NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization, Nature of Business and Trade Name
A summary of significant accounting policies of Bigfoot Project Investments, Inc. (the “Company”), a company organized in the state of Nevada, is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.
The Company was incorporated in the State of Nevada on November 30, 2011. The Company’s administrative office is located at 570 El Camino Real NR-150, Redwood City, CA and its fiscal year ends on July 31. Since inception, the Company has been engaged in organizational efforts and obtaining initial financing. The Company was established as an entertainment investment company.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. The accompanying unaudited balance sheet as of July 31, 2016 has been derived from the audited financial statements for the year ended July 31, 2016. In the opinion of management such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. Operating results and cash flows for interim periods are not necessarily indicative of the results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our 10-K for the year ended July 31, 2016 filed with the SEC on December 13, 2016.
Fair Value Measurements
In January 2010, the FASB ASC Topic 825, “
Financial Instrument
”, requires disclosures about fair value of financial instruments in quarterly reports as well as in annual reports. For the Company, this statement applies to certain investments and long-term debt. Also, the FASB ASC Topic 820, “
Fair Value Measurements and Disclosure
”, clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.
Various inputs are considered when determining the value of the Company’s investments and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.
·
Level 1 – observable market in-puts that are unadjusted quoted prices for identical assets or liabilities in active markets.
·
Level 2 – Other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.).
·
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).
6
BIGFOOT PROJECT INVESTMENTS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted fair value when a significant event occurs. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets or liabilities carried and measured on a nonrecurring or recurring basis during the reporting periods. The Company’s financial instruments consist of cash, accounts receivable, accrued expenses, convertible notes and related party notes payable. The carrying amount of these financial instruments approximates fair value either based on the length of maturities or interest rates that approximate prevailing market rates unless otherwise discussed in these financial statements.
Basic and Diluted Earnings per Share
Basic earnings per share are based on the weighted-average number of shares of common stock outstanding.
The FASB ASC Topic 260, “Earnings per Share”, requires the Company to include additional shares in the computation of earnings per share, assuming dilution.
Diluted earnings per share are based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options are assumed to be exercised at the time of issuance, and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company does not have diluted effects on common stock as there were no warrants or options issued.
Basic and diluted earnings per share are the same as there was no dilutive effect of outstanding stock options for the nine months ended April 30, 2017 and 2016.
The following is a reconciliation of basic and diluted earnings per share for the nine months ended April 30, 2017 and 2016:
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Period Ended
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Period Ended
|
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April 30, 2017
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|
April 30, 2016
|
|
Numerator:
|
|
|
|
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|
Net (loss) available to common shareholders
|
$
|
(1,141,930)
|
$
|
(45,047)
|
|
|
|
|
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|
|
Denominator:
|
|
|
|
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|
Weighted average shares – basic and diluted
|
|
213,940,000
|
|
207,490,000
|
|
|
|
|
|
|
|
Net (loss) per share – basic and diluted
|
$
|
(0.01)
|
$
|
(0.00)
|
NOTE 2 - GOING CONCERN
The Company’s financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs. These factors raise substantial doubt as to the Companys ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully raise capital through equity or debt financing and eventually attain profitable operations. Historically, it has mostly relied upon internally generated funds such as shareholder loans and advances to finance its operation and growth. Management may raise additional capital by future public or private offerings of the Company’s stock or through loans although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
7
BIGFOOT PROJECT INVESTMENTS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 3 – ADVANCE FROM SHAREHOLDERS
During the nine months ended April 30, 2017, additional advances from shareholders were received in the amount of $48,414. These advances bear no interest and are due on demand. The total advances from shareholders as of July 31, 2016 were $17,681 and as of April 30, 2017 were $46,112.
The total repayments to shareholders for the nine months ended April 30, 2017 was $19,983.
NOTE 4 – PROMISSORY NOTE – RELATED PARTIES
In January 2013, Bigfoot Project Investments, Inc. executed a promissory note in the amount of $484,029 as part of the asset transfer agreement for the transfer of all assets held by Searching for Bigfoot, Inc. In August 2013, the Company increased the balance of the promissory note by $489 to add an asset that was not included in the original transfer. The terms of the note stated that the unpaid principal and the accrued interest are payable in full on January 31, 2016. The holders of this note have executed a new due date of January 31, 2018.
The interest rate stated on the note is 4.0% (four percent). Monthly payments are not required in the note; however, the note does contain a prepayment clause that allows for payments to be made prior to the due date with no detrimental effects. During the nine months ended April 30, 2017, the Company made a principal payment of $12,148.
