The accompany notes are an integral part of these consolidated financial statements
The accompany notes are an integral part of these consolidated financial statements
The accompany notes are an integral part of these consolidated
financial statements
The accompany notes are an integral part of these consolidated financial statements
Notes to Consolidated Financial Statements
December 31, 2015 and December 31,
2014
NOTE 1 – ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated in Florida
on July 31, 2001. On September 21, 2001 the Company was acquired by PlaNet.Com, Inc., a Nevada public, non-reporting corporation.
Pla.Net.Com, Inc. was considered a shell at the time of acquisition and therefore the acquisition was treated as a reverse merger
(the acquired company is treated as the acquiring company for accounting purposes). Pla.Net.Com, Inc. changed its name to Inpatient
Clinical Solutions, Inc. immediately after the merger. In April 2012, the Company changed its name to Integrated Inpatient
Solutions, Inc.
The Company provides interior design
services targeting budget-minded individuals. The business operates under the trade name Integrated Interior Design. The Company
earns revenues from providing decorator services, which are billed on hourly and per diem rates. The interior design business
operates in South Florida. The business provides interior design, interior staging, accompanied shopping, paint color selection,
architectural drawing and other design services.
On August 26, 2014, the Company entered
into a Share Exchange Agreement pursuant to which the Company agreed to acquire all of the outstanding capital Shares of Integrated
Timeshare Solutions, Inc., a Nevada corporation (“ITS”) in exchange for newly issued shares of the Company’s
Common Shares. Accordingly, as a result of the exchange, ITS is now a wholly owned subsidiary of the Company. ITS was established
on July 2, 2014 as a real estate consulting firm specializing in timeshare liquidation and mortgage relief. The Company has discontinued
operations of this subsidiary.
On December 31, 2015, Integrated Inpatient
Solutions, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) pursuant
to which the Company agreed to acquire all of the assets and liabilities of Boston Carriers LTD, a corporation organized under
the laws of the Republic of the Marshall Islands (“Boston Carriers”) in exchange for newly issued shares of the Company’s
Series B Preferred Shares, $0.0001 par value per share (the “Series B Preferred Shares”), which were issued to the
former sole Shareholder of Boston Carriers (the “Exchange”) as described herein. Included in the assets acquired was
all outstanding Shares in Poseidon Navigation Corp. a corporation organized under the laws of the Republic of the Marshall Islands
(“Poseidon”). Accordingly, as a result of the Exchange, Poseidon is now a wholly owned subsidiary of the Company.
In connection with the execution of the Purchase Agreement, the Company filed a Certificate of Designations with the Secretary
of State of the State of Nevada regarding the creation of the Series B Preferred Shares and an aggregate of 1,850,000 shares of
Series B Preferred Shares were issued to the former Boston Carriers’ Shareholder.
Also on December 31, 2015, the Company’s then existing Directors
appointed Antonis Bertsos, Harris Frangos and Fred Pier to the Company’s Board of Directors and concurrent with the
closing of the Exchange (the “Closing Date”), the Company’s former sole officer and all former directors
resigned. Subsequently, the Company’s former sole officer was retained as a consultant and, pursuant to the terms of
Consulting Agreement, effective January 1, 2016, will be issued a total of 26,274,987 shares of the Company’s Common
Shares. (see Note 11) Also, the Company has agreed to issue an additional 10,000,000 shares of its Common Shares to an
outside service provider in lieu of cash payment upon the filing of Form 8-K to disclose the Purchase Agreement with the
Securities Exchange Commission. (See note 11) The Company has also reserved for issuance 1,850,000,000 shares of Common
Shares which may be issued upon the conversion of shares of the Series B Preferred Shares. Upon issuance of the Series B
preferred Shares, the former sole Shareholder of Boston Carriers will initially hold approximately 92.5% of our issued and
outstanding Common Shares.
The Series B Preferred Shares will automatically convert, with no action by the
holders thereof, into shares of Common Shares of the Corporation at a rate of 1,000 shares of Common Shares for each Series B
Preferred share, on the date that is five (5) business days following the distribution by the Corporation of a cash dividend
to the shareholders of its Common Shares of all amounts received by the Corporation as a refund to the Corporation from the
United States Internal Revenue Service in connection with the Corporation's 2014 federal tax return less a maximum of $20,000
which would solely be used to pay the Corporation’s obligation under a settlement agreement relating to the Strong v.
Strong lawsuit (the "Dividend"). The Series B Preferred Shares are not participating shares and prior to conversion
the holders thereof shall not receive any dividend or other distribution from the Corporation and no portion of the Dividend
will be distributed for the benefit of the holders of Series B Preferred Shares. Prior to conversion; however, the holders of
Series B Preferred Shares shall be entitled to vote on all matters on which holders of Common Shares are entitled to vote and
shall vote as if such Series B shares had converted, provided however, that the holders of Series B Preferred Shares shall
not be entitled to vote on any matter which would amend the terms of and restrictions on the Series B Preferred Shares.
In connection with the Exchange, the
Company and Boston Carriers contributed $75,000 and $100,000, respectively into an escrow account in which the Company is contributing
all funds in its bank accounts at December 31, 2015 less amounts necessary to cover outstanding checks. The Escrow Account is
maintained by our legal counsel, The Law Office of James G. Dodrill II, P.A., which will disburse funds as directed by Osnah Bloom,
our former CEO and current consultant to the Company, to pay obligations of the Company outstanding at the Closing Date as well
as to hold a reserve for payment of anticipated costs associated with ongoing lawsuits in which the Company is a party and which
relate to discontinued operations of the Company.
Also as a result of the Exchange, the
Company assumed Boston Carrier’s liabilities, including those associated with: (1) a Share Subscription Agreement between
Boston Carriers and YP Holdings, LLC, a Texas company (the “Subscription Agreement”) and (2) a Bareboat Hire purchase
agreement (“BBHP”) between Poseidon Navigation, Inc. (See note 4).
In order to comply with the terms of
the Subscription Agreement, the Company will need to make certain amendments to our Certificate of Incorporation. Pursuant to
the terms of the Subscription Agreement, YP Holdings, LLC (“YP”) invested $1,000,000 to acquire Boston Carriers’
preferred Shares (the “BC Preferred Shares”) which is convertible into shares of Boston Carrier’s Common Shares
(the “BC Common Shares”) as described in the Subscription Agreement. The terms of the Subscription Agreement required
that the issuer also issue an equal number of shares of BC Preferred Shares to YP as a commitment fee for YP to make its investment.
