Indicate by check mark the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
¨
Yes
x
No
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Exchange Act.
¨
Yes
x
No
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 resistant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
¨
Yes
x
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation s-K (§ 229.405 of this chapter is not contained herein and will not be contained to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
¨
Yes
x
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” “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
¨
Yes
x
No
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal year. $412,500.00
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
The number of shares outstanding of the issuer’s Common Stock, $0.0001 par value, as of April 4, 2017. 93,911,633
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the documents is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980)
This annual report on Form 10-K of Advanced Environmental Petroleum Producers, Inc. for the year ended December 31, 2016 contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve risks and uncertainties. In particular, statements under the Sections; Description of Business, Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward looking statements. Where in any forward looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.
The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the cost and effects of legal proceedings and the terms of or ability to close transactions and/or agreements.
You should not rely on forward looking statements in this annual report. This annual report contains forward looking statements that involve risks and uncertainties. We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward looking statements, which apply only as of the date of this annual report. Our actual results could differ materially from those anticipated in these forward-looking statements.
PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is eligible for trading on the OTC-pink market under the symbol “AEPP”. The trading volume in our common stock varies. There is no assurance that any trading market in existence at any time will continue. A purchaser of shares may, therefore, find it difficult to resell our securities offered herein should he or she desire to do so when eligible for public resale.
Holders
On December 31, 2016, there were 101 shareholders of record of our common stock. As of April 4, 2017 there are 93,911,633 shares of our Common Stock issued and outstanding.
Dividends
Since inception, we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, that our Board of Directors may deem relevant.
Recent Sales of Unregistered Securities
Set forth below is information regarding the issuance and sales of AEPP’s common stock without registration during the last four years. No sales involved the use of an underwriter and no commissions were paid in connection with the sale of any securities. The following securities of AEPP were issued by AEPP within the past four (4) years and were not registered under the Securities Act of 1933: The shares of our common stock were issued pursuant to Section 4(2) of the Securities Act of 1933 and the exempt transaction provisions of applicable state law. All shareholders in our Section 4(2) offering are sophisticated investors who are personally known by our former president, ANDREW S. MYNHEER. Each shareholder had sufficient knowledge and experience in finance and business matters to evaluate the risks and merits of the investment or was otherwise able to bear the economic risks of an investment in our company. Additionally, each shareholder was provided with access to the type of information about our company that would normally be provided in a prospectus. Finally, the shareholders agreed not to resell or distribute the securities to the public and were aware that each certificate representing shares of our common stock would bear a restrictive transfer legend to prevent any unauthorized distribution.
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Name of Stockholder
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Shares
Received
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Date Shares
Sold
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Consideration
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*
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Jenkin Wong
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6
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February 10, 2014
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$
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5,000
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*
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Emmy Shu Ying
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10
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May 23, 2014
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$
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7,500
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*
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David Henkel
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6
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June 11, 2014
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$
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5,000
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*
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Jenkin Wong
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6
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July 22, 2014
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$
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5,000
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|
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*
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Allen Wong
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10
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August 31, 2014
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$
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7,500
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*
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Soellingen Advisory Group
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300
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September 25, 2014
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$
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42,000
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*
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Soellingen Advisory Group
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500
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September 25, 2014
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$
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25,000
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*
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Wei Peng Zhuang
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103
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November 28, 2014
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$
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51,800
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*
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Andrew S. Mynheer
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15,000
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June 14, 2013
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Services
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*
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Christopher J. Mynheer
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15,000
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June 14, 2013
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Services
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Theresa Kearl
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3,500,000
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November 9, 2015
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17,500
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Devin Kyle Lavalle
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3,000,000
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November 9, 2015
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15,000
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Shivon Michelle Lavalle
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1,000,000
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November 9, 2015
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5,000
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New Opportunity Business Solutions, Inc.
