Living Breath Project, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
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For the Period from
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For the Three Months
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For the Three Months
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December 27, 2005
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Ended
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Ended
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(inception) through
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August 31, 2013
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August 31, 2012
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August 31, 2013
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(Unaudited)
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(Unaudited)
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(Unaudited)
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CASH FLOWS FROM OPERATING
ACTIVITIES:
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|
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Net loss
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$
|
(50,490
|
)
|
$
|
(255,064
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)
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$
|
(1,432,970
|
)
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Adjustments to reconcile
net loss to net cash used in operating activities
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Depreciation
expense
|
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243
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|
|
243
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|
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1,471
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|
Changes in
operating assets and liabilities:
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|
|
|
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Accounts payable
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43,019
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-
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63,874
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Accrued expenses and other current liabilities
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(37,700
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)
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-
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4,030
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Net cash
used in operating activities
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(44,928
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)
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(254,821
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)
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(1,363,595
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)
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CASH FLOWS FROM INVESTING
ACTIVITIES:
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Purchases of
property and equipment
|
|
-
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-
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(4,866
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)
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Net cash used in
investing activities
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-
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-
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(4,866
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)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Deposits from stockholder
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38,500
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|
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-
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38,500
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Proceeds from sale of equity units
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|
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-
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308,219
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Capital contribution
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|
-
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243,719
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1,023,471
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Net cash
provided by financing activities
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38,500
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|
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243,719
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1,370,190
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Effect of
exchange rate changes on cash
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Net
change in cash
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(6,428
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)
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(11,102
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)
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1,729
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Cash at
beginning of the period
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8,157
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15,415
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-
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|
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Cash at
end of the period
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$
|
1,729
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|
$
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4,313
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|
$
|
1,729
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|
|
|
|
|
|
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SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
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Interest paid
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$
|
-
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$
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-
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$
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-
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Income tax paid
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$
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-
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$
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-
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$
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-
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|
See accompanying notes to the consolidated financial
statements.
F-5
Living Breath Project, Inc.
(A Development Stage Company)
August 31, 2013 and 2012
Notes to the Consolidated Financial Statements
(Unaudited)
Note 1 Organization and Operations
Living Breath Project, Inc. (Formerly Dilmax
Corp.)
Living Breath Project, Inc. (the Company) was incorporated
under the laws of the State of Nevada on April 14, 2011 as Dilmax Corp. The
Companys original business was on-line distribution of music for fitness.
On October 1, 2012, Genie OMalley acquired 8,100,000 shares of
the Companys common stock, par value $0.001 per share (the Common Stock),
resulting in a change of control of the Company. Also, on October 1, 2012, Clear
Mind Technology Corp., a company owned and controlled by Ms. OMalley, acquired
approximately 735,000 shares of the Companys Common Stock from twenty-six
non-affiliated shareholders.
On November 6, 2012, the Company amended its Articles of
Incorporation to (i) change its name to Living Breath Project, Inc., (ii)
increase the number of its authorized shares of capital stock from 75,000,000 to
210,000,000 shares of which (a) 200,000,000 shares were designated common stock,
par value $0.001 per share and (b) 10,000,000 were designated preferred stock,
par value $0.001 per share, and (iii) effectuated a three-for-one forward-split
of its Common Stock for shareholders of record as of November 6, 2012.
iBreathe, Inc.
iBreathe, Inc. ("iBreathe) was incorporated on December 27,
2005 under the laws of the State of Delaware. On July 9, 2008, iBreathe was
re-domiciled as a Minnesota corporation by virtue of a merger with iBreathe,
Inc., a Minnesota corporation.
Acquisition of iBreathe, Inc. Treated as a Reverse
Acquisition
On November 6, 2012, the Company consummated an Agreement and
Plan of Merger (the Agreement) with iBreathe, Inc., a Minnesota corporation
(iBreathe) whereby iBreathe merged with and into the Company (the Merger) in
exchange for an aggregate of 18,029,694 shares (6,009,898 pre-split shares) (the
Merger Shares) of the Companys newly issued shares of Common Stock. The
shares issued represented approximately 63.6% of the issued and outstanding
common stock immediately after the consummation of the Acquisition Agreement.
As a result of the controlling financial interest of the former
stockholder of iBreathe, for financial statement reporting purposes, the merger
between the Company and iBreathe has been treated as a reverse acquisition with
iBreathe deemed the accounting acquirer and the Company deemed the accounting
acquiree under the acquisition method of accounting in accordance with section
805-10-55 of the FASB Accounting Standards Codification. The reverse acquisition
is deemed a capital transaction and the net assets of iBreathe (the accounting
acquirer) are carried forward to the Company (the legal acquirer and the
reporting entity) at their carrying value before the acquisition. The
acquisition process utilizes the capital structure of the Company and the assets
and liabilities of iBreathe which are recorded at their historical cost. The
equity of the Company is the historical equity of iBreathe retroactively
restated to reflect the number of shares issued by the Company in the
transaction.
