NOTES
TO CONDENSED FINANCIAL STATEMENTS
September
30, 2018
(unaudited)
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Social
Life Network, Inc. (the “Company”) is a technology company that licenses its Social Life Network SaaS (Software as
a Service) Internet Platform (hereafter referred to as the “Platform”) to niche industries for an annual license fee
and/or a percentage of profits. The Platform is a cloud-based social network and eCommerce system that can be accessed by a web
browser or mobile application that allows end-users to socially connect with one another and their customers to market and advertise
their products and services. The Platform can be customized to suit virtually any international niche industry or sub-culture,
such as hunting and fishing, tennis, real estate professionals, health and fitness, and charity causes. The Company also owns
cannabis/hemp related websites which generates advertising revenue through MjLink.com, Inc (hereafter referred to as “MjLink”),
a wholly-owned subsidiary of the Company, incorporated in Delaware on September 20, 2018.
The
Company’s history began as C J Industries, Inc., incorporated in the State of California on August 30, 1985. On February
24, 2004, the Company merged with Calvert Corporation, a Nevada Corporation, changing its name to Sew Cal Logo, Inc., and moving
its domicile to Nevada.
In
June 2014, the Company was placed into receivership in Nevada’s 8th Judicial District (White Tiger Partners, LLC et al v.
Sew Cal Logo, Inc.et al, Case No A-14-697251-C) (Dept. No.: XIII).
On
January 29, 2016, the Company, as the seller (the “Seller”), completed a business combination/merger agreement (the
“Agreement”) with the buyer, Life Marketing, Inc., a Colorado corporation (the “Buyer”), its subsidiaries
and holdings and all of the Buyer’s securities holders. The Company acted through Robert Stevens, the court-appointed
receiver and White Tiger Partners, LLC, the Company’s judgment creditor. The Agreement provided that the then current
owners of the private company, Life Marketing, Inc., become the majority shareholders pursuant to which an aggregate of 119,473,334
restricted common stock shares were issued to the Company’s officers, composed of 59,736,667 shares each to our Chief Executive
Officer, Ken Tapp, and Andrew Rodosevich, our Chief Financial Officer. Pursuant to the terms of the Agreement:
1)
The Company cancelled all previously created preferred class of stock;
2)
The Company delivered its newly issued, restricted common stock shares equivalent to approximately 89.5% of our outstanding shares
as a control block in exchange for 100% of the Buyer’s outstanding shares;
3)
The court appointed receiver sold its judgment to the Buyer and the Seller agreed to pay the receiver $30,000 and the equivalent
of 9.99% of the outstanding stock post-merger of the newly issued unregistered exempt shares.
4)
The Company’s then officers and directors were terminated, elevating Ken Tapp and Andrew Rodosevich as the Company’s
Chief Executive Officer/Director and Chief Financial Officer/Director, respectively;
5)
The Company effected a 5,000 to 1 reverse stock split effective April 11, 2016, with each shareholder retaining a minimum of 100
shares;
6)
The Company changed its name from Sew Cal Logo, Inc. to WeedLife, Inc, and subsequently to Social Life Network, Inc. effective
in Nevada April 11, 2016;
7) The Company changed its stock symbol from SEWC to WDLF;
8)
The Company decreased its authorized common stock shares from 2,000,000,000 shares to 500,000,000 shares, effective with the Nevada
Secretary of State on March 17, 2016.
On
June 6, 2016, the Court issued an order in the receivership pursuant to Section 3(a) (10) of the Securities Act of 1933, as amended
(the “Securities Act”), ratifying the above actions. The receiver was discharged on June 7, 2016.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements
reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair
statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected
for the full year ending December 31, 2018. These unaudited condensed financial statements should be read in conjunction with
the financial statements and related notes for the year ended December 31, 2017.
Use
of estimates
The
preparation of 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 and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant
estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Reclassifications
Certain
reclassifications have been made to the prior period financial information to conform to the presentation used in the financial
statements for the nine months ended September 30, 2018.
Revenue
Recognition
Revenue
is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration
that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the
nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue
that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies
the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract;
(ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context
of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation
of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each
performance obligation.
