UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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For the fiscal year ended
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| (State or Other Jurisdiction | (Commission | (I.R.S. Employer | ||
| of Incorporation or Organization) | File Number) | Identification No.) |
Address of Principal Executive Office:
Registrant’s telephone number, including
area code:
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
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pursuant to Section 13 or Section 15(d) of the Act.
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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.
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every Interactive Data File required to be submitted and to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
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defined in Rule 12b-2 of the Act).
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Yes
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As of March 31, 2022, the registrant had shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
INDEX
PART I
ITEM 1. BUSINESS
Unles s the contex t in d i cate s o r su g g es ts otherwise , referenc e s t o “ w e, ” “our, ” “us, ” th e “Com p any, ” o r “Vynleads ” refe r t o Vyn l eads , Inc. , a Del a ware corporati o n.
F O RWAR D -L O OKI NG S T A T EM E NTS
Thi s a n nua l repor t c ontain s for w a r d -looking state m e n ts . T h es e s tatement s relat e t o fu tu r e even ts o r o u r futur e financia l performance . Thes e st a tement s often ca n b e identif i e d b y th e u se o f t e r m s suc h a s " may, " "w i ll ," " e xp e ct, " "beli e v e, " "a n t icipate ," "estimate, " "approximat e " o r "continue, " o r th e negati v e thereof. W e inten d tha t suc h forward-loo k in g stat e m e n t s b e subjec t t o th e saf e h a r b o r s fo r su c h state m ent s. W e wis h t o cautio n r e ader s n o t to place undue reli a nce on an y s u c h forward-l o okin g statemen ts, w h ich speak only as o f the d at e made . An y forwar d - loo k in g stat e m e n t s represen t mana g em e nt ' s b e st j u dgmen t a s to wh a t ma y o ccu r i n t h e future . Ho w ever , forwa r d - loo k in g stat e m e n ts ar e sub j ec t to ri s k s, uncer tai n ties a nd important factors be yond our contr o l t h at could caus e act u a l result s an d event s t o diffe r materiall y fro m histo rical r e s u lts o f operations a nd ev ent s an d thos e presentl y anti cip a ted or proj e cte d . We dis c laim an y obligatio n subsequentl y t o revi se an y forward-lo o kin g stat e m e nt s t o reflec t ev e nt s o r circ u mstance s afte r th e dat e o f su c h statemen t o r to ref l ec t t he occurrenc e o f a n t icipate d o r un an t icipate d e vents . Throu g hou t t hi s Report , refe r e n ce s t o “we, ” “us ” “th e Compa n y, ” “th e r e g istrant ,” etc ., a ll r efe r to Vy n l ea d s, I nc .
G E N E R A L
History of o u r c o m pany
Ou r corporati o n wa s f o r me d i n Delawar e i n Jul y 20 1 5.
Vy n l ea d s' flagshi p brand , “Don e w it h Diab e t es ” (DWD ), wa s intr o d u ce d i n 201 6 . Sinc e it s ince p tion , DWD has a cquir e d more t h a n 2 8,0 0 0 p a yi n g mem b er s an d generate d mor e tha n $8 M i n gros s re v enue s s inc e it s launc h date o n M a rch 8, 2 016. Vynleads p l an s t o expan d it s Lifestyl e Blu e p rin t m o d el , whic h powers D W D , a c r o s s a rang e o f verticals , wit h a focu s o n healt h an d w e llnes s support , an d chroni c illnes s man a gement.
Vy n lea d s' gl o bal health missi o n aim s t o revoluti onize t h e pre v e nt a tive care envir o n m en t aroun d th e w o r l d a n d t o hel p kee p member s wit h chroni c illnes s o u t of the em e r g ency room.
Th e socia l purpos e an d intentio n o f V yn l ead s, I nc . i s t o p r ov ide life-improvin g h ealt h an d wel l ness i n formation a nd p r o ducts t o member s w i t h chronic h e alth concerns . W e ar e a heal th an d w el l ne s s i n f o r m a t i o n compan y t h a t leverage s onlin e prop e r tie s fo r th e intende d purpos e o f p ro v i din g a qualit y an d conv e nie n t experience f o r our m e m b e rs and o fferin g o u r brand s a me a n s t o g row globall y . The technolog y , i n f o rmation , an d str u ctur e behin d eac h o f ou r bran d s plan s to fo c u s o n th e pai n p o int s f o r i ndivid u als who a re str u ggling w it h health- r elate d issues . Ou r goa l i s t o hel p th e se individual s mainta in opti m a l healt h wi th a combi n ation of reso u rc e s , support , guidance , an d products.
Ad d i tiona l informatio n abou t V y nle a ds i s a v ailabl e a t www.vynleads.com . Detail s abo u t t h e DW D P r ot o c ol are avail a ble online a t w w w. dw d p r ot o col . com an d www.wearedwd.com.
Ov e r v i ew
W e ar e a provide r o f healt h a n d wellnes s informa t io n princ i pa l l y t a r g eted to people wh o ar e prediabete s o r wh o h av e typ e 2 di a betes . T y pe 2 diabete s is a co n d itio n characteriz e d b y hig h bloo d glucos e lev e l s cause d b y eithe r a lac k o f i n s u li n o r th e body' s i n abilit y t o us e i n suli n ef f icient l y . Typ e 2 diabetes develop s mos t ofte n i n middle-age d an d olde r a dult s bu t ca n ap p ea r i n children , tee n s, an d youn g peo p le . Acc o r d in g t o th e Ame r ica n Di a bet e s Fo u ndati o n, t yp e 2 diabete s i s t h e mos t commo n for m o f dia b et e s. Whil e man y peopl e ma y n ee d t o tak e ora l medicatio n s o r insuli n a s prescr i be d b y thei r p hysicia n s to hel p th e perso n me e t hi s o r he r targete d bl o o d glu c os e levels , acc o r d ing to the Amer i can Di a betes F o undati o n som e peopl e wit h ty p e 2 diabetes c an c o ntrol thei r b l o o d gluc o se wit h health y eatin g an d bein g activ e . W e d o no t offe r p r o duct s targete d t o c ustomer s wit h typ e 1 diabetes , n o r d o w e rend e r medical advice . W e provid e i n f o r matio n t o ou r cus t o m er s w h o a re seekin g t o mak e health y choice s b y pro v idin g clear , generi c bl u eprints , ed u cation , r e s o u rces , and s u pport . O u r cor e produc t i s ou r pro p r ietar y Lif e s tyl e Blueprin t, a d igita l guid e t ha t provide s di e t ar y recommendation s f or a v ery low c a lorie e ig h t- w eek diet tog e th e r w i t h in f o rm a t i o n f oc u sin g o n what , ho w a n d h o w muc h a per s o n e a t s , n u t ri t iona l in form ati o n a n d h o w a person’s b o dy d oe s a n d d o e s n o t u s e fo o d t o enabl e o u r customer s t o conti n u e leadin g a mo re succ e s s fu l life st y le. W e also offer n u trition a l supplement s an d monthl y subs c r ipt i on s t o ou r p rop r ietary new s lett e r whic h c o v er s a wid e variet y o f health y living-relate d topics.
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Our i n f o rmational c o n te n t , whic h i s develop e d by our company b a sed up o n p u blicly availa b le st u di e s an d othe r s o u rce s of i n f o r mation , i s roote d i n :
| · | Education and Action. Our goal is to help our audience understand the root of a healthy lifestyle, and give action-based blueprints that provide a long-term commitment to their newfound education; |
| · | Easy. Each aspect of our behavior change protocols is simple and reasonably attainable; |
| · | Avoid Guesswork. We give clear path guides to help real people, without confusion. In an information-overload world, we seek to do all of the groundwork in order to give our audience the right data and resources they need to succeed; and |
| · | Support and Community. We provide a platform for our customers to ensure resilience and follow-through as they seek to achieve their healthy- living goals. |
Th e L i festyl e Blueprin t an d ou r othe r pro d ucts
Our Lifes t y le B luep r int , t i tle d “ Th e DW D Protocol : S u cces s B l u epri n t , ” i s a d i gita l protoco l whic h is designe d t o b e a n easy-to-fo llow g ui d e esp e cially for individual s wh o ar e prediabete s a n d typ e 2 di a bete s sufferers . Th e Lifestyl e Bl u eprin t in c l u d e s d ietar y r ec o m m en d a t i ons f or a ver y low-calori e eight-w e e k diet to g et h e r w i t h i n f o r matio n fo c u sin g o n what , ho w a n d h ow mu ch a pe rs on e a t s , n ut ri t i on a l i n f o rmatio n an d ho w a person’ s b o dy does a nd d oes n ot use fo o d t o enabl e ou r c u stomer s t o continu e le a di n g a mor e su c cess f u l l ifest yl e .
Th e proprietar y inform a tio n prov i de d in th e Li f e s tyl e B lueprin t, w h ich contains f o u r module s in c ludin g “ T he F oundation,” “ T he Meal P lan” “Diabetes F r e e Li f e s tyle ” an d “Ta k in g C on t r o l , ” to g e th e r w i t h r eci p e b o ok s , i s base d o n publicl y a v ailabl e informati o n a n d studie s whic h addres s ho w a health y lifestyl e can hel p individual s wh o a r e p r e d ia b ete s an d typ e 2 diab e te s suff e r e r s .
Our D W D Protocol : S u cces s Blueprin t i s designe d t o o ffe r comprehe n siv e i n f o r matio n a nd s u pport, in c l uding:
| · | Background information about type 2 diabetes; |
| · | Individual action plans; |
| · | Virtual messaging, coaching and support; |
| · | Measurable milestones and targets; |
| · | An eight-week hypocaloric diet; |
| · | A detailed guide for transitioning back into healthy post-diet eating; and |
| · | Recipe books focused on simple to prepare meals with detailed nutritional information. |
We s e ll t he L if e st yle B lu e p r int f o r $49 . I n additi o n t o t h e L i f estyl e Bluepr i n t, w e al so offe r mo n t hl y subscription s t o ou r newsl e tter s whic h cove r a wide variet y o f h e alt h an d lifestyl e topics . Ex a m p l e s o f rec e n t newsl e tte r title s ar e “ 7 Habit s Th a t Wi ll Mak e Y o u a Heal th ie r Person, ” “Th e Powe r o f Positivity,” “Relaxatio n Practice s A ct u a lly Ch a nges Your G ene s ,” and “ T he Facebo o k P henomenon E xplai n e d.” Thes e n ewsletter s ar e writte n b y ou r staf f an d ar e based upo n conten t a g gregate d fro m a n u m b e r o f publicl y availabl e so u rces . Monthl y subscri p tio n rate s ar e $9.95.
We also offer two nutritional supplements, including our DWD x3 Advanced Daily Supplement and our Premium-Grade Omega x3 supplement, which are manufactured for us in Vermont by Food Science® Corporation. These nutritional supplements are made of all-natural, non-toxic, and non-GMO ingredients.
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W e d o n ot provid e medi c a l advic e t o o u r customers . Th e infor m a t io n an d conten t whic h appear s i n ou r Lifes ty l e B lueprin t an d o u r newsle t ter s a re wr i tte n by ou r staf f an d base d up o n a wi d e rang e o f publi c l y availabl e in f ormatio n an d studies , i n clu d ing those publi sh e d b y Newcastl e U ni v ersity a nd the Nation a l In stit u t e s o f Health . Th e co n t e n t an d i n f o r matio n a re als o r e v iewe d b y ou r me d ica l advisor s pri or to publi c ation. Neithe r th e L ifes t y le B l u ep r i nt n or our new s lett e rs ar e intend e d , however , a s a s u b stitut e fo r me d ica l advice provi d e d b y a ph y s i cian o r othe r healt h car e provider . A ll informati o n p ro v id e d in the Lif e s tyl e Blueprin t an d an y o t he r product s w e pr ovide relati n g t o specifi c medica l con d itions , healt h c a re prev e n tiv e care , a n d he a l th y lifestyles , i s presented for i nf o r mati on a l p u r p o se s o n l y . W e advis e o u r customer s tha t th e i n f o r matio n i n th e Lifestyl e Blueprin t shoul d no t b e co n s idere d complet e o r exh a ustive a n d doe s n ot cov e r al l disorder s o r conditio n s o r thei r treatment , nor a ll h ealth-relat e d issues. We f u rt her a d vi s e our cust o m e rs t h a t the y shoul d c onsul t wit h their physicia n o r othe r he a lt h car e p r o v id e r whe n decidin g o n a n y h e alth-relate d regimen , includin g d i e t o r e x e r c i se , a n d fo r an y specifi c individ u a l medical advice.
Market s fo r Li f e s tyl e Blue p ri n ts
Ou r mode l i s h ighl y scalabl e, a n d w e belie v e tha t w e ca n ente r n e w market s a t a lo w cos t an d me a s u r e d way. W e e xpect to expand ou r produc t off e ring s i n the fu tur e to includ e a Li f e s tyl e B l u eprin t designe d fo r a dult s wh o ar e overweigh t o r obese . W e als o i n ten d , over time, to e x pand our p r o duct offerings with additiona l Lif e styl e Blueprint s t a r ge te d t o i n di v id u a ls w i t h c a rdi o vascular disease, m emor y l o ss an d dementia , addicti o n , ADH D (attentio n deficit hyperacti v it y dis o rd e r ) , a n d th e h uma n papillomaviru s viru s (H P V) . W e h a ve n o t , however , determin e whe n w e wil l b e e x pandin g our p r o duct offerings a n d ther e ar e n o a s s u r a n ce s w e wil l eve r d o so.
Marketin g an d sales
We s e ll p r o ducts through our w e bsites a t w w w.const i tut i ona l hea l th.co m , www.wearedwd.com, an d www.dwdprotocol. c om . W e ut i liz e d i g i ta l media , p rimar i l y paid search, paid social, a f filiat e ma r k etin g an d displ a y a d vertisin g t o dr i v e traf f i c to our w eb site . We a ls o u se s oc i a l n e tworkin g s ites , includin g F aceboo k , Twitter , an d variou s blo g s . In 2021 a n d 2 0 20 we spent $0 an d $895 , resp e ctively , on ad v ertisin g .
W e s e e k t o marke t ou r product s u s in g direc t t o c onsume r o n l in e sal e s throug h multipl e c h annels . Socia l media , searc h en g in e s, an d conten t platforms, principall y F aceboo k , a s wel l a s I n s tagram, Goo g le, a nd You T ub e , hav e historicall y bee n ou r pr i n cip a l source s fo r acquirin g n e w customers . I n th e cas e of paid ad v e r t is i n g, w e us e bot h i n terna l (ma n age d b y us ) an d ext e rna l (manag e d throug h affiliate s or partner ad v e rtisers) adv e r t isin g acc o unt s.