Because the Company has assumed all liabilities of Boston Carriers, the Company is ultimately responsible to issue shares of our
Common Shares to satisfy the terms of the Subscription Agreement.
On February 29, 2016, the Company agreed
to file Articles of Conversion with the Nevada Secretary of State and Articles of Domestications with the Registrar of the Republic
of the Marshall Islands effective March 21, 2016. Additionally, the Company agreed to adopt a Plan of Conversion whereby the Company
becomes a Marshall Islands company effective March 21, 2016. Concurrent with this plan the Company agreed to change its name to
Boston Carriers, Inc. (See Note 11)
Upon filing of the Articles of Conversion,
the Company switched the names of its Series B Preferred Shares to Series A Preferred Shares to more accurately describe the related
rights and preferences (See note 11). The Series B Preferred Shares, totaling 1,850,000 shares, was renamed to Series A Preferred
Shares. The non-redeemable, convertible preferred Shares totaling 250,000 shares, that are issued and outstanding as of December
31, 2015 and 2014, respectively, was renamed to Series B Preferred Shares.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The areas
involving the most significant use of estimates include legal contingencies, deferred tax benefits, refundable income taxes, estimated
realizable value of accounts receivable. These estimates are based on knowledge of current events and anticipated future events.
The Company adjusts these estimates each period as more current information becomes available. The impact of any changes in estimates
is included in the determination of earnings in the period in which the estimate is adjusted. Actual results may ultimately differ
materially from those estimates.
Cash
The Company considers cash in banks
and other highly liquid investments with insignificant interest rate risk and maturities of three months or less at the time of
acquisition to be cash and cash equivalents. At December 31, 2015 and December 31, 2014, the Company had no cash equivalents.
The Company maintains cash accounts in financial institutions that are guaranteed by the Federal Deposit Insurance Corporation
(“FDIC”), as well as in financial institutions that are not guaranteed by FDIC. Deposits in excess of the FDIC insurance
amount of $250,000 totaled $385,628 at December 31, 2015 and $80,000 at December 31, 2014. Management of the Company, considers
the probability of incurring a loss deriving from the valuation of cash accounts in financial institutions that are not covered
by FDIC, as remote.
Accounts Receivable
The determination of bad debt allowances
constitutes a significant estimate. Accounts receivable represent amounts due from interior design customers. Accounts receivable
are recorded and stated at the amount expected to be collected and have been adjusted to reflect the differences between charges
and the estimated reimbursable amounts.
Accounts receivable represent amounts
due from customers for design services and customers relinquishing their Timeshares. Accounts receivable from customers for design
services are recorded and stated at the amount expected to be collected and reflect an allowance for uncollectible amounts of
$3,022 and $6,987 at December 31, 2015 and December 31, 2014, respectively, Accounts receivable from customers relinquishing
their Timeshares was $0 and $9,000 at December 31, 2015 and December 31, 2014, respectively.
Inventory
Inventories consist of finished goods
and are stated at the lower of cost and market.
Property and Equipment
Property and equipment are recorded
at cost and depreciated on a straight-line basis over the estimated useful life of the asset. Expenditures for major renewals
and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs
are charged to expense as incurred.
Principles of Consolidation
The accompanying consolidated financial
statements include the accounts of Boston Carriers, Inc. (formerly known as Integrated Inpatient Solutions, Inc.) and its wholly
owned subsidiaries; Integrated Timeshare Solutions, Inc. and Poseidon Navigation Corp. (from December 31, 2015). All intercompany
transactions and balances have been eliminated in consolidation.
As described previously, the Company
completed the Share Exchange Agreement on August 26, 2014. The agreement resulted in the purchase of 100% of the outstanding shares
of Integrated Timeshare Solutions, Inc. for 47,278,938 shares of the Company’s Common Shares with a fair value of $378,231.
Purchase Price
|
|
$
|
378,231
|
|
Cash
|
|
|
10,106
|
|
Notes receivable – related party
|
|
|
7,000
|
|
Accounts Payable
|
|
|
(3,250
|
)
|
Due to Related Party
|
|
|
(8,590
|
)
|
Purchase Price Differential
|
|
$
|
372,965
|
|
Impairment of Goodwill and Long-Lived
Assets
The Company assesses the recoverability
of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or
group of long-lived assets over their remaining estimated useful lives, against their respective carrying amounts. Impairment,
if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If
long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than
originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated
useful lives. The Company determined that there were $0 and $372,965 of impairment of long-lived assets as of December
31, 2015 and December 31, 2014, respectively. During the year ended December 31, 2014, $372,965 of impairment on the goodwill
was associated with its purchase of all of the outstanding capital Shares of Integrated Timeshare Solutions, Inc.
Fair Value of Financial Instruments
U.S. GAAP for fair value measurements
establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three
levels. The fair value hierarchy gives the highest priority to quoted market prices (unadjusted) in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs are inputs, other
than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs.
The carrying amounts of the Company’s
financial assets and liabilities, such as cash, accounts receivable, deposits, accounts payable and accrued liabilities, approximate
their fair values because of the short maturity of these instruments.
Revenue Recognition
The Company follows ASC 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable
and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement
that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably
assured.
Interior Design
– The
Company provides design services billed at hourly rates. The Company recognizes revenue from design services when services are
rendered to the customers.
Timeshare Liquidation
–
The Company earns revenue from timeshare liquidation and mortgage relief services. The Company offers services for timeshare owners
that either owns their timeshare outright and for those that have a mortgage on their property, and are interested in exiting
their timeshare property. The Company recognizes revenue when the title has been transferred and the transaction is complete.
Maritime Transport
– The
Company will earn revenue from marine transportation services on a worldwide scale. The Company will recognize revenue when services
are rendered, the Company has a signed charter agreement or other evidence of an arrangement, the price is fixed or determinable,
and collection is reasonably assured.
Voyage revenues for the transportation
of cargo will be recognized ratably over the estimated relative transit time of each voyage. A voyage will be deemed to commence
when a vessel is available for loading and will be deemed to end upon the completion of the discharge of the current cargo. Estimated
losses on voyages are provided for in full at the time such losses become evident. Under a voyage charter, the Company agrees
to provide a vessel for the transportation of specific goods between specific ports in return for payment of an agreed upon freight
rate per ton of cargo.
Revenues will be recorded net of address commissions. Address commissions represent
a discount provided directly to the charterers based on a fixed percentage of the agreed upon charter rate. Since address commissions
represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange
for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.
Revenue from time chartering and bareboat
chartering will be earned and recognized on a daily basis as the service is delivered. Revenue arising from contracts that provide
our customers with continuous access to convoy capacity is recognized ratably over the period of the contracts.
