Gross profit margin increased
19% for the nine months ended March 31, 2015 as compared to the nine months ended March 31, 2014. As a percentage of sales, the
gross profit margin was 61% and 57% during the three and nine months ended March 31, 2015, respectively and 52% and 38% for the
three and nine months ended March 31, 2014 respectively. The increase in gross profit margin was primarily due to the decrease
in cost of acquired used equipment and the termination and discontinuance of our Tampa, Florida operations which significantly
reduced our warehouse salaries which is a component of our cost of sales. We expect margins to remain in constant levels during
the remainder of the fiscal year.
Selling,
general and administrative expenses decreased 18% and 21% during the three and nine months ended March 31, 2015 as compared to
the three and nine months ended March 31, 2014, respectively. The decrease during the three and nine months ended March 31, 2015
is primarily attributable to the decrease in compensation expense as a result of the discontinuance of the Tampa, Florida operations
and also a decrease in stock based compensation due to the options have been fully vested and recognized during the second quarter
of fiscal 2014.
Other
expense increased by approximately $587,000 and $3.7 million during the three and nine months ended March 31, 2015 as compared
to the three and nine months ended March 31, 2014, respectively. The increase is the result of the recognition of derivative expense,
loss from extinguishment of debt, interest expense which includes amortization of debt discount and deferred financing cost offset
by the gain from change in fair value of derivatives. The loss from extinguishment of debt $124,850 and $1,619,472 for the three
and nine months ended March 31, 2015, respectively, was a result of the assignment of various notes and the conversion of principal
and accrued interest on notes into common stock.
Net
loss during the nine months ended March 31, 2015 was approximately $(4,003,000) as compared to net loss of approximately $(1,256,000)
for the nine months ended March 31, 2014 resulting from the discussion above.
Liquidity
and capital resources
Liquidity
is the ability of a company to generate sufficient cash to satisfy its needs for operating the business. At March 31, 2015 we
had a working capital deficit of approximately $1.3 million as compared to working capital deficit of approximately $1.6 million
at June 30, 2014. The decreased working capital deficit at March 31, 2015 is primarily attributable to a decrease in accounts
payable and accrued expenses of approximately $219,000. During the nine months ended March 31, 2015, we received net proceeds
from the issuance of convertible notes amounting to $848,000. The proceeds from these notes were used for working capital purposes
and to pay off convertible notes.
Cash
flows
Net
cash used in operating activities was approximately $563,000 for the nine months ended March 31, 2015 as compared to net cash
used in operating activities of approximately $93,000 for the nine months ended March 31, 2014.
In the nine
months ended March 31, 2015 cash was used as follows:
|
● |
Net loss was approximately
$(4,003,000), partially offset by |
|
|
|
|
● |
Net changes in
operating assets and liabilities of approximately $(298,000), and |
|
|
|
|
● |
Non-cash operating
expenses of approximately $4,495,000. |
|
|
|
|
● |
Non-cash operating
income of approximately $757,000. |
In the nine
months ended March 31, 2014 cash was used as follows:
|
● |
Net loss was approximately
$(1,256,000), partially offset by |
|
|
|
|
● |
Net changes in
operating assets and liabilities of approximately $886,000, and |
|
|
|
|
● |
Non-cash operating
expenses of approximately $448,000. |
|
|
|
|
● |
Non-cash operating
expenses of approximately $171,000. |
Net
cash provided by investing activities was approximately $16,000 for the nine months ended March 31, 2015 as compared to approximately
$18,000 for the nine months ended March 31, 2014. The nine months ended March 31, 2015 reflects the decrease in restricted cash.
The nine months ended March 31, 2014 reflects the decrease in restricted cash and the equipment purchases are primarily for the
system and process changes.
