|
Monaker Group, Inc. and Subsidiaries
|
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
For the three months ended
|
|
|
|
As Previously
Reported
November 30, 2015
|
|
|
Restatement /
Adjustment
|
|
|
As Restated
November 30, 2015
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Travel and commission revenues
|
|
$
|
21,717
|
|
|
$
|
—
|
|
|
$
|
21,717
|
|
Total revenues
|
|
|
21,717
|
|
|
|
—
|
|
|
|
21,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (exclusive of amortization)
|
|
|
25,373
|
|
|
|
—
|
|
|
|
25,373
|
|
Technology and development
|
|
|
18,282
|
|
|
|
—
|
|
|
|
18,282
|
|
Salaries and benefits
|
|
|
338,528
|
|
|
|
—
|
|
|
|
338,528
|
|
Selling and promotions expense
|
|
|
10,940
|
|
|
|
—
|
|
|
|
10,940
|
|
General and administrative
|
|
|
929,234
|
|
|
|
—
|
|
|
|
929,234
|
|
Total operating expenses
|
|
|
1,322,357
|
|
|
|
—
|
|
|
|
1,322,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1,300,640
|
)
|
|
|
—
|
|
|
|
(1,300,640
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense including loss on inducement expense on conversion of debt
|
|
|
(380,982
|
)
|
|
|
2,748,191
|
|
|
|
2,367,209
|
|
Gain (loss) on settlement of debt
|
|
|
1,418,026
|
|
|
|
(2,113,624
|
)
|
|
|
(695,598
|
)
|
Gain on change in fair value of derivatives
|
|
|
8,302
|
|
|
|
—
|
|
|
|
8,302
|
|
Loss from proportionate share of investment in unconsolidated affiliate
|
|
|
(444,872
|
)
|
|
|
444,872
|
|
|
|
—
|
|
Loss on inducement to convert preferred stock
|
|
|
(1,392,666
|
)
|
|
|
—
|
|
|
|
(1,392,666
|
)
|
Impairment of equity method investment
|
|
|
(3,038,365
|
)
|
|
|
3,038,365
|
|
|
|
—
|
|
Other income
|
|
|
234,522
|
|
|
|
(234,629
|
)
|
|
|
(107
|
)
|
Total other income (expense)
|
|
|
(3,596,035
|
)
|
|
|
3,883,175
|
|
|
|
287,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(4,896,675
|
)
|
|
$
|
3,883,175
|
|
|
$
|
(1,013,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to the noncontrolling interest
|
|
|
2,641
|
|
|
|
—
|
|
|
|
2,641
|
|
Net loss attributable to Monaker Group, Inc.
|
|
$
|
(4,894,034
|
)
|
|
$
|
3,883,175
|
|
|
$
|
(1,010,859
|
)
|
Preferred stock dividend
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net loss attributable to common shareholders
|
|
$
|
(4,894,034
|
)
|
|
$
|
3,883,175
|
|
|
$
|
(1,010,859
|
)
|
Weighted average number of shares outstanding
|
|
|
2,498,269
|
|
|
|
—
|
|
|
|
2,498,269
|
|
Basic and diluted net loss per share
|
|
$
|
(1.96
|
)
|
|
$
|
1.56
|
|
|
$
|
(0.40
|
)
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Comprehensive loss
|
|
$
|
(4,894,034
|
)
|
|
$
|
3,883,175
|
|
|
$
|
(1,010,859
|
)
|
Monaker Group, Inc. and Subsidiaries
|
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
For the nine months ended
|
|
|
|
As Previously
Reported
November 30, 2015
|
|
|
Restatement /
Adjustment
|
|
|
As Restated
November 30, 2015
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Travel and commission revenues
|
|
$
|
507,077
|
|
|
$
|
—
|
|
|
$
|
507,077
|
|
Total revenues
|
|
|
507,077
|
|
|
|
—
|
|
|
|
507,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (exclusive of amortization)
|
|
|
188,078
|
|
|
|
—
|
|
|
|
188,078
|
|
Technology and development
|
|
|
54,846
|
|
|
|
—
|
|
|
|
54,846
|
|
Salaries and benefits
|
|
|
1,032,826
|
|
|
|
—
|
|
|
|
1,032,826
|
|
Selling and promotions expense
|
|
|
14,203
|
|
|
|
—
|
|
|
|
14,203
|
|
General and administrative
|
|
|
1,589,674
|
|
|
|
—
|
|
|
|
1,589,674
|
|
Total operating expenses
|
|
|
2,879,627
|
|
|
|
—
|
|
|
|
2,879,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(2,372,550
|
)
|
|
|
—
|
|
|
|
(2,372,550
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense including loss on inducement expense on conversion of debt
|
|
|
(2,260,087
|
)
|
|
|
1,919,100
|
|
|
|
(340,987
|
)
|
Gain (loss) on settlement of debt
|
|
|
1,194,026
|
|
|
|
(2,113,624
|
)
|
|
|
(919,598
|
)
|
Gain on change in fair value of derivatives
|
|
|
108,937
|
|
|
|
—
|
|
|
|
108,937
|
|
Loss from proportionate share of investment in unconsolidated affiliate
|
|
|
(1,203,103
|
)
|
|
|
1,203,103
|
|
|
|
—
|
|
Loss on inducement to convert preferred stock
|
|
|
(1,392,666
|
)
|
|
|
—
|
|
|
|
(1,392,666
|
)
|
Impairment of equity method investment
|
|
|
(3,038,365
|
)
|
|
|
3,038,365
|
|
|
|
—
|
|
Other income
|
|
|
232,789
|
|
|
|
(234,629
|
)
|
|
|
(1,840
|
)
|
Total other income (expense)
|
|
|
(6,358,469
|
)
|
|
|
3,812,315
|
|
|
|
(2,546,154
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(8,731,019
|
)
|
|
$
|
3,812,315
|
|
|
$
|
(4,918,704
|
)
|
Net loss attributable to the noncontrolling interest
|
|
|
4,784
|
|
|
|
—
|
|
|
|
4,784
|
|
Net loss attributable to Monaker Group, Inc.
|
|
$
|
(8,726,235
|
)
|
|
$
|
3,812,315
|
|
|
$
|
(4,913,920
|
)
|
Net loss attributable to common shareholders
|
|
$
|
(8,726,235
|
)
|
|
$
|
3,812,315
|
|
|
$
|
(4,913,920
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
1,549,050
|
|
|
|
—
|
|
|
|
1,549,050
|
|
Basic and diluted net loss per share
|
|
$
|
(5.63
|
)
|
|
$
|
2.46
|
|
|
$
|
(3.17
|
)
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Comprehensive loss
|
|
$
|
(8,726,235
|
)
|
|
$
|
3,812,315
|
|
|
$
|
(4,913,920
|
)
|
Monaker Group, Inc. and Subsidiaries
|
Consolidated Statements of Cash Flows
|
For the nine months ended
|
|
|
|
|
|
|
|
|
|
As Previously
Reported
November 30, 2015
|
|
|
Restatement /
Adjustment
|
|
|
As Restated
November 30, 2015
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to Monaker Group, Inc.