The principal of the note as of July 31, 2016 and April 30, 2017 was $484,518 and 472,370, respectively. Interest expense for the nine months ended April 30, 2017 and 2016 was $9,680 and $9,681, respectively.
NOTE 5 - CAPITAL STOCK
As of September 13, 2016, a new S1 registration was declared effective. The second offering provided for 20,000,000 shares at a share price of $0.75 cents. No shares have been sold from this offering.
The Company has 208,717,000 and 217,317,000 shares of common stock issued and outstanding as of July 31, 2016 and April 30, 2017, respectively.
On November 26, 2016 the Company entered into a rescission and release agreement with the Advisors (see Note 6 – Advisory Agreements) whereby the Company agreed to issue 900,000 and 200,000 shares of its common stock as full satisfaction of the Advisory Agreements.
On November 18, 2016, the Company entered into an agreement with FMW Media Works to provide advisory services to the Company. Compensation under this agreement is in the form of stock totaling to 7,500,000 shares. FMW Media Works is required to provide management consulting, business development services, strategic planning, marketing and public relations. The Company recognized stock compensation of $750,000 for the common shares issued pursuant to the agreement for the nine months ended April 30, 2017.
8
BIGFOOT PROJECT INVESTMENTS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 6 – ADVISORY AGREEMENTS
On May 1, 2016, the Company entered into two agreements with Surf Financial and William Hiney (collectively, the “Advisors”) to provide advisory services to the Company. Compensation under each agreement was contingent upon each Advisor’s performance for an initial six-month period expiring on November 2, 2016 (the “Contingency Period”).
Specifically, under each agreement, respectively, the Advisors were required to provide management consulting, business development services, strategic planning, marketing and public relations. If in the initial six-month contingent period, each Advisor was required to provide its or his best efforts to provide the advisory services described in each agreement; otherwise, the Company in its sole and absolute discretion could unilaterally cancel the agreements at the end of the Contingency Period and each agreement would be automatically null and void thereby terminating entirely the Advisors’ right to compensation. As compensation, the Company shall issue to the Advisors 4,000,000 shares and 1,000,000 shares, respectively, of restricted common stock, subject to rescission and redemption at the end of the Contingency Period by the Company. The value placed upon the shares was $0.10 per share as this was considered fair value of the Company’s common stock based upon its recently completed S-1 offering registered with the SEC. Fair value of the shares to be issued pursuant to the agreements was $500,000. The Company recognized stock compensation in the amount of $250,000 which represents the fair value of the vested shares from May 1, 2016 through July 31, 2016 and recognized the remaining $250,000 of stock compensation during the nine months ended April 30, 2017.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company could become a party to various legal actions arising in the ordinary course of business. Matters that are probable of unfavorable outcomes to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, the Company’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. As of the date of this report, except as described below, there are no material pending legal proceedings to which the Company is a party or of which any of their property is the subject, nor are there any such proceedings known to be contemplated by governmental authorities.
NOTE 8 – CONVERTIBLE NOTES
On January 19, 2017, the Company issued a convertible promissory note in the amount of $62,500 to EMA Financial, LLC, a Delaware limited liability company. This convertible note is due and payable on January 19, 2018, subject to annual interest rate of 10% and is convertible to common stock of the Company effective May 23, 2017 at a conversion price equal to the lower of: (i) the closing sale price of the common stock on the trading immediately preceding the closing date of the note, and (ii) 50% of the lowest sale price for the common stock during the twenty (20) consecutive trading days immediately preceding the conversion date. The note may be prepaid at 130% - 145% of outstanding
On February 27, 2017, the Company issued a convertible promissory note in the amount of $62,500 to Auctus Fund LLC (Auctus Fund”), a Delaware limited liability company. This convertible note is due and payable on November 18, 2017, subject to annual interest of 10% per annum and is convertible to the Company’s common stock, at the election of the noteholder after the 120 days holding period expires, at a conversion rate equal to the lesser of (i) 50% of the lowest closing sale price of the common stock during the twenty-five (25) trading days prior to the date of the note and (ii) 50% of the lowest sale price for the common stock during the twenty-five (25) consecutive days immediately preceding the conversion date. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 24% per annum and the note becomes immediately due and payable. Should an event of default occur, the Company is liable to pay 150% of the then outstanding principal and interest. The note agreement contains covenants requiring Auctus Fund’s written consent for certain activities not in existence or not committed to by the Company on the issuance date of the note, as follows: dividend distributions in cash or shares, stock repurchases, borrowings, sale of assets, certain advances and loans in excess of $100,000, and certain guarantees with respect to preservation of existence of the Company and non-circumvention. The Company may prepay the amounts outstanding to Auctus Fund at any time up to the 180
th
day following the issue date of this note by making a payment to the note holder of an amount in cash equal to 125% to 150%, multiplied by the sum of: (w) the then outstanding principal amount of this note
plus
(x) accrued and unpaid interest on the unpaid principal amount of the note
plus
(y) default interest, depending on the time of prepayment.
9
BIGFOOT PROJECT INVESTMENTS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 9- SUBSEQUENT EVENTS
On June 1, 2017, the Company entered into two separate agreements (the “Re-Release”) with The Bosko Group LLC (the “Distributor”) to provide distribution and promotional services to the Company.
Compensation to the Company for the Re-Release will be based on projected gross sales range and royalties for six existing DVD documentaries which will be offered into all distribution markets.
Compensation to the Company for the distribution of new feature-length films is based on past performance of previous productions with up-front funding and royalties based on film sales over all distribution channels.
On December 7, 2016, the Company entered into agreements with PAG Consulting and PR Consulting (the “Advisors”) to provide advisory services to the company. Compensation under this agreement is in the form of stock in the amount of 10,000,000 shares. The Advisors are required to provide management consulting, business development services, strategic planning, marketing and public relations. Pursuant to these agreements in May 2017, the Company authorized the issuance of 3,000,000 shares each to PAG Consulting and PR Consulting as partial compensation. The remaining compensation of 2,000,000 shares owed to each party will be issued after performance of services as described in the agreements.
10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects. These statements include, among other things, statements regarding:
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·
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our ability to diversify our operations;
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·
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inability to raise additional financing for working capital;
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·
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the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
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·
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our ability to attract key personnel;
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·
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our ability to operate profitably;
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·
|
our ability to generate sufficient funds to operate the Bigfoot Project Investments, Inc. operations, upon completion of our acquisition;
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·
|
deterioration in general or regional economic conditions;
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·
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adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
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·
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changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
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·
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the inability of management to effectively implement our strategies and business plan;
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·
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inability to achieve future sales levels or other operating results;
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·
|
the unavailability of funds for capital expenditures;
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·
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other risks and uncertainties detailed in this report;
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As well as other statements regarding our future operations, financial condition and prospects, and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A and those discussed in other documents we file with the Securities and Exchange Commission. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
References in the following discussion and throughout this quarterly report to “we”, “our”, “us”, “Bigfoot Project”, “the Company”, and similar terms refer to Bigfoot Project Investments, Inc. unless otherwise expressly stated or the context otherwise requires.
11
OVERVIEW AND OUTLOOK
Background
In January 2013, Bigfoot Project Investments Inc. acquired all the assets of Searching for Bigfoot Inc. Since the majority shareholder of Searching for Bigfoot, Inc. is also the majority shareholder in Bigfoot Project Investments Inc. the asset acquisition was treated as a related party transaction and was not considered an arm’s length transaction under Generally Accepted Accounting Principles.
The assets acquired were transferred over at the existing book value listed on the balance sheet of Searching for Bigfoot, Inc. at the time of transfer. The transfer agreement called for the issuance of 4,400,000 shares of common stock which were valued at $.10 per share and the issuance of a promissory note in the amount of $484,029. The Company recorded a deemed distribution related to this transaction in the amount of $924,029. In August 2013, the Company increased the promissory note by $489 to add an asset that was not included in the original transfer.
As part of the asset transfer agreement Bigfoot Project Investments, Inc. received the following assets:
Footprint cast of Bigfoot – 73 original casts
Photographs of Dead Creature from Strickler, Arkansas 1994 Dear Creature Incident
109-inch Skeleton
Various Media Artifacts – Video TV News Media – 52 news stories
Contract to sell Dinosaur fossil – most recent estimate by Paleontologist $1.2 million dollars
Rubber suit from 2008 hoax
Various DNA samples – Hair, and nails
License to use 6 dinosaur displays
Exclusive rights to the Bigfoot Website
Exclusive rights to the Bigfoot Live Radio Show
Exclusive rights to the Bigfoot Live Radio Show Website
360 hours of raw footage from expeditions for movie development
Various DVD Movies and Documentary film projects
Exclusive rights to all current contracts negotiated under Searching For Bigfoot, Inc.
The above list is a complete list of the fixed assets for Bigfoot Project Investments, Inc.