Net
cash provided by financing activities was approximately $669,000 for the nine months ended March 31, 2015 as compared to approximately
$105,000 for the nine months ended March 31, 2014. The increase is primarily attributable to the issuance of convertible notes
payable which resulted to net proceeds to us for $828,000 offset by payment on notes of approximately $168,000 during the nine
months ended March 31, 2015. The increase is primarily attributable to the issuance of convertible notes payable during the nine
months ended March 31, 2014.
Off
Balance Sheet Arrangements
As
of the date of this report, we do not have 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 that are material to investors. The term “off-balance sheet arrangement”
generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party,
under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained
or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market
risk support for such assets.
Critical
Accounting Policies
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related
disclosure of contingent assets and liabilities. We believe the critical accounting policies in Note 1 to the financial statements
appearing elsewhere in this report affect our more significant judgments and estimates used in the preparation of our financial
statements. Actual results may differ from these estimates under different assumptions and conditions.
Recent
Accounting Pronouncements
We
have adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not
yet effective, is not anticipated to have a material effect on our financial position or results of operations.
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
Not
applicable for a smaller reporting company.
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures,
our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing
disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also 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. Based on their evaluation as of the end of the period covered
by this report, our Chief Executive Officer who also serves as our principal financial and accounting officer has concluded that
our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed
in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer,
to allow timely decisions regarding required disclosure as the result of the failure to timely file a Current Report on Form 8-K.
We have identified the following material weaknesses in our disclosure controls and procedures as of March 31, 2015:
As
a result of limited resources, we did not maintain proper segregation of incompatible duties. Namely the lack of an audit committee,
an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial information
in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of the lack of segregation
of duties potentially affects multiple processes and procedures.
We
are in the continuous process of improving our internal control over financial reporting in an effort to eliminate these material
weaknesses through improved supervision and training of our staff and our accounting consultants, but additional effort is needed
to fully remedy these deficiencies. The Company intends to continue to hire additional finance and accounting personnel necessary
to address the weaknesses once additional capital is obtained which will allow full implementation of needed controls and procedures.
Despite the existence of the material weaknesses, we believe that our consolidated financial statements contained in this Quarterly
Report on Form 10-Q fairly presents our financial position, results of operations and cash flows for the period ending March 31,
2015 in all material respect.
Changes
in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting
during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
None.
Item
1A. Risk Factors.
Not applicable
for a smaller reporting company.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
In
February 2015, the Company issued 31,865,350 shares of its unregistered shares of common stock to David Bernstein, its Chief Executive
Officer and a member of its board of directors in lieu of $6,373 of deferred compensation owed to Mr. Bernstein and 31,865,350
shares were issued to Vlad Stelmak, the Company’s Chief Operating Officer and a member of its board of directors, in lieu
of $6,373 of deferred compensation currently owed to Mr. Stelmak.
During
the period from January 1, 2015 through March 31, 2015, the Company issued 2,365,307,705 shares of its unregistered common stock
valued at $274,367 in exchange for conversion of debt and accrued interest in the aggregate amount of $25,304.
The
shares of common stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the
provisions of Section 4(a)(2) of the Securities Act of 1933, as amended, (“Securities Act”), and/or Section 3(a)(9)
of the Securities Act.
Item
3. Defaults Upon Senior Securities.
None.
Item
4. Mine Safety Disclosures.
Not applicable
to our company’s operations.
Item
5. Other Information.
None.