Demurrage income represents payments
made by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and
will be recognized as it is earned.
Revenues arising from contracts that
provide our customers with continuous access to convoy capacity will be recognized ratably over the period of the contracts.
Revenues from time
chartering of vessels will be accounted for as operating leases and are thus recognized on a straight line basis as the average
revenue over the rental periods of such charter agreements as service is performed, except for loss generating time charters,
in which case the loss will be recognized in the period when such loss is determined. A time charter involves placing a vessel
at the charterer’s disposal for a period of time during which the charterer uses the vessel in return for the payment of
a specified daily hire rate. Short period charters for less than three months will be referred to as spot-charters. Charters extending
three months to a year are generally referred to as medium-term charters. All other charters will be considered long-term. Under
time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel.
Income Taxes
The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are
expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it
is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements
of Operations in the period that includes the enactment date.
The Company adopted section 740-10-25
of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under
Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The
Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section
740-10-25.
The Company’s tax returns for
the years ended 2012, 2013, 2014 and 2015 remain open for audit by the Internal Revenue Service.
On March 21, 2016, the Company redomiciled
to a Marshall Islands Corporation. Pursuant to various treaties and the United States Internal Revenue Code, the Company believes
that substantially all its operations will be exempt from income taxes in the Marshall Islands and the United States of America
effective March 21, 2016.
Marshall Islands and Liberia do not
impose a tax on international shipping income. Under the laws of Marshall Islands and Liberia, the countries of incorporation
of the Company and its subsidiary and the vessels’ registration, the companies are subject to registration and tonnage taxes
which will be included in direct vessel expenses in the accompanying consolidated statements of operations.
Earnings (Loss) Per Share
The Company computes earnings (loss)
per share in accordance with the provisions of FASB ASC Topic 260, "Earnings Per Share," which specifies the computation,
presentation and disclosure requirements for earnings (loss) per share for entities with publicly held Common Shares. Basic
earnings (loss) per share are computed by dividing net earnings (loss) available to common shareholders by the weighted average
number of common shares outstanding during the period. Diluted earnings (loss) per share are computed assuming the
exercise of dilutive Shares options under the treasury Shares method and the related income tax effects. As of December 31, 2015
and 2014, the Company has 1,850,000 and 0 shares of Series A Preferred Shares issued and outstanding convertible into 1,850,000,000
and 0 shares of Common Share, respectively. As of December 31, 2015 and 2014, the Company had 250,000 shares of Series B Preferred
Shares outstanding convertible into 2,500,000 shares of Common Share.
Reclassification
Certain reclassifications, including
discontinued operations, have been made to the prior year’s data to conform to current year presentation. These reclassifications
had no effect on net income (loss).
Recent Accounting Pronouncements
In April 2015, FASB issued Accounting
Standards Update (“ASU”) No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying
the Presentation of Debt Issuance Costs”, is to simplify presentation of debt issuance costs by requiring that debt issuance
costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount
of that debt liability, consistent with debt discounts. The ASU does not affect the recognition and measurement guidance for debt
issuance costs. For public companies, the ASU is effective for financial statements issued for fiscal years beginning after December
15, 2015, and interim periods within those fiscal years. Early application is permitted. We are currently reviewing the provisions
of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. We are currently
reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial
condition.
In April
2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-04, “Compensation – Retirement Benefits
(Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets”,
permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s
fiscal year-end and apply that practical expedient consistently from year to year. The ASU is effective for public business entities
for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.
Early application is permitted. We are currently reviewing the provisions of this ASU to determine if there will be any impact
on our results of operations, cash flows or financial condition.
In April 2015, FASB issued Accounting Standards Update (“ASU”)
No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting
for Fees Paid in a Cloud Computing Arrangement”, provides guidance to customers about whether a cloud computing arrangement
includes a software license. If such an arrangement includes a software license, then the customer should account for the software
license element of the arrangement consistent with the acquisition of other software licenses. If the arrangement does not include
a software license, the customer should account for it as a service contract. For public business entities, the ASU is effective
for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early application
is permitted. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of
operations, cash flows or financial condition.
In April 2015, FASB issued Accounting Standards Update (“ASU”) No. 2015-06,
“Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions”,
specifies that, for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of
a transferred business before the date of a drop down transaction should be allocated entirely to the general partner. In that
circumstance, the previously reported earnings per unit of the limited partners (which is typically the earnings per unit measure
presented in the financial statements) would not change as a result of the dropdown transaction. Qualitative disclosures about
how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings
per unit under the two-class method also are required. The ASU is effective for fiscal years beginning after December 15, 2015,
and interim periods within those fiscal years. Earlier application is permitted. We are currently reviewing the provisions of
this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In May 2015, FASB issued Accounting
Standards Update (“ASU”) No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its Equivalent)” removes the requirement to categorize within the
fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient.
The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at
fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which
the entity has elected to measure the fair value using that practical expedient. This ASU is effective for public business entities
for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the
amendments in this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal
years. A reporting entity should apply the amendments retrospectively to all periods presented. The retrospective approach requires
that an investment for which fair value is measured using the net asset value per share practical expedient be removed from the
fair value hierarchy in all periods presented in an entity’s financial statements. Earlier application is permitted. We
are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash
flows or financial condition.
In June 2015, FASB issued Accounting
Standards Update (“ASU”) No. 2015-10, “Technical Corrections and Improvements” covers a wide range of
Topics in the Codification. The amendments represent changes to clarify the Codification, correct unintended application of guidance,
or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice
or create a significant administrative cost to most entities. Additionally, some of the amendments will make the Codification
easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation
of guidance in the Codification. Transition guidance varies based on the amendments in this ASU. The amendments in this ASU that
require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective
upon the issuance of this ASU. We are currently reviewing the provisions of this ASU to determine if there will be any impact
on our results of operations, cash flows or financial condition.
In July 2015, FASB issued Accounting Standards Update (“ASU”) No.
2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” more closely align the measurement of
inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The amendments in
this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The
amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or
average cost. An entity should measure inventory within the scope of this Update at the lower of cost and net realizable
value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable
costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or
the retail inventory method. For public business entities, this ASU is effective for fiscal years beginning after December
15, 2016, including interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years
beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments
in this ASU should be applied prospectively with earlier application permitted as of the beginning of an interim or annual
reporting period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our
results of operations, cash flows or financial condition.
