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EX-32 - EXHIBIT 32 - BRIGHTLANE CORP.brightlaneex32.htm
EX-31 - EXHIBIT 31 - BRIGHTLANE CORP.brightlaneex31.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


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

For the quarterly period ended: September 30, 2016


or


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


For the transition period from _________to ________


Commission File Number:   000-54027


BRIGHTLANE CORP.

(Exact name of registrant as specified in its charter)


Nevada

 

30-0782905

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)


3270 Sul Ross, Houston, Texas 77098

(Address of principal executive offices) (Zip Code)


(888) 468-2856

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]   No [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [  ]   No [X]

 

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 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]

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]   No [ X ]

 

As of November 14, 2016, the registrant had 18,923,005 shares of common stock outstanding.





1




TABLE OF CONTENTS

 

 

Page

PART I

 

Item 1. Financial Statements

3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3. Quantitative and Qualitative Disclosures About Market Risk

16

Item 4. Controls and Procedures

16

 

 

PART II

 

Item 1. Legal Proceedings

18

Item 1A. Risk Factors

18

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

18

Item 3. Defaults Upon Senior Securities

18

Item 4. Mine Safety Disclosures

18

Item 5. Other Information

18

Item 6. Exhibits

18

 

 

SIGNATURES

19

 




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Table of Contents

PART I

Item 1.  Financial Statements.

BRIGHTLANE CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

September 30,

2016

 

December 31,

2015

ASSETS

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

Cash and cash equivalents

$

298,166

$

215,881

Total Current Assets

 

298,166

 

215,881

 

 

 

 

 

Investment in non-consolidated subsidiary

 

3,085,521

 

3,085,521

Real estate acquired

 

117,900

 

-

Equipment, net

 

883

 

183

 

 

 

 

 

          TOTAL ASSETS

$

3,502,470

$

3,301,585

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable

$

14,690

$

9,518

Accrued expenses

 

15,000

 

15,000

Accrued interest

 

21,405

 

2,118

Demand note payable

 

50,000

 

60,723

Total Current Liabilities

 

101,095

 

87,359

 

 

 

 

 

Convertible note payable - related party

 

694,200

 

250,000

 

 

 

 

 

          TOTAL LIABILITIES

 

795,295

 

337,359

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

Series A Preferred Voting Stock, $0.001 par value, 1 share

 

 

 

 

     authorized, 1 share issued and outstanding

 

-

 

-

Series B Preferred Voting Stock, $0.001 par value, 1 share

 

 

 

 

     authorized, 1 share issued and outstanding

 

-

 

-

Common stock, $0.001 par value, 250,000,000 shares authorized,

 

 

 

 

     18,923,005 shares issued and outstanding at

 

 

 

 

     September 30, 2016 and December 31, 2015

 

18,923

 

18,923

Additional paid in capital

 

4,224,091

 

4,224,091

Accumulated deficit

 

(1,535,839)

 

(1,278,788)

TOTAL STOCKHOLDERS' EQUITY

 

2,707,175

 

2,964,226

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$

3,502,470

$

3,301,585


 The accompanying notes to the unaudited condensed financial statements are an integral part of these statements.

 



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Table of Contents


BRIGHTLANE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three Months Ended September 30,

Nine Months Ended

September 30,

 

 

2016

2015

2016

2015

REVENUE

$

72,484

$

-

$

72,484

$

-

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Selling, general and administrative

 

122,367

 

18,198

 

306,973

 

26,319

 

 

 

 

 

 

 

 

 

NET OPERATING LOSS

 

(49,883)

 

(18,198)

 

(234,489)

 

(26,319)

 

 

 

 

 

 

 

 

 

OTHER EXPENSES

 

 

 

 

 

 

 

 

Interest expense – related party

 

10,225

 

-

 

19,501

 

-

Interest expense – other

 

1,000

 

 

 

3,061

 

 

Extinguishing of accounts payable

 

-

 

(26,752)

 

-

 

(27,652)

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

 

(61,108)

 

8,554

 

(257,051)

 

1,333

 

 

 

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

 

-

 

-

 

0

 

-

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

(61,108)

$

8,554

$

(257,051)

$

1,333

 

 

 

 

 

 

 

 

 

Net Loss Per Share: Basic and Diluted

$

(0.01)

$

(0.00)

$

(0.01)

$

(0.00)

 

 

 

 

 

 

 

 

 

Weighted Average Number of Shares Outstanding: Basic and Diluted

 

18,923,005

 

6,923,005

 

18,923,005

 

6,923,005


 

 The accompanying notes to the unaudited condensed financial statements are an integral part of these statements.