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7,200,000
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November 19, 2015
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36,000
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Island Capital Management
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30,000
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January 6, 2016
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4,000
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Ricky Gatt
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500,000
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June 6, 2016
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2,500
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Bert Lavallee
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3,500,000
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June 6, 2016
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|
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17,500
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Robert W. Harris
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1,000,000
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June 24, 2016
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|
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5,000
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Robert W. Harris
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2,000,000
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June 27, 2016
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10,000
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Ricky Gatt
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500,000
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June 27, 2016
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|
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2,500
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Tom Buggs
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1,600,000
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June 8, 2016
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8,000
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Margaret Studer
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75,000
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August 19, 2016
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|
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375
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|
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Kathleen Dinneen
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75,000
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August 19, 2016
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375
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Amy Bugg
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200,000
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August 19, 2016
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1,000
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|
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Adam Hedayat
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4,000,000
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August 19, 2016
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|
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20,000
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Rozalia Mako
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|
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100,000
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August 19, 2016
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500
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_____________
*Shares are reflective of one for one thousand (1:1,000) reverse split, effective October 13, 2015.
Item 6. Selected Financial Data
The registrant qualifies as a smaller reporting company, as defined by Rule 229.10(f)(1) and is not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Special Note Regarding Forward Looking Statements.
This annual report on Form 10-K of the Company for the period ended December 31, 2016 contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve risks and uncertainties. In particular, statements under the Sections; Description of Business, Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward looking statements. Where in any forward looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.
The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the cost and effects of legal proceedings and the terms of or ability to close transactions and/or agreements.
You should not rely on forward looking statements in this annual report. This annual report contains forward looking statements that involve risks and uncertainties. We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward looking statements, which apply only as of the date of this annual report. Our actual results could differ materially from those anticipated in these forward-looking statements.
Our Business Overview
Advanced Environmental Petroleum Producers, Inc., (“AEPP”), a Florida corporation, (the "Company") provided consulting services primarily to independent business owners and other market participants located in California, the Southeast and Midwest of the United States of America (the “U.S.”). Historically, we conducted initial marketing and sales activities to take advantage of opportunities related to time, location and quality of business operations. We have conducted our operations primarily in industry/incentive friendly regions of The United States of America.
Plan of Operation
Pursuant to a Stock Purchase Agreement dated as of March 6, 2017 by and among Oncolix, Inc., a Delaware corporation (the “
Purchaser”
or “
Oncolix
”
”), Mr. Kistler our majority shareholder and sole executive officer, employee and director on our Board, New Opportunity Business Solutions, Inc. a corporation whose sole employee, officer, director, control person and shareholder is Mr. Kistler (“
NOBS
,” and together with Mr. Kistler, collectively, the “
Seller
”) and the Company (the “
SPA
”), the Seller agreed to sell 61,465,130 shares of our common stock owned by the Seller (approximately 66% of our issued and outstanding shares) to the Purchaser for a purchase price of $315,000 (the “
Share Acquisition
”). As a result of the Share Acquisition, the Purchaser will become the majority shareholder of the Company, and pursuant to the SPA, approximately $111,928 of the $315,000 purchase price will be utilized by the Seller to pay all outstanding indebtedness and financial obligations of the Company so that immediately following the closing of the Share Acquisition (the “
SPA Closing
”), the Company will have no outstanding indebtedness and/or other financial obligations. There are numerous conditions to the Closing of the Share Acquisition, and no assurance can be given that the SPA Closing will be completed.
As a condition to the SPA Closing, Mr. Kistler, our sole employee, executive officer, director and our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, shall resign all such positions with the Company immediately following the Board’s appointment of one of the Purchaser’s nominee as a director to our Board and as our Chief Executive Officer, President, Principal Executive Officer and Principal Financial Officer and another nominee of the purchaser as a director to our Board and our Secretary and Chief Accounting Officer. Both of such persons may be deemed affiliates of the Purchaser.
Additional information about the SPA, the Share Acquisition and related matters and agreements can be found in our Schedule 14f-1 Information Statement filed with the Securities and Exchange Commission (the “
SEC
”) on March 8, 2017, and amended pursuant to that Amendment No. 1 filed with the SEC on March 21, 2017, pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, and SEC Rule 14f-1 promulgated thereunder.
