Principles of Consolidation:

The accompanying consolidated financial statements represent the consolidation of the accounts of Boston Carriers, Inc. (formerly known as Integrated Inpatient Solutions, Inc.) and its wholly-owned subsidiaries; Integrated Timeshare Solutions, Inc. and Poseidon Navigation Corp. All intercompany transactions and balances have been eliminated in consolidation. The subsidiaries are fully consolidated from the date on which control is transferred to the Company. Subsidiaries are those entities in which the Company has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies of each one.

The Company also consolidates entities that are determined to be variable interest entities as defined in the accounting guidance, if it determines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. As of December 31, 2017, and 2016, the Company has no variable interest entities.

Certain reclassifications, including discontinued operations and reverse stock split, have been made to the prior years’ presentation to conform to current year presentation. These reclassifications had no effect on net loss.

The Company is the sole owner of all of the outstanding shares of the subsidiaries included in the consolidated financial statements, and are presented below:

Company name

Country of incorporation

Nature/
Vessel name

Statement of operations

2017

2016

2015

1

Integrated Timeshare Solutions, Inc.

Nevada

Revoked

—

2

Poseidon Navigation Corp.

Marshall Islands

Nikiforos

1/1/2017 - 12/31/2017

1/1/2016 - 12/31/2016

12/31/2015

Discontinued Operations

Discontinued Operations:

The Company reports discontinued operations when the operations and cash flows of a component, have been (or will be) eliminated from the ongoing operations of the Company, and the operations and cash flows will not be replaced or the Company does not have the ability to replace the component, and the Company will not have any significant continuing involvement in the operations of the component after its disposal.

In March 2013 and in November 2014, management decided to exit the health care provider business and the timeshare business, respectively. In January 2016, the Company exited the interior design business and now conducts maritime transportation operations. The financial statements have been reclassified in order to represent these operations as discontinued operations for the all the periods of the financial statements (refer to Note 14).

Foreign Currency Transactions

Foreign Currency Transactions:

The functional currency of the Company is the U.S. dollar, because the Company’s Vessel operates in international shipping markets, and therefore primarily transacts business in U.S. dollars and the Company’s debt is denominated in U.S. dollars. In addition, the businesses the Company exited in the past which are reported as discontinued operations were operated in United States of America and their main currency was U.S. dollar. The Company’s accounting records are maintained in U.S. dollars. Transactions involving other currencies during a year are converted into U.S. dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies than the U.S. dollar, are translated to reflect the period-end exchange rates. Resulting gains or losses are reflected in the accompanying consolidated statements of operations.

Trade Receivables

Trade Receivables:

The amount shown as trade receivables, net at each balance sheet date includes estimated recoveries from charterers for hire, freight and demurrage billings, net of allowance for doubtful accounts. Accounts receivable involve risk, including the credit risk of non-payment by the customer. Accounts receivable are considered past due based on contractual and invoice terms. An estimate is made of the allowance for doubtful accounts based on a review of all outstanding amounts at each period, and an allowance is made for any accounts which management believes are not recoverable. The determination of bad debt allowances constitutes a significant estimate. Bad debts are written off in the year in which they are identified. The allowance for doubtful accounts as of December 31, 2017 and December 31, 2016 amounted to $43,367 and $0 respectively, in relation to the shipping business.

Vessel

Vessel:

Vessel is stated at cost, less accumulated depreciation and any impairment loss. Cost consists of the contract price and delivery and acquisition expenses. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of a vessel; otherwise, these amounts are charged to expenses as incurred.

Vessel is depreciated on a straight-line basis over its estimated useful life, after considering the estimated salvage value of the Vessel. Vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap value per lightweight tonnage (“LWT”). Management estimates the residual value of the Company’s Vessel based on a scrap rate of $300 per LWT after considering current market trends for scrap rates and five-year average historical scrap rates of the residual values of similar, with the Company’s, vessels.

Management estimates the useful life of the Company’s Vessel to be 25 years from the date of its initial delivery from the shipyard. If regulations place limitations over the ability of the Vessel to trade, its remaining useful life would be adjusted, if necessary, at the date such regulations are adopted.

Accounting for Special Survey and Dry-docking Costs

Accounting for Special Survey and Dry-docking Costs:

The Company’s Vessel is subject to regularly scheduled dry-docking and special survey, which are carried out every 30 and 60 months, respectively, to coincide with the renewal of the related certificates issued by the Classification Societies, unless a further extension is obtained in rare cases and under certain conditions. The costs of dry-docking and special surveys are deferred and amortized over the above periods or to the next dry-docking or special survey date if such date has been determined.

Costs incurred during the dry-docking period relating to routine repairs and maintenance are expensed. The unamortized portion of special survey and dry-docking costs for vessels sold is included as part of the carrying amount of the vessel in determining the gain/(loss) on sale of the vessel. The balance is included in the vessels and other fixed assets, net.

Provisions

Provisions:

The Company, in the ordinary course of business, is subject to various claims, suits and complaints. Management provides for a contingent loss in the financial statements if the contingency has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. In accordance with the guidance issued by the Financial Accounting Standards Board (“FASB”), in accounting for contingencies, if the Company has determined that the reasonable estimate of the loss is a range, and there is no best estimate amount within the range, the Company will provide the lower amount of the range.