Fo r interna l ac c ounts , w e directl y spen d an d manag e al l ad v ertis i n g d o l lar s s p en t on a c o s t p e r c l ick , o r “CP C , ” basi s. T ypic a lly , w e wi ll s p en d approxima t ely $60.00 o n internal ac c ount a d vert i si n g for each new c ustomer. I n t h e c a se o f externa l acc o unt s, w e wil l wor k thr o u gh third p ar ty aff i lia t e s or pa r tn e r advert i sers . Thes e a f fi l iat e o r partne r advertiser s typicall y u se ou r produc t m a terial s o n the i r adverti s in g acc o unts , s p en d th e ir own ad v ertisi n g d o llars, and are paid by us on a c o st per a c qui sit i on , o r “ CP A, ” bas i s . Hi s toricall y ou r payment s t o t h es e affil i at e o r partne r a dvertiser s o n a CP A basi s h a s be e n tie d t o a n ew cust o m e r sales . D e pendin g o n th e produ c t s sol d , t h e CP A p a you t c a n range from $ 3 0. 0 0 to $80.00 f o r a ne w custome r sale. T his rang e , however , ma y change a t an y time , d e pendin g o n th e cos t o f reven u e , and/o r lifetim e c u stome r valu e w e believ e t h e campaig n ca n achieve. We also may decide to not engage in any CPA / affiliate marketing at any time, thus negating all affiliate sales channels wherever possible.
W e als o us e emai l advertisin g a s a sourc e o f n e w custome r g e ne r ation . In th e cas e o f emai l adverti s ing , we w i l l p a y fo r ou r a d ver t isemen t lin k (p ictur e o r text) t o b e sen t t o a thir d p a rt y publis h er’ s emai l list . W e sen d ou r internall y create d advertiseme n t s t o th e thir d part y publishe r wit h a uniqu e trac k in g li n k em b e dded, a nd the third party p ub l isher manages t h e e n tire ema i lin g proc e s s . W e em b e d th e uniqu e t r a ck i n g lin k to assi st u s t o evaluat e th e sale s performance f ro m eac h emai l list . Utilizin g t h i s proc e ss , w e n eithe r parti c ipat e i n t h e transmissio n o f th e actua l email s no r d o w e hav e a cces s t o th e potent i a l customer 's em a i l.
W e als o utiliz e em a il lea d ge n e r a t io n t o attr a c t potenti a l ne w c u stomers . I n thi s scenari o , w e ma y spen d adverti s in g dollar s on a campaig n tha t acquire s n e w cust o m e r emai l l e ads . Th e s e lead s t y pic a lly r e view fr e e arti c l e s o r c o n t e n t onlin e tha t w e pu b lish , an d offe r th e opportunit y fo r the reade r to joi n o u r emai l ing lis t t o rec e iv e mor e informatio n .
In th e cas e o f eac h o f ou r a d v er tisi n g c am p a i g ns, sin c e o u r ca m paign s hi s toricall y hav e bee n di g it a l l y driv e n , w e us e variou s f o r m s of m u l t imedia , including vid e o , audio , a n d imagery . Depe n d ing on the pl a tform a n d p lac e me n t (m o bile/t a bl e t/desktop), the advertisin g conten t wil l vary . Fo r example , i n th e cas e of Facebo o k , w e wil l us e vide o wit h audi o t o presen t th e produ c t in a detailed and ex p lan a tory way. We recog n ize that o u r produ c t i s no t g enera l ly known, a nd typicall y o u r customer s mus t b e e d ucated o n what the produ c t d oe s prio r t o a c quirin g a purchas e f ro m t h em.
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Our Lifestyle Blueprint is digitally delivered by us. We have engaged Argo Marketing Group, Inc. to provide customer relations services for us in connection with sales of our products. Under the terms of the agreement entered into in November 2015, Argo Marketing Group, Inc. is responsible for all customer service call handling, email management, and chargeback management. We agreed to pay the company various initial and additional set up fees, customer services fees tiered to the weekly minutes, per transaction fees for email resolutions or return processing and chargeback management, among other fees. The initial term of the agreement was for one year, with automatic one-year renewals unless either party provides a 30 day written notice of non-renewal. The agreement may be terminated by Argo Marketing Group, Inc. for non-payment, in the event of our bankruptcy or insolvency and by either party upon a breach or without cause. Mr. Mannine, our chief executive officer, has personally guaranteed our obligations under this agreement.
We do not manufacture the private label nutritional supplements we sell. These nutritional supplements are manufactured on a per order basis for us by Food Science® Corporation, a 40- year old Vermont-based family-owned company focused on nutritional research and product development. We utilize the services of a third-party fulfillment company to ship the nutritional supplements to our customers, and pay this provider an order and per item fee.
We believe our relationships with our supplement supplier and the third party providers we utilize for fulfillment and customer service are good. However, while we believe we can replace the third party providers for fulfillment and customer service with comparable companies at similar costs to us, a disruption in the relationship with our supplement supplier would materially impact our business until such time as we were able to establish a relationship with an alternative supplier.
We terminated our relationship with Argo Marketing Group, Inc. after third quarter 2020.
Com p etitors
W e s e e k t o compet e wit h a numbe r o f larger , mor e esta b l ishe d companie s tha t provid e h ealt h an d wellnes s conten t a n d marke t nutritio n a l supplements, includin g Nutrisystem , I n c . (N a s daqGS : N T RI ), Medi f ast , Inc . (NYSE : MED ) an d W eig h t Watcher s I n ternational, Inc. (NY S E: W T W ), a s wel l a s p r ivately hel d Virt a H e alt h Corp . an d telev i s i o n an d medi a personal i t y D r. Ax e . I n a d d ition , whil e w e d o n o t offer produ c ts t a rg e ted to c u stomer s wit h typ e 1 diabetes, s o m e o f ou r c o m p etitor s targe t customer s wit h bo t h t y pe 1 and t yp e 2 d i a be t e s. A l l o f t hes e p o t e n tia l comp e tito rs hav e greate r b r a nd a waren e ss and fi n a ncial res o ur c e s that we do. W hile we a r e seekin g t o compet e b y f o cusi n g o n ou r nich e proprietar y content , w e d o n o t presentl y hav e th e fina n cia l resources availabl e t o u s t o effectivel y ma rket o ur compa n y o n a large s ca le o r t o develo p ne w p r o duct s to qui c kly respond t o a marketpl ace domi n ated by well established , wel l capitalize d co m pa n i es . Ther e ar e n o assuranc e s w e wil l eve r establis h b r a n d rec o gnitio n a t a sufficien t leve l t o permi t u s t o generat e any s ignifican t revenue s or to effect i v ely compete in o u r market.
I n f o rmati o n S yst e m s
Ou r ecommerc e an d we b s ite s a n d o u r tool s an d trackers , al l o f w hic h ar e base d pr i mari ly o n t h i rd-part y s o ftwar e c ustomize d t o mee t o u r busines s needs , are eac h host e d i n t o p tie r hostin g fa c i lities . T h es e facilitie s pro v id e redun d an t networ k c onnections , physica l a n d fir e sec u rit y a n d generato r powe r bac k u p for th e equipmen t upo n w h ic h ou r website s r e l y an d ar e intend e d t o provide a n u n interrupti b le power s u ppl y . Our servers a nd o ur n e twork a re monitor e d 24 h o urs a da y , seve n day s a wee k .
W e us e a variet y o f securit y technique s t o protec t o u r confide n tia l custome r d a t a . Whe n ou r cust o mer s plac e a n ord e r o r acces s thei r a c coun t informatio n , we s e cur e tha t transactio n b y u si ng encry p tion t e chnologies , incl u di n g transpor t laye r security , o r TLS . Ou r cust o m e r dat a i s pr ot e cted ag a inst unauthorized acces s b y sec u r it y meas u r e s an d w e e n g ag e a v ariet y o f industr y leadin g technolog y provider s includin g Veri S i gn , Cy b er S ource , an d S e cureWork s t o further ensur e th e securi ty o f ou r credi t c a rd transactio n s an d th e sa f e ty o f o u r customers ’ person a l i n f o rmation.
I n t e llectua l prope r ty
W e cur r e n tl y rel y o n a combinat i o n o f trad e secre t law s a n d restriction s o n disclosur e t o pro t ec t ou r i n t ellectua l prop e rt y r i ghts . Ou r s u cces s d e pend s o n the pr o te c tion of o u r propriet a ry r i ght s a s wel l a s ou r abilit y t o operat e wit h ou t infringin g o n th e p r o p rietar y right s o f others . W e utilize d t h e u n r e g istere d brand nam e “Const i tutiona l Health ” i n ou r b usin e s s. W e hav e bee n grante d a limite d non-tra n s ferrable , royalty-free li c ense b y Natur e X Inc . t o utiliz e th e t r a d emark “Gluce v ia ® ” for so long as we c o n tinu e t o a c quir e it s faxinu s ex celsio r s e e d e x trac t w h i c h i s a compon e n t o f o u r DW D n u tritio n a l supplements.
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W e a l s o ow n t h e domai n name s www . vyn l ead s .com , wearedwd.com , d w dprotocol. c om , codex o n e . o r g , and www. c onstitution a lh e a lth.com, togethe r wi th a numbe r o f additio n a l domai n n ame s whic h we ma y us e i n fu t u re periods . However , a s wit h p hon e nu m bers , w e d o n o t hav e an d can n o t acquir e an y property right s i n a n I n terne t address . T h e reg u l atio n o f domai n name s i n t h e Unit e d S tates and in ot h e r c ountrie s i s a l s o subjec t t o cha n g e . Regulat o ry bo d ie s could establis h a dditiona l top-leve l domai n s, appoin t a d d itiona l d o m a in nam e r e g i strar s or modi fy th e re q uirement s f o r holding doma i n names . A s a result , w e might no t b e abl e t o maintai n ou r doma in name s o r o b t ai n comparabl e d omai n names , whic h coul d har m ou r business.
Go v ernme n t reg u l ation
Ou r i n dustr y i s subjec t t o federal , stat e an d othe r g o vernmenta l regulatio n . Certai n fed e r a l an d state agencies, such as t h e F TC , r e gulat e an d enforc e suc h l a ws relatin g t o advertising , d isclo s ure s t o consumers , privacy , consume r p r icing , an d billin g arrangement s a n d o t he r consume r pro t e c t i on ma t t e rs . A d etermination b y a federa l o r stat e age n cy , o r a c o urt , tha t a n y o f ou r practice s d o no t mee t exi s tin g o r ne w l a ws o r regu l ati ons co uld res u l t i n liability , advers e publicit y and restri c t ion s o n ou r b u s ines s oper a t i ons . T h e F T C ha s in th e pa st instituted e n f o r c em e nt actions a g a i n st di e tary supplement a n d food comp a nies for false a nd misleadin g a dvertisin g o f som e o f thei r pr od u cts. T here are no assurance s tha t th e FT C w il l no t q uestio n ou r advertisin g cl a i m s i n th e future . A n enforcement actio n broug h t b y a g o vernmen t ag e ncy , li k e th e FT C i n th e Uni t e d St a tes , o r a cl a ss actio n law s uit , c oul d ad v er s e ly affec t o u r reputatio n an d potentiall y result i n si g nifican t penaltie s an d costs , eithe r o f whic h coul d h a v e a materia l advers e effe c t o n ou r result s of operat i on s an d fin a ncia l cond i tion.
Othe r aspect s o f ou r i ndustr y ar e als o s u b j e c t t o g o vernmen t regulati o n . Fo r example , th e ma n u f act u ring, lab e ling, a n d d istri b utio n o f foo d produ c ts , including nutritio n a l supplements , ar e s u b j e c t t o stric t Unite d St a t e s D e par t men t o f Agricul t ure , o r “USD A,” and U n ited Stat e s Fo o d a n d Dru g A d ministration , or “FDA, ” r e quirement s an d f o o d ma nu fact u r e rs are su b je c t to rigo r ou s inspe c t io n an d othe r req u ire m ent s of th e USD A an d F D A , an d comp a n ie s operatin g in foreig n market s mus t compl y wit h th o se co u ntries ’ requirement s fo r prope r labeling , co n trol s o n h y gi e ne, food preparati o n a n d othe r matters . W e rel y o n our s u pplem e nt supplie r t o follo w al l a p plicabl e governmen t r e gul a t ion . I f ou r sup p lemen t suppli e r shoul d f a i l t o confor m t o al l applicabl e reg u l ations , o r if f edera l, state , loca l o r fore i g n reg u latio n o f ou r i n dustr y increase s fo r an y reason , the n w e m a y b e require d t o modif y o r disc o ntinu e ou r supplemen t offerings whic h coul d har m ou r operatin g results . A d d i tional l y , remed i e s availabl e i n an y potentia l admi n istrativ e o r reg u l ator y actio n s m ay i n c lu d e p r o d uct r eca ll s and re q u irin g u s t o refun d am o unt s pai d b y al l affe c t e d customer s o r pa y othe r d a m a ges , whi c h c o u l d b e substantial.
Aspe c ts o f o u r industr y ar e al so subjec t t o st a te regulatio n s. In 19 8 6, C a lifornia passed T he S a fe Dri n ki n g W a t e r and T o xic E n f o r c em e nt Act of 1986 , whic h is comm o nly kn o wn as “Proposition 65. ” Thi s pro p o sitio n s e ek s t o p reven t b usin e s se s fro m ex p o sin g co n s u m e r s t o certai n toxins , i n cludin g le a d, arsenic , and PCBs , withou t providi n g a warn i n g. B e caus e Propositio n 6 5 di d no t se t a saf e ha rb o r l i mi t fo r repro d u ctiv e healt h a n d P C Bs , a l l product s contai n i n g even trac e amount s o f PCB s requir e a specifi c warni n g label . I n add i tion, f o r any food or n utrition a l supplement s co n tainin g ove r 0 .0 9 micr o gram s pe r da y of PCBs , th e state-mandate d warnin g labe l i s e x p ande d t o includ e an addit i ona l cance r warn i n g . Whil e a t th i s t ime , th e s u pple m ent s w e marke d an d sel l d o not contain the in g r e die n ts to requ i r e Propositio n 6 5 disclosure , i t is p ossible in the f u ture oth e r su p p leme n ts w e ma y marke t an d sel l wil l requir e th e warning l ab e l s . I t i s a l s o possib le a t a dditiona l s tate s wil l al so en a c t legislati o n whic h c oul d re q u ir e u s t o chang e t he t y pe o f nu tritiona l su p p l e me n ts o r othe r products w e market , o r discontinu e offer i n g certai n prod u ct s an d servic e s i f th e es t imate d cos t o f comp l ianc e outweigh s th e potenti a l revenues.
