NET SAVINGS LINK, INC.
(Unaudited)
| |
February 28,
2013
|
|
November 30,
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
$
|
10,049
|
|
$
|
18,131
|
|
Other current assets
|
|
2,926
|
|
|
4,037
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
12,975
|
|
|
22,168
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of $23,026 and
$19,887, respectively
|
|
14,646
|
|
|
17,785
|
|
Website development, net of accumulated amortization of $25,534 and
$21,605, respectively
|
|
53,031
|
|
|
56,960
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
|
80,652
|
|
$
|
96,913
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
52,290
|
|
$
|
48,281
|
|
Due to related parties
|
|
176,255
|
|
|
128,255
|
|
Derivative liabilities
|
|
27,488
|
|
|
54,062
|
|
Convertible notes payable, net of debt discount of $3,158 and $8,119,
respectively
|
|
62,942
|
|
|
132,581
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
318,975
|
|
|
363,179
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY(DEFICIT)
|
|
|
|
|
|
|
Series A Preferred Stock, $0.0001 par value, 1000,000,000 shares
authorized, 1,500,000 and 1,500,000 shares issued and outstanding,
respectively
|
|
15
|
|
|
15
|
|
Common stock, $0.001 par value, 1,000,000,000 shares authorized,
766,633,114 and 428,333,637 shares issued and outstanding, respectively
|
|
766,633
|
|
|
428,334
|
|
Additional paid-in capital
|
|
2,914,621
|
|
|
3,048,205
|
|
Accumulated deficit
|
|
(3,919,592)
|
|
|
(3,742,820)
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity (deficit)
|
|
(238,323)
|
|
|
(266,266)
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
$
|
80,652
|
|
$
|
96,913
|
The accompanying notes are an integral part of these unaudited financial statements.
NET SAVINGS LINK, INC.
(Unaudited)
| |
Three Months
Ended
February 28, 2013
|
|
Three Months
Ended
February 29, 2012
|
|
|
|
|
|
|
|
|
REVENUES
|
$
|
6,066
|
|
$
|
17,019
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
Depreciation and amortization
|
|
7,068
|
|
|
7,068
|
|
General and administrative
|
|
68,753
|
|
|
234,487
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
75,821
|
|
|
241,555
|
|
|
|
|
|
|
|
|
OPERATING LOSS
|
|
(69,755)
|
|
|
(224,536)
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
Loss on derivative
|
|
(48,458)
|
|
|
-
|
|
Interest expense
|
|
(58,559)
|
|
|
(1,287)
|
|
|
|
|
|
|
|
|
Total Other Income (Expense)
|
|
(107,017)
|
|
|
(1,287)
|
|
|
|
|
|
|
|
|
NET LOSS
|
$
|
(176,772)
|
|
$
|
(225,823)
|
|
|
|
|
|
|
|
|
BASIC NET LOSS PER COMMON SHARE
|
$
|
(0.00)
|
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
BASIC WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
|
|
575,443,855
|
|
|
200,784,568
|
The accompanying notes are an integral part of these unaudited financial statements.
NET SAVINGS LINK, INC.
(Unaudited)
| |
Three Months
Ended
February 28, 2013
|
|
Three Months
Ended
February 29, 2012
|
| |
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
| |
|
|
|
|
|
|
Net loss
|
$
|
(176,772)
|
|
$
|
(225,823)
|
|
Items to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
7,068
|
|
|
7,068
|
|
Debt discount amortization
|
|
54,961
|
|
|
-
|
|
Debt offering cost amortization
|
|
1,171
|
|
|
548
|
|
Loss on derivative
|
|
48,458
|
|
|
-
|
|
Common stock issued for services
|
|
-
|
|
|
66,000
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
(Increase) decrease in other assets
|
|
(61)
|
|
|
-
|
|
Increase in accounts payable and accrued liabilities
|
|
9,093
|
|
|
4,514
|
|
Increase (decrease) in related party accounts payable
|
|
48,000
|
|
|
15,550
|
|
Net Cash Used in Operating Activities
|
|
(8,082)
|
|
|
(132,143)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
| |
|
|
|
|
|
|
Proceeds from convertible notes payable
|
|
-
|
|
|
85,000
|
|
Cash paid for debt offering costs
|
|
-
|
|
|
(5,000)
|
|
Net Cash Provided by Financing Activities
|
|
-
|
|
|
80,000
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
|
|
(8,082)
|
|
|
(52,143)
|
|
|
|
|
|
|
|
|
CASH AT BEGINNING OF PERIOD
|
|
18,131
|
|
|
174,923
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD
|
$
|
10,049
|
|
$
|
122,780
|
|
|
|
|
|
|
|
|
CASH PAID FOR:
|
|
|
|
|
|
|
Interest
|
$
|
-
|
|
$
|
-
|
|
Income taxes
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
NON-CASH FINANCING ACTIVITIES:
|
|
|
|
|
|
| |
|
|
|
|
|
|
Common stock issued for convertible notes and accrued interest
|
$
|
79,684
|
|
$
|
-
|
|
Discount on convertible notes payable from derivative instrument
|
$
|
50,000
|
|
$
|
-
|
|
Settlement of derivative liability to additional paid-in capital
|
$
|
125,032
|
|
$
|
-
|
The accompanying notes are an integral part of these unaudited financial statements.
