The accompanying notes are an
integral part of these consolidated financial statements.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
1: BASIS OF PRESENTATION
The
unaudited interim consolidated financial information furnished herein reflects all adjustments, consisting only of normal recurring
items, which in the opinion of management are necessary to fairly state RealBiz Media Group, Inc. and its subsidiaries’
(collectively, the “Company” or “we,” “us” or “our”) financial position, results
of operations and cash flows for the dates and periods presented and to make such information not misleading. Certain information
and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) have been omitted pursuant to rules and regulations of the Securities
and Exchange Commission (“SEC”); nevertheless, management of the Company believes that the disclosures herein are
adequate to make the information presented not misleading.
These
unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated
financial statements for the year ended October 31, 2016, contained in the Company’s Annual Report on Form 10-K filed with
the SEC on February 10, 2017. The results of operations for the nine months ended July 31, 2017, are not necessarily indicative
of results to be expected for any other interim period or the fiscal year ending October 31, 2017.
The
Company evaluated subsequent events through the date its financial statements were issued. No significant recognized or non recognized
subsequent events were noted other than those discussed in Note 7, Debt.
Reclassifications
We
have reclassified certain prior period amounts in our consolidated financial statements to conform to our current period presentation.
NOTE 2: ORGANIZATION AND NATURE OF BUSINESS
We are currently engaged in two primary businesses,
which include providing digital media and marketing services for the real estate industry and the international food business.
We intend to divest the real estate business during this fiscal year.
Food
Products
Verus
Foods, Inc. (“Verus”) a Nevada corporation, and our wholly owned subsidiary, was incorporated in January 2017,
and is an international supplier of consumer food products. Verus markets under its own brand primarily to supermarkets, hotels
and other members of the wholesale trade. In 2017, Verus is pursuing a three-pronged development program through the addition
of cold-storage facilities, product line expansion and new vertical farm-to-market operations. Verus’ initial focus is on
frozen foods, particularly meat, poultry, seafood, vegetables and french fries. Verus has a significant regional presence in the
Middle East and North Africa (“MENA”) and sub-Saharan Africa (excluding Office of Foreign Assets Control
(“OFAC”) restricted nations), with deep roots in the Gulf Cooperation Council (“GCC”) countries, which
includes the United Arab Emirates, Oman, Bahrain, Qatar, Kingdom of Saudi Arabia and Kuwait. In January 2017, Verus received a
contract valued at $78 million to supply beef to the GCC countries. The first orders under this contract were shipped in February
2017.
Real
Estate
We have generated revenue from service fees (video creation and production and website hosting (ReachFactor))
and product sales (Nestbuilder Agent 2.0 and Microvideo app). We were formed through the merging of three divisions: (i) our fully
licensed real estate division (formerly known as Webdigs); (ii) our TV media contracts (Home Preview Channel /Extraordinary Vacation
Homes) division; and (iii) our Real Estate Virtual Tour and Media group (RealBiz 360). The assets of these divisions were used
to create a new suite of real estate products and services that create stickiness through the utilization of video, social media
and loyalty programs. At the core of our programs is our proprietary video creation technology which allows for an automated conversion
of data (text and pictures of home listings) to a video with voice and music. We provide video search, storage and marketing capabilities
on multiple platform dynamics for web, mobile and TV. Once a home, personal or community video is created using our proprietary
technology, it can be published to social media, email or distributed to multiple real estate websites, broadband or television
for consumer viewing.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
3: NEW ACCOUNTING PRONOUNCEMENTS
In August 2016, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
, which provides clarification
on classifying a variety of activities within the statement of cash flows. The standard is effective for the Company as
of November 1, 2018, with early adoption permitted. The Company is currently assessing the impact the new guidance
will have on its statement of cash flows.
In March 2016, the FASB issued ASU 2016-09,
Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
, which simplifies
the accounting for share-based payment transactions, including income taxes, classification of awards as either equity or liabilities
and classification on the statement of cash flows. The new guidance also allows an entity to make an accounting policy election
to account for forfeitures when they occur or to estimate the number of awards that are expected to vest with a subsequent true
up to actual forfeitures (current GAAP). The standard is effective for the Company as of November 1, 2017, with
early adoption permitted. The Company is currently assessing the impact the new guidance will have on its consolidated financial
statements.
In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606)
(“ASU 2014-09”), which supersedes previous revenue recognition
guidance. ASU 2014-09 requires that a company recognize revenue at an amount that reflects consideration to which the company
expects to be entitled in exchange for transferring goods or services to a customer. In applying the new guidance, a company will
(i) identify the contract(s) with customer; (ii) identify the performance obligations in the contract; (iii) determine transaction
price; (iv) allocate the transaction price to the contract’s performance obligations; and (v) recognize revenue when (or
as) the entity satisfies a performance obligation. ASU 2014-09 was to be effective for reporting periods beginning after December
15, 2016. However, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date. This new guidance is
effective for the Company beginning November 1, 2018 and can be adopted using either a full retrospective or modified approach.
The Company is currently evaluating the impact of ASU 2014-09 on its financial position, results of operations and cash flows.