La w s a n d r eg u la ti ons d i r ec tl y ap p licabl e t o communications , operation s o r commerc e ove r th e Inte r n et such as those gov e r n ing i ntellectual p r o perty, priva c y, libel , an d taxatio n , ar e b ecomi n g mor e prevalen t a n d som e remai n unsettle d . I f w e ar e require d t o compl y wit h n e w l aws or r eg u lation s o r ne w interpretations o f existin g law s o r r e gul a t ions , o r i f w e ar e unabl e t o compl y wit h th e se laws , r e gulation s o r interpret a tions , o u r busines s c oul d b e ad v ersel y affected . Future la w s o r re gu l a t i o n s , i n clu d ing law s o r r e gulation s aff e ctin g o u r m a r k eting and adv e rtisin g practi c es , re l ation s w it h consumer s, emplo y ees , servic e p r o v id e r s , o r ou r service s an d products , ma y h av e a n a dvers e impac t o n u s.
Employe e s
A t March 31, 2022 , w e ha d on e empl oyee i n clu d ing our chief e x ecu t ive officer.
Pro p erties
W e r e n t exec u tiv e of f ic e spac e o n a mo n th t o mo n t h basi s u n d e r a co-worki n g a g r e em e n t wit h a n unrel a ted third party at a m o nt h l y fe e o f $2 0 0.
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ITEM 1A. RISK FACTORS
Th e effect s o f th e COVID -19 pa n demic, in c lu d ing actions taken b y businesse s an d governments , hav e adv e rsel y affect e d th e globa l e c onomy, disrupted g lo b a l s u ppl y c h ain s an d create d signifi cant v o latility in t h e financ i al m a r ke ts . A s a r e s ul t , t he r e ha s b ee n a signific a n t reductio n i n deman d fo r o u r produ c t s and s e r v ices . I f th e reduce d deman d continue s f o r a prol o nge d per i od , th e Compan y ’ s business , fi n ancia l con d ition , result s o f o p eratio n an d liquidit y ma y be materiall y an d adversel y af f e c t e d . Th e Company’ s o p eration s al so ma y b e adversel y affe c t e d i f significan t port i ons of the C o m p any’ s workforc e ar e u n abl e to wor k effectivel y du e t o illn e s s , q u arantin e s, governmen t a ction s o r o the r res t rict i on s i n connecti o n wit h futur e wav e s o f COVID-1 9 pandemic.
Th e exten t t o w h ic h th e COVID-1 9 pandemi c adversel y affect s th e Company’ s b u sin e s s , financia l c ondition , result s o f operati o n a n d liquidit y wil l dep e n d on futur e developments , whic h a re un c ertai n an d canno t b e p r e d icte d. Th es e f ut u re d eve lo p m e nts i n cl u de, but are not limited to, t he sc o pe a nd d uration of the COVID-1 9 pandemi c an d action s take n b y governmenta l authoritie s an d othe r thir d p a rtie s i n r e spons e t o th e p andemic . Disruptio ns a nd/ o r unc e rtainties relate d t o th e COVID-1 9 pand e mi c f o r a sustaine d perio d o f tim e co u ld r e s u l t in de l a y s o r mo d ification s t o th e C o m p any’ s stra t eg ic plan s an d in it i ative s and hin d e r th e Compa n y ’ s abilit y to achiev e it s strategi c goals.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not own any real estate or other properties.
ITEM 3. LEGAL PROCEEDINGS
I n 20 1 6 w e engage d a thir d part y t o provid e certai n promotion a l servi c e s t o u s i n connectio n wit h o u r business , includin g th e us e o f hi s nam e a n d a ppearance, unde r th e term s o f a five-yea r a greement . A s compensation , w e agree d t o us e ou r c ommerciall y r eason a b le effor ts t o p romot e an d sell a b ook aut h ored b y him an d t o pa y him , a s a royalty , a percentag e o f th e sale s o f th e boo k , afte r dedu c tion s f o r al l direc t cost s o f fulfillin g suc h sal e s. D u r in g 201 7 th e thir d party in it i ate d a se r ie s o f informa l claim s an d file d unauthorize d unif o r m co mmerc i a l code ( U CC ) f i n a n cin g s tatement s i n s e vera l stat e s agains t u s an d certai n o f our officers , director s, an d f o unders , all e gi n g n o n-payment of t h e roy a lt y amounts . W e di s p ut e al l claim s b y t h e thir d p a rt y an d belie v e tha t a ll ro y alt y amounts du e hi m hav e bee n pai d i n full . W e a re n o longe r sellin g th e boo k authore d b y him . W e hav e succee d e d i n removi n g c e r tai n o f th e UC C lie n s an d w e a re pursuin g action s t o remov e th e r emainin g u n authori z e d UC C lien.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Marke t Informat i o n
Ou r commo n s toc k i s traded but the market is limited and sporadic. It is listed on OTCQB with the symbol of VYND. As of March 21, 2022 the price is $0.28
Ho l de r s
W e hav e 55 s toc k holder s o f r e cor d h oldin g 11,599,83 0 share s o f ou r commo n s toc k a s o f March 21, 2022.
Dividends
We h a ve n ot declared di v id e nds on our c ommon stock and do n ot a nti c ip a te paying di v id e nds on our c omm o n stock in t he f o r e s e ea b l e future . W e antici p ate that any f u nds a vailable for pa y me n t o f d i viden d s wil l b e re-i n veste d int o th e Compan y t o f urthe r it s busines s s trategy.
Rece n t Sales of Unregist e r e d S ecurities
No n e .
I ssu e r Purchas e o f S ecuri t ies
No n e .
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
Th e followin g discussio n shoul d b e rea d i n conjuncti o n wit h ou r fina n ci a l statements , includin g th e note s thereto , a p peari n g e lsewher e i n thi s ann u a l report. Th e followin g discussio n contain s forward-l o oki n g statement s t h a t reflec t ou r plans , est i mates , an d belief s. O u r actua l result s coul d diffe r materiall y from thos e discusse d i n th e f o r war d l o okin g statements . O u r audite d finan c ia l s tatement s ar e state d i n Unite d S t ate s D o l lar s an d a re prepare d i n a c cordanc e wit h the Unite d St a t e s Generall y Accepte d Ac c ounti n g Principles.
Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report discusses the Company’s financial condition and results of operations as of and for 2021 and 2020.
R esult s o f O p era t ions
Th e C o m p an y ha s incurre d l o s s e s s inc e inc e ptio n resultin g i n a n acc u m u late d defici t o f $1,987,278 a s o f Decembe r 31 , 2021 . Ou r financia l statem e nt s have bee n prepare d assumin g tha t w e wil l continu e a s a goin g concer n and , accordingly , d o no t includ e adjustm e n t s rel a t in g t o th e r e coverabilit y an d re a l izati o n of as s e t s an d cl a s s ificatio n o f li a bilitie s tha t migh t b e necessar y shoul d w e b e una b le t o c o ntinue in o peration.
W e wil l requir e ad d itiona l ca p i t a l t o mee t ou r s hor t an d lon g t er m operatin g requirements . W e expec t t o rais e a d ditional c a pi ta l throug h , amon g othe r things, the sal e o f equ it y s e c u r i t i e s .
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Fiscal year ended December 31, 2 021 c o m p ared to t h e y e ar fi s c al ended December 31, 2 0 20
Reve n ues
Reve n u e s fo r 2021 wer e $484 , a decrease of $47,778 , or 99.0 % , fro m $48,262 i n 20 20 . The declin e i n revenues wa s a c ros s al l produc t lines . Th e decr e as e i n sale s fo r subscri p tion s an d supplement s wa s directl y associate d t o a reducti o n in advertising spend f o r th e year . T h e redu c e d a dvertisin g s p en d a ls o im p acte d th e numbe r o f ne w c ustomer s w e a c quire d fo r th e year , thi s included s u bscriptions a nd s u ppl e m e nt produc t lines. COVID-19 has impacted our ability to raise new capital, hence affecting overall revenues and operating costs.
Costs a n d Expenses
Tota l cost s a n d o p eratin g exp e ns es de c r e ased $153,293 , or 36.5 % , to $267,257 in 2021 fr o m $420,550 i n 2 020 . T he d ecrease i n operatin g c o st s and expense s w a s du e t o sa v i n g s ini t iat i ve s t o o f fse t th e declin e i n revenue.
| · | Cost o f revenue de c re a sed $24,241 , or 42.7%, to $32,467 in 2021 compared to $56,708 in 20 20 , and increased as a p ercentage of net re v enue to 6,708.1% fr o m 117.5%. Our cost of revenue includes the cost of the supplements we sell as well as shipping and handling costs for shipments to customers, merchant processing fees, call center support, and order processing. The increase in cost of revenues as a percent of revenues is due to the decline in revenue across all product lines and subscriptions. |
| · | Ad v e rtisi n g e x penses d ecrea s ed $895 o r 100 % , t o $ 0 in 2 021 from $895 in 20 20 , and de crease d a s a percentag e o f ne t reven u e to 0% fr o m 1.9%. The decrease in advertising expenses as a percentage of our net revenues is the result of our advertising cost per sale decreasing. We monitor our advertising purchases and customer acquisition costs based on various advertising websites, partners and campaigns, and we adjust our campaign costs based on new website subscriptions or sales. The decrease is also due to cost cutting measures. |
| · | Selling, general and administrative expenses decreased $128,157, or 35.3%, to $234,790 in 2021 from $362,947 in 2020, and increased as a percentage of net revenue to 48,510.6% from 752%. The decrease in SG&A in 2021 as compared to 2020 is principally attributable to decreases in consulting and accounting expenses, exchange fees and filing, office expenses and payroll tax expenses. |
Net L o ss
Our net loss for t h e y e ar en d ed Decemb e r 31, 2 021 was $271,581 compare d t o $379,630 fo r th e y ear e n ded De c ember 3 1 , 2020.
Liquidit y an d capita l resourc e s
Liquid i t y is th e ab i li ty o f a c o m p an y t o generat e sufficien t c a s h t o satisf y it s ne e d s fo r ca s h . T h e followin g tabl e summarize s o u r t ot a l cu rre nt a ssets , t ot a l cur r e nt lia b ilitie s a n d workin g capit a l deficit a t Decembe r 31 , 2021 a s compare d t o Decemb e r 31 , 2 020.
|
December 31, 2021 |
December 31, 2020 |
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| Total current assets | $ | 25,390 | $ | 37,999 | ||||
| Total current liabilities | $ | 517,256 | $ | 379,359 | ||||
| Working capital deficit | $ | (491,866 | ) | $ | (341,360 | ) | ||
The reduction in total current assets between the periods primarily reflects a reduction in cash and prepaid expense. The increase in total current liabilities reflects an increase in notes payable, accounts payable, and accrued expenses. We do not have any capital commitments and do not have any external sources of working capital available.
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Goin g co n cer n an d man a gement’ s liquidit y p la n s
The COVID-19 pandemic has materially and adversely impacted the U.S. economy and financial markets, with legislative and regulatory responses including unprecedented monetary and fiscal policy actions across all sectors, and there is significant uncertainty as to timing of stabilization and recovery. The extent of the COVID-19 impacts will depend on future actions and outcomes, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the short-term and long-term economic impact of the outbreak (including the effect on advertising activity, consumer discretionary spending and our employees), and the actions taken to mitigate the impact of the virus, and the pace of economic and financial market recovery when the COVID-19 pandemic subsides, among others.
We have experienced recurring operating losses and negative operating cash flows, and have financed our recent working capital requirements primarily through the issuance of notes payable. During the years ended December 31, 2021 and 2020, we have reported net losses of $271,581 and $379,630, respectively. As of December 31, 2021, our working capital was a deficit of $491,866, our accumulated deficit was $1,987,278, and we had negative cash flows from operations of $130,513. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. The accompanying Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. There are no assurances we will be successful in our efforts to report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
Our ability to continue to grow our business is dependent upon our ability to raise additional sufficient capital to fund our operating expenses, including advertising, until such time, if ever, that we are able to report profitable operations, as well as for our short-term and long-term growth plans. We do not generate operating income and we are presently relying on cash we receive from the holdback receivable to pay our operating expenses. Our management estimates that we require approximately $5,500,000 in additional working capital during the next 12 months in order to meet our current business objectives, including the development of new indicators for our Lifestyle Blueprint platform, the addition of print versions of our DWD Protocol, expanding our supplement product line and additional subscription content offerings for our customers. This additional working capital is also necessary to fund increases in our advertising and marketing costs, costs associated with the development of additional infrastructure to support our expected growth, as well as funds to pay our operating expenses and general working capital. We currently do not have any firm commitments to provide any additional capital to us. There are no assurances we will be successful in securing the additional capital necessary to grow our company and pay our operating expenses. Any delay in raising sufficient funds could adversely impact our ability to continue to increase our revenues in future periods. In addition, if we are unable to raise the necessary additional working capital, we may be forced to reduce certain operating expenses in an effort to conserve our working capital which will adversely impact our revenues and results of operations in future periods and there are no assurances we could continue as a going concern.
Summar y o f cas h f l o ws
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December 31, 2021 |
December 31, 2020 |
|||||||
| Net cash used in operating activities | $ | (130,513 | ) | $ | (112,666 | ) | ||
| Net cash provided by investing activities | $ | — | $ | — | ||||
| Net cash provided by financing activities | $ | 125,000 | $ | 56,500 | ||||
The increase in cash used in our operating activities in 2021 as compared to 2020 is due to a decrease in net loss and a courtesy PPP loan credit offset by increases in accounts payable and capital contribution of services from the CEO and a decrease in the holdback receivable and prepaid expenses.
There w a s no net c a sh pro v id e d by o r use d i n investin g activiti es d uring 2021 a n d 2 0 20.
Net cash provided by financing activities during 2021 reflects proceeds from notes payable – related party and proceeds from additional notes payable offset by repayment of notes payable. Net cash p r o vi d ed b y financing acti v iti e s dur i n g 2020 refle c t s the loan from Bank of America under the Paycheck Protection Program.
Co mm i tment s an d Co n t ingenc i e s
In format i o n rega r d ing ou r C ommi t ment s an d C ontingenc i e s is cont ained in Note 8 to the Financia l S tatements.
