0001493152-18-012216.txt : 20180817 0001493152-18-012216.hdr.sgml : 20180817 20180817101711 ACCESSION NUMBER: 0001493152-18-012216 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 44 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20180817 DATE AS OF CHANGE: 20180817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Frelii, Inc. CENTRAL INDEX KEY: 0001223533 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 980380519 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-51210 FILM NUMBER: 181024949 BUSINESS ADDRESS: STREET 1: 2600 W. EXECUTIVE PKWY. STREET 2: SUITE 500 CITY: LEHI STATE: UT ZIP: 84043 BUSINESS PHONE: (435) 315-2457 MAIL ADDRESS: STREET 1: 2600 W. EXECUTIVE PKWY. STREET 2: SUITE 500 CITY: LEHI STATE: UT ZIP: 84043 FORMER COMPANY: FORMER CONFORMED NAME: Vican Resources, Inc. DATE OF NAME CHANGE: 20110613 FORMER COMPANY: FORMER CONFORMED NAME: Tremont Fair, Inc. DATE OF NAME CHANGE: 20090813 FORMER COMPANY: FORMER CONFORMED NAME: CANCER DETECTION CORP. DATE OF NAME CHANGE: 20090113 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

 

For the quarter ended June 30, 2018

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

 

For the transition period from ____ to ____

 

Commission File No. 333-107179 & 000-51210

 

FRéLII, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   980380519
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

2600 W. Executive Pkwy., Suite 500

Lehi, UT 84043

(Address of principal executive offices, including Zip Code)

 

(833) 437-3544

(Registrant’s telephone number, including area code)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [  ] Yes [X] No

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class  Outstanding as of August 8, 2018
Class B Common stock, $0.001 par value  38,511,107
Class A Common stock, $0.001 par value  -0-

 

 

 

 
 

 

FRéLLI, INC. (FORMERLY KNOWN AS VICAN RESOURCES, INC.)

 

TABLE OF CONTENTS

 

PART I    
     
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 16
     
PART II    
     
Item 1. Legal Proceedings 17
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Default upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 18
Item 6. Exhibits 18
SIGNATURES 19

 

2
 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

The Financial Statements of the Company are prepared as of June 30, 2018.

 

FRÉLII, INC. (FORMERLY VICAN RESOURCES, INC.)

BALANCE SHEETS

(Expressed in US dollars)

 

   June 30, 2018   December 31, 2017 
   (unaudited)     
ASSETS          
Current assets          
Cash and cash equivalents  $50,483   $- 
Account receivable   3,291    - 
Note receivable   24,124    340,640 
Interest receivable   578    14,466 
Total current assets   78,476    355,106 
Software, less accumulated amortization of $20,966 at June 30, 2018   213,409    - 
Total assets  $291,885   $355,106 
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)          
Current liabilities          
Accounts payable and accrued liabilities  $9,550   $3,339 
Accrued salaries and related expense   23,326    - 
Settlement amount due former related party   126,654    - 
Advances from former related parties   91,220    37,064 
Total current liabilities   250,750    40,403 
Total liabilities   250,750    40,403 
           
Shareholders’ equity (deficit)          
Preferred Stock, $0.001 par value; 20,000,000 shares authorized:          
Series A Preferred Stock, $0.001 par value; 0 (December 31, 2017 - 100) shares issued and outstanding   -    - 
Common Stock, $0.001 par value; 2,000,000,000 shares authorized:          
Class B Common Stock, $0.001 par value; 36,911,107 (December 31, 2017 – 10,441,107) shares issued and outstanding   36,911    10,441 
Additional paid in capital   6,177,206    3,430,239 
Accumulated deficit   (6,172,982)   (3,125,977)
Total shareholders’ equity (deficit)   41,135    314,703 
Total liabilities and shareholders’ equity (deficit)  $291,885   $355,106 

 

See accompanying notes to the financial statements

 

3
 

 

FRÉLII, INC. (FORMERLY VICAN RESOURCES, INC.)

STATEMENTS OF OPERATIONS

(Expressed in US dollars)

 

   Three months
ended
June 30, 2018
   Three months
ended
June 30, 2017
   Six months
ended
June 30, 2018
   Six months
ended
June 30, 2017
 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Revenues  $3,291   $-   $3,741   $- 
                     
Operating expenses                    
Compensation (including stock-based compensation of $1,750,000, $0, $2,351,562, and $0, respectively)   1,903,709    -    2,631,269    - 
Settlement with former related party   133,320    -    133,320    - 
Marketing and advertising   118,496    -    143,096    - 
Professional fees   14,625    26,500    51,481    51,500 
Amortization of software   11,719    -    20,966    - 
Other   45,305    4,632    73,875    5,761 
Total operating expenses   2,227,174    31,132    3,054,007    57,261 
                     
Loss from operations   (2,223,883)   (31,132)   (3,050,266)   (57,261)
Other income (expenses)                    
Gain on cancellation of liabilities   -    -    -    671,585 
Interest income on note receivable   578    4,384    3,261    4,384 
Interest expense on notes payable   -    (25,933)   -    (47,482)
Accretion expense   -    (63,830)   -    (63,830)
Change in fair value of embedded derivative   -    80,802    -    80,802 
Total other income (expenses) net   578    (4,577)   3,261    645,459 
Income (loss) before taxes   (2,223,305)   (35,709)   (3,047,005)   588,198 
Income tax expense   -    -    -    - 
Net income (loss) and comprehensive income (loss)  $(2,223,305)  $(35,709)  $(3,047,005)  $588,198 
                     
Net income (loss) per common share:                    
                     
Basic and diluted  $(0.06)  $(0.02)  $(0.09)  $0.30 
                     
Weighted average number of common shares outstanding – basic and diluted:   36,264,954    1,943,634    32,373,538    1,943,634 

See accompanying notes to financial statements

 

4
 

 

FRÉLII, INC. (FORMERLY VICAN RESOURCES, INC.)

STATEMENTS OF CASH FLOWS

(Expressed in US dollars)

 

   Six months
ended
June 30, 2018
    Six months
ended
June 30, 2017
 
   (unaudited)    (unaudited) 
Cash flow from operating activities           
Net income (loss)  $(3,047,005)   $588,198 
Adjustments to reconcile net income (loss) to net cash used by operating activities:           
Stock based compensation   2,351,562     - 
Gain on cancellation of liabilities   -     (671,585)
Amortization of software   20,966     - 
Change in fair value of embedded derivative   -     (80,802)
Accretion expense – debt discount on note payable   -     63,830 
Changes in operating assets and liabilities           
Change in other account receivable   (3,291)    - 
Interest receivable   13,888     (4,384)
Accounts payable and accrued liabilities   29,537     74,518 
Settlement amount due former related party   126,654     - 
Net cash used in operating activities   (507,689)    (30,225)
Cash flow from investing activities        
Secured promissory note receivable   -     (500,000)
            
Collections of note receivable   316,516     - 
Net cash provided by investing activities   316,516     (500,000)
Cash flow from financing activities           
Sale of Class B Common Stock   187,500     - 
Advances from former related parties   54,156     30,225 
Proceeds from convertible note   -     500,000 
Net cash provided by financing activities   241,656     530,225 
Increase (decrease) in cash and cash equivalents   50,483     - 
Cash and cash equivalents, beginning of period   -     - 
Cash and cash equivalents, end of period  $50,483    $- 
            
Cash payments for:           
Interest  $13,888    $- 
Income taxes  $-    $- 
Non-cash investing and financing activities:           
Issuance of shares of Class B Common Stock to various employees and consultants for services rendered  $2,351,562    $- 

 

See accompanying notes to the financial statements

 

5
 

 

FRéLII, INC. (FORMERLY VICAN RESOURCES, INC.)

NOTES TO THE FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(Expressed in US dollars)

(Unaudited)

 

NOTE 1 — NATURE OF OPERATIONS

 

The Company incorporated in the State of Nevada on September 5, 2002, under the name “Bayview Corporation.” On April 7, 2005, the Company changed its name to Xpention Genetics, Inc. concurrent with a change in its business to researching and developing cancer treatment drugs. On September 17, 2008, the Company changed its name to Cancer Detection Corporation. On August 13, 2009, the Company again changed its name to Tremont Fair, Inc. From July 2009 until May 2011, the Company operated as a real estate services firm, seeking to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas. On May 26, 2011, the Company changed its name to Vican Resources, Inc., and changed its business model when it sold the real estate services division and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other commodities (hereafter, “Vican Trading”). Upon the acquisition of Vican Trading, there was an implied option for either party to rescind the original acquisition. During 2011, that rescission option was exercised and on December 20, 2011, the Company again changed its business when it unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic patients (hereafter, “Med Ex Florida”). On March 22, 2012, the Company again changed its business to become an oil & gas exploration, development, and distribution company, unwound the purchase of the assets of Med Ex Florida, and acquired an interest in two oil & gas wells located in Jefferson County, Mississippi.

 

In April 2017, the Company underwent a change of control whereby our current Chief Executive Officer Ian Jenkins acquired a controlling interest in the Company’s capital stock and was appointed our sole officer and director. On April 11, 2017, the Company executed a Share Exchange Agreement with Unprescribed, LLC, later amended to include Cornerstone Medical Center LLC, whereby the Company, among other terms, agreed to exchange shares with the ownership units of those two entities for 25,000,000 shares of the Company’s Class B Common Stock (no shares of Class A Common Stock are issued or outstanding, so the Class B Common Stock is hereinafter referred to as the “Class B Common Stock” or the “Common Stock”). The Share Exchange Agreement, as amended, terminated by its own terms on December 31, 2017. Following the termination of the Share Exchange Agreement, the Company modified its business plan to acquire certain intellectual property assets and to engage a new management team to effectuate the new business plan.

 

Effective March 9, 2018, the Company changed its name to Frélii, Inc. The new business plan is to launch a web-based subscription service providing personalized nutrition and wellness plans. The Company launched its website, www.frelii.com, in March 2018 beta testing a limited number of free users.

 

NOTE 2 — BASIS OF PRESENTATION OF UNAUDITED CONDENSED FINANCIAL INFORMATION

 

The unaudited condensed financial statements of the Company for the three and six month periods ended June 30, 2018 and 2017 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2017 was derived from the audited financial statements included in the Company’s financial statements as of and for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). These financial statements should be read in conjunction with that report.

 

6
 

 

Recently Issued Accounting Pronouncements

 

Between May 2014 and December 2016, the FASB issued several ASU’s on Revenue from Contracts with Customers (Topic 606). These updates supersede nearly all existing revenue recognition guidance under current U.S. generally accepted accounting principles (GAAP) and became effective for annual periods beginning after December 15, 2017 and interim periods therein. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services.

 

Adoption of these updates in 2018 has not had any impact on our financial statements.

 

NOTE 3 - GOING CONCERN UNCERTAINTY

 

The accompanying financial statements have been prepared as if the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has sustained net losses which have resulted in an accumulated deficit at June 30, 2018, and negative cash flows from operations, all of which raise substantial doubt regarding the Company’s ability to continue as a going concern.

 

The Company believes these conditions have resulted from the inherent risks associated with small companies. Such risks include, but are not limited to, the ability to (i) generate revenues and sales of its products and services at levels sufficient to cover its costs and provide a return for investors, (ii) attract additional capital in order to finance growth, (iii) further develop and successfully market commercial products and services, and (iv) successfully compete with other comparable companies having financial, production and marketing resources significantly greater than those of the Company.