Although we are not presently engaged in any capital raising activities, we may engage in one or more private offerings of our company’s securities in the future. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933. See “Note 2 – Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”
Consulting Relationship
New Opportunity Business Solutions, Inc., (NOBS) is wholly owned by Brian Kistler our CEO and was a non-related entity that provided consulting services to our Company until January 9, 2017 when Mr. Kistler assumed the role as CEO. AEPP was a client of New Opportunity Business Solutions, Inc. The original amount of the note payable was $199,800. The note states a 10% interest rate. The note is as support for the consulting fee which was owed by AEPP but not paid as required. The principal balance at December 31, 2016 and 2015 are $0 and $126,300, respectively. Accrued interest at December 31, 2016 and 2015 was $0 and $50,324, respectively.
New Opportunity Business Solutions, Inc. the Consultant, served generally, on a non-exclusive basis, as a corporate consultant. New Opportunity Business Solutions, Inc. assisted with the filing of an S-1 Registration statement with the Securities Exchange Commission and any required amendments thereafter, prepared and assisted with the filing of a 15c211 with the Financial Investment Regulatory Authority (FINRA) and any required amendments thereafter, and those other filings that shall, from time to time, be required, to successfully obtain a quotation of the Company's common shares on the OTC Bulletin Board and obtain trading thereupon. NOBS will also assist AEPP in preparation of annual 10K and quarterly 10Q statements for review by a PCAOB accountant and the Company's SEC counsel, and assisting in timely EDGAR filing of 10K and 10Q's with the SEC.
Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
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·
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A requirement to have only two years of audited financial statements and only two years of related MD&A;
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·
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Exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;
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·
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Reduced disclosure about the emerging growth company’s executive compensation arrangements; and
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·
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No non-binding advisory votes on executive compensation or golden parachute arrangements.
|
We have already taken advantage of these reduced reporting burdens in this Form 10-K, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. We are choosing to utilize the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act. This election allows our Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
We are a reporting company and file all reports required under sections 13 and 15d of the Exchange Act.
Critical Accounting Policies
We prepare our condensed financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our condensed financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
Results of Operations for the years ended December 31, 2016 and 2015.
Revenues
Revenue.
Total revenue for the years ended December 31, 2016 and 2015 was $0 and $0, respectively. The Company has not secured any additional clients or contracts as of December 31, 2016.
Operating Expenses
Total Expenses.
Total expenses for the years ending December 31, 2016 and 2015 was $105,781 and $58,958, respectively. Total expenses consisted of professional fees of $98,324 and $47,385, respectively; selling, general and administrative of $10,211 and $8,604, respectively; research and development of $0 and $2,969, respectively; and Foreign exchange (gain) loss of ($2,754) and $0, respectively. The increase in total expenses was primarily due to the fees associated with public reporting requirements.
Other income (expense)
Other income (expense). Total other income (expense) for the years ending December 31, 2016 and 2015 was $4,710,062 and ($19,244), respectively. Total other income (expense) consisted of interest expense of ($8,512) and ($19,244), respectively; and gain on extinguishment of debt of $4,701,550 and $0, respectively. The change in other income (expense) was directly related to the reduction and extinguishment of certain note payable.
Financial Condition
Total Assets.
Total assets were $1,671 and $3,502 at December 31, 2016 and December 31, 2015, respectively. Total assets at December 31, 2016 and December 31, 2015 consisted of cash of $1,671 and $0, respectively and intangible assets of $0 and $3,502, respectively. The decrease in total assets was due to write off of the intangible assets.
Total Liabilities.
Total liabilities were $225,881 and $304,323 at December 31, 2016 and December 31, 2015, respectively. Total liabilities at December 31, 2016 and December 31, 2015 consisted of accounts payable of $225,881 and $127,699, respectively; notes payable of $0 and $126,300, respectively and accrued interest of $0 and $50,324, respectively. Total liabilities were primarily due to the promissory note related to consulting contracts and accounts payable associated with the ordinary course of business.