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O ff-Balan c e Shee t Arrangements
W e hav e n o t e ntere d i nt o an y off-balanc e s h ee t arra n gement s tha t hav e or a re r e a s onabl y l ik el y t o h av e a curren t or f u tu r e ef f ec t o n o ur finan c ia l con d ition, change s i n fin a n ci a l co n dition , rev e nue s o r expenses , r e s u lt s o f operatio n s, liquidity , ca p ita l e xpenditure s o r c apita l resou r ce s an d woul d b e co n s idered materia l t o inv e s tors.
Critical Accounting Policies and Estimates
Our financial statements have been prepared in conformity with U.S. GAAP and are based upon certain critical accounting policies. These policies may require management to make estimates, judgments and assumptions that we believe are reasonable based on our historical experience, contract terms, observance of known trends in our Company and the industry as a whole, and information available from other outside sources. Our estimates affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results may differ from those initial estimates. Our significant accounting policies are more fully described in Note 3 of the Financial Statements.
Revenue recognition – Our product revenues are generated through online channels, in which customers provide their credit and/or debit cards for processing payments to purchase our products and services. The credit cards go through various checks and balances to ensure these are valid charges. We use our judgment in various ways including: that the payment is valid if it is approved by the various credible checks in place by the online banking systems, we have engaged with to complete each transaction. In some cases, the banking partners in place will address charges as invalid or fraudulent, due to a lost credit card, or related, and can redress payments issued for up to 12 months or longer. These adjustments are typically done via chargebacks. Every transaction is tracked, but we are unable to ever completely verify a valid transaction. Beyond that, there are also estimated elements of when a consumer “changes their mind” on sale transactions, and leveraging their banking relationships to chargeback the transaction. (Also known as friendly fraud in the space.) In addition to these elements and judgements, there is the case of all of our products having a 60-day money back guarantee. In some cases, customers will take advantage of this system to use our digital services and products for 1-59 days, then decide to request a refund. As these and future events and their effects of these revenue-impacting elements cannot be determined with complete precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Financial Statements.
Holdback Receivables – Since a primary source of our income is generated through online channels, in which a merchant account and merchant bank relationship is developed, we naturally must account for holdback receivables. These merchant banks require “holdbacks,” based on the level of risk associated to a specific business or merchant account. In our case, to ensure we can continue processing credit/debit card sales online, our merchant bank requires they holdback a percentage of that receivable money as a guarantee. The money they hold back is held in their accounts as a ‘reserve.’ They are able to hold a percentage of our monies based on our receivables. We use our judgment in various ways including: we believe the merchant bank will honor their agreement, and release funds based on what is agreed upon in our merchant agreement. We also believe they will continue to operate as expected, and allow us to process sales and transactions accordingly. We also expect our partner merchant bank to be truthful and honorable should we close our accounts and request our monies to be released, in which they are able to hold those funds for upwards of 12 months to cover refunds, chargebacks, and related processing fees. As these and future events and their effects of these holdback receivable elements cannot be determined with complete precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Financial Statements.
Income Taxes – The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.
| 10 |
Emergin g Growt h Compa n y
W e a re a n “emergin g gro w t h compan y , ” a s d efine d i n th e Jumpstar t Ou r Busin e s s Star t u ps Ac t o f 2012 , o r th e “JOB S Act” , an d w e are permitt e d to ta k e advantag e o f c ertai n exemptio n s fro m variou s publi c comp a n y re p orting r e quireme n ts, i ncludin g no t b e i n g require d t o hav e ou r i n t erna l control s ove r fina n cial re p orting audit e d by o u r indep e n d en t regist e r e d pu b li c account i ng f ir m p u r s u a nt t o S ectio n 40 4 o f th e Sarb a n es-Oxle y Ac t o f 20 02, or t h e “ S arbanes-Oxl e y Act”, red u ced d isclosure oblig a tion s r e g ardin g e x ecuti v e comp e nsatio n i n o u r periodi c rep o rt s and proxy s t atements a n d e x e m p t i on s f rom th e req u irement s o f hol d i n g a nonbindin g advisor y vot e o n ex e cutiv e compe n s a t io n an d an y golde n parachut e payments . W e ma y ta k e a d v antag e o f thes e exempt i on s unti l w e are n o lon g e r a n “emergin g growt h co m pany. ” I n a d d ition , th e J OB S A ct provides that a n “ e m e rging g r owth comp a ny” can del a y a d opti n g ne w o r revised accountin g s tan d ar d s unti l suc h t im e a s thos e sta n dard s a p pl y t o privat e companies.
W e hav e el e cte d t o us e th e extende d transitio n perio d fo r comp l y i n g wit h ne w o r revise d a ccountin g stand a r d s und e r th e JOB S Act . Th is elect i o n allo ws u s to del a y th e adoptio n o f ne w o r revise d accou n tin g sta n dard s tha t h av e differen t e ffectiv e dat e s fo r p ubli c an d privat e comp a n ie s unti l t h o s e standard s appl y to p r ivat e companies . A s a resul t o f thi s election , ou r f in anc i a l st a t ement s ma y no t b e comparabl e t o companie s tha t compl y wit h publi c c ompan y eff e ctiv e dates.
W e coul d remai n a n e m e r gin g grow th comp a ny for up to five y ear s , o r unti l th e earlies t of:
| · | the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion; |
| · | the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or 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 |
| · | the date we have issued more than $1 billion in non-convertible debt during the preceding three-year period. |
At thi s time , w e expec t t o remai n a n eme r g i n g g rowt h co m p an y unti l p o ssibl y a s lat e a s 20 2 3. R e fere n ces h e r ei n t o “emergin g g r owth compa n y” h a ve the me a ni n g associated with th a t t er m in th e J OB S A ct.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
TABLE OF CONTENTS
| Page No. | |
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Report of Independent Registered Public Accounting Firm (PCAOB ID #
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12 |
| Balance Sheets at December 31, 2021 and 2020 | 13 |
| Statements of Operations for the Years Ended December 31, 2021 and 2020 | 14 |
| Statements of Stockholders’ Deficit for the Years Ended December 31, 2021 and 2020 | 15 |
| Statement of Cash Flows for the Years Ended December 31, 2021 and 2020 | 16 |
| Notes to the Financial Statements for the Years Ended December 31, 2021 and 2020 | 17 |
| 11 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of:
Vynleads, Inc.
O p in io n o n th e Financ i a l Statements
We have audit e d the accompa n ying b alan c e she e ts o f Vynleads , Inc . (th e “Company” ) a s o f D e ce m be r 3 1 , 2021 an d 2020 , t h e relate d statement s of operations , stockh o lders ’ deficit a n d c as h flow s fo r e ac h o f th e tw o year s i n t h e p e r io d ende d Decembe r 31 , 2021 , an d th e relate d notes (collectively referred to as the financial statements) . In ou r o p i nion , th e fi n ancia l statemen ts presen t fair ly, i n al l m at e r i al resp e cts, the fin a ncial positio n o f th e C om p a ny as of D e cembe r 3 1 , 2021 an d 2020 , an d t h e res u lt s o f it s operatio n s an d i ts cas h flow s f o r each of the two years in the period ended Dec e m b er 31, 2021 , i n conformit y wit h accountin g prin c iple s generall y acc e pt e d i n th e Unite d S t ate s o f Americ a .
Expla n at o r y P ara g r aph – G o ing Conc e r n
Th e accompa n yi n g financia l statement s hav e bee n prep a r e d assumin g th a t t h e Compan y wil l c o ntinu e a s a g o in g co n cern . A s dis c u s s e d i n N o te 2 to the f inan c ia l s tatements , t h e Compan y ha s experience d recurri n g o p eratin g losse s sinc e in c eptio n an d neg a tiv e cas h flow s fro m operatio n s an d ha s fin a nce d its re c e nt working c a pital re q uire ment s primaril y throug h t h e issu a nc e o f d eb t. T h es e factors raise subst a ntial d oubt a b out the Compa n y ' s abilit y t o conti n u e a s a goin g concern . Manag e m e nt’ s pl a ns in re g a rd to t h ese ma t t e rs ar e descr ib e d i n N o te 2. The fin a ncial st a tements do n ot includ e an y adj u stment s tha t m i gh t r esu lt fro m the outcom e o f thi s u ncer t ainty.
Ba si s fo r Opinion
These fin a ncial st a tements are t h e r e sponsibilit y o f th e Company’ s ma n agement . Ou r r e sponsibilit y i s t o expres s a n opinio n o n th e Company’ s finan c ial s tatement s base d o n ou r audit s. W e ar e a publi c acc o untin g fir m r e gistere d wit h th e Pu b li c C o mpa n y Accou n tin g Oversigh t Bo a r d (Un i te d States) (“ P C AOB” ) an d ar e req u ire d t o b e indep e nden t wit h respec t t o t he Company in a ccordance with t h e U .S . federa l secu r it i e s law s a n d th e applic a b l e rule s a n d r egu l a t ion s o f th e Securi t ie s an d Exchang e C ommis s io n an d th e PC AO B.
W e conducte d ou r audit s i n ac c ordanc e wit h th e standard s o f th e PCAOB . Thos e s tan d ar d s requir e tha t w e pla n an d perfor m th e a udit to obta i n r e asonable as s u r a nc e abou t whethe r th e fina n cial stat e m e nts ar e fre e o f materia l misstatement , w h eth e r du e t o erro r o r fraud . Th e Compa n y i s n ot require d t o hav e , nor w er e w e engage d to p erform , a n audi t o f it s interna l c ontrol s o ve r financia l re p o rting . Accor d ingly , w e ex p r e ss n o suc h opini on.
Ou r audit s include d performin g proced u r e s t o a s ses s t h e risk s o f ma t e r ia l miss t atemen t o f th e f inanc i a l s tatements , whe t h e r due t o e r ro r o r fraud , and perf o r min g procedure s t h a t respon d t o thos e risks . Su c h pro c e d ure s include d ex a m ining , o n a tes t basi s, evidenc e regardin g th e amount s an d disclosure s i n the finan c ia l s tatements . Ou r audit s als o include d evaluatin g th e acc o untin g principle s use d an d s i g nificant e s timat e s made by m a nagement , a s wel l a s evaluating th e overal l financia l statemen t p r esentati o n. W e b eliev e tha t ou r audit s provid e a re a sonabl e b asi s fo r ou r opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/
s
/
We have served as the Company’s auditor since 2018.
March 31, 2022
| 12 |
Vynleads, Inc.
Balance Sheets
| December 31, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ |
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$ |
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| Accounts Receivable |
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Holdback Receivable from merchant, net of reserve for refunds of $
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| Prepaid Expenses and other current assets |
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| Total current assets |
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| Total assets | $ |
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$ |
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| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ |
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$ |
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| Notes Payable |
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| Notes Payable – Related Party |
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| Total current liabilities |
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| Notes Payable, net of current |
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| Total liabilities |
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| Commitments and contingencies (See Note 8) | ||||||||
| Stockholders' deficit: | ||||||||
| Preferred stock; $ par value; shares authorized, shares issued and outstanding, respectively | ||||||||
| Common stock; $ par value; shares authorized; shares and shares issued and outstanding, respectively |
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| Additional paid-in capital |
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| Accumulated deficit |
(
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) |
(
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) | ||||
| Total stockholders' deficit |
(
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) |
(
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) | ||||
| Total liabilities and stockholders' deficit | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these financial statements.
| 13 |
Vynleads, Inc.
Statements of Operations
| For the year ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Revenue, net of refunds and chargebacks | $ |
|
$ |
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||||
| Cost and Expenses: | ||||||||
| Cost of Revenue |
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| Advertising |
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| Selling, general and administrative expense |
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| Total costs and expenses |
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| Loss from operations |
(
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) |
(
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) | ||||
| Other income |
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| Interest expense |
(
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) |
(
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) | ||||
| Net loss before provision for income taxes |
(
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) |
(
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) | ||||
| Income tax expense |
(
|
) | ||||||
| Net loss | $ |
(
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) | $ |
(
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) | ||
| Net loss per common share, basic and diluted | $ |
(
|
) | $ |
(
|
) | ||
| Weighted average common shares outstanding, basic and diluted |
|
|
||||||
The accompanying notes are an integral part of these financial statements.
| 14 |
Vynleads, Inc.
Statements of Stockholders' Deficit
For the Years Ended December 31, 2021 and 2020
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders' | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance at December 31, 2019 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
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) | |||||||||
| Common Stock Issued for Services |
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|
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|
||||||||||||||||
| Stock-based compensation | — |
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|||||||||||||||||
| Capital Contribution | — |
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|||||||||||||||||
| Net Loss | — |
(
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) |
(
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) | |||||||||||||||
| Balance at December 31, 2020 |
|
|
|
(
|
) |
(
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) | |||||||||||||
| Capital Contribution | — |
|
|
|||||||||||||||||
| Net Loss | — |
(
|
) |
(
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) | |||||||||||||||
| Balance at December 31, 2021 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||
The accompanying notes are an integral part of these financial statements.
| 15 |
Vynleads, Inc.
Statement of Cash Flows
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustments to reconcile net loss to net cash flows used in operating activities | ||||||||
| Stock-based compensation |
|
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| Capital contribution from CEO |
|
|
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| PPP Courtesy Credit |
(
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) | ||||||
| Changes in operating assets and liabilities and other, net |
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||||||
| Net cash flows used in operating activities |
(
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) |
(
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) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from notes payable |
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|
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| Proceeds from notes payable – related party |
|
|||||||
| Repayment of notes payable |
(
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) | ||||||
| Net cash flows provided by financing activities |
|
|
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| Net decrease in cash |
(
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) |
(
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) | ||||
| Cash at beginning of year |
|
|
||||||
| Cash at end of year | $ |
|
$ |
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| Supplemental disclosure of cash flow information: | ||||||||
| Income taxes paid | $ | $ |
|
|||||
| Interest paid | $ |
|
$ |
|
||||
| Supplemental for non-cash investing and financing activities: | ||||||||
| Stock issued for prepaid consulting | $ | $ |
|
|||||
The accompanying notes are an integral part of these financial statements.
| 16 |
VYNLEADS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
1. Business
Vynleads, Inc. (“Vynleads”) was incorporated as a Delaware corporation on July 15, 2015. We are a provider of health and wellness information principally targeted to people who are pre-diabetes or who have type 2 diabetes. We provide information to our customers who are seeking to make healthy choices by providing clear, generic blueprints, education, resources, and support. Our core product is our proprietary Lifestyle Blueprint, a digital guide that provides dietary recommendations for a very low calorie eight-week diet together with information focusing on what, how and how much a person eats, nutritional information and how a person’s body does and does not use food to enable our customers to continue leading a more successful lifestyle. We also offer nutritional supplements and monthly subscriptions to our proprietary newsletter which covers a wide variety of healthy living-related topics.
