UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 10-Q/A

Amendment No. 2

 

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarterly Period Ended September 30, 2013

 

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from__________to________

 

Commission File No. 0-50863

 

INOLIFE TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

New York		30-0299889
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Post Office Box 2223 Banner Elk, North Carolina		28604
(Address of principal executive offices)		(Zip Code)

  

(828) 387-2347 

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

As of August 8, 2014, the shares outstanding of the registrant’s common stock are 470,319,652.

 

 

 

 

TABLE OF CONTENTS

 

			PAGE
PART I. FINANCIAL INFORMATION
Table of Contents				2
Explanatory Note				3
Item 1.	Condensed Consolidated Financial Statements.			4
	Condensed Consolidated Balance Sheets for the periods ending September 30, 2013 (unaudited)(restated) and March 31, 2013 (restated).			4
	Condensed Consolidated Statements of Operations for the three and six month periods ending September 30, 2013 (unaudited) (restated) and September 30, 2012 (unaudited) (restated).			5
	Condensed Consolidated Statements of Cash Flows for the six month periods ending September 30, 2013 (unaudited) (restated) and September 30, 2012 (unaudited) (restated).			6
	Notes to Condensed Consolidated Financial Statements (unaudited).			7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.			16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.			19
Item 4.	Controls and Procedures.			19
PART II. OTHER INFORMATION.
Item 1.	Legal Proceedings			20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.			20
Item 3.	Defaults Upon Senior Securities.			20
Item 4.	Mine Safety Disclosure.			20
Item 5.	Other Information.			20
Item 6.	Exhibits.			21
Signatures				22

 

2

  

EXPLANATORY NOTE

 

This Amendment No. 2 on Form 10-Q/A amends and restates the quarterly report on Form 10-Q of InoLife Technologies, Inc., or “the Company”, for the quarter ended September 30, 2013, as originally filed with the Securities and Exchange Commission, or “the SEC”, on January 9, 2014, and as amended on May 19, 2014 . We refer to the quarterly report on Form 10-Q that was filed on January 9, 2014 as “the original filing”. Contrary to the rules of the SEC, the Company’s consolidated financial statements included in the original filing were not reviewed by an independent public accountant in accordance with professional standards for conducting such reviews. This amendment is being filed to include consolidated financial statements which comply with the rules of the SEC, and have been reviewed by the Company’s independent audit firm.

 

This amended report does not reflect any other events occurring after the original filing.

 

3

  

PART I – FINANCIAL STATEMENTS

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

INOLIFE TECHNOLOGIES, INC.

Consolidated Balance Sheets

 

				September 30,				March 31,
				2013				2013
				(Restated)
ASSETS
Current Assets
	Cash and cash equivalents		$	5,000				-
	Prepaid Expenses							53,750
Total Current Assets				5,000				53,750
	TOTAL ASSETS		$	5,000				53,750
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
	Accounts payable		$	787,675				766,640
	Accrued management fees, related party			664,085				372,085
	Accrued consulting fees			27,700				62,500
	Accrued employer taxes			95,513				84,442
	Accrued interest			168,647				146,543
	Convertible notes payable			591,335				585,830
	Derivative Liability			228,000				365,344
	Note payable, related party			78,958				64,161
Total Current Liabilities				2,641,913				2,447,545
	TOTAL LIABILITIES			2,641,913				2,447,545
Commitments and Contingencies
Stockholders' Deficit
Preferred stock: 100,000,000 authorized; $0.00001 par value
	132,774 and 213,322 issued and outstanding, respectively			2				2
Preferred Stock - Series C, par value $0.01 per share,
	572 and 572 issued and outstanding, respectively			6				6
Common stock: 5,000,000,000 authorized; $0.00001 par value
	220,080,492 and 40,040,492 issued and outstanding, respectively			1,485				400
Additional paid in capital				7,244,610				5,338,645
Accumulated deficit				(9,883,016	)			(7,732,848	)
Total Stockholders' Deficit				(2,636,913	)			4,859,551
	TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	5,000				7,307,097

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

   

INOLIFE TECHNOLOGIES, INC.

Consolidated Statements of Operations

 

			Three months ended								Six months ended
			September 30,								September 30,
			2013				2012				2013				2012
			(Restated)				(Restated)				(Restated)				(Restated)
Revenues			$	-			$	-				-			$	-
Operating Expenses
	Professional fees			24,095				147,458				1,924,902				173,102
	Management expenses			146,000				9,200,868				292,000				9,446,835
	Selling, general and administrative expense			8,282				17,543				37,751				41,595
	Total operating expenses			178,377				9,365,869				2,254,653				9,661,532
Net loss from operations				(178,377	)			(9,365,869	)			(2,254,653	)			(9,661,532	)
Other income (expense)
	Interest expense			(35,902	)			(47,957	)			(58,827	)			(105,148	)
	Gain on debt forgiveness			-				-				11,757				-
	Other Income			14,211				-				14,211				-
	Change in fair value of derivative			-				27,479				137,344				27,479
				(21,691	)			(20,478	)			104,485				(77,669	)
	Loss before provision for taxes			(200,068	)			(9,386,347	)			(2,150,168	)			(9,739,201	)
	Provision for income taxes			-				-				-				-
Net loss			$	(200,068	)		$	(9,386,347	)		$	(2,150,168	)		$	(9,739,201	)
Basic and diluted loss per share			$	(0.00	)		$	(6,020.39)			$	(0.01	)		$	(21,405.91)
Weighted average number of
	shares outstanding			158,367,451				1,559				165,008,930				455