In November 2015, the FASB issued ASU 2015-17,
Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes
(“ASU 2015-17”), to simplify the presentation
of deferred income taxes. The amendments in this update require that all deferred tax assets and liabilities, including those
previously classified as current, be classified as a single noncurrent line in a classified statement of financial position. The
amendments in the standard will align the presentation of deferred income tax assets and liabilities with International Financial
Reporting Standards. The standard is effective for the Company as of November 1, 2017 with early adoption permitted. The Company
plans to adopt the new guidance on November 1, 2017. The Company is currently evaluating the impact of ASU 2015-17 on its financial
position, results of operations and cash flows.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
4: FAIR VALUE OF FINANCIAL INSTRUMENTS
The
Company has adopted FASB ASC Topic 820,
Fair Value Measurements and Disclosures
(“ASC 820”), formerly SFAS
No. 157,
Fair Value Measurements
. ASC 820 defines “fair value” as the 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 describes three levels of inputs that may be used to measure fair value:
Level
1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level
2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly.
Level
3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s
best estimate of fair value.
Financial
instruments consist principally of cash, accounts receivable, prepaid expenses, due from affiliates, accounts payable, accrued
liabilities and other current liabilities. The carrying amounts of such financial instruments in the accompanying balance sheets
approximate their fair values due to their relatively short-term nature. The fair value of long-term debt is based on current
rates at which the Company could borrow funds with similar remaining maturities. The carrying amounts approximate fair value.
It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these
financial instruments.
NOTE
5: GOING CONCERN
The accompanying unaudited interim
consolidated 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 has incurred a net loss of $1,322,152
and negative cash flows from operations of $745,976 for the nine months ended July 31, 2017. As of July 31, 2017, the Company
had a working capital deficit of $911,132 and an accumulated deficit of $22,966,603. It is management’s opinion that
these facts raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited interim
consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts nor do the amounts and classification of liabilities that might be necessary should the Company be unable
to continue as a going concern for a period of twelve months from the date of this report.
In order to meet its working capital needs
through the next twelve months, the Company may consider plans to raise additional funds through the issuance of additional shares
of common or preferred stock or through the issuance of debt instruments. Although the Company intends to obtain additional
financing to meet our cash needs, the Company may be unable to secure any additional financing on terms that are favorable or
acceptable to it, if at all.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
6: DUE FROM/TO AFFILIATES
During the normal course of business, the
Company received and/or made advances for operating expenses and various debt obligation conversions to/from our
former parent company, Monaker Group, Inc. (“Monaker”). As a result of these transactions, the Company has
recorded a receivable of $1,287,517 as of July 31, 2017 and October 31, 2016, respectively. On May 11, 2016, the Company filed
a lawsuit against Monaker seeking collection of this balance. Due to uncertainty surrounding our ability to collect this amount,
management has elected to record an allowance against the full amount of this receivable (See Note 11).
NOTE
7: DEBT
The
Company records debt net of debt discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial
conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification.
The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital.
Debt discount is amortized to interest expense over the life of the debt.
As
of July 31, 2017 and October 31, 2016, there was $693,750 and $1,044,681 of convertible notes payable outstanding, net of discounts,
respectively.
On
September 1, 2017, the Company issued Power Up Lending Group Ltd. a convertible note in the principal amount of $78,000 (the “Power
Up Note 4”). The Power Up Note 4 accrues interest at a rate of 8% per annum and matures on June 10, 2018. Pursuant to the
terms of the Power Up Note 4, the Company may prepay the principal amount of the note together with accrued interest at any time
on or prior to February 28, 2018, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the
outstanding principal and accrued interest of the note are generally convertible into shares of the Company’s common stock
at a discount rate of 39% of the market price on the date of conversion, subject to certain restrictions.
On
August 2, 2017, the Company issued JSJ Investments Inc. a convertible note in the principal amount of $125,000 (the “JSJ
Note 2”). The JSJ Note 2 accrues interest at a rate of 8% per annum and matures on May 2, 2018. Pursuant to the terms of
the JSJ Note 2, the Company may prepay the principal amount of the note together with accrued interest at any time on or prior
to January 29, 2018, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the outstanding principal
and accrued interest of the note are generally convertible into shares of the Company’s common stock at a discount rate
of 39% of the market price on the date of conversion, subject to certain restrictions.
On
July 17, 2017, the Company issued Crossover Capital Fund II, LLC a convertible note in the principal amount of $100,250 (the “Crossover
Note”). The Crossover Note accrues interest at a rate of 9% per annum and matures on April 17, 2018. Pursuant to the terms
of the Power Up Note 3, the Company may prepay the principal amount of the note together with accrued interest at any time on
or prior to January 13, 2018, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the outstanding
principal and accrued interest of the note are generally convertible into shares of the Company’s common stock at a discount
rate of 38.5% of the market price on the date of conversion, subject to certain restrictions.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On
June 29, 2017, the Company issued Power Up Lending Group Ltd. a convertible note in the principal amount of $40,000 (the “Power
Up Note 3”). The Power Up Note 3 accrues interest at a rate of 8% per annum and matures on March 30, 2018. Pursuant to the
terms of the Power Up Note 3, the Company may prepay the principal amount of the note together with accrued interest at any time
on or prior to December 26, 2017, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the
outstanding principal and accrued interest of the note are generally convertible into shares of the Company’s common stock
at a discount rate of 39% of the market price on the date of conversion, subject to certain restrictions.
On
June 20, 2017, the Company issued EMA Financial, LLC a convertible note in the principal amount of $100,000 (the “EