Source: http://ih.advfn.com/stock-market/USOTC/grey-cloak-tech-pk-GRCK/stock-news/77856084/quarterly-report-10-q
Timestamp: 2020-04-04 03:48:32
Document Index: 18743124

Matched Legal Cases: ['arty 34', 'arty 59', 'arty 1', 'arty 118', 'arty 30', 'arty 370', 'arty 118']

Date : 07/12/2018 @ 10:32PM
Stock : Grey Cloak Tech Inc (PK) (GRCK)
Quote : 0.021 0.0 (0.00%) @ 9:30PM
Commission file number 333-202542
Nevada 47-2594704
10300 W. Charleston, Las Vegas, NV 89135
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the previous 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. Yes ☒ No ☐
As of July 11, 2018, there were 469,012,760 shares of common stock, $0.001 par value, issued and outstanding.
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operation 13
Item 3. Quantitative and Qualitative Disclosure About Market Risks 17
ITEM 1	Financial Statements
Cash $ 88,052 $ 81,653
Accounts receivable 2,164 16,000
Inventory 40,286 48,466
Note receivable 79,295 79,295
Accrued interest receivable 2,372 1,590
Total current assets 212,169 227,004
Fixed assets, net of accumulated depreciation of $1,351 and $1,121, respectively 1,419 1,650
Website, net of accumulated amortization of $8,540 and $4,002, respectively 45,919 50,457
Trademarks 1,650 1,650
Deposit 1,500 —
Goodwill 841,982 841,982
Total other assets 892,470 895,739
TOTAL ASSETS $ 1,104,639 $ 1,122,743
Accounts payable $ 33,721 $ 67,364
Accounts payable - related party 34,923 4,000
Notes payable - related party 59,884 59,810
Convertible debt, net of discount of $371,484 and $305,396, respectively 316,613 316,781
Convertible debt - related party, net of discount of $16,371 and $23,871, respectively 13,629 6,129
Accrued interest payable 33,568 24,059
Accrued interest payable - related party 1,529 1,159
Derivative liabilities 978,314 1,822,568
Total current and total liabilities 1,472,181 2,301,870
Preferred stock, $0.001 par value, 75,000,000 shares authorized,1,333,334 and 1,333,334 shares issued and outstanding, respectively 1,333 1,333
Common stock, $0.001 par value, 2,500,000,000 shares authorized, 469,012,760 and 224,605,587 shares issued and outstanding, respectively 469,013 224,606
Additional paid-in capital 6,909,880 6,278,316
Accumulated deficit (7,747,768 ) (7,683,382 )
Total stockholders' deficit (367,542 ) (1,179,127 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,104,639 $ 1,122,743
REVENUE $ 19,856 $ 42,000
COST OF REVENUE 14,699 3,000
GROSS PROFIT 5,157 39,000
General and administrative 113,673 331,770
General and administrative - related party 118,391 56,500
Total operating expenses 232,064 388,270
Interest expense, net of interest income (408,097 ) (1,272,493 )
Interest expense - related party (370 ) (296 )
Change in fair value on derivative 1,097,469 1,176,873
Loss on extinguishment of debt (526,481 ) (52,977 )
Total other income (expense) 162,521 (148,893 )
Net loss before income tax provision (64,386 ) (498,163 )
NET LOSS $ (64,386 ) $ (498,163 )
Loss per share - basic and diluted $ (0.00 ) $ (0.03 )
Weighted average number of shares outstanding - basic and diluted 364,956,165 18,909,688
Depreciation and amortization 4,769 365
Non-cash interest 408,514 1,348,597
Change in fair value on derivative liability (1,097,469 ) (1,176,873 )
Loss on extinguishment of debt 526,481 52,977
Accounts receivable 13,836 (500 )
Inventory 8,180 —
Prepaid expenses — 2,180
Accrued interest receivable (782 ) —
Deposits (1,500 ) —
Accounts payable (33,643 ) 32,429
Accounts payable - related party 30,923 4,500
Accrued payroll and taxes — 5,879
Accrued interest payable 16,523 3,079
Accrued interest payable - related party 370 296
Net Cash used in Operating Activities (188,184 ) (225,234 )
Payments of note receivable — (20,000 )
Cash flows used from Investing Activities: — (20,000 )
Proceeds from issuance of convertible debt,
net of discount of $32,917 and $42,000, respectively 194,583 439,000
Payments for repayment of convertible debt — (186,250 )
Net Cash provided by Financing Activities 194,583 252,750
Increase in cash 6,399 7,516
Cash at beginning of period 81,653 24,102
Cash at end of period $ 88,052 $ 31,618
Beneficial conversion feature and warrants recognized as a discount $ — $ —
Conversion of debt for shares of common stock $ 161,580 $ 505,564
Common stock issued in connection with debt conversion $ 875,971 $ —
Preferred stock issued for acquisition $ — $ —
Grey Cloak Tech Inc. (the “Company”) was incorporated in the State of Nevada on December 19, 2014. The Company was formed to provide cloud based software to detect advertising fraud on the internet. The Company has acquired Eqova Life Sciences and is transitioning it business towards marketing and selling CBD oil products.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2018 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s form 10-K for the year ended December 31, 2017 filed with the SEC on June 8, 2018.