Item
6. Exhibits.
Exhibit No. |
|
Description |
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|
3.1 |
|
Bylaws
(Incorporated herein by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-1 as filed with the
Commission on May 10, 2011). |
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|
3.2 |
|
Amended
and Restated Articles of Incorporation of WeedHire International, Inc. (Incorporated herein by reference to Exhibit 3.3 to
the Company’s Current Report on Form 8-K as filed with the Commission on November 7, 2014). |
|
|
|
3.3 |
|
Certificate
of Designation of Series A Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K as filed with the Commission on January 21, 2015). |
|
|
|
4.1 |
|
Convertible
Promissory Note between AnythingIT, Inc. and Union Capital, LLC dated August 21, 2014 (Incorporated herein by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on November 3, 2014). |
|
|
|
4.2 |
|
Back
End Convertible Promissory Note between AnythingIT, Inc. and Union Capital, LLC dated August 21, 2014 (Incorporated herein
by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the Commission on November 3,
2014). |
|
|
|
4.3 |
|
Back
End Promissory Note between AnythingIT, Inc. and Union Capital, LLC dated August 21, 2014 (Incorporated herein by reference
to Exhibit 4.4 to the Company’s Current Report on Form 8-K as filed with the Commission on November 3, 2014). |
|
|
|
4.4 |
|
Convertible
Promissory Note between AnythingIT, Inc. and Redwood Fund II, LLC dated August 22, 2014 (Incorporated herein by reference
to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the Commission on September 16, 2014). |
|
|
|
4.5 |
|
Convertible
Promissory Note between AnythingIT, Inc. and JSJ Investments Inc. dated August 29, 2014 (Incorporated herein by reference
to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on September 9, 2014). |
|
|
|
4.6 |
|
Convertible
Promissory Note between AnythingIT, Inc. and Macallan Partners, LLC dated September 3, 2014 (Incorporated herein by reference
to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the Commission on September 16, 2014). |
4.7 |
|
Convertible
Promissory Note between AnythingIT, Inc. and KBM Worldwide, Inc. dated September 9, 2014 (Incorporated herein by reference
to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on September 25, 2014). |
|
|
|
4.8 |
|
Convertible
Promissory Note between AnythingIT, Inc. and KBM Worldwide, Inc. dated September 17, 2014 (Incorporated herein by reference
to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the Commission on September 25, 2014). |
|
|
|
4.9 |
|
Amendment
to Convertible Promissory Note and Back End Convertible Promissory Note between AnythingIT, Inc. and Union Capital, LLC dated
September 19, 2014 (Incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed
with the Commission on November 3, 2014). |
|
|
|
4.10 |
|
Convertible
Promissory Note between AnythingIT, Inc. and Eastmore Capital, LLC dated September 29, 2014 (Incorporated herein by reference
to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on October 9, 2014). |
|
|
|
4.11 |
|
Common
Stock Purchase Warrant between AnythingIT, Inc. and Eastmore Capital, LLC dated September 29, 2014 (Incorporated herein by
reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the Commission on October 9, 2014). |
|
|
|
4.12 |
|
Convertible
Promissory Note between AnythingIT, Inc. and Vista Capital Investments, LLC dated October 10, 2014 (Incorporated herein by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on October 17, 2014). |
|
|
|
4.13 |
|
Convertible
Promissory Note between AnythingIT, Inc. and Vista Capital Investments, LLC dated October 17, 2014 (Incorporated herein by
reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the Commission on October 17, 2014). |
|
|
|
4.14 |
|
Convertible
Promissory Note between AnythingIT, Inc. and KBM Worldwide, Inc. dated November 7, 2014 (Incorporated herein by reference
to Exhibit 4.4 to the Company’s Current Report on Form 8-K as filed with the Commission on November 19, 2014). |
4.15 |
|
Convertible
Promissory Note between AnythingIT, Inc. and Coventry Enterprises, LLC dated November 12, 2014 (Incorporated herein by reference
to Exhibit 4.1 to the Company’s Current Report on Form 8-K as filed with the Commission on November 19, 2014). |
|
|
|
4.16 |
|
Back
End Convertible Promissory Note between AnythingIT, Inc. and Coventry Enterprises, LLC dated November 12, 2014 (Incorporated
herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K as filed with the Commission on November
19, 2014). |
|
|
|
4.17 |
|
Back
End Promissory Note between AnythingIT, Inc. and Coventry Enterprises, LLC dated November 12, 2014 (Incorporated herein by
reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K as filed with the Commission on November 19, 2014). |
|
|
|
10.1 |
|
Securities
Purchase Agreement between AnythingIT, Inc. and Union Capital, LLC dated August 21, 2014 (Incorporated herein by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on November 3, 2014). |
|
|
|
10.2 |
|
Securities
Purchase Agreement between AnythingIT, Inc. and Eastmore Capital, LLC dated September 29, 2014 (Incorporated herein by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on October 9, 2014). |
|
|
|
10.3 |
|
Securities
Purchase Agreement between AnythingIT, Inc. and KBM Worldwide, Inc. dated November 7, 2014 (Incorporated herein by reference
to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the Commission on November 19, 2014). |