 






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Table of Contents

BRIGHTLANE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Nine Months Ended

September 30,

 

2016

2015

OPERATING ACTIVITIES

 

 

Net income (loss)

$

(257,051)

$

1,333

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

 

 

 

 

     Depreciation expense

 

-

 

484

     Loss on asset abandonment

 

-

 

183

Changes in Assets and Liabilities

 

 

 

 

     Accounts payable

 

5,172

 

(42,723)

     Accrued expenses

 

-

 

(20,000)

     Accrued interest

 

19,287

 

-

     Real estate acquired

 

(117,900)

 

-

NET CASH USED IN OPERATING ACTIVITIES

 

(350,492)

 

(60,723)

 

 

 

 

-

INVESTING ACTIVITIES

 

 

 

 

     Purchase of equipment

 

(700)

 

-

NET CASH USED IN INVESTING ACTIVITIES

 

(700)

 

-

 

 

 

 

 

FINANCING ACTIVITES

 

 

 

 

     Proceeds received from related party note

 

444,200

 

60,723

     Repayment of demand note payable

 

(10,723)

 

-

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

433,477

 

60,723

 

 

 

 

 

NET CHANGE IN CASH

 

82,285

 

-

 

 

 

 

 

Cash and Cash Equivalents – Beginning of Period

 

215,881

 

-

 

 

 

 

 

Cash and Cash Equivalents – End of Period

$

298,166

$

-

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

Cash paid for interest

$

3,275

$

-

Cash paid for income taxes

$

-

$

-



 The accompanying notes to the unaudited condensed financial statements are an integral part of these statements.

 

 




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Table of Contents

BRIGHTLANE CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

(UNAUDITED)



NOTE 1 – ORGANIZATION AND BUSINESS

 

Brightlane Corp. (“we”, “our”, “us”, the “Company” or the “Registrant”) was initially incorporated under the laws of the State of Delaware in December 2006 under the name “Cold Gin Corporation.” On December 27, 2010, in connection with an Agreement and Plan of Reorganization we changed our domicile from Delaware to Nevada, our name to Bonanza Gold Corp.  In the third quarter of 2015, Brightlane Acquisition Corp. acquired a controlling interest in the Company from existing shareholders.  This change of control began the transitioning to a lease-to-own real estate company.  In connection with this transition, effective September 22, 2015 we changed our name to Brightlane Corp.


Our business model is oriented around acquiring single family homes and portfolios of single family homes and then lease-to-own the properties whereby the lessees will eventually own the home if they so choose.  Once the tenants fulfill their obligations under the contract, we will deliver the deed to the lessees.  We will actively pursue the acquisition of these types of homes through the purchase of bank REOs, portfolios and other methods of acquisition.  


On December 21, 2015, we completed the agreement to acquire all of the outstanding shares of Brightlane Homes, Inc. which through its wholly owned subsidiary acquired a 99.9% limited partner interest in Brightlane RECA LP which is the beneficiary of the Brightlane RECA Trust which owns a portfolio of assets here in referred to as the Brightlane RECA portfolio.  The Brightlane RECA portfolio consists of approximately 350 income-producing owner-financed and purchase money notes related to 350 single-family homes.  The underlying homes are geographically dispersed across the Great Lakes, Upper Midwest, Ohio Valley, Midwest and Southeast regions of the U.S. and are held in a statutory trust known as Brightlane RECA Trust for which Brightlane RECA LP is the sole beneficiary. The largest concentrations are in the Southeast, particularly in South Carolina and North Carolina.  In addition to these income-producing owner-financed and purchase money notes, there are additional REO properties in the portfolio.


In May 2016, we incorporated a wholly-owned subsidiary BrightLife Management.  This operation is handling the management of newly acquired homes and begin the process of vertically integrating property management services.  In the long-term this will allow us to:  (1) manage our own assets; and (2) transition assets currently managed by third parties into our integrated operations.  Both of these scenarios will have a positive impact on profitability.  We have begun investing in the appropriate software assets and personnel to effectively operate this new addition and enhancement to our operations, and have begun generating income this quarter.