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5

  

INOLIFE Technologies, Inc.

Consolidated Statements of Cash Flows

 

			6 months ended September 30, 2013				6 months ended September 30, 2012
			(restated)				(restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Loss		$	(2,150,168	)		$	(9,739,201	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Change in fair value of derivative			(137,344	)			(27,479	)
	Gain on debt forgiveness			(11,757	)			-
	Common stock issued in exchange for services			1,845,922				9,582,417
	Amortization of debt discount			-				81,698
	Beneficial conversion feature related to issuance of convertible debentures			20,000				-
	Changes in assets and liabilities:
	(Increase) Decrease in prepaid expense			53,750				(137,340	)
	Increase (Decrease) in accounts payable			19,425				(16,210	)
	Increase(Decrease) in accrued liabilities			36,270				37,500
	Increase(Decrease) in Management fess			292,000				143,210
	Increase(Decrease) in note payable to related parties			14,798				22,650
	Increase(Decrease) in accrued interest			22,104				24,545
	Net Cash Used in Operating Activities		$	5,000			$	(28,210	)
CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES :
	Net Cash Used in Investing Activities			-				-
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
	Net Cash Provided by (Used for) Financing Activities			-				-
	NET INCREASE (DECREASE) IN CASH			5,000				(28,210	)
	CASH AT BEGINNING OF PERIOD			-				28,210
	CASH AT END OF PERIOD		$	5,000			$	-
SUPPLEMENTAL CASH FLOW INFORMATION:
	Cash Paid for interest			-				-
	Cash Paid for taxes			-				-
	Common Stock issued for services			1,845,922				9,582,417
	Common Stock issued upon conversion			44,000				62,300

 

 The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6

 

NOTE 1 – THE COMPANY

 

HISTORY

 

InoLife Technologies, Inc. (the “Company”) was incorporated under the laws of the State of New York on November 12, 1998 as Safe Harbour Health Care Properties, Ltd. During 1999, the Company ceased its operations. The Company remained dormant until 2004, when one of the Company’s shareholders purchased a controlling interest. In February 2004, the Company began its development stage as an internet based marketing company. The Company, as of December 2007 discontinued its internet marketing due to difficulties with service providers and subsequent cancellations by customers.

 

In August 2009, Gary Berthold purchased 35,013,540 shares of InoLife Technologies, Inc. representing a majority of the outstanding shares. In connection with the purchase, all of the directors and officers of the Company resigned from their positions, after first appointing Berthold as a director.

 

Effective September 17, 2009, the Board of Directors of the Company authorized the execution of a share exchange agreement (the “Share Exchange Agreement”) with InoVet, Ltd., a Delaware corporation (“InoVet”) and the shareholders of InoVet (the “InoVet Shareholders”). In accordance with the terms and provisions of the Share Exchange Agreement, the Company agreed to: (i) acquire all of the issued and outstanding shares of common stock of InoVet from the InoVet Shareholders; and (ii) issue an aggregate of 10,000,000 shares of its restricted common stock to the InoVet Shareholders.

 

On July 7, 2011, the Company acquired 100% of the issued and outstanding shares of Stemtide Inc. in exchange for 50,000,000 shares of common stock of the Company, the assumption of certain outstanding liabilities, and contingent residual payments of 10% of the gross profits derived from the sale of Stemtide Inc.’s Age-Reversing Products. The 50,000,000 shares of common stock were issued upon consummation of the agreement. The principal asset of Stemtide Inc. that was acquired was the manufacturing and marketing rights to the Stemtide Age-Reversing Products, throughout the United States, licensed from an affiliate of the principal shareholders of InoLife. These licensing rights were valued at $627,000 based on the Company assuming $572,000 of accounts payable and issuing 50,000,000 shares of common stock valued at $55,000. There were no other assets acquired. In addition, the Company issued 572 Series B PS as a securitization against the payment of the assumed accounts payable out of future revenues. The PS held as security will be reduced as the accounts payable are paid. The licensing rights were fully impaired at March 31, 2012.

