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EX-31.2 - CERTIFICATION - FUTUREWORLD CORP.exhibit312.htm
EX-31.1 - CERTIFICATION - FUTUREWORLD CORP.exhibit311.htm
EX-32.1 - CERTIFICATION PURSUANT TO - FUTUREWORLD CORP.exhibit321.htm
EX-32.2 - CERTIFICATION PURSUANT TO - FUTUREWORLD CORP.exhibit322.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the quarterly period ended:    June 30, 2014 (First Quarter)
     
                          or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the transition period from  _________ to _________ .

 

Commission File Number 000-1273988

  

 Date of Report (date of earliest event reported):   August 12, 2014

 

FUTUREWORLD CORP.

(Exact name of registrant as specified in its charter)

 

DELAWARE 000-1273988 81-0562883
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
     

 

   
3637 4th Street North, Saint Petersburg, Florida   33704
(Address of principal executive offices)    (Zip Code)

 

Registrant's telephone number, including area code:   (727) 474-1816

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Name of Each Exchange on Which Registered
     
None   None
     

Securities registered pursuant to section 12(g) of the Act:

Common Stock, $0.0001 par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No
     
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. x Yes o     No
     
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.

 

x Yes

 

x No

     
         

 

  xYes o No
     
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

 

 

o Yes

 

x No

     
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
o  Large accelerated filer o  Accelerated filer o  Non-accelerated filer x  Smaller reporting Company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes  x No
               

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:

 

Voting Common Equity Non-voting Common Equity
$1,800,000 None

 

The number of shares outstanding of each of the registrant’s classes of common stock, as of June 30, 2014:

 

Common stock, par value $0.0001 per share 451,373,966
Other None

 

 

 

 
 

 

 

FutureWorld Corp.

 Annual Report on Form 10-Q

For the First Quarter Ended June 30, 2014

 

INDEX

 

       
PART I FINANCIAL INFORMATION   PAGE
       
Item 1 Condensed Consolidated Financial Statements    
       
  Condensed Consolidated Balance Sheets as of June 30, 2014 (unaudited) and March 31, 2014 (unaudited)   5
       
  Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2014 and 2013 (unaudited)   6
       
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2014 and 2013 (unaudited)   7
       
  Condensed Consolidated Notes to Financial Statements (unaudited)   8
       
Item 2 Management's Discussion and Analysis or Plan of Operation   18
       
Item 3 Quantitative and Qualitative Disclosures About Market Risk   19
       
Item 4 Controls and Procedures   19
       
Item 4 T Controls and Procedures   19
       
PART II OTHER INFORMATION    
       
Item 1 Legal Proceedings   21
       
Item 1A Risk Factors   21
       
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds   21
       
Item 3 Defaults Upon Senior Securities   21
       
Item 4 Removed and Reserved   21
       
Item 5 Other Information   21
       
Item 6 Exhibits   22
       
Signatures   22

 

 

 

 

 

 
 

 

DOCUMENTS INCORPORATED BY REFERENCE

The following documents (or portions thereof) are incorporated by reference into the Parts of this Form 10-Q noted:

NONE

 

Forward-Looking Statements

 

This Annual Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes,” “estimates” or similar language, and among other things:  (i) events that may occur in the future, (ii) implementation of our business model; development and marketing of our products and services and (iii) prospects for revenues and profitability.  All forward-looking statements included in this document are based on information available to us on the date hereof.  We caution investors that our business and financial performance and the matters described in these forward-looking statements are subject to substantial risks and uncertainties.  Because of these risks and uncertainties, some of which may not be currently ascertainable and many of which are beyond our control, actual results could differ materially from those projected in the forward-looking statements. Deviations between actual future events and our estimates and assumptions could lead to results that are materially different from those expressed in or implied by the forward looking statements. We do not intend to update these forward looking statements to reflect actual future events. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

 

 

 

FUTUREWORLD CORP.
Consolidated Balance Sheets
       
       
   June 30,  March 31,
   2014  2014
   (unaudited)  (audited)
Assets      
Current assets          
Cash  $133,437   $2,000 
Accounts receivable   47,362    0 
Inventory   70,035    0 
Note receivable   2,327    0 
Total current assets   253,166    0 
           
Property & equipment, net of accumulated - net          
Intangible property, net of accumulated - net   2,103,150      
Deposits        0 
Total Assets  $2,356,316   $2,000 
           
Liabilities and Stockholders' Equity          
Current liabilities          
Accounts payable  $8,329   $6,350 
Accrued expenses   1,137,649    1,089,530 
Deferred revenue        0 
Notes payable   356,164    0 
Loans and notes payable, related parties        277,338 
Total current liabilities   1,502,143    1,373,218 
           
Notes payable to shareholder   223,844    0 
Total liabilities   1,725,987    1,373,218 
           
Stockholders' Equity          
Preferred stock, 100,000,000 authorized, $.0001 par value:          
None issued and outstanding          
Preferred stock, $.0001 par value, 100,000,000 shares authorized, none issued          
Common stock, $.0001 par value, 4,900,000,000 shares authorized,          
  and; 501,373,966 and 416,373,966 shares          
  issued and outstanding, respectively   50,257    44,637 
Additional paid-in capital   6,744,272    4,647,567 
Minority interest in subsidiary          
Accumulated deficit   (6,164,200)   (6,063,422)
Total stockholders' equity   630,329    (1,371,218)
           
Total Liabilities and Stockholders' Equity  $2,356,316   $2,000 
           
.          
           
           
           
The accompanying notes are an integral part of these financial statements.          

