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 |
| N/A | N/A | N/A |
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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Yes
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Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
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Yes
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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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Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted and to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
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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.
| Large accelerated filer ☐ | Accelerated filer ☐ |
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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
to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act).
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Yes
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As of March 21, 2023, 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 sell products through our websites at www.constitutionalhealth.com, www.wearedwd.com, and www.dwdprotocol.com. We utilize digital media, primarily paid search, paid social, affiliate marketing and display advertising to drive traffic to our web site. We also use social networking sites, including Facebook, Twitter, and various blogs. In 2022 and 2021 we spent $0 and $0, respectively, on advertising.
We seek to market our products using direct to consumer online sales through multiple channels. Social media, search engines, and content platforms, principally Facebook, as well as Instagram, Google, and YouTube, have historically been our principal sources for acquiring new customers. In the case of paid advertising, we use both internal (managed by us) and external (managed through affiliates or partner advertisers) advertising accounts.
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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We also own the domain names www.vynleads.com, wearedwd.com, dwdprotocol.com, codexone.org, and www.constitutionalhealth.com, together with a number of additional domain names which we may use in future periods. However, as with phone numbers, we do not have and cannot acquire any property rights in an Internet address. The regulation of domain names in the United States and in other countries is also subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names, which could harm our 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 25, 2023 , 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, 2023 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, 2023.
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 2022 and 2021.
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 $2,260,901 a s o f Decembe r 31 , 2022 . 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, 2 022 c o m p ared to t h e y e ar fi s c al ended December 31, 2 0 21
Reve n ues
Reve n u e s fo r 2022 wer e $49 , a decrease of $435 , or 89.8 % , fro m $484 i n 20 21 . 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 5,960 , or 2.23 % , to $261,297 in 2022 fr o m $267,257 i n 2 021 . 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 $3,270 , or 10.07%, to $29,197 in 2022 compared to $32,467 in 20 21 . 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. |
| · | Selling, general and administrative expenses decreased $2,690, or 1.15%, to $232,100 in 2022 from $234,790 in 2021. The decrease in SG&A is principally attributable to decreases in consulting and accounting expenses, legal expenses, office expenses and general expenses. |
Net L o ss
Our net loss for t h e y e ar en d ed Decemb e r 31, 2 022 was $273,624 compare d t o $271,581 fo r th e y ear e n ded De c ember 3 1 , 2021.
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 , 2022 a s compare d t o Decemb e r 31 , 2 021.
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December 31, 2022 |
December 31, 2021 |
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| Total current assets | $ | 24,328 | $ | 25,390 | ||||
| Total current liabilities | $ | 659,817 | $ | 517,256 | ||||
| Working capital deficit | $ | (635,489 | ) | $ | (491,866 | ) | ||
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, 2022 and 2021, we have reported net losses of $273,624 and $271,581, respectively. As of December 31, 2022, our working capital was a deficit of $635,489, our accumulated deficit was $2,260,901, and we had negative cash flows from operations of $123,693 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, 2022 |
December 31, 2021 |
|||||||
| Net cash used in operating activities | $ | (123,692 | ) | $ | (130,513 | ) | ||
| Net cash provided by investing activities | $ | — | $ | — | ||||
| Net cash provided by financing activities | $ | 122,479 | $ | 125,000 | ||||
The increase in cash used in our operating activities in 2022 as compared to 2021 is due to an increase in net loss and courtesy PPP loan credit offset by increases in accounts payable and capital contribution 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 2022 a n d 2 0 21.
Net cash provided by financing activities during 2022 reflects proceeds from notes payable.
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. | |
| Report of Independent Registered Public Accounting Firm (Assurance Dimensions, PCAOB ID #5036) | 12 |
| Report of Independent Registered Public Accounting Firm (Liggett & Webb, P.A., PCAOB ID # 287) | 13 |
| Balance Sheets at December 31, 2022 and 2021 | 14 |
| Statements of Operations for the Years Ended December 31, 2022 and 2021 | 15 |
| Statements of Stockholders’ Deficit for the Years Ended December 31, 2022 and 2021 | 16 |
| Statement of Cash Flows for the Years Ended December 31, 2022 and 2021 | 17 |
| Notes to the Financial Statements for the Years Ended December 31, 2022 and 2021 | 18 |
| 11 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Vynleads, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Vynleads, Inc. (the Company) as of December 31, 2022, and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has experienced recurring operating losses since inception and negative cash flows from operations and has financed its recent working capital requirements primarily through the issuance of debt. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters to be communicated 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 did not identify critical audit matters that need to be communicated.
We have served as the Company’s auditor since 2022.
March 21, 2023
| 12 |
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 t o f Vynleads , Inc . (th e “Company” ) a s o f D e ce m be r 3 1 , 2021 , t h e relate d statement s of operations , stockh o lders ’ deficit a n d c as h flow s fo r the year 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 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 the year 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 . As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. 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
| 13 |
Vynleads, Inc.