|
|
$
|
(8,726,235
|
)
|
|
$
|
3,812,315
|
|
|
$
|
(4,913,920
|
)
|
Adjustments to reconcile net loss to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest in
income of consolidated subsidiaries
|
|
|
(4,784
|
)
|
|
|
—
|
|
|
|
(4,784
|
)
|
Loss from proportionate share of investment in unconsolidated affiliate
|
|
|
1,203,103
|
|
|
|
(1,203,103
|
)
|
|
|
—
|
|
Amortization of intangibles
|
|
|
54,846
|
|
|
|
—
|
|
|
|
54,846
|
|
Stock based compensation and consulting fees
|
|
|
715,677
|
|
|
|
370,330
|
|
|
|
1,086,007
|
|
Loss on settlement of debt
|
|
|
1,656,418
|
|
|
|
(736,820
|
)
|
|
|
919,598
|
|
Directors fees
|
|
|
5,000
|
|
|
|
(5,000
|
)
|
|
|
—
|
|
Gain on settlement of debt
|
|
|
(728,664
|
)
|
|
|
728,664
|
|
|
|
—
|
|
Gain on change in fair value of derivatives
|
|
|
(108,937
|
)
|
|
|
—
|
|
|
|
(108,937
|
)
|
Loss on inducement to converted preferred stock
|
|
|
1,392,666
|
|
|
|
—
|
|
|
|
1,392,666
|
|
Impairment on investment in preferred stock
|
|
|
3,038,365
|
|
|
|
(3,038,365
|
)
|
|
|
—
|
|
Dividend income
|
|
|
(234,859
|
)
|
|
|
234,859
|
|
|
|
—
|
|
Bad debt
|
|
|
316,254
|
|
|
|
(316,254
|
)
|
|
|
—
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in dividends receivable
|
|
|
—
|
|
|
|
881,587
|
|
|
|
881,587
|
|
Decrease in prepaid expenses and other current assets
|
|
|
(19,368
|
)
|
|
|
(7
|
)
|
|
|
(19,375
|
)
|
Decrease in due to/from affiliates
|
|
|
(35,555
|
)
|
|
|
35,555
|
|
|
|
—
|
|
Increase in accounts payable and accrued expenses
|
|
|
(128,720
|
)
|
|
|
(542,753
|
)
|
|
|
(671,473
|
)
|
Decrease in other current liabilities
|
|
|
(9,480
|
)
|
|
|
(130,270
|
)
|
|
|
(139,750
|
)
|
Net cash used in operating activities
|
|
|
(1,614,273
|
)
|
|
|
90,738
|
|
|
|
(1,523,535
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments related to website development costs
|
|
|
(10,000
|
)
|
|
|
—
|
|
|
|
(10,000
|
)
|
Investment in Name Your Fee
|
|
|
—
|
|
|
|
75,000
|
|
|
|
75,000
|
|
Net cash used in investing activities
|
|
|
(10,000
|
)
|
|
|
75,000
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments against convertible promissory notes
|
|
|
(36,400
|
)
|
|
|
—
|
|
|
|
(36,400
|
)
|
Principal payments of other notes payable
|
|
|
—
|
|
|
|
(75,000
|
)
|
|
|
(75,000
|
)
|
Proceeds from shareholder loans
|
|
|
25,000
|
|
|
|
(9,081
|
)
|
|
|
15,919
|
|
Proceeds from advances
|
|
|
(9,081
|
)
|
|
|
66,081
|
|
|
|
57,000
|
|
Proceeds received for capital contribution for Name Your Fee
|
|
|
75,000
|
|
|
|
(75,000
|
)
|
|
|
—
|
|
Proceeds received for settlement on accrued dividends
|
|
|
75,000
|
|
|
|
(75,000
|
)
|
|
|
—
|
|
Proceeds from issuance of series B preferred shares
|
|
|
—
|
|
|
|
75,000
|
|
|
|
75,000
|
|
Proceeds from issuance of series C preferred shares
|
|
|
10,000
|
|
|
|
17,500
|
|
|
|
27,500
|
|
Proceeds from the issuance of common stock
|
|
|
1,450,996
|
|
|
|
—
|
|
|
|
1,450,996
|
|
Proceeds from the exercise of common stock warrants
|
|
|
88,725
|
|
|
|
(88,725
|
)
|
|
|
—
|
|
Proceeds from the collection of stock subscription receivable
|
|
|
5,000
|
|
|
|
—
|
|
|
|
5,000
|
|
Net cash provided by financing activities
|
|
|
1,684,240
|
|
|
|
(164,225
|
)
|
|
|
1,520,015
|
|
Net decrease in cash
|
|
|
59,967
|
|
|
|
1,513
|
|
|
|
61,480
|
|
Cash at beginning of period
|
|
|
226,412
|
|
|
|
—
|
|
|
|
226,412
|
|
Cash from merger
|
|
|
56,902
|
|
|
|
(56,902
|
)
|
|
|
—
|
|
Cash at end of period
|
|
$
|
343,281
|
|
|
$
|
(55,389
|
)
|
|
$
|
287,892
|
|
Note 3 – Going Concern
As reflected in the accompanying consolidated
financial statements, the Company had an accumulated deficit of $93,925,793, a working capital deficit of $3,819,950 at November
30, 2015, a net loss for the nine months ended November 30, 2015 of $4,913,920 and cash used in operations during the nine months
ended November 30, 2015 of $1,523,535. While the Company is attempting to increase sales, the growth has yet to achieve significant
levels to fully support its daily operations. These factors raise substantial doubt about the Company’s ability to continue
as a going concern. Management plans to address this this going concern by continuing to raise funds with third parties by way
of a public or private offering. Management and members of the Board are working aggressively to increase the viewership of our
products by promoting it across other mediums which should increase value to advertisers and result in higher advertising rates
and revenues.
While the Company believes in the viability
of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances to that effect.
The Company’s limited financial resources have prevented the Company from aggressively advertising its products and services
to achieve consumer recognition. The ability of the Company to continue as a going concern is dependent on the Company’s
ability to further implement its business plan and generate greater revenues. The consolidated financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions
presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company
to continue as a going concern.
Note 4 – Note Receivable
On December 22, 2014, the Company advanced
$15,000 to a non-related third party debtor and signed a one year, six (6%) percent promissory note. The entire principal balance
of this note, together with all accrued and unpaid interest, is due and payable on December 31, 2015.
Note 5 – Investment in Equity
Instruments and Deconsolidation
Our investment in an unconsolidated affiliate
consists of an investment in equity instruments of RealBiz. On October 9, 2012, Monaker and RealBiz, formerly known as Webdigs,
Inc. (“Webdigs”), completed the transactions contemplated by that certain Share Exchange Agreement entered into on
April 4, 2012 (the “Exchange Agreement”). Under the Exchange Agreement, our Company exchanged with Webdigs all of the
outstanding equity in Attaché Travel International, Inc., a Florida corporation and wholly owned subsidiary of Monaker (“Attaché”).
Attaché owns approximately 85% of a corporation named RealBiz Holdings Inc. (“RealBiz”) which is the parent
corporation of RealBiz360, Inc. RealBiz is a real estate media services company with a proprietary video processing technology
that is used to provide virtual tours to the real estate industry. In exchange for our Attaché shares, our Company received
a total of 93 million shares of newly designated Series A Convertible Preferred Stock (“Webdigs Series A Stock”). At
November 30, 2015 Monaker owned 48,621,133 shares of RealBiz Series A Preferred Stock and 10,359,890 shares of RealBiz common stock,
representing 34% ownership of RealBiz.
On October 31, 2014 (“Deconsolidation
Date”), Monaker and RealBiz deconsolidated their financial statements since the investment in RealBiz went below 50% majority
ownership and Monaker was deemed to no longer have control over RealBiz. Monaker’s proportional financial interest in RealBiz
is reduced when shares of Monaker Dual convertible preferred stock and Monaker convertible debt are exchanged for RealBiz common
shares. The financial statements as of February 28, 2015 include consolidated balances of RealBiz through October 31, 2014. During
the nine months ended November 30, 2015, Monaker recorded our allocated portions totaling $-0- of RealBiz’s net loss of $4,928,000.
Monaker continues to own RealBiz Preferred Series A stock and, through November 30, 2015, although the two companies shared similar
Directors, the companies are operating independently.
At November 30, 2015, RealBiz Media Group,
Inc. had current assets of approximately $467,000, total assets of approximately $501,000, current liabilities of approximately
$1,619,000 and total liabilities of approximately $2,309,000. For the nine months ended November 30, 2015, unaudited RealBiz Media
Group, Inc. had gross sales of approximately $727,000 and a net loss of approximately $4,928,000.
Note 6 – Property and Equipment
At November 30, 2015, the Company did not have any property
and equipment.
Note 7 – Website Development Costs
and Intangible Assets
The following table sets forth the intangible
assets, both acquired and developed, including accumulated amortization as of November 30, 2015:
|
|
November
30, 2015
|
|
|
|
Remaining
Useful
Life
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Website platform
|
|
3.0 years
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
Website development costs
|
|
0.3 years
|
|
|
635,755
|
|
|
|
632,616
|
|
|
|
3,139
|
|
H & A Club Portal
|
|
2.1 years
|
|
|
181,730
|
|
|
|
50,480
|
|
|
|
131,250
|
|
Acquired contracts, domains & customer lists
|
|
2.0 years
|
|
|
1,188,000
|
|
|
|
—
|
|
|
|
1,188,000
|
|
Name Your Fee Website (not placed in service)
|
|
3.0 years
|
|
|
915,392
|
|
|
|
—
|
|
|
|
915,392
|
|
|
|
|
|
$
|
3,320,877
|
|
|
$
|
683,096
|
|
|
$
|
2,637,781
|
|
On May 14, 2015, the Company signed a Joint Venture Agreement with Jasper Group Holdings, Inc. for the
limited purpose of utilizing and developing the NameYourFee.com website and such other businesses as the partners may agree upon
in writing. The Company received a 51% capital interest and 50% of the future profits and issued 100,000 of its Series D Preferred
Stock at a value of $500,000, based on its stated value of $5 per share. Upon the consolidation of Name Your Fee, LLC for the nine
months ended November 30, 2015, the Company has capitalized $915,392 of costs associated with the Name Your Fee employment website
that has not been placed into service.