Liquidity and Capital Resources
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.
The Company had a net loss for the years ended December 31, 2016 and 2015 of $4,815,843 and $78,202, respectively. The Company has an accumulated loss of $5,376,564 as of December 31, 2016. Because of the absence of positive cash flows from operations, the Company will require additional funding for continuing the development and marketing of services. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We are presently unable to meet our obligations as they come due. At December 31, 2016, we had working capital deficit of $224,210. Our working capital deficit is due to the results of operations.
Net cash used in operating activities for the years ending December 31, 2016 and 2015 was ($4,767,986) and ($11,952), respectively. Net cash used in operating activities included our net loss, prepaid expense, accounts payable and accrued interest.
Net cash used in investing activities for the years ending December 31, 2016 and 2015 was $3,502 and ($3,502) respectively. Net cash used in investing activities included the development and write off of intangible assets.
Net cash provided by financing activities for the years ending December 31, 2016 and 2015 was $4,766,155 and $0, respectively. Net cash provided by financing activities is from the reduction of notes payable and conversion of note payable into common stock.
We anticipate that our future liquidity requirements will arise from the need to fund any new business plan we may develop or acquire, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from raising additional funds from the private sources and/or debt financing. However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to either generate cash flow from a new business plan or raise additional capital to meet our obligations on a timely basis and ultimately to attain profitability. Our Plan of Operation for the next twelve months is to raise capital and attempt to find, start and /or acquire a business. See “Note 2 – Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”
We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.
Capital Resources.
We had no material commitments for capital expenditures as of December 31, 2016.
Off-Balance Sheet Arrangements
We have made no 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 is material to investors.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The registrant qualifies as a smaller reporting company, as defined by Rule 229.10(f)(1) and is not required to provide the information required by this Item.
Item 8. Financial Statements and Supplementary Data
The report of the independent registered public accounting firm and the financial statements listed on the accompanying index at page F-1 of this report are filed as part of this report and incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
We did not have any disagreements on accounting and financial disclosure with our accounting firm during the reporting period.
Item 9A. Controls and Procedures
(a) Management’s Annual Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with the U.S. generally accepted accounting principles.
As of December 31, 2016, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934. Based on this evaluation, management concluded that our financial disclosure controls and procedures were not effective so as to timely identify, correct and disclose information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.
As of December 31, 2016, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our internal control over financial reporting, as defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 and based on the criteria for effective internal control described
Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission . Based on this evaluation, management concluded that our internal control over financial reporting was not effective so as to timely identify, correct and disclose information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.
The management including its Principal Executive Officer and Principal Financial Officer, does not expect that its disclosure controls and procedures, or its internal controls over financial reporting will prevent all error and all fraud. A control system no matter how well conceived and operated, can provide only reasonable not absolute assurance that the objectives of the control system are met. Further, the design of control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any within the Company have been detected.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the temporary rules of the SEC that permit the Company to provide only management’s report in this Annual Report.
(b) Change in Internal Control Over Financial Reporting
We have not made any significant changes to our internal controls subsequent to the Evaluation Date. We have not identified any significant deficiencies or material weaknesses or other factors that could significantly affect these controls, and therefore, no corrective action was taken.
Item 9B. Other Information
NONE
Notes to The Financial Statements
NOTE 1. NATURE OF BUSINESS
ORGANIZATION
Advanced Environmental Petroleum Producers, Inc. (hereinafter “AEPP”) is a company incorporated in the State of Florida in June 2013. We were formed as a consultant to the electric vehicle research and technologies industry. The electric vehicle research and technologies industry is subject to constant change due to market trends, thereby making it extremely competitive. The electric vehicle research and technologies industry is complex, because several segments are regulated by both federal and state governments. AEPP’s approach assists general business operations with the growth and development, international expansion and marketing aspects of their business, allowing our potential customers to focus on the business aspects of operations. By using the services provided by AEPP, our clients are free to focus on compliance with regulations within their industry, and to complete their primary business goals.