NOTE 2 – GOING CONCERN


The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company only generated minimal revenues since inception and has an accumulated deficit of $1,535,839 as of September 30, 2016. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company’s continuation as a going concern is dependent upon, among other things, its ability to generate revenues and its ability to obtain capital from third parties.  No assurance can be given that the Company will be successful in these efforts.



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Table of Contents

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2016 and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Form 10-K for the year ended December 31, 2015 filed with the SEC on April 14, 2016.


Use of 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.


Cash and Cash Equivalents


The Company accounts for cash and cash equivalents under FASB ASC 305, “Cash and Cash Equivalents”, and considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.  


Convertible Instruments

 

The Company evaluates and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”.

 

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

 

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.



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Table of Contents

Income Taxes


The Company accounts for income taxes under ASC 740 Income Taxes.  Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs.  A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.  No deferred tax assets or liabilities were recognized at September 30, 2016 and December 31, 2015.


Financial Instruments


The Company’s balance sheet includes certain financial instruments: primarily accounts payable, accruals and debt obligations. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.


ASC 820, “Fair Value Measurements and Disclosures,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


     Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities

 

     Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

     Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.


The Company does not have any assets or liabilities measured at fair value on a recurring basis.




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Table of Contents

Investments in non-consolidated subsidiaries


Investments in non-consolidated entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company's ability to exercise significant influence over the operating and financial policies of the investee. When the equity method is used, investments are recorded at original cost and adjusted periodically to recognize the Company's proportionate share of the investees' net income or losses after the date of investment. When net losses from an investment accounted for under the equity method exceed its carrying amount, the investment balance is reduced to zero and additional losses are not provided for. The Company resumes accounting for the investment under the equity method if the entity subsequently reports net income and the Company's share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred.


Long-lived Assets  


Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.


Related Parties


The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.  


Stock-Based Compensation


FASB ASC 718 “Compensation – Stock Compensation,” prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights, may be classified as either equity or liabilities. The Company determines if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.


The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “Equity – Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.




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Recently Issued Accounting Pronouncements


We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.


Revenue Recognition

 

The Company’s revenue is currently from property management services. The Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. We record revenue when persuasive evidence of an arrangement exists, the services have been performed, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured.


NOTE 4 – INVESTMENT IN NON-CONSOLIDATED SUBSIDIARY


On December 21, 2015, we completed an agreement to acquire all of the outstanding shares of Brightlane Homes, Inc. which through its wholly owned subsidiary had previously acquired a 99.9% limited partner interest in Brightlane RECA LP which is the beneficiary of the Brightlane RECA Trust which owns a portfolio of assets here in referred to as the Brightlane RECA portfolio.  The Brightlane RECA portfolio consists of approximately 350 income-producing owner-financed and purchase money notes related to 350 single-family homes and real estate properties owned.  The Company is accounting for its investment under the equity method of accounting due to the Company not maintaining control of Brightlane RECA, LP, which full control remains with the general partner, but having significant influence through its 99.99% limited partner interest. The consideration for the acquisition was 12,000,000 shares of common stock. The cost of the acquisition was determined according to ASC 845 Nonmonetary Transactions, whereby the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered or received, whichever is more clearly evident. The Company has determined that due to the inactive trading market of its common stock surrendered, the fair value of the asset received were more clearly evident.  The transaction was valued at the underlying value of the assets in the Brightlane RECA portfolio, net of the associated debt.


The Company determined the value to be the fair value of the unpaid principal balance of the individual purchase money notes and the fair value of the real estate owned, net of an underlying “defined” debt (which is defined in the original contribution agreement).  The fair value of the purchase money notes and real estate owned was $8,885,152 and the balance of the defined debt was $5,799,631 (resulting in a net value of $3,085,521) at the acquisition date of December 21, 2015.  According to the limited partner agreement, the general partner will recognize all income and receive all net cash flow from the Brightlane portfolio. Upon the company investing additional capital into Brightlane RECA LP, which will be used to pay the defined debt, the general partner will transfer 90% of its general partner interest to the Company.


NOTE 5 – NOTES PAYABLE


On September 30, 2015 the Company borrowed $60,723 from a third party.  The note bears interest at 8% and is payable on demand. Interest is paid quarterly. The note is convertible into common stock of the Company at $0.50 per share.  On January 28, 2016, the Company made a principal payment of $10,723, bringing the outstanding principal to $50,000 on this note.  Interest expense incurred during the six months ended September 30, 2016 was $3,061.