In August 2015, FASB issued Accounting
Standards Update (“ASU”) No. 2015-13, “Derivatives and Hedging (Topic 815): Application of the Normal Purchases
and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets” specifies that the use of
locational marginal pricing by an independent system operator does not constitute net settlement of a contract for the purchase
or sale of electricity on a forward basis that necessitates transmission through, or delivery to a location within, a nodal energy
market, even in scenarios in which legal title to the associated electricity is conveyed to the independent system operator during
transmission. Consequently, the use of locational marginal pricing by the independent system operator does not cause that contract
to fail to meet the physical delivery criterion of the normal purchases and normal sales scope exception. If the physical delivery
criterion is met, along with all of the other criteria of the normal purchases and normal sales scope exception, an entity may
elect to designate that contract as a normal purchase or normal sale. This ASU is effective upon issuance and should be applied
prospectively. Therefore, an entity will have the ability to designate on or after the date of issuance any qualifying contracts
as normal purchases or normal sales. We are currently reviewing the provisions of this ASU to determine if there will be any impact
on our results of operations, cash flows or financial condition.
In August 2015, FASB issued Accounting
Standards Update (“ASU”) No.2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective
Date” defers the effective date ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit
entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning
after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only
as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.
All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018,
and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply
the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim
reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of
an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning
one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. We are currently
reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial
condition.
In November 2015, FASB issued
Accounting Standards Update (“ASU”) No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of
Deferred Taxes”, which requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement
of financial position. The amendments in this Update apply to all entities that present a classified statement of financial position.
The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented
as a single amount is not affected by the amendments in this Update. For public business entities, the amendments in this Update
are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within
those annual periods. For all other entities, the amendments in this Update are effective for financial statements issued for
annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018.
Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. We are currently
reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial
condition.
All other newly issued accounting pronouncements
but not yet effective have been deemed either immaterial or not applicable.
NOTE 2 - PROPERTY AND EQUIPMENT
The Company’s property and equipment consisted of the following at December 31,
2015 and December 31, 2014:
|
|
|
|
|
|
Estimated
|
|
|
2015
|
|
2014
|
|
Useful Life
|
Computer and Office Equipment
|
|
$
|
33,868
|
|
|
$
|
33,868
|
|
|
5 -7 years
|
Furniture and Fixtures
|
|
|
18,530
|
|
|
|
18,530
|
|
|
7 years
|
|
|
|
52,398
|
|
|
|
52,398
|
|
|
|
Less: Accumulated Depreciation
|
|
|
(52,398
|
)
|
|
|
(52,398
|
)
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Depreciation expense for the years
ended December 31, 2015 and December 31, 2014 was $0 and $3,567, respectively.
NOTE 3 – INCOME TAXES
The following is a reconciliation of
the effective income tax rate to the Federal statutory rate:
|
|
2015
|
|
2014
|
Income tax calculated at statutory rate
|
|
|
(34.00
|
%)
|
|
|
(34.25
|
%)
|
State income taxes, net of Federal tax benefit
|
|
|
(3.63
|
%)
|
|
|
(5.5
|
%)
|
Temporary differences
|
|
|
30.00
|
%
|
|
|
(5.84
|
%)
|
Permanent Differences
|
|
|
0.70
|
%
|
|
|
25.14
|
%
|
Change in valuation allowance
|
|
|
6.93
|
%
|
|
|
(10.49
|
%)
|
(Benefit) from income taxes
|
|
|
(0.00
|
%)
|
|
|
(30.94
|
%)
|
The accompanying financial statements
include refundable income taxes of $237,077 and $237,077 at December 31, 2015 and 2014. These amounts represent the excess of
federal and state income tax deposits over the expected tax liability.
In addition, the Company recognized
a deferred tax asset of approximately $159,500 during 2014. The deferred tax asset was derived from $35,000 from the write-off
of prepaid malpractice insurance policy premiums that will be amortized over a three-year period for income tax reporting purposes,
$41,000 related to accrued malpractice expenses not deductible until paid for income tax reporting purposes and a benefit of $83,500
from Florida NOL tax carryforwards. The Company recorded an increase in the valuation allowance of approximately $30,500 for
the deferred tax asset because of uncertainty of realization.
|
|
|
|
|
|
|
2015
|
|
2014
|
Amortization of intangible assets
|
|
$
|
94,366
|
|
|
$
|
112,894
|
|
Operating loss carryforward
|
|
|
187,019
|
|
|
|
46,606
|
|
Gross deferred tax assets
|
|
|
281,385
|
|
|
|
159,500
|
|
Valuation allowance
|
|
|
(281,385
|
)
|
|
|
(159,500
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability/(asset)
|
|
$
|
—
|
|
|
|
|
|
The Company has net operating loss
carry forwards (NOL) for income tax purposes of approximately $373,000. This loss is allowed to be offset against future income
until the year 2036 when the NOL’s will expire. Other timing differences relate to amortization for the acquisition of Integrated
Timeshares Solutions, Inc. during the year ended December 31, 2014. The tax benefits relating to all timing differences have been
fully reserved for in the valuation allowance account due to the substantial losses incurred through December 31, 2015. The change
in the valuation allowance for the year ended December 31, 2015 was an increase of $121,885. The Company's tax returns for the
prior three years remain subject to examination by major tax jurisdictions.
The Company has not completed a study
to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company became
a “loss corporation” under the definition of Section 382. If the Company has experienced an ownership changed, utilization
of the NOL carryforwards would be subject to an annual limitation under Section 382 of the Code which is determined by first multiplying
the value of the Company’s Shares at the time of ownership change by the applicable long term, tax-exempt rate, and then
could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL carryforwards
before utilization. Further, until a study is completed and any limitation knows, no positions related to limitations are being
considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization
as a result of such limitation will be removed from deferred tax assets with a corresponding reduction of the valuation allowance.
Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results
of operation or financial position of the Company. The NOL carryforwards expired in the years 2034 through 2035.
NOTE 4 – ADVANCES FOR BAREBOAT
CONTRACT
Poseidon Navigation Corp. (“Poseidon”),
which is now our wholly owned subsidiary, will acquire a 1994 Japanese built Handymax vessel (43,656 dwt). The BBHP is essentially
a “lease to own” arrangement. Poseidon paid $500,000 at November 24, 2015 as a down payment and will pay $1,721.25
per day, payable in advance every 30 days, for five years commencing on the date of delivery of the vessel. At the conclusion
of the five years Poseidon will have the right to purchase the vessel for $10. On January 27, 2016 the company reached a further
agreement to accept taking delivery of a 1996 built Handymax vessel (45,693 dwt) instead and to reduce the bareboat hire rate.
(See Note 11)
NOTE 5 - SHAREHOLDERS' EQUITY
Common Shares
On July 16, 2014, the Company increased the
authorized shares of Common Shares from 100,000,000 to 300,000,000 shares with the par value remaining at $0.001 per share.
On June 10, 2014, the Company issued 2,700,000
shares of Common Shares to a non-related party for services with a fair value of $24,570.
On June 10, 2014, the Company issued 2,700,000
shares of Common Shares to a non-related party for services with a fair value of $24,570.
On August 26, 2014, the Company issued 25,411,801
shares of Common Shares to Osnah Bloom, CEO effective through December 31, 2015, for services rendered with a fair value of $203,294.
On August 26, 2014, the Company issued 26,833,992
shares of Common Shares to Hina Sharma, former Director for services rendered with a fair value of $214,672.
On August 26, 2014, the Company issued 21,296,819
shares of Common Shares to non-related party in exchange for 450,000 shares of Integrated Timeshare Solutions, Inc with a fair
market value of $170,375.
On August 26, 2014, the Company issued 21,296,819
shares of Common Shares to non-related party in exchange for 450,000 shares of Integrated Timeshare Solutions, Inc with a fair
market value of $170,375.
On August 26, 2014, the Company issued 4,685,300
shares of Common Shares to non-related party in exchange for 100,000 shares of Integrated Timeshare Solutions, Inc with a fair
market value of $37,481.
On August 26, 2014, the Company issued 4,966,855
shares of Common Shares to James Dodrill for legal services rendered with fair value of $39,736
On June 23, 2015, the company amended its
Articles of Incorporation to increase the total number of shares of all classes of Shares to 2,010,000,000 shares, of which 2,000,000,000
shares shall be Common Shares with a par value of $0.0001 per share, and 10,000,000 shares shall be Serial Preferred Shares with
a par value of $0.0001 per share.
In March 2015, the Company entered into a
settlement agreement with a former Officers and shareholders. Under the terms of the agreement, the Company agreed to pay $19,250
and forgive the $5,000 note receivable paid to the former Officer. The former Officers and shareholders agreed to relinquish his
interest in the Company including 21,296,819 shares of the Company’s Common Shares. As of December 31, 2015, the Company
has paid $19,250 to the former officer and the share ownership has been returned to the Company.
In May 2015, the former Directors agreed to
relinquish 25,982,119 shares of the Company’s Common Shares due to Company winding down the timeshare business. As of December
31, 2015 the share ownership has been returned to the Company.
Preferred Shares
The Company has 10,000,000 authorized
shares of non-redeemable, convertible preferred Shares with a par value of $.0001. Each share of preferred Shares is convertible
to 10 shares of Common Shares.
On November 24, 2015 (the “Effective Date”), prior to the Asset
Purchase Agreement with Boston Carriers, LTD (“Boston Carriers), Boston Carriers sold Preferred shares
raising net proceeds of $1,000,000. Pursuant to the terms of the Subscription Agreement, YP Holdings, LLC (“YP”)
invested $1,000,000 to acquire 100 Boston Carriers’ Preferred Shares (the “BC Preferred Shares”) with a
face value of $10,000 each which is convertible into shares of Boston Carriers’ Common Shares (the “BC
Common Shares”) as described in the Certificate of Designations with respect to the Preference Shares (the
“Certificate of Designations”). Pursuant to the Subscription Agreement, YP will be issued an equal number of
shares of BC Preferred Shares as a commitment fee. Pursuant to the Certificate of Designations, the BC Preferred Shares will
accrue cumulative dividends at a rate equal to 10.75% per annum, subject to adjustment as provided in the Certificate of
Designations. The dividends are payable in cash or BC Common Shares at its option and upon conversion of the BC Preferred
Shares; such dividends have a guaranteed payable amount. The Certificate of Designations will also provide that, immediately
upon the Effective Date , YP has the right to convert the BC Preferred Shares into BC Common Shares at a conversion
price of $1.00 per BC Common Shares, subject to adjustment as set forth in the Certificate of Designations. On or after ten
years from the Effective Date, Boston Carriers has the right to redeem the BC Preferred Shares at the liquidation value of
$10,000 per share (the “Liquidation Value”), plus accrued and unpaid dividends thereon. Prior to such time,
Boston Carrier may redeem the BC Preferred Shares at the Liquidation Value plus the Embedded Dividend Liability (as defined
in the Certificate of Designations), less any dividends paid (the “Early Redemption Price”). Upon certain
liquidation events occurring prior to the ten-year anniversary of the Effective Date, Boston Carriers will redeem the BC
Preferred Shares at the Early Redemption Price. The subscription is recorded as Shares subscription liability as the BC
Preferred Shares have not been issued by Boston Carriers. Boston Carriers has reached an agreement with the subscriber for
the actual issuance of the shares to take place from Boston Carriers, Inc. (formerly known as Integrated Inpatient
Solutions Inc). On December 31, 2015, the Company assumed the stock subscription liability of $1,000,000, and the amount
remaining outstanding as of December 31, 2015 as the Preference Shares have not been issued to the subscriber.
On December 31, 2015, the Company entered into an Asset Purchase Agreement (the
“Purchase Agreement”) pursuant to which the Company agreed to acquire all of the assets and liabilities of Boston
Carriers LTD, a corporation organized under the laws of the Republic of the Marshall Islands (“Boston Carriers”)
in exchange for newly issued shares of the Company’s Series B Preferred Shares, $0.0001 par value per share (the
“Series B Preferred Shares”), which were issued to the former sole Shareholder of Boston Carriers (the
“Exchange”) as described herein. Included in the assets acquired was all outstanding Shares in Poseidon
Navigation Corp. a corporation organized under the laws of the Republic of the Marshall Islands (“Poseidon”).
Accordingly, as a result of the Exchange, Poseidon is now a wholly owned subsidiary of the Company.
In connection with the execution of
the Purchase Agreement, the Company filed a Certificate of Designations with the Secretary of State of the State of Nevada regarding
the creation of the Series B Preferred Shares and an aggregate of 1,850,000 shares of Series B Preferred Shares were issued to
the former Boston Carriers’ Shareholder.