NOTE 2. GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATION
Certain reclassifications have been made to the prior period financial statement to conform to the current period presentation. The reclassifications had no effect on reported losses.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents totaled $1,671 at December 31, 2016 and $0 at December 31, 2015.
CASH FLOWS REPORTING
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.
ADVANCED ENVIRONMENTAL PETROLEUM PRODUCERS INC.
Notes to The Financial Statements
RELATED PARTIES
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
FINANCIAL INSTRUMENTS
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820,
Fair Value Measurements and Disclosures
, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
|
|
·
|
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
|
|
|
|
|
|
|
·
|
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
|
|
|
|
·
|
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
|
|
|
|
|
|
|
|
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2016 and December 31, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
|
INTANGIBLE ASSETS
The Company is in the process of applying for patent protection for its products and technologies. The Company has applied the provision of ASC topic 350 – Intangible – goodwill and other, in accounting for its intangible assets. Due to the early stages of the process the Company has not capitalized the full cost of the provisional patent application process. Therefore, Intangible assets are currently not being amortized. As of December 31, 2016, and 2015 Intangible assets totaled $0 and $3,502, respectively.
REVENUE RECOGNITION
The Company follows ASC 605,
Revenue Recognition
. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives revenue from consulting arrangements with clients. Revenue is generated by hourly fee structure or fixed contract costs, based on expected time to complete, additionally, costs incurred may be billed, as defined by the contractual arrangements.
RESEARCH AND DEVELOPMENT
The Company expenses research and development costs when incurred. Research and development costs include engineering and testing of product and outputs. Indirect costs related to research and developments are allocated based on percentage usage to the research and development. We spent $0 in research and development costs for the year ending December 31, 2016 and $2,969 for the Year ending December 31, 2015.
ADVANCED ENVIRONMENTAL PETROLEUM PRODUCERS INC.
Notes to The Financial Statements
DEFERRED INCOME TAXES AND VALUATION ALLOWANCE
The Company accounts for income taxes under ASC 740,
Income Taxes
. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of December 31, 2016, or December 31, 2015.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at December 31, 2016 and December 31, 2015. As of December 31, 2016, the Company had no dilutive potential common shares.
RECENT ACCOUNTING PRONOUNCEMENTS
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the
FASB Accounting Standards Codification™
(“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future financial statements.
We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-10”) and have applied the standard as of the dates during the periods reported.
We have reviewed the FASB issued Accounting Standard Update (“ASU 2014-09”). The Company does not believe that the new or modified principal will not have a material effect on these financial statements.
We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
NOTE 4. INCOME TAXES
At December 31, 2016, the Company had a net operating loss carry–forward for Federal income tax purposes of approximately $5,376,564 that may be offset against future taxable income through 2033 No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets calculated at the effective rates note below, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by the valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate of 3.6% to income before taxes), as follows:
|
For the Year Ended December 31,
|
|
2016
|
|
|
2015
|
|
|
Tax expense (benefit) at the statutory rate
|
|
$
|
(1,637,000
|
)
|
|
$
|
(27,000
|
)
|
|
State income taxes, net of federal income tax benefit
|
|
|
(173,000
|
)
|
|
|
(3,000
|
)
|
|
Change in valuation allowance
|
|
|
1,800,000
|
|
|
|
30,000
|
|
|
Total
|
|
$
|
---
|
|
|
$
|
---
|
|
ADVANCED ENVIRONMENTAL PETROLEUM PRODUCERS INC.
Notes to The Financial Statements
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
The Company had net operating income for the year ended December 31, 2016 of $6,159 and net operating losses for the year ended December 31, 2015 of $78,202 from operations. The carry forwards expire through the year 2033. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.
The Company’s net deferred tax asset as of December 31, 2016 and December 31, 2015 is as follows:
|
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
|
Deferred tax assets
|
|
$
|
2,022,000
|
|
|
$
|
211,000
|
|
|
Valuation allowance
|
|
|
(2,022,000
|
)
|
|
|
(211,000
|
)
|
|
Net deferred tax asset
|
|
$
|
---
|
|
|
$
|
---
|
|
The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the period from inception ended December 31, 2013 through the year ended December 31, 2016. The Company recognizes interest and penalties related to income taxes in income tax expense. The Company had incurred no penalties and interest for the period from inception ended December 31, 2013 through the year ended December 31, 2016. The open tax years are 2013, 2014, 2015 and 2016.