 

On April 5, 2017 (see Note 1), there was a change in control of the Company. We expect to be dependent on additional debt and equity financing to develop our new business but we cannot assure you that any such financings will be available or will otherwise be made on terms acceptable to us, or that our present shareholders might suffer substantial dilution as a result.

 

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

These financial statements have been prepared on the basis that the Company will continue as a going concern, which presumes that it will be able to realize its assets and discharge its liabilities in the normal course of business as they come due. These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

 

NOTE 4 – PROMISSORY NOTE RECEIVABLE FROM RELATED PARTY

 

On April 11, 2017, pursuant to a Security Agreement dated April 11, 2017, the Company paid $495,000 to Cornerstone Medical Center LLC (“Cornerstone”). In exchange, the Company received a $500,000 Secured Promissory Note from Cornerstone (the “Promissory Note”), dated April 11, 2017. The Promissory Note bears interest at 4% per annum, or 18% in the event of a default under the Promissory Note. The principal and interest was due on December 31, 2017. The Promissory Note is secured by all the assets of Cornerstone.

 

7
 

 

The principal balance of the promissory note changed in the six months ended June 30, 2018 as follows:

 

 

Balance of Cornerstone Note at December 31, 2017  $340,640 
Cornerstone payments to service providers relating to Frélii, Inc. business plan   (56,910)
Cash payments received by Frélii, Inc.   (259,606)
Balance at June 30, 2018  $24,124 

 

Cornerstone is owned by Gregory Mongeon, who served as a former officer and director of the Company from January 17, 2018 to May 15, 2018.

 

NOTE 5 – SOFTWARE

 

At June 30, 2018, software, net, consisted of:

 

Software and intellectual property acquired from Christopher Dean pursuant to Tech Assignment Agreement on January 18, 2018 in exchange for 7,500,000 shares of Class B Common Stock (see Note 7).  $234,375 
Accumulated amortization   (20,966)
Net   $213,409 

 

On January 23, 2018, the Company engaged Fish & Richardson LLP to handle intellectual property work such as patent and trademark applications relating to the software.

 

The acquired software is being amortized using the straight-line method over its estimated economic life of 5 years. Expected future amortization expense for the acquired software as of June 30, 2018 follows:

 

Year ending
December 31,
   Amount 
2018    23,437 
2019    46,875 
2020    46,875 
2021    46,875 
2022    46,875 
2023    2,472 
       
Total   $213,409 

 

NOTE 6 – SETTLEMENT AMOUNT DUE FORMER RELATED PARTY

 

On June 1, 2017, the Company and Gregory Mongeon (see Note 4 above) executed a Separation and Release Agreement. The agreement provides for the Company to make 20 monthly cash payments of $6,666 each to Mr. Mongeon from June 5, 2018 to January 5, 2020 (total of $132,660). The agreement also provides for limits on future sales of 7,500,000 shares of Class B Common Stock owned by Mr. Mongeon. At June 30, 2018, the remaining amount due Mr. Mongeon pursuant to the Separation and Release Agreement was $126,654.

 

8
 

 

NOTE 7 - ADVANCES FROM RELATED PARTIES

 

Advances from related parties, which are all non-interest bearing and due on demand, consist of the following:

 

   June 30, 2018   December 31, 2017 
Kline Law Group P.C. and spouse of controlling person of Kline Law Group P.C.  $91,220   $37,064 
Total  $91,220   $37,064 

 

Kline Law Group P.C. (“KLG”) is counsel to the Company and is controlled by Scott Kline. Julia Kline, wife of Scott Kline, served as the Company’s Chief Operating Officer from January 19, 2018 to July 13, 2018. (See Note 8)

 

On July 6, 2018 (see Note 9), the liability to KLG and the spouse of the controlling person of KLG was satisfied.

 

NOTE 8 - COMMON STOCK AND PREFERRED STOCK TRANSACTIONS

 

On January 18, 2018, the Company entered into a technology assignment agreement (the “Tech Assignment Agreement”) whereby the Company acquired certain intellectual property consisting of advanced computer programming software, source code, proprietary designs, plans, processes, test procedures, and other technical data and information (the “Technology”) from Christopher Dean in exchange for 7,500,000 shares of Class B Common Stock of the Company. Christopher Dean was the Chief Technology Officer and a director of the Company from January 17, 2018 to March 27, 2018.

 

The $234,375 estimated fair value of the 7,500,000 shares of Class B Common Stock was capitalized as software. As the trading market of the Company’s Class B Common Stock was inactive, the fair value of the Class B Common Stock was based on the $0.03125 per share price derived from the $250,000 purchase price of the Exchange Note, which was converted to 8,000,000 shares of Class B Common Stock on December 14, 2017.

 

On January 19, 2018, the Company entered into employment agreements with Ian Jenkins (Chief Executive Officer and Chief Financial Officer), Christopher Dean (former Chief Technology Officer), Dr. Gregory Mongeon (former Chief Medical Officer), Seth Jones (Chief Marketing Officer), and Julia Kline (former Chief Operating Officer). The agreements all have a term of five years and provide for annual base salaries totalling, in the aggregate, $400,000. All of the agreements may be terminated by the Company at any time without cause by giving written notice to the

respective employee for which termination is effective 30 days therefrom. On January 31, 2018, pursuant to the employment agreements, the Company issued a total of 17,450,000 shares of Class B Common Stock of the Company to these five officers.

 

The $545,312 estimated fair value of the 17,450,000 shares of Class B Common Stock using the 0.03125 per share price described in the second preceding paragraph was expensed as compensation in the three months ended March 31, 2018.

 

On January 21, 2018 and January 26, 2018, the Company’s Chief Executive Officer returned 100 shares of Series A Preferred Stock and 1,830,000 shares of Class B Common Stock to the Company’s treasury that were cancelled by the Company.

 

9
 

 

On January 31, 2018, the Company issued a total of 1,800,000 shares of Class B Common Stock of the Company to 6 service providers (including 800,000 shares issued to two relatives of the Company’s Chief Executive Officer and 600,000 shares issued to two independent directors of the Company) for services rendered.

 

The $56,250 estimated fair value of the 1,800,000 shares of Class B Common Stock (using the $0.03125 per share as described in the fifth preceding paragraph) was expensed as compensation in the three months ended March 31, 2018.

 

On March 23, 2018, the Company sold 150,000 shares of Class B Common Stock to an investor at a price of $1.25 per share for $187,500 cash proceeds.

 

On May 8, 2018, the Company issued 600,000 shares of Class B Common Stock of the Company to Dr. Hans Jenkins in connection with an employment agreement signed between Dr. Jenkins and the Company on the same date. The $750,000 estimated fair value of the 600,000 shares of Class B Common Stock (based on the $1.25 per share price of the March 23, 2018 sale of 150,000 shares of Class B Common Stock) was expensed as compensation in the three months ended June 30, 2018.

 

On May 15, 2018, the Company issued a total of 800,000 shares of Class B Common Stock of the Company to 6 employees and consultants for services rendered pursuant to the Company’s 2018 Incentive Stock Option Plan. The $1,000,000 estimated fair value of the 800,000 shares of Class B Common Stock (based on the $1.25 per share price of the March 23, 2018 sale of 150,000 of Class B Common Stock) was expensed as compensation in the three months ended June 30, 2018.

 

NOTE 9 - SUBSEQUENT EVENTS

 

On July 6, 2018, the Company issued a total of 600,000 shares of Class B Common Stock to its two outside directors (300,000 shares each) for services rendered.

 

On July 6, 2018, the Company settled an outstanding debt of $91,220 for professional fees incurred and operating expenses paid on behalf of the Company owed to Kline Law Group, P.C. and its principal Scott Kline. Mr. Kline and Kline Law Group agreed to waive all outstanding amounts due as of July 6, 2018, in exchange for 1,000,000 Class B Common Stock shares.

 

On July 13, 2018, Julia Kline resigned all her positions with the Company. Ms. Kline was appointed as the Company’s Chief Operating Officer on January 17, 2018, and as Secretary on March 27, 2018.

 

On July 20, 2018, the Company sold 100,000 shares of Class B Common Stock and a three-year warrant to purchase up to 100,000 shares of Class B Common Stock at $1.50 per share to an investor for $125,000 cash proceeds, as previously disclosed in a Form 8-K filed on August 2, 2018.

 

On July 31, 2018, the Company entered into an Asset Purchase Agreement with Kingdom Life Sciences, LLC, a Utah limited liability company (“KLS”), and its equity holders whereby the Company agreed to purchase certain assets of KLS in exchange for payment of a liability of KLS in the amount of approximately $19,244 and 20,000 Class B Common Stock shares of the Company. The transaction was previously approved by the Company’s Board of Directors (the “Board”) in a meeting held on May 15, 2018. As equity holders of KLS, Ian Jenkins, the Company’s Chief Executive Officer and a director, and Gregory Mongeon, a former director and officer of the Company, both abstained from the Board vote approving the transaction. The foregoing transaction was previously disclosed in a Form 8-K filed on August 3, 2018.

 

10
 

 

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

 

Special Note Regarding Forward Looking Statements

 

This Quarterly Report on Form 10-Q, including the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results of the Company to differ materially from those anticipated, expressed or implied in the forward-looking statements. The words “believe”, “expect”, “anticipate”, “project”, “targets”, “optimistic”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those anticipated include risks related to our potential inability to raise additional capital; changes in domestic and foreign laws, regulations and taxes; uncertainties related to China’s legal system and economic, political and social events in China; Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks”; changes in economic conditions, including a general economic downturn or a downturn in the securities markets; and any of the factors and risks mentioned in the “Risk Factors” sections of our Annual Report on Form 10-K for fiscal year ended December 31, 2016 and subsequent SEC filings. The Company assumes no obligation and does not intend to update any forward-looking statements, except as required by law.

 

Overview

 

The Company incorporated in Nevada September 5, 2002 as “Bayview Corporation.” Since 2002, the Company changed control and its name and business plan numerous times. In April 2017, our current Chief Executive Officer acquired a controlling interest in the Company, and in January 2018, the Company commenced its current operations, which consist of providing personalized health and nutrition plans based on genetics and our artificial intelligence-driven computer algorithm. On March 9, 2018, the Company changed its name to Frélii, Inc. and its ticker symbol to “FRLI” to coincide with its new business plan. Frélii’s strategy is to provide direct to consumer affordable access to personalized health assessments and nutrition plans. The Company’s web platform informs users about their health risks and identifies certain beauty and fitness-related genetic markers then generates health, fitness and beauty protocols. Users who have previously purchased genetic health reports from 23andMe or Ancestry.com can provide their login information or upload their raw genetic data and the Company’s technology will interpret that genetic data and automatically adjust the protocol. The web platform’s tools include nutrition and fitness plans, nutritional supplement recommendations, downloadable menus, recipes, and shopping lists, and virtual personal training. Users can also order nutritional and vitamin supplements from the site’s premium health supplement marketplace. The Company plans to generate revenues through user subscriptions, health genetic diagnostic kit purchases, and sales of nutritional supplements.

 

Overview of Our Plan of Operations

 

The Company’s core business strategy is to provide direct to consumer diet, beauty, and fitness assessments and nutrition plans based on genetic data, physiology, environmental and lifestyle factors all on one web platform.

 

The Company’s Web Platform

 

The Company has developed a web-based platform at www.frelii.com that provides users personalized, DNA-based diet and nutrition plans and identifies certain potential health risks. Users can input their raw genetic data by logging into their 23andMe profile or uploading their Ancestry.com raw genetic data and the Company’s web platform analyzes that data using its artificial intelligence-based algorithm. The Company’s mobile application, currently in development, is anticipated to launch to a limited number of users during the third quarter 2018.

 

11
 

 

Technology

 

The Company believes its advanced computer learning-based algorithm generates accurate and valuable insight about individual genetic health risks, diet, fitness and beauty genetic markers and generates highly-personalized protocols based on that information.

 

Users who have previously purchased their genetic reports from 23andMe or Ancestry.com can provide their login information or upload their raw genetic data and the Company’s web platform can upload that data, allowing the algorithm to adjust the user’s diet, fitness, beauty and nutritional supplement recommendations. Other features of the Company’s website are nutrition and fitness plans, supplement recommendations, downloadable menus, recipes, and shopping lists, and virtual personal training.

 

During third quarter 2018, the Company plans to offer for sale its own brand of genetic health testing kits, but currently has no written agreements with any manufacturers of such tests.

 

Users can currently order nutritional and vitamin supplements from the Company’s website. In the future, the Company plans to generate revenues through user subscriptions, genetic health testing kit purchases, and nutritional supplements.

 

Management Team

 

The Company’s Board of Directors is comprised of various professionals in multiple areas of importance to the Company’s business strategy:

 

  Alternative Health Care – Chief Executive Officer and Chairman Ian Jenkins has over 10 years of experience as a senior executive in the health and supplement industry, and an extensive background in physiology, technology startups, and supplement product research and development; Director James Spallino has over 35 years of experience in the integrative medical and dental industry as both an entrepreneur and consultant;
  Medical – Director and Chief Medical Officer Dr. Hans Jenkins is a board-certified physician specializing in preventive health education, medical screenings, and recommending lifestyle modifications to acheive optimal health;
  Digital Technology – Director and primary technology consultant, Jayson Uffens, is a senior technology architect with over two decades of executive experience at high-growth technology firms like GrubHub, Northrop Grumman, and GoDaddy;
  Digital Marketing – Chief Marketing Officer Seth Jones is a marketing strategist and digital media expert who has produced and distributed digital content that has generated more than 4.5 million subscribers and over 915 million views on YouTube and over 3.2 million subscribers and over a billion views on Facebook for an extreme sports and adventure video production company;
  International Trade – Director Tarek Mango has been involved in international trade and business development for over 20 years, and has successfully consulted for, built, and introduced U.S. health care-related brands into Middle Eastern, Asian, and European markets.

 

Marketing Plans/Launch Schedule

 

In March 2018, the Company launched beta testing on its website www.frelii.com, which offers web based subscriptions for DNA-based personalized nutrition plans and health supplement recommendations. Following a beta test of less than 1000 users, management decided to implement additional technology to improve functionality and user experience. The Company anticipates the completion of its mobile application during third quarter 2018, and plans to launch its mobile application product to a limited number of users to test functionality.

 

The Company has planned a comprehensive digital marketing campaign that includes Facebook and Twitter ads, a social media affiliate program, and other social media digital advertising conducted both directly, and through marketing consultants including Social5, a Salt Lake City-based social media marketing firm.

 

12
 

 

Offices

 

The Company’s executive offices are located at 2600 W. Executive Pkwy., Ste. 500, Lehi, UT 84043. Customers and investors can also contact the Company by telephone at (833) 4FRELII.

 

Liquidity and Capital Resources

 

As of June 30, 2018, the Company’s primary source of liquidity consisted of $50,483 in cash and cash equivalents. Since inception, the Company has financed its operations through a combination of short and long-term loans, and through the private placement of its common stock.

 

The Company has sustained significant net losses which have resulted in an accumulated deficit at June 30, 2018 of $6,172,982, and is currently experiencing a shortfall in operating capital which raises doubt about the Company’s ability to continue as a going concern.

 

The Company is currently seeking to secure additional debt or equity capital to finance substantial business development initiatives, including the next phase of our website product. However, there is presently no agreement in place that guarantees continued financing for the Company and there can be no assurance that the Company can raise any additional funds, or that such funds will be available on acceptable terms. Funds raised through future equity financing will likely dilute the Company’s current shareholders. Lack of additional funds will materially affect the Company and its business, and may cause the Company to cease operations. Consequently, shareholders could lose their entire investment in the Company.

 

Operations for the six months ended June 30, 2018, were primarily funded through private placements of the Company’s common stock and collections of a note receivable issued in April 2017.

 

Results of Operations

 

For the Six Months Ended June 30, 2018 Compared to the Six Months Ended June 30, 2017.

 

Revenues. For the six months ended June 30, 2018 and 2017, revenues were $3,741 and $nil respectively.

 

Operating expenses. Our operating expenses primarily consisted of general and administrative expenses, such as audit and review fees, transfer agent services, Edgar filing costs, employee salaries, consulting fees, and other professional services. Operating expenses for the six months ended June 30, 2018 was $3,054,007 compared to $57,261 for the six months ended June 30, 2017. The increase of $2,996,746 in operating expenses of was mainly due to a significant increase in compensation expenses, which includes salaries paid to employees and consultants and stock-based compensation. Compensation for the three months ended June 30, 2018 includes stock-based compensation issued to various employees and consultants of $1,750,000.

 

Other Income (Expenses). Other income for the six months ended June 30, 2018, was $3,261 compared with other income of $645,459 for the six months ended June 30, 2017. The decrease in other income was mainly due to a large gain on cancellation of liabilities of $671,585 during the six months ended June 30, 2017. In 2018, the Company recognized interest income of $3,261. For the six months ended June 30, 2017, the Company recognized interest expense of $47,482.

 

Net loss. Net loss for the six months ended June 30, 2018 was $3,047,005 compared to net income of $ 588,198 for the six months ended June 30, 2017. The increase in net loss was a result of salaries, stock-based compensation, and expenses required to develop the Company’s web platform and mobile application.

 

13
 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

Personnel

 

The Company has eight full-time employees, but utilizes other contract personnel to carry out its business. The Company utilizes contract personnel on a continuous basis, primarily in connection with developing its website and mobile application and marketing its products on social media.

 

Net Cash Used in Operating Activities

 

During the six months ended June 30, 2018, the Company had net cash used in operations of $507,689 compared with $30,225 for the six months ended June 30, 2017. Net cash used in operations increased due to the Company commencing operations, incurring compensation expenses related to developing its website, mobile application, and intellectual property assets, and marketing and advertising.

 

Net Cash Provided by Financing Activities

 

During the six months ended June 30, 2018, the Company had net cash provided by financing activities of $241,656 compared with $530,225 for the six months ended June 30, 2017. The decrease in net cash provided by financing activities is due to the Company raising fewer proceeds through private placements of its common stock during 2018, than it raised through debt instruments during 2017.

 

Financial instruments and risk factors

 

The Company has exposure to liquidity risk and credit risk. The Company’s risk management objective is to preserve and redeploy the existing resources as appropriate, ultimately to protect shareholder value. Risk management strategies, as discussed below, are designed and implemented to ensure the Company’s risks and the related exposure are consistent with the business objectives and risk tolerance.

 

Liquidity Risk: Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity by ensuring that there is sufficient capital to meet short and long-term business requirements, after taking into account cash requirements from operations and the Company’s holdings of cash and cash equivalents. The Company also strives to maintain sufficient financial liquidity at all times in order to participate in investment opportunities as they arise, as well as to withstand sudden adverse changes in economic circumstances.

 

Management forecasts cash flows for its current and subsequent fiscal years to predict future financing requirements. Future requirements may be met through a combination of credit and access to capital markets.

 

The following are the maturities, excluding interest payments, reflecting undiscounted future cash disbursements of the Company’s financial liabilities as of June 30, 2018:

 

   2018   2019 and later 
Accounts payable and accrued liabilities  $32,876   $- 
Advances from related parties   91,220    - 
Settlement amount due former related party   39,996    86,658 
   $164,092    86,658 

 

14
 

 

Credit risk: Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations.

 

As of June 30, 2018, the Company’s credit risk is primarily attributable to its promissory note receivable and interest receivable. Credit risk is mitigated as the Company has security over the assets of the promissory note issuer.

 

Interest rate risk: Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company does not have significant interest rate risk.

 

Related Party Transactions

 

In January 2018, the Company entered into an employment agreement with an officer who is related to the controlling party of Kline Law Group P.C. During the year ended December 31, 2017, and the six months ended June 30, 2018, the Kline Law Group incurred a debt of $ 91,220 for professional services and corporate and administrative expenses paid on behalf of the Company. On July 6, 2018, Kline Law Group P.C. and its principal Scott Kline agreed to waive the foregoing debt in exchange for 1,000,000 Class B Common Stock shares of the Company.

 

During the year ended December 31, 2017, Cornerstone Medical Group LLC, an entity owned by Gregory Mongeon, a former director and officer of the Company, incurred certain professional services and corporate and administrative expenses on behalf of the Company.

 

Advances from related parties, which are all non-interest bearing and due on demand, consist of the following:

 

   June 30, 2018   December 31, 2017 
Kline Law Group P.C.  $91,220   $37,064 
Total  $91,220   $37,064 

 

Critical Accounting Policies

 

Cash and Cash Equivalents

 

Cash Equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.

 

Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Derivative financial instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

 

The Company reviews the terms of equity instruments and other financing arrangements, if any, to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants to employees and non-employees in connection with consulting or other services. These options or warrants may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.

 

15
 

 

Basic and Diluted Net Income (Loss) Per Share

 

The Company follows ASC Topic 260 to account for the earnings per share. Basic earnings (loss) per common share (“EPS”) calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings (loss) per common share calculations are determined by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents (if dilutive) outstanding.

 

Income Taxes

 

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not that such tax benefits will not be realized.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls Procedures

 

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

 

As of June 30, 2018, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. We also do not have an audit committee. Based on the evaluation described above, and as a result, in part, of not having an audit committee and having one individual serve as our chief executive officer and principal financial officer, we have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were ineffective.

 

(b) Changes in Internal Controls over Financial Reporting

 

There was no change in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

(c) Officer’s Certifications

 

Appearing as an exhibit to this Quarterly Report on Form 10-Q are “Certifications” of our principal executive and financial officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Quarterly Report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

 

16
 

 

PART II- OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

As of the date hereof, there have been no events that are required to be reported under this Item.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

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

 

Incentive Stock Option Share Issuances

 

On May 8, 2018 and May 15, 2018, the Company’s Board of Directors approved the issuance of an aggregate of 1,400,000 shares of Class B Common Stock of the Company to 7 employees and consultants in connection with the Company’s previously disclosed 2018 Incentive Stock Option Plan (“ISO Shares”).

 

The Company issued the unregistered ISO Shares in reliance upon Rule 701, adopted pursuant to Section 3(b) of the Securities Act of 1933, as amended (the “Securities Act”), which exempts from registration requirements certain offers and sales of securities made pursuant to compensatory benefit plans or written contracts relating to compensation by an issuer that is not subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is not an investment company registered or required to be registered under the Investment Company Act of 1940.

 

Other Sales of Unregistered Securities

 

On July 20, 2018, the Company sold units each consisting of one share of Class B Common Stock and a warrant to purchase another share of Class B Common Stock at $1.50 per share to Current Capital Corp., an accredited investor. The price of each unit was $1.25 and 100,000 units were sold. As a result, the Company issued 100,000 shares of Class B Common Stock and a three-year warrant to purchase up to 100,000 shares of Class B Common Stock at $1.50 per share to Current Capital Corp. in exchange for $125,000 in cash proceeds as previously disclosed in a Form 8-K filed on August 2, 2018. The Company plans to use the proceeds of the foregoing stock subscription to fund operating expenses.

 

On July 31, 2018, the Company agreed to issue 20,000 Class B Common Stock shares to the equity holders of Kingdom Life Sciences, LLC as consideration in part for assigning the Company all right, title, and interest in certain nutritional supplement product inventory and related intellectual property currently being marketing and sold as “Keotone” and “Keospark.” Kingdom Life Sciences, LLC (“KLS”) is owned in part by Ian Jenkins, Chief Executive Officer and a director of the Company, and Gregory Mongeon, a former officer and director from January 17, 2018 to May 15, 2018. The foregoing transaction was previously disclosed in a Form 8-K dated August 3, 2018.

 

The Company’s sales of its unregistered securities to both Current Capital Corp. and KLS were made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All of the individuals and/or entities listed above that purchased the unregistered securities were all known to the Company and its management through pre-existing business relationships. All purchasers were provided access to all material information, if requested, and all information necessary to verify such information and consulted with the Company’s management in connection with these purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

 

17
 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

There have been no events that are required to be reported under this Item.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

There have been no events that are required to be reported under this Item.

 

ITEM 5. OTHER INFORMATION.

 

Recent Developments

 

On June 1, 2018, the Company entered into a separation and release agreement with Gregory Mongeon, a former officer and director of the Company. In the foregoing agreement, the Company agreed to continue to pay to Mongeon’s salary following his resignation (previously disclosed in an amended 10Q K filed on May 23, 2018) until January 2020, in exchange for Mongeon’s agreement to limit future sales of the Company’s common stock held by him to no more than 1% of the total issued and outstanding number of shares, except in limited circumstances. The parties also agreed to a limited mutual release of claims.

 

The above description of the separation and release agreement does not purport to be complete and is qualified in its entirety by reference to the form of separation and release agreement that is attached as Exhibit 10.1.

 

Where You Can Find More Information

 

The Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “Commission”). The Company’s Commission filings are available to the public over the Internet at the Commission’s website at http://www.sec.gov. The public may also read and copy any document the Company files with the Commission at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00 am to 3:00 pm. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. We maintain a website at http://www. frelii.com (which website is expressly not incorporated by reference into this filing). Information contained on our website is not part of this report on Form 10-Q.

 

Item 6. Exhibits.

 

The following exhibits are filed with or incorporated by reference in this report:

 

Item No.   Description
10.1*   Form of Separation and Release Agreement between the Company and Gregory Mongeon.
     
31.1*   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Ian Jenkins.
     
32.1*   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Ian Jenkins.

 

* filed herewith

 

18
 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 15, 2018.

 

  FRÉLII, INC.
   
August 17, 2018 By: /s/ Ian Jenkins
    Ian Jenkins
    Chief Executive Officer, Chief Financial Officer and Director

 

19
 

EX-10.1 2 ex10-1.htm

 

SEPARATION AND RELEASE AGREEEMENT

 

THIS SEPARATION AND MUTUAL RELEASE AGREEMENT (“Agreement”) is made and entered into by and between Frélii, Inc., a Nevada corporation with a principal place of business of 2600 W. Executive Pkwy., Suite 500, Lehi, UT 84045 (“Company”) and Gregory Mongeon, an individual with a principal address of 2102 W. Golden Pond Way, Orem, UT 84058 (“Executive” and “Company” each a “Party” and together, the “Parties”).

 

RECITALS

 

WHEREAS, Executive has resigned from his position as Chief Sales Officer and a director of the Company and within ninety (90) days of his resignation will no longer be deemed an “affiliate” under the rules of the Securities and Exchange Commission; and

 

WHEREAS, Executive owns Seven Million Five Hundred Thousand (7,500,000) restricted Class B Common Stock shares of the Company (traded under the symbol FRLI); and

 

WHEREAS, the Company desires to settle any potential claims that the Company and Executive may have related to Executive’s term of service with the Company upon the terms and conditions more fully set forth below.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants herein set forth, for which the Parties hereby acknowledge is good and sufficient consideration, the Parties agree as follows:

 

TERMS

 

1.       Separation. The Parties agree that as of May 15, 2018, Executive resigned as an officer, employee, and/or director of the Company. As of that date, Executive no longer has any authority to bind the Company, transact on the Company’s, or represent himself to third parties as an officer, director, employee, or agent of the Company.

 

2.       Consideration. Upon execution of this Agreement, and subject to the terms hereof, the Company shall pay to Executive a cash payment of $6,666 each calendar month (“Monthly Cash Payments”), no later than the 5th day of each month through January 2020, after which date such

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 1 
 

 

Monthly Cash Payments shall cease. The Parties acknowledge and agree that such payments are not consideration for employment or for services rendered in the past or future, but instead are consideration for the mutual promises and covenants herein. Executive shall bear the exclusive responsibility to pay any taxes due on the Monthly Cash Payments. Executive acknowledges and agrees that he has previously received all salaries and wages and benefits due from the Company in connection with his employment.

 

3.       Agreement to Limit Sale of Shares. (a) Executive hereby agrees that he will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, lend, transfer or otherwise dispose of any shares or any options, warrants or other rights to purchase shares or any other security of the Company that Executive owns or has a right to acquire as of the date hereof (collectively, the “Shares”) except as set forth below:

 

(i)       Executive may make public sales of his Shares in brokered transactions (as such term is defined in Rule 144) in an amount not greater than 1% of the number of issued and outstanding shares of common stock of the Company during any three (3) month period; except when/if the Company’s securities become traded on a national exchange (such as NASDAQ), Executive may sell during any three (3) month period the greater of (1) 1% of the number of issued and outstanding shares of common stock of the Company, or (2) the average reported weekly trading volume of the Company’s stock during the four weeks preceding any filing of a notice of sale on Form 144 as required by Section 16 of the Exchange Act; and

 

(ii)       Executive may make private sales of the Shares, provided that any transferee of the Shares shall also be subject to the terms hereof and the Shares shall bear an appropriate restrictive legend.

 

(b)       Any subsequent issuance to and/or acquisition by Executive of shares or options or instruments convertible into shares will be subject to the provisions of this Agreement. Notwithstanding the foregoing restrictions on transfer, the Executive may, at any time and from time to time, transfer the shares (i) as bona fide gifts or transfers by will or intestacy, (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the Executive, provided that any such transfer shall not involve a disposition for value, (iii) to a partnership which is the general partner of a partnership of which the Executive is a general partner, provided, that, in the case of any gift or transfer described in clauses (i), (ii) or (iii), each donee or transferee agrees in writing to be bound by the terms and conditions contained herein in the same manner as such terms and conditions apply to the undersigned. For purposes hereof, “immediate family” means any relationship by blood, marriage or adoption, not more remote than first cousin. The Executive shall retain all rights of ownership in the Lockup Shares, including, without limitation, voting rights and the right to receive any dividends that may be declared in respect thereof.

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 2 
 

 

(c)       The Company is hereby authorized and required to disclose the existence of this Agreement to its transfer agent. The Company and its transfer agent are hereby authorized and required to decline to make any transfer of the common stock if such transfer would constitute a violation or breach of this Agreement.

 

4.       Release by Executive. Executive agrees to release the Company, its officers, directors, affiliates and assigns from all claims past present and future. In consideration of the undertakings, transactions and consideration recited in this Agreement, which Executive agrees he would not otherwise be entitled to, Executive, on behalf of himself, his agents, representatives, attorneys, assigns, heirs, executors, and administrators, hereby unconditionally and irrevocably remises, releases and forever discharges the Company and its past, present and future officers, stockholders, directors, employees, representatives, attorneys, agents, successors, divisions, companies, subsidiaries and affiliates (and past, present and future officers, stockholders, directors, employees, representatives, attorneys of such divisions, companies, subsidiaries and affiliates), hereinafter referred to as the “Releasees,” or any of them, of and from any and all suits, claims, demands, interest, costs (including attorney fees and costs incurred), expenses, actions and causes of action, rights, liabilities, obligations, promises, agreements, controversies, losses and debts, of any nature whatsoever, against any of them, which Executive or his heirs, successors, legal representatives or assigns now has, owns or holds, or at any time heretofore ever had, owned or held, or could have owned or held, whether known or unknown, suspected or unsuspected, from the beginning of the world to this date, including, without limiting the generality of the foregoing, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, Massachusetts General Laws c. 151B, and any other statutory, common law or other claims of any nature whatsoever against any of the Releasees. Executive further represents that he has not, and never will, institute against any of the Releasees any action or other proceeding in any court, administrative agency, or other tribunal of the United States or any State thereof, with respect to any claim or cause of action of any type arising or which may have existed at any time prior to the present date. If Executive does bring such a claim, he agrees to pay the reasonable costs incurred by the Company or any of the Releasees in defending such action, including reasonable attorneys’ fees. This means that by signing this Agreement, Executive will have waived any right he had to bring a lawsuit or make any legal claim against the Company or any of the Releasees up to the date of the signing of this Agreement, and that Mongeon will have released the Releasees of all claims of any nature arising up to the date of the signing of this Agreement.

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 3 
 

 

5.       Release by the Company. In consideration of the undertakings, transactions and consideration recited in this Agreement, the Company hereby agrees to release and discharge Executive, his heirs and administrators of and from any and all suits, claims, demands, interest, costs (including attorney fees and costs actually incurred), expenses, actions and causes of action, rights, liabilities, obligations, promises, agreements, controversies, losses and debts, of any nature whatsoever, against any of them, that the Company now has, owns or holds, or at any time heretofore ever had, owned or held, or could have owned or held, whether known or unknown, suspected or unsuspected, from the beginning of the world to this date. Provided however, the foregoing release of claims by the Company specifically excludes any claims against Executive for indemnification or contribution that may arise from claims brought against the Company by third parties arising from Executive’s personal or professional conduct (including but not limited to any actions taken in violation of any medical practice-related licensing, whether or not provided on behalf of the Company) prior to or during his employment with the Company in accordance with the indemnification provisions of Section 8 herein. Notwithstanding the foregoing, the Company represents that it will not institute against Executive, his heirs and administrators, any action or other proceeding in any court, administrative agency, or other tribunal of the United States or any State thereof with respect to any claim or cause of action of any type arising or that may have existed at any time prior to the present date. If the Company does bring a claim other than for indemnification or contribution as described herein above, the Company agrees to pay the reasonable costs incurred by Executive, his heirs or administrators in defending such action, including reasonable attorneys’ fees.

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 4 
 

 

6.       Confidentiality/Non-disparagement. Executive agrees to keep confidential and not to disclose the terms of this Agreement and/or the terms of the payments or other benefits provided to her under it to anyone other than his attorney(s) or accountant(s), provided they likewise agree not to disclose said information to anyone. Executive further agrees that neither he nor any of his agents shall disparage the Company or its directors, officers, employees or agents in a personal manner, a professional manner or otherwise. Furthermore, Executive agrees that neither he nor any of his agents shall disclose any non-public information concerning the Company and its business that he acquired either before or during his employment with the Company (“Confidential Information”). If Executive breaches any of his obligations with respect to Confidential Information, he understands and acknowledges that he shall forever forfeit any payments made to him hereunder including the Monthly Cash Payments.

 

7.       Return of Company Property. Executive agrees to immediately return to the Company any Company property including but not limited to the following:

 

Infusion Soft email management software, Kingdom Life Sciences.com, Clrskn.com, Keospark.com, LiveKEO.com, Freley.net, Freley.info, Freley.org, Freley.us, beautybites.io, techhealthnews.com, livefrélii.com, freliiconsultant.com, freliidoctor.com, freliicoach.com, freliilifestyle.com, freliikids.com, freliifamily.com, freliiclinic.com, askfrelii.com, wellnessnews.co, wellnessnews.io, healthylife.io, hackmygenetics.com, theresageneforthat.com, showmethedna.com, widowmakergene.com, showmemydna.com, freley.com.

 

8.       Indemnification. Executive (“Indemnifier”) shall indemnify and hold harmless the Company, its subsidiary corporations, shareholders, directors, officers, managers, members, partners (other corporate participants), agents, representatives, attorneys, permitted assigns, affiliates, employees, and lenders (each an “Indemnified Party”) from any claim, suit, or proceeding brought by any third party that arises from Executive’s personal or professional conduct (including but not limited to any actions taken in violation of any medical practice- related licensing, whether or not provided on behalf of the Company) either before or during his employment with the Company (an “Indemnified Claim”). Furthermore, Executive agrees to indemnify any such Indemnified Party for any losses including but not limited to reasonable attorneys’ fees, fines, and expenses of litigation (“Losses”) incurred by an Indemnified Party in the defense of any such claims. Pursuant to the foregoing indemnification provision, Executive agrees to sign the transfer agent instruction letter and stock powers, attached hereto as Addendum A, instructing the Company’s stock transfer agent to deliver to the Company five (5) duly-executed stock certificates in the amount of 500,000 shares each, for a total of 2,500,000 Class B Common Stock shares to be held in escrow for a period of five (5) years (the “Escrowed Shares”). In the case of any Indemnified Claim, Executive agrees that the Company shall first deduct the amount of such Losses from any remaining Monthly Cash Payments due to him under Section 2 of this Agreement. If such Losses exceed the amount of any remaining Monthly Cash Payments, Executive hereby agrees to forfeit any Escrowed Shares in the amount of such losses (based on the trading price of the Escrowed Shares when such Losses are incurred) and further agrees that the Company may cancel such shares by providing instruction to the transfer agent. If, after twenty- four (24) months of executing this Agreement, there have been no Indemnified Claims, the Company shall release Five Hundred Thousand (500,000) shares of the Escrowed Shares to Executive each calendar year thereafter (on the anniversary of this Agreement’s execution date) provided there are no Indemnified Claims, until all the Escrowed Shares have been released. Notwithstanding the forgoing, all Escrowed Shares shall be held in escrow until any Indemnified Claims are resolved with prejudice. Furthermore, Executive agrees not to transact with or pledge as security any of the Escrowed Shares, and agrees to release and hold harmless each of the Indemnified Parties for any losses incurred because of any decrease in value of the Escrowed Shares.

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 5 
 

 

9.       Nature of Agreement. The Parties agree and acknowledge that the considerations exchanged herein do not constitute and shall not be construed as an admission of liability or wrongdoing on the part of any party hereto. The Parties agree that this Agreement may not be used as evidence in any subsequent proceeding of any kind except one in which either of the parties alleges a breach of the terms of this Agreement, or one in which either of the parties elects to use this Agreement as a defense to any claim.

 

10.       Binding Agreement/Modifications. This Agreement is binding on the Parties, their respective agents, assigns, heirs, executors, successors and administrators, and can only be modified by a writing signed by both Parties.

 

11.       Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission, including an executed counterpart of a signature page in Portable Document Format (PDF) shall be as effective as a manually delivered original signed copy of this Agreement.

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 6 
 

 

12.       Severability. If any term of this Agreement is to any extent illegal, otherwise invalid, or incapable of being enforced, such term shall be excluded to the extent of such invalidity or unenforceability; all other terms hereof shall remain in full force and effect; and, to the extent permitted and possible, the invalid or unenforceable term shall be deemed replaced by a term that is valid and enforceable and that comes closest to expressing the intention of such invalid or unenforceable term. If application of this Severability provision should materially and adversely affect the economic substance of the transactions contemplated hereby, the Party adversely impacted shall be entitled to compensation for such adverse impact, provided the reason for the invalidity or unenforceability of a term is not due to serious misconduct by the Party seeking such compensation

 

13.       Notice Provision. Any notice, demand or request required or permitted to be given or made under this Agreement shall be in writing and will be deemed given or made when delivered in person, when sent by United States registered or certified mail, or postage prepaid, or overnight delivery to a Party at its or his address as specified below:

 

  If to Company: Frélii, Inc.  
  2600 W. Executive Pkwy., Suite 500  
  Lehi, UT 84045  
     
  If to Executive: Gregory Mongeon  
     
     
     
     

 

Either Party may change its address for notice by notifying the other Party in writing.

 

14.       Entire Agreement. This Agreement supersedes all prior agreements between the Parties with respect to its subject matter and constitutes (along with the Employment Agreement attached hereto as Addendum B) a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter.

 

15.       Applicable Law. This Agreement shall be governed by the laws of the State of Utah. The Parties acknowledge and agree that no provision of this Agreement shall be interpreted in favor of, or against, any of the Parties hereto because any such Party or its counsel participated in the drafting thereof, or because any such provision is inconsistent with any prior draft hereof or thereof.

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 7 
 

 

16.       Arbitration. Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. The place of arbitration shall be Salt Lake City, Utah. Utah law shall apply. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

 

17.       Venue for Disputes. If either party brings against the other party any proceeding arising out of this Agreement or arising out of disclosure or use of Confidential Information, that party may bring that proceeding only in the United States District Court for the District of Utah or, only if there is no federal subject matter jurisdiction, in a state court sitting in Utah County, Utah, and each party hereby submits to the exclusive jurisdiction of those courts for purposes of any such proceeding.

 

18.       Voluntary Assent. Each Party acknowledges that it or he has participated in the negotiation of this Agreement and the drafting and preparation thereof. The Parties both represent and warrant that they have not been coerced into entering into this Agreement, nor has any person or entity exercised any pressure or undue influence on such Party to enter into this Agreement. Furthermore, both Parties have had adequate opportunity to fully discuss and review the terms of this Agreement with an attorney. Both Parties further represent that it and he has carefully read this Agreement, understand the terms herein, and freely and voluntarily assent to its terms and conditions.

 

WHEREFORE, the Parties have read the above Agreement and attest that they fully understand and knowingly and voluntarily accept its provisions in their entirety without reservation.

 

[SIGNATURE PAGE TO FOLLOW]

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 8 
 

 

COMPANY   EXECUTIVE
         
         
         
By: Ian Jenkins, CEO   By: Gregory Mongeon
Date:     Date:  

 

Separation and Release Agreement

Company ____

Executive ____

 

 Page 9 
 

 

 

EX-31.1 3 ex31-1.htm

 

EXHIBIT 31.1

 

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Ian G. Jenkins of Frelii, Inc.. (the “Company”), certify that:

 

1. I have reviewed this 10-Q of the Company;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

4. As the Company’s Principal Executive Officer and Principal Financial and Accounting Officer I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

 

5. As the Company’s Principal Executive Officer and Principal Financial and Accounting Officer I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

Date: August 17, 2018

 

/s/ IAN JENKINS  
Ian Jenkins  
Principal Executive Officer  
And Principal Financial and Accounting Officer  

 

 
 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Ian G. Jenkins, Principal Executive Officer and Principal Financial and Accounting Officer of Frélii, Inc. (the “Company”) certify that:

 

1. I have reviewed the quarterly report on Form 10-Q of the Company;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and

 

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the period presented in this quarterly report.

 

Date: August 17, 2018

 

/s/ IAN JENKINS  
Ian Jenkins  
Principal Executive Officer  
And Principal Financial and Accounting Officer  

 

 
 

 