 

 

 

 

 

 

 
Consolidated Statements of Operations
(unaudited)
 
 

 

 

 

      For the Three Months Ended  
      June 30,  
        2014     2013    
                   
Revenues   $ 70,660   $              -    
Direct costs     11,983                 -    
                   
Gross Profit     58,677     -    
                   
Operating expenses:                
  Salaries and benefits     81,080               36,514    
  Consulting     -                 -    
  Professional fees     57,800              3,977    
  General and administrative     14,933              -    
  Amortization and depreciation     -                   11,054    
  Total operating expenses     153,813     51,545    
                   
Other income (expense):                
  Interest expenses     (5,641)             (2,624)    
  Sale of assets, net                           -                              -       
  Total other (expense)     (5,641)                          (2,624)    
Loss from operations before income taxes     (100,778)                             (54,169)    
                 
    Provision for income taxes                       -                          -       
                 
Loss from operations before minority interest   $ (100,778)     $          (54,169)    
                 
    Minority Interest     -                         -       
                 
Net loss   $ (100,778)   $          (54,169)    
                 
Earnings (loss) per share:                
  Basic   $ (0.0002)   $               (0.0012)    
Weighted average shares outstanding                
  Basic     451,373,966          446,373,966    

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

 

 

FUTUREWORLD CORP.
Consolidated Statements of Cash Flows
(unaudited)
        For the three Months Ended  
        June 30,  
          2014       2013  
                     
Cash Flows from Operating Activities:                  
     Net (loss) income     $ (100,778)     $ (54,169)  
  Adjustment to reconcile Net Income to net                  
  cash provided by operations:                  
     Depreciation and amortization               11,054  
     Amortization of deferred revenue                  
     Loss on sale of assets                  
     Issuance of stock in settlement of services                  
     Minority interest                  
  Changes in assets and liabilities:                  
     Accounts receivable       (47,362)          
     Inventory       (70,035)          
     Due from affiliate                  
     Related party  loans       (53,494)       (181,000)  
     Prepaid and other       (2,332)          
     Accounts payable       1,979       (5,330)  
     Accrued expenses       48,119       (77,455)  
     Customer deposits and deferred revenue               -  
  Net Cash (Used) Provided by Operating Activities       (123,125)       (306,900)  
                     
                     
Cash Flows from Financing Activities:                  
    Proceeds from issuance of stock                  
    Proceeds from issuance of note payable       356,164          
  Repayments of notes payable                  
  Proceeds from sale of assets                  
    Related party advances               5,818  
  Net Cash (Used) Provided by Financing Activities       356,164       5,818  
                     
                     
Net increase/decrease in Cash       131,437       (301,082)  
                     
Cash at beginning of period       2,000       -  
                     
Cash at end of period     $ 133,437     $ -  
                     
                     
Supplemental cash flow information:                  
  Interest paid     $ -     $ -  
  Taxes paid     $ -     $ -  
                     
                     
The accompanying notes are an integral part of these financial statements.  

 

 

 
 

 

 

 

FUTUREWORLD CORP.

(A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

As of June 30, 2014

(Unaudited)

 

 

1. History of the Company and Nature of the Business

 

OUR HISTORY

 

“We”, “us” and “our” refer to FutureWorld Corp., a Delaware corporation.

 

The history of our incorporation and our ownership, in chronological order, is as follows:

 

On May 13, 2009, Mr. Talari converted the principal amount and accrued interest of one convertible note, and the accrued interest and a portion of the principal amount of a second note into 50,000,000 shares of our common stock respectively.  After these conversions, Mr. Talari legally and beneficially owned eighty-four percent of our common stock.
June 10, 2009, FutureWorld Corp. acquires SeaTech Energy Inc., a Nevada corporation, for 150M shares in Common Stock or $1,500,000.
On June 11, 2014, the Company changed its name to FutureWorld Corp.

 

 

 Nature of Business

 

The address of our executive offices is: 3637 4th Street North, Saint Petersburg, FL 33704 and our telephone number at that address is 239-324-0000 or 727-474-1816. The address of our web site is www.futureworldcorp.com. The information at our web site is for general information and marketing purposes and is not part of this annual report for purposes of liability for disclosures under the federal securities laws.

  

FutureWorld Corp., a Delaware corporation, is a U.S. diversified Industrial Hemp/ Medical Cannabis Company, which together with its subsidiaries, focuses on the identification, acquisition, development, and commercialization of Hemp/Cannabis products, services and technologies globally under the banner of Cannabis 2.0.

 

FutureWorld Corp. is seeking to acquire minority or full interest in currently operating companies and disruptive technologies in the Industrial Hemp/Medical and Recreational Cannabis Industry globally; such as vaporizers, lab testing, tracking systems, security, CBD oil, testing kits, financial solutions, dispensaries and other needed components. Our goal is to provide our acquired companies, current and future shareholders a clear strategy for the growth of their companies and their investment in those companies.

 

We currently provide multiple products that supply the burgeoning cannabis industry. The “picks and shovel” business model capitalizes of selling enterprises associated with the Industrial Hemp and Medical Cannabis industries products that are essential in their success. Our products solve long standing problems in cultivation, processing, and retail sales for industrial hemp and medical cannabis. The following divisions will continue to delve even further into purchasing existing products or developing brand new products as the wholesale and retail space continues to evolve. In addition, one primary focus is to manufacture, market, and sell products containing hemp derived CBD oil. We are invested in the following portfolio companies as subsidiaries;

CB Scientific, Inc.
MedTest Inc.
URVape, Inc.
HempTech Corp.

HempTechRx Inc.
DispenseTek
FutureFinance

 

 

 
 

 

 

 

CB Scientific, Inc.:

CBD Oil- CBD is one of at least 60 cannabinoids found in hemp, and is non-psychoactive. The Cannabidiol “CBD” is a compound in cannabis that has significant medical effects, but does not make people feel “high” and can actually counter the psychoactive effects of THC. The reduced psychotropic of CBD-rich cannabis makes it an appealing treatment option for patients seeking anti-inflammatory, anti-pain, anti-anxiety, anti-psychotic, and/or anti-spasm effects without disconcerting lethargy. Scientific and clinical studies underscore CBD’s potential as a treatment for a wide range of conditions, including rheumatoid arthritis, diabetes, alcoholism, MS, chronic pain, schizophrenia, PTSD, antibiotic-resistant infections, epilepsy, and other neurological disorders. CBD has demonstrated neuro-protective and neurogenic effects, and its anti-cancer properties are currently being investigated at several academic research centers in the United States and elsewhere.