Following the Merger, the Company adopted the business plan of
iBreathe to provide proprietary and integrated products, services, education and
film that can assist individuals to awaken stillness, direction, health and all
over well-being using cleansing language of life. The Company has also been
developing its website, product distribution procedures, and social media plan.
The Company also intends to undertake a global research initiative studying the
benefits of cleansing emotions individually and how this process can motivate
change, healing and support within
communities. The Company is an organization which is deeply passionate about recidivism, those who suffer within it and how communities can become free of the financial and emotional burdens presented by recidivism.
Note 2 – Summary of Significant Accounting Policies
The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most
important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are
inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation - Unaudited Interim Financial Information
The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial
information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial
statements of the Company for the fiscal year ended May 31, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on September 27, 2013.
Fiscal Year End
The Company elected May 31st as its fiscal year ending date.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, if deemed appropriate, those estimates are adjusted
accordingly.
Actual results could differ from those estimates.
Principles of Consolidation
The Company applies the guidance of Topic 810
“Consolidation”
of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned
subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of
Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial
interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly,
of more than 50 percent of the outstanding voting shares of another entity is a
condition pointing toward consolidation. The power to control may also exist
with a lesser percentage of ownership, for example, by contract, lease,
agreement with other stockholders, or by court decree. The Company consolidates
all less-than-majority-owned subsidiaries, if any, in which the parents power
to control exists.
The Company's consolidated subsidiary and/or entity is as
follows:
Name of consolidated subsidiary
|
State or other jurisdiction of
|
Date of incorporation or formation
|
Attributable
|
or entity
|
incorporation or organization
|
(date of acquisition, if applicable)
|
interest
|
|
|
|
|
iBreathe, Inc.
|
The State of Minnesota
|
December 27, 2005
|
100%
|
The consolidated financial statements include all accounts of
the Company as of August 31, 2013 and for the reporting period then ended and
iBreathe as of August 31, 2013 and 2012 and for the reporting periods then
ended.
All inter-company balances and transactions have been
eliminated.
Development Stage Company
The Company is a development stage company as defined by
section 915-10-20 of the Financial Accounting Standards Board (FASB)
Accounting Standards Codification. The Company is still devoting substantially
all of its efforts on establishing the business and still qualifies as a
development stage company. All losses accumulated since inception have been
considered as part of the Companys development stage activities.
Fair Value of Financial Instruments
The carrying amount of the Companys financial assets and
liabilities, such as cash, accounts payable, accrued expense and other current
liabilities, approximate their fair values because of the short maturity of the
instrument.
Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less at the time of purchase to be cash
equivalents.
Property and Equipment
Property and equipment is recorded at cost. Expenditures for
major additions and betterments are capitalized. Maintenance and repairs are
charged to operations as incurred. Depreciation is computed by the straight-line
method (after taking into account their respective estimated residual values)
over the assets estimated useful lives. Upon sale or retirement, the related
cost and accumulated depreciation are removed from the accounts and any gain or
loss is reflected in the statements of operations.
Income Tax Provision
Uncertain Tax
Positions
The Company did not take any uncertain tax positions and had no
adjustments to its income tax liabilities or benefits pursuant to the provisions
of Section 740-10-25 for the interim period ended August 31, 2013 or 2012.
Net Income (Loss) per Common
Share
Net income (loss) per common share is computed pursuant to
section 260-10-45 of the FASB Accounting Standards Codification. Basic net
income (loss) per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the period.
Diluted net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the
period to reflect the potential dilution that could occur from common shares
issuable through stock options and warrants.
There were no potentially dilutive shares outstanding for the
interim period ended August 31, 2013 or 2012.
Recently Issued Accounting
Pronouncements
Management does not believe that any recently issued, but not
yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying financial statements.
Note 3 Going Concern
The consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities
in the normal course of business.
As reflected in the consolidated financial statements, the
Company had a deficit accumulated during the development stage at August 31,
2013, a net loss and net cash used in operating activities for the interim
period then ended. These factors raise substantial doubt about the Companys
ability to continue as a going concern. The Company has funded its operations
since inception with the proceeds from the issuance of common stock and capital
contributions.
While the Company is attempting to commence operations, further
implement its business plan and generate sufficient revenues, the Companys cash
position, if any, may not be sufficient enough to support the Companys daily
operations. Management intends to raise additional funds by way of a public or
private offering. Management believes that the actions presently being taken to
further implement its business plan and generate sufficient revenues provide the
opportunity for the Company to continue as a going concern. While the Company
believes in the viability of its strategy to commence operations, further
implement its business plan and generate sufficient revenues and in its ability
to raise additional funds by way of a public or private offering, there can be
no assurances to that effect. The ability of the Company to continue as a going
concern is dependent upon the Companys ability to further implement its
business plan and generate sufficient revenues and its ability to raise
additional funds by way of a public or private offering.
The consolidated financial statements do not include any
adjustments related to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
Note 4 Property and Equipment
Property and equipment, stated at cost, less accumulated
depreciation, consisted of the following:
|
|
Estimated Useful
|
|
|
|
|
|
|
|
|
|
Life
(Years)
|
|
|
August 31, 2013
|
|
|
May
31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Computer equipment
|
|
5
|
|
|
4,866
|
|
|
4,866
|
|
|
|
|
|
|
|
|
|
|
|
Less accumulated
depreciation (ii)
|
|
|
|
|
(1,471
|
)
|
|
(1,228
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,395
|
|
$
|
3,638
|
|
(i) Depreciation
Expense
Depreciation expense was $243 each for
the interim period ended August 31, 2013 and 2012, respectively.
Note 5 Stockholders' Equity
Shares Authorized
Upon formation the total number of shares of all classes of capital stock which the Company was authorized to issue was seventy five million (75,000,000) shares with a par value of $0.001, all of which were designated as Common Stock.
Amendment to the Certificate of Incorporation
On November 6, 2012, the Company filed a Certificate of Amendment of Certificate of Incorporation, and (i) changed its name to Living Breath Project, Inc.; (ii) increased its total number of shares of all classes of stock which the Company is
authorized to issue from Seventy Five Million (75,000,000) shares, inclusive of Seventy Five Million (75,000,000) shares of Common Stock, par value $0.001 per share, to Two Hundred Ten Million (210,000,000) shares, inclusive of (a) Ten Million
(10,000,000) shares of Preferred Stock, par value $0.001 per share, and (b) Two Hundred Million (200,000,000) shares of Common Stock, par value $0.001 per share; and (iii) effectuated a 3-for-1 (1:3) forward stock split (the “Stock
Split”).
All shares and per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split.
Common Stock
Immediately prior to the consummation of the Agreement and Plan of Merger on November 6, 2012, the Company had 10,305,000 common shares issued and outstanding.
Upon consummation of the Agreement and Plan of Merger on November 6, 2012, the Company issued 18,029,694 shares of its common stock pursuant to the terms and conditions of the Agreement and Plan of Merger.
Sale of Common Stock or Equity Units
On February 9, 2012, iBreathe settled a shareholder claim, bought back 120,000 shares of iBreathe's capital stock originally sold for $120,000 for $200,000, resulting in $80,000 in settlement of claim.
From November 21, 2012 through January 7, 2013, the Company sold 85,419 shares of its common stock for cash at $1.00 per share or $85,419 in cash.
From March 11, 2013 through May 14, 2013, the Company sold 222,800 shares of its common stock for cash at $1.00 per share or $222,800 in cash.
Deposits from Stockholder for Acquisition of Common Stock
From June 14, 2013 through August 22, 2013, a stockholder of the Company deposited $38,500 to acquire shares of the Company’s common stock.
Note 6 – Subsequent Events
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were certain
reportable subsequent event(s) to be disclosed as follows:
On September 24, 2013, the Company entered into and consummated a Share Exchange Agreement with O’Malley Lifestyle, Inc., a Nevada corporation (“OML”), a related entity, whereby the Company acquired all of the issued and
outstanding capital stock of OML solely in exchange for 7,300,000 newly-issued shares of the Company’s common stock. OML is the owner of the Clear Mind™, Clear Mind Technology™, Clear Mind Cognitive Healing Process™, Clear
Mind Experience™, iBreathe™ properties and related proprietary service technologies, products and services. At the time of acquisition, OML had no significant assets, liabilities or operations.
FORWARD LOOKING STATEMENTS
The information in this report contains forward-looking
statements. All statements other than statements of historical fact made in this
report are forward looking. In particular, the statements herein regarding
industry prospects and future results of operations or financial position are
forward-looking statements. These forward-looking statements can be identified
by the use of words such as believes, estimates, could, possibly,
probably, anticipates, projects, expects, may, will, or should, or
other variations or similar words. No assurances can be given that the future
results anticipated by the forward-looking statements will be achieved.
Forward-looking statements reflect managements current expectations and are
inherently uncertain. Our actual results may differ significantly from
managements expectations.
Although these forward-looking statements reflect the good
faith judgment of our management, such statements can only be based upon facts
and factors currently known to us. Forward-looking statements are inherently
subject to risks and uncertainties, many of which are beyond our control. As a
result, our actual results could differ materially from those anticipated in
these forward-looking statements as a result of various factors, including those
set forth below under the caption Risk Factors. For these statements, we claim
the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. You should not unduly rely
on these forward-looking statements, which speak only as of the date on which
they were made. They give our expectations regarding the future but are not
guarantees. We undertake no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, unless required by law.