NET SAVINGS LINK, INC.
Notes to the Unaudited Financial Statements
1. Nature of Operations and Continuance of Business
The unaudited interim financial statements included herein have been prepared by Net Savings Link, Inc. (“NSL” or the “Company”) in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. We suggest that these interim financial statements be read in conjunction with the audited financial statements and notes thereto included in our Form 10-K for the year ended November 30, 2012, as filed with the SEC. We believe that all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein and that the disclosures made are adequate to make the information not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year as reported in Form 10-K have been omitted.
2. Going Concern
NSL’s financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, NSL has generated minimal revenue and accumulated significant losses since inception. As of February 28, 2013, company has accumulated deficit of $3,919,592 and a working capital deficit of $306,000. All of these items raise substantial doubt about its ability to continue as a going concern. Management’s plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the NSL’s ability to continue as a going concern are as follows:
In order to fund the start-up of operations during the year ended November 30, 2012, NSL entered into several financing transactions and NSL plans to continue to try to raise funds in fiscal 2013. The continuation of NSL as a going concern is dependent upon its ability to generating profitable operations that produce positive cash flows. If NSL is not successful, it may be forced to raise additional debt or equity financing.
There can be no assurance that NSL will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of NSL to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
3. Related Party Transactions
As of February 28, 2013 and November 30, 2012, the Company owed $74,828 and $50,828, respectively, to the President and CEO of the Company for back due wages.
As of February 28, 2013 and November 30, 2012, the Company owed $101,427 and $77,427, respectively, to the Vice President and director of the Company for back due wages.
4. Convertible Promissory Notes Payable
During the three months ended February 28, 2013, holders of three Convertible Promissory Notes elected to convert a total of $74,600 in principal and $5,084 in interest into 338,299,477 shares of the Company’s common stock at an average conversion price of $0.0002 per share.
5. Derivative Liabilities
NSL analyzed the conversion options embedded in the Convertible Promissory Notes for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instruments embedded in the above referenced convertible promissory notes should be classified as liabilities and recorded at fair value due to their being no explicit limit to the number of shares to be delivered upon settlement of the conversion options. Additionally, the above referenced convertible promissory notes contain dilutive issuance clauses. Under these clauses, based on future issuances of NSL’s common stock or other convertible instruments, the conversion price of the above referenced convertible promissory notes can be adjusted downward. Because the number of shares to be issued upon settlement of the above referenced convertible promissory notes cannot be determined under this instrument, NSL cannot determine whether it will have sufficient authorized shares at a given date to settle any other future share instruments.
During the three months ended February 28, 2013, a Convertible Promissory Note became convertible into shares of the Company’s common stock. The fair value of the conversion option was determined to be $64,739 using a Black-Scholes option-pricing model. Upon the date the Convertible Promissory Notes became convertible, $50,000 was recorded as debt discount, $64,739 was recorded as day one derivative liability and $14,739 was recorded as day one loss on derivative liability.
During the three months ended February 28, 2013, $74,600 in principal amounts of Convertible Promissory Notes were converted into common stock (see Notes 4 and 6), $125,032 in related derivative liability was extinguished through a charge to paid-in capital and $33,179 was recorded as a net loss on mark-to-market of the conversion options and warrants.