Note 8 – Notes Payable
|
|
|
|
|
The following table sets forth the notes payable as of November 30, 2015:
|
|
Principal
|
|
On September 6, 2011, the Company renegotiated a note, due to default, until February 1, 2013 for $785,000. Beginning on October 1, 2011, the Company is obligated to make payments of $50,000 due on the first day of each month. The first $185,000 in payments is to be in cash and the remaining $600,000 shall me made in cash or common stock. On February 15, 2012, the noteholder assigned $225,000 of its $785,000 outstanding promissory note to a non-related third party investor and the Company issued a new convertible promissory note for the same value. On February 27, 2015, the Company signed a settlement agreement whereby interest payments were made and the balance is convertible to common stock at the Company’s option. As of November 30, 2015, the Company is not in default of this note.
|
|
$
|
510,000
|
|
|
|
|
|
|
On August 16, 2004, the
Company entered into a promissory note with an unrelated third party for $500,000. The note bears interest at 7% per year and
matured in March 2011 and was payable in quarterly installments of $25,000. The Company is in default of this note.
|
|
|
137,942
|
|
|
|
|
|
|
In February
2009, the Company restructured note agreements with three existing noteholders. The collective balance at the time of the restructuring
was $250,000 plus accrued interest payable of $158,000 which was consolidated into three new notes payable totaling $408,000.
The notes bear interest at 10% per year and matured on May 31, 2010, at which time the total amount of principle and accrued interest
was due. In connection with the restructure of these notes the Company issued 150,000 detachable 3 year warrants to purchase common
stock at an exercise price of $3.00 per share. The warrant issuance was recorded as a discount and amortized monthly over the
terms of the note. On July 30, 2010, the Company issued 535,000 shares of common stock to settle all of these note agreements
except for $25,000. The Company is in default of this note.
|
|
|
25,000
|
|
|
|
|
|
|
In connection
with the acquisition of Brands on Demand, a five year lease agreement was entered into by an officer of the Company. Subsequent
to terminating the officer, the Company entered into an early termination agreement with the lessor in the amount of $30,000 secured
by a promissory note to be paid in monthly installments of $2,500, beginning June 1, 2009 and matured June 1, 2010. The Company
is in default of this note.
|
|
|
30,000
|
|
|
|
|
|
|
On
December 5, 2011, the Company converted $252,833 of accounts payable and executed an 8% promissory note to same vendor. Commencing
on December 5, 2011 and continuing on the 1st day of each calendar month thereafter, the Company shall pay $12,000 per month.
All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this note,
including, without limitation, reasonable attorney’s fee, then to payment in full of accrued and unpaid interest and finally
to the reduction of the outstanding principal balance of the note. The Company is in default of this note.
|
|
|
221,130
|
|
|
|
$
|
924,072
|
|
|
|
|
|
|
Interest charged to operations relating to the above
notes was $43,422 and $35,431, respectively for the nine months ended November 30, 2015 and 2014. As of November 30, 2015,
the Company has not made payments on the above obligations; accrued interest at November 30, 2015 is $256,094.
|
|
|
|
|
Note 9 – Other Notes Payable
The following table sets forth the other notes payable as of
November 30, 2015:
|
|
Principal
|
|
Related parties :
|
|
|
|
|
|
|
|
|
|
On August 21, 2012, the Company received $50,000 in proceeds from a related-party investor and issued a bridge loan agreement with no maturity date. In lieu of interest, the Company issued 100,000 two (2) year warrants with an exercise price of $0.05 per share valued at $1,500 and charged this to operations. The fair value of the warrants was estimated at the date of grant using the Black-Scholes option- pricing model with the following assumptions: risk-free interest rate of 0.29%, dividend yield of -0-%, volatility factor of 384.11% and expected life of three months. On July 15, 2013, the Company received $90,000 from the same related-party investor and converted the remaining balance of $30,000 into a new convertible promissory note valued at $120,000. The new note bears interest at 12% per annum until the maturity date of October 31, 2015 of which the annual interest rate is 18% per annum. Until such time of repayment of principal and interest, the holder of the new note may convert, in whole or part, into Series A or Series B Preferred stock. The Company has made the following principal payments: $20,000 on August 15, 2013, $25,000 on October 1, 2013 and $25,000 on October 23, 2014, leaving a remaining principal balance of $50,000
|
|
|
50,000
|
|
|
|
|
|
|
Non-related parties:
|
|
|
|
|
|
|
|
|
|
The Company has an existing promissory note, dated July 23, 2010, with a shareholder in the amount of $100,000. The note is due and payable on July 23, 2012 and bears interest at a rate of 6% per annum. As consideration for the loan, the Company issued 200 warrants to the holder with a nine year life and a fair value of approximately $33,000 to purchase shares of the Company’s common stock, $0.00001 par value, per share, at an exercise price of $500 per share. The fair value of the warrants was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of .984%, dividend yield of -0-%, volatility factor of 115.05% and an expected life of 1.5 years and has been fully amortized. On September 26, 2012, the noteholder assigned $30,000 of its principal to a non-related third party investor and the Company issued a convertible promissory note for same value. The Company is in default of this note
|
|
|
70,000
|
|
|
|
$
|
120,000
|
|
|
|
|
|
|
Interest charged to operations relating to the above
notes was $7,650 and $10,068 respectively for the nine months ended November 30, 2015 and 2014. As of November 30, 2015, the
Company has not made payments on the above obligations; and accrued interest at November 30, 2015 is $50,232.
|
|
|
|
|
Note 10 – Other Advances
Related Party
On April 13, 2011 the Company owed $186,000
of related party advances, the Company, as part of a shareholder loan conversion agreement, converted $98,000 of related party
advances with the issuance of 1,407,016 shares of common stock and 2,814,032 three (3) year warrants with an exercise price $0.25
per share. Also on April 13, 2011, the Company converted $70,000 of related party advances into a convertible promissory note,
leaving a balance due of $18,000. During the nine months ended November 30, 2015, the remaining principal balance of $18,000 was
converted into the common stock of our former consolidated subsidiary, RealBiz, as part of an exchange agreement between the Company
and the debt holder. In order to issue RealBiz common stock, we convert our investment of Series A Preferred stock into common
stock of RealBiz and then exchange those shares for debt.
Non Related Party
Prior to the fiscal year ended February 28, 2011, a non-related
party made $50,000 in payments to a vendor on behalf of the Company. The remaining principal balance as of November 30, 2015 totaled
$50,000.
Note 11 – Shareholder Loans
During the nine months ended November 30, 2015, the Company
received $25,000 in cash proceeds, made payments of $9,081 in principal payments and the remaining balance as of November 30, 2015
totaled $394,919.
Note 12 – Convertible Promissory
Notes
The Company has convertible
promissory notes with interest rates ranging from 6% to 12% per annum, maturity dates ranging from September 30, 2012 to
October 19, 2016 and with a range of fixed and variable conversion features. During the nine months ended November 30, 2015
and 2014, the Company recognized interest expense of $289,915 and $437,067, respectively. The table below summarizes the
convertible promissory notes as of November 30, 2015.
|
|
November 30, 2015
|
|
|
|
|
Non
Related
Party
|
|
|
|
Related
Party
|
|
|
|
Total
|
|
Principal
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
6,828,386
|
|
|
$
|
1,025,000
|
|
|
$
|
7,853,386
|
|
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds received from note issuances
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Fees
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Subtractions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion to common shares
|
|
|
3,235,084
|
|
|
|
675,000
|
|
|
|
3,910,084
|
|
Principal repayments
|
|
|
36,400
|
|
|
|
—
|
|
|
|
36,400
|
|
|
|
|
3,271,484
|
|
|
|
675,000
|
|
|
|
3,946,484
|
|
Ending balance
|
|
$
|
3,556,902
|
|
|
$
|
350,000
|
|
|
$
|
3.906,902
|
|
Carrying Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Total convertible promissory notes
|
|
$
|
3,556,902
|
|
|
$
|
350,000
|
|
|
$
|
3,906,902
|
|
Less: current portion
|
|
|
593,599
|
|
|
|
350,000
|
|
|
|
943,599
|
|
Long term portion
|
|
$
|
2,963,303
|
|
|
$
|
—
|
|
|
$
|
2,963,303
|
|
Principal past due and in default
|
|
$
|
316,017
|
|
|
$
|
—
|
|
|
$
|
316,017
|
|
During the nine months ended November 30, 2015, the Company:
|
●
|
Recorded debt discount amortization expense in the
amount of $-0-
|
|
●
|
Made $36,400 in principal payments against outstanding
convertible promissory notes.
|
|
●
|
Executed a conversion of $810,804 of principal into
411,754 shares of the Company’s common stock.
|
|
●
|
Issued 124,000 shares of its common stock in satisfaction
of $3,100,000 in principal of modified convertible promissory notes in accordance with the terms of the notes. Additionally, as
an inducement to convert such notes into common stock, the Company issued 496,000 shares of its common stock at a value of $1,612,000
and granted one (1) year common stock warrants to purchase 30,000 shares of common stock with an exercise price of $0.50 per share
valued at $44,418, for a total amount charged to interest expense of $1,656,418. The value of the common stock issued was based
on the fair value of the stock determined by actual trading price quotes at the time of issuance. The value of the warrants was
estimated at the time of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest
rate of 0.23%, dividend yield of -0-%, volatility factor of 217.20%, and expected life of one year.
|
Note 13 – Stockholders’
Deficit
Preferred stock
The aggregate number of shares of preferred
stock that the Company is authorized to issue is up to One Hundred Million (100,000,000), with a par value of $0.0001 per share
(“the Preferred Stock”) with the exception of Series A Preferred shares having a $0.01 par value. The Preferred Stock
may be divided into and issued in series. The Board of Directors of the Company is authorized to divide the authorized shares of
Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares
of all other series and classes. The Board of Directors of the Company is authorized, within any limitations prescribed by law
and the articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and
terms of the shares of any series of Preferred Stock.