The present usage for CBD oil in the United States is estimated to be approximately 1,000-2,000 Kilograms a year and growing and with a yearly value of around $200,000,000. Currently, the apparent current competitors are; CannaVest, Inc. and Medical Marijuana, Inc., which own portions of each other’s companies, are the primary supplier of CBD oil in the United States. They supply the product in bulk to affiliate distributors and sell it retail in plastic tubes that are refined up to three levels. Real Scientific Hemp Oil™ is their trademark name.

CB Scientific is in the process of sourcing its own CBD oil from Europe. We are also developing plans to fund an overseas hemp cultivation project to provide a consistent and reliable supply to the United States and beyond. Currently, industrial hemp cultivation is legal in China, Australia, Austria, Canada, Chile, Denmark, Finland, France, Germany, Great Britain, Hungary, India, Italy, Japan, New Zealand, Poland, Russia, Spain Switzerland, and Turkey.

CB Scientific will process the CBD oils that will be sold through our online presence for retailing industrial hemp oil-based Cannabidiol (CBD) nutritional supplements, wellness and personal care products and vapable CBD oils. DispenseTEK will market items such as CBD oil, CBD infused edibles & multiple hemp related items and cross market our vaporizers from URVape.com. DispenseTEK will be featuring scientific grade hemp oil which is highly sought after around the world. We will sell already recognizable brands including our own brands and drive internet sales through ads, videos, social media and Search Engine Optimization.

The global Nutraceutical market is projected to be in excess of $200 billion by 2015 and the current US Nutraceutical and Dietary supplement market is valued at around $42 billion. URCBDOil.com will be at the forefront of this massive marketplace with significant opportunities. Cannabinoids (non-psychoactive CBD) have been found to have antioxidant properties, unrelated to NMDA receptor antagonism. This new found property makes cannabinoids useful in the treatment and prophylaxis of a wide variety of oxidation associated diseases, such as ischemic, age-related, inflammatory and auto-immune diseases.

(mention US Patent?) Cannabinoids are found to have particular application as neuroprotectants, for example in limiting neurological damage following ischemic events, such as stroke and trauma, or in the treatment of neurodegenerative diseases, such as Alzheimer's, Parkinson's and HIV dementia. URCBDOil.com should be live by July 1, 2014. URCBDOil.com will assist FutureWorld to generate positive cash flow for both URVape and our CBD oil and CBD infused products..

MedTest, Inc.:

MedTest, Inc. a Nevada owned company based in Denver Colorado that FutureWorld recently purchased for cash, stock and a revenue sharing component. MedTest Inc has a working relationship with Herbal Synergy LLC in Colorado and is developing new technologies specifically for cannabis analytics. Charles Steinberg’s credentials will prove to be an asset to MedTest Inc. Mr. Steinburg of Herbal Synergy has been one of the main men behind gas chromatography testing in Colorado. He has been a judge at five previous High Times Cannabis Cups. Mr. Steinberg will be a judge at the next three High Times Cannabis Cups (San Francisco, CA: June 28th – 29th, Clio, MI July 26th – 27th, Seattle WA Sept 6th – 7th). Herbal Synergy LLC has pioneered residual solvent testing for medical cannabis and has always strived to help patients know exactly what they are buying. MedTest Inc. believes every product sold to patients as “Medical Quality” should be inspected for health benefits, safety, consistency, purity, potency and packaged properly for distribution.

URVape, Inc.:

URVape™ is our brand name vaporizer pen which is sold with a charger and refill bottles. We market the product at URVape.com. It is our own trademarked vaporizer being marketed and sold online and in retail shops. The product is cutting edge design and requires puffing on the pen to facilitate battery use. The URVape vaporizing pen is sleek and lightweight. URVape will initially have oil

 
 

vaporizers available and dry herb versions available in the coming months.

URVape 1.0 - For use with oil extracts

Powered by battery, vaporizers extract the active ingredients from cannabis by heating it to a temperature lower than required for combustion. When air is drawn through the heated cannabis it emits a vapor that is inhaled. URVape is;

URVape - Extremely easy to use. No Buttons. Just draw through the mouthpiece and the unit automatically heats up to release oil vapor.

LED lights on the bottom light up when you inhale, Auto shut off after 8 seconds, Discreet, Stylish and Sleek, Stylus on end of pen, Long Battery Life - Lasts for 4-5 days depending on number of puffs, FutureWorld has identified three key long-term items sweeping the globe that solidify URVape’s entry into the market:

The decriminalization and legalization of cannabis for medicinal and recreational use - The adoption of electronic vaporizing by the world’s 1.2 Billion smokers - eCig or vaporizer market is the fastest market within the tobacco (free) industry and estimated to be a multi-billion dollar industry within few years.

HempTech Corp:

HempTech Corp has several products available specifically geared to helping cultivators of industrial hemp and medical cannabis maximum yields while helping to control costs. CaNNaLyTiX™ , SPIDer™, SmartSense™ ,Smart.NRG™ , and CaNNaTRAK™.

CaNNaLyTiX™ “A picture is word a thousand words” and being able to visualize all the various aspects of a cultivation enterprise solves challenges before they become problems. CaNNaLyTiX™ is a dashboard controller system that allows the various computer systems to be integrated throughout a cultivator’s infrastructures. Using state-of –the-art API connecting software packages, CaNNaLyTiX™ can allow all computer systems to be monitored with the ease of a smartphone app and the robust hardware of integrated servers or cloud-based application.

CaNNaTRAK™- the next generation of barcode & RFID tracking systems for keeping pace with the extensive demands of seed to sale tracking of Hemp/Cannabis for state compliance. We are currently developing “game changer” modifications that will make it the ultimate software system in the industry. CannaTRAK’s Asset Tracking Management Software automates the major aspects of the Asset Life Cycle. The Product suite is made up of modules, which are able to operate independently of one another, are able to be configured to work together, or to be integrated with non-native applications. CaNNaTRAK™’s software easily tracks assets using bar coding, radio frequency (RFID), imaging, and wireless technologies. CaNNaTRAK™ software is designed under the client/server architecture, is multi-user and menu-driven following industry-standard MS Windows protocols and graphical user interfaces. CaNNaTRAK™ applications are compatible with MS Windows XP, Vista, Windows 7 & 8.1 operating systems and with SQL Server 2008 through 2013.