NOTE 5. SHAREHOLDERS’ EQUITY
The Company, through approval of its Board of Directors, authorized common shares of 500,000,000 with a par value of $0.0001.
On September 10, 2015, the majority shareholders of the Company approved a reverse stock split of one for 1,000 (1:1000) of the Company's total issued and outstanding shares of common stock. Pursuant to the Company's Bylaws and the Florida Division of Corporations, a vote by the holders of at least a majority of the Company’s outstanding votes is required to effect the Stock Split. The Company’s articles of incorporation do not authorize cumulative voting. As of the record date of September 10, 2015, the Company had 31,635,598 voting shares of common stock issued and outstanding. The consenting stockholders of the shares of common stock are entitled to 30,000,000 votes, which represents approximately 99% of the voting rights associated with the Company’s shares of common stock. The consenting stockholders voted in favor of the Stock Split by unanimous written consent dated September 10, 2015.
On October 9, 2015 FINRA approved the stock split to be effective October 13, 2015 and filed with the Securities and Exchange Commission on October 16, 2015.
COMMON STOCK
On October 24, 2015, the Company announced that it had entered into an agreement to acquire 100% of the issued and outstanding shares of 1923285 Alberta Ltd (Alberta) for 65,600,000 shares of the Company’s common stock. It was agreed that the Company’s 65,600,000 shares of common stock and 100% of the issued and outstanding Alberta shares would be held in escrow until Alberta provided the Company with first, required audited financial statements and the Company completed its due diligence. On February 10, 2017 the agreement was terminated and the Company’s 65,600,000 shares of common stock were cancelled and placed back into Treasury.
ADVANCED ENVIRONMENTAL PETROLEUM PRODUCERS INC.
Notes to The Financial Statements
On November 6, 2015, the Company issued 7,500,000 shares of common stock to several non-related parties in exchange for the extinguishment of $37,500 of notes payable. The shares were issued at $0.005 per share.
On November 19, 2015, the Company issued 7,200,000 shares of common stock to a non-related party in exchange for the extinguishment of $36,000 of notes payable. The shares were issued at $0.005 per share.
On January 6, 2016, the Company issued 30,000 shares of common stock to non-related parties in exchange for the extinguishment of $4,000 of accounts payable. The shares were issued at FMV of $0.01 per share.
On February 11, 2016, the Company issued 4,920,000 shares of common stock to non-related parties. The shares were issued and are being held in escrow in addition to the shares issued as a part of the Share Purchase Agreement dated October 24, 2015. The shares were issued at $0.005 per share.
On June 6, 2016, the Company issued 4,000,000 shares of common stock to non-related parties in exchange for the extinguishment of $20,000 of notes payable. The shares were issued at FMV of $0.263 per share.
On June 24, 2016, the Company issued 3,000,000 shares of common stock to a non-related party in exchange for the extinguishment of $15,000 of notes payable. The shares were issued at FMV of $0.263 per share.
On June 27, 2016, the Company issued 500,000 shares of common stock to a non-related party in exchange for the extinguishment of $2,500 of notes payable. The shares were issued at FMV of $0.263 per share.
On July 8, 2016 issued 1,600,000 shares of common stock to a non-related party in exchange for the extinguishment of $8,000 of notes payable. The shares were issued at FMV of $0.50 per share.
On July 16, 2016, the Company announced that it has entered into a verbal final agreement to retire all of the outstanding past due liabilities as stated on the 10Q filed with the Securities and Exchange Commission dated May 20, 2016. Per the terms of the agreement there will be 4,920,000 common shares cancelled from the shares issued in escrow in October 2015.
On August 19, 2016, the Company issued of 4,450,000 common shares to non-related parties in exchange for extinguishment of $22,250 of notes payable. The shares were issued at FMV of $0.45 per share.