When our shareholders elect to convert
to common stock of RealBiz, we convert our Series A Preferred stock investment of RealBiz into common stock of RealBiz and then
exchange those shares for our preferred stock.
Series A Preferred Stock
The Company has authorized and designated
3,000,000 shares of Preferred Stock as Series A 10% Cumulative Convertible Preferred Stock, par value $0.01 per share (the “Series
A Preferred Stock”). The holders of record of shares of Series A Preferred Stock are entitled to vote on all matters submitted
to a vote of the shareholders of the Company and are entitled to one hundred (100) votes for each share of Series A Preferred Stock.
Per the terms of the Amended and Restated
Certificate of Designations, subject to the availability of authorized and unissued shares of Series A Preferred Stock, the holders
of Series A Preferred Stock may, by written notice to the Company, elect to convert all or any part of such holder’s shares
of Series A Preferred Stock into common stock at a conversion rate of the lower of (a) $0.50 per share or (b) at the lowest price
the Company has issued stock as part of a financing. Additionally, the holders of Series A Preferred Stock may by written notice
to the Company, convert all or part of such holder’s shares (excluding any shares issued pursuant to conversion of unpaid
dividends) into debt obligations of the Company, secured by a security interest in all of the assets of the Company and its’
subsidiaries, at a rate of $0.50 of debt for each share of Series A Preferred Stock. On July 9, 2013, the Company amended the Certificate
of Designations for the Company’s Series A Preferred Stock to allow for conversion into Series C Preferred stock to grant
to a holder of the Series A Preferred Stock the option to elect to convert all or any part of such holder’s shares of Series
A Preferred Stock into shares of the Company’s Series C Convertible Preferred Stock, par value $0.00001 per share (“Series
C Preferred Stock”), at a conversion rate of five (5) shares of Series A Preferred Stock for every one (1) share of Series
C Preferred Stock. Furthermore, the amendment allows for conversion into common stock at the lowest price the Company has issued
stock as part of a financing to include all financing such as new debt and equity financing and stock issuances as well as existing
debt conversions into stock. On February 28, 2014, the Company’s Preferred Series A shareholders agreed to authorize a change
to the Certificate of Designations of the Series A Preferred Stock in Nevada to lock the conversion price to a fixed price of $0.01.
In the event of any liquidation, dissolution
or winding up of this Company, either voluntary or involuntary (any of the foregoing, a “liquidation”), holders of
Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of this
Company to the holders of the common Stock or any other series of Preferred Stock by reason of their ownership thereof an amount
per share equal to $1.00 for each share (as adjusted for any stock dividends, combinations or splits with respect to such shares)
of Series A Preferred Stock held by each such holder, plus the amount of accrued and unpaid dividends thereon (whether or not declared)
from the beginning of the dividend period in which the liquidation occurred to the date of liquidation.
During the nine months ended November 30,
2015, the Company:
|
●
|
Converted
331,403 shares of Series A Preferred stock, at a carrying value of $331,403, into 3,314,030 shares of common stock of our former
subsidiary RealBiz at agreed upon conversion terms.
|
|
●
|
Converted 15,000 shares of Series A Preferred stock,
at a carrying value of $15,000 into 30,000 shares of common stock.
|
Dividends in arrears on the outstanding
preferred shares total $821,954 as of November 30, 2015. The Company had 1,869,611 shares issued and outstanding as of November
30, 2015.
Series B Preferred Stock
The Company has authorized and designated
3,000,000 shares of Preferred Stock as Non-Voting Series B 10% Cumulative Convertible Preferred Stock with a par value of $0.00001
per share (“the Series B Preferred Stock”). The holders of Series B Preferred Stock may elect to convert all or any
part of such holder’s shares into the Company’s common stock at $5 per share or into shares of RealBiz Media’s
common stock at $0.05 per share.
Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a “liquidation”), the holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages owing thereon, for each share of then outstanding Preferred Stock before
any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company shall be insufficient
to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders
in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
During the nine months ended November 30,
2015, the Company:
|
●
|
Issued 15,000 shares of Series B Preferred stock for
proceeds received in the prior year valued at $75,000.
|
|
●
|
Issued 15,000 shares of Series B Preferred stock as partial
payment of interest due to a convertible promissory note holder valued at $75,000.
|
|
●
|
Converted 20,000 shares of Series B Preferred stock into
RealBiz common stock, upon the investor’s request, issuing 2,000,000 shares of RealBiz common stock with a total carrying value
of $100,000.
|
|
●
|
Entered into a special exchange agreement with holders
of Series B Preferred stock to convert 138,000 shares of Series B Preferred stock at a value of $690,000 into 280,000 shares of
its common stock valued at $948,600, incurring a loss on inducement of $258,600 with the Series B Preferred stock shareholders
agreeing to forfeit $145,162 in accrued dividends and any entitlement to future dividends.
|
Dividends in arrears on the outstanding
preferred shares total $412,588 as of November 30, 2015. The Company had 134,200 shares of Series B Preferred stock issued and
outstanding as of November 30, 2015.
Series C Preferred Stock
The Company has authorized and designated
3,000,000 shares of Preferred Stock as Non-Voting Series C 10% Cumulative Convertible Preferred Stock with a par value of $0.00001
per share (the “Series C Preferred Stock”). On July 9, 2014, Monaker filed (i) an Amendment to its Series C Certificate
of Designation with the Secretary of State of the State of Nevada to change the conversion price from $5.00 to a new conversion
price of $0.25. The holders of Series C Preferred stock may elect to convert all of any part of such holder’s shares into
the Company’s common stock at $0.25 per share or into shares of RealBiz Media’s common stock at $0.10 per share.
Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a “liquidation”), the holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages owing thereon, for each share of then outstanding Preferred Stock before
any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company shall be insufficient
to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders
in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
During the nine months ended November 30,
2015, the Company:
|
●
|
Issued 2,000 shares of its Series C Preferred stock along
with one (1) year common stock warrants to purchase 2,000 shares of common stock with an exercise price of $2.50 per share and
received $10,000 in cash proceeds.
|
|
●
|
Issued 3,500 shares of its Series C Preferred stock along
with one (1) year common stock warrants to purchase 4,500 shares of common stock with an exercise price of $2.50 per share, for
$22,500 of proceeds received from prior year advances.
|
|
●
|
Issued 13,000 shares of Series C Preferred stock and
one (1) year common stock warrants to purchase 6,000 shares of common stock with an exercise price of $0.50 per share, to recipients
for consulting services rendered valued at $73,138. The value of the common stock issued was based on the fair value of the stock
at the time of issuance. The value of the warrants was estimated at the date of grant using a Black-Scholes option pricing model
with the following assumptions: risk free interest rate of 0.10% to 0.24%, dividend yield of -0-%, volatility factor of 217.04,
and expected life of one year.
|
|
●
|
Issued 30,000 shares of Series C Preferred stock for
a deferred compensation settlement with the former CFO of RealBiz, our former subsidiary valued at $150,000.
|
|
●
|
Converted 22,100 shares of Series C Preferred stock into
960,000 shares of common stock of our former subsidiary RealBiz at the agreed upon conversion terms.
|
|
●
|
Entered into a special exchange agreement with holders
of Series C Preferred stock to convert 203,000 shares of Series C Preferred stock at a value of $1,005,000 into 406,000 shares
of its common stock valued at $1,286,216, incurring a loss on inducement of $281,216 with the Series C Preferred stock shareholders
agreeing to forfeit $97,389 in accrued dividends and any entitlement to future dividends.
|
Dividends in arrears on the outstanding
preferred shares total $42,120 as of November 30, 2015. The Company had 41,000 shares of Series C Preferred stock issued and outstanding
as of November 30, 2015.
Series D Preferred Stock
The Company has authorized and designated
3,000,000 shares of Preferred Stock as Non-Voting Series D 10% Cumulative Convertible Preferred Stock with a par value of $0.00001
per share (the “Series D Preferred Stock”). On July 9, 2014, the Company filed (i) an Amendment to its Series D Certificate
of Designation with the Secretary of State of the State of Nevada to change the conversion price from $5.00 to a new conversion
price of $0.25. The holders of Series D Preferred stock may elect to convert all of any part of such holder’s shares into
the Company’s common stock at $0.25 per share or into shares of RealBiz Media’s common stock at $0.15 per share.
Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a “liquidation”), the holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages owing thereon, for each share of then outstanding Preferred Stock before
any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company shall be insufficient
to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders
in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
During the nine months ended November 30,
2015, the Company:
|
●
|
Issued 60,000 shares of Series D Preferred stock in connection
with an Asset Purchase Agreement the Company assigned to its former subsidiary, RealBiz, valued at $400,000. The value assigned
to the asset purchase agreement was based upon the fair market value of RealBiz’s common stock on the date of the agreement as
if all 60,000 shares were converted into RealBiz common stock.
|
|
●
|
Issued 100,000 shares of Series D Preferred stock in
connection with a joint venture agreement with Jasper Group Holdings, Inc. (“Jasper”) and created a Florida Limited
Liability Company called Name Your Fee, LLC. As stated in the agreement, ownership of the entity is at 51% for Monaker and 49%
for Jasper. Monaker will issue to Jasper 100,000 Series D Preferred shares at a stated value of $5 per share for a total of $500,000
as its contribution. Jasper is contributing $75,000, advancing $75,000 to RealBiz (a former subsidiary of Monaker) and the assets
of the website (Name Your Fee) together with associated technology.
|
|
●
|
Issued 1,000 shares of Series D Preferred stock to a
director at a stated value of $5 per share totaling $5,000.
|
|
●
|
Converted 62,100 shares of Series D Preferred stock,
upon investor request, into 2,069,793 shares of RealBiz with a carrying value of $310,500.
|
|
●
|
Entered into a special exchange agreement with holders
of Series D Preferred stock to convert 561,600 shares of Series D Preferred stock at a value of $2,808,000 into 1,123,200 shares
of its common stock valued at $3,660,850, incurring a loss on inducement of $852,850 with the Series D shareholders agreeing to
forfeit $729,048 in accrued dividends and any entitlement to future dividends.
|
|
●
|
Converted 28,644 shares of Series D Preferred stock,
upon investor request, into 75,000 shares of the Company’s common stock at a value of $143,220.
|
Dividends in arrears on the outstanding
preferred shares total $766,059 as of November 30, 2015. The Company had 347,456 shares of Series D Preferred stock issued and
outstanding as of November 30, 2015.
Common Stock
On October 28, 2011, the Board and the
holders of a majority of the voting power of our shareholders approved an amendment to our articles of incorporation to increase
our authorized shares of common stock from 200,000,000 to 500,000,000. On February 13, 2012, the Board and the holders of a majority
of the voting power of our shareholders approved an amendment to our articles of incorporation to increase our authorized shares
of common stock from 500,000,000 to 2,500,000,000. The increase in our authorized shares of common stock became effective upon
the filing of the amendment(s) to our articles of incorporation with the Secretary of State of the State of Nevada.
On May 2, 2012, the Board consented to
(i) effect a 1-to-500 reverse split of the Company’s common stock and (ii) reduce the number of authorized shares from 2,500,000,000
to 5,000,000. Such actions became effective upon the filing of the amendment(s) to our articles of incorporation with the Secretary
of State of the State of Nevada. The consolidated financial statements have been retroactively adjusted to reflect this reverse
stock split.
On June 26, 2012, the Board and the holders
of a majority of the voting power of our shareholders approved an amendment to our articles of incorporation to increase our authorized
shares of common stock from 5,000,000 to 500,000,000.
On June 25, 2015, the Board consented to
(i) effect a 1-to-50 reverse split of the Company’s common stock and (ii) change the name of the Company from Next 1 Interactive,
Inc. to Monaker Group, Inc. Such actions became effective upon the filing of the amendment(s) to our articles of incorporation
with the Secretary of State of the State of Nevada. The consolidated financial statements have been retroactively adjusted to reflect
this reverse stock split.
During the nine months ended November 30, 2015, the Company:
|
●
|
Issued 676,677 shares of its common stock along with one year common stock warrants to
purchase
510,840 shares of common stock with an exercise price between $1.50 and $12.50 per share, for cash proceeds of
$1,437,796.
|
|
●
|
Issued 71,532 shares of its common stock upon the exercise of common stock warrants to purchase 71,532 shares of common
stock,
for cash proceeds of $89,766.
|
|
●
|
Preferred series conversions:
|
○
Converted
15,000 shares of Series A Preferred stock valued at $15,000, into 30,000 shares of the Company’s common stock.
○
Entered into a special exchange agreement with holders of
Series B Preferred stock to convert 138,000 shares of Series B preferred stock at a value of $690,000 into 280,000 shares of its
common stock valued at $948,600, incurring a loss on inducement of $258,600 with the Series B Preferred stock shareholders agreeing
to forfeit $145,162 in accrued dividends and any entitlement to future dividends.
○
Entered into a special exchange agreement with holders of
Series C Preferred stock to convert 203,000 shares of Series C Preferred stock at a value of $1,005,000 into 406,000 shares of
its common stock valued at $1,286,216, incurring a loss on inducement of $281,216 with the Series C Preferred stock shareholders
agreeing to forfeit $97,389 in accrued dividends and any entitlement to future dividends.
○
Entered into a special exchange agreement with holders of
Series D Preferred stock to convert 560,600 shares of Series D Preferred stock at a value of $2,808,000 into 1,121,200 shares of
its common stock valued at $3,660,850, incurring a loss on inducement of $852,850 with the Series D Preferred stock shareholders
agreeing to forfeit $729,048 in accrued dividends and any entitlement to future dividends.
○
Converted 28,644 shares of Series D Preferred stock, upon
investor request, into 75,000 shares of the Company’s common stock at a value of $143,220.
|
●
|
Issued 136,000 shares of its common stock in satisfaction
of $146,430 in principal of convertible promissory notes in accordance with the terms of the notes.
|
|
●
|
Issued 620,000 shares of its common stock in satisfaction
of $4,756,418 in principal of modified convertible promissory notes in accordance with the terms of the notes. Additionally, as
an inducement to convert $3,100,000 of the $4,756,418 in principal, the Company issued 496,000 shares of its common stock at a
value of $1,612,000 and granted one (1) year common stock warrants to purchase 30,000 shares with an exercise price of $0.50 per
share valued at $44,418 for a total amount charged to interest expense of $1,656,418. The value of the common stock issued was
based on the fair value of the stock determined by actual trading price quotes at the time of issuance. The value of the warrants
was estimated at the time of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest
rate of 0.23%, dividend yield of -0-%, volatility factor of 217.20% and expected life of one year.
|
|
●
|
Issued 20,000 shares of its common stock as part of an
acquisition agreement with Launch 360 Media, Inc. (“Launch 360”), dated May 6, 2015, for a ten percent (10%) interest in the
common stock outstanding of Launch 360 valued at $56,000. The value of the common stock issued was based on the fair value of
the stock determined by actual trading price quotes at the time of issuance.
|
|
●
|
Issued 24,919 shares of its common stock valued at $108,195 to its employees as stock
compensation.
The value of the common stock issued was based on the fair value of the stock at the time of issuance.
|
|
●
|
Issued 109,731 shares of its common stock and one (1) year common stock warrants to purchase
182,291
shares of common stock with an exercise price of $1.25 per share for a total value of $563,060 for consulting services
rendered. The value of the common stock issued was based on the fair value of the stock determined by actual trading price
quotes at the time of issuance. The value of the warrants was estimated at the time of grant using the Black-Scholes option
pricing model with the following assumptions: risk free interest rate of 0.40%, dividend yield of -0-%, volatility factor of
207.55% and expected life of one year.
|
|
●
|
Issued 355,754 shares of common stock valued at $1,135,124
to settle $964,384 of principal as part of settlement agreements with note holders and recognized a $170,740 loss on settlement
of debt. The value of the common stock issued was based on the fair value of the stock determined by actual trading price quotes
at the time of execution of the settlement agreements.
|
|
●
|
Issued 383,230 shares of its common stock on October
26, 2015, valued at $1,188,000, to the holders of Always On Vacation, Inc. involving a merger of Monaker’s wholly-owned
subsidiary AOV Holding, Inc. and Always On Vacation, Inc. effectively cancelling each shares of capital stock of Always on Vacation,
Inc. The common stock was recorded at fair value as of the acquisition dated according to ASC 805 and is treated as a business
combination.
|
The Company had 4,728,610 shares of common
stock issued and outstanding as of November 30, 2015 post-split based upon the 1:50 reverse stock split that occurred on June 25,
2015 and has retroactively adjusted the unaudited consolidated financial statements according to ASC 260-10-55-12.
Common Stock Warrants
At November 30, 2015, there were
1,006,685 warrants outstanding with a weighted average exercise price of $3.77 and weighted average life of 1.34 years.