The Company participates in Protection and Indemnity (P&I) insurance plans provided by mutual insurance associations known as P&I clubs. Under the terms of these plans, participants may be required to pay additional premiums (supplementary calls) to fund operating deficits incurred by the clubs (“back calls”). Obligations for back calls are accrued annually based on information provided by the clubs and when the obligations are probable and estimable.

Revenue Recognition

Revenue Recognition:

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.

Shipping Business

The Company generates its revenues from charterers for the charter hire of its Vessel on a worldwide scale. Vessels are chartered using either time charters, where a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate, or voyage charters, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified freight rate.

Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. A voyage is deemed to commence when a vessel is available for loading and is deemed to end upon the completion of the discharge of the current cargo. Estimated losses on voyages are provided for in full at the time such losses become evident. Under a voyage charter, the Company agrees to provide a vessel for the transportation of specific goods between specific ports in return for payment of an agreed upon freight rate per ton of cargo. The Company does not recognize revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage.

Revenues are recorded net of address commissions. Address commissions represent an amount provided directly to the charterers based on a fixed percentage of the agreed upon charter rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.

Revenue from time chartering is earned and recognized on a daily basis as the service is delivered.

Demurrage income represents payments made by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and will be recognized on a pro rata basis as it is earned.

Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average revenue over the rental periods of such charter agreements as service is performed, as adjusted for the off-hire days that the vessel spends undergoing repairs, maintenance and upgrade work depending on the condition and specification of the vessel. For loss generating time charters, the loss is recognized in the period when such loss is determined.

A time charter involves placing a vessel at the charterer’s disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Short period charters for less than three months are referred to as spot-charters. Charters extending three months to a year are generally referred to as medium-term charters. All other charters are considered long-term. Under time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel.

Interior Design Business (Discontinued Operations)

The Company provided design services billed at hourly rates. The Company recognized revenue from design services when services were rendered to the customers.

Timeshare Liquidation (Discontinued Operations)

The Company earned revenue from timeshare liquidation and mortgage relief services. The Company offered services for timeshare owners that either owned their timeshare outright and for those that had a mortgage on their property, and were interested in exiting their timeshare property. The Company recognized revenue when the title has been transferred and the transaction was completed.

Commissions

Commissions:

Commissions include brokerage commissions are paid by the Company to brokers and are typically based on a percentage of the charter rate. Brokerage commissions are recognized over the related charter period and are recognized as incurred.

Vessel Operating Expenses

Vessel Operating Expenses:

Vessel operating expenses consist of all expenses relating to the operation of vessels, including crewing, repairs and maintenance, insurance, stores and lubricants and miscellaneous expenses such as communications. Vessel operating expenses exclude fuel cost, port charges, agency fees, canal tolls and, which are included in voyage expenses.

Repairs and Maintenance

Expenditure for routine repairs and maintenance of the vessels is charged against income in the period in which it is incurred. Major vessel improvements and upgrades are capitalized to the cost of vessel.

Insurance Claims

Insurance Claims:

Insurance claims at each balance sheet date consist of claims submitted and/or claims in the process of compilation or submission (claims pending). They are recorded on an accrual basis and represent the claimable expenses, net of applicable deductibles, incurred through December 31 of each reporting period, which are probable to be recovered from insurance companies. Any remaining costs to complete the claims are included in accrued liabilities. The classification of insurance claims into current and non-current assets is based on management’s expectations as to their collection dates.

Stock-based Compensation

Stock-based Compensation:

The Company pays the Chief Executive Officer, Chief Financial Officer and member of Board of Directors for his annual base salary and the members of Board of Directors for their annual remunerations (in part or in whole) with Company’s Common Stock. The cost is recognized over the period during which the officer and the members of the board, are required to provide their service.

Income Taxes

Income Taxes:

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

The Company’s tax returns for the years ended 2014, 2015, 2016 and 2017 remain open for audit by the Internal Revenue Service.

Marshall Islands and Liberia do not impose a tax on international shipping income in case the shipowner does not conduct any business operation in the territory of the Marshall Islands. Under the laws of Marshall Islands and Liberia, the countries of incorporation of the Company and its shipping subsidiary and the Vessel’s registration, respectively, the companies are subject to registration fees and tonnage taxes which will be included in direct vessel operating expenses in the accompanying consolidated statements of operations.

Loss Per Share of Common Stock

Loss Per Share of Common Stock:

The Company computes loss per share of Common Stock for all periods presented based on the weighted average number of its outstanding Common Stock during the periods after giving retroactive effect to reverse stock splits. Basic losses per share of Common Stock are computed by dividing net loss available to common shareholders by the weighted average number of shares of Common Stock outstanding during the periods presented. Diluted losses per share of Common Stock are computed assuming the exercise of any dilutive securities under the treasury shares method and the related income tax effects. The Company has 374,499,079, 1,498,831 and 0 shares issuable upon conversion of convertible notes that were not included in the computation of dilutive loss per share because their inclusion is antidilutive for the years ended December 31, 2017, 2016 and 2015, respectively.