CaNNaTRAK’s mobile information applications are compatible with Windows Mobile devices and are tightly integrated with; bar coding, RFID, GPS, imaging, biometrics and wireless technologies. Due to the State law, legal governance, compliance and tax reasons, we believe CaNNaTRAK™ will be an invaluable tool for legal compliance and profitability from growers to dispensers of the legal medicinal marijuana. Over the past decade, 22 states have approved the use of medicinal marijuana. Medicinal marijuana has become an alternative to traditional treatments for patients with clinical diseases such as cancer and HIV/AIDS. The medicinal marijuana market is estimated to be valued in the billions of dollars initially and may provide hundreds of millions of dollars tax revenue for the state’s tax coffers.

We believe compliance and governance will be a big concern for the state offices overseeing the cannabis lifecycle and CaNNaTRAK™ will be an invaluable tool to comply and monitor for the medicinal marijuana industry. Our competition presently consists of the MITS system being used in the state of Colorado, the BioTrackTHC system being used in the state of Washington, and MJ Freeway. Our primary plan is to be ready for the state of Florida when medical marijuana passes on Nov. 4th, 2014. Certainly we will look to enter every burgeoning market including Florida. Florida is set to be the 2nd largest Cannabis market in the United States behind California

SPIDer (Secure Perimeter Intrusion Detection Network) is a system to meet the needs of theft and malicious attacks. While the economy is seeing improvement, theft, site destruction, and malicious activity are still happening at an alarming rate and within the legal Cannabis/Hemp industry surging forward we can expect no change particularly because of its specific draw. The SPIDer systems consist of 3 levels of detection to identify intruders and threats in areas that are restricted.

The first level utilizes an electronically charged coaxial cable woven into your chain link fencing. Excessive fence movement will set off an alarm through your network notification system that someone is attempting to enter your facility. This is a very cost effective means to secure your site to meet security requirements for your company. The second level consists of a visual intrusion

 
 

monitoring system. It is a wireless, battery operated, and connected through the cellular network. It provides 24/7 monitoring and notification through the internet and email system. Once an intruder is identified an alarm is sent to the security team with a picture that allows you to identify if this is an authorized or unauthorized person. If it is an unauthorized person you can take the appropriate action.

The network system can quickly be deployed and moved to provide security coverage as needed. The third level is a multi-level detection and verification system that uses both level one and level two to rapidly identify a potential intruder and provide you information for a rapid decision. The combination of the two systems provides the additional barriers for quick action. Sometimes seconds are critical in preventing serious damage or theft at your site. The command center software provides intrusion notification to your network center and to individuals via email. For level two and three you receive a picture that enables you to make a more informed and quicker decision concerning your action.

The SPIDer solution addresses the potential threat facing the entire Cannabis/Hemp industry. With this system you are able to arm your security team with information that enables them to be proactive in addressing these costly activities. Compliance with state rules and regulations for the Cannabis/ Hemp industry is going to be essential. Though there are many security companies on the market, few are adapting themselves to the Cannabis industry.

SmartSense- offers wireless security and smart sensor mesh network for precision agriculture, irrigation systems, and greenhouses for the hemp industry. Our Smart Agriculture models allow monitoring multiple environmental parameters involving a wide range of applications with smart sensors such as Leaf Wetness, Atmospheric Pressure, Solar Radiation, Air Temperature / Humidity, Soil Temperature / Moisture, Ultraviolet Radiation and etc. The smart sensor information will be collected and sent via the cloud to the central office for analysis and procedural modifications. FutureWorld is not aware of another competitor in the United States. FutureWorld, through, HempTech plans on marketing the product to large and medium sized grow facilities as they will have the greatest need.

Smart.NRG- offers tools to analyze every aspect of a cultivator’s energy usage. Being fully integrated with CaNNaLyTiX™, one can visualize energy consumption in real-time and track historical usage. The software’s predictive functionality also helps optimize energy use challenges proactively. We believe a cultivator’s huge electric bills can be scaled back when the entire grow is looked at as a complete and fully integrated operation.

SmartGROW- HempTech is developing their own proprietary organic soils and nutrients that will be specifically marketed and made to bolster the Hemp/Cannabis community for industrial hemp farms, to Cannabis grows of various sizes, and to home-based potted plant grows for personal use. As such, every cultivator of marijuana needs the right kind of fertilizer and pesticides/herbicides to proper grow and achieve quality products. But what is great about getting into soil is that hemp/cannabis is only one part of a huge agricultural market. The company will sell its products to the entire farming community which is a great revenue source, but the additional focus to the cannabis market will set us apart. The competition in the market for this focused marketing is extensive yet we feel there is substantial room in the space for growth..

We will manufacture a complete line of innovative sustainable and organic fertilizers, pesticides, fungicides, and soil amendments. The products we will use are currently used all over the world, in all sorts of growing environments like organic and conventional farms, golf courses, nurseries, lawns, gardens, and greenhouses, but we will be adding specific mixtures targeted to just the Cannabis/Hemp community. We have access to a modern laboratory and manufacturing facility and will be able to develop special formulations for whatever unique growing situation someone may have. In that way, the consumer can save money and pay only for the nutrients their plant needs. We intend on opening up a new company for this purpose and joint venturing with an agricultural industry expert. Negotiations for the new company are currently underway. FutureWorld will own the intellectual rites in conjunction with the JV.

DispenseTek:

CaNNaBoX™- Much like a bank ATM, the CaNNaBoX™ machine operates with the swipe of a card, which will verify identity, age and prescription information of a medical marijuana patient before releasing measured packages of marijuana. The upside is you won't have to be waited on by an assistant if you don't require consultation and the location is busy. The machine is capable of holding several hundred items in multiple forms of marijuana. CaNNaBoX™ is a secure robotic device specifically designed for dispensing cannabis products in secure prepackaged amounts, in complete accordance with state law requirements, in licensed dispensaries, and only to legal buyers .