The Series B Preferred Shares will
automatically convert, with no action by the holders thereof, into shares of Common Shares of the Corporation at a rate of 1,000
shares of Common Shares for each Series B Preferred share, on the date that is five (5) business days following the distribution
by the Corporation of a cash dividend to the shareholders of its Common Shares of all amounts received by the Corporation as a
refund to the Corporation from the United States Internal Revenue Service in connection with the Corporation's 2014 federal tax
return less a maximum of $20,000 which would solely be used to pay the Corporation’s obligation under a settlement agreement
relating to the Strong v. Strong lawsuit (the "Dividend"). The Series B Preferred Shares are not participating shares
and prior to conversion the holders thereof shall not receive any dividend or other distribution from the Corporation and no portion
of the Dividend will be distributed for the benefit of the holders of Series B Preferred Shares. Prior to conversion; however,
the holders of Series B Preferred Shares shall be entitled to vote on all matters on which holders of Common Shares are entitled
to vote and shall vote as if such Series B shares had converted, provided however, that the holders of Series B Preferred Shares
shall not be entitled to vote on any matter which would amend the terms of and restrictions on the Series B Preferred Shares.
On February 29, 2016, the Company agreed
to file Articles of Conversion with the Nevada Secretary of State and Articles of Domestications with the Registrar of the Republic
of the Marshall Islands effective March 21, 2016. Additionally, the Company agreed to adopt a Plan of Conversion whereby the Company
becomes a Marshall Islands company effective March 21, 2016 . Concurrent with the Plan of Conversions, the Company agreed
to change its name to Boston Carriers, Inc. (See Note 11)
Further, as per the Articles of Incorporation,
filed with the Registrar of the Republic of Marshall Islands, and effective March 21 2016, the aggregate number of shares of Shares
that the Company is authorized to issue is two billion and ten million (2,010,000,000) shares of capital Shares of which:
(i)
|
|
two billion (2,000,000,000) shares shall be registered shares of common Shares, each
with a par value of US$0.0001 per share (the “Common Shares”) registered shares;
|
(ii)
|
|
one million eight hundred and fifty thousand (1,850,000) shares shall be registered
preferred shares, each with a par value of US$0.0001 per share (the “Series A Preferred Shares”), this Series A Preferred
Shares will automatically convert, with no action by the holders thereof, into shares of Shares of the Company at a rate of 1,000
shares of common Shares for each Series A Preferred share, on the date that is five (5) business days following the distribution
by the Company of a cash dividend to the shareholders of its common Shares of all amounts received by the Corporation as a refund
to the Company from the United States Internal Revenue Service in connection with Company’s 2014 federal tax return less
a maximum of $20,000 which would solely be used to pay a Company’s obligation under a settlement agreement relating to the
Strong v. Strong lawsuit (the “Dividend”). The Series A Preferred Shares are not participating shares and prior to
conversion the holders thereof shall not receive any dividend or other distribution from the Company and no portion of the Dividend
will be distributed for the benefit of the holders of Series A Preferred Shares. Prior to conversion, however, the holders of
Series A Preferred shares shall be entitled to vote on all matters on which holders of common Shares are entitled to vote and
shall vote as if such Series A Preferred Shares had converted, provided however, that the holders of Series A Preferred Shares
shall not be entitled to vote on any matter which would amend the terms of and restrictions on the Series A Preferred shares;
|
(iii)
|
|
two hundred and fifty thousand (250,000) shares shall be registered preferred shares,
each with a par value of US$0.0001 (the “Series B Preferred Shares”) with the holder of this Series B Preferred Shares
having the right to convert the preferred Shares into common Shares at a ratio of ten shares of common Shares for each share of
preferred Shares held and having no other right;
|
(iv)
|
|
seven million nine hundred thousand (7,900,000) shares shall be registered preferred
shares, each with a par value of US$0.0001 (the Series C Preferred Shares”).
|
All the authorized shares have been
retroactively adjusted and reflected in the financial statements.
Upon filing of the Articles of Conversion,
the Company switched the names of its Series B Preferred Shares to Series A Preferred Shares to more accurately describe the related
rights and preferences (See Note 11). The Series B Preferred Shares totaling 1,850,000 shares, was subsequently renamed to Series
A Preferred Shares. The non-redeemable, convertible preferred Shares totaling 250,000 shares, which are issued and are outstanding
as of December 31, 2015 and 2014, respectively, was subsequently renamed to Series B Preferred Shares.
NOTE 6 - COMMITMENT AND CONTINGENCIES
Commitments
In April 2013, the Company entered
into a one-year office lease agreement at $450 per month, and the lease expired in May 2014. The office space was being occupied
on a month to month basis until the lease agreement was amended. In August 2014, the Company entered into an amended lease agreement.
The lease term is one year commencing on June 1, 2014 and expired on May 31, 2015. The office space is currently being occupied
on a month to month basis and the Company has no plans on relocating. The monthly rent remains at $450 per month. Total rent expense
for the year ended December 31, 2015 and December, 31 2014 was $4,770 and $5,724, respectively.
On August 26, 2014, the Company entered
into an employment agreement with its Chief Executive Officer. The agreement is for a period of two years unless renewed or extended
by both parties. The agreement provides an annual base salary of $80,000. The Officer is also eligible for a bonus payment based
on the gross revenue achieved by the Company at the end of each twelve-month period following commencement of this agreement.
The bonuses are ranging from $40,000 to $100,000 for gross revenues ranging from $3,750,000 to $7,500,000 and over $7,500,000.
As of December 31, 2015 and December 31, 2014, the Company did not reach the targeted gross revenue respectively. Therefore, the
Officer did not receive any bonuses in 2015 and 2014. This employment agreement was subsequently terminated and replaced by a
consulting agreement effective January 1, 2016. (See Note 11)
On August 26, 2014, the Company entered
into an employment agreement with its Senior Vice President of Sales. The agreement is for a period of two years unless renewed
or extended by both parties. The agreement provides an annual base salary of $80,000. The Officer is also eligible for a bonus
payment based on the gross revenue achieved by the Company at the end of each twelve-month period following commencement of this
agreement. The bonuses are ranging from $40,000 to $100,000 for the gross revenue ranging from $3,750,000 to $7,500,000 and over
$7,500,000. In March 2015, the Officer entered into a settlement agreement with the Company. As a result, the employment agreement
was concurrently terminated.
Poseidon Navigation Corp. (“Poseidon”),
which is now our wholly owned subsidiary, will acquire a 1994 Japanese built Handymax vessel (43,656 dwt). The BBHP is essentially
a “lease to own” arrangement. Poseidon paid $500,000 at November 24, 2015 as a down payment and will pay $1,721.25
per day, payable in advance every 30 days, for five years commencing on the date of delivery of the vessel. At the conclusion
of the five years, Poseidon will have the right to purchase the vessel for $10. On January 27, 2016, Poseidon reached a further
agreement to accept delivery of a 1996 built Handymax Vessel instead and to reduce the bareboat hire rate. (See Note 11)
Contingencies
While providing healthcare services
in the ordinary course of our business, the Company became involved in lawsuits and legal proceedings involving claims of medical
malpractice related to medical services provided by our affiliated physicians. The Company is currently involved in the settlement
stages of one such matter. The accompanying financial statements include an accrual of $95,000 for this matter under the caption
liabilities from discontinued operations. This accrual represents the Company’s anticipated deductible on the settlement.