We are a company who has, over the past year, developed nine DVD Movies; eight of which have been completed for distribution and one which is currently in the final stages of completion for distribution. We have established a contract with a Media Marketing Distribution Company (The Bosko Group), who has contracted six of the nine DVD movies to their distribution agents. We are a company with only minimal revenues to date: we have minimal assets, and have incurred losses since inception.
Bigfoot Project Investments Inc. plans to establish itself as the most reliable and dependable source for materials including documentaries, physical evidence, and eye witness accounts for the purpose of documenting the evidence of the existence of Bigfoot. Our major source of revenue will be the sale of documentaries and specials that follow our progress. We have found that there is a market for these films and have started selling them on a semi-regular basis. In addition to the film sales we plan on having expeditions to locations where there have been multiple eye witness accounts as well as periodic exhibitions of the physical evidence that has been accumulated. We plan on focusing our efforts on expeditions to locations that have had multiple eye witness reports to maximize the chances of locating the creature and producing films that will be marketable to the public.
12
RESULTS OF OPERATIONS
During the three months ended April 30, 2017, we generated revenue of $1,448. During the three months ended April 30, 2016, we generated revenue of $339.
During the nine months ended April 30, 2017, we generated revenue of $3,018. During the nine months ended April 30, 2016, we generated revenue of $1,955.
Operating expenses during the three months ended April 30, 2017 were $94,739. Operating expenses during the three months ended April 30, 2016 were $15,073.
Operating expenses during the nine months ended April 30, 2017 were $1,129,978. Operating expenses during the nine months ended April 30, 2016 were $32,317. Operating expenses for the three months ended April 30, 2017 consisted of professional fees of $36,477, expedition expenses of $39,905 and general and administrative fees of $18,357. Operating expenses for the nine months ended April 30, 2017 consisted of professional fees of $1,057,712, expedition expenses of $50,127 and general and administrative fees of $22,139.
Operating expenses for the nine months ended April 30, 2016 consisted of professional fees of $18,540, expedition expenses of $7,623 and general and administrative fees of $6,154. Expenses increased during 2017 mainly due to the Company’s consulting agreements and reporting requirements, having become fully reporting under the 1934 Act on March 16, 2015.
There is significant uncertainty projecting future profitability due to our history of losses and lack of revenues. In our current state we have no recurring or guaranteed source of revenues and cannot predict when, if ever, we will become profitable. There is significant uncertainty projecting future profitability due to our minimal operating history and lack of guaranteed ongoing revenue streams.
Liquidity and Capital Resources
As of April 30, 2017, we had $23,992 in cash and did not have any other cash equivalents. The following table provides detailed information about our net cash flow for all financial statement periods presented in this Quarterly Report. To date, we have financed our operations through the issuance of stock and borrowings.
The following table sets forth a summary of our cash flows for the nine months ended April 30, 2017 and 2016:
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Period Ended
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|
Period Ended
|
|
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|
|
April 30,
2017
|
|
|
April 30,
2016
|
|
Net cash used in operating activities
|
|
$
|
(96,962)
|
|
$
|
(10,218)
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|
Net cash used in investing activities
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|
(981)
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|
|
-
|
|
Net cash provided by financing activities
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|
|
121,283
|
|
|
31,300
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|
Net increase in Cash
|
|
|
23,340
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|
|
21,082
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|
Cash, beginning
|
|
|
652
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|
|
221
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|
Cash, ending
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|
$
|
23,992
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|
$
|
21,303
|
Since inception, we have financed our cash flow requirements through issuance of common stock and debt financing. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of listings or some form of advertising revenues. We anticipate obtaining additional financing to fund operations through additional common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.
We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our website, provide national and regional industry participants with an effective, efficient and accessible website on which to promote their products and services through the Internet, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
13
Operating activities
Net cash used in operating activities was $96,962 for the period ended April 30, 2017, as compared to $10,218 used in operating activities for the period ended April 30, 2016.
Investing activities
Net cash used in investing activities was $981 for the period ended April 30, 2017, as compared to $0 used in investing activities for the same period in 2016.
Financing activities
Net cash provided by financing activities for the period ended April 30, 2017 was $121,283 as compared to $31,300 for the same period of 2016.
We believe that cash flow from operations will not meet our present and near-term cash needs and thus we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We will require additional cash resources due to changed business conditions, implementation of our strategy to expand our sales and marketing initiatives, increase brand awareness, or acquisitions we may decide to pursue. If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.
Off-Balance Sheet Arrangements
We did 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 is material to investors.