Balance Sheets
| December 31, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ |
|
$ |
|
||||
| Accounts Receivable | ||||||||
|
Holdback Receivable from merchant, net of reserve for refunds of $
|
|
|
||||||
| Prepaid Expenses and other current assets |
|
|
||||||
| Total current assets |
|
|
||||||
| Total assets | $ |
|
$ |
|
||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ |
|
$ |
|
||||
| Notes Payable |
|
|
||||||
| Notes Payable – Related Party |
|
|
||||||
| Total current liabilities |
|
|
||||||
| Total liabilities |
|
|
||||||
| 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 issued and outstanding |
|
|
||||||
| Additional paid-in capital |
|
|
||||||
| Accumulated deficit |
(
|
) |
(
|
) | ||||
| Total stockholders' deficit |
(
|
) |
(
|
) | ||||
| Total liabilities and stockholders' deficit | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these financial statements.
| 14 |
Vynleads, Inc.
Statements of Operations
| For the year ended | ||||||||
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue, net of refunds and chargebacks | $ |
|
$ |
|
||||
| Cost and Expenses: | ||||||||
| Cost of Revenue |
|
|
||||||
| Gross Loss | $ |
(
|
) | $ |
(
|
) | ||
| Operating Expense | ||||||||
| Selling, general and administrative expense |
|
|
||||||
| Total costs and expenses |
|
|
||||||
| Loss from operations |
(
|
) |
(
|
) | ||||
| Other income(expense) | ||||||||
| Gain on partial PPP Loan Forgiveness |
|
|
||||||
| Interest expense |
(
|
) |
(
|
) | ||||
| Net loss before provision for income taxes |
(
|
) |
(
|
) | ||||
| State Income tax expense |
(
|
) | ||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Net loss per common share, basic | $ |
(
|
) | $ |
(
|
) | ||
| Net loss per common share, diluted | $ |
(
|
) | $ |
(
|
) | ||
| Weighted average common shares outstanding, basic |
|
|
||||||
| Weighted average common shares outstanding, diluted |
|
|
||||||
The accompanying notes are an integral part of these financial statements.
| 15 |
Vynleads, Inc.
Statements of Stockholders' Deficit
For the Years Ended December 31, 2022 and 2021
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders' | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance at December 31, 2020 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||
| In Kind Contribution of Services | — |
|
|
|||||||||||||||||
| Net Loss | — |
(
|
) |
(
|
) | |||||||||||||||
| Balance at December 31, 2021 |
|
|
|
(
|
) |
(
|
) | |||||||||||||
| In Kind Contribution of Services | — |
|
|
|||||||||||||||||
| Net Loss | — |
(
|
) |
(
|
) | |||||||||||||||
| Balance at December 31, 2022 |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||
The accompanying notes are an integral part of these financial statements.
| 16 |
Vynleads, Inc.
Statement of Cash Flows
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustments to reconcile net loss to net cash flows used in operating activities | ||||||||
| In Kind Contribution of Services |
|
|
||||||
| PPP Courtesy Credit |
(
|
) |
(
|
) | ||||
| Changes in operating assets and liabilities and other, net |
|
|
||||||
| Net cash flows used in operating activities |
(
|
) |
(
|
) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from notes payable |
|
|
||||||
| Proceeds from notes payable – related party |
|
|||||||
| Repayment of notes payable |
(
|
) |
(
|
) | ||||
| Net cash flows provided by financing activities |
|
|
||||||
| Net decrease in cash |
(
|
) |
(
|
) | ||||
| Cash at beginning of year |
|
|
||||||
| Cash at end of year | $ |
|
$ |
|
||||
| Supplemental disclosure of cash flow information: | ||||||||
| Income taxes paid | $ |
|
$ | |||||
| Interest paid | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these financial statements.
| 17 |
VYNLEADS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
1. Business
Vy n l ea d s, I n c . (“Vynl e ads” ) wa s i n c orporat e d a s a Delawar e c orporatio n o n Jul y 1 5 , 2015 . W e ar e a provide r o f healt h a n d wellnes s informatio n principally targete d t o p e opl e wh o ar e p r e - diab e t e s o r wh o hav e typ e 2 d ia b ete s . W e p r o vi d e information to o ur c ustomer s wh o ar e s e eki n g t o mak e h ealth y choice s by pr o vi d ing clear, ge n e ric bluep r ints , e ducati o n , resources , an d supp o rt . Ou r c o r e pro d u c t i s ou r p roprietar y Lifestyl e Blu e p ri n t , a digi t a l gu i d e tha t p r o vi d e s dietar y recommendati o ns fo r a v e ry l ow ca l o ri e e igh t-w eek di e t t o gethe r wi th infor m atio n f o cusi n g o n what , ho w an d ho w muc h a perso n eats , nutritio n al informatio n an d h o w a person’ s bo d y d o es and d o e s not use fo o d t o enabl e ou r customer s t o continu e lea d in g a mor e suc c essfu l l ifestyle . W e als o offer nutritio n a l supplement s a n d month l y s u bscription s t o ou r propr i etar y newslette r whic h cover s a wid e v a r iet y o f he a lthy living -relate d topics.
Ou r corporat e h eadquarter s ar e locate d i n R o c k Hill , S out h Caro lina.
2. Going Concern
Our fin
a
nci
a
l
statements
h
ave
b
ee
n
presente
d
o
n
a going conc
e
r
n basis
, w
h
ich
co
n
t
emplate
s
th
e
rea
l
izatio
n
o
f
asset
s
an
d
satis
f
ac
t
io
n
of
l
iabi
l
it
i
e
s
i
n
th
e
norma
l
cou
r
s
e
o
f
bus
i
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es
s.