During the nine months ended November 30, 2015, the Company granted 735,631 warrants – 182,291 warrants for consulting
fees, 12,500 warrants attached to Series C Preferred stock issuances, 510,840 warrants granted with common stock
subscriptions and 30,000 warrants granted for inducement to settle modified debt; 69,500 were exercised and 123,911 expired.
As of November 30, 2015 and February 28, 2015, the warrants have an intrinsic value of $0.00.
Common Stock Options
On August 23, 2015, the Company entered
into a stock option termination agreement with all the option holders. Due to the multiple reverse stock splits, the Company anticipated
it would be highly unlikely these options would be exercised and terminated all 81 options outstanding.
Note 14 - Commitments and Contingencies
The Company leases approximately 6,500
square feet of office space in Weston, Florida pursuant to a lease agreement, with Bedner Farms, Inc. of the building located at
2690 Weston Road, Weston, Florida 33331. In accordance with the terms of the lease agreement, the Company is renting the commercial
office space, for a term of five years commencing January 1, 2011 through December 31, 2015. The rent for the nine months ended
November 30, 2015 and 2014 was $109,024 and $103,856 respectively. In September of 2011, the Company sublet a portion of its office
space offsetting our rent expense by $1,500 per month. In November 2012, the Company entered into another agreement to sublet a
portion of its office space offsetting our rent expense by an additional $2,500 per month, this tenant will pay $2,750 as of January
2014. In January 2014, the total monthly rent sublet offset is $4,250.
On December 17, 2015, the Company signed
a new lease for approximately 2,500 square feet with Bedner Farms as the over-landlord and Swift Response, LLC as the sub-landlord
for office space location at 2690 Weston Road Weston, Florida 33331. The Company is renting commercial office space for three years
commencing January 1, 2016 through December 31, 2018. The rent for the three years are $78,000, $80,340, $82,750 respectively.
The following schedule represents obligations under written
commitments on the part of the Company that are not included in liabilities:
|
|
|
Current
|
|
|
|
|
|
|
Long
Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
And
|
|
|
|
|
|
|
|
|
FY
2016
|
|
|
FY
2017
|
|
|
thereafter
|
|
|
Totals
|
|
Consulting
|
|
|
$
|
25,875
|
|
|
$
|
103,500
|
|
|
$
|
207,000
|
|
|
$
|
336,375
|
|
Leases
|
|
|
|
26,144
|
|
|
|
81,481
|
|
|
|
149,700
|
|
|
|
257,325
|
|
Other
|
|
|
|
97,447
|
|
|
|
331,764
|
|
|
|
663,528
|
|
|
|
1,092,739
|
|
Totals
|
|
|
$
|
149,466
|
|
|
$
|
516,745
|
|
|
$
|
1,020,228
|
|
|
$
|
1,686,439
|
|
Legal Matters
The Company is involved, from time to time,
in litigation, other legal claims and proceedings involving matters associated with or incidental to our business, including, among
other things, matters involving breach of contract claims, intellectual property, employment issues, vendor matters, and other
related claims. The Company believes that the resolution of currently pending matters will not individually or in the aggregate
have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation
or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or
other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such
litigation or claims.
There is currently a case pending whereby
the Company’s Chief Executive Officer (the “Defendant”) is being sued for allegedly breaching a contract, which
he signed in his role as the CEO of the Company’s wholly owned subsidiary Extraordinary Vacations Group, Inc. (“Extraordinary
Vacations”). The case is being strongly contested. The Defendant filed a motion to dismiss plaintiff’s amended complaint
with prejudice and such motion has been argued before the judge in the case. The Company is currently awaiting the judge’s
ruling at this time.
The Company is a defendant in a lawsuit
filed by Twelfth Child Entertainment in the Circuit Court for Palm Beach, Florida alleging that Monaker owes 11,000 shares of Series
D Preferred stock for a License Agreement. The case has been resolved in arbitration and the Twelfth Child was granted an arbitration
award of approximately $80,000. However, the Company is continuing to negotiate a settlement that would set aside this award.
There is a case that was filed on March
14, 2014 whereby the Company is a defendant in a lawsuit filed by Lewis Global Partners in the Circuit Court for Broward County,
Florida alleging that Monaker owes 2,700 shares of Series B Preferred stock for a Consulting Agreement. The case is being strongly
contested and is being sent to arbitration.
The Company is unable to determine the
estimate of the probable or reasonably possible loss or range of losses arising from the above legal proceedings.
Note 15 – Segment Reporting
Accounting Standards Codification 280-16
“Segment Reporting”, established standards for reporting information about operating segments in annual consolidated
financial statements and required selected information about operating segments in interim financial reports issued to stockholders.
It also established standards for related disclosures about products, services, and geographic areas. Operating segments are defined
as components of the enterprise about which separate financial information is available that is evaluated regularly by the chief
operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.
The Company currently has only one segment
in full operation, Travel. In the prior year, the Company had consolidated RealBiz and had a second segment, real estate media
which is no longer reported.
The Company did not generate any revenue
outside the United States for the nine months ended November 30, 2015 and 2014 and did not have any assets located outside the
United States.
Note 16 – Fair Value Measurements
The Company has adopted the provisions
of ASC Topic 820, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in GAAP,
and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but provides guidance
on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. The fair value
hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable
inputs).
The hierarchy consists of three levels:
|
●
|
Level
1 - Quoted prices in active markets for identical assets or liabilities.
|
|
●
|
Level
2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets of
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or liabilities.
|
|
●
|
Level
3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets
or liabilities.
|
Our assessment of the significance of a
particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or
liability.
The Company analyzes all financial instruments
with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives
and Hedging”. Derivative liabilities are adjusted to reflect fair value at each period end, with an increase or decrease
in the fair value being recorded in results of operations as adjustments to fair value of derivatives. Effects of interactions
between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial instruments.
In addition, the fair values of freestanding derivative instruments such as warrant and option derivatives are valued using the
Black-Scholes model.
The Company uses Level 3 inputs for its valuation
methodology for the warrant derivative liabilities and embedded conversion option liabilities as their fair values were determined
by using the Black-Scholes option-pricing model based on various assumptions. The Company’s derivative liabilities are adjusted
to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations
as adjustments to fair value of derivatives.
The following table sets forth
the liabilities as of November 30, 2015, which are recorded on the balance sheet at fair value on a recurring basis by level within
the fair value hierarchy. As required, they are classified based on the lowest level of input that is significant to the fair
value measurement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
Description
|
|
November 30, 2015
|
|
|
Quoted
Prices
in
Active Markets for
Identical Assets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible promissory note with embedded conversion option
|
|
$
|
178,212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
178,212
|
Total
|
|
$
|
178,212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
178,212
|
The following table sets forth a summary of changes
in fair value of our derivative liabilities for the nine months ended November 30, 2015:
|
|
|
|
|
Beginning balance, February 28, 2015
|
|
$
|
287,149
|
|
Change in fair value of embedded conversion feature of:
|
|
|
|
|
Gain on change in fair value of derivatives on convertible promissory notes
|
|
|
(108,937
|
)
|
Ending balance, November 30, 2015
|
|
$
|
178,212
|
|
Note 17 – Subsequent Events
The Company has evaluated subsequent events occurring
after the balance sheet date and has identified the following:
During December 2015 and January 2016, the Company:
|
●
|
Converted $350,000 in modified convertible promissory notes and $50,000 in
notes payable in accordance with an exchange agreement with a note holder and issued 226,292 shares of common stock.
|
|
●
|
Issued 222,400 shares of common stock upon the conversion of 111,200 shares
of Series B Preferred stock.
|
|
●
|
Issued 10,000 shares of common stock for the conversion of a $12,500 convertible
promissory note.
|
|
●
|
Issued 5,000 shares of common stock to various parties to settle debt in relation
to the Always on Vacation acquisition. Common shares issued for AOV shareholders, deferred compensation and bonus shares.
|
|
●
|
Issued 61,430 shares of common stock as part of the Always On Vacation exchange
agreement.
|
|
●
|
Issued 20,635 shares of Company common stock for various consulting and employment
agreements.
|
We are currently assessing the impact of the accounting for these transactions.
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Forward Looking Statements
The following discussion should be read in conjunction
with the attached consolidated unaudited financial statements and notes thereto, and our consolidated audited financial statements
and related notes for our fiscal year ended February 28, 2015 found in our Annual Report on Form 10-K. 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 in our Annual Report on Form 10-K.
This Report contains statements that we believe
are, or may be considered to be, “forward-looking statements”. All statements other than statements of historical fact
included in this Report regarding the prospects of our industry or our prospects, plans, financial position or business strategy,
may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking
words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,”
“project,” “anticipate,” “believe,” “plans,” “forecasts,” “continue”
or “could” or the negatives of these terms or variations of them or similar terms. Furthermore, such forward-looking
statements may be included in various filings that we make with the Securities and Exchange Commission (“SEC”) or press
releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that
the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will
prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well
as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers
are cautioned not to place undue reliance on any forward-looking statements contained herein, which reflect management’s
opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results
of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our
reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained in this Report.
