Notes to the Condensed Financial Statements
September 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The recent COVID 19 Pandemic (“the Pandemic”) has had a dramatic effect on our business as well as the business of our contract developers. The wide-ranging effects on the world-wide business market has led to a closure or partial closure of firms we are relying on in our product development. As a result their work on our project has been slowed. While we cannot predict when the influence of the Pandemic will end, we trust businesses will be able to open and expand activities to their former levels and increase following a return to normal operations.
a. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Nu-Med Plus, Inc. (the “Company”). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual consolidated financial statements of Nu-Med Plus, Inc. for the year ended December 31, 2020 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2021. In particular, the Company’s significant accounting principles were presented as Note 1 to the Consolidated Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021.
b. Revenue Recognition
The Financial Accounting Standards Board (“FSB”) issued new guidance for the recognizing and reporting of revenue in contracts with customers. The effective date for implementation for public companies is January 1, 2018.
The new guidance established a five-step analysis to be followed when determining the recognition of revenue.
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1.
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Identify the contract with a customer.
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2.
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Identify the performance obligations in the contract.
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3.
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Determine the transaction price.
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4.
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Allocate the transaction price to the performance obligations in the contract.
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5.
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Recognize revenue when, or as, the reporting organization satisfied a performance obligation.
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While the Company is an early-stage company with no revenue, at the time we begin to generate revenue the Company will recognize such revenue in conformity with the guidelines set forth by ASC 606.
c. Estimates
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. Actual results could differ from those estimates.
d. Cash and Cash Equivalents
The Company considers all deposit accounts and investment accounts with an original maturity of 90 days or less to be cash equivalents. The cash balance we currently have on deposit is within the limits for which the FDIC insures.
e. Property and Equipment
Property and equipment is stated at cost. Expenditure for minor repairs, maintenance, and replacement parts which do not increase the useful lives of the assets are charged to expense as incurred. Expenditures, exceeding $500, for new assets or that increase the useful life of existing assets are capitalized. Depreciation is computed using the straight-line method. The lives over which the fixed assets are depreciated are five to seven years.
f. Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB Accounting Standards Codification (“ASC”) Topic 820 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements), as follows:
Level 1 - Quoted market prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than level one inputs that are either directly or indirectly observable; and
Level 3 - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
All cash, accounts payable and accrued liabilities are carried at cost, which approximates fair value due to the short-term nature of these financial instruments. Additionally, we measure certain financial instruments at fair value on a recurring basis.
g. Earnings per Share
The computation of earnings per share of common stock is based on the weighted average number of shares outstanding during the period of the financial statement. The company included -0- and 84,000 shares subscribed but unissued in its calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020, respectively.
Diluted earnings per share is computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period. As of September 30, 2021 and 2020 there were -0- and 34,643,900, respectively, potential dilutive shares that needed to be considered as common share equivalents.
As of September 30, 2021 and 2020 the dilutive shares were excluded from the calculation for diluted earnings per share as there was a net loss and their inclusion in the calculation would be anti-dilutive.
h. Concentrations and Credit Risk - The Company has relied on a small group of investors to fund its operations. If this group becomes unable or unwilling to provide additional funding, the Company may be unable to remain in business or to execute on its business plan.
i. Income Taxes
Deferred taxes are provided on an asset and liability approach whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
j. Stock-based Compensation
The Company, in accordance with ASC 718, Compensation – Stock Compensation, records all share-based payments to employees at the grant-date fair value of the equity instruments issued. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company uses the closing price of the stock, as quoted by NASDAQ, on the date of the grant. The Company believes this pricing method provides the best estimate of fair the fair value of the consideration given. Compensation cost is recognized over the requisite service period.
k. Leases
The Company accounts for all leases in accordance with ASC 842, Leases, recognizing both assets and liabilities on the balance sheet for the right to use those assets for the lease term and obligations to make the lease payments created by those leases that have terms of greater than twelve months.
l. Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.
NOTE 2 – GOING CONCERN
The Company acknowledges that the funds on hand as of September 30, 2021, will not be sufficient to enable it to execute its business plan and funding through the sale of equity capital and short term related party and other shareholder loans in order to meet the planned expenditures for development, operations, and administrative cost over the next 12 months will be required. Planned expenditures are approximately $1,200,000 for the next twelve months. The Company is currently funded through December 31, 2021. If plans to obtain further financing prove to be insufficient to fund operations, continued viability could be at risk. These factors raise substantial doubt about the Company's ability to continue as a going concern.
NOTE 3 – PROPERTY AND EQUIPMENT
Property and equipment and related accumulated depreciation consisted of the following at September 30, 2021, and December 31, 2020:
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September 30, 2021
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December 31, 2020
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Computer and office
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$
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90,368
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$
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90,368
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Accumulated depreciation
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(85,452)
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(78,737)
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Total Property and Equipment
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$
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4,916
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$
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11,631
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Depreciation expense for the nine months ended September 30, 2021 and 2020 was $6,715 and $9,144, respectively.
NOTE 4 – PREFERRED STOCK
On October 19, 2011, the Company filed Articles of Incorporation with the State of Utah so as to authorize 10,000,000 shares of preferred stock having a par value of $0.001 per share. No preferred shares are issued or outstanding at September 30, 2021.