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NOTE 6 – RELATED PARTY TRANSACTIONS


On December 9, 2015, we entered into a subscription agreement to sell one unit consisting of a $250,000 promissory note, one share of Series A Preferred Voting Stock and one share of Series B Preferred Voting Stock to an accredited investor in exchange for $250,000 and the investor’s agreement to utilize its best efforts to cause a capital injection of up to $3,000,000.00 into the Company on or before January 1, 2017.  The promissory note carries an interest rate of 6% per annum with a maturity date of December 9, 2018.  The lender may convert into shares of our common stock after one year, at $0.50 per share.  In addition, the lender has the option of accruing interest or receiving interest only payment annually. Interest expense for this note for the nine and three months ended September 30, 2016 was $11,250 and $3,750 respectively.


On March 24, 2016, we received an additional $110,000 in capital from the aforementioned related party as an advance on the commitments this related party has to us.  We are carrying this additional note at the same terms in which prior note was receive from this related party (an interest rate of 6% per annum with a three-year maturity date).  The lender has the option of accruing interest or receiving interest only payments annually.  Interest expense for this note for the nine and three months ended September 30, 2016 was $3,426 and $1,650 respectively.


On July 27, 2016, we received an additional $499,200 in capital from the aforementioned related party as an advance on the commitments this related party has to us.  We are carrying this additional note at the same terms in which prior note was receive from this related party (an interest rate of 6% per annum with a three-year maturity date).  The lender has the option of accruing interest or receiving interest only payments annually.  During the three month ended September 30, 2016, we repaid a total of $165,000 to the related party.  Interest expense for this note for the nine and three months ended September 30, 2016 was $4,825 and $0 respectively.


NOTE 7– SHAREHOLDERS’ EQUITY


Common Stock


The Company has 250,000,000 authorized common shares with a par value of $0.001 per share.  Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.


The Company issued 12,000,000 shares of common stock for the acquisition of Brightlane Homes, Inc. on December 21, 2015.


There were 18,923,005 common shares issued and outstanding at September 30, 2016 and at December 31, 2015.


Preferred Stock


Currently we have two types of Preferred Stock: (1) Series A Preferred Voting Stock, and (2) Series B Preferred Voting Stock.  There is one (1) share of Series A Preferred Voting Stock, and one (1) share of Series B Preferred Voting Stock issued and outstanding as of the date of this report.  The series designations of rights and preferences are synopsized below.




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Series A Preferred Voting Stock.  With respect to all meetings of the shareholders of the Company at which the holders of the Company’s Common Stock, par value $0.001 per share, are entitled to vote (each, a “Shareholders Meeting”) and with respect to any written consents sought by the Company from the holders of the Common Stock (each, a “Shareholder Consent”), the holder of the share of Series A Preferred Voting Stock shall vote together with all the holders of the Common Stock and any other voting preferred stock issued and outstanding, and holders of the issued Series A Preferred Voting Stock shall be entitled to cast on such matters a number of votes equal to 20,000,000 common shares.


Series B Preferred Voting Stock  With respect to all meetings of the shareholders of the Company at which the holders of the Company’s Common Stock, par value $0.001 per share, are entitled to vote (each, a “Shareholders Meeting”) and with respect to any written consents sought by the Company from the holders of the Common Stock (each, a “Shareholder Consent”), the holder of the share of Series B Preferred Voting Stock shall vote together with all the holders of the Common Stock and any other voting preferred stock issued and outstanding, and holders of the issued Series B Preferred Voting Stock shall be entitled to cast on such matters a number of votes equal to 20,000,000 common shares.


The original holder, Brightlane Acquisition Corp, of the Series A Preferred Voting Stock and Series B Preferred Voting Stock have commitments to the Company to include a loan to the Company on a convertible promissory note dated December 9, 2015 in the amount of $250,000 and to facilitate on a best efforts basis the injection of additional monies to be utilized by the Company in an amount of not less than $3 million prior to January 1, 2017, and the Series A Preferred Voting Stock share be automatically cancelled under the following provisions:

(i)

Upon conversion of the $250,000 convertible promissory note dated December 9, 2015.

(ii)

Upon repayment of the $250,000 convertible promissory note dated December 9, 2015.