 

On February 23, 2012 the Company effected a 1 for 500 reverse stock split, and on January 24, 2013, the Company effected a 1 for 50,000 reverse stock split, collectively referred to as the Stock Splits. Unless otherwise noted, all impacted amounts included in the financial statements and notes thereto have been retroactively adjusted for the Stock Splits. Unless otherwise noted, impacted amounts include shares of common stock authorized and outstanding, share issuances and cancellations, shares underlying preferred stock, convertible notes, warrants and stock options, shares reserved, conversion prices of convertible securities, exercise prices of warrants and options, and loss per share.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Unaudited Interim Consolidated Financial Statements:

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S‑X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals, unless otherwise indicated) considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three and six months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2014. Events occurring subsequent to September 30, 2013 have been evaluated for potential recognition or disclosure in the unaudited consolidated financial statements for the three and six months ended September 30, 2013.

 

7

  

The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes concerning the year ended March 31, 2013, which are included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2014, filed with the Securities and Exchange Commission (the “SEC”) on July 15, 2014.

 

The condensed consolidated balance sheet at March 31, 2013 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements.

 

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company 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.

 

Management believes that all adjustments necessary for a fair statement of the results of the three and six months ended September 30, 2013 and 2012 have been made.

 

Significant Accounting Policies:

 

Basis of Presentation:

 

The Company prepares its consolidated financial statements on the accrual basis of accounting. All intercompany balances and transactions are eliminated.

 

Cash and Cash Equivalents:

 

All highly liquid investments with original maturities of three months or less are included in cash and cash equivalents. All deposits are maintained in FDIC insured depository accounts in local financial institutions and balances are insured up to $250,000.

 

Fair Value Measurements:

 

ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair value of financial instruments is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Corporation’s credit worthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

 

The carrying amount of cash and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions.

 

Interest rate risk is the risk that the Company’s earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any.

 

8

  

Financial risk is the risk that the Company’s earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to financial risk, if any.

 

Earnings Per Share:

 

Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share include the effects of any outstanding options, warrants and other potentially dilutive securities. Basic and diluted earnings per share (“EPS”) are based on weighted-average common shares and exclude shares that would have an anti-dilutive effect. The Company did not consider any potential common shares in the computation of diluted EPS as of September 30, 2013 and 2012, due to the loss from continuing operations, as they would have an anti-dilutive effect on EPS.

 

Share Based Payments:

 

The Company accounts for share based payments using a fair value based method whereby compensation cost is measured at the grant date based on the value of the services received and is recognized over the service period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued. In calculating this fair value, there are certain assumptions used such as the expected life of the option, risk-free interest rate, dividend yield, volatility and forfeiture rate. The use of a different estimate for any one of these components could have a material impact on the amount of calculated compensation expense.

 

Segment Reporting

 

The Company has determined it has only one operating segment as of the periods presented.

 

Income Taxes

 

The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. 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 income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. The Company has had significant operating losses and a valuation allowance is recorded for the entire amount of the deferred tax assets, resulting in no deferred tax assets or liabilities recognized as of September 30, 2013 or September 30, 2012.

 

The Company accounts for uncertain tax positions according to the provisions of ASC 740. ASC 740 contains a two-step approach for recognizing and measuring uncertain tax positions. Tax positions are evaluated for recognition by determining if the weight of available evidence indicates that it is probable that the position will be sustained on audit, including resolution of related appeals or litigation. Tax benefits are then measured as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.

 

9

  

The Company’s open tax periods are 2009 through 2013.

 

Recently Issued Accounting Pronouncements:

 

On June 10, 2014 the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from U.S. GAAP for development stage entities. The Company has elected to early adopt this guidance, and therefore is no longer presenting the financial statements in accordance with ASU 915, with inception to date disclosures.

 

The Company is evaluating how to apply ASU 605, Revenues from Contracts with Customers, before its effective date, however, as the Company does not yet have revenue to recognize, it will not have an impact on current results of operations, financial position or cash flow.

 

NOTE 3 – CONVERTIBLE NOTES PAYABLE

 

Convertible notes payable consist of the following at September 30, 2013 and March 31, 2013:

 

	Due Date		Interest				September 30, 2013				March 31, 2013
E-Lionheart	2/3/2012			8	%			203,960				203,960
Longside Ventures	various			various				269,267				269,267
Orchid	5/12/2012			0	%			37,600				37,600
Just Marketing	Demand			10	%			40,000				-
New Opportunity Business Solutions	Demand			10	%			26,800				27,500
Robin W. Hunt	Demand			10	%			13,707				57,915
								591,334				596,242
Debt Discount								-				10,412
								591,334				585,830

 

10

 