FutureWorld has teamed up with American Green to brand the Zazzz Dispensary machine with the CaNNaBoX™ logo and distribute the product across the United States and beyond. Presently, we are aware of the Zazzz machine presented by American Green, which is first to the market, MedBox Inc.’s machine, and a vending machine product by Endexx Corp. The model for FutureWorld is to bring 1500 units to market within a couple years in accordance with our JV goals alongside American Green and its Zazzz machine.

 
 

There will be a revenue sharing agreement with American Green and FutureWorld for every placed CaNNaBoX™ machine via monthly leasing and transaction costs. We are currently putting together the details of the JV with American Green and beginning the marketing and design phase of our product. Revenues are purely a function of quantity at this point. A monthly leasing fee of approximately $150 dollars a month and a transaction cost somewhere between $1.50 and $2.00 per. Competing brands are to look for a large upfront expenditures from dispensaries for the machines which we believe will make their sales model harder to actual achieve sales nationwide.

CaNNaBoX™ will be marketed exclusively through our new dispensary division, DispenseTek. DispenseTek was created to market and sell dispensary related products and services including but not limited to CaNNaBoX™. It is important to understand, CaNNaBoX™ robotic dispensaries are secure delivery and control systems for use in licensed cannabis dispensaries and not “vending machines”. Their specific design benefits public safety, governance, dispensaries, and consumers.

CannaPKG, Inc. - FutureWorld is currently in the process of finalizing its purchase of CannaPKG, Inc. CannaPKG is marketed on CannaPKG.com. Many of the products in the industry from edibles, to oil cartridges, vaporizers to plant buds all need special packaging of which FutureWorld intends to play an integral part. Smell proof bags, and jars along with an assortment of a great many other industry products will be available. Our biggest competitor would be considered to be Cannaline.com. The site will utilize Search Engine Optimization and social media. In addition, we will employ sales agents to visit retailers who may look to supply their stores with our products.

FutureFinance:

CaNNaBit™- CaNNaBit™ offers Bitcoin and Fiat currency exchange services; payment processing; on-line real-time currency trading; cash management, namely, facilitating transfers of electronic cash equivalents; digital currency exchange transaction services for transferrable electronic cash equivalent for dispensaries nationwide. Banking has been a big issue for the Cannabis dispensaries due to the current federal ban and classification of Cannabis. Hence most banking groups would not risk fines and closure by the federal government providing banking services for the growers and dispensaries in the Cannabis industry.

 

2.   Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying balance sheets as of June 30, 2014 and 2013, and the statements of operations, statements of cash flows, and statement of changes in stockholders’ equity for the years ended June 30, 2014 and 2013 of FutureWorld Corp. have been prepared by the Company. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position as of June 30, 2014 and 2013, and the results of operations and cash flows for the years ended June 30, 2014 and 2013.

  

 

Principles of Consolidation

 

The consolidated financial statements include the accounts and operations of FutureWorld Corp., and its wholly owned subsidiaries,

 
 

URVape, Inc., HempTech Corp., CB Scientific (MedTest Inc.) and HempTechRX Inc.

 

Basis of Accounting

 

The Company maintains its financial records and financial statements on the accrual basis of accounting, in conformity with generally accepted accounting principles in the United States of America. The accrual basis of accounting provides for matching of revenues and expenses in the period they were earned and incurred.

 

Cash and Cash Equivalents

 

For purposes of reporting cash flows, the Company considers all cash accounts that are not subject to withdrawal restrictions or designated for assets acquisitions, and certificates of deposit that have an original maturity of three months or less when purchased, to be cash equivalents. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

 

Fair Value of Financial Instruments

 

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

     
  •  Cash and Cash Equivalents, Accounts Receivable, Prepaid Expenses, Accounts Payable,  and  Accrued Expenses :
   

The carrying amount reported in the balance sheets for these items approximates fair value because of the short maturity of these instruments.

 

  •  Loans and Notes Payable to Related Parties:
    The carrying value of loans and notes payable to related parties approximates fair value as each of the notes payable carries an interest rate commensurate with commercial borrowing rates available to the Company.
    As of June 30, 2014 and 2013, the fair values of the Company’s financial instruments approximate their historical carrying amount.

 

Property and Equipment

 

Property and equipment are recorded at historical cost.  Depreciation is computed on the straight-line method over estimated useful lives of the respective assets, ranging from three to seven years.  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation periods or the unamortized balance is warranted.  Based upon the Company's most recent analysis, management believes that no impairment of property and equipment exists at March 31, 2014 and 2013.

 

Intellectual Property & licensing for CaNNaTRAK, SmartSense, CaNNaLyTiX.

 

On June 30th, FutureWorld Corp. signed an exclusive License Agreement with Infrax Systems, Inc. to use Technologies behind CannaTRAK(TM), SmartSense(TM), SmartNergy(TM) with CaNNaLyTiX(TM) and its' Asset Management Software (Secure Intelligent Devices (lights, LEDs, & systems) with embedded two way communication systems dispensing critical real time information, management and controls) in the Cannabis industry. The term of the agreement is for a period of 10 (ten) years. This Agreement shall be renewable at the end of the current term for a successive term of five (5) years. FutureWorld shall hold the rights to the Intellectual Property with respect to Cannabis Industry as it relates to products developed for specific applications such as growth management, analytics, energy management etc. FutureWorld agreed to pay Infrax Systems a one-time fee of Two Million Dollars ($2,000,000) in cash or 50,000,000 shares of common stock, par value $0.0001, for use of the Products and their related IP.

 

Stock Based Compensation

 

The Companies estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model. For stock-based awards issued to employees and directors, stock-based compensation is attributed to expense using the straight-line single option method, which is consistent with how the prior-period pro-forma were provided. Stock-based compensation expense recognized in the Statements of Operations for the years ended March 31, 2013 and 2012 included compensation expense for share-based payment awards granted prior to, but not yet vested based on the grant date fair value estimated and compensation expense for the share-based payment awards granted subsequent to January 1, 2006 based on the grant date fair value estimated.