Sinc
e
Ju
ly
15
,
2
0
15
,
th
e
dat
e
o
f
ou
r
i
nc
e
p
tion
,
w
e
hav
e
exp
e
r
ienc
e
d
recurrin
g
op
erating
losses
a
nd
n
e
gative
operatin
g
cas
h
fl
o
w
s
,
a
n
d
h
a
ve
financ
e
d
o
u
r
recen
t
workin
g
capita
l
requirement
s
prim
a
r
il
y
throu
g
h
th
e
issua
n
c
e
o
f
deb
t.
D
u
r
in
g
th
e
y
ear
s
en
d
e
d
Decemb
e
r
31
,
2
022
an
d
2021
,
w
e
hav
e
reporte
d
n
e
t
losse
s
o
f
$
Despit
e
o
u
r
curren
t s
a
l
es
,
e
x
pense
,
cas
h
flo
w
projecti
o
ns
,
an
d
aggregat
e
cas
h
an
d
holdback re
c
eiv
a
b
l
e
fro
m
o
u
r
merchant
,
ne
t
o
f
reserv
e
f
o
r
refunds
,
o
f
$
Ou r abilit y t o mee t ou r curren t an d projecte d oblig a t ion s depen d s o n ou r abilit y t o generat e s u fficien t sale s a n d t o contro l e xp e nses and will re q uire t h at we s e ek a dditional c a pital throu g h p r ivat e and/o r pu b li c fina n cin g sources . Ther e ca n b e n o a s s u r ance s tha t w e wil l ac h iev e ou r forecaste d financia l result s o r t h at we w i l l b e abl e to rais e add i tiona l c a pita l t o operat e o u r bus i ness . An y suc h failur e wo u l d hav e a mat e r i al a d verse impact o n o u r liq u idit y a n d financial conditio n an d coul d forc e u s t o c u rtai l o r disc o ntinu e op e rati o n s entirel y a n d c oul d req u ir e u s t o fil e fo r pr o tectio n un d e r b a n k r u pt c y laws . Th e se c o n di ti ons raise subst a ntial d oubt as to o u r abilit y t o continu e a s a goin g 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 preparati o n of fin a ncial st a tement s i n conformit y wit h U.S . GAA P requ i re s m a nagemen t t o mak e cer t ai n est i mate s an d assumption s tha t aff e c t the re p o rte d amount s o f asset s a n d liabilitie s an d di s c losur e o f cont in gen t asset s an d liab i li t ie s a t th e dat e o f t h e financia l s t atement s an d th e re p o rte d amount s of re v enu e an d expense s durin g th e reporti n g p e r iod . W e believ e t h a t judg e me n t i s involve d in determi n ing ou r reserv e fo r refunds , o ur holdb a ck reserv e , and valuation o f stock-base d compe n sation. W e evaluat e o u r estimates an d as s u m p tion s a s fact s a n d c i rcumstance s di c tate . A s f utur e event s a n d thei r e f fect s canno t b e d e termined with p r e cision, a c tua l result s c oul d diffe r from thes e estimate s an d assum p tions , a n d thos e differen c e s co u ld b e ma t e r ia l t o t h e F in anc i a l Sta t e m en t s.
| 18 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
Cash
C as h i nc l u d e s c a sh on h an d, is dep o s ite d a t on e are a ban k an d ma y excee d federall y insure d limit s a t times. We co n s ider all h i ghl y liqui d investment s wit h a ma t u ri ty of th re e m on t hs o r les s whe n purchase d t o b e c as h e q u i v a l e n t s . T he car r y ing am ou n ts r e porte d i n th e balanc e sheet s f o r cas h an d cas h equivalents approximat e thei r fai r value.
Holdback Receivable
Holdba
c
k
receiva
b
le
include
s
a
m
e
rchan
t
holdbac
k
ne
t
o
f a r
e
s
e
r
v
e
fo
r
r
e
t
urns
,
whic
h
reser
v
e
i
s
$
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.
Ou r percentage s o f rev e nu e b y typ e fo r y ear s en d e d Decemb e r 31 , 2 022 an d 2021 ar e a s follows:
|
Year ended December 31, |
||||||||
| 2022 | 2021 | |||||||
| 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.
Basi c los s pe r c o m mo n shar e is compute d b y di v i din g ne t los s b y th e weighted-averag e numbe r o f commo n share s o utstandin g durin g th e period . Dilute d loss pe r commo n shar e i s base d upo n t he weighted-avera g e commo n share s out s tan d i n g durin g t h e perio d plu s a d d itiona l weighted-aver a g e commo n equivalent s h are s outstandin g duri n g th e per i o d. Commo n eq u iv a l en t share s resul t fro m th e assume d exerci se of outstan d ing stock optio n s an d warrants , th e proce e d s of whic h ar e the n assume d t o h a ve b ee n use d t o repurchas e outst a n d i n g c o mmon stock usi n g the tre a s u ry stock m e th o d. In a ddition, th e numerato r i s a d juste d for an y change s i n incom e (loss ) th a t w o u ld resul t fro m th e assume d c onversio n o f potenti a l shares . Potentiall y dilutiv e s h ares , w h i c h wer e e x cl u d e d f ro m t h e d i lute d lo s s pe r sha re calculat i o ns be c aus e th e effec t woul d b e a ntidilutive or the opti o ns a n d w arrant s ex e r cis e pric e s wer e g r e a te r t h a n th e averag e market pric e o f th e commo n shares , wer e s h a res f or t he yea r s e nde d D e cembe r 3 1 , 2022 an d 2021.