The Company has evaluated their convertible notes for embedded derivative features and has determined that in several of the notes a derivative liability is necessary to recognize. These notes contain a conversion feature which includes a “reset” provision, whereby the conversion rate would be reset should there be future equity sales at a price less than the conversion rate in effect at the time. Therefore, the conversion feature is required to be bifurcated and accounted for under derivative accounting, and remeasured each period end, with any changes in the fair value of the derivative to be recognized in income. All the notes which contained the reset provision were entered into during the year ended March 31, 2012. The original fair value of the derivative liability at inception totaled $456,719. During the six months ended September 30, 2013 and 2012, a change in fair value of $137,344 and $27,479, respectively, was recognized. There was no change in fair value in the three months ended December 31, 2013 and a $27,479 change in fair value in the three months ended September 30, 2012. . During the three months ended June 30, 2013 there was a reduction in the derivative liability of $137,344 due to the reduction of the related notes principal balances, which was recognized as a separate line item on the accompanying Statement of Operations. The fair value of the derivative liability as of both September 30, 2013 and March 31, 2013, , has been determined to be $228,000. Derivative liabilities were valued using a probability based weighted-average Black-Scholes-Merton valuation with the following assumptions:

 

		September 30,				March 31,
			2013				2013
Risk-free interest rate			0.03	%			0.03	%
Expected volatility			100	%			100	%
Expected life (in years)			Remaining term				Remaining term
Expected dividend yield			0.00	%			0.00	%

 

The conversion features were evaluated for any beneficial aspect and it was determined that several of the notes contained beneficial conversion features, whereby the conversion rate was calculated at a discount to the market price. The beneficial conversion features recognized at inception during the year ended March 31, 2012 amounted to $234,000. The discount related to the beneficial conversion features as well as the discount arising from the derivative liability was amortized over the term of the related convertible debentures using the effective interest method, resulting in amortization of approximately $10,000, and $109,000 during the six months ended September 30, 2013 and 2012, respectively.

 

On July 23, 2013, the Company entered into a $40,000 convertible debenture with Just Marketing,Group, Inc., which bears interest at 10%. The note is due on demand 120 days after issuance. The note is convertible, beginning 60 days after issuance, at a 50% discount to market price on date of conversion, or mutually agreed upon terms. The Company determined the conversion feature was not required to be bifurcated, as although the conversion terms were not fixed, we do not know what mutually agreed upon terms will be and if will not still qualify as indexed to the Company’s own stock. Therefore, the Company recognized a beneficial conversion feature in the amount of $20,000. The related debt discount was amortized over the 120 day period until demand, which has been considered the maturity date.

 

 At September 30, 2013 and March 31, 2013 the accrued interest on all notes is $74,300 and $63,000, respectively.

 

During the three and six months ended September 30, 2013, the Company issued an aggregate of 8,000,000 and 32,000,000, shares of its common stock, respectively, to note holders pursuant to the original terms of the Convertible Debentures, representing the conversion of $16,000 and $44,000, respectively in principal and accrued interest. 

 

11

  

NOTE 4 – RELATED PARTY TRANSACTIONS

 

During July 2012 the Company issued three billion shares of common stock to its Officers for past services rendered with a fair value of $9,000,000, based on the market price of the stock on the date granted. These shares were subsequently cancelled on November 27, 2012 and replaced by 120,000 shares of preferred stock with a fair value of $300,000.

 

NOTE 5 – COMMON AND PREFERRED STOCK

 

Please see Note 3 for all share issuances upon conversions of convertible debentures.

 

Please see Note 4 for a discussion of common and Preferred Stock issued to related parties. As of September 30, 2013, all the Preferred Stock of the Company is held by the Officers.

 

On May 1, 2013, INOL entered into an Exclusive Licensing Agreement with Green Dolphin Corp, whose President has agreed to become VP of Business Development. In connection with the license agreement the Company issued to Green Dolphin 1,200,000 common shares, with a fair value based on the market price of the shares of $264,000 (amount included in disclosure above). As the shares were issued to a company controlled by a consultant of the Company, and it is not known if the Company will ever actually distribute the products offered under the license agreement, the shares have been treated as additional compensation to the consultant.

 

During the three and six months ended September 30, 2013 the Company issued 260,000 and 18,040,000 shares of its common stock for services to various consultants with a fair value of $1,845,922. The fair value was determined using the market price of the Company’s stock on the date of issuance.

 

NOTE 6 – FINANCIAL CONDITION AND GOING CONCERN

 

The Company has minimal operations and has negative working capital as of September 30, 2013. Due to the limited operating history and limited operations, the Company will require additional working capital to survive. If the funds the Company has are not sufficient, it will also consider bank loans and additional shareholder loans. There are no assurances that the Company will be able to obtain any of these. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital cannot be generated, the Company may not be able to continue its operations.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be able to continue as a going concern.