The Company only applies the five-step model to contracts
when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it
transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company
reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations
are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance
obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations
are transferred to customers at a point in time, typically upon delivery.
The
Company generates revenues through three primary sources: 1) licensing agreements from which the Company receives an annual license
fee or a percentage of net profits; 2) online advertising with priced based on the CPC (cost per click) and CPM (cost per 1000
ad impressions); and 3) premium monthly digital marketing subscriptions, which provide business director and online review management
for monthly subscriptions.
Recently
issued accounting pronouncements
The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material
impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting
pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE
3 – GOING CONCERN
The
Company’s unaudited financial statements have been prepared on a going concern basis, which assumes that the Company will
be able to realize its assets and discharge its liabilities and commitments in the normal course of business for the foreseeable
future. The Company has an accumulated deficit of $26,111,605 at September 30, 2018, had a net loss of $2,974,281 and used net
cash of $415,842 in operating activities for the nine months ended September 30, 2018. These factors raise substantial doubt about
the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent
upon its generating profitable operations in the future and/or to obtain the necessary financing to meet obligations and repay
liabilities arising from normal business operations when they come due. The Company’s management intends to finance operating
costs over the next twelve months with existing cash on hand and public issuance of common stock. While the Company believes that
it will be successful in obtaining the necessary financing and generating revenue to fund its operations, meet regulatory requirements
and achieve commercial goals, there are no assurances that such additional funding will be achieved or that the Company will succeed
in its future operations. The financial statements of the Company do not include any adjustments that may result from the outcome
of these uncertainties.
NOTE
4 – RELATED PARTY TRANSACTIONS
The
Company has software license agreements with Real Estate Social Network, Inc. and Sports Social Network. The Real Estate Social
Work license agreement provides that the Company will receive 20% of the net profits from all monthly subscriptions and online
ad sales from the licensee (Real Estate Social Network), paid annually, on the 31st day of January for the preceding year. Due
to the related party nature of this agreement, revenue will only be recognized when received. The Company received $54,400 and
$25,000 for the period ended September 30, 2018 and 2017, respectively, from Real Estate Social Network, Inc. The Sports Social
Life Network license agreement provides that the Company will receive $125,000 annually for the first two years of this agreement,
and thereafter 20% of the net profits from all monthly subscriptions and online ad sales from the licensee, paid annually, on
the 31
st
day of January for the preceding year. Early payment or installment payments on a monthly or quarterly basis
are allowed for both license agreements. Due to the related party nature of this agreement revenue will only be recognized when
received. The Company received $280,504 and $82,400 for the periods ended September 30, 2018 and 2017, respectively, from Sports
Social Network. The Company’s Chief Executive Officer, Ken Tapp, owns 59.6% of the Company’s outstanding shares and
is also the Chief Technology Officer of Real Estate Social Network and Sports Social Network and owns approximately 40% each of
those entities through LVC Consulting, LLC, of which he is the only member. The Company’s Chief Financial Officer until
July 31, 2018, Andrew Rodosevich, owns 14.7% of our outstanding shares and is a Managing Member of Real Estate Social Network
and Sports Social Network and owns approximately 39% of those entities through Rodosevich Investments, LLC, of which Andrew Rodosevich
is the sole member.
On
July 18, 2016, the Company executed a Note Payable with Andy Rodosevich, the Company’s CFO, for $26,400 to pay for public
company expenses. The note is unsecured, non-interest bearing and due December 31, 2019. The balance on this Note as of September
30, 2018, is $26,400.
On
September 1, 2016, the Company executed a Note Payable with Like RE, Inc. for $53,000. Ken Tapp, our Chief Executive Officer,
is also an officer with Like RE, Inc. The note is unsecured, non-interest bearing and due December 31, 2018. During the year ended
December 31, 2017, Like RE, Inc. advanced the Company an additional $1,900, $500 of which was repaid. The balance on this Note
as of September 30, 2018, is $0.