The Company records revenue upon shipment of the products to the customers.
There is no concentration of revenue for the three months ended March 31, 2018. One customer accounted for 100% of total revenue earned during the three months ended March 31, 2018.
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. As of March 31, 2018, the Company did not have any amounts recorded pertaining to uncertain tax positions.
Balance, January 1, 2018 $ 1,822,568
Issued during the three months ended March 31, 2018 415,698
Change in fair value recognized in operations (1,097,469 )
Converted during the three months ended March 31, 2018 (162,484 )
Balance, March 31, 2018 $ 978,314
The Company evaluates and account for conversion options embedded in convertible instruments in accordance with ASC 815 “ Derivatives and Hedging Activities ”.
The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities. During the three months ending March 31, 2018, the Company recognized a loss on extinguishment of $526,481 from the conversion of convertible debt with a bifurcated conversion option.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated minimal revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (December 19, 2014) through the period ended March 31, 2018 of $7,747,768. In addition, the Company’s development activities since inception have been financially sustained through equity financing. Management plans to seek funding through debt and equity financing.
For the three months ended March 31, 2018 and 2017, the Company had expenses totaling $28,500 and $28,000, respectively, to an officer and director for salaries, which is included in general and administrative expenses – related party on the accompanying statement of operations. As of March 31, 2018, there was no accounts payable – related party.
For the three months ended March 31, 2018 and 2017, the Company had expenses totaling $42,000 and $28,500, respectively, to a company owned by an officer and director for consulting fees, which is included in general and administrative expenses – related party on the accompanying statement of operations. As of March 31, 2018, there was $15,000 in accounts payable – related party.
For the three months ended March 31, 2018 and 2017, the Company had expenses totaling $30,498 and $0, respectively, to an officer and director for consulting fees, which is included in general and administrative expenses – related party on the accompanying statement of operations. As of March 31, 2018, there was $11,923 in accounts payable – related party.
For the three months ended March 31, 2018 and 2017, the Company had expenses totaling $12,000 and $0, respectively, to the wife of an officer and director for consulting fees, which is included in general and administrative expenses – related party on the accompanying statement of operations. As of March 31, 2018, there was $8,000 in accounts payable – related party.