Our corporate headquarters are located in Rock Hill, South Carolina.
2. Going Concern
Our financial statements have been presented on a going concern
basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since July 15,
2015, the date of our inception, we have experienced recurring operating losses and negative operating cash flows, and have financed
our recent working capital requirements primarily through the issuance of debt. During the years ended December 31, 2021 and 2020, we
have reported net losses of $
Despite our current sales, expense, cash flow projections,
and aggregate cash and holdback receivable from our merchant, net of reserve for refunds, of $
Our ability to meet our current and projected obligations depends on our ability to generate sufficient sales and to control expenses and will require that we seek additional capital through private and/or public financing sources. There can be no assurances that we will achieve our forecasted financial results or that we will be able to raise additional capital to operate our business. Any such failure would have a material adverse impact on our liquidity and financial condition and could force us to curtail or discontinue operations entirely and could require us to file for protection under bankruptcy laws. These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome from this uncertainty.
3. Summary of Critical Accounting Policies
Accounting Principles
The financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Use of Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain 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 revenue and expenses during the reporting period. We believe that judgement is involved in determining our reserve for refunds, our holdback reserve, and valuation of stock-based compensation. We evaluate our estimates and assumptions as facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Financial Statements.
| 17 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
Cash
Cash includes cash on hand, is deposited at one area bank and may exceed federally insured limits at times. We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amounts reported in the balance sheets for cash and cash equivalents approximate their fair value.
Holdback Receivable
Holdback receivable includes a merchant holdback net of a reserve
for returns, which reserve is $
Revenue Recognition
The Company accounts for revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606. Revenues are recognized when the Company satisfies a performance obligation by transferring control of the promised goods or services to our customers at a point in time, in an amount specified in the contract with our customer and that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company also assesses our customer’s ability and intention to pay, which is based on a variety of factors including our customer’s historical payment experience and financial condition.
We generate revenues primarily from (i) internet content subscriptions and (ii) sales of nutritional supplements. Revenues are recognized upon the acceptance of subscription membership or shipment of nutritional supplements, provided that an order has been received or a contract executed, there are no uncertainties regarding customer acceptance, the sales price is fixed or determinable and collection is deemed reasonably assured. If uncertainties regarding customer acceptance exist, we recognize revenues when those uncertainties are resolved, and title has been transferred to the customer. Amounts collected or billed prior to satisfying the above revenue recognition criteria are recorded as deferred revenue.
Our percentages of revenue by type for years ended December 31, 2021 and 2020 are as follows:
|
Year ended December 31, |
||||||||
| 2021 | 2020 | |||||||
| Internet content subscriptions |
|
% |
|
% | ||||
| Nutritional supplements |
|
% |
|
% | ||||
Shipping and Handling Costs
We include shipping and handling fees billed to customers as revenue and shipping and handling costs for shipments to customers as cost of revenue.
Advertising Costs
Advertising costs for the years ended December 31, 2021 and
2020 were $
Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is based upon the weighted-average common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period. Common equivalent shares result from the assumed exercise of outstanding stock options and warrants, the proceeds of which are then assumed to have been used to repurchase outstanding common stock using the treasury stock method. In addition, the numerator is adjusted for any changes in income (loss) that would result from the assumed conversion of potential shares. Potentially dilutive shares, which were excluded from the diluted loss per share calculations because the effect would be antidilutive or the options and warrants exercise prices were greater than the average market price of the common shares, were shares for the years ended December 31, 2021 and 2020.
| 18 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
Income Taxes
The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.
We account for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. We evaluate this tax position on a quarterly basis. We also accrue for potential interest and penalties, if applicable, related to unrecognized tax benefits in income tax expense.
We account for stock based instruments issued to employees and non-employees for services in accordance with Accounting Standard Codification (“ASC”) Topic 718.
Stock-based compensation is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the requisite service period. Accordingly, the Black-Scholes option pricing model is utilized to derive an estimated fair value.
The Black-Scholes pricing model requires the consideration of the following six variables for purposes of estimating fair value:
| · | the stock option exercise price; |
| · | the expected term of the option; |
| · | the grant date price of our common stock, which is issuable upon exercise of the option; |
| · | the expected volatility of our common stock; |
| · | the expected dividends on our common stock (we do not anticipate paying dividends in the foreseeable future); and |
| · | the risk-free interest rate for the expected option term. |
Expected Dividends . We have never declared or paid any cash dividends on any of our capital stock and do not expect to do so in the foreseeable future. Accordingly, we use an expected dividend yield of zero to calculate the grant-date fair value of a stock option.
Expected Volatility . The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determine the expected volatility solely based upon the historical volatility of our common stock over a period commensurate with the option’s expected term. We do not believe that the future volatility of our common stock over an option’s expected term is likely to differ significantly from the past.
Risk-Free Interest Rate . The risk-free interest rate is the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the option’s expected term on the grant date.
Expected Term . For option grants subsequent to the adoption of the fair value recognition provisions of the accounting standards, the expected life of stock options granted is based on the actual vesting date and the end of the contractual term.
Grant Date Price of Common Stock . The closing market price of our common stock on the date of grant.
| 19 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
Fair Value of Financial Instruments
We follow Accounting Standards Codification 820-10 (“ASC 820-10”), “Fair Value Measurements and Disclosures,” for fair value measurements. ASC 820- 10 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value, which focuses on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurement based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.
The hierarchy established under ASC 820-10 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 under ASC 820-10 are described below:
| Level 1 - Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date. As required by ASC 820-10, we do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price. | |
| Level 2 - Pricing inputs are quoted prices for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments. | |
| Level 3 - Pricing inputs are unobservable for the investment, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Level 3 includes investments that are supported by little or no market activity. |
The carrying amounts of our cash, holdback receivable, prepaid expense and other current asset, accounts payable and accrued expenses approximate their fair values due to their short-term maturities as of December 31, 2021 and 2020.
Recent Accounting Pronouncements
We have evaluated all issued but not yet effective accounting pronouncements and determined that, other than the following, they are either immaterial or not relevant to us.
4. Related Party Transactions
On March 16, 2021, the Company executed a note payable to Mr. Sergei Stetsenko,
a member of our Board of Directors, in the amount of $
During the year ended December 31, 2021 and 2020, we paid to Mr. Bezusov
$
On June 14, 2018, we entered into an employment agreement with Mr. Mannine pursuant to which he was engaged to serve as our Chief Executive Officer. Mr. Mannine’s compensation includes a grant of year options to purchase shares of our common stock at an exercise price of $ per share, which vested upon the effectiveness of the registration statement on December 7, 2018.
During the year ended December 31, 2020, Mr. Mannine personally paid $
On September 21, 2020, Mr. Mannine voluntarily agreed to cancel the
employment agreement and waive all cash due and any related accruals. During the years ended December 31, 2021 and 2020, $
| 20 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
On May 21, 2018, we entered into an Amended and Restated Strategic Financing & Corporate Development Agreement with CRG which was amended and restated an earlier agreement entered into in October 2017. We have engaged this company to serve as our non-exclusive strategic financing and corporate development services provider and to render certain advice and services to us as we may reasonably request concerning equity or debt financings, strategic planning, merger and acquisition possibilities, and business development activities. The scope of services under this agreement also includes introducing us to one or more non-U.S. persons, as that term is defined in Regulation S under the Securities Act, in connection with possible debt or equity financings or potential lenders. The initial term of the agreement expired in May 2020, but pursuant to the terms of the agreement, renews automatically for one-year periods unless notice of non-renewal is provided by either party at least 30 days prior to the renewal term commencement. The agreement was renewed until May 2022.
As compensation under the terms of this agreement, we agreed to pay CRG Finance AG certain fees for transactions which are consummated during the term of the agreement and for a one year period following the termination of the agreement, including:
| · | a fee equal to 7% of the proceeds received by us plus a warrant exercisable into 7% of the shares of our common stock at the offering price of our shares for sales by us of equity or equity-linked securities to non-U.S. Persons introduced to us by CRG Finance AG; |
| · | a fee equal to 1% of the total gross cash proceeds or non-cash consideration received by us, together with a five year warrant exercisable into 1% of the securities issued or to be issued by us in a business combination with a non-U.S. person first introduced to us by CRG Finance AG; |
| · | a fee equal to 1% of consideration received by us in any debt financing not convertible into equity, including, but not limited to, a revolving credit line or credit enhancement instrument, including on an insured or guarantee basis, with a non-U.S. Person first introduced to us by CRG Finance AG; and |
| · | a fee equal to 2% of any revenue-producing contract, fee-sharing arrangement, licensing, royalty or similar agreement with a non-U.S. Person first introduced to us by CRG Finance AG. |
In addition to the foregoing fees, we have agreed to reimburse CRG Finance AG for its pre-approved out of pocket expenses it incurs under the terms of the agreement. The agreement contains customary confidentiality and indemnification provisions.
5. Income Taxes
For the year ended December 31, 2021, the provision for income
taxes was $
As of December 31, 2
021
,
we
h
ave net operating loss carryforwards of
a
pproxim
a
tely
$
| 2021 | 2020 | |||||||||||||||
| Tax | Rate | Tax | Rate | |||||||||||||
| Taxes computed at statutory rate | ||||||||||||||||
| Federal | $ |
(
|
) |
|
% | $ |
(
|
) |
|
% | ||||||
| State |
(
|
) |
|
% |
(
|
) |
|
% | ||||||||
| Total taxes at blended statutory rate | $ |
(
|
) |
|
% | $ |
(
|
) |
|
% | ||||||
| Increase (decrease) resulting from: | ||||||||||||||||
| Effect of tax rate change |
|
% |
|
% | ||||||||||||
| Nondeductible expenses |
|
% |
|
% | ||||||||||||
| State income tax refund |
|
% |
|
% | ||||||||||||
| Other |
|
-
|
% |
|
-
|
% | ||||||||||
| Change in valuation allowance |
|
-
|
% |
|
-
|
% | ||||||||||
| Total income tax (benefit) expense | $ |
-
|
% | $ |
|
-
|
% | |||||||||
| 21 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
The tax effect of significant components of our deferred tax assets and liabilities at December 31, 2021 and 2020, are as follows:
| 2021 | 2020 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | $ |
|
$ |
|
||||
| Amortization of intangibles |
|
|
||||||
| Reserve for refunds |
|
|
||||||
| Stock compensation |
|
|
||||||
| Charitable contribution carryforward |
|
|
||||||
| Total deferred tax assets |
|
|
||||||
| Less: Valuation allowance |
(
|
) |
(
|
) | ||||
| Net deferred tax assets | $ | $ | ||||||
In assessing the realizability of deferred tax assets, we consider 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. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Because of our historical earnings history, the net deferred
tax asset for 2021 has been reduced based on the amount deemed recoverable from the use of loss carrybacks. The change in the valuation
allowance was an increase of $
6. Notes Payable
On December
1, 2021, the Company executed a note payable to an individual in the amount of $
On September
28, 2021, the Company executed a note payable to an individual in the amount of $
On August 4, 2021,
the Company executed a note payable to an individual in the amount of $
On May 10, 2021,
the Company executed a note payable to an individual in the amount of $
On April 15, 2021,
the Company executed a note payable to an individual in the amount of $
On March 16, 2021, the Company executed a note payable to Mr. Sergei Stetsenko,
a member of our Board of Directors, in the amount of $
On February 3, 2021, the Company executed a note payable to an individual
in the amount of $
| 22 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
On December 17, 2020, the Company executed a note payable to an individual
in the amount of $
On October 27, 2020, the Company executed a note payable to an individual
in the amount of $
On May 5, 2020, the Company received loan proceeds in the amount of $
On November 18, 2019, the Company executed a note payable to an
individual in the amount of $
On November 18, 2019, the Company executed a note payable to an individual
in the amount of $
7. Economic Injury Disaster Loan
On April 14, 2020, the Company received a grant in the amount of $
8. Commitments and Contingencies
Employment Agreement
On June 14, 2018, we entered into an employment agreement with Mr. Mannine pursuant to which he was engaged to serve as our Chief Executive Officer. The initial term of the agreement expires in June 2023, subject to successive automatic one- year renewals unless a non-renewal notice is received by either party at least 90 days prior to the expiration of the then current renewal term.
| 23 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
Mr. Mannine’s compensation includes:
| · |
an annual base salary of $
|
| · | an annual bonus as determined by the board of directors; |
| · | a grant of -year options to purchase shares of our common stock at an exercise price of $ per share which vest upon the effectiveness of a registration statement to be filed with the Securities and Exchange Commission; |
| · | participation in all benefit plans we may offer our employees; and |
| · | 20 paid vacation days annually. |
Mr. Mannine's employment agreement may be terminated, and he is entitled to certain payments upon such termination, as follows:
| · | if we should terminate Mr. Mannine’s employment without “cause” or if he should resign for “good reason" or if a “change of control” occurs, we are obligated to pay him a lump-sum severance payment equal to the sum of three months’ base salary, plus one month for every year he was employed and 50% of three years annual bonus (based on the prior year’s compensation); |
| · | if Mr. Mannine’s employment is terminated as a result of his death or disability, he is entitled to receive his base salary and a pro-rata annual bonus, if any, based on the year during which such termination is effective; or |
| · | if we should terminate Mr. Mannine for “cause,” or if he voluntarily terminates the agreement, he is entitled to receive his base salary only through the date of termination, and he is not be entitled to any other compensation for the calendar year during which the termination occurs or any subsequent calendar period, including, but not limited to, any annual bonus, if any, that has not already been paid. |
The employment agreement with Mr. Mannine contains customary confidentiality, non-compete and indemnification clauses. On September 21, 2020, Mr. Mannine agreed to voluntarily cancel the employment agreement.