On
July 31, 2018, the Company’s Board of Directors unanimously voted and approved of: (a) accepting the resignation of Andrew
Rodosevich as the Company’s Chief Financial Officer and Director; (b) immediately following the resignation of Andrew Rodosevich
in (a), Ken Tapp being appointed as our Chief Financial Officer/Chief Accounting Officer; and (c) the appointment of D. Scott
Karnedy, Leslie Bocskor, Kenneth Granville and Vincent “Tripp” Keber as members of the Company’s Board.
NOTE
5 – SALES RETURNS
On
May 31, 2018 and for the period ended September 30, 2018, the Company issued a credit memo to one of its customers for $2,096.
Since the Company’s policy is to net discounts, returns, allowances, customer rebates and other adjustments with gross sales
this is a negative balance to revenue due to no other revenue in the quarter and as such this properly remains in the period that
this occurred.
NOTE
6 – STOCK WARRANTS
During
the year ended December 31, 2017 and 2016, the Company granted 9,900,020 and 6,400,000 warrants, respectively, to various third
parties for services. Each warrant entitles the holder to one common stock share at an exercise price of five cents. The term
of the warrants is 5 years from the initial exercise date. The warrants will be expensed as they become exercisable beginning
January 1, 2017 through September 1, 2019. During the nine months ended September 30, 2018, 10,100,020 of the warrants vested.
The aggregate fair value of the warrants totaled $2,449,800 based on the Black-Scholes-Merton pricing model using the following
estimates: exercise price of $0.05, stock prices ranging from $0.13 to $0.65, risk free rates ranging from 1.77% - 1.92%, volatility
ranging from 456% to 467%, and expected life of the warrants of 5 years.
A
summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:
|
|
Shares
available to
purchase
with
warrants
|
|
|
Weighted
Average
Price
|
|
|
Weighted
Average
Fair Value
|
|
Outstanding, December 31, 2016
|
|
|
6,400,000
|
|
|
$
|
0.05
|
|
|
$
|
-
|
|
Issued
|
|
|
9,900,020
|
|
|
$
|
0.05
|
|
|
$
|
-
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Expired
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Outstanding, December 31, 2017
|
|
|
16,300,020
|
|
|
$
|
0.05
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, December 31, 2017
|
|
|
5,100,000
|
|
|
$
|
0.05
|
|
|
$
|
0.20
|
|
Issued
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Expired
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Outstanding, September 30, 2018
|
|
|
16,300,020
|
|
|
$
|
.05
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, September 30, 2018
|
|
|
15.200,020
|
|
|
$
|
.05
|
|
|
$
|
0.30
|
|
Range
of Exercise Prices
|
|
|
Number
Outstanding
9/30/2018
|
|
|
Weighted
Average
Remaining Contractual
Life
|
|
|
Weighted
Average
Exercise Price
|
|
$
|
0.05
|
|
|
|
16,300,020
|
|
|
|
4.10
years
|
|
|
$
|
0.05
|
|
NOTE
7 – COMMON STOCK
On
June 10, 2016, the Company issued 1,000,000 restricted common stock shares to Michael Fuller in connection with his Search Optimization
and Content Monitoring Services as an independent contractor. The shares are valued at $0.16, the closing stock price on the date
of grant, for total non-cash expense of $160,000. The shares were issued during the nine months ended September 30, 2017.
On
June 10, 2016, the Company issued 500,000 restricted common stock shares to Bruce Kennedy in connection with his News Monitoring
and Article Publishing Services to the Company as an independent contractor. The shares are valued at $0.16, the closing stock
price on the date of grant, for total non-cash expense of $80,000. The shares were issued during the nine months ended September
30, 2017.
On
June 10, 2016, the Company issued 1,000,000 restricted common stock shares to Trang Pham in connection with her Accounting
Services to the Company as an independent contractor. The shares are valued at $0.16, the closing stock price on the date of grant,
for total non-cash expense of $160,000. The shares were issued during the nine months ended September 30, 2017.
On
June 10, 2016, the Company issued 1,000,000 restricted common stock shares to Lonnie Klaess in connection with his Secretarial
and Office Management Services to the Company as an independent contractor. The shares are valued at $0.16, the closing stock
price on the date of grant, for total non-cash expense of $160,000. The shares were issued during the nine months ended September
30, 2017.