EX-101.INS 5 frli-20180630.xml XBRL INSTANCE FILE 0001223533 2018-01-01 2018-06-30 0001223533 2017-12-31 0001223533 2018-06-30 0001223533 us-gaap:SeriesAPreferredStockMember 2017-12-31 0001223533 us-gaap:SeriesAPreferredStockMember 2018-06-30 0001223533 us-gaap:CommonClassBMember 2017-12-31 0001223533 us-gaap:CommonClassBMember 2018-06-30 0001223533 FRLI:ShareExchangeAgreementMember us-gaap:CommonClassBMember 2017-04-10 2017-04-11 0001223533 FRLI:SecurityAgreementMember FRLI:SecuredPromissoryNoteMember FRLI:CornerstoneMedicalCenterLLCMember 2017-04-10 2017-04-11 0001223533 FRLI:SecurityAgreementMember FRLI:SecuredPromissoryNoteMember FRLI:CornerstoneMedicalCenterLLCMember 2017-04-11 0001223533 2017-06-30 0001223533 2017-01-01 2017-06-30 0001223533 FRLI:KlineLawGroupPCMember FRLI:JuliaKlineMember 2017-12-31 0001223533 FRLI:KlineLawGroupPCMember FRLI:JuliaKlineMember 2018-06-30 0001223533 FRLI:ExchangeNoteMember 2017-12-13 2017-12-14 0001223533 us-gaap:CommonClassBMember 2018-08-08 0001223533 us-gaap:CommonClassAMember 2018-08-08 0001223533 2016-12-31 0001223533 us-gaap:CommonClassBMember FRLI:ChristopherDeanMember 2018-01-17 2018-01-18 0001223533 us-gaap:CommonClassBMember 2018-01-17 2018-01-18 0001223533 FRLI:EmploymentAgreementsMember FRLI:FiveOfficersMember 2018-01-17 2018-01-19 0001223533 FRLI:EmploymentAgreementsMember FRLI:FiveOfficersMember us-gaap:CommonClassBMember 2018-01-30 2018-01-31 0001223533 FRLI:CommonClassBOneMember 2018-01-01 2018-06-30 0001223533 FRLI:CommonClassBOneMember 2018-06-30 0001223533 us-gaap:ChiefExecutiveOfficerMember us-gaap:SeriesAPreferredStockMember 2018-01-20 2018-01-21 0001223533 us-gaap:ChiefExecutiveOfficerMember us-gaap:SeriesAPreferredStockMember 2018-01-25 2018-01-26 0001223533 us-gaap:CommonClassBMember FRLI:SixServiceProvidersMember 2018-01-30 2018-01-31 0001223533 us-gaap:CommonClassBMember FRLI:TwoRelativesOfChiefExecutiveOfficerMember 2018-01-30 2018-01-31 0001223533 us-gaap:CommonClassBMember FRLI:TwoDirectorsMember 2018-01-30 2018-01-31 0001223533 FRLI:CommonClassBTwoMember 2018-01-01 2018-06-30 0001223533 FRLI:CommonClassBTwoMember 2018-06-30 0001223533 us-gaap:CommonClassBMember 2017-12-13 2017-12-14 0001223533 us-gaap:CommonClassBMember us-gaap:InvestorMember 2018-03-22 2018-03-23 0001223533 FRLI:TechAssignmentAgreementMember FRLI:ChristopherDeanMember us-gaap:CommonClassBMember 2018-01-17 2018-01-18 0001223533 us-gaap:CommonClassBMember 2018-01-18 0001223533 2018-04-01 2018-06-30 0001223533 2017-04-01 2017-06-30 0001223533 FRLI:GregoryMongeonMember FRLI:SeparationAndReleaseAgreementMember 2017-06-01 0001223533 FRLI:GregoryMongeonMember FRLI:SeparationAndReleaseAgreementMember FRLI:JuneFiveTwoThousandEighteenToJanuaryFiveTwoThousandTwentyMember 2017-05-31 2017-06-01 0001223533 FRLI:SeparationAndReleaseAgreementMember FRLI:GregoryMongeonMember us-gaap:CommonClassBMember 2017-06-01 0001223533 us-gaap:CommonClassBMember us-gaap:InvestorMember 2018-03-23 0001223533 us-gaap:SubsequentEventMember FRLI:TwoDirectorsMember us-gaap:CommonClassBMember 2018-07-05 2018-07-06 0001223533 us-gaap:SubsequentEventMember FRLI:DirectorOneMember us-gaap:CommonClassBMember 2018-07-05 2018-07-06 0001223533 us-gaap:SubsequentEventMember FRLI:DirectorTwoMember us-gaap:CommonClassBMember 2018-07-05 2018-07-06 0001223533 us-gaap:SubsequentEventMember 2018-07-06 0001223533 us-gaap:SubsequentEventMember us-gaap:CommonClassBMember 2018-07-05 2018-07-06 0001223533 us-gaap:SubsequentEventMember us-gaap:CommonClassBMember 2018-07-19 2018-07-20 0001223533 us-gaap:SubsequentEventMember us-gaap:CommonClassBMember 2018-07-20 0001223533 us-gaap:SubsequentEventMember FRLI:AssetPurchaseAgreementMember FRLI:KingdomLifeSciencesLLCMember 2018-07-30 2018-07-31 0001223533 us-gaap:SubsequentEventMember FRLI:AssetPurchaseAgreementMember FRLI:KingdomLifeSciencesLLCMember us-gaap:CommonClassBMember 2018-07-30 2018-07-31 0001223533 FRLI:GregoryMongeonMember FRLI:SeparationAndReleaseAgreementMember 2017-05-31 2017-06-01 0001223533 FRLI:GregoryMongeonMember FRLI:SeparationAndReleaseAgreementMember 2018-06-30 0001223533 us-gaap:CommonClassBMember FRLI:DrHansJenkinsMember 2018-05-06 2018-05-08 0001223533 us-gaap:CommonClassBMember FRLI:DrHansJenkinsMember 2018-05-08 0001223533 us-gaap:CommonClassBMember FRLI:SixEmployeesAndConsultantsMember FRLI:TwoThousandEighteenIncentiveStockOptionPlanMember 2018-05-01 2018-05-15 0001223533 us-gaap:CommonClassBMember FRLI:SixEmployeesAndConsultantsMember FRLI:TwoThousandEighteenIncentiveStockOptionPlanMember 2018-05-15 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure FRLI:Payments 10-Q 2018-06-30 false --12-31 Smaller Reporting Company Q2 2018 50483 0.001 0.001 0.001 0.001 20000000 20000000 100 0 100 0 10441107 36911107 10441107 36911107 0.001 0.001 0.001 0.001 2000000000 2000000000 FRLI 29537 74518 316516 -500000 241656 530225 <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 7 - ADVANCES FROM RELATED PARTIES</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Advances from related parties, which are all non-interest bearing and due on demand, consist of the following:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2018</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">December 31, 2017</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 60%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Kline Law Group P.C. and spouse of controlling person of Kline Law Group P.C.</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 16%; border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">91,220</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">37,064</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">91,220</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">37,064</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Kline Law Group P.C. (&#8220;KLG&#8221;) is counsel to the Company and is controlled by Scott Kline. Julia Kline, wife of Scott Kline, served as the Company&#8217;s Chief Operating Officer from January 19, 2018 to July 13, 2018. (See Note 8)</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 6, 2018 (see Note 9), the liability to KLG and the spouse of the controlling person of KLG was satisfied.</p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 8 - COMMON STOCK AND PREFERRED STOCK TRANSACTIONS</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 18, 2018, the Company entered into a technology assignment agreement (the &#8220;Tech Assignment Agreement&#8221;) whereby the Company acquired certain intellectual property consisting of advanced computer programming software, source code, proprietary designs, plans, processes, test procedures, and other technical data and information (the &#8220;Technology&#8221;) from Christopher Dean in exchange for 7,500,000 shares of Class B Common Stock of the Company. Christopher Dean was the Chief Technology Officer and a director of the Company from January 17, 2018 to March 27, 2018.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The $234,375 estimated fair value of the 7,500,000 shares of Class B Common Stock was capitalized as software. As the trading market of the Company&#8217;s Class B Common Stock was inactive, the fair value of the Class B Common Stock was based on the $0.03125 per share price derived from the $250,000 purchase price of the Exchange Note, which was converted to 8,000,000 shares of Class B Common Stock on December 14, 2017.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 19, 2018, the Company entered into employment agreements with Ian Jenkins (Chief Executive Officer and Chief Financial Officer), Christopher Dean (former Chief Technology Officer), Dr. Gregory Mongeon (former Chief Medical Officer), Seth Jones (Chief Marketing Officer), and Julia Kline (former Chief Operating Officer). The agreements all have a term of five years and provide for annual base salaries totalling, in the aggregate, $400,000. All of the agreements may be terminated by the Company at any time without cause by giving written notice to the</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">respective employee for which termination is effective 30 days therefrom. On January 31, 2018, pursuant to the employment agreements, the Company issued a total of 17,450,000 shares of Class B Common Stock of the Company to these five officers.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The $545,312 estimated fair value of the 17,450,000 shares of Class B Common Stock using the 0.03125 per share price described in the second preceding paragraph was expensed as compensation in the three months ended March 31, 2018.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 21, 2018 and January 26, 2018, the Company&#8217;s Chief Executive Officer returned 100 shares of Series A Preferred Stock and 1,830,000 shares of Class B Common Stock to the Company&#8217;s treasury that were cancelled by the Company.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 31, 2018, the Company issued a total of 1,800,000 shares of Class B Common Stock of the Company to 6 service providers (including 800,000 shares issued to two relatives of the Company&#8217;s Chief Executive Officer and 600,000 shares issued to two independent directors of the Company) for services rendered.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The $56,250 estimated fair value of the 1,800,000 shares of Class B Common Stock (using the $0.03125 per share as described in the fifth preceding paragraph) was expensed as compensation in the three months ended March 31, 2018.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 23, 2018, the Company sold 150,000 shares of Class B Common Stock to an investor at a price of $1.25 per share for $187,500 cash proceeds.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 8, 2018, the Company issued 600,000 shares of Class B Common Stock of the Company to Dr. Hans Jenkins in connection with an employment agreement signed between Dr. Jenkins and the Company on the same date. The $750,000 estimated fair value of the 600,000 shares of Class B Common Stock (based on the $1.25 per share price of the March 23, 2018 sale of 150,000 shares of Class B Common Stock) was expensed as compensation in the three months ended June 30, 2018.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 15, 2018, the Company issued a total of 800,000 shares of Class B Common Stock of the Company to 6 employees and consultants for services rendered pursuant to the Company&#8217;s 2018 Incentive Stock Option Plan. The $1,000,000 estimated fair value of the 800,000 shares of Class B Common Stock (based on the $1.25 per share price of the March 23, 2018 sale of 150,000 of Class B Common Stock) was expensed as compensation in the three months ended June 30, 2018.</p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 3 - GOING CONCERN UNCERTAINTY</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying financial statements have been prepared as if the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has sustained net losses which have resulted in an accumulated deficit at June 30, 2018, and negative cash flows from operations, all of which raise substantial doubt regarding the Company&#8217;s ability to continue as a going concern.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company believes these conditions have resulted from the inherent risks associated with small companies. Such risks include, but are not limited to, the ability to (i) generate revenues and sales of its products and services at levels sufficient to cover its costs and provide a return for investors, (ii) attract additional capital in order to finance growth, (iii) further develop and successfully market commercial products and services, and (iv) successfully compete with other comparable companies having financial, production and marketing resources significantly greater than those of the Company.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 5, 2017 (see Note 1), there was a change in control of the Company. We expect to be dependent on additional debt and equity financing to develop our new business but we cannot assure you that any such financings will be available or will otherwise be made on terms acceptable to us, or that our present shareholders might suffer substantial dilution as a result.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">These financial statements have been prepared on the basis that the Company will continue as a going concern, which presumes that it will be able to realize its assets and discharge its liabilities in the normal course of business as they come due. These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.</p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 9 - SUBSEQUENT EVENTS</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 6, 2018, the Company issued a total of 600,000 shares of Class B Common Stock to its two outside directors (300,000 shares each) for services rendered.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 6, 2018, the Company settled an outstanding debt of $91,220 for professional fees incurred and operating expenses paid on behalf of the Company owed to Kline Law Group, P.C. and its principal Scott Kline. Mr. Kline and Kline Law Group agreed to waive all outstanding amounts due as of July 6, 2018, in exchange for 1,000,000 Class B Common Stock shares.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 13, 2018, Julia Kline resigned all her positions with the Company. Ms. Kline was appointed as the Company&#8217;s Chief Operating Officer on January 17, 2018, and as Secretary on March 27, 2018.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 20, 2018, the Company sold 100,000 shares of Class B Common Stock and a three-year warrant to purchase up to 100,000 shares of Class B Common Stock at $1.50 per share to an investor for $125,000 cash proceeds, as previously disclosed in a Form 8-K filed on August 2, 2018.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 31, 2018, the Company entered into an Asset Purchase Agreement with Kingdom Life Sciences, LLC, a Utah limited liability company (&#8220;KLS&#8221;), and its equity holders whereby the Company agreed to purchase certain assets of KLS in exchange for payment of a liability of KLS in the amount of approximately $19,244 and 20,000 Class B Common Stock shares of the Company. The transaction was previously approved by the Company&#8217;s Board of Directors (the &#8220;Board&#8221;) in a meeting held on May 15, 2018. As equity holders of KLS, Ian Jenkins, the Company&#8217;s Chief Executive Officer and a director, and Gregory Mongeon, a former director and officer of the Company, both abstained from the Board vote approving the transaction. The foregoing transaction was previously disclosed in a Form 8-K filed on August 3, 2018.</p> 0.04 2017-12-31 37064 91220 37064 91220 -507689 -30225 13888 Frelii, Inc. 50483 259606 495000 -56910 -13888 4384 25000000 0.18 <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 1 &#8212; NATURE OF OPERATIONS</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company incorporated in the State of Nevada on September 5, 2002, under the name &#8220;Bayview Corporation.