NOTE 5 – COMMON STOCK
Stock Subscription Payable:
At September 30, 2021 and December 31, 2020, the Company had $-0- and $724,314, respectively, in stock subscriptions payable for which it is obligated to issue -0- and 28,902,684 shares of restricted common stock, respectively, pursuant to separate subscription agreements.
Common Stock Issued for Cash
During the nine months ending September 30, 2021, the Company issued 120,000 shares of restricted common stock for $30,000 to an unrelated investor. During the nine months ending September 30, 2020, the Company issued 200,000 shares of restricted common stock for $50,000 to an unrelated investor.
Common Stock Issued for conversion of liabilities
During the nine months ended September 30, 2020, the Company issued 1,000,000 shares of restricted common stock in exchange for the conversion of $10,000 of accrued interest on notes payable.
Common Stock Issued to Officer:
In February 14, 2018 the Company announced that the consulting agreement with the Chief Financial Officer (Mr. Merrell) was terminated effective December 31, 2017, and that a new agreement was entered into effective January 1, 2018 under which Mr. Merrell would receive 2,000,000 shares of restricted common stock, vesting at 500,000 shares per year, for his service. The term of the agreement is for one year, which term automatically renews for one-year extensions up to four years unless terminated by either party with 30 days written notice. The Company issued all 2,000,000 shares to Mr. Merrell on August 20, 2018. Any common shares not earned during the four-year period are to be returned or cancelled. A charge will be made each quarter as the shares are earned under the provisions of the agreement until such time as all shares have been earned. A charge of $150,000 and $150,000 was recorded for the six months ended September 30, 2021 and 2020, respectively. In June 2020 Mr. Merrell was issued an additional 500,000 shares which vested at issuance, resulting in a $435,000 stock-based compensation charge recorded in the nine-month period ended September 30, 2020.
Common Stock Issued for Services:
The Company issued no shares of stock for services in the nine months ended September 30, 2021. During the nine months ended September 30, 2020 the Company issued 1,545,000 shares of restricted common stock to consultants for services performed and/or to be performed. The issuances were valued at $1,066,650 and of that amount $940,500 was recorded as prepaid assets. The Company incurred stock-based compensation of $126,125 during the nine-months ended September 30, 2020. As of September 30, 2021, the prepaid amount has been fully amortized.
NOTE 6 – CONVERTIBLE PROMISSORY NOTES – Related Party
In the early days of its operations the Company entered into two interest bearing convertible notes. One note was for $200,000, the other for $130,100, for a combined total of $340,000 plus interest. On March 23, 2021 the Company issued 28,000,000 shares of restricted common stock in full settlement of the notes and all accrued but unpaid interest.
NOTE 7 – NOTE – SBA Loan
$9,384 Promissory Note
The Company applied for and received a $9,384 loan under the Paycheck Protection Program administered by the Small Business Administration. The note bears an annual interest rate of 1% and has a maturity date of May 8, 2022. The terms of the loan provide that an application for forgiveness of the loan amount may be requested if the funds were used for payroll, medical insurance, rent and utilities. Under the terms of the program the Company applied for forgiveness of the total amount due under the note. On May 3, 2021 the Company received a letter advising that their request for forgiveness of all principal and accrued interest was approved.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The Company has obligations under both a financing lease and operating lease, as detailed below.
Operating Lease Obligations
The Company entered into a lease for office space in February 2017 for $950 per month. In November 2017 the Company signed a six-month extension of the lease with a lease payment of $978 per month. In March 2018 the Company extended the lease agreement through August 31, 2019 at a rate of $1,008 per month. In July 2019 the Company extended the lease agreement through August 31, 2020 at a rate of $1,038 per month. In July 2021 the Company extended the lease agreement through August 31, 2022 at a rate of $1,058 per month.
Amortization of $7,981 was recorded as rent expense in the nine month period ended September 30, 2021, leaving an operating right-of-use asset at September 30, 2021 of $11,647 and an operating lease liability of $11,647. Amortization of $9,355 was recorded as rent expense for the nine month period ended September 30, 2020.
Obligations under this lease are as follows:
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2021
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2022
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2023
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Office lease
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$
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3,174
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$
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8,464
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$
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-
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Upon the adoption of ASC 842, the calculation of our lease obligation using a discount rate of 8% resulted in an immaterial difference and therefore, no interest will be imputed on the lease obligation.
Consulting Agreement
In June 2020, the Company entered into consulting agreements with Roger Gill and Peter Kristensen. Both of the agreements begin June 22, 2020 and run for a period of twelve months, terminating June 30, 2021. Under the terms of the agreements Mr. Gill received 500,000 shares of restricted common stock and Mr. Kristensen received 100,000 shares of restricted stock for their services. The fair-value of the stock was $565,500 and was recorded as a prepaid. The prepaid amount was amortized over the period of the agreement and, at September 30, 2021, there is no remaining balance.
On March 15, 2020 the Company entered into a service agreement with Hanover International, Inc. to provide advisory services to the Company. The contract is a one year contract, but may be cancelled with thirty days notice any time after the 91st day of the agreement. Hanover receives a fee of $3,500 per month, from which fee it pays all of its expenses. In addition, Hanover received 750,000 shares of restricted common stock, earned in quarterly tranches of 187,500 shares, deemed earned and issuable after services are provided for each quarter. As of September 30, 2021 all of the shares to which the Company is obligated under this agreement have been issued and the total value of $375,000 has been fully amortized.
NOTE 9 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events pursuant to ASC Topic 855 and has determined that there are no events that require disclosure as of the date of issuance.