(iii)

If the Company is not in receipt of a capital injection of $3 million provided by or facilitated by the holder, or its assignee, of the Series A Preferred Voting Stock or the Series B Preferred Voting Stock on or before January 1, 2017.


Warrants issued in connection with sale of common shares


On July 14, 2015, the Company’s Board of Directors, not subject to stockholder approval, approved the Amendment and Restatement of Outstanding Warrants.  The amendments extended the expiry date for a period of one year and added a provision for cashless exercise.


The following table shows the Company's warrants that have been amended and remain outstanding:


 

Issue Date

Expiration Date

Number of Warrants

Remaining Life
(in Years)

Amended and restated warrant certificate No. 1104

12/3/2012

12/2/2016

 

225,000

 

0.17

Amended and restated warrant certificate No. 1006

5/13/2013

5/12/2017

 

175,000

 

0.61

Amended and restated warrant certificate No. 1006

5/14/2013

5/13/2017

 

225,000

 

0.62

Amended and restated warrant certificate No. 1006

7/25/2013

7/24/2017

 

225,000

 

0.81

Amended and restated warrant certificate No. 1105

1/9/2014

1/8/2018

 

175,000

 

1.27

 

 

 

 

1,025,000

 

 

 


As of September 30, 2016, the Company had issued 1,025,000 warrants that are exercisable at $1.25 per warrant for one share of common stock and remain outstanding, with a weighted average remaining life of 0.57 years.  The Holder of any warrant may not exercise any portion of the Warrant if such exercise will cause it to own more than 4.99 percent of the Company’s issued and outstanding common stock.




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Table of Contents

Summary of warrant activities


The following table summarizes information concerning outstanding and exercisable warrants as of September 30, 2016:


 

 

 

 

 

 

 

 

Warrants Outstanding

Warrants Exercisable

Range of exercise prices

Number outstanding

Average remaining life (in years)

Exercise price

Number outstanding

Average remaining life (in years)

Weighted average exercise price

 

 

 

 

 

 

 

$1.25

1,025,000

0.57

$1.25

1,025,000

0.57

$1.25


NOTE 8 – SUBSEQUENT EVENTS


Management has evaluated subsequent events through the date the financial statements were issued.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

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Table of Contents

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.


The following analysis of our financial condition and results of operations for the period January 1, 2016 through September 30, 2016 should be read in conjunction with the financial statements, including footnotes, and other information presented elsewhere in this Report on Form 10-Q and the risk factors and the financial statements for the year ended December 31, 2015 and the other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission on April 14, 2016.  In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Where possible, we have tried to identify these forward looking statements by using words such as “anticipate,” “believe,” “intends,” or similar expressions. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2016.


Working Capital


 

 

September 30, 2016

 

 

December 31, 2015

 

Current Assets

 

$

298,166

 

 

$

215,881

 

Current Liabilities

 

$

101,095

 

 

$

87,359

 

Working Capital

 

$

197,071

 

 

$

128,522

 


Cash Flows

  

 

Nine Months Ended

September 30,

 

 

 

2016

 

 

2015

 

Cash Flows used in Operating Activities

 

$

(350,492)

 

 

$

(60,723)

 

Cash Flows used in Investing Activities

 

$

(700)

 

 

$

-

 

Cash Flows from Financing Activities

 

$

433,477

 

 

$

60,723

 

Net change in Cash During Period

 

$

82,285

 

 

$

0

 



Results of Operations for the three months ended September 30, 2016 and 2015


For the three months ended September 30, 2016 and 2015, total revenues were $72,484 and $0 respectively, with a net loss of $61,108 and a net income of $8,554 respectively.  The revenues for the period ended September 30, 2016 were as a result of the sale of a residential asset as well as the initial revenues from management fees generated by the newly formed Brightlife Management subsidiary.  The net losses were attributable to operating expenses of $122,367 and interest expenses of $11,225 for the three months ended September 30, 2016 as compared to a net income of $8,554 which was a result of other income from the extinguishing of certain accounts payable during the same period in 2015.  The net losses were attributable to operating and interest expenses and that primarily constituted expenses related to the reformulation of the Company’s business model into a lease-to-own real estate model.  The operating expenses for the period ended September 30, 2016 were primarily general and administrative in nature and included legal fees, management and consulting fees, and audit and accounting fees as well as funds utilized to acquire new homes.