 

12

  

NOTE 7 – RESTATEMENT

 

As noted previously, the Company filed the interim consolidated financial statements without review by an independent public accountant. Additionally the Company did not have a permanent CFO or accounting personnel. As the accompanying consolidated financial statements were prepared for review in this amended filing, it was noted that there were several clerical errors, and the financial statements as originally filed did not agree to the Company’s accounting records. Therefore, a portion of the restatement cannot be identified as due to certain transactions which were incorrectly recognized in the original financial statements. A majority of the difference between the financial statements as originally filed and included herein can be attributed to previous period’s restatements, as disclosed in the Form 10K for the years ended March 31, 2014 and 2013, and their impact going forward. These restatement entries have been identified below, with the remaining differences attributed to clerical error.

 

The Company identified errors are as follows:

 

Through March 31, 2013

 

In connection with several of the Convertible Notes payable entered into during the year ended March 31, 2012, the embedded derivative was not appropriately evaluated and certain “reset” provisions was not properly bifurcated and accounted for under derivative accounting. The derivative liability connected to these Convertible Notes Payable amounted to $456,719 at inception, with a change to the derivative fair value of $77,788 for the year ended March 31, 2012 and $13,444 for the year ended March 31, 2013.

 

In connection with several of the Convertible Notes payable entered into during the year ended March 31, 2012, the conversion feature was not appropriately evaluated to recognize a beneficial conversion feature upon issuance. The beneficial conversion features amounted to $234,000 at inception, with $$148,500 of the resulting debt discount being amortized during the year ended March 31, 2012 and $85,500 amortized during March 31, 2013.

 

On April 18, 2012, the Company issued 30,000,000 common shares in satisfaction of $465,000 of accrued compensation to Gary and Sharon Berthold. The amount was incorrectly recognized as $226,500 in APIC. Additionally, in connection with a swap of Preferred Stock, $71,700 was incorrectly recognized in APIC.

 

During the year ended March 31, 2013, certain shares issued in connection with a consulting agreement were incorrectly valued at $1,000 based on the par value of the shares. The corrected fair value of the shares issued for services was $90,000, based on the market price of the shares. Additionally, one consulting agreement was omitted in error.

 

In connection with the acquisition of Stemtide, 572 Series C Preferred Shares were issued as securitization for the future payment of the accounts payable of Stemtide assumed in the acquisition. These shares were incorrectly accounted for as if issued in satisfaction of the accounts payable

 

During the year ended March 31, 2013 the Company extinguished several Convertible Debentures, in the amount of $550,845 including accrued interest, without formal agreements for the forgiveness of debt.

 

Through September 3, 2013

 

Certain shares issued to consultants and directors were incorrectly valued at par, and have been restated to recognize the fair value of the shares issued.

 

13

  

The derivative liability (which had not been recognized on the original financial statements) was remeasured as of the end of the period, with the change in fair value recognized in earnings.

 

During the six months ended September 30, 2013 the Company extinguished several Convertible Debentures and accounts payable, in the amount of approximately $333,000 including accrued interest, without formal agreements for the forgiveness of debt. These amounts were reinstated, with interest for the six months ending September 30, 2013 being properly accrued. 

 

INOLIFE TECHNOLOGIES, INC.

Balance Sheets
 

		September 30, 2013 As originally reported			Derivative Liability at Inception			Deriviative Liability - Change in Fair Value - March 31, 2013			Amortization of Discount related to derivative - March 31, 2013			BCF at Inception			BCF Amortization during 2012			BCF Amortization during 2013			Shares issued to Officers for compensation			Consulting agreements March 31, 2013			PS Series B 2012			Extinguishment of Debt March 31, 2013			Miscellaneous adjustments as of March 31, 2013			Deriviative Liability - Change in Fair Value - June 30, 2013			Extinguishment of Debt September 30, 2013			Interest on Notes Payable reinstated			Consulting agreements			Clerical errors			September 30, 2013 As Restated
																											ASSETS
Current Assets
Cash and cash equivalents		$	5,000																																																		$	5,000
Prepaid Expenses			-																																																			-
Total Current Assets			5,000																																																			5,000
TOTAL ASSETS		$	5,000																																																		$	5,000
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable		$	-																											572,000						61,465						59,944									94,266		$	787,675
Accrued management fees, related party			593,857																					(48,648	)																										118,876			664,085
Accrued consulting fees			-																								62,500																					(40,000	)		5,200			27,700
Accrued employer taxes			214,389																					70,230																											(189,106	)		95,513
Accrued interest			756																														136,786												31,105									168,647
Convertible notes payable			-			(159,292	)					148,881			(234,000	)		148,500			85,500												456,530									145,216												591,335
Derivative Liability			-			456,719			(91,375	)																													(137,344	)														228,000
Note payable, related party			-																																							78,958												78,959
Total Current Liabilities			809,002																																																			2,641,913
TOTAL LIABILITIES			809,002																																																			2,641,913
COMMITMENTS AND CONTINGENCIES
Stockholders' Deficit
Preferred stock:									-
Preferred Stock - Series B			2																																																			2
Preferred Stock - Series C			6																																																			6
Common stock:			2,883																																																(2,772	)		1,485
Shares held in escrow			-																																																			-
Additional paid in capital			6,614,298			180,186									234,000									(71,700	)		89,000			(572,000	)											49,000						749,350			(26,150	)		7,244,610
Accumulated deficit			(7,421,191	)		(477,613	)		91,375			(148,881	)					(148,500	)		(85,500	)		50,118			(151,500	)					(593,316	)		(61,465	)		137,344			(333,118	)		(31,105	)		(709,350	)		(315	)		(9,883,016	)
Total Stockholders' Deficit			(804,002	)																																																		(2,636,913	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	5,000																																																		$	5,000
Total Stockholders' Deficit

 

14

 

INOLIFE TECHNOLOGIES, INC. 

