The accompanying unaudited consolidated financial statements of Experience Art and Design, Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (“Commission” or “SEC”). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary in order to make the consolidated financial statements not misleading and for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
Description of Business
Since December 16, 2015, the Company has been focused on two primary business models: the re-work of existing oil wells and dry cleaners, through two wholly owned subsidiary companies: TransAmerican Oil and Metropolitan Dry Cleaners (Metro) respectively. TransAmerican Oil never moved past its signed LOI, a transaction was never consummated, and the Company has differed its plans to enter the Oil and Gas sector.
Metropolitan Dry Cleaners was going to be a roll-up of existing enterprises with a multi-year history of revenues and profits in a variety of primarily East Coast States. The Company would have provided dry cleaning, laundry, and garment alterations as offered by the existing target businesses along with regular home pick-up and delivery services. The Company was to have both production facilities and retail storefronts to complement its pick-up and delivery service. The LOI entered between Metro and a seven-unit operation located on the Cape in Massachusetts was terminated.
The Company is in the process of acquiring select operating assets of Bahamas Development Corporation OTCPink: “BDCI”. These assets will be acquired in two separate transactions; the first will be a Triangular Reverse Merger to acquire Incite Performance Wear “IPW”. IPW is a full package cut and sew with dye sublimation printing company that manufactures custom private-branded 100% moisture wicking polyester performance wear shirts with UPF 40 Sun Protection. The Company’s manufacturing process is very unique and distinct from other apparel companies as well as Made in the USA. What makes the company different from others is the way that it manufactures their performance shirts. Incite sources fabric in from its supplier mills, cuts it to size followed by dying the sublimate prints on individual pieces of material before the shirt is sewn together. This enables the company to deliver very high quality seamless, ‘Made in the USA’ performance shirts featuring competitive pricing. IPW manufactures private branded performance apparel for many industries that include: Fishing, Marine, Agricultural, Hospitality, Team Sports, Outdoor Activewear, Military and many Non-Profit Organizations and Charities. More information on the company’s products and services may be found at:
www.IncitePerformanceWear.com
. EXAD plans to acquire the Native Outfitters brand as an asset sale in the near future.
Note 2
Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statement have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-K should be read in conjunction with recent company filings with the SEC.
Management's Estimates and Assumptions
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.
Cash and Equivalents
The Company’s cash and cash equivalents consist of cash, as well as interest and non-interest bearing balances due from banks both foreign and domestic with an original maturity of three months or less. Amounts in depository accounts fluctuate on a daily basis due to activity and liquidity needs. It is the Company’s policy not to deposit large sums of cash within foreign operational deposit accounts due to financial instability in the region and the Company fund operations on an as needed basis. The Company maintains cash in bank deposit accounts domestically, which at times may exceed the federally insured limits throughout the course of operations.
Accounts Receivable
Accounts receivable consist primarily of trade receivables, net of a valuation allowance for doubtful accounts.
The Company attempts to limit its exposure to losses on accounts receivable by monitoring the size and economic strength of its receivables, and whenever appropriate reflect a reserve for accounts that have been deemed potentially uncollectable. Monitoring occurs on a regular basis and exposure is limited by the vetting process for customers.
Allowance for Doubtful Accounts
The Company extends credit to customers and other parties in the normal course of business. The Company regularly reviews outstanding receivables and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established reserves, the Company makes judgments regarding its customers' ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. When the Company determines that a customer may not be able to make required payments, the Company increases the allowance through a charge to income in the period in which that determination is made.
Property, Plant and Equipment
The Company accounts for property, plant and equipment at historical cost less accumulated depreciation. Historical cost includes all expenditures that are directly attributable to the acquisition of fixed assets. Subsequent costs are included in the asset's carrying amount and are recognized as a separate asset, as appropriate, only when there is the probability of future economic benefits. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Plant and machinery
10 to 20 years
Furniture and fixtures
10 to 17 years
The assets' residual values and useful lives are reviewed, and adjusted as appropriate at least once a year. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount.
Revenue Recognition
Revenue is recognized when the earning process is completed, the risks and rewards of ownership have transferred to the customer, which is generally the same day as delivery or shipment of the product, the price to the buyer is fixed or determinable, and collection is reasonably assured. Taxes assessed by a governmental authority that are incurred as a result of a revenue transaction are not included in revenues. The Company has no significant sales returns or allowances.
Income Taxes
The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest and penalties associated with income taxes are included in selling, general and administrative expense.
A tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. As of June 30, 2017, the Company had not recorded any tax benefits from uncertain tax positions.
Net Income (Loss) Per Common Share
The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares outstanding during a period. Diluted net income (loss) per common share is computed by dividing the net income (loss), adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities. There was $23,250 in dilutive securities that were outstanding as of June 30, 2017.
Stock-Based Compensation
The Company sometimes grants shares of stock for goods and services and in conjunction with certain agreements. These grants are accounted for based on the grant date fair values.
Subsequent Events
On July 5, 2017, the Company filed an 8k announcing new management. Eugene Caiazzo was elected to serve as the Company’s sole Officer and as a Director. Gary Brown was elected to serve as a Director of the Company. Both Mr. Caiazzo and Mr. Brown serve in the same positions in Bahamas Development Corporation. Mr. Dwyer resigned from all positions and returned 5 million shares of Series A Preferred stock back to the Company, which all 5 million shares of Series A where issued to Mr. Caiazzo.
On July 10, 2017, the Company filed an 8k announcing it had entered into a Management Services Agreement with Bahamas Development Corporation to manage the day to day operations of Native Outfitters.
On August 8, 2017, the Company filed an 8k announce it had filed an Amendment with the State of Nevada to increase its Authorized shares by Fifty (50) million shares. The Company went to state it believed no more then 25 million would be needed to clean up the balance sheet from the predecessor companies.
On August 15, 2017, the Company filed an 8k announcing it had secured a $200,000 non-dilutive bridge loan to close the acquisition of IPW by August 31, 2017. This loan would be repaid from the financing agreement being acquired from Wells Fargo for the acquisition of IPW.
New Accounting Pronouncements
There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our consolidated financial position, operations or cash flows.
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
Risk and Uncertainties
The Company is subject to risks common to companies in the technology industries, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel.
Note 3
Going Concern and Liquidity Considerations
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. For the quarter ended June 30, 2017, the Company had a gain from operations of $496 and had an accumulated deficit of
$1,309,014. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2017.
These factors, among others, 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.
Note 4
Intangibles
The $77,050 in Intangible (“Other assets”) consist primarily of tradenames, logos, LOI, and Business Development activities, which were acquired in the fourth quarter of 2015 from a related-party, Derrick Lefcoe. The Company acquired a shell with a market value of $20,000 during the fourth quarter of 2016.
Note 5
Short-Term Borrowings
The Company has received funding from our sole officer and director and a non-related 3
rd
party, which has been used to fund the ongoing operations in the interim until permanent financing can be arranged. As of June 30, 2017, the total amount borrowed was $30,546
Note 6
Long-Term Debt
None
Note 7
Income Taxes
During the quarter ending 2017, The Company has been operating at a net operational loss the federal tax rates on income range 15% to 35% stagger at different income brackets. Since the Company had a net operation loss, no tax provision for U.S. tax purposes was deemed necessary at this time.
Note 8 Equity
During the quarter ending June 30, 2017 the Company exchanged $45,000 for 45,000,000 shares of its Common stock.
Note 9 Related Party Transactions
The Company has entered into a series of Agreements to acquire assets from Bahamas Development Corporation. Both of our Directors and our Sole Officer serve in the same capacity at Bahamas Development Corporation.