| 19 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
Income Taxes
Th e provisio n fo r inc o me taxe s i nc l u d e s federal , stat e , l o ca l an d foreig n taxes . In c om e taxe s ar e a ccounte d fo r un d e r th e liabi l it y m ethod . D e f erre d ta x a s sets an d liabiliti e s ar e r e cognize d fo r th e estimate d futur e ta x co n s e quence s o f temporar y differen c e s betwee n t h e financia l statemen t carryin g amount s an d their r es p ec t iv e ta x b ases.
Deferre d t a x asset s a n d liabilitie s ar e me a s u r e d usin g enacte d ta x rate s expecte d t o ap p ly t o t axa b l e incom e i n t he y ear i n w hic h th e temporar y di f feren c e s are expecte d t o b e recovere d o r se t tled . W e evaluat e t h e realizabi l it y o f ou r deferr e d ta x asset s a n d establis h a va l u ation all o w an c e whe n i t i s mor e likel y tha n not th a t a ll o r a port i o n of deferre d ta x asset s wi ll no t b e rea l ize d .
W e accoun t f o r unc e r tai n ta x posi t ion s usin g a “more-li k ely-tha n-not” t h r e s h old for re c ognizi n g a n d resolvin g uncertai n ta x positions . T he evaluatio n of uncertai n ta x position s i s base d on fa c tors i n clu d in g , but n o t l imi t e d to , change s i n t a x law , t h e measuremen t o f ta x posi t io ns ta k e n o r exp e cted to be taken in t a x returns , t h e effectiv e sett l e m e n t o f matter s subjec t t o audit , ne w aud it ac t ivit y an d change s i n fact s o r circ u mstance s re l a ted to a tax position. W e e v al u a te thi s ta x positio n o n a quart e r l y basis . W e al so ac c rue fo r pot e n t ia l interes t an d pena l ties , if applicable , re l a t e d t o u nrecog nized tax b enefi t s i n incom e 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.
St o ck-base d compensatio n i s me a s ur e d at the grant date b a s e d on the estimated fair v al u e of t h e awar d an d i s recognize d a s a n e xpens e ove r th e requisite s e r v ice period. Accordingly , th e Black-Sch o l e s opti o n pricin g m o de l i s utilize d t o d e riv e a n estimate d fai r v al u e .
Th e Black- S chole s pricin g mo d e l require s th e consideratio n o f t h e foll o win g si x variable s fo r purpose s o f estimatin g f a i r val u e:
| · | 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. |
Expe c t ed Di v ide n ds . W e hav e nev e r declare d o r p a i d an y cas h divi d end s o n a n y o f ou r capita l s to c k a n d do not expect to do so i n th e foresee a b le future. Acc o r d in g l y , w e us e a n expecte d divid e n d y i el d o f z e ro t o c al cu l at e t h e g ran t - d at e f a ir valu e o f a stoc k option.
Expe c t ed Volatility . Th e expecte d volatilit y i s a m e asur e o f t h e amo u nt by which our st o ck p r i c e i s exp e cte d t o f luctuat e dur i n g th e expecte d ter m o f o ptions g r a n t e d . W e determin e th e expec t e d volatilit y solel y base d up o n th e hi s torica l v o l ati l it y of ou r comm o n stoc k ove r a p erio d c o mmensurat e wit h th e opti o n’s expecte d term . W e d o no t belie v e tha t th e futu re volati l it y of ou r comm o n stoc k ove r a n option’ s expecte d te rm i s lik e ly t o diffe r signif i c a n t l y f rom th e pas t.
Risk-Free Interest Rate . Th e risk- f re e in t e r es t r a te i s th e i m p li e d yiel d availa b l e o n U.S . T reasur y zero-coupo n issue s wit h a remainin g ter m equ a l t o the option’ s expecte d te rm o n t h e gra n t date.
Expe c t ed Term . F o r optio n grant s subseq u e n t t o th e ado p tio n o f th e fai r valu e re c ognitio n provis i o ns of t h e ac c ounti n g standa rds , th e expe c t e d lif e o f stock option s grante d i s base d o n t h e actua l vestin g dat e an d th e en d o f th e co n t ractua l term.