Consolidated Statements of Operations

 

			September 30,				Deriviative Liability - Change				Amortization of Discount related				Consulting				Miscellaneous				September 30,
			2012				in Fair Value				to derivative				agreements				adjustments				2012
				As originally reported																				As Restated
Revenues			$	-																				-
Operating Expenses
	Professional fees			9,602,526												37,500				(9,466,924	)			173,102
	Managment expenses																			9,446,835				9,446,835
	Selling, general and administrative expense			45,240																(3,644	)			41,595
	Total operating expenses			9,647,766																				9,661,532
Net loss from operations				(9,647,766	)																			(9,661,532	)
Other income (expense)
	Interest expense			(27,833	)							(36,698	)							(40,617	)			(105,148	)
	Gain on debt forgiveness			-																				-
	Miscellaneous expense			-																				-
	Change in fair value of derivative			-				27,479																27,479
				(27,833	)																			(77,669	)
	Loss before provision for taxes			(9,675,599	)																			(9,739,201	)
	Provision for income taxes			-																				-
Net loss			$	(9,675,599	)																			(9,739,201	)
Basic and diluted loss per share			$	(21,266	)																			(21,406	)
Weighted average number of shares outstanding				455																				455

   

NOTE 8 – SUBSEQUENT EVENTS

 

Management has evaluated all activity of the Company through January 9, 2014 (the original issue date of the financial statements) and concluded that the following additional subsequent events have occurred that require recognition in the financial statements or disclosure in the notes to financial statements.

 

On November 29, 2013 Sharon Berthold resigned her positions as Executive Vice President, Director and Secretary.

 

15

  

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements: No Assurances Intended

 

In addition to historical information, this report contains forward-looking statements, which are generally identifiable by use of the words” believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions. These forward-looking statements represent Management’s belief as to the future of the Company. Whether those beliefs become reality will depend on many factors that are not under management’s control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

 

This Amendment No. 2 on Form 10-Q/A amends and restates the quarterly report on Form 10-Q of InoLife Technologies, Inc., or “the Company”, for the quarter ended September 30, 2013, as originally filed with the Securities and Exchange Commission, or “the SEC”, on January 9, 2014, and as amended on May 19, 2014 . We refer to the quarterly report on Form 10-Q that was filed on January 9, 2014 as “the original filing”. Contrary to the rules of the SEC, the Company’s consolidated financial statements included in the original filing were not reviewed by an independent public accountant in accordance with professional standards for conducting such reviews. This amendment is being filed to include consolidated financial statements which comply with the rules of the SEC, and have been reviewed by the Company’s independent audit firm.

 

This amended report does not reflect any other events occurring after the original filing.

 

Results of Operations

 

Due to our continued lack of funds, our operations are very limited. As a result, we realized no revenue during the period ended September 30, 2013.

 

The largest expenses during the six months ended September 30, 2013 and 2012 were for professional fees. The expense related to professional fees was approximately $170,000 and $2,217,000 for the three and six months ended September 30, 2013, respectively. The expense related to professional fees was approximately $9,311,000 and $9,580,000 for the three and six months ended September 30, 2012, respectively. Included in the professional fees, the executive officers received 3 billion shares in July, 2012 with a fair value of $9,000,000, for management services. These shares were subsequently cancelled in the third quarter of 2013, the expense reversed, and replaced with 120 preferred shares with a fair value of $300,000.

 

The majority of the consultants are being paid through the issuance of common stock. Such consulting services include, but are not limited to accounting, legal, business development, SEC reporting, investor relations and mergers and acquisitions. The additional consultant expense for the period ending September 30, 2013 as compared to September 30, 2012, was for shares issued to consultants as signing bonuses for agreeing to serve in executive and director positions with the Company going forward, as well as increased legal fees. The common stock was issued at the markets closing price on the day of issuance.

 

We realized a net loss of $200,068 and a net loss $2,150,168 for the three and six months ended September 30, 2013, compared to a net loss of $9,386,347 and a net loss $9,739,201 for the three and six months ended September 30, 2012.