During the years ended December 31, 2021 and 2020, Mr. Mannine
voluntarily agreed to waive all cash due and any related accruals. The salary forgiven for the years ended December 31, 2021 and
2020 of
$
Co mm i tments
On May 21, 2018, we entered into an Amended and Restated Strategic Financing & Corporate Development Agreement with CRG which was amended and restated an earlier agreement entered into in October 2017. We have engaged this company to serve as our non-exclusive strategic financing and corporate development services provider and to render certain advice and services to us as we may reasonably request concerning equity or debt financings, strategic planning, merger and acquisition possibilities, and business development activities. The scope of services under this agreement also includes introducing us to one or more non-U.S. persons, as that term is defined in Regulation S under the Securities Act, in connection with possible debt or equity financings or potential lenders. The initial term of the agreement expired in May 2019, but pursuant to the terms of the agreement, renews automatically for one-year periods unless notice of non-renewal is provided by either party at least 30 days prior to the renewal term commencement. The agreement was renewed until May 2022.
| 24 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
As compensation under the terms of this agreement, we agreed to pay CRG Finance AG certain fees for transactions which are consummated during the term of the agreement and for a one year period following the termination of the agreement, including:
| · | a fee equal to 7% of the proceeds received by us plus a warrant exercisable into 7% of the shares of our common stock at the offering price of our shares for sales by us of equity or equity-linked securities to non-U.S. Persons introduced to us by CRG Finance AG; |
| · | a fee equal to 1% of the total gross cash proceeds or non-cash consideration received by us, together with a five year warrant exercisable into 1% of the securities issued or to be issued by us in a business combination with a non-U.S. person first introduced to us by CRG Finance AG; |
| · | a fee equal to 1% of consideration received by us in any debt financing not convertible into equity, including, but not limited to, a revolving credit line or credit enhancement instrument, including on an insured or guarantee basis, with a non-U.S. Person first introduced to us by CRG Finance AG; and |
| · | a fee equal to 2% of any revenue-producing contract, fee-sharing arrangement, licensing, royalty or similar agreement with a non-U.S. Person first introduced to us by CRG Finance AG. |
In addition to the foregoing fees, we have agreed to reimburse CRG Finance AG for its pre-approved out of pocket expenses it incurs under the terms of the agreement. The agreement contains customary confidentiality and indemnification provisions.
On February 12, 2020, we entered
a consulting agreement with Primoris Group Inc (“Primoris”). Primoris was issued
common shares at a fair value of
$
($
per share) on June 30, 2020.
shares are restricted from resale or transfer by Primoris per the consulting agreement
until February 12, 2021. The consultant has an option to register 100,000 on any future registration statement. In addition to any restrictions
imposed by the agreement, all the shares require an exemption for resale to the public.
For the years ended
December 31, 2021 and December 31, 2020, we have recorded stock-based compensation of $
and $
, respectively. As of December 31,
2021 and December 31, 2020, $
Under terms of the consulting agreement,
we agree to pay Primoris $
Contingencies
In April 2016, we entered into a Promotion and Royalty Agreement (the “Agreement”) with a consultant to obtain certain promotional services from him (the “Promoter”), including the use of his name and appearance. In consideration for the services rendered by the Promoter, we agreed to use commercially reasonable efforts to promote and sell a book authored by him (the “Book”) and to pay him a percentage of the sales of the Book after deductions for all direct costs of fulfilling such sales (the “Royalty”). During the course of 2017, the Promoter initiated a series of informal claims and filed unauthorized uniform commercial code financing statements (“UCC Liens”) in several states as liens against us and certain of our officers, directors, and founders, alleging non- payment for the Royalty amounts due under the Agreement. We dispute the Promoter’s claims and have determined that any and all amounts due to the Promoter under the Agreement have been paid in full. We have succeeded in removing certain of the UCC Liens and are pursuing action to remove the remaining unauthorized UCC Liens. We do not believe that the claims of the Promoter are valid in any respect.
9. Concentration of Credit Risk and Major Customers and Suppliers
None of our revenues are concentrated with any single customer composing 10% or more of our total revenues.
We purchase our inventory of herbal/natural supplements from one supplier. While we believe that we will be able to find a secondary supplier, there could be a manufacturing delay in the transition to a new supplier and such a supply interruption would materially impact our business for some period of time.
| 25 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
10. Stockholders Deficit
Our authorized capital stock consists of shares of common stock, par value $ per share, and shares of blank check preferred stock, par value $ per share. As of December 31, 2021 and 2020, there are and shares of common stock outstanding, respectively and there are shares of preferred stock issued and outstanding at either date.
Contributed Capital
On September 21, 2020, Mr.
Mannine voluntarily agreed to cancel his employment agreement and waive all cash due and any related accruals. The salary forgiven
for the year ended December 31, 2021 and 2020 of
$
During the year ended December 31, 2020, Mr. Mannine personally paid $
Consulting Agreement
On February 12, 2020, we entered a consulting agreement with Primoris Group Inc (“Primoris”). Primoris was issued common shares at a fair value of $ ($ per share) on June 30, 2020. shares are restricted from resale or transfer by Primoris per the consulting agreement until February 12, 2021. The consultant has an option to register 100,000 on any future registration statement. In addition to any restrictions imposed by the agreement, all the shares require an exemption for resale to the public. The agreement was not renewed upon expiration date.
Preferred Stock
Our board of directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. The rights, preferences, limitations and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and other matters. Our board of directors may authorize the issuance of preferred stock, which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our board of directors can fix limitations and restrictions, if any, upon the payment of dividends on both classes of our common stock to be effective while any shares of preferred stock are outstanding.
Warrants
O
n
Oct
o
b
e
r
1
0
,
2017
,
w
e
entere
d
into t
h
e
F
ina
n
ci
n
g
Agreement w
i
t
h
C
R
G
,
a
s
mor
e
full
y
d
esc
r
ibe
d
i
n
Not
es
4
and 8
.
In connection with the related equity financing as of December 31, 2017, CRG had
earned
fully vested five-year warrants with an exercise price of $
During January 2018, as part of the Private Placement more
fully described in Note 4, CRG earned an additional
fully vested common stock warrants with an exercise price of $
| 26 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
On March 8, 2018, we entered into an advisory agreement with
a scientific advisor to provide certain services to us. Pursuant to the agreement, we issued
five-year common stock warrants at
an exercise price of $
During the years ended December 31, 2021 and 2020, we have recorded
stock-based compensation expense of $
As of December 31, 2021 and December 31, 2020, the intrinsic value for warrants outstanding and exercisable is $ and $ , respectively.
The following table summarizes information about the warrants outstanding and exercisable as of December 31, 2021 and 2020:
| 2021 | 2020 | ||||||||||||
| Warrants |
Weighted Average Exercise Price |
Warrants |
Weighted Average Exercise Price |
||||||||||
| Outstanding, beginning of year |
|
$ |
|
|
$ |
|
|||||||
| Granted | |||||||||||||
| Exercised | |||||||||||||
| Forfeited | |||||||||||||
| Expired | |||||||||||||
| Outstanding, end of year |
|
$ |
|
|
$ |
|
|||||||
| Exercisable, end of year |
|
$ |
|
|
$ |
|
|||||||
As of December 31, 2021
| Warrants Outstanding | Warrants Exercisable | ||||||||||
|
Range of Exercise Price |
Number Outstanding |
Remaining Average Contractual Life (In Years) |
Weighted Average Exercise Price |
Number Exercisable |
Weighted Average Exercise Price |
||||||
| $ -$ |
|
$ |
|
$ | |||||||
As of December 31, 2020
| Warrants Outstanding | Warrants Exercisable | ||||||||||
|
Range of Exercise Price |
Number Outstanding |
Remaining Average Contractual Life (In Years) |
Weighted Average Exercise Price |
Number Exercisable |
Weighted Average Exercise Price |
||||||
| $ -$ |
|
$ |
|
$ | |||||||
In December 2017 our board of directors adopted our 2017 Equity Incentive Plan, or the “2017 Plan.” Our stockholders ratified the 2017 Plan in December 2017. The purpose of the 2017 Plan is to encourage ownership in our company by our officers, directors, employees and consultants, and to incentivize and align the interests of the plan participants with the interests of our stockholders. We have reserved shares of our common stock for issuance under the 2017 Plan. Grants pursuant to the 2017 Plan may be: i) incentive stock options; ii) non-statutory stock options; iii) stock awards, including shares of our common stock and stock units; and iv) stock appreciation rights.
| 27 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
The board of directors or a committee of the board of directors administers the 2017 Plan. Presently, the 2017 Plan is administered by our board of directors. The term of each plan option and the manner in which it may be exercised is determined by the board of directors or a committee of the board of directors, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of grants or any other type of award under the plan are determined by the board of directors or committee of the board of directors at the time of grant. The 2017 Plan provides that the maximum value of any award during any calendar year cannot exceed $1,000,000.
Any option granted under the plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted under the 2017 Plan to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The 2017 Plan further provides that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any plan participant during any calendar year cannot exceed $100,000. Option awards may provide for the exercise by means of cash, consideration received by us under a broker-assisted sale and remittance program, cashless exercise, any other consideration legally permitted, or a combination of the foregoing. The 2017 Plan administrator may also determine the method of payment of the exercise price at the time the option is being exercised. Grants under the 2017 Plan are not transferrable.
Generally, options which are exercisable at the date of the plan participant’s termination from our employment or severance of the relationship with our company must be exercised within three months of the termination date; the plan administrator may extend the exercise period of the option for a separated plan participant providing that the extended date does not go beyond the original expiration date of the option. Similarly, generally options which are exercisable at the date of the plan participant’s disability or death must be exercised within six months of the termination date in the event of the disability of the plan participant or 12 months following the plan participant’s death. In our discretion, any outstanding options held by a plan participant terminated for cause may be immediately cancelled.
In the event there is a “change in control” of our company as defined in the 2017 Plan, as determined by the board of directors or the committee, we may in our discretion: i) provide for the assumption or substitution of, or adjustment (including to the number and type of shares and exercise or purchase price applicable) to, each outstanding award; ii) accelerate the vesting of options and terminate any restrictions on stock awards; and/or iii) provide for termination of awards as a result of the change in control on such terms and conditions as it deems appropriate, including providing for the cancellation of awards for a cash or other payment to the participant.
The number of shares of our common stock underlying any outstanding but unexercised option and the exercise price of that option will be proportionally adjusted in the event of a stock split, stock combinations, dividends, and similar corporate events.
On June 14, 2018, pursuant to the employment agreement with Mr. Mannine, more fully described in Note 8, we issued stock options with an exercise price of $ . Such options fully vest upon the effectiveness of a registration statement on Form S-1. We determined that the options had an initial fair value of $ . We estimated the fair value of these options using the Black-Scholes option pricing model, based on the following assumptions: the recent cash offering price of $0.225 as the estimated fair value of the underlying common stock at the valuation measurement date; no dividend yield for all of the years; expected volatility of %; risk-free interest rate of % and an expected life of years. We amortized the fair value over the period from their issuance on June 14, 2018 through December 7, 2018, the date on which the registration statement was declared effective.
As of December 31, 2021 and December 31, 2020, the intrinsic value for option outstanding and exercisable is $ and $ , respectively.
| 28 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
The following table summarizes information about stock options outstanding and exercisable as of as of December 31, 2021 and 2020:
| 2021 | 2020 | ||||||||||||
| Options |
Weighted Average Exercise Price |
Options |
Weighted Average Exercise Price |
||||||||||
| Outstanding, beginning of year |
|
$ |
|
|
$ |
|
|||||||
| Granted | |||||||||||||
| Exercised | |||||||||||||
| Forfeited | |||||||||||||
| Expired | |||||||||||||
| Outstanding, end of year |
|
$ |
|
|
$ |
|
|||||||
| Exercisable, end of year |
|
$ |
|
|
$ |
|
|||||||
| Options available for future grant, end of year |
|
|
|||||||||||
As of December 31, 2021
| Options Outstanding | Options Exercisable | ||||||||||
|
Range of Exercise Price |
Number Outstanding |
Remaining Average Contractual Life (In Years) |
Weighted Average Exercise Price |
Number Exercisable |
Weighted Average Exercise Price |
||||||
| $ |
|
$ |
|
$ | |||||||
As of December 31, 2020
| Options Outstanding | Options Exercisable | ||||||||||
|
Range of Exercise Price |
Number Outstanding |
Remaining Average Contractual Life (In Years) |
Weighted Average Exercise Price |
Number Exercisable |
Weighted Average Exercise Price |
||||||
| $ |
|
$ |
|
$ | |||||||
12. Subsequent Events
On January 26, 2022, the Company
executed a note payable to an individual in the amount of $
On February 10, 2022, the Company
executed a note payable to an individual in the amount of $
| 29 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluatio n o f Discl o sur e Co n trol s an d Proced u res
Ou r managemen t i s responsibl e fo r e s t ablishi n g a n d maintai n ing ad e quat e “ d i sclosur e control s an d procedures, ” a s suc h ter m i s define d i n Rule s 1 3 a-15(e) and 15d-15(e) o f the S ecuritie s Excha n ge Ac t o f 19 3 4 (th e “Exc h ang e A c t ”) , tha t a re designe d t o e nsur e tha t informatio n requi r ed to be discl o s ed b y us in re p orts t h at we file o r submi t unde r th e E x chang e Ac t i s recor d e d, processed , summarized , an d reporte d w ithi n th e t im e per i o d s specifie d i n S E C r u les and fo rms , an d tha t suc h informat i o n i s acc u m u late d an d communicat e d to our ma n agement, incl u di n g ou r Chie f Ex e cutiv e Office r an d Chie f Fi n ancia l O f ficer , as appropriate , t o all o w timel y d ec i s ion s regardin g re q u ire d disclosure . Ou r manag e m e nt ha s concl ud e d t h a t o u r d isc l o s u re c o n t r o l s a n d pro c edure s wer e not effe c tive as of t h e e n d of the p erio d cov e re d b y thi s Repor t t o p r o vide the reasonable ass u r a nce disc u ssed ab o ve.
Mana g ement' s Annu a l Repor t o n I nt erna l Co n tr o l Ove r Finan c ia l Re p orti n g
Ou r managemen t i s responsibl e fo r e s t ablishi n g a n d maintai n ing ad e quat e interna l co n t ro l o v e r f inancia l rep o r tin g ( a s suc h te rm is define d in Ru l e s 13a-15 ( f) unde r th e E x chang e Act) . Ou r managemen t as s e s se d th e eff e ctiven e ss o f o u r interna l co n t ro l o v e r financia l reportin g a s o f De c em b e r 31 , 2021 . I n makin g this as s e s sment , o u r manageme n t use d the cri t e r i a se t for th b y th e Committe e o f S p onsori n g Organiza t i o ns of t h e Tr eadway Commission in Interna l Contro l- Integrate d Framewor k (20 1 3).
Ou r managemen t ha s c o n clude d th a t a s o f Decembe r 31 , 2021 , ou r interna l c o n tro l ove r financia l re p o rtin g w a s no t effe c tiv e t o provid e reasonabl e assurance r egard ing th e re l iabil i t y o f f i nancia l reportin g a n d th e prepar ati o n o f fi n ancial st a tements f o r externa l p u r p o se s i n accordan c e with U.S. generally ac c ept e d accountin g principle s a s a resul t o f mater i a l w e aknesses . Thes e materia l weaknesse s i n ou r i n t e r na l contro l ove r fin a nci a l reportin g resul t fro m n o segregation o f duties , n o mu l tip le leve l o f revie w i n th e f i n ancia l clos e proces s a n d lac k o f e xperi e n ce d accou n tin g staf f wit h e xpertis e i n th e applic a t io n o f GAA P . T h ese wea k nesse s ar e primaril y d u e t o our lack of emplo y ees a n d q ual i fie d staff.