Gr a nt Date Price of Common S t o c k. T h e closing m a rk e t pri c e of our comm o n stock on t h e d a te of g r a n t.
| 20 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
Fair Value of Financial Instruments
W e f o llo w Acco u n tin g Standard s Co d i ficatio n 82 0 - 1 0 (“AS C 8 20-1 0 ”), “Fai r V a lu e Measur e m e n t s an d Disclosures, ” fo r f a ir valu e measurements . AS C 8 2 0- 1 0 d efine s fai r value , establis h e s a fr a m e w or k fo r measurin g f a i r value , an d exp a nd s d isclosu r e s a bou t fai r v a lu e measurements . T h e standar d provide s a consi s ten t def in it i o n of fa ir value , whic h f o cuse s o n a n exi t price , whic h i s t h e p r ic e th a t woul d b e receive d t o sel l a n asse t o r pai d t o t r a n s f e r a liabilit y i n an or d e rly tr a nsaction b etw een m a r k e t pa rt ic ipant s a t th e mea s u r e m e n t date . T h e standar d als o p r ioritizes , withi n t h e measuremen t o f fai r v alue , t h e us e of mark e t -base d inform a tio n ove r en t it y s p ecifi c informati o n a n d e stabli s h e s a three-le v e l hierarch y f o r fai r valu e m e asuremen t base d o n th e n at u re o f in p u ts used in t h e v a lu a tion of an ass e t o r l i ab i l i t y a s o f th e mea s u r e m e n t date.
Th e hierarch y establishe d unde r A S C 820-1 0 give s th e highes t priorit y t o u n adjuste d qu o te d pri ces in acti v e markets for i d ent i ca l asset s o r liabilitie s (Leve l 1) an d th e lowes t pri o r it y t o unobserv a bl e input s (Leve l 3) . Th e t hre e level s o f t h e fai r v a l u e hierarch y unde r A S C 820-1 0 ar e de scrib e d b e low:
Leve l 1 - Pri c in g input s ar e quo t e d price s a v ailabl e i n activ e market s f o r ident i ca l i n ves t ment s as of t h e rep o rting dat e . As require d b y AS C 8 20-10 , we d o n ot adjus t th e quote d pric e f o r thes e investm e nts , e ve n i n s i t u ati ons w h er e w e h old a l a r g e p o s it i o n an d a sal e c o uld reas o n a bl y impac t th e quoted price.
Leve l 2 - Pri c in g input s ar e quo t e d price s fo r simila r i n v estme n t s , o r i n put s tha t ar e observable , eithe r d i rectl y or ind i rec t ly , fo r subs t an t ial ly th e fu ll ter m throu g h c o rro b or a t io n wit h observabl e marke t data . Le v e l 2 i nc lu de s investment s value d a t q uot e d price s adjuste d fo r leg a l or c o nt r ac t ual r estri c t ion s speci f i c to t he s e i n ve s t m en ts .
Leve l 3 - Pri c in g input s ar e uno b ser v abl e fo r th e investment , t h a t i s , i np u ts t h a t ref le c t t h e re po rti ng e nt it y ’ s o w n ass u m pt i on s abou t t h e assumptions mark e t participant s wo u ld us e i n pric i n g th e asse t o r l iabil i t y. Leve l 3 include s inv e s tment s that a re supp o rted by little or no market a c tivit y .
The carrying a mo u nts of o ur ca sh , holdbac k receivable , prepaid expense and other current asset, ac c ount s pa y abl e an d ac c ru e d e x p ense s approx i mat e thei r fai r value s du e to thei r s h ort-ter m matu r iti e s a s o f Decembe r 31 , 2 022 a n d 2 021.
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 $
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.
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, 2022 and 2021, $
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 2023.
| 21 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
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
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| 2022 | 2021 | |||||||||||||||
| Tax | Rate | Tax | Rate | |||||||||||||
| Taxes computed at statutory rate | ||||||||||||||||
| Federal | $ |
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| State |
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| Total taxes at blended statutory rate | $ |
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(
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|
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| Increase (decrease) resulting from: | ||||||||||||||||
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|
% | ||||||||||||
| Nondeductible expenses |
|
|
% |
|
% | |||||||||||
| State income tax refund |
|
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|
% | ||||||||||||
| Other |
-
|
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|
-
|
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| Change in valuation allowance |
|
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|
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| Total income tax (benefit) expense | $ |
|
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|
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|
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|
% | |||||||
| 22 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
The tax effect of significant components of our deferred tax assets and liabilities at December 31, 2022 and 2021 , are as follows:
| 2022 | 2021 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | $ |
|
$ |
|
||||
| Amortization of intangibles |
|
|
||||||
| Reserve for refunds |
|
|
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| Stock compensation |
|
|
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| Charitable contribution carryforward |
|
|
||||||
| Total deferred tax assets |
|
|
||||||
| Less: Valuation allowance |
(
|
) |
(
|
) | ||||
| Net deferred tax assets | $ | $ | ||||||
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6. Notes Payable
On August 12, 2022, the Company executed a note payable to an individual
in the amount of $
On May 18, 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 $
On January 26, 2022, the Company executed a note payable to an individual
in the amount of $
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 $
| 23 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
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 $
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 $
| 24 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
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.
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, 2022 and 2021, Mr. Mannine voluntarily
agreed to waive all cash due and any related accruals. The salary forgiven for the years ended December 31, 2022 and 2021 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.
| 25 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
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 200,000 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, 2022 and December 31, 2021, we have recorded stock-based compensation of $0 and $0, respectively. As of December 31, 2022 and December 31, 2021, $0 and $0, respectively, is recorded in prepaid expense related to the consulting agreement.