|
|
|
10.4 |
|
Securities
Purchase Agreement between AnythingIT, Inc. and Coventry Enterprises, LLC dated November 12, 2014 (Incorporated herein by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on November 19, 2014). |
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10.5 |
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Investment
Agreement between WeedHire International, Inc. and David Bernstein dated as of January 7, 2015 (Incorporated herein by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on January 21, 2015). |
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10.6 |
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Investment
Agreement between WeedHire International, Inc. and Vlad Stelmak dated as of January 7, 2015 (Incorporated herein by reference
to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the Commission on January 21, 2015). |
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31.1 |
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Rule
13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer* |
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31.2 |
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Rule
13a-14(a)/ 15d-14(a) Certification of principal financial and accounting officer* |
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32.1 |
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Section
1350 Certification of Chief Executive Officer and principal financial and accounting officer* |
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101.INS |
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XBRL
Instance Document** |
101.CAL |
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XBRL
Taxonomy Extension Calculation Linkbase ** |
101.PRE |
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XBRL
Taxonomy Extension Presentation Linkbase ** |
101.LAB |
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XBRL
Taxonomy Extension Label Linkbase ** |
101.DEF |
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XBRL
Taxonomy Extension Definition Linkbase ** |
101.SCH |
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XBRL
Taxonomy Extension Schema ** |
* filed
herewith
**
In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this report shall be
deemed furnished and not filed.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
WeedHire
International, Inc. |
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|
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May
15, 2015 |
By: |
/s/
David Bernstein |
|
Name: |
David Bernstein |
|
|
Chief Executive
Officer and Principal |
|
|
Financial and
Accounting Officer |
EXHIBIT
31.1
Certifications
I, David
Bernstein, certify that:
1. |
I
have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2015 of WeedHire International, Inc. (the “registrant”); |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented
in this report; |
|
|
4. |
The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
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|
|
|
(b) |
Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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; |
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|
|
|
(c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation;
and |
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|
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(d) |
Disclosed
in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and |
5. |
The
registrant’s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions): |
|
(a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
(b) |
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated:
May 15, 2015 |
/s/
David Bernstein |
|
David Bernstein, |
|
Chief
Executive Officer |
|
(Principal
Executive Officer) |
EXHIBIT
31.2
Certifications
I, David
Bernstein, certify that:
1. |
I
have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 of WeedHire International,
Inc. (the “registrant”); |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
(a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
(b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, 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; |
|
|
|
|
(c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and |
|
|
|
|
(d) |
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
|
|
|
5. |
The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions): |
|
|
|
(a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
(b) |
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Dated:
May 15, 2015 |
/s/
David Bernstein |
|
David Bernstein, |
|
(Principal Financial
and Accounting Officer) |
EXHIBIT
32.1
Section
1350 Certification
In
connection with the Quarterly Report of WeedHire International, Inc. (the “Company”) on Form 10-Q for the quarterly
period ended March 31, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, David Bernstein,
Chief Executive Officer and Principal Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350,
as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. |
The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
and |
|
|
2. |
The
information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations
of the Company. |
Dated:
May 15, 2015 |
/s/
David Bernstein |
|
David Bernstein |
|
Chief Executive
Officer and Principal
Financial and Accounting Officer |
This
certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically
incorporates it by reference.
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