As of March 31, 2018, the Company had the following:
Unsecured convertible debt, due 10/17/18, 5% interest, converts at a 50% discount to market price based on the last 3 days trading price
Less: Discount (16,371 )
TOTAL $ 13,629
Unsecured convertible debt, due 08/24/18, 12% interest, converts at a 50% discount to market price based on the last 25 days trading price $ 110,000
Unsecured convertible debt, due 11/01/18, 12% interest, converts at a 50% discount to market price based on the last 25 days trading price 110,000
Unsecured convertible debt, due 10/04/18, 8% interest, converts at a 55% discount to market price based on the last 20 days trading price 50,000
Unsecured convertible debt, due 02/02/19, 8% interest, converts at a 55% discount to market price based on the last 20 days trading price 42,500
Unsecured convertible debt, may borrow up to $300,000, due 10/04/18, 8% interest, converts at a 44% discount to market price based on the last 20 days trading price 30,000
Unsecured convertible debt, may borrow up to $300,000, due 11/09/18, 8% interest, converts at a 44% discount to market price based on the last 20 days trading price 45,000
Unsecured convertible debt, may borrow up to $300,000, due 01/08/19, 8% interest, converts at a 30% discount to market price based on the last 20 days trading price 40,000
Unsecured convertible debt, due 08/17/17, 12% interest, converts at a 45% discount to market price based on the last 20 days trading price 9,500
Unsecured convertible debt, due 01/23/18, 8% interest, converts at the lower of $0.04 or a 40% discount to market price based on the last 20 days trading price 17,000
Unsecured convertible debt, due 10/26/18, 8% interest, converts at a 45% discount to market price based on the last 20 days trading price 10,000
Unsecured convertible debt, due 06/26/18, 9% interest, converts at a 42% discount to market price based on the last 15 days trading price 27,137
Unsecured convertible debt, due 12/01/17, 12% interest, converts at a 50% discount to market price based on the last 20 days trading price 66,000
Unsecured convertible debt, due 06/30/18, 12% interest, converts at a 39% discount to market price based on the average of the lowest 2 trading prices in the last 15 days trading price 46,210
Unsecured convertible debt, due 07/30/18, 12% interest, converts at a 39% discount to market price based on the average of the lowest 2 trading prices in the last 15 days trading price 43,000
Unsecured convertible debt, due 10/10/18, 12% interest, converts at a 39% discount to market price based on the average of the lowest 2 trading prices in the last 15 days trading price 35,000
Unsecured convertible debt, due 01/19/17, 8% interest, default interest at 18%, converts at a 54% discount to market price based on the lowest trading prices in the last 20 days trading price 6,750
SUBTOTAL 688,097
Less: Discount (371,484 )
TOTAL $ 316,613
Some of the convertible promissory notes are in default but will be in compliance upon filing of the 10-Q.
The Company has authorized 75,000,000 common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought. During February 2017, the Company increased authorized number of shares to 500,000,000. Also, the Company increased the preferred stock to 75,000,000 shares and designated 25,000,000 shares of preferred stock to Series A Convertible Preferred Stock. During January 2018, the Company increased its authorized number of common shares to 1,000,000,000. During April 2018, the Company increased its authorized number of common shares to 2,500,000,000. The Board of Directors, in the future, has the authority to increase the authorized capital up to 4,000,000,000 based on shareholder approval.
The shareholder of the Company approved a reverse stock split at a ratio of between 1-for-100 and 1-for 250. The Company received approval from FINRA for a reverse stock split of 1-for-250 pending the filing of this 10-Q.
On October 16, 2017, the Company filed an Amended and Restated Certificate of Designation of the Rights, Preferences, Privileges and Restrictions of the Series A Convertible Preferred Stock (the “Amended Certificate”) with the Secretary of State of the State of Nevada. The Amended Certificate reduces the number of preferred shares designated as Series A Preferred Stock from 25,000,000 shares to 1,333,334 shares. The Amended Certificate also changes the conversion and voting rights of the Series A Preferred Stock. The Series A Preferred Stock is now convertible into the number of shares of our common stock equal to 0.00006% of our outstanding common stock upon conversion. The voting rights of the Series A Preferred Stock are now equal to the number of shares of common stock into which the Series A Preferred Stock may convert.
During the three months ended March 31, 2018, the Company issued a total of 244,407,173 shares of common stock for the conversion of debt totaling $161,580 including interest of $7,014 and fees of $18,415 and loss on settlement of debt of $526,481.
As of March 31, 2018, there were 10,956,250 warrants outstanding, of which 3,956,250 are fully vested.
As of October 17, 2017, the Company operated in two reportable segments (Advertising and CBD) supported by a corporate group which conducts activities that are non-segment specific. The following table present selected financial information about the Company’s reportable segments for the three months ended March 31, 2018.
CONSOLIDATED ADVERTISING CBD CORPORATE
Revenue 19,856 — 19,856 —
Cost of Revenue 14,699 6,000 8,699 —
Long-lived Assets 843,632 — 843,632 —
Loss Before Income Tax (64,387 ) 6,000 (11,157 ) (59,230 )
Identifiable Assets 261,007 162,971 98,036 —
Depreciation and Amortization 4,769 464 4,305 —
On April 27, 2018, the Company amended its articles of incorporation and increased its authorized number of common shares to 2,500,000,000.