Under terms of the consulting agreement,
we agree to pay Primoris $
Contingencies
I n Apri l 2016 , w e entere d int o a P r o m o tion and R oy a lty A g r e eme n t ( t h e “Agreement” ) w it h a consu l tan t t o obta in certai n p r o mo t i ona l service s fr o m hi m (the “Promot e r ” ), including the u se of hi s nam e an d appeara n ce . I n c onsi d eratio n fo r th e servic e s r e ndere d b y th e P rom o t er , w e agree d t o us e commercially re a s o n abl e e ffort s t o promot e an d sel l a boo k authore d b y hi m (th e “Book” ) an d t o pa y hi m a per ce n tage of t h e sales of the Bo o k afte r d e ductio n s fo r al l d i rect cos ts o f fulf i ll i n g suc h sale s (th e “R o yalty”) . Durin g th e co u r s e o f 2017 , th e Promote r initiate d a serie s o f i nf o rmal cl a ims a nd filed u nauthori z ed u niform comm e rcial c ode finan c ing stat e m e nt s (“UC C Lie n s ” ) i n se v e r a l s t ate s a s lien s a ga i n s t u s a n d c e r tai n o f ou r officers , d irecto r s , an d founders , allegin g non- paymen t fo r th e Royalt y amou n t s du e unde r th e Agreement . W e disput e th e Promoter’ s claim s an d hav e determine d tha t a n y a n d al l amo u n t s du e t o the Promote r unde r t h e Agreemen t hav e bee n pai d i n full . W e h a v e s uc ceede d i n removin g certai n o f t h e UC C Lien s a n d a re pursuin g acti o n t o r e m o ve the remainin g unauthorize d UC C L i e n s. W e d o n ot believ e tha t t h e c l aim s o f th e Promote r a r e vali d i n an y respect.
9. Concentration of Credit Risk and Major Customers and Suppliers
The re v enue s ar e co n cent r a t e d wit h a si n g l e custome r.
W e purchas e ou r inve n t or y of h erbal/natural su p pl e me n ts fr o m o n e supplier . Whil e w e believ e tha t w e wil l b e abl e t o fin d a sec ond a ry supplier, there c o uld be a manufa c turin g dela y i n t h e transitio n t o a ne w s u pplie r an d s uch a sup p ly int e rru p tion w o uld mater i all y impac t ou r b u s ines s fo r som e per i o d o f t ime.
| 26 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
10. Stockholders’ Deficit
Ou r authori z e d c apita l s toc k c onsist s o f s h are s o f commo n stock , pa r v a l u e $ pe r share , an d share s o f blan k chec k preferred s toc k , pa r v a l u e $ pe r share . A s o f Decembe r 3 1, 2022 an d 2021, t h ere are and share s o f comm on sto c k o u tstanding, respe c t ivel y an d ther e are sh a r e s o f pr e f e r re d stoc k i ssue d an d outstandin g a t eith e r 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, 2022 and 2021 of
$
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.
Consulting Agreement
On February 12, 2020, we entered a consulting agreement with Primoris Group Inc (“Primoris”). Primoris was issued 200,000 common shares at a fair value of $45,000 ($0.225 per share) on June 30, 2020. 100,000 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.
Preferre d S t o c k
Ou r boar d o f directors , withou t f urthe r stoc k holde r ap p r o v al , m a y issu e prefe r re d stoc k in on e or m o re serie s fro m ti me t o t i me a n d fi x o r alte r the des i gna t ions , relat i v e rights , pr i o r it i es , p r e f e r ences , quali f ications , limit a t ion s an d r e stric t ion s o f th e share s o f eac h se r ies . Th e right s, pref e r e nces , limit a t ions an d r estr i c t ion s o f differen t serie s o f prefer r e d stoc k ma y d i ffe r wit h respec t t o dividen d ra tes, am o unts pay a ble on liq u id a tion , v o t in g rig h ts , c o nversio n rights, re d e mption provisi o ns, sin k ing f un d provisi o ns a n d othe r matter s. Our bo a rd of dire c tors m a y a u th o r iz e t h e issuanc e o f pre f e r r e d stock , whic h r a nk s senio r to ou r commo n stoc k f o r th e p aymen t of di v id e nds a n d the distribu t io n o f asset s o n liquidation . I n addition, o ur bo a rd of dire c t o r s ca n f i x l imi t ation s a nd restri c t ions , i f a n y, upo n th e pa yment of divi d ends on b oth cl a sse s o f ou r commo n stoc k t o b e e ffectiv e whil e an y share s o f p r eferre d st o c k a re outstanding.
Warrants
O
n
Oct
o
b
e
r
1
0
,
2017
,
w
e
entere
d into t
h
e
F
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Agreement w
i
t
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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 $
Durin
g
Januar
y
2018
,
a
s
par
t
o
f
th
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$
| 27 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
On
Marc
h
8
,
2018
,
w
e
en
t
ere
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in
to
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n
advisor
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s
t
o
us
.
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n
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t
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th
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agreement
,
w
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issued
five-ye
a
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commo
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sto
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k
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a
rrant
s
a
t
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n
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x
ercis
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o
f
$
As of December 31, 2022 and December 31, 2021, the intrinsic value for warrants outstanding and exercisable is $ and $ , respectively.