 

The Company’s determination of fair value of share-based payment awards to employees and directors on the date of grant using the Black-Scholes model, which is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

 

Income Taxes

 

The Company records federal and state income tax liability at the federal and state rates after allowances. Deferred income taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards, 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 bases.

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.

 
 

 

Tax benefit from an uncertain tax position may be recognized in the financial statements when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized and in subsequent periods.

 

The Company adopted a policy under which, if required to be recognized in the future, they will classify interest related to the underpayment of income taxes as a component of interest expense and will classify any related penalties in selling, engineering, general and administrative expenses in the statement of operations.

 

Advertising Costs

 

Advertising costs are charged to operations as incurred.

 

Earnings (Loss) Per Share

 

Basic EPS is calculated by dividing earnings (loss) available to common shareholders by the weighted average number of common shares outstanding during each period.  Diluted EPS is similarly calculated, except that the denominator includes common shares that may be issued subject to existing rights with dilutive potential, except when their inclusion would be anti-dilutive.

 

Based on an estimated current value of the Company’s stock being equal to or less than the exercise price of the warrants, none of the shares assumed issued upon conversion of the warrants, nor any of the stock assumed issued under the Company's Incentive Stock Plan are included in the computation of fully diluted loss per share, since their inclusion would be anti-dilutive.

 

Impact of Recently Issued Accounting Pronouncements

 

We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We believe that the following impending standards may have an impact on our future filings. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

 

In June 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification (“Codification”). The Codification is the single source for all authoritative Generally Accepted Accounting Principles (“GAAP”) recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009.  The implementation of the Codification did not impact our financial statements or disclosures other than references to authoritative accounting literature are now made in accordance with the Codification.

 

In May 2009, the FASB issued guidance under ASC 855 “Subsequent Events” which established general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance requires the Company to disclose the date through which the Company has evaluated subsequent events and the basis for the date. The guidance was effective for interim periods which ended after June 15, 2009. See Note 1, “Basis of Presentation,” for disclosure of the date to which subsequent events are disclosed.

 

In June 2008, the FASB issued authoritative guidance as required by the “Derivative and Hedging” ASC Topic 815-10-15-74 in Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock , The objective is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock and it applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative, for purposes of determining whether that instrument or embedded feature qualifies for the first part of the scope exception. This Issue also applies to any freestanding financial instrument that is potentially settled in an entity’s own stock, regardless of whether the instrument has all the characteristics of a derivative. We currently have warrants that embody terms and conditions that require the reset of their strike prices upon our sale of shares or equity-indexed financial instruments at amounts less than the conversion prices. These features will no longer be treated as “equity” once it becomes effective.  Rather, such instruments will require classification as liabilities and measurement at fair value. Early adoption is precluded. This standard did not have a material impact on the financial statements.

 

 In March 2008, the FASB issued guidance under ASC 815 “Derivatives and Hedging”. The guidance is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged.  This standard did not have a material impact on the financial statements.

 
 

 

In December 2007, the FASB issued revised guidance under ASC 805 “Business Combinations”, which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. ASC 805 is effective as of the beginning of the first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of ASC 805 did not have a material impact on the Company’s financial position, results of operations or cash flows because the Company has not been involved in any business combinations during the six months ended December 31, 2009.

 

In December 2007, the FASB issued guidance under ASC 810 “Consolidation”.  This guidance establishes new accounting and reporting standards for the Non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance will change the classification and reporting for minority interest and non-controlling interests of variable interest entities. The guidance requires the minority interest and non-controlling interest of variable interest entities to be carried as a component of stockholders’ equity. Accordingly we will reflect non-controlling interest in our consolidated variable interest entities as a component of stockholders’ equity. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 and earlier adoption is prohibited. The Company adopted this guidance beginning July 1, 2009. The Company does not have Variable Interest Entities consolidated in its financial statements.  Disclosure of a non-controlling interest has been made on the Company’s financial statements.

 

In July 2006, the FASB issued guidance under ASC 740 “Income Taxes”. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements. It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on a tax return. The adoption of this guidance did not have any impact on our financial statements.

 

Other recent accounting pronouncements issued by the FASB, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

 

3.  Going Concern

 

For the year ended June 30, 2014, the Company incurred a net loss of $100,778 and a cumulative net loss since inception of $6,164,200.  As of June 30, 2014, the Company had a working capital of $133,437 and $133,437 in cash with which to satisfy any future cash requirements.  These conditions raise substantial doubt about the Company's ability to continue as a going concern.  The Company depends upon capital derived from future financing activities such as loans from its officers and directors, subsequent offerings of its common stock or debt financing in order to operate and grow the business either directly or through its subsidiary.  There can be no assurance that the Company will be successful in raising such capital.  The key factors that are not in the Company's control and that may have a direct bearing on operating results.  These factors include, but are not limited to, acceptance of the Company’s business plan, the ability to raise capital in the future, the ability to expand its customer base, and the ability to hire key employees to grow the business.  There may be other risks and circumstances that management may be unable to predict.

 

 

4.  Property and Equipment

 

 

Property and equipment as of June 30, 2014 and 2013 consists of the following:

 

    2014     2013  
             
Computer equipment   $ -     $ 9,873  
Furniture and fixtures     -       17,070  
      -       26,943  
Accumulated depreciation     -       24,369  
     Net   $ -     $ 2,574  

 

5.  Intangible Assets

 

Intangible assets consists of the following:      
    June 30,  2014  
     (unaudited)  
 Intellectual Property & licensing for CaNNaTRAK, SmartSense, CaNNaLyTiX    $             2,000,000  
       
                2,000,000  
 Accumulated amortization                0  
     $          2,000,000  

 

6.   Stock Issuances

 

FutureWorld has issued 50,000,000 shares of common stock, par value $0.0001, to Infrax Systems for the Agreement dated June 30th,

 
 

2014. The agreement allows FutureWorld to use Technologies behind CannaTRAK(TM), SmartSense(TM), SmartNergy(TM) with CaNNaLyTiX(TM) and its' Asset Management Software (Secure Intelligent Devices (lights, LEDs, & systems) with embedded two way communication systems dispensing critical real time information, management and controls) developed by Infrax Systems. The term of the agreement is for a period of 10 (ten) years. This Agreement shall be renewable at the end of the current term for a successive term of five (5) years. FutureWorld shall hold the rights to the Intellectual Property with respect to Cannabis Industry as it relates to products developed for specific applications such as growth management, analytics, energy management etc. FutureWorld agreed to pay Infrax Systems a one-time fee of Two Million Dollars ($2,000,000) in cash or 50,000,000 shares of common stock, par value $0.0001, for use of the Products and their related IP.