On
June 30, 2016, the Company sold 200,000 shares of common stock to Justin Dinkel for total cash proceeds of $10,000. As of September
30, 2018, the shares have not yet been issued by the transfer agent so have been credited to the common stock to be issued account.
On
June 30, 2016, the Company sold 300,000 shares of common stock to Ryan Falbo for total cash proceeds of $15,000. As of September
30, 2018, the shares have not yet been issued by the transfer agent so have been credited to the common stock to be issued account.
From
October 11 to December 13, 2017, the Company entered into subscription agreements with 30 accredited investors. We offered common
stock shares to the accredited investors at $0.15 per share. The Company issued a total of 1,730,001 shares for total gross proceeds
of $259,500. The Company received $257,500 in 2017 and the remaining $2,000 in March 2018. The shares were issued during the nine
months ended September 30, 2017.
During
the nine months ended September 30, 2018, the Company issued 3,000,000 shares of common stock for services. 1,000,000 shares were
issued at $0.10 on April 30, 2018 and 3,000,000 shares were issued at $0.15 on August 29, 2018, based on the closing stock price
on the date of grants, created a total non-cash expense of $550,000.
On
July 3, 2018, the Company’s Board of Directors adopted the Certificate of Designation of Preferences, Rights and Limitations
of the Class B Common Stock (“Certificate”), including that each Class B Common Stock Share shall have ten (10) votes
on all matters presented to be voted by the holders of Common Stock. Further, the Company’s Board of Directors authorized
the issuance of 5,000,000 Class B Common Stock Shares to Ken Tapp, our Chief Executive Officer, in return for his service as our
Chief Executive Officer from February 1, 2016 to July 2, 2018. The Class B Common Stock Shares only have voting power and have
no equity, cash value or any other value. The 5,000,000 Class B Common Stock Shares were never issued. Effective August 16, 2018,
our Board of Directors cancelled the authorization of issuing the 5,000,000 shares of Class B Common Stock to its Chief Executive
Officer, Ken Tapp.
From
July 31, 2018 to September 30, 2018, the Company entered into subscription agreements with 23 accredited investors. We offered
common stock shares to the accredited investors at $0.15 per share. The Company issued a total of 4,200,009 shares for total gross
proceeds of $630,001. The shares were issued during the nine months ended September 30, 2018.
NOTE
8 – SUBSEQUENT EVENTS
Common
Stock
On
October 19, 2018, the Company sold 3,000,000 shares of common stock to Electrum Partners for total cash proceeds of $360,000.
To date, the shares have not yet been issued by the transfer agent so have been credited to the common stock to be issued account.
On
October 19, 2018, the Company issued 500,000 and 833,333 restricted common stock shares to D. Scott Karnedy and IRTH Communications,
respectively, in connection with related services to the Company. The shares are valued at $0.12, the closing stock price on the
date of grant, for total non-cash expense of $160,000.
On
November 1, 2018, the Company issued 500,000 restricted common stock shares to Mark DiSiena, the in-coming Chief Financial Officer
in connection with his related services to the Company. The shares are valued at $0.15, the closing stock price on the date of
grant, for total non-cash expense of $75,000.
Board
of Director, Chief Financial Officer, and Board Appointments
On
October 27, 2018, the Company’s Board of Directors unanimously voted and approved Mark DiSiena being appointed as our Chief
Financial Officer/Chief Accounting Officer effective November 1, 2018.
Apart
from the above event, management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance
sheet date through the date the financial statements were available to be issued and has determined that there are no other material
subsequent events that require disclosure in the financial statements.
Social
Life Network, Inc. is referred to hereafter as “we”, “our” or “us”.
FORWARD-LOOKING
STATEMENTS
This
document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking
statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings,
revenue or other financial items; any statements of the plans, strategies and objections of management for future operations;
any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance;
any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,” “continue,”
“believe,” “expect” or “anticipate” or other similar words. These forward-looking statements
present our estimates and assumptions only as of the date of this report. Except for our ongoing securities laws, we do not intend,
and undertake no obligation, to update any forward-looking statement.
Although
we believe that the expectations reflected in any of our forward- looking statements are reasonable, actual results could differ
materially from those projected or assumed in any or our forward-looking statements. Our future financial condition and results
of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.