 

16

  

Liquidity and Capital Resources

 

At September 30, 2013 we have a cash position of $5,000. Since we initiated our business operations in 2009, our operations have been funded primarily by the private sale of equity and debt to investors. As a result, through September 30, 2013, we have used all of our funds for our operations.

 

We continue to actively seek investment capital. At the present time, however, we have had limited commitments from funders to provide us any additional funds.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably expected to have a current or future effect on our financial condition or results of operations.

 

Impact of Accounting Pronouncements

 

On June 10, 2014 the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from U.S. GAAP for development stage entities. The Company has elected to early adopt this guidance, and therefore is no longer presenting the financial statements in accordance with ASU 915, with inception to date disclosures.

 

The Company is evaluating how to apply ASU 605, Revenues from Contracts with Customers, before its effective date, however, as the Company does not yet have revenue to recognize, it will not have an impact on current results of operations, financial position or cash flow.

 

Plan of Operation

 

InoLife Technologies, Inc. is organized to develop and market Skin Care and DNA Testing products within the US. The Company's mission is to aggressively identify, manufacture and market innovative and affordable healthcare products and services directly to the marketplace. By targeting cutting-edge DNA-based testing and reporting methodologies, the company is able to significantly benefit the health and wellness needs of both individuals and their healthcare providers.

 

InoLife will be focusing primarily in two areas that leverage the Company’s strong relationships with certified laboratories for all natural organic compounds and DNA based predisposition test platforms. The two areas will be:

 

1) Skincare Division that will develop and market a complete line of all natural skincare products for men and women with Proprietary Anti-Aging beneficial properties.

 

2) Healthcare Division that will encompass InoLife’s Genetic Test Platforms and DNA predisposition products for certain diseases for the professional medical industry.

 

InoLife’s Skincare Division, will utilize a patented compound to formulate a unique cream with Anti-Aging properties for both men and women. In addition, there will also be multiple other products the Company plans to develop over the next 12 months that will include all natural sunscreens; facial moisturizers and scrubs; and effective all natural formulations for the treatment of acne.

 

17

  

InoLife Technologies, Inc. is working on putting the necessary funding in place to market the commercial use of proprietary Intellectual Property by manufacturing, brand marketing and selling an integrated program of age reversing creams and lotions. These products will be sold directly to consumers through e-commerce, direct sales, pharmacies, retailers, distributors and healthcare providers. It also offers products that are sold only to physicians, hospitals, outpatient facilities and others in the medical community for use with their patients.

 

Inolife's Healthcare Division has developed a wide variety of genetic test platforms that provide meaningful information about genetic makeup, predispositions to certain diseases and ancestral information. Some of the platforms provide genetic biomarkers that address several pervasive healthcare needs. Test kit results can lead to lower total healthcare expenditures through early detection and management of health issues including obesity, cancers, diabetes, cardiac issues and general fitness.

 

InoLife is committed to our shareholders to increase the fundamental value of the Company’s stock. The key to the success of each of these divisions is investment and key personnel. Management is currently in discussions with interested investment groups to help fund the Company’s development and marketing initiatives. InoLife is already in the process of bringing on board the right management talent to make this all happen. It will be necessary to strengthen the accounting functions as the company rolls out their new product lines. The Company would like to thank its shareholders for their patience and continual support 

 

Our Independent Auditors have expressed substantial doubt about our ability to continue as a going concern.

 

As we don’t have enough cash on hand to pay our expenses for the next 12 months of operations, our independent auditors have included a “going concern” qualification in their audit report. The Company will have to continue to raise funds to continue to operate.

 

We require additional financing and our inability to raise additional capital on acceptable terms in the future may have a material adverse effect on our business and financial condition.

 

We do not have sufficient operating capital to fund our operations for the next 12 months and must raise that capital through loans and/or sales of our common stock. There is no guarantee that we will be able to do so. Failure to do so could cause us to have to cut operations and delay development and introduction of our products.

 

Because we have a limited operating history to evaluate our company and are implementing a new business model, the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delay frequently encountered by a new company.

 

Since we have a limited operating history we cannot assure you that our business will generate revenues or be profitable. Early stage companies often are unsuccessful and encounter unanticipated expenses and difficulties, investors should consider this risk in determining whether to purchase or sell our common stock.

 

Our current management holds significant control over our common stock and they may be able to control our Company indefinitely.

 

Our management has significant control over our voting stock that may make it difficult to complete some corporate transactions without their support and may prevent a change in control. As of September 30, 2013, our directors and executive officers as a whole, beneficially own approximately 92,120,044 shares of our common stock, and all of our Preferred Stock. The above-described significant stockholders will have considerable influence over the outcome of all matters submitted to our stockholders for approval, including the election of directors. In addition, this ownership could discourage the acquisition of our common stock by potential investors and could have an anti-takeover effect, possibly depressing the trading price of our common stock.

 

18

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable to small reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

(a)   Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures.