The details of this settlement are described more fully below.
In September 2013, the Company became
involved in a legal settlement relating to a malpractice claim. As a result of the settlement agreement, the Company agreed to
pay a total amount of $500,000, which will be covered by the tail malpractice insurance. The Company has approximately $95,000 for the
deductible on the tail malpractice insurance as of December 31, 2015 and December 31, 2014.
Edra Schwartz as the Personal Representative
of the Estate of Robert A. Schwartz, Deceased, v. Jason Strong, M.D., Aretha Nelson, M.D. and Inpatient Clinical Solutions, Inc
.
- This matter involves a 66 year old white male who developed a MRSA (methicillin-resistant staphylococcus aureus) infection following
a craniotomy to remove a suspected meningioma. The matter alleges (1) Failure to properly interpret the brain MRIs preoperatively
(this is directed at the radiologist preoperatively); and (2) Failure to diagnose a MRSA infection and brain abscess following
the craniotomy on May 6, 2009. The patient died on September 24, 2009. The suit commenced October 18, 2011 and the case is pending
in the circuit court of the 17 Judicial Circuit in and for Broward County, FL, Case # 11-10485. The claim is for unspecified monetary
damages. The Company is defending this case vigorously and, while the claims for damages have not been quantified, the Company
does not believe that a negative decision would have a material impact on the Company.
In November 2011, the Company became
involved in a legal settlement relating to a malpractice claim for $100,000. As a result of the settlement agreement, the Company
agreed to pay a total amount of $100,000. As of December 31, 2015 and December 31, 2014, the remaining balances were approximately
$20,000, which are due within the next year, and $40,000 respectively.
In November 2014, the Company had a
dispute with a former Officer and shareholder. The agreement was settled in March 2015 whereupon the Company agreed to pay the
former Officer and shareholder $19,250 and forgive the $5,000 note receivable paid to the former Officer (see Note 4). The former
Officer and shareholder agreed to relinquish his entire interest in the company, including his Shares ownership. As of December
31, 2015, the Company has paid $19,250 to the former officer and the Shares ownership has been returned to the Company.
In October 2015, the Company became
involved in a potential legal settlement relating to a malpractice claim. The Company and the other parties have not entered into
a settlement agreement. However, the Company anticipates that the amount will be covered by the tail malpractice insurance. The
Company has accrued $25,000 for the deductible on the tail malpractice insurance as of December 31, 2015.
The Company is currently not aware
of any other such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse
effect on its business, financial condition or operating results except for the items described above. Litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.
The accrued legal settlements are presented
as liabilities from discontinued operation in the accompanying balance sheets (see Note 9).
NOTE 7 – TRANSACTIONS WITH
RELATED PARTIES
On August 26, 2014, the Company issued 25,411,801
shares of Common Shares to Osnah Bloom, former CEO for services rendered with a fair value of $203,294.
On August 26, 2014, the Company issued 26,833,992
shares of Common Shares to Hina Sharma, former Director for services rendered with a fair value of $214,672.
In March 2015, the Company entered into a
settlement agreement with a former Officers and shareholders. Under the terms of the agreement, the Company agreed to pay $19,250
and forgive the $5,000 note receivable paid to the former Officer. The former Officers and shareholders agreed to relinquish his
interest in the Company including 21,296,819 shares of the Company’s Common Shares. As of December 31, 2015, the Company
has paid $19,250 to the former officer and the Shares ownership has been returned to the Company treasury.
During the year ended December 31,
2015, the former Officer and former principal shareholder of the Company paid expenses on behalf of the Company in the amount
of $6,000.
NOTE 8 – CONCENTRATIONS
Geographic and Employment
The interior design business was concentrated
in South Florida. The Company relies on a former officer, which has remained as a temporary consultant. (See Note 11)
The Company intends to carry on the
business of maritime transportation and discontinue its interior decorating services. The maritime transportation business is
based in Athens, Greece and is an integrated dry bulk shipping company which will own, operate and manage a fleet of dry bulk
vessels that transport iron ore, coal, grain, steel products, cement, alumina and other dry bulk cargoes internationally.
Revenue and Accounts Receivable
During the year ended December 31, 2015, 58%
of revenues from the design business were derived from three customers of 28%, 19%, and 11% of net revenue. At December 31, 2014,
76% of revenues were derived from two customers at 65% and 11%.
As of December 31, 2015, 84% of accounts receivable
from the design business were derived from four customers at 28%, 28%, 17%, and 11%.
As of December 31, 2014, 76% of accounts receivable
from the design business were derived from two customers at 65% and 11%.
Accounts receivable from customers
relinquishing their Timeshares was $0 and $9,000 at December 31, 2015 and 2014.
NOTE 9 -
Discontinued
Operations
In March 2013 management decided to
exit the
health care provider
business
and in November
2014 management decided to exit the timeshare business. In December 2015, the Company decided to exit the interior design business
and will conduct business of maritime transportation (see Note 8). Accordingly, the financial statements have been presented in
accordance with ASC 205-20,
Discontinued Operations
.
The following table illustrates the
reporting of the discontinued operations included in the Statements of Operations for the year ended December 31, 2015 and December
31, 2014.
|
|
December 31,
2015
|
|
December 31,
2014
|
Timeshare deed liquidation revenue
|
|
$
|
54,231
|
|
|
$
|
40,787
|
|
Impairment on Goodwill occurred in
Integrated Timeshare Solutions, Inc
|
|
|
—
|
|
|
|
372,965
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
24,906
|
|
|
|
232,141
|
|
Total operating expenses
|
|
|
24,906
|
|
|
|
605,106
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
29,325
|
|
|
($
|
564,319
|
)
|
As of December 31, 2015 and December
31, 2014, assets and liabilities from discontinued operations are listed below:
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
9,443
|
|
|
$
|
20,496
|
|
Accounts receivable
|
|
|
—
|
|
|
|
9,000
|
|
Escrow funds - timeshare
|
|
|
—
|
|
|
|
16,050
|
|
Assets from discontinued operations
|
|
$
|
9,443
|
|
|
$
|
45,546
|
|
|
|
|
|
|
|
|
|
|
Accrued legal settlements
|
|
$
|
94,294
|
|
|
$
|
108,589
|
|
Client Deposits - Timeshare
|
|
|
—
|
|
|
|
46,784
|
|
Other
|
|
|
—
|
|
|
|
11,933
|
|
Liabilities from discontinued operations
|
|
$
|
94,294
|
|
|
$
|
167,306
|
|
NOTE 10 – GOING CONCERN
As reflecedt in the accompanying consolidated
financial statements, the Company had recurring losses from operations, has used cash in operations of $380,218 and has an accumulated
deficit of $834,180 as of December 31, 2015. This raised substantial doubt about its ability to continue as a going concern. The
ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital
and implement its new business plan. The consolidated financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
Management believes that actions presently
being taken to obtain additional funding and implement its strategic plans, including the acquisition of the 1996 built Handymax
Vessel (See Note 11) provide the opportunity for the Company to continue as a going concern.