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Table of Contents

Results of Operations for the nine months ended September 30, 2016 and 2015


For the nine months ended September 30, 2016 and 2015, total revenues were $72,484 and $0 respectively, with a net loss of $257,051 and a net income of $1,333 respectively.  The revenues for the period ended September 30, 2016 were as a result of the sale of a residential asset as well as the initial revenues from management fees generated by the newly formed Brightlife Management subsidiary.  The net losses were attributable to operating expenses of $306,973 and interest expenses of $22,562 for the nine months ended September 30, 2016 as compared to operating expenses of $26,319 offset by other income of $27,652 from the extinguishing of certain accounts payable during the same period in 2015.  The net losses were attributable to operating and interest expenses and that primarily constituted expenses related to the reformulation of the Company’s business model into a lease-to-own real estate model.  The operating expenses for the period ended September 30, 2016 were primarily general and administrative in nature and included legal fees, management and consulting fees, and audit and accounting fees as well as funds utilized to acquire new homes.


Liquidity and Capital Resources


Liquidity

At September 30, 2016, we had cash and cash equivalents of $298,166 and had working capital of $197,071.


For the nine months ended September 30, 2016, we recorded a net loss of $257,051.  We had a positive change of $5,172 due to accounts payable, a positive change of $19,287 due to accrued interest, and a negative change of $117,900 due to the acquisition of real estate consisting of five homes.  As a result, we had net cash used in operating activities of $350,492 for the nine months ended September 30, 2016.


For the nine months ended September 30, 2015, we recorded a net income of $1,333.  We had an adjustment of $484 due to depreciation expenses, and abandoned assets of $183.  We had a negative change of $42,723 due to accounts payable and a negative change of $20,000 due to accrued expenses.  As a result, we had net cash used in operating activities of $60,723 for the nine months ended September 30, 2015 which was funded by a note payable of $60,723 to an unrelated party.


For the nine months ended September 30, 2016, we spent $700 on the purchase of equipment, resulting in net cash used in investing activities of $700 for the period.  We did not pursue any investing activities during the nine months ended September 30, 2015.


For the nine months ended September 30, 2016, we received $609,200 as proceeds from a related party of which we repaid $165,000, and we also repaid a portion of a demand note payable of in the amount of $10,723.  As a result, we had net cash provided by financing activities of $433,477 for the nine months ended September 30, 2016.  


We had working capital at September 30, 2016 of $197,071 and working capital at December 31, 2015 of and $128,522 respectively. The increase in our working capital is attributed to the increase in raising capital offset by an increased activity in real estate acquisition of $117,900.




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Table of Contents

The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements.  While we have a best efforts commitment from the aforementioned accredited investor it is uncertain when such additional funding will be available and whether the terms will be acceptable to us. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.


We have no known demands or commitments and are not aware of any events or uncertainties as of September 30, 2016, other than the work commitment previously mentioned, that will result in or that are reasonably likely to materially increase or decrease our current liquidity.


Capital Resources

We had no material commitments for capital expenditures as of September 30, 2016.


Off Balance Sheet Arrangements

There are no off balance sheet arrangements.


Item 3. Quantitative and Qualitative Disclosures about Market Risk.


Not applicable because the Company is a smaller reporting company.


Item 4. Controls and Procedures.


Evaluation of Disclosure Controls and Procedures


Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer who is also our Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer who is also our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer who is also our Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2016, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.




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Table of Contents

Changes in Internal Control over Financial Reporting


Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

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Table of Contents

PART II - OTHER INFORMATION


Item 1. Legal Proceedings.


We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interests.


Item 1A.  Risk Factors.


Not applicable because the Company is a smaller reporting company.


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


1. Quarterly Issuances:


We did not issue any unregistered securities during the quarter.


2. Subsequent Issuances:


Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.


Item 3. Defaults upon Senior Securities.


None.


Item 4. Mine Safety Disclosures


Not Applicable.


Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

31.1

Certification pursuant to Rule 13a-14(a)/15d-14(a) (1)

 

32.1

Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 (1)

 

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBR Taxonomy Extension Presentation Linkbase Document




18



Table of Contents

SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.


BRIGHTLANE CORP.


Date:  November 14, 2016

By:

/s/ Steve Helm

Steve Helm

President and Chief Executive Officer

(Principal Executive Officer, Principal Accounting Officer

and Principal Financial Officer)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

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