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 

With respect to the period ending September 30, 2013, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

 

Based upon our evaluation regarding the period ending September 30, 2013, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.

 

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

 

(b)   Changes in Internal Controls.

 

There have been no changes in the Company’s internal control over financial reporting during the period ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

19

  

PART II – OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS. 

 

Inolife Technologies, Inc. v. Sharon P. Berthold, 14 CVS 3156-Forsyth County, North Carolina:

 

This is an action against a former officer of the Company. Counsel for Inolife believes that the litigation has no material detrimental effect to the Company’s financial situation.

 

The Company is currently not involved in any other litigation that we believe could have a material adverse effect on our financial condition or results of operations.

 

To the best of our knowledge, except as set forth herein, none of the directors or director designees to our knowledge has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement.

 

ITEM 1A. RISK FACTORS.

 

Not required for smaller reporting companies.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

During the period September 30, 2013, the Company issued an aggregate of 32,000,000 shares of its common stock, to note holders pursuant to the original terms of the Convertible Debentures.

 

During the period September 30, 2013 the Company issued 19,240,000 shares of its common stock for services to various consultants.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default not cured within 30 days, with respect to any indebtedness of the Company.

 

ITEM 4. MINE SAFETY DISCLOSURE.

 

Not applicable

 

ITEM 5. OTHER INFORMATION.

 

There is no other information required to be disclosed under this item which was not previously disclosed.

 

20

 

ITEM 6. EXHIBITS.

 

3.1	Articles of Incorporation of InoLife Technologies Inc. as amended (the “Company”).
	-	Certificate of Incorporation, as amended through June 2004 - filed as an exhibit to the Registration Statement on Form 10-SB (File No.: 000-50863) and incorporated herein by reference.
	-	Certificate of Amendment of Certificate of Incorporation executed on November 25, 2005 - filed as an exhibit to the Current Report on Form 8-K dated November 29,2005 and incorporated herein by reference.
	-	Certificate of Amendment of Certificate of Incorporation executed on March 4, 2008 – filed as an Exhibit to the Current Report on Form 8-K dated March 6, 2008 and incorporated herein by reference
	-	Certificate of Amendment of Certificate of Incorporation executed on June 6, 2008 – filed as an Exhibit to the Current Report on Form 8-K dated June 9, 2008 and incorporated herein by reference
	-	Certificate of Amendment of Certificate of Incorporation Filed August 31, 2009
	-	Amendment to Certificate of Incorporate and Designation of Series B Preferred Stock (incorporated by reference to Form 8-K filed on March 22, 2011)
3.2	Second Amended and Restated By-laws - filed as an exhibit to the Company’s Current Report on Form 8-K dated November 17, 2005 and incorporated herein by reference.
3.3	Series B Preferred Stock Agreement.
10.1	Financial Services Advisory Agreement with New York Consulting Group Agreement (incorporated by reference to the Company’s 8-K filed September 21, 2009)
10.2	Share Exchange Agreement with InoVet Ltd. (incorporated by reference to the Company’s 8-K filed September 21, 2009)
10.3	Continental Investment Group, Inc. Consulting Agreement (incorporated by reference to the Company’s Form 8-K filed June 6, 2011)
10.4	RO Investments, Inc. Consulting Agreement (incorporated by reference to the Company’s Form 8-K filed June 6, 2011)
10.5	Connied, Inc. Consulting Agreement (incorporated by reference to the Company’s Form 8-K filed June 6, 2011)
10.6	Fuselier and Co, Inc. Consulting Agreement (incorporated by reference to the Company’s Form 8-K filed June 6, 2011)
10.7	Employment Agreement dated April 30, 2011 with Gary Berthold (incorporated by reference to the Company’s Form 8-K filed May 3, 2011)
10.8	Employment Agreement dated April 30, 2011 with Sharon Berthold (incorporated by reference to the Company’s Form 8-K filed May 3, 2011)
10.9	Strategic Alliance Agreement with InoHealth Products, Inc. (to be filed)
10.10	Convertible Note dated September 3, 2010 (incorporated by reference to the Company’s Form 10-Q for the period ended December 31, 2010)
10.11	Convertible Note dated September 17, 2010 (incorporated by reference to the Company’s Form 10-Q for the period ended December 31, 2010)
21.1	List of Subsidiaries (previously filed)
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of The Securities Exchange Act.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of The Securities Exchange Act.
32.1	Certification of Chief Executive Officer and Chief Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.

 

21

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	INOLIFE TECHNOLOGIES, INC.
Dated: August 15, 2014	By:	/s/ Gary Berthold
		Gary Berthold
		Chief Executive Officer

  

In accordance with the Exchange Act, this Report has been signed below by the following persons, on behalf of the Registrant and in the capacities and on the dates indicated.

 

Dated: August 15, 2014	By:	/s/ Gary Berthold
		Gary Berthold
		Chief Executive Officer

 

 

 22

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