Th e followin g tabl e summ a r ize s i n f o r matio n a bou t th e w a r ra n ts outsta n din g and exercisable a s o f Decembe r 31 , 2 022 an d 2021:
| 2022 | 2021 | ||||||||||||
| 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, 2022
| 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, 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 |
||||||
| $ -$ |
|
$
|
|
$
|
|||||||
In Decembe r 201 7 ou r b oar d o f di r ecto rs ado p te d ou r 201 7 E q uit y Incenti v e Plan , o r th e “201 7 P l an. ” Ou r stoc k holder s ratifie d the 2 0 17 P lan in Dec e m b er 2017 . Th e purpos e o f th e 201 7 Pla n i s t o en c ourag e ow n er s h ip i n o ur compa n y by o u r offic e rs, d i rectors , employee s an d consult a nts , an d t o incenti v i z e and a l ig n t h e interes ts o f th e pla n par t icipant s wi th th e in terest s of our st ock h old e r s . W e h a ve r e s e r v e d shares of o u r commo n sto c k fo r issua n c e u nder th e 201 7 Plan . Grant s p u r s u an t t o th e 201 7 Pla n ma y be : i ) incentiv e s toc k options ; ii ) non-sta t u t or y stoc k options ; iii ) st oc k a w ards , includin g share s o f our c o m m o n st o c k a nd s t oc k u ni ts ; an d iv ) stoc k appreciati o n right s .
| 28 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
Th e boar d o f director s o r a committ e e o f t h e b o a rd o f di r e c tor s admi n ister s th e 201 7 Plan . Pre s e n tly , th e 201 7 Pla n i s admini s tere d b y ou r b o ar d o f dire c t ors. The t e rm of e a ch p lan option and th e manne r i n whic h i t ma y b e exercise d i s determine d b y th e boar d o f director s o r a c o m mitte e o f th e boar d o f d i rectors, pr o vi d ed that no o ption may be e x e rcis a b l e mor e tha n 1 0 year s afte r t h e d a te o f it s gran t and , i n th e cas e o f a n ince n tiv e opt i o n gra n ted to a n eligi b le employee ow n i n g mor e tha n 1 0 % o f th e commo n st o c k , n o mor e tha n fiv e y e a r s afte r th e dat e o f t h e g ran t. T he term s o f grant s o r an y othe r type of award un d er the pl a n are determi n ed b y the board of d irector s o r committe e o f th e boar d o f director s a t th e tim e o f grant . T he 201 7 Pla n provi d e s tha t th e maxim u m valu e o f a n y awar d durin g an y calenda r y ear c a nnot ex c eed $1, 0 00,000.
An y optio n grante d u nde r th e pla n mus t provid e fo r a n exerci se pric e o f no t les s t h a n 1 00 % o f t h e f a i r mark e t valu e o f th e und erlyi n g sh a res on t h e d a te of gr a n t , bu t th e exerci se pric e o f any ISO gr a nt e d u n der the 2017 Pla n t o a n eligibl e empl o ye e ow n i n g mor e tha n 10 % o f ou r o u t s t andin g commo n s toc k must no t b e les s tha n 110 % o f fai r mar ket val u e on the date of the g ra n t. T he 201 7 Pla n f u r the r provide s tha t wit h respe c t t o ISO s th e aggreg a te fai r marke t valu e of th e commo n st o c k u nderl y i n g th e optio n s whic h ar e exercisabl e by a n y p l a n parti c i pa n t durin g a ny cal e ndar y ear ca n not exc e e d $ 100,000 . Opti o n award s may pr o vi d e for the ex e rcise by m e a n s o f cash , c o n s id e ration r e cei v e d b y u s und e r a broker-assiste d s al e an d remittanc e program , cashles s e x ercise , an y ot h e r consideratio n legall y permitted , o r a combi n atio n o f th e forego ing. T he 2017 Plan a d m inistr a t o r ma y als o determin e th e metho d o f paymen t o f th e e x ercise pric e a t th e tim e th e optio n i s bein g exerci s e d . Gr a nt s unde r t h e 2 0 1 7 P l a n ar e no t transferrable.
Ge n er a lly , option s whic h ar e exerci s ab le a t th e dat e o f th e p l a n pa r tic i p ant ’s t e r minat i o n fro m o ur employmen t o r severan c e o f t h e relat io ns hip w i t h our compan y mus t b e exercise d wit h i n thre e mon t h s o f th e te r minati on da t e ; the pla n admin i strato r ma y exten d th e ex e r cis e peri o d o f th e o p tio n fo r a separated pla n partici p an t providin g th a t t h e e x ten d e d d a te do e s not go b eyon d th e o r igina l e x p iratio n da te of t h e o p tion. S imilarly, g e n erall y optio n s w h i ch a re exerci s a bl e a t th e dat e o f th e p lan partici p ant’s dis a bility or deat h mus t b e e x ercise d w i thi n s ix month s of th e term i n a t io n d at e i n th e e ven t o f t h e disabilit y of th e pla n participan t o r 1 2 month s follow i n g th e pla n particip a nt’ s death . I n ou r discreti o n , a ny outsta n di n g o p tions held b y a pla n par t icipan t term i n a t e d for caus e ma y b e imme d i atel y cancell e d.