In orde r t o remediat e thes e mat e ria l weak n es s e s i n o ur interna l contro l o v e r financia l report i ng , w e wi ll nee d t o:
| · | create a position to segregate duties consistent with control objectives and will increase our personnel resources; and |
| · | hire experienced independent third parties or consultants to provide additional expert advice as needed. |
Un ti l suc h t im e a s w e r e m ed i at e t h e materi a l we aknesse s i n ou r i n ternal contr o l over fina n c ial reporting , ther e i s a likelihoo d tha t ou r f in anc i a l s t atement s in futur e period s ma y contai n error s w h i c h wil l req u ir e a restate m ent . Fo r f isca l y ea r 2020 , w e h a v e mad e effort s t o mit i ga te thes e weak n esse s i n ou r internal contr o l over fina n c i a l r e portin g result s b y hirin g a c o nsultan t t o revie w o u r fi n ancial s o n a qu arterl y an d annua l basis . W e b e l iev e th is ste p wi ll hel p t o m it i ga te i s sue s tha t ma y ari se fro m a l i mi t e d staff.
Ch a n ge s i n Inter n a l Contro l Ove r F i n a ncia l Reporting
Ou r managemen t ha s d e t ermine d th a t t h er e wer e n o c h ange s mad e i n th e implementatio n o f o u r inter n a l control s ov e r fi n ancia l reporti n g d u r in g th e y ear ende d Decembe r 3 1 , 2021.
Attestatio n Rep o r t o f I n depe n d en t Pu b l i c Ac c ountin g Firm
Thi s a n nua l repor t d o e s n o t includ e a n attest a t io n repor t o f ou r registere d p ubli c acco u n tin g f i r m r e g ardin g interna l co n t ro l o v e r financia l reportin g b ecaus e as a smalle r reportin g compa n y w e ar e n ot subjec t t o attestatio n b y ou r in d epende n t regi s tere d publi c a c counti n g fir m pursuan t t o rules of t h e S ecurities a n d Exchang e C ommi s sio n tha t permi t u s t o provid e onl y managemen t ’ s repor t i n thi s a nnua l rep o rt.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The dir e ct o rs hold o ffic e unti l th e ne x t annua l m e etin g o f stock h ol d er s an d unti l t h ei r successor s a re electe d an d qualified . An y dir e cto r ma y r esig n hi s o r her o f fic e a t an y tim e an d ma y b e remov e d a t a n y tim e b y th e holder s o f a m a j orit y o f t h e share s the n entitl e d t o vote . T h e Boar d o f Dire c tor s appoint s the executi v e o f ficers , an d th e e x ecuti v e officer s serv e a t th e pl e asur e o f th e Company’ s Bo a rd o f Directors.
Th e di r e ct o rs an d executiv e of f icers , thei r ag e s, position s he l d , an d duratio n o f suc h ar e a s follows:
| Name | Age | Positions | ||
| Alex J. Mannine | 33 | Chief Executive Officer, Secretary, Director | ||
| Stanislav Bezusov | 34 | Executive Vice President, Chief Technology Officer, Chief Operating Officer, Director | ||
| Sergei Stetsenko | 51 | Director |
Ale x J . Mannine . Mr . Ma n ni n e h a s serve d a s a membe r o f ou r boar d o f director s a n d o u r Chief Ex e c utive Office r sinc e co-fou n din g o u r compan y i n J u ly 201 5 . Prior to foun d ing our company, M r . Mannin e wa s th e fo u nde r o f T h e Iro n Wing , Inc. , a n indepen d en t new s n etwor k focuse d o n lo n g-ter m in v esting, r etirem e nt plannin g an d healt h y livi n g , fro m Decembe r 201 4 t h r o ug h Jun e 2015 . F r o m 201 1 throug h Decembe r 2 013 , Mr. Ma n ni n e was i nit i all y a Di r ec tor of Transmedi a Operation s o f Am e r ica n Lant e rn Pres s an d th e r e a f te r the D i rec tor of Di gi t al Use r Experienc e a t it s Mo n eyMetals.com , a gol d an d s ilve r b ullion company. Mr. M a nni n e rec e ived his Bach e l o r o f Art s i n W e b Desig n & Interact ive Medi a f r o m Th e Ar t Inst i tut e o f C h ar lo tt e i n 2 0 10 . Ou r boar d o f directors ha s c o ncl u de d th a t base d upo n M r . Man n ine’ s specifi c experience , qualificatio n s, attribute s an d s kill s a s th e co-founde r o f b o t h ou r compan y an d T h e Iron Wing , Inc. , Mr . Mannin e is servin g a s a me m b e r of the bo a rd of dire c t or s o f ou r compan y .
Sta n islav Bezuso v . Mr . Bez u so v h a s serve d a s Exec u t i v e Vic e President , Chie f Te c hnolog y Office r a n d Chie f Operati o ns Office r of o u r compa n y sin c e co- fo u ndin g th e compan y i n Jul y 20 1 5 a n d as a memb e r of o ur bo a rd o f dire c tor s sinc e Jun e 20 1 8 . F ro m Jul y 201 5 unti l Jul y 2 0 1 7 M r. Bezus o v wa s a l s o a memb e r of o ur bo a rd of dire c tors . Fro m 201 0 unti l co-foundin g ou r compan y i n 20 1 5 , Mr . Bezuso v w a s sel f -employe d a s a so f twar e d eveloper . Mr . Bezusov re c e i v ed h is BS in Applied Mat h e ma t ic s i n 200 7 an d hi s M a s ter s in C o m p ut e r Sciences in 2 0 08 fr o m Vas y l Stefany k Precarpathia n N ationa l Universi ty in Iv a no-Frankivsk , Ukraine . Ou r b o ard of dir e c t o rs has concluded tha t base d up o n Mr . Bezusov’ s specifi c experience , qualificati on s , attribute s an d skill s a s the co-f o unde r o f ou r compan y an d a softwar e developer , Mr . Bezuso v i s servin g a s a membe r o f t h e b o ar d o f dir e ctor s o f o u r compa n y.
Serge i Stetsenko . Mr. S tetsenk o , a c o-fo u nder o f ou r company , h a s b e e n a membe r o f ou r boar d o f director s sinc e A p ri l 2 0 16 . Sinc e 200 8 Mr . Stetsenk o has bee n th e Chie f E x ecutiv e Office r o f CR G Financ e AG , a Zug , Swi t z e r lan d - b a s e d p r ivat e ventur e c a pita l investmen t c o m p an y whic h invest s i n smal l and midsize d companie s i n Nort h A m e r ica , Europe , Commonwealt h o f I n depende n t State s (CI S ) , Afric a a n d Brazil. S in c e Ju n e 2 0 17 h e ha s serve d a s a member o f th e boar d o f director s o f Bl ockch a inK2 C o r p . ( T SXV: BI T K), an d sinc e Apri l 2 01 7 h e ha s serve d a s a membe r o f th e boar d o f d irector s o f Gre a t b a nks R esource s L td . (TSX V: G T B ) . Ou r board o f directors con c lud e d t h at b ased upon his specific ex p e r i en c e , qualifications , attribut es a n d skills as the co-found e r o f ou r compan y an d hi s senio r e xecutiv e p o sition s wit h previou s companies , Mr . Stetsenk o i s servin g a s a direct o r o f ou r comp a ny.
Fa mi ly R e l a t io n s h i ps
Ther e ar e n o famil y relationship s betwe e n a n y o f ou r director s and/or ex e cutive offi c e rs.
I n volvemen t i n Certai n Leg a l Pr o ceedings
T o ou r k nowle d g e , ou r director s an d executiv e o f ficer s h av e no t bee n involve d i n a n y o f th e foll owing eve n ts duri n g the past t e n years:
| 1. | any ba n kruptcy p etition filed b y o r agains t suc h perso n o r a ny b u s ines s o f whic h suc h perso n w as a g enera l partne r o r exe c ut iv e offic e r eit h e r at th e t im e o f th e bankruptc y o r wi th i n t wo year s pr ior to tha t ti m e ; |
| 2. | any co n vi c t i on in a cr i mi nal p ro c eeding or be in g subjec t t o a p e nding c rimi n a l procee d ing (ex cludin g t r affi c v i olati o n s a n d othe r minor offenses); |
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| 3. bein g subjec t t o an y order , judgment , o r d ecree , no t subsequentl y re v e r se d , suspende d o r vacated , o f an y cour t o f competen t jurisd i ction, permane n tl y o r temporaril y enjoin i n g hi m fro m o r o therw i s e l i mitin g hi s involvemen t in an y typ e o f b u s iness , sec u riti e s o r bankin g activitie s or t o b e a s s o ciate d wit h an y perso n pr a c ticing in ba n king or secu ri t ie s ac t ivi t ies; |
| 4. | bein g foun d b y a cour t o f competen t juri s dictio n i n a c ivi l ac t ion , th e SE C o r th e Co mmodit y F ut u r e s Tra d i n g Commissio n t o hav e violate d a F e dera l o r s tat e s e curitie s o r c ommoditie s law , an d th e ju d g men t ha s no t b ee n r e v er s e d , suspend e d , o r v acated; |
| 5. | being subject of, o r a part y to , an y Fe d era l o r stat e judicia l o r administrativ e order , judgmen t decree , o r fin d ing , no t subse q u entl y reversed, suspe n ded or va c ate d , relating to a n alle g e d v i olati o n o f an y F ed e r a l o r stat e sec u r itie s o r c om m od i tie s la w o r regula t ion , an y la w o r regulation respectin g f inanc i a l in sti t ution s o r insuranc e companies , o r an y l a w o r reg u l atio n prohi b i tin g mai l o r wir e fra u d o r fr a u d i n conn e ctio n wit h any busines s ent i ty ; or |
| 6. | bein g subjec t o f o r p art y t o a n y san c tio n o r ord e r, n ot subseq u entl y reversed , suspe n ded , o r vacated , o f an y sel f -regulator y organization , any regist e r e d e n t it y o r an y equivalen t e x change , as s o ci a tion , e n t i t y o r organizati o n tha t h a s disc i plinar y authori ty ove r it s m e mbe rs or per s o ns associate d wit h a member. |
Boa r d Committees
W e hav e no t establ i she d a n y co m mit t ee s o f ou r b oa rd of di r ec t ors , includin g a n audi t committee , a compensatio n c o mmitte e o r a nom i natin g comm i t t ee , or an y com m it t e e p erformin g a si m il ar fun c tion. T he f u nctions of t hos e commi t tee s ar e b e i n g unde r tak en b y th e boar d o f director s a s a whole . Becaus e w e d o n o t hav e an y in d epende n t dir e ctors , w e belie v e tha t th e establishmen t o f thes e committee s woul d b e mor e for m tha n substance.
Our securities a re no t quote d o n a n e x chang e tha t ha s requirement s tha t a maj o r it y o f ou r boar d m e mb e rs be i n depend e nt, a nd we ar e no t currentl y otherwi se s u bj e c t t o a n y l a w , r u l e or re gu l atio n requirin g tha t al l o r an y portion of our b oard o f direct o rs incl u de “ i n d epende n t” direc t o r s , n or are we r equire d t o establish o r main t a in a n audi t commi t te e o r o the r comm i ttee s o f ou r boar d o f director s.
Also , Mr . Stetsenko , o n e o f ou r d ire c tors, is c o nsid e r e d an "a u d it com m it t e e financia l exper t" w i thi n the meanin g o f Ite m 401(e ) o f Reg u latio n S-K.
Co d e of E t h i cs
W e hav e adopte d a Cod e o f Busines s Con d uc t an d Ethic s tha t app l i e s t o o u r Presiden t an d Chie f Executiv e Office r an d Chie f Operatin g Of f icer , a n d which wil l appl y t o ou r Chie f Fi n ancia l Office r o r an y othe r person s pe r formin g s imi l a r funct i ons , if an d w h e n suc h pos i tion s ar e hi red b y us. T his c o de p ro v id e s w ri t te n s t andard s tha t we beli eve are reason a bly designed to de t e r wr o ngdoing and pro m ote ho n est and ethi c a l con d uct, in c ludi n g th e ethica l handli n g of act u a l or a pparent c o nflicts of i n teres t b e t wee n persona l an d profes s ion a l relationships , an d full , fair , accurate , tim e ly an d und e rstanda b le disc l o sure in re p orts we f i l e w it h t h e Secu r it i e s E xchang e Com m iss i on.
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ITEM 11. EXECUTIVE COMPENSATION
Th e followin g tabl e se ts forth inform a tion concernin g th e c o mpensatio n o f ou r p rincipa l e xecuti v e o ffi cer f or t h e c u r re nt r e p ortin g perio d i s a s foll o w s:
| Name and principal position | Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
No equity incentive plan compensation ($) |
Non-qualified deferred compensation earnings ($) |
All other compensation ($) |
Total ($) |
|||||||||||||||||||||||||
| Alex J. Mannine, | 2020 | 130,000 | — | — | — | — | — | — | 130,000 | |||||||||||||||||||||||||
| Chief Executive Officer | 2021 | 130,000 | — | — | — | — | — | — | 130,000 | |||||||||||||||||||||||||
Employme n t Agreeme n t s o r Arrange m ents
Ale x J . Mannine . Mr . Mannine’ s compensati o n h a s h i s t o r icall y b ee n de t e r mine d b y the bo a rd of dire c tors of which h e i s a member . I n Jun e 2018 , w e entered int o a n em p l o y m e n t agreemen t wit h Mr . M a nni n e p u r s u a nt t o w h i ch h e wa s enga g e d t o serv e a s ou r C h i e f Exe c u tiv e O f ficer . Th e ini t ia l t er m o f th e agreement expir e s in Ju n e 2 0 23, subject to successiv e aut o m a t i c one-yea r r e n ew a l s unles s a non-renewa l n otic e i s receive d b y eithe r part y a t le a st 9 0 day s p rio r t o the expir a tion of the t h e n c u r r en t renewa l ter m. Mr . Mannine’ s co m pensatio n includes:
| · | an annual base salary of $130,000, subject to an annual review with an increase of at least 5% per annum as determined by the board of directors; |
| · | an annual bonus as determined by the board of directors; |
| · | a grant of 10-year options to purchase 100,000 shares of our common stock at an exercise price of $0.225 per share which vest upon the effectiveness of the registration statement; |
| · | participation in all benefit plans we may offer our employees; and |
| · | 20 paid vacation days annually. |
Mr . Mannine' s employmen t a g re e m e n t may be termi n a t e d, and he is entitle d t o certai n pa y me n ts upo n suc h termination , a s f o llow s :
| · | if we should terminate Mr. Mannine’s employment without “cause” or if he should resign for “good reason" or if a “change of control” occurs, we are obligated to pay him a lump-sum severance payment equal to the sum of three months’ base salary, plus one month for every year he was employed and 50% of three years annual bonus (based on the prior year’s compensation); |
| · | if Mr. Mannine’s employment is terminated as a result of his death or disability, he is entitled to receive his base salary and a pro-rata annual bonus, if any, based on the year during which such termination is effective; or |
| · | if we should terminate Mr. Mannine for “cause,” or if he voluntarily terminates the agreement, he is entitled to receive his base salary only through the date of termination, and he is not be entitled to any other compensation for the calendar year during which the termination occurs or any subsequent calendar period, including, but not limited to, any annual bonus, if any, that has not already been paid. |
Th e employmen t agre e m e n t wit h M r. Mannin e contai n s customar y confi d entiality , non-compet e a nd ind e m n ification clauses. On September 21, 2020, Mr. Mannine voluntarily agree to cancel the employment agreement.