 

7.     Related Parties Transactions

 

On June 30th, FutureWorld Corp. signed an exclusive License Agreement with Infrax Systems, Inc. to use Technologies behind CannaTRAK(TM), SmartSense(TM), SmartNergy(TM) with CaNNaLyTiX(TM) and its' Asset Management Software (Secure Intelligent Devices (lights, LEDs, & systems) with embedded two way communication systems dispensing critical real time information, management and controls). The term of the agreement is for a period of 10 (ten) years. This Agreement shall be renewable at the end of the current term for a successive term of five (5) years. FutureWorld shall hold the rights to the Intellectual Property with respect to Cannabis Industry as it relates to products developed for specific applications such as growth management, analytics, energy management etc. FutureWorld agreed to pay Infrax Systems a one-time fee of Two Million Dollars ($2,000,000) in cash or 50,000,000 shares of common stock, par value $0.0001, for use of the Products and their related IP.

 

Mr. Talari, CEO of FutureWorld is an acting CEO of Infrax Systems.

 

8.  Accrued Expenses

 

 

Accrued expenses at June 30, 2014 and 2013 were as follows:

    2014     2013  
Accrued salaries   $ 1,072,714     $ 831,527  
Payroll tax liabilities             41,576  
Accrued interest     64,935       0  
Accrued penalties             -  
    $ 1,137,649     $ 873,103  

 

9.   Related Parties Disclosures

 

(a) Loan from Saeed (Sam) Talari

 

Mr. Talari has advanced funds to the Company at various times. On April 1, 2010 the Company issued a promissory note with an initial balance of $306,319 bearing interest at 5%. This note allows Mr. Talari to advance additional funds to the Company as needed. At June 30, 2014 and 2013, the balance due to Mr. Talari on this Promissory Note is $223,844 and $299,118 respectively, and the accrued interest thereon at June 30, 2014 and 2013 is $64,935 and $45,048 respectively.

 

 (b) Employment Agreements

 

Sam Talari

 

On January 1, 2012, the Company entered into a three-year Employment Agreement with Mr. Talari, the Company’s Acting Chief Executive Officer, and one of the Company's directors. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $9,371 per month, with a 5% increase per annum and (b) all group insurance plans and other benefit plans and programs made available to the Company’s management employees. The balance of accrued salaries payable to Mr. Talari is $1,037,284 and $900,733 as of June 30, 2014 and 2013 respectively.

 

 

 

 

 
 

 

Cameron Cox

On April 15, 2014, the Company entered into a three-year Employment Agreement with Mr. Cox, the Company’s Acting Vice President of Business Development. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $3,000 per month, with a 5% increase per annum, and (b) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Bill Short

On April 24, 2014, the Company entered into a three-year Employment Agreement with Mr. Short, the Company’s Acting Chief Operations Officer. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $3,000 per month, with a 5% increase per annum, and (b) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Kevin Defant

On April 21 , 2014, the Company entered into a three-year Employment Agreement with Mr. Defant, the Company’s Acting Tech Director. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $2,000 per month, with a 5% increase per annum, and (b) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Derek Lebahn

On May 15, 2014, the Company entered into a three-year Employment Agreement with Mr. Lebahn, the Company’s Acting President of the CB Scientific Division. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $2,000 per month, with a 5% increase per annum, and (b) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Charles Steinberg

On May 15, 2014, the Company entered into a three-year Employment Agreement with Mr. Steinberg, the Company’s Acting Vice President of the CB Scientific Division. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $2,000 per month, with a 5% increase per annum, and (b) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Joseph Kelly

On June 18, 2014, the Company entered into a three-year Employment Agreement with Mr. Kelly, the Company’s Acting Product Development Executive for the CB Scientific Division. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $850 per month, with a 5% increase per annum, and (b) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Scott Zabrek

On June 18, 2014, the Company entered into a three-year Employment Agreement with Mr. Zabrek, the Company’s Acting President of CannaPKG, Inc Division. The Agreement is automatically extended for additional one-year periods without further action from the Company or the executive, unless notice of termination is given by either party within 90 days of the end of any periods. The Agreement provides for (a) a base salary of $2,000 per month, with a 5% increase per annum, and (b) all group insurance plans and

 
 

other benefit plans and programs made available to the Company’s management employees.

 

(c) Office Space

 

During the Company's initial stage, it has limited need for use of office space or equipment.  The Company operates out of office space provided by the principals at no cost to the Company in Saint Petersburg, Florida.

 

 

Item 2.   Management’s discussion and analysis of financial condition and results of operations

 

Our significant accounting policies are more fully described in Note 1 to the financial statements. However, certain accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management; as a result they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on knowledge of our industry, historical operations, terms of existing contracts, and our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate.

 

 

Our critical accounting policies include:

 

Revenue Recognition.   We recognize revenue from licensing our software upon the installation and acceptance of the software by customers in accordance with Statement of Position 97-2, Software Revenue Recognition.  When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year.  Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement.

 

Long-Lived Assets - We depreciate property and equipment and amortize intangible assets, including software development costs over the respective assets’ estimated useful life and periodically review the remaining useful lives of our assets to ascertain that our estimate is still valid. If we determine a useful life has materially changed, we either change the useful life or write the asset down or if we determine the asset has exhausted its useful life, we write the asset off completely.