On June 8, 2018, the Company sold its website, CBD.co, to a third party for $50,000.
ITEM 2 M a nagement’s Discussion and Analysis of Financial Condition and Results of Operations
On October 17, 2017, we acquired Eqova Life Sciences, a Nevada corporation (“Eqova”), through an exchange of shares of our Series A Convertible Preferred Stock for all of the outstanding equity interest of Eqova. As part of the Exchange, we have brought on Eqova’s President and Director, Patrick Stiles, to serve as our President and Chief Executive Officer and as a Director on our Board of Directors.
Revenue $ 19,856 $ 42,000 $ (22,144 )
Cost of revenue 14,699 3,000 11,699
General and administrative 113,673 331,770 (218,097 )
General and administrative - related party 118,391 56,500 61,891
Total operating expenses 246,763 391,270 (144,507 )
Net operating loss (226,907 ) (349,270 ) (122,363 )
Other income (expense) 162,521 (148,893 ) 311,414
Net loss $ (64,386 ) $ (498,163 ) $ 433,777
General and administrative expenses – related party were $118,391 for the three months ended March 31, 2018, compared to $56,500 for the three months ended March 31, 2017, an increase of $61,891, or approximately 110%. The increase was mainly due to increase in compensation to Patrick Stiles.
Our cash, current assets, total assets, current liabilities, and total liabilities as of March 31, 2018 and December 31, 2017, respectively, are as follows:
March 31 December 31, Increase/
Cash $ 88,052 $ 81,653 $ 6,399
Total Current Assets 212,169 227,004 (14,835 )
Total Assets 1,104,639 1,122,743 (18,104 )
Our cash increased slightly because we were able to raise capital from the sale of warrants, notes and convertible notes. Our total current assets decreased primarily because of lower inventory and accounts receivable as of March 31, 2018. Our total current liabilities decreased during the three months ended March 31, 2018 primarily because of changes to the value of our derivative liabilities as of March 31, 2018. Our accumulated deficit increased during the three months ended March 31, 2018 by $64,386 to ($7,747,768) while our total stockholders’ deficit decreased by $811,585 to $367,542, primarily due to issuances of stock upon conversion of our convertible notes.
We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of March 31, 2018, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2018, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in our Annual Report on Internal Control Over Financial Reporting filed in our Annual Report on Form 10-K.
Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
No change in our system of internal control over financial reporting occurred during the period covered by this report, the three month period ended March 31, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Except as discussed below, we have not issued unregistered securities during the period covered by this report:
We issued the following promissory notes, during the three months ended March 31, 2018, which are convertible into shares of our common stock as described below:
Unsecured Convertible Promissory Note issued to Auctus Fund, LLC on 2/1/18, due 11/01/18, 12% interest, converts at a 50% discount to market price based on the last 25 days trading price $ 110,000
Unsecured Convertible Promissory Note, issued to Adar Bays, LLC on 02/02/18, due 02/02/19, 8% interest, converts at a 55% discount to market price based on the last 20 days trading price 42,500
Unsecured Convertible Promissory Note, issued to Power Up Lending Group Ltd. on 1/2/18, due 10/10/18, 12% interest, converts at a 39% discount to market price based on the average of the lowest two trading prices in the last 15 days trading price
All of the issuances of securities above were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, the investors were sophisticated and familiar with our operations, and there was no solicitation in connection with the offering.
3.2 (2) Certificate of Amendment to the Articles of Incorporation, dated February 24, 2017
3.3 (1) Bylaws of Grey Cloak Tech Inc.
3.4 (3) Certificate of Designation of the Series A Convertible Preferred Stock
100.INS XBRL Instance Document
100.SCH XBRL Schema Document
100.CAL XBRL Calculation Linkbase Document
100.DEF XBRL Definition Linkbase Document
100.LAB XBRL Labels Linkbase Document
100.PRE XBRL Presentation Linkbase Document
(2) Incorporated by reference from our Current Report on Form 8-K dated and filed with the Commission on February 27, 2017.
(3) Incorporated by reference from our Current Report on Form 8-K dated and filed with the Commission on April 6, 2017.
Dated: July 12, 2018 /s/ Patrick Stiles
By:	Patrick Stiles
Its:	Chief Executive Officer
Grey Cloak Tech (PK) (USOTC:GRCK)