During the years ended December 31, 2021 and 2020, Mr. Mannine voluntarily agreed to waive all cash due and any related accruals. The salary forgiven for the years ended December 31, 2021 and 2020 of $130,000 and $119,483 are included as part of selling, general and administrative expense. The salary forgiven is treated as in-kind contribution of service and reflected as contributed capital in the financial statements.
Sta n islav Bezuso v . W e ar e n o t a part y t o a n employmen t agreemen t wit h Mr . Bezuso v an d t h e c o m p ensatio n h e i s pai d f o r hi s service s w h i c h i s i n the for m of consultin g fee s i s det e r mine d b y t h e b o a rd o f di r e c tors . I n 2021 an d 2020, w e p ai d Mr . Bezuso v $0 an d $2,000 , resp e ctively , i n consultin g fees.
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O u t s tan d i n g e q uity awar d s at fiscal y e ar-end
Th e followin g tabl e provide s informatio n co n cerni n g u n exercise d o ptions, stock that h a s no t v este d an d equit y inc e n tiv e pla n a w ard s fo r e a c h n a m e d executi v e o f f icer o utstand i n g a s o f Decembe r 31 , 2021 :
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||||
| Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
|||||||||||||||||||||||||||
| Alex J. Mannine | 100,000 | — | — | 0.225 | 12/6/28 | — | — | — | — | |||||||||||||||||||||||||||
Directo r Compensation
W e hav e n o t p ai d a n y compensatio n t o ou r d i r e c tor s a s o f Decemb er 31, 2021. O ur board of dir e ct o rs has n o t a d opt e d a dir e c t o r c o m p ensation policy. We did no t c om p ensat e ou r d ire c tor s fo r t h e i r service s o n th e boar d d urin g 2021 an d 20 20 .
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Th e followin g tabl e se ts forth inform a tion regardin g beneficia l ownershi p o f ou r c a p ita l stoc k by:
| · | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock; |
| · | each of our directors; |
| · | each of our named executive officers; and |
| · | our named executive officers, directors and director nominees as a group. |
Th e percentag e ownershi p informatio n i n th e tabl e belo w i s base d o n 11,599,83 0 s h are s o f commo n stoc k outstandin g a s o f March 31 , 2022.
Unles s ot h e r wis e indicated , th e busines s a d dres s o f eac h perso n list e d i s i n car e o f 596 Herrons F erry Ro a d , S uit e 301 , Roc k H ill , Sout h Carolin a 2 9730 . The percentage s i n th e tabl e hav e bee n calculate d o n th e basi s o f t reatin g a s outstandin g f o r a particula r per s o n , al l share s o f o u r commo n s toc k outstandin g o n that date and all shares of o u r common sto c k issuabl e t o tha t holde r i n th e even t o f exercis e o f outstandin g options , warrants , ri g hts or c onversi o n privil e ges owned b y tha t perso n a t t h a t dat e whic h ar e exerci s a b l e withi n 6 0 day s o f tha t date . Excep t a s o the r wis e indicated , th e p er s o ns li s t ed below h a ve s o le voti n g a n d inv e stmen t p ow e r wit h respec t t o al l share s o f ou r c ommo n stoc k owne d b y them , e x cep t t o th e ex t en t th a t powe r ma y b e share d w it h a spouse.
| Common Stock | ||||||||
| Name and Address of Beneficial Owner | Shares | % | ||||||
| Alex J. Mannine (1) | 2,738,889 | 24.0 | % | |||||
| Sergei Stetsenko (2) | 2,750,000 | 24.1 | % | |||||
| All officers and directors as a group (three persons) (1)(2) | 5,874,655 | 51.9 | % | |||||
———————
| (1) | The number of shares beneficially owned by Mr. Mannine includes 2,638,889 shares held of record by Bring Forth Good LLC, an entity over which has sole voting and dispositive control. The number of shares beneficially owned by Mr. Mannine include 100,000 shares of our common stock underlying a vested option exercisable at $0.225 per share, which expire on December 6, 2028. |
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| (2) | The number of shares beneficially owned by Mr. Stetsenko includes 385,766 shares issuable upon the exercise of a warrant exercisable at $0.225 per share expiring in January 2023 held of record by CRG Finance AG. Mr. Stetsenko has voting and dispositive control over securities held of record by that entity. |
The following table provides information as of December 31, 2021 about the Company’s equity compensation plans.
|
Number of securities to
be issued upon exercise of outstanding options, warrants and rights |
Weighted average
exercise price of outstanding options, warrants and rights |
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
||||
| (a) | (b) | (c) | ||||
| Equity compensation plans approved by security holders | 100,000 | $0.225 | 1,000,000 (1) | |||
| Equity compensation plans not approved by security holders | — | — | — | |||
| Total | 100,000 | $0.225 | 1,000,000 (1) |
———————
| (1) | Shares issuable pursuant to the 2017 Equity Incentive Plan. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
On May 21, 2018, we entered into an Amended and Restated Strategic Financing & Corporate Development Agreement with CRG which was amended and restated an earlier agreement entered into in October 2017. We have engaged this company to serve as our non-exclusive strategic financing and corporate development services provider and to render certain advice and services to us as we may reasonably request concerning equity or debt financings, strategic planning, merger and acquisition possibilities, and business development activities. The scope of services under this agreement also includes introducing us to one or more non-U.S. persons, as that term is defined in Regulation S under the Securities Act, in connection with possible debt or equity financings or potential lenders. The initial term of the agreement expired in May 2019, but pursuant to the terms of the agreement, renews automatically for one-year periods unless notice of non-renewal is provided by either party at least 30 days prior to the renewal term commencement. The agreement was renewed until May 2022.
A s compensatio n u nde r th e term s o f thi s a g r e e m e n t , w e agree d t o p a y CR G Financ e A G certai n fee s f o r tr a nsaction s whi c h ar e consummate d dur i n g th e te rm o f th e agreemen t an d fo r a o n e y e ar period f o llo w i n g th e t e r min ati o n o f the a gr e e ment, in c lu d ing:
| · | a fee equal to 7% of the proceeds received by us plus a warrant exercisable into 7% of the shares of our common stock at the offering price of our shares for sales by us of equity or equity-linked securities to non-U.S. Persons introduced to us by CRG Finance AG; |
| · | a fee equal to 1% of the total gross cash proceeds or non-cash consideration received by us, together with a five year warrant exercisable into 1% of the securities issued or to be issued by us in a business combination with a non-U.S. person first introduced to us by CRG Finance AG; |
| · | a fee equal to 1% of consideration received by us in any debt financing not convertible into equity, including, but not limited to, a revolving credit line or credit enhancement instrument, including on an insured or guarantee basis, with a non-U.S. Person first introduced to us by CRG Finance AG; and |
| · | a fee equal to 2% of any revenue-producing contract, fee-sharing arrangement, licensing, royalty or similar agreement with a non-U.S. Person first introduced to us by CRG Finance AG. |
I n additi o n t o t h e foregoin g fee s , w e h av e agree d t o reim b u r se C RG F i nanc e AG fo r i ts pre-approve d ou t o f p o cke t ex p ense s i t incur s unde r th e term s o f the agreement . Th e agreemen t contain s customar y confident i ali ty an d indemnificatio n provisions.
Othe r th a n a s disc lo se d ab o v e , t here h as b e e n n o transacti o n d u ring the p e riod co v er e d by this report , o r curr e n tl y propose d t r a nsaction, in whi c h we w e re or a re t o b e a parti c ip a nt an d th e a m o u n t involve d excee d s th e lesse r o f $ 1 20, 0 0 0 o r on e percen t o f o u r to t a l asse ts a t yea r -en d fo r th e las t complete d f isca l y ear, and in whi c h a n y of t h e follow i n g person s ha d o r wil l hav e a d i rec t o r indi r e c t mate r ia l interest:
| (i) | A n y directo r o r executiv e office r o f ou r company |
| (ii) | An y perso n wh o benefici a l l y o w n s, dire c tl y o r indirectly , s h a re s carryin g mor e tha n 5 % o f th e v oting ri g hts atta c hed to o u r out s tan d i n g share s of com m o n stock; |
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| (iii) | Any of our p r o moters an d contr o l persons ; a n d |
| (iv) | Any membe r o f th e i mmediat e famil y (incl u di n g spo u se , parents , chil d r e n, si b l ing s an d in - laws ) o f an y o f t h e foregoin g persons. |
During the years ended December 31, 2021 and 2020, we paid Mr. Bezusov $0 and $2,000, respectively, in consulting fees pursuant to a verbal agreement with him. We are not a party to an employment agreement with Mr. Bezusov and the compensation he is paid for his services is determined by the board of directors.
On September 21, 2020, Mr. Mannine voluntarily agreed to cancel the employment agreement and waive all cash due and any related accruals. The salary forgiven for the years ended December 31, 2021 and 2020 of $130,000 and $119,483 are included as part of selling, general and administrative expense. The salary forgiven is treated as in-kind contribution of service and reflected as contributed capital in the financial statements.
During the year ended December 31, 2020, Mr. Mannine personally paid $3,040 of company expenses. This is reflected as contributed capital in the financial statements.
Directo r Inde p ende n c e
W e d o n ot presentl y h a ve a n y inde p enden t directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Ligget t & W ebb , P .A. , serve d a s o u r indepe n d en t registere d publi c acc o untin g fi rm fo r 2 021 an d 2020 . Th e followin g ta b le show s the fee s t h a t wer e bi lle d f or the audit a n d other servi c es p rovide d b y suc h fir m f o r 2021 an d 20 20 .
| 2021 | 2020 | |||||||
| Audit Fees | $ | 24,065 | $ | 24,423 | ||||
| Audit-Related Fees | — | — | ||||||
| Tax Fees | — | — | ||||||
| All Other Fees | — | — | ||||||
| Total | $ | 24,065 | $ | 24,423 | ||||
Audi t Fee s — Thi s categor y include s th e a udi t o f ou r a nnua l financia l st a tements , r ev i e w o f financia l statement s include d i n ou r For m 1 0-Q Qu a r terl y Report s an d service s th a t ar e n or mall y p r o vi de d b y th e i n depend e n t auditor s i n conne c tio n w it h engagement s fo r t hos e fisca l years . Thi s category als o include s a dvic e o n au d i t an d accountin g matter s tha t aros e during , o r a s a resu l t of , th e audi t o r th e revie w o f interi m financia l stat e m e n ts.
Audit - Rela t e d Fee s — Thi s categ o ry consist s o f ass u rance and r e lated servi c es by th e in d epende n t audit o r s tha t a r e reasonabl y r e lated to the perf o rman c e of t h e a u dit or rev ie w of ou r f inanc i a l s tatement s a n d are not re p orted abo v e u n d e r “Audi t F e es. ” T h e service s f o r th e fee s discl o se d u nde r this cat e gor y includ e fee s r elate d t o ou r S- 1 Registr a t io n Stat e m e n t f i l ed w i t h the S E C.
Tax Fees — Thi s cat e gor y c o nsist s o f pro f essi o n a l service s re n dere d b y o ur indepe n d en t au d i tor s fo r t a x c o m plianc e an d ta x a dvi c e . Th e service s f o r th e fee s disclose d und e r thi s categor y i n cl u d e tax ret u rn prep a ratio n an d tec h ni c a l ta x a dvi c e .
All O th e r F e es — Thi s categor y consist s o f f ee s fo r o the r m iscellaneou s i tem s.
Ou r Bo a rd o f Director s ha s ado p t e d a procedur e fo r pre-ap p r o v a l of all f e es ch a rg e d by o u r ind epen d en t au d i tors . Unde r th e proced u r e , th e Board approve s th e en g agemen t lett e r w i t h r e s p ec t t o a udit , ta x an d revie w services . Ot h e r fee s a re subjec t t o pre-approva l b y th e Board , or , i n th e perio d betwe e n me e tings, by a designated m e mb e r o f Board . An y suc h appro v a l b y t h e d e s ign a te d membe r i s disclose d t o th e entir e B o ar d a t th e ne x t meeting . Th e audi t fees pai d t o th e auditor s wit h respec t t o 2021 an d 2020 wer e pre- a pproved by t h e e n tire B oar d o f Di r e c t ors.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Annual Report.
Exhibits:
| Exhibit | Incorporated by Reference |
Filed or
Furnished |
||||||||
| No. | Exhibit Description | Form | Date Filed | Number | Herewith | |||||
| 31.1 | Certification of Chief Executive Officer, principal executive officer, principal financial and accounting officer | Filed | ||||||||
| 32.1 | Certification of Chief Executive Officer, principal executive officer, principal financial and accounting officer | Filed | ||||||||
| 101.INS | XBRL Instance Document | Filed | ||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
ITEM 16. FORM 10-K SUMMARY.
We may voluntarily include a summary of information required by Form 10-K under this Item 16. We have elected not to include such summary information.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Vynleads, Inc. | ||
| By: | /s/ Alex J. Mannine | |
|
Alex J. Mannine, Chief Executive Officer Dated: March 31, 2022
|
||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Alex J. Mannine | |
|
Alex J. Mannine Chief Executive Officer, director, principal executive officer, principal financial and accounting officer Dated: March 31, 2022
|
||
| By: | /s/ Stanislav Bezusov | |
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Stanislav Bezusov Executive Vice President, Chief Operating Officer and Chief Technology Officer, director Dated: March 31, 2022 |
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