Critical Accounting Policies and Estimates
The discussion and analysis of the Company’s
financial condition and results of operations are based upon its consolidated unaudited financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited
financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates past judgments
and estimates, including those related to bad debts, accrued liabilities, convertible promissory notes and contingencies. Management
bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting
policies and related risks described in the Company’s annual report on Form 10-K as filed with the Securities and Exchange
Commission on June 16, 2015 are those that depend most heavily on these judgments and estimates. As of November 30, 2015, there
had been no material changes to any of the critical accounting policies contained therein.
Overview
We are a media based company utilizing video as
a key driver to create consumer awareness of products and opportunities in the travel, home and employment sectors. To further
loyalty and long term relationships we have created a membership reward programs and multiple business associations and partnerships.
Additionally we hold a 51% majority ownership in Name Your Fee, LLC for the employment segment, a minority interest in RealBiz
Media Group, Inc. a publicly traded real estate media company (“RealBiz”), servicing the real estate segment and a
10% ownership in R&R Television Network a company services the lifestyle industry. The Company’s mission has been to
both create and acquire travel, employment and real estate video content that can be delivered on any screen (Television, web and
mobile), all with interactive advertising and transactional shopping components designed to engage and enable viewers to request
information, make purchases and get an in-depth look at products and services all through their device of choice. Since our deconsolidation
of RealBiz, our only operational segment is our travel segment.
Summary
Monaker Group, Inc.
(“Monaker”) is a multi-faceted interactive media company whose key focus is around what the Company believes to
be the most universal, yet powerful consumer-passion categories being - travel, home and work. The Company is engaged in the
business of providing digital media and marketing services for these industries along with the opportunity to create long
term relationships through its Home & Away Club membership programs. During the nine months ended November 30, 2015, all
of our revenue was derived from our travel operations. The Company generates revenue from commissions from traditional sales
of our travel products and expects to accelerate its revenue base through: (i) advertising revenue from preferred suppliers,
sponsors and referral fees, (ii) travel and employment media services which include video sponsorship packages, pre-roll
advertising, commissions and referral fees; and (iii) revenue derived from Home & Away Club memberships.
The Company’s Media Group concentrates awareness
campaigns through its three divisions:
(1) Travel – which encompasses Maupintour
(one of the oldest luxury tour operators in the United States) NextTrip.com/Voyage.tv, a video and media website with thousands
of hours of travel footage.
(2) Employment - the NameYourFee.com website which is designed to allow
recruiters to expand their reach of candidates to potential employers.
(3) Home – via its Home & Away Club loyalty program and minority
interest in RealBiz.
The Company targets content utilizing video via
digital platforms including satellite, cable, and broadcast, Broadband, Web, Print and the development of a Home & Away Mobile
App.
We are currently primarily focused only on our
travel segment and expect to expand into the employment and Home/Membership services during the next quarter. The following is
an overview of the 3 areas that currently have travel operations and/or the Company is imminently commencing promotion utilizing
our media services.
1. Maupintour Extraordinary Vacations (“Maupintour”)
is the oldest tour operator in North America having a history of over 65 years of creating and booking tours and activity-focused
trips, from private tours of the Vatican to bicycling in the Alps to wine tasting in Italy. Maupintour books these trips and serves
thousands of travel agents around the world. The Company has an active alumni that desires luxury vacations that includes private
sightseeing, fine dining and 4 and 5 star accommodations. The Company previously ran group tours ranging from 10 to 25; however
it has moved its model to customization of high end tours for families, small groups and individuals. The Company’s most
popular destinations are Egypt, Israel, Europe, Africa, Asia and Peru. The Company’s peak season for this division is from
February to July. Maupintour’s website is www.Maupintour.com.
2. NextTrip.com is being repositioned as an all-purpose
travel site that includes customer support, relevant social networking, and travel business showcases, with a primary emphasis
on Video to targeted web users and a secondary promotion to TV viewers via VOD promotion. The site is scheduled for launch in the
2nd quarter of this fiscal year and will work in conjunction with the Home & Away Club App to provide users with relevant information
utilizing its diverse video library and experience to entertains, informs, and offers utility and savings to members. The travel
website currently offers users, free of charge, hundreds of destination videos and promotes worldwide vacation destinations. NextTrip.com
plans to generate revenues through advertising, travel commission, referral fees, and its affiliate program. The travel products
and fulfillment and services are both created by the company and/or contracted out to key industry suppliers including Mark Travel.
Mark Travel is the largest wholesaler of travel products in the United States. NextTrip.com will look to serve relevant videos
to travelers via four key elements: (i) television ads; (ii) travel video on demand for web and TV; (iii) broadband telecast (with
the web player surrounded by interactive banner ads and/or discount travel coupons); and (iv) the development of its Travel App.
3. The Home & Away Club (H&AC). The Company
has launched the Home & Away Club website and is both targeting existing customers and new potential customers to the site
by offering up to $500 Rewards so consumers can try before they buy. As a primary means of creating awareness for H&AC the
Company is utilizing existing customers, relationships and forging new partnerships within the travel, real estate and employment
sectors. The Company intends to utilize targeted video for the travel, leisure, home products and services to engage and enable
viewers to request information, make reservations and get an in-depth look at products and services the Club offers. The Company
created a points based program for real estate agents that utilize the RealBiz services. With the Home and Away club, agents can
earn dollars for completing actions and can receive greatly discounted gifts to give to their happy clients. This allows real estate
agents the ability to earn and/or purchase Home and Away Club membership for themselves and/or gifting to their customers. The
membership gives the homeowner access to wholesale pricing on travel, lifestyle and home products while providing the real estate
agents a loyalty platform that allows them the means to stay in contact with their customer.
Sufficiency of Cash Flows
Because current cash balances and our projected
cash generated from operations are not sufficient to meet our cash needs for working capital and capital expenditures, management
intends to seek additional equity or obtain additional credit facilities. However, there can be no assurance that we will be able
to issue additional capital upon terms acceptable to us. The sale of additional equity will result in additional dilution to our
shareholders. A portion of our cash may be used to acquire or invest in complementary businesses or products or to obtain the right
to use complementary technologies. From time to time, in the ordinary course of business, we evaluate potential acquisitions of
such businesses, products or technologies.
RESULTS OF OPERATIONS
For the Three Months Ended November 30, 2015 Compared to the Three
Months Ended November 30, 2014
Revenues
Our total revenues decreased 93% to $21,717 for
the three months ended November 30, 2015, compared to $310,341 for the three months ended November 30, 2014, a decrease of $288,624.
The decrease is mainly due to the deconsolidation of our former consolidated subsidiary RealBiz and, consequently, our revenues
no longer include the revenue of RealBiz. This decrease in revenues was partially offset by the recognition of travel revenues,
previously deferred, because the travel had not occurred.
Revenues from the travel segment decreased 76%
to $21,717 for the three months ended November 30, 2015, compared to $89,393 for the three months ended November 30, 2014, a decrease
of $67,676. The decrease is attributable to a decrease in tour and cruises booked by our luxury tour operation which provides escorted
and independent tours worldwide to upscale travelers.
Revenues from the RealBiz real estate media operations
decreased 100% to $0 for the three months ended November 30, 2015, compared to $220,948 for the three months ended November 30,
2014, a decrease of $220,948, due to the deconsolidation of our former consolidated subsidiary RealBiz.
Operating Expenses
Our operating expenses include cost of revenues,
technology and development, salaries and benefits, selling and promotions and general and administrative expenses. Our operating
expenses decreased 24% to $1,322,357 for the three months ended November 30, 2015, compared to $1,737,655 for the three months
ended November 30, 2014, a decrease of $415,298. This decrease was mainly attributable to deconsolidation of the expenses of our
former consolidated subsidiary, RealBiz.
Other Income (Expenses)
Interest income increased to
$2,367,209 for three months ended November 30, 2015, compared to interest expense of $376,980 for the three months ended
November 30, 2014, an increase in interest income of $2,744,189, primarily due to the inducement expense relating to inducing
a convertible debt holder to convert its debt into common shares and warrants as discussed in Note 13. Gain on change in fair
value of derivatives increased 120% to $8,302 for the three months ended November 30, 2015, compared to a loss on change in
fair value of derivatives of $40,635 for the three months ended November 30, 2014, an increase of $48,937 primarily due to
change in the per share value of the underlying common stock and conversion of outstanding principal in convertible
promissory notes containing embedded conversion options. There was also a $6,255,188 decrease in gain on deconsolidation of
subsidiary, relating to RealBiz, for the three months ended November 30, 2014, compared to no gain on deconsolidation of
subsidiary for the three months ended November 30, 2015. We had $695,598 of loss on settlement of debt for the three months
ended November 30, 2015. The loss was due primarily to the inducement of converting a debt and equity holder into common
shares. We had total other expense of $287,140 for the three months ended November 30, 2015, compared to total other income
of $5,426,006 for the three months ended November 30, 2014, a decrease of $5,138,866, mainly due to the reduction in gain on
deconsolidation of subsidiary.