&#8221; On April 7, 2005, the Company changed its name to Xpention Genetics, Inc. concurrent with a change in its business to researching and developing cancer treatment drugs. On September 17, 2008, the Company changed its name to Cancer Detection Corporation. On August 13, 2009, the Company again changed its name to Tremont Fair, Inc. From July 2009 until May 2011, the Company operated as a real estate services firm, seeking to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas. On May 26, 2011, the Company changed its name to Vican Resources, Inc., and changed its business model when it sold the real estate services division and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other commodities (hereafter, &#8220;Vican Trading&#8221;). Upon the acquisition of Vican Trading, there was an implied option for either party to rescind the original acquisition. During 2011, that rescission option was exercised and on December 20, 2011, the Company again changed its business when it unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic patients (hereafter, &#8220;Med Ex Florida&#8221;). On March 22, 2012, the Company again changed its business to become an oil &#38; gas exploration, development, and distribution company, unwound the purchase of the assets of Med Ex Florida, and acquired an interest in two oil &#38; gas wells located in Jefferson County, Mississippi.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2017, the Company underwent a change of control whereby our current Chief Executive Officer Ian Jenkins acquired a controlling interest in the Company&#8217;s capital stock and was appointed our sole officer and director. On April 11, 2017, the Company executed a Share Exchange Agreement with Unprescribed, LLC, later amended to include Cornerstone Medical Center LLC, whereby the Company, among other terms, agreed to exchange shares with the ownership units of those two entities for 25,000,000 shares of the Company&#8217;s Class B Common Stock (no shares of Class A Common Stock are issued or outstanding, so the Class B Common Stock is hereinafter referred to as the &#8220;Class B Common Stock&#8221; or the &#8220;Common Stock&#8221;). The Share Exchange Agreement, as amended, terminated by its own terms on December 31, 2017. Following the termination of the Share Exchange Agreement, the Company modified its business plan to acquire certain intellectual property assets and to engage a new management team to effectuate the new business plan.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective March 9, 2018, the Company changed its name to Fr&#233;lii, Inc. The new business plan is to launch a web-based subscription service providing personalized nutrition and wellness plans. The Company launched its website, <u>www.frelii.com</u>, in March 2018 beta testing a limited number of free users.</p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 4 &#8211; PROMISSORY NOTE RECEIVABLE FROM RELATED PARTY</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 11, 2017, pursuant to a Security Agreement dated April 11, 2017, the Company paid $495,000 to Cornerstone Medical Center LLC (&#8220;Cornerstone&#8221;). In exchange, the Company received a $500,000 Secured Promissory Note from Cornerstone (the &#8220;Promissory Note&#8221;), dated April 11, 2017. The Promissory Note bears interest at 4% per annum, or 18% in the event of a default under the Promissory Note. The principal and interest was due on December 31, 2017. The Promissory Note is secured by all the assets of Cornerstone.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The principal balance of the promissory note changed in the six months ended June 30, 2018 as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Balance of Cornerstone Note at December 31, 2017</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 21%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">340,640</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Cornerstone payments to service providers relating to Fr&#233;lii, Inc. business plan</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(56,910</font></td> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Cash payments received by Fr&#233;lii, Inc.</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(259,606</font></td> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Balance at June 30, 2018</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">24,124</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Cornerstone is owned by Gregory Mongeon, who served as a former officer and director of the Company from January 17, 2018 to May 15, 2018.</p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The principal balance of the promissory note changed in the six months ended June 30, 2018 as follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Balance of Cornerstone Note at December 31, 2017</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 21%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">340,640</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Cornerstone payments to service providers relating to Fr&#233;lii, Inc. business plan</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(56,910</font></td> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Cash payments received by Fr&#233;lii, Inc.</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(259,606</font></td> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Balance at June 30, 2018</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">24,124</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Advances from related parties, which are all non-interest bearing and due on demand, consist of the following:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">June 30, 2018</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">December 31, 2017</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 60%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Kline Law Group P.C. and spouse of controlling person of Kline Law Group P.C.</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 16%; border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">91,220</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 18%; border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">37,064</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">91,220</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">37,064</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="margin: 0pt"></p> 38511107 0 10441 36911 2351562 0 1750000 0 187500 2351562 7500000 7500000 20000 <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 2 &#8212; BASIS OF PRESENTATION OF UNAUDITED CONDENSED FINANCIAL INFORMATION</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The unaudited condensed financial statements of the Company for the three and six month periods ended June 30, 2018 and 2017 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2017 was derived from the audited financial statements included in the Company&#8217;s financial statements as of and for the year ended December 31, 2017 included in the Company&#8217;s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the &#8220;SEC&#8221;). These financial statements should be read in conjunction with that report.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="text-transform: uppercase"><b>Recently Issued Accounting Pronouncements</b></font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Between May 2014 and December 2016, the FASB issued several ASU&#8217;s on Revenue from Contracts with Customers (Topic 606). These updates supersede nearly all existing revenue recognition guidance under current U.S. generally accepted accounting principles (GAAP) and became effective for annual periods beginning after December 15, 2017 and interim periods therein. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Adoption of these updates in 2018 has not had any impact on our financial statements.</p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">At June 30, 2018, software, net, consisted of:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Software and intellectual property acquired from Christopher Dean pursuant to Tech Assignment Agreement on January 18, 2018 in exchange for 7,500,000 shares of Class B Common Stock (see Note 7).</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 21%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">234,375</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated amortization</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(20,966</font></td> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Net </font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">213,409</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="margin: 0pt"></p> <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The acquired software is being amortized using the straight-line method over its estimated economic life of 5 years. Expected future amortization expense for the acquired software as of June 30, 2018 follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ending</b></font><br /> <font style="font: 10pt Times New Roman, Times, Serif"><b>December 31,</b></font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2018</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 20%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">23,437</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2019</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2020</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2,472</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">213,409</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="margin: 0pt"></p> P5Y 213409 500000 91220 234375 19244 8000000 1000000 150000 100000 600000 187500 125000 1800000 800000 600000 600000 300000 300000 54156 30225 234375 20966 46875 46875 46875 46875 2472 23437 <p style="margin: 0pt"></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 5 &#8211; SOFTWARE</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">At June 30, 2018, software, net, consisted of:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Software and intellectual property acquired from Christopher Dean pursuant to Tech Assignment Agreement on January 18, 2018 in exchange for 7,500,000 shares of Class B Common Stock (see Note 7).</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="width: 21%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">234,375</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Accumulated amortization</font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">(20,966</font></td> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">Net </font></td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">213,409</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 23, 2018, the Company engaged Fish &#38; Richardson LLP to handle intellectual property work such as patent and trademark applications relating to the software.</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The acquired software is being amortized using the straight-line method over its estimated economic life of 5 years. Expected future amortization expense for the acquired software as of June 30, 2018 follows:</p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Year ending</b></font><br /> <font style="font: 10pt Times New Roman, Times, Serif"><b>December 31,</b></font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Amount</b></font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2018</font></td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 1%; line-height: 107%">&#160;</td> <td style="width: 20%; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">23,437</font></td> <td style="width: 1%; line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2019</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2020</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">46,875</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; line-height: 107%">&#160;</td> <td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">2,472</font></td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center; line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="text-align: right; line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td> <td style="line-height: 107%">&#160;</td> <td style="line-height: 107%">&#160;</td> <td style="border-bottom: black 2.25pt double; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 107%"><font style="font: 10pt Times New Roman, Times, Serif">213,409</font></td> <td style="line-height: 107%">&#160;</td></tr> </table> <p style="margin: 0pt"></p> 0001223533 355106 291885 314703 41135 -3125977 -6172982 3430239 6177206 40403 250750 40403 250750 3339 9550 355106 291885 213409 355106 78476 14466 578 340640 24124 3291 23326 126654 126654 32373538 1943634 36264954 1943634 -0.09 0.3 -0.06 -0.02 -3047005 588198 -2223305 -35709 -3047005 588198 -2223305 -35709 3261 645459 578 -4577 47482 25933 3261 4384 578 4384 671585 -3050266 -57261 -2223883 -31132 3054007 57261 2227174 31132 73875 5761 45305 4632 20966 11719 51481 51500 14625 26500 143096 118496 2631269 1903709 3741 3291 63830 63830 80802 80802 133320 133320 3291 126654 500000 <p style="margin: 0pt"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 6 &#8211; SETTLEMENT AMOUNT DUE FORMER RELATED PARTY</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 1, 2017, the Company and Gregory Mongeon (see Note 4 above) executed a Separation and Release Agreement. The agreement provides for the Company to make 20 monthly cash payments of $6,666 each to Mr. Mongeon from June 5, 2018 to January 5, 2020 (total of $132,660). The agreement also provides for limits on future sales of 7,500,000 shares of Class B Common Stock owned by Mr. Mongeon. At June 30, 2018, the remaining amount due Mr. Mongeon pursuant to the Separation and Release Agreement was $126,654.