I n th e even t ther e i s a “chang e i n contr o l” of o ur comp a ny a s define d i n th e 201 7 Plan , a s determine d b y th e b o ar d o f direct o rs o r th e committee , w e m a y in ou r discretio n : i ) provid e f o r th e a s s u m p t io n o r substitutio n of , o r a d justmen t (includin g t o th e n umbe r an d typ e o f sh a r e s an d exercis e o r purch a s e price applica b le) t o , each outst a ndi n g award; ii) ac c elerate t h e v e s t in g o f option s an d terminat e a n y restriction s o n stoc k awards ; and/o r iii ) provid e f o r termination o f award s a s a resul t o f th e cha nge in c ontr o l on such terms an d c ondition s a s i t de e ms appropri ate, includi n g p ro v iding for t h e cancellatio n o f aw a r d s fo r a cas h o r othe r p aymen t t o the pa rt i c ipa n t.
Th e numbe r o f share s o f o u r commo n sto c k u n derlyin g an y outstandin g bu t une x ercise d optio n an d th e ex e r cis e pric e o f th a t opt i o n will be p r o portionally adj u sted in the event of a st o ck s p l it , stoc k combinations , dividends , a n d simila r c o rporat e ev e n ts.
O n Jun e 14 , 2 0 18 , purs ua n t to t he em pl o y m e n t agreemen t wit h Mr . M a nnine , mor e full y d escribe d i n Not e 8 , w e issue d st o c k optio n s wit h an exerci se pric e o f $ . Suc h opti o ns fully v es t upo n t h e effectivenes s o f a regi s tratio n state m e nt o n For m S -1 . W e determ in e d tha t th e opt i o n s h a d a n ini t ial fair v al u e of $ . W e e s timat e d th e fai r valu e o f thes e op t io n s usin g th e Bla c k-Schole s o ptio n pricin g model , b a s e d o n th e f o l low i n g assumptions : the re c en t cas h offerin g pric e o f $0.22 5 a s th e estimate d fai r val ue o f th e underlyin g c o mm o n stoc k a t th e valuatio n measuremen t d ate ; n o di v i de n d y iel d f o r al l of th e years ; e x p ecte d volatilit y of % ; r i sk-fre e interes t rat e o f % a n d a n e x p ecte d lif e o f years . W e amortize d th e fai r valu e o ve r th e perio d fro m their issuan c e on June 14, 2 018 thro u gh Dec e m b er 7, 2 0 18, the date on whic h th e registratio n statemen t wa s d ecla r e d effective .
As of December 31, 2022 and December 31, 2021, the intrinsic value for option outstanding and exercisable is $ and $ , respectively.
| 29 |
|
VYNLEADS, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 |
Th e followin g tabl e summ a r ize s i n f o r matio n a bou t stoc k opti o n s o u tstandin g an d exercisabl e a s of a s o f Dec e m b e r 31 , 2022 an d 2 021:
| 2022 | 2021 | ||||||||||||
| 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, 2022
| 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, 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 |
||||||
| $ |
|
$
|
|
$
|
|||||||
12. Subsequent Events
On March 1, 2023, the company executed
a note payable to an individual in the amount of $
| 30 |
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 December 31 , 2022, our internal 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 , 2022.
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.
| 31 |
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 |
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, | 2021 | 130,000 | — | — | — | — | — | — | 130,000 | |||||||||||||||||||||||||
| Chief Executive Officer | 2022 | 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, 2022 and 2021, Mr. Mannine voluntarily agreed to waive all cash due and any related accruals. The salary forgiven for the years ended December 31, 2022 and 2021 of $130,000 and $130,000 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 2022 an d 2021, w e p ai d Mr . Bezuso v $0 an d $0 , resp e ctively , i n consultin g fees.
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O u t s tan d i n g e q uity awar d s at fiscal y e ar-end
Th e followin g tabl e provide s informatio n co n cerni n g u n exercise d o ptions, stock that h a s no t v este d an d equit y inc e n tiv e pla n a w ard s fo r e a c h n a m e d executi v e o f f icer o utstand i n g a s o f Decembe r 31 , 2022 :
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||||
| Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
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
We have not paid any compensation to our directors as of December 31, 2022. Our board of directors has not adopted a director compensation policy. We did not compensate our directors for their services on the board during 2022 and 2021.
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 December 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 2023.
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, 2022 and 2021, we paid Mr. Bezusov $0 and $0, 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, 2022 and 2021 of $130,000 and $130,000 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.
Liggett & Webb, P.A., and Assurance Dimensions served as our independent registered public accounting firm for 2022. Liggett & Webb, P.A. served as our independent registered public accounting firm for 2021 until their resignation on November 15, 2022. The following table shows the fees that were billed for the audit and other services provided by such firms for 2022 and 2021.
| 2022 | 2021 | |||||||
| Audit Fees | $ | 23,602 | $ | 24,065 | ||||
| Audit-Related Fees | — | — | ||||||
| Tax Fees | 3,000 | — | ||||||
| All Other Fees | — | — | ||||||
| Total | $ | 26,602 | $ | 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 to 2021 and 2020 wer e pre- a pproved by t h e e n tire B oar d o f Di r e c t ors.
| 37 |
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 | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Filed | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | 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.
| 38 |
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 21, 2023
|
||
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 21, 2023
|
||
| By: | /s/ Stanislav Bezusov | |
|
Stanislav Bezusov Executive Vice President, Chief Operating Officer and Chief Technology Officer, director Dated: March 21, 2023 |
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