The following table summarizes the derivative liabilities included in the balance sheet at February 28, 2013:
|
Derivative liabilities November 30, 2012
|
$
|
54,062
|
|
Addition of new derivative
|
|
64,739
|
|
Reclassification of derivative liability to additional paid-in capital due to
promissory note conversions
|
|
(125,032)
|
|
Losses on change in fair value
|
|
33,719
|
|
Balance at February 28, 2013
|
$
|
27,488
|
The following table summarizes the loss on derivative liabilities included in the income statement for the three months ended February 28, 2013:
|
Excess of fair value of conversion option derivative liabilities over the related
notes payable
|
$
|
14,739
|
|
Losses on change in fair value
|
|
33,719
|
|
Loss on derivative liabilities
|
$
|
48,458
|
NSL valued its derivatives liabilities using the Black-Scholes option-pricing model. Assumptions used during the three months ended February 28, 2013 include (1) risk-free interest rates between 0.11% to 1.06%, (2) lives of between 0 and 6 years, (3) expected volatility of between 74% to 837%, (4) zero expected dividends, (5) conversion prices as set forth in the related instruments, and (6) the common stock price of the underlying share on the valuation dates.
6. Common Stock
On December 12, 2012, the Company issued 39,726,443 shares of common stock for $3,585 of debt and $2,970 of accrued interest, or $0.0002 per share.
On January 7, 2013, the Company issued 10,689,655 shares of common stock for $3,100 of debt, or $0.0003 per share.
On January 10, 2013, the Company issued 23,103,447 shares of common stock for $5,200 of debt and $1,500 of accrued interest, or $0.0003 per share.
On January 13, 2013, the Company issued 42,301,121 shares of common stock for $11,315 of debt and $318 of accrued interest, or $0.0003 per share.
On January 15, 2013, the Company issued 23,793,103 shares of common stock for $6,900 of debt, or $0.0003 per share.
On January 16, 2013, the Company issued 53,853,730 shares of common stock for $16,225 of debt and $66 of accrued interest, or $0.0003 per share.
On January 29, 2013, the Company issued 53,893,213 shares of common stock for $11,725 of debt and $132 of accrued interest, or $0.0002 per share.
On January 30, 2013, the Company issued 23,478,261 shares of common stock for $5,400 of debt, or $0.0002 per share.
On February 13, 2013, the Company issued 43,931,092 shares of common stock for $7,150 of debt and $98 of accrued interest, or $0.0002 per share.
On February 20, 2013, the Company issued 23,529,412 shares of common stock for $4,000 of debt, or $0.0002 per share.
7. Financial Instruments
ASC 820, Fair Value Measurements (ASC 820) and ASC 825, Financial Instruments (ASC 825), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
NSL’s financial instruments consist principally of cash, accounts payable, and accrued liabilities. Pursuant to ASC 820 and 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on February 28, 2013:
| |
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
None
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
$
|
-
|
$
|
-
|
$
|
27,488
|
$
|
27,488
|
The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on November 30, 2012:
| |
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
None
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
$
|
-
|
$
|
-
|
$
|
54,062
|
$
|
54,062
|
8. Subsequent Events
Convertible Notes Payable
On March 8, 2013, the Company received funding from an Unsecured Convertible Promissory Note in the amount of $42,500. The Convertible Promissory Note is unsecured, due November 4, 2013, accrued interest at 8% per annum and is convertible, at the option of the holder, into shares of the Company’s common stock after 180 days from issuance at forty one percent (41%) of the fair market value of one share of the Company’s common stock based on the average of the three lowest bid prices of the Company’s common stock during the ten trading days prior to the conversion date.
On April 8, 2013, the Company received funding from a Unsecured Convertible Promissory Note in the amount of $10,900. The Convertible Promissory Note is unsecured, due January 10, 2014 accrued interest at 8% per annum and is convertible, at the option of the holder, into shares of the Company’s common stock after 180 days from issuance at thirty five percent (35%) of the fair market value of one share of the Company’s common stock based on the average of the two lowest bid prices of the Company’s common stock during the ninety trading days prior to the conversion date.
Due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options embedded in the Convertible Promissory Notes, the conversation options, once available, will be deemed and classified as derivative liabilities and recorded at fair value.
Common Stock
During March 2013, the Company issued 38,235,294 shares of common stock for conversion of $6,500 of a Convertible Promissory Note, or $0.00017 per share.