NOTE 11 – SUBSEQUENT EVENTS
On January 1, 2016, the Company agreed
to issue 26,274,987 shares of Common Shares to Osnah Bloom as compensation pursuant to a Consulting Agreement. The shares were
issued on February 16, 2016 with a fair value of $105,100.
On December 31, 2015, the Company agreed
to issue 10,000,000 shares of Common Shares to James Dodrill for legal services rendered. There shares were issued on February
1, 2016 with a fair value of $25,000.
On January 27, 2016,
Poseidon reached a further agreement to accept taking delivery of a 1996 built Handymax vessel (45,693 dwt) instead and to reduce
the bareboat hire rate. After the lessor failed to deliver the vessel in accordance with agreed terms, we mutually agreed to terminate
the existing contract (dated November 24, 2015) without liability to either party. The amount which Poseidon previously paid,
has been transferred and credited toward a new agreement for a newer vessel. Under the terms of the new agreement, Poseidon will
acquire a 1996 Japanese built Handymax vessel (45,693 dwt). In addition to the down payment of $500,000, which was paid on November
24, 2015, we will pay $1,315 per day, payable in advance every 30 days, for five years commencing on the date of delivery of the
vessel. At the conclusion of the five years, Poseidon will have the right to purchase the vessel for $125. The vessel was delivered
to the Company on February 13, 2016.
As of February 13, 2016, the Company’s
future minimum commitments, net of commissions under chartered-in vessels, were as follows:
Chartered-in
vessel to be delivered
|
2016
|
|
|
$
|
423,430
|
|
|
2017
|
|
|
|
479,975
|
|
|
2018
|
|
|
|
479,975
|
|
|
2019
|
|
|
|
479,975
|
|
|
Thereafter
|
|
|
|
536,645
|
|
|
Total
|
|
|
$
|
2,400,000
|
|
On February 29, 2016, the Company agreed
to file Articles of Conversion with the Nevada Secretary of State and Articles of Domestications with the Registrar of the Republic
of the Marshall Islands effective March 21, 2016. Additionally, on February 29, 2016, the Company agreed to adopt a Plan of Conversion
whereby the Company becomes a Marshall Islands company effective March 21, 2016. Concurrent with this plan the Company agreed
to change its name to Boston Carriers, Inc.
Upon filing of the Articles of Conversion,
the Company switched the names of its Series B Preferred Shares to Series A Preferred Shares to more accurately describe the related
rights and preferences (See Note 11). The Series B Preferred Shares totaling 1,850,000 shares, was renamed to Series A Preferred
Shares. The non-redeemable, convertible preferred Shares totaling 250,000 shares that are issued and are outstanding as of December
31, 2015 and 2014, respectively, was renamed to Series B Preferred Shares.
Following consummation of the above
items, the Company adopted a plan to file Amended and Restated Articles of Incorporation to increase the authorized shares of
the Company’s Shares to issue fifty billion two million and one hundred thousand (50,002,100,000) shares of capital Shares,
of which:
(i)
|
|
forty billion (40,000,000,000) shares shall be registered shares of Common Shares,
par value of US$0.0001 per share (the “Common Shares”);
|
(ii)
|
|
five billion (5,000,000,000) shares shall be registered shares of Class B Common Shares,
par value US$0.0001 per share (the “Class B Shares”);
|
(iii)
|
|
one million eight hundred and fifty thousand (1,850,000) shares shall be registered
preferred shares, each with a par value of US$0.0001 (the “Series A Preferred Shares”), this Series A Preferred
Shares will automatically convert, with no action by the holders thereof, into shares of Common Shares of the Corporation at a
rate of 1,000 shares of Common Shares for each Series A Preferred share, on the date that is five (5) business days following
the distribution by the Corporation of a cash dividend to the shareholders of its Common Shares of all amounts received by the
Corporation as a refund to the Corporation from the United States Internal Revenue Service in connection with the Corporation's
2014 federal tax return less a maximum of $20,000 which would solely be used to pay the Corporation’s obligation under a
settlement agreement relating to the Strong v. Strong lawsuit (the "Dividend"). The Series A Preferred Shares are not
participating shares and prior to conversion the holders thereof shall not receive any dividend or other distribution from the
Corporation and no portion of the Dividend will be distributed for the benefit of the holders of Series A Preferred shares. Prior
to conversion, however, the holders of Series A Preferred shares shall be entitled to vote on all matters on which holders of
Common Shares are entitled to vote and shall vote as if such Series A Preferred shares had converted, provided however, that the
holders of Series A Preferred shares shall not be entitled to vote on any matter which would amend the terms of and restrictions
on the Series A Preferred shares;
|
(iv)
|
|
two hundred and fifty thousand (250,000) shares shall be registered preferred shares,
each with a par value of US$0.0001 (the “Series B Preferred Shares”) with the holder of this Series B Preferred
Shares having the right to convert the preferred Shares into Common Shares at a ratio of ten shares of Common Shares for each
share of preferred Shares held and having no other right;
|
(v)
|
|
five billion (5,000,000,000) shares shall be registered preferred shares, each with
a par value of US$0.0001 (the “Series C Preferred Shares”) . The number of authorized shares of Common Shares,Class
B Shares Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares may be increased or decreased (but
not below the number of shares thereof then outstanding) by resolution of the Board of Directors or the affirmative vote of the
holders of a majority of the voting power of all of the then outstanding shares of the capital Shares of the Corporation entitled
to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the
Preferred Shares, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Shares Designation.
|
As of March 30, 2016, The
amended and Restated Articles of Incorporation have not be filed and approved by The Registrar of The Republic of The Marshall
Islands.