Net Loss
We had a net loss of $1,013,500 for the three months
ended November 30, 2015, compared to net income of $3,998,692 for the three months ended November 30, 2014, a decrease of $5,012,192.
The increase in loss from 2014 to 2015 was primarily a result of the deconsolidation of our former consolidated subsidiary, RealBiz.
RESULTS OF OPERATIONS
For the Nine Months Ended November 30, 2015 Compared to the Nine
Months Ended November 30, 2014
Revenues
Our total revenues decreased 52% to $507,077 for
the nine months ended November 30, 2015, compared to $1,061,643 for the nine months ended November 30, 2014, a decrease of $554,566.
The decrease is mainly due to the deconsolidation of our former consolidated subsidiary, RealBiz, and no longer including the revenue
of RealBiz. The decrease was partially offset by the receipt of deferred revenue.
Revenues from the travel segment increased 71%
to $507,077 for the nine months ended November 30, 2015, compared to $295,679 for the nine months ended November 30, 2014, an increase
of $211,398. The increase is attributable to the receipt of deferred revenue.
Revenues from the RealBiz real estate media operations
decreased 100% to $0 for the nine months ended November 30, 2015, compared to $765,964 for the nine months ended November 30, 2014,
due to the deconsolidation of our former consolidated subsidiary, RealBiz, and no longer including the revenue of RealBiz in our
financials.
Operating Expenses
Our operating expenses include cost of revenues,
technology and development, salaries and benefits, selling and promotions and general and administrative expenses. Our operating
expenses decreased 49% to $2,879,627 for the nine months ended November 30, 2015, compared to $5,694,870 for the nine months ended
November 30, 2014, a decrease of $2,815,243. This decrease was mainly attributable to deconsolidation of the expenses of the former
consolidated subsidiary, RealBiz.
Other Income (Expenses)
Interest expense decreased to
$340,987 for the nine months ended November 30, 2015, compared to $909,830 for the nine months ended November 30, 2014, a
decrease of $568,843, primarily due to the inducement expense relating to inducing a debt holder to convert its debt into
common shares and warrants as disclosed in Note 14. Loss on settlement of debt increased 100% to $919,598 for the nine
months ended November 30, 2015, compared to $0 for the nine months ended November 30, 2014. The loss was due primarily to the
inducement of converting a debt and equity holder into common shares. Gain on change in fair value of derivatives decreased
90% to $108,937 for the nine months ended November 30, 2015, compared to $1,102,932 for the nine months ended November 30,
2014, a decrease of $993,995 primarily due to change in the per share value of the underlying common stock and conversion of
outstanding principal in convertible promissory notes containing embedded conversion options. Gain on deconsolidation of
subsidiary decreased 100% to $0 for the nine months ended November 30, 2015, compared to $6,255,188 for the nine months ended
November 30, 2014, the decrease of $6,255,188 due to restating the effect of deconsolidation. Total other expense decreased
to $2,546,154 for the nine months ended November 30, 2015, compared to a $6,202,807 gain for the nine months ended November
30, 2014, an increase in loss of $8,748,961 primarily due to non-recurring expenses resulting from the deconsolidation of our
former consolidated subsidiary RealBiz.
Net Loss
We had a net loss of $4,918,704 for the nine months
ended November 30, 2015, compared to net income of $1,569,580 for the nine months ended November 30, 2014, an increase in net loss
of $6,488,284. The increase in loss from 2014 to 2015 was primarily due to an increase of $1,023,172 in interest expense from loss
on inducement expense on conversion of debt, and a decrease of $6,255,188 in gain on deconsolidation of subsidiary which were offset
by a decrease in operating expenses of $2,815,243.
Contractual Obligations
The following schedule represents obligations under written commitments
on the part of the Company that are not included in liabilities:
|
|
|
Current
|
|
|
|
|
|
Long
Term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
And
|
|
|
|
|
|
|
|
FY
2016
|
|
|
FY
2017
|
|
|
thereafter
|
|
|
Totals
|
|
Consulting
|
|
|
$
|
25,875
|
|
|
$
|
103,500
|
|
|
$
|
207,000
|
|
|
$
|
336,375
|
|
Leases
|
|
|
|
26,144
|
|
|
|
81,481
|
|
|
|
149,700
|
|
|
|
257,325
|
|
Other
|
|
|
|
97,447
|
|
|
|
331,764
|
|
|
|
663,528
|
|
|
|
1,092,739
|
|
Totals
|
|
|
$
|
149,466
|
|
|
$
|
516,745
|
|
|
$
|
1,020,228
|
|
|
$
|
1,686,439
|
|
Liquidity and Capital Resources
At November 30, 2015, we had $287,892 cash on-hand,
an increase of $61,480 from $226,412 at the start of fiscal 2016. The increase in cash was due primarily to equity fund raising
offset by operating expenses, website development costs and advances to affiliates.
Net cash used in
operating activities was $1,523,535 for the nine months ended November 30, 2015, a decrease of $790,182 from $2,313,717 used
during the nine months ended November 30, 2014. This decrease was primarily due to an increase in loss on inducement to
convert a debt into common stock included in interest expense, a decrease in the gain on change in fair value of derivatives,
a decrease in the non-controlling interest in income of consolidated subsidiaries, an increase in loss on debt conversions
and an increase in stock based compensation, offset by increases in net loss and to a lesser extent a decrease in the
amortization of intangibles, a decrease in amortization of debt, a decrease in directors fees, and a decrease in accounts
payable and accrued expenses.
Net cash provided by investing activities increased
to $65,000 for the nine months ended November 30, 2015, compared to $599,257 used in investing activities for the nine months ended
November 30, 2014, an increase of $664,257 primarily due to website development costs incurred in the prior year.
Net cash provided by financing activities decreased
by $1,277,492 to $1,520,015, for the nine months ended November 30, 2015, compared to $2,797,507 for the nine months ended November
30, 2014. This decrease was primarily due to the decrease of proceeds from convertible notes of $470,000, net decrease of proceeds
received from the issuance of Series B Preferred stock shares of $125,000 and Series C Preferred stock shares of $519,500, a decrease
of proceeds received in advance subscriptions of $277,500 which was offset by an increase of proceeds from the issuance of common
stock of $158,540.
The growth and development of our business will
require a significant amount of additional working capital. We currently have limited financial resources and based on our current
operating plan, we will need to raise additional capital in order to continue as a going concern. However, there can be no assurance
that we will be able to raise additional capital upon terms that are acceptable to us. We currently do not have adequate cash to
meet our short or long-term objectives. In the event additional capital is raised, it may have a dilutive effect on our existing
stockholders.
We are a media company currently primarily focusing
on travel and real estate by utilizing multiple media platforms including the Internet, radio and television. As a company that
has recently changed our business model and emerged from the development phase with a limited operating history, we are subject
to all the substantial risks inherent in the development of a new business enterprise within an extremely competitive industry.
Due to the absence of an operating history under the new business model and the emerging nature of the markets in which we compete,
we anticipate operating losses until we can successfully implement our business strategy, which includes all associated revenue
streams. Our multi-platform media revenue model is new and evolving, and we cannot be certain that it will be successful. The potential
profitability of this business model is unproven. Our ability to generate revenues depends, among other things, on our ability
to create enough viewership to provide advertisers, sponsors, travelers and homebuyers value. Accordingly, we cannot assure you
that our business model will be successful or that we can sustain revenue growth, achieve or sustain profitability, or continue
as a going concern.
We will need to raise substantial additional capital
to support the on-going operation and increased market penetration of our real estate and travel business including the development
of national sales representation for national and global advertising and sponsorships, increases in operating costs resulting from
additional staff and office space until such time as we generate revenues sufficient to support the business. We believe that in
the aggregate, we will need approximately $750,000 to $1.5 million to repay debt obligations, provide capital expenditures for
additional equipment and satisfy payment obligations, office space and systems required to manage the business, and cover other
operating costs until our planned revenue streams from advertising, sponsorships, e-commerce, travel and real estate are fully-
implemented and begin to offset our operating costs. There can be no assurances that we will be successful in raising the required
capital to complete this portion of our business plan.
Since our inception, we have funded our operations
with the proceeds from the private equity financings. We have issued these shares without registration in private placements under
Section 4(a)(2) of the Securities Act of 1933, as amended, (the “Securities Act”) afforded the Company. The shares
were sold solely to “accredited investors” as that term is defined in the Securities Act. Currently, revenues provide
less than 20% of our cash requirements. The remaining cash need is derived from raising additional capital. The current monthly
cash burn rate is approximately $200,000, with the expectation of profitability by the end of fiscal 2016.