There were 93,911,633 shares of common stock issued and outstanding at December 31, 2016 and 80,331,633 shares of common stock issued and outstanding at December 31, 2015.
All issued and outstanding shares and per share prices are reflective of the one to one thousand (1:1,000) revere split effective October 13, 2015.
ADVANCED ENVIRONMENTAL PETROLEUM PRODUCERS INC.
Notes to The Financial Statements
NOTE 6. RELATED PARTY TRANSACTIONS
NOTES PAYABLE
Notes payable consisted of the following as of December 31, 2016:
|
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
|
New Opportunity Business Solutions, Inc., a related party for consulting services to the Company. Advanced Environmental Petroleum Producers Inc. (AEPP) is a client of New Opportunity Business Solutions, Inc. The original amount of the note payable was $199,800. The note states a 10% interest rate with no set maturity date and is due on demand. Payment of principal and interest is due on demand and is not contingent. However to the extent that the Company incurs expense to accomplish the goal of the consulting agreement, the obligation of the company shall be reduced an equal amount. The note is as support for the consulting fee which was owed by AEPP but not paid as required. The loan is in default. Accrued interest at December 31, 2016 and December 31, 2015 was $0 and $50,324, respectively.
|
|
$
|
0
|
|
|
$
|
126,300
|
|
|
|
|
|
|
|
|
|
|
|
|
Total notes payable
|
|
$
|
0
|
|
|
$
|
126,300
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
$
|
0
|
|
|
$
|
126,300
|
|
NOTE 7. COMMITMENTS AND CONTINGENCIES
On October 24, 2015, the Company announced that it had entered into an agreement to acquire 100% of the issued and outstanding shares of 1923285 Alberta Ltd. ("Alberta") for 65,600,000 shares of the Company’s common stock. Both the Company's 65,600,000 and 100% of the issued and outstanding Alberta Shares will be held in escrow until Alberta provides the Company with firstly, required audited financial statements, secondly, a certificate that the leases held by Alberta from Peru Petro (an entity owned by the Government of Peru) are unencumbered and are in good standing. It is anticipated that the audited financial statements and the report confirming the reserves and the potential reserves was to be completed before December 31, 2016 however due to unforeseen circumstances has been delayed but is still pending. On February 10, 2017, the agreement was terminated for non-performance and the Company’s 65,600,000 shares of common stock were cancelled and placed back into Treasury.
Alberta was incorporated in 2015 in the province of Alberta. Alberta has ownership interests in a lease that encompasses 10,100 square Kilometers of oil and gas and mineral leases in the country of Peru known as “Block 19”.
From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 8. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of common stock of the Company as of December 31, 2016.
ADVANCED ENVIRONMENTAL PETROLEUM PRODUCERS INC.
Notes to The Financial Statements
NOTE 9. SUBSEQUENT EVENTS
RELATED PARTY TRANSACTIONS
On January 9, 2017, Brian Kistler was appointed to the Board of Directors and as CEO. Simultaneously, Andrew Mynheer resigned as Chairman of the Board and CEO, Secretary/Treasurer and Christopher Mynheer resigned as a member of the Board of Directors.
On February 10, 2017, the Company terminated all relationship with 193285 Alberta Ltd. and cancelled all 65,600,000 shares of its common stock that was being held in escrow. Consequently, all prior information regarding that proposed transaction has been terminated and is no longer to be considered part of the company’s focus moving forward.
On March 6, 2017 Mr. Kistler, our CEO personally assumed the guarantor for all accounts payable and accepted 60,000,000 restricted common shares as payment for $231,259 accounts payable as of 2-22-2017.
On March 6, 2017 Mr. Kistler, our CEO sold 60,000,000 to Oncolix, Inc. which has effected a change of control of the Company. Mr. Kistler also sold 1,465,130 shares that were registered in the name of New Opportunity Business Solutions, Inc. to Oncolix, Inc.
Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation no events have occurred requiring adjustment to or disclosure in the financial statements.