During April 2013, the Company issued 37,500,000 shares of common stock for conversion of $4,500 of a Convertible Promissory Note, or $0.00012 per share,
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
FORWARD-LOOKING STATEMENTS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
Working Capital
|
|
|
February 28,
|
|
November 30,
|
|
|
|
2013
|
|
2012
|
|
Current Assets
|
$
|
12,975
|
$
|
22,168
|
|
Current Liabilities
|
|
318,975
|
|
363,179
|
|
Working Capital (Deficit)
|
$
|
(306,000)
|
$
|
(341,011)
|
Cash Flows
|
|
|
Three months ended
|
|
Three months ended
|
|
|
|
February 28, 2013
|
|
February 29, 2012
|
|
Cash Flows Used in Operating Activities
|
$
|
(8,082)
|
$
|
(132,143)
|
|
Cash Flows Used in Investing Activities
|
|
-
|
|
-
|
|
Cash Flows Provided by Financing Activities
|
|
-
|
|
80,000
|
|
Net Increase (Decrease) in Cash During Period
|
$
|
(8,082)
|
$
|
(52,143)
|
Balance Sheet
As at February 28, 2013, the Company had total assets of $80,652 compared with total assets of $96,913 as at November 30, 2012. The assets are mainly comprised of cash balances in the Company’s bank account and website development costs.
The Company had total liabilities of $318,975 at February 28, 2013 compared with $363,179 as at November 30, 2012. The decrease in total liabilities is mainly attributed to the conversion of $74,600 in convertible promissory notes, partially offset by a $48,000 increase in accrued wages.
Operating Revenues
During the three months ended February 28, 2013, the Company received $6,066 in revenue, compared to $17,019 of revenue in the same period ended February 29, 2012.
Operating Expenses
During the three months ended February 28, 2013, the Company incurred operating expenses totaling $75,820 compared with $241,555 for the three months ended February 29, 2012. The decrease in operating expenses is mainly attributed to a decrease in expense from the issuance of common stock for services of $66,000, a reduction of website related maintenance expense of approximately $27,480 and a reduction in advertising and promotional expense of approximately $26,000, as well as a reduction in overall operating activity as the Company seeks to minimize expenditures.
Net Loss
During the three months ended February 28, 2013, the Company realized net loss of $176,772 compared with a net loss of $225,823 for the three months ended February 29, 2012. The decrease in net loss was primarily due to a decrease in operational costs as discussed above; partially offset by increases of approximately $48,500 in losses on derivative and $57,200 in interest expense for the three months ended February 28, 2013 compared to the three months ended February 29, 2012.
Liquidity and Capital Resources
As at February 28, 2013, the Company had a cash balance of $10,049 and a working capital deficit of $306,000 compared with a cash balance of $18,131 and working capital deficit of $341,011at November 30, 2012. The increase in working capital is mainly due to a decrease in total liabilities as a result of the conversion of $74,600 in convertible promissory notes during the three months ended February 28, 2013, partially offset by an approximately $8,000 decrease in cash and $48,000 increase in accrued wages during the three months ended February 28, 2013.
Cash Flows from Operating Activities
During the three months ended February 28, 2013, the Company used $8,082 of cash flow from operating activities compared with use of $132,143 of cash flow during the three months ended February 29, 2012. The decrease in the use of cash flow for operating activities is mainly due to a reduction of net loss of approximately $49,000 as a result of decreases in spending on promotion and website maintenance and operating expenses during the three months ended February 28, 2013, compared to the three months ended February 29, 2012.
Cash Flows from Investing Activity
The Company did not have any investing activities during the three month periods ending February 29, 2012 and February 28, 2011.
Cash Flows from Financing Activities
The Company did not have any financing activities during the three months ended February 28, 2013. During the three months ended February 29, 2012, the Company received proceeds of $85,000 from two convertible promissory notes payable, which were unsecured, convertible into the common stock of the Company, due interest at 8% per annum and have maturity dates approximately nine months from the dates of issuance.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have no significant 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 are material to stockholders.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective because procedures were not in place to provide for timely, complete, accurate reporting of events. The foregoing was a result of our president’s lack of experience with his reporting and disclosure obligations lack of proper segregation of duties due to limited personnel, and a lack of formal review process that includes multiple levels of review, resulting in audit adjustments related to the derivative liability account, accounting of the Company’s convertible debt instuments and conversions and bad debt. Our president is committed to educating himself through the seminars and consulting with attorneys to become fully knowledgeable with his obligations. In addition, currently there are no written policies or procedures that clearly define the roles in the disclosure and reporting process.
There were no changes in our internal control over financial reporting during the quarter ended February 28, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.