 

Stock Based Compensation -   We account for stock based compensation under the provisions of Statement of Financial Accounting Standards No. 123, (revised 2004) Share-Based Payments.  Under the fair value recognition provisions of SFAS 123R, we recognize stock-based compensation expense net of an estimated forfeiture rate and therefore only recognize compensation cost for those shares expected to vest over the service period of the award.  Calculating stock-based compensation expense requires the input of subjective assumptions, including the expected term of the option grant, stock price volatility, and the pre-vesting option forfeiture rate.  We estimate the expected life of options granted based on historical exercise patterns.  We estimate stock price volatility based on historical implied volatility in our stock.  In addition, we are required to estimate the expected volatility rate and only recognize expense for those shares expected to vest.  We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised or cancelled.

 

Income Taxes - We record federal and state income tax liability in accordance with Statement of Financial Accounting Standards No. 109 – Accounting for Income Taxes .  Deferred income taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards, 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 bases.  Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

Recent Accounting Pronouncements:

 

The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to June 30, 2014 through the date these financial statements were issued.

 
 

 

PLAN OF OPERATIONS

 

As more fully described in “LIQUIDITY AND CAPITAL RESOURCES”, we had $0 in cash at June 30, 2014, and 60,047 respectively, remaining on the lines of credit from Mr. Talari and FutureTech Capital with which to satisfy our future cash requirements. Our management believes that the credit lines will support only limited activities for the next twelve months. We are attempting to secure other sources of financing to develop our business plan, and to implement our sales and marketing plan. We have no assurance we will be able to obtain additional funding to sustain even limited operations beyond twelve months based on the available lines of credit with Mr. Talari and FutureTech. If we do not obtain additional funding, we may need to cease operations until we do so and, in that event, may consider a sale of our technology. Our plan of operations set forth below depends entirely upon obtaining additional funding.

 

We have had and have ongoing discussions, arrangements, understandings, commitments or agreements for additional funding with prospective funding partners. We have funded our operations so far through PIPE and debt instruments. We will consider equity funding, either or both of a private sale or a registered public offering of our common stock; however, it seems unlikely that we can obtain an underwriter. We will consider a joint venture in which the joint venture partner provides funding to the enterprise. We will consider debt financing, both unsecured and secured by a pledge of our technology.

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

For the quarter ended June 30, 2014, the Company incurred a net loss of $100,778. As of June 30, 2014, the Company had a working capital of $133,437 and $133,437 in cash with which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company depends upon capital derived from future financing activities such as loans from its officers and directors, subsequent offerings of its common stock or debt financing in order to operate and grow the business either directly or through its subsidiary. There can be no assurance that the Company will be successful in raising such capital. The key factors that are not in the Company's control and that may have a direct bearing on operating results. These factors include, but are not limited to, acceptance of the Company’s business plan, the ability to raise capital in the future, the ability to expand its customer base, and the ability to hire key employees to grow the business. There may be other risks and circumstances that management may be unable to predict.

 

We had no other contractual obligation or material commercial commitments for capital expenditures.

 

Off-Balance Sheet Arrangements

 

We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as special purpose entities or variable interest entities, which have been established for the purpose of facilitating off-balance sheet arrangements or other limited purposes.


 

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

 

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 4.  Controls and Procedures.

 

Not applicable.

 

 

Item 4(T).  Controls and Procedures

 

As of June 30, 2014 we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. This evaluation was done under the supervision and with the participation of our management, including our President and Chief Financial Officer. Based on this evaluation of our disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15e), our President and Chief Financial Officer have concluded that as of June 30, 2014 such disclosure controls and procedures were not effective.

 

 

  We do not have adequate personnel and other resources to assure that significant and complex transactions are timely analyzed and reviewed.
· We have limited personnel and financial resources available to plan, develop, and implement disclosure and procedure controls and other procedures that are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.
· Our limited financial resources restrict our employment adequate personnel needed and desirable to separate the various receiving, recording, reviewing and oversight functions for the exercise effective control over financial reporting.
· Our limited resources restrict our ability to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure.
 
 

 

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Pursuant to Rule 13a-15d of the Exchange Act, management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (1992) and Internal Control Over Financial Reporting Guidance for Smaller Public Companies (2006), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of June 30, 2014. 

 

This quarterly report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this quarterly report.

 

Changes in Controls and Procedures

 

There were no significant changes made in our internal controls over financial reporting during the first quarter June 30, 2014 that have materially affected or are reasonably likely to materially affect these controls. Thus, no corrective actions with regard to significant deficiencies or material weaknesses were necessary.

 

Limitations on the Effectiveness of Internal Control

 

Our management, including the President, does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors. An internal 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 benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.

 

 

 

 

 

 
 

 

 

 

PART II - OTHER INFORMATION

 

Item 1 Legal Proceedings.

 

None

 

Item 1A Risk Factors.

 

There have been no material changes to the risk factors previously disclosed in our Fiscal year Report on Form 10-K for the first quarter March 31, 2014 filed on July 14, 2014 with the Securities and Exchange Commission.

 

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds.

 

None

 

Item 3  Defaults Upon Senior Securities.

 

Not applicable.

 

Item 4  Removed and Reserved.

 

Not applicable

 

 

Item 5  Other Information.

 

We are in the process of spinning-off one of our subsidiary; URVape Inc. We have chosen resources to file the appropriate filings with SEC shortly. Another subsidiary will be spun off shortly after the completion of URVape Inc.

 

Item 6  Exhibits.

 

 

31.A Principal Executive Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.B Principal Financial & Accounting Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.A Principal Executive Officer’s Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.B Principal Financial & Accounting Officer’s Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

 

 

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant cause this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  FutureWorld Corp.  
       
Date:       August 12, 2014 By: /s/ Sam Talari  
    Saeed (Sam) Talari, Principal Executive Officer  

 

     
       
Date:       August 12, 2014 By: /s/ Sam Talari  
    Saeed (Sam) Talari, Principal Financial & Accounting Officer