</p> 6666 132660 7500000 1.25 1.50 1.25 1.25 316516 20 7500000 0.03125 0.03125 0.03125 250000 P5Y 400000 17450000 17450000 1800000 545312 56250 750000 1000000 100 100 1800000 1830000 800000 P3Y 100000 500000 EX-101.SCH 6 frli-20180630.xsd XBRL SCHEMA FILE 00000001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 00000002 - Statement - Balance Sheets link:presentationLink link:calculationLink link:definitionLink 00000003 - Statement - Balance Sheets (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000004 - Statement - Statements of Operations (Unaudited) link:presentationLink link:calculationLink link:definitionLink 00000005 - Statement - Statements of Operations (Unaudited) (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000006 - Statement - Statements of Cash Flows (Unaudited) link:presentationLink link:calculationLink link:definitionLink 00000007 - Disclosure - Nature of Operations link:presentationLink link:calculationLink link:definitionLink 00000008 - Disclosure - Basis of Presentation of Unaudited Condensed Financial Information link:presentationLink link:calculationLink link:definitionLink 00000009 - Disclosure - Going Concern Uncertainty link:presentationLink link:calculationLink link:definitionLink 00000010 - Disclosure - Promissory Note Receivable from Related Party link:presentationLink link:calculationLink link:definitionLink 00000011 - Disclosure - Software link:presentationLink link:calculationLink link:definitionLink 00000012 - Disclosure - Settlement Amount Due Former Related Party link:presentationLink link:calculationLink link:definitionLink 00000013 - Disclosure - Advances from Related Parties link:presentationLink link:calculationLink link:definitionLink 00000014 - Disclosure - Common Stock and Preferred Stock Transactions link:presentationLink link:calculationLink link:definitionLink 00000015 - Disclosure - Subsequent Events link:presentationLink link:calculationLink link:definitionLink 00000016 - Disclosure - Promissory Note Receivable from Related Party (Tables) link:presentationLink link:calculationLink link:definitionLink 00000017 - Disclosure - Software (Tables) link:presentationLink link:calculationLink link:definitionLink 00000018 - Disclosure - Advances from Related Parties (Tables) link:presentationLink link:calculationLink link:definitionLink 00000019 - Disclosure - Nature of Operations (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000020 - Disclosure - Promissory Note Receivable from Related Party (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000021 - Disclosure - Promissory Note Receivable from Related Party - Schedule of Promissory Note (Details) link:presentationLink link:calculationLink link:definitionLink 00000022 - Disclosure - Software (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000023 - Disclosure - Software - Schedule of Software, Net (Details) link:presentationLink link:calculationLink link:definitionLink 00000024 - Disclosure - Software - Schedule of Software, Net (Details) (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000025 - Disclosure - Software - Schedule of Expected Future Amortization Expense (Details) link:presentationLink link:calculationLink link:definitionLink 00000026 - Disclosure - Settlement Amount Due Former Related Party (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000027 - Disclosure - Advances from Related Parties - Schedule of Advances from Related Parties (Details) link:presentationLink link:calculationLink link:definitionLink 00000028 - Disclosure - Common Stock and Preferred Stock Transactions (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000029 - Disclosure - Subsequent Events (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 7 frli-20180630_cal.xml XBRL CALCULATION FILE EX-101.DEF 8 frli-20180630_def.xml XBRL DEFINITION FILE EX-101.LAB 9 frli-20180630_lab.xml XBRL LABEL FILE Class of Stock [Axis] Series A Preferred Stock [Member] Class B Common Stock [Member] Type of Arrangement and Non-arrangement Transactions [Axis] Share Exchange Agreement [Member] Security Agreement [Member] Short-term Debt, Type [Axis] Secured Promissory Note [Member] Legal Entity [Axis] Cornerstone Medical Center LLC [Member] Related Party [Axis] Kline Law Group P.C. [Member] Title of Individual [Axis] Julia Kline [Member] Debt Instrument [Axis] Exchange Note [Member] Class A Common Stock [Member] Christopher Dean [Member] Employment Agreements [Member] Five Officers [Member] Class B Common Stock One [Member] Chief Executive Officer [Member] Six Service Providers [Member] Two Relatives of Chief Executive Officer [Member] Two Directors [Member] Class B Common Stock Two [Member] Investor [Member] Tech Assignment Agreement [Member] Gregory Mongeon [Member] Separation and Release Agreement [Member] Award Date [Axis] June 5, 2018 to January 5, 2020 [Member] Subsequent Event Type [Axis] Subsequent Event [Member] Director One [Member] Director Two [Member] Asset Purchase Agreement [Member] Kingdom Life Sciences, LLC [Member] Dr. Hans Jenkins [Member] 6 Employees and Consultants [Member] Plan Name [Axis] 2018 Incentive Stock Option Plan [Member] Statement [Table] Statement [Line Items] Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Filer Category Entity Common Stock, Shares Outstanding Trading Symbol Document Fiscal Period Focus Document Fiscal Year Focus ASSETS Current assets Cash and cash equivalents Account receivable Note receivable Interest receivable Total current assets Software, less accumulated amortization of $20,966 at June 30, 2018 Total assets LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable and accrued liabilities Accrued salaries and related expense Settlement amount due former related party Advances from former related parties Total current liabilities Total liabilities Shareholders' equity (deficit) Preferred Stock value Common Stock value Additional paid in capital Accumulated deficit Total shareholders' equity (deficit) Total liabilities and shareholders' equity (deficit) Software, accumulated amortization Preferred stock, par value Preferred stock, shares authorized Preferred Stock, shares issued Preferred Stock, shares outstanding Common stock, par value Common stock, shares authorized Common Stock, shares issued Common Stock, shares outstanding Income Statement [Abstract] Revenues Operating expenses Compensation (including stock-based compensation of $1,750,000, $0, $2,351,562, and $0, respectively) Settlement with former related party Marketing and advertising Professional fees Amortization of software Other Total operating expenses Loss from operations Other income (expenses) Gain on cancellation of liabilities Interest income on note receivable Interest expense on notes payable Accretion expense Change in fair value of embedded derivative Total other income (expenses) net Income (loss) before taxes Income tax expense Net income (loss) and comprehensive income (loss) Net income (loss) per common share: Basic and diluted Weighted average number of common shares outstanding – basic and diluted: Stock based compensation Statement of Cash Flows [Abstract] Cash flow from operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash used by operating activities: Gain on cancellation of liabilities Change in fair value of embedded derivative Accretion expense - debt discount on note payable Changes in operating assets and liabilities Change in other account receivable Interest receivable Accounts payable and accrued liabilities Settlement amount due former related party Net cash used in operating activities Cash flow from investing activities Secured promissory note receivable Collections of note receivable Net cash provided by investing activities Cash flow from financing activities Sale of Class B Common Stock Advances from former related parties Proceeds from convertible note Net cash provided by financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Cash payments for: Interest Income taxes Non-cash investing and financing activities: Issuance of shares of Class B Common Stock to various employees and consultants for services rendered Organization, Consolidation and Presentation of Financial Statements [Abstract] Nature of Operations Basis of Presentation of Unaudited Condensed Financial Information Going Concern Uncertainty Debt Disclosure [Abstract] Promissory Note Receivable from Related Party Research and Development [Abstract] Software Related Party Transactions [Abstract] Settlement Amount Due Former Related Party Advances from Related Parties Equity [Abstract] Common Stock and Preferred Stock Transactions Subsequent Events [Abstract] Subsequent Events Schedule of Promissory Note Schedule of Software, Net Schedule of Expected Future Amortization Expense Schedule of Advances from Related Parties Common stock shares exchanged to ownership units Payment to related party debt Debt instrument, face amount Debt instrument, interest rate Debt instrument, default interest rate Debt instrument maturity date Balance of Cornerstone Note at December 31, 2017 Cornerstone payments to service providers relating to Frelii, Inc. business plan Cash payments received by Frelii, Inc. Balance at June 30, 2018 Estimated economic life of acquired software Software and intellectual property acquired from Christopher Dean pursuant to Tech Assignment Agreement on January 18, 2018 in exchange for 7,500,000 shares of Class B Common Stock (see Note 7). Accumulated amortization Software, net Common stock exchanged to acquire software and intellectual property 2018 2019 2020 2021 2022 2023 Total Number of monthly payments Debt periodic payments Number of future sales shares Settlement amount due to former related party Advances from related parties Exchange of debt Fair value of common stock issued for capitalized software Number of common stock issued for capitalized software Issuance of stock, price per share Purchase price of exchange note Debt converted to common stock, shares issued Employment agreement term Officers compensation Number of common stock issued for share based compensation Estimated fair value of common stock for share based compensation Number of shares returned/cancelled Treasury stock shares cancelled Number of common stock shares issued for services Sale of common stock, shares issued Cash proceeds from sale of common stock Sale of stock price per share Number of common shares issued, shares Issuance of common stock for services, shares Settled an outstanding debt Debt exchange for common stock shares Warrant term Warrant to purchase shares of common stock Number of assets purchase amount Number of assets purchases shares Christopher Dean [Member] Class B Common Stock One [Member] Class B Common Stock Two [Member] Common stock shares exchanged to ownership units. Cornerstone Medical Center LLC [Member] Cornerstone payments to service providers. Debt instrument, default interest rate. Employement agreement, term. Employment Agreements [Member] Exchange Note [Member] Exchange of debt Five Officers [Member] Total gain on cancellation of liabilities. Interest income on note receivable. Julia Kline [Member] Kline Law Group P.C. [Member] Promissory note receivable from related party [Text Block] Purchase price of exchange note. Secured Promissory Note [Member] Security Agreement [Member] Share Exchange Agreement [Member] Six Service Providers [Member] Two Directors [Member] Two Relatives of Chief Executive Officer [Member] Settlement with former related party. Settlement Amount Due Former Related Party [Table Text Block] Gregory Mongeon [Member] Separation and Release Agreement [Member] June 5, 2018 to January 5, 2020 [Member] Director One [Member] Director Two [Member] Asset Purchase Agreement [Member] Kingdom Life Sciences, LLC [Member] The net amount paid or received by the reporting entity associated with purchase (sale or collection) of note receivable arising from the financing of goods and services. Number of monthly payments. Dr. Hans Jenkins [Member] 6 Employees and Consultants [Member] 2018 Incentive Stock Option Plan [Member] Warrant term. Tech Assignment Agreement [Member] Assets, Current Assets Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Operating Expenses Operating Income (Loss) Interest Expense, Debt Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Income Tax Expense (Benefit) Increase (Decrease) in Accounts and Other Receivables Increase (Decrease) in Interest and Dividends Receivable Increase (Decrease) in Accounts Payable and Accrued Liabilities Increase (Decrease) in Due to Other Related Parties Net Cash Provided by (Used in) Operating Activities Payments to Acquire Notes Receivable Net Cash Provided by (Used in) Investing Activities Proceeds from Related Party Debt Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Finite-Lived Intangible Assets, Net EX-101.PRE 10 frli-20180630_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT v3.10.0.1
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2018
Aug. 08, 2018
Entity Registrant Name Frelii, Inc.  
Entity Central Index Key 0001223533  
Document Type 10-Q  
Document Period End Date Jun. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Trading Symbol FRLI  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2018  
Class B Common Stock [Member]    
Entity Common Stock, Shares Outstanding   38,511,107
Class A Common Stock [Member]    
Entity Common Stock, Shares Outstanding   0
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Current assets    
Cash and cash equivalents $ 50,483
Account receivable 3,291
Note receivable 24,124 340,640
Interest receivable 578 14,466
Total current assets 78,476 355,106
Software, less accumulated amortization of $20,966 at June 30, 2018 213,409
Total assets 291,885 355,106
Current liabilities    
Accounts payable and accrued liabilities 9,550 3,339
Accrued salaries and related expense 23,326
Settlement amount due former related party 126,654
Advances from former related parties 91,220 37,064
Total current liabilities 250,750 40,403
Total liabilities 250,750 40,403
Shareholders' equity (deficit)    
Additional paid in capital 6,177,206 3,430,239
Accumulated deficit (6,172,982) (3,125,977)
Total shareholders' equity (deficit) 41,135 314,703
Total liabilities and shareholders' equity (deficit) 291,885 355,106
Series A Preferred Stock [Member]    
Shareholders' equity (deficit)    
Preferred Stock value
Class B Common Stock [Member]    
Shareholders' equity (deficit)    
Common Stock value $ 36,911 $ 10,441
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets (Parenthetical) - USD ($)
Jun. 30, 2018
Dec. 31, 2017
Software, accumulated amortization $ 20,966  
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 20,000,000 20,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 2,000,000,000 2,000,000,000
Series A Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred Stock, shares issued 0 100
Preferred Stock, shares outstanding 0 100
Class B Common Stock [Member]    
Common stock, par value $ 0.001 $ 0.001
Common Stock, shares issued 36,911,107 10,441,107
Common Stock, shares outstanding 36,911,107 10,441,107
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.10.0.1
Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Income Statement [Abstract]        
Revenues $ 3,291 $ 3,741
Operating expenses        
Compensation (including stock-based compensation of $1,750,000, $0, $2,351,562, and $0, respectively) 1,903,709 2,631,269
Settlement with former related party 133,320 133,320
Marketing and advertising 118,496 143,096
Professional fees 14,625 26,500 51,481 51,500
Amortization of software 11,719 20,966
Other 45,305 4,632 73,875 5,761
Total operating expenses 2,227,174 31,132 3,054,007 57,261
Loss from operations (2,223,883) (31,132) (3,050,266) (57,261)
Other income (expenses)        
Gain on cancellation of liabilities 671,585
Interest income on note receivable 578 4,384 3,261 4,384
Interest expense on notes payable (25,933) (47,482)
Accretion expense (63,830) (63,830)
Change in fair value of embedded derivative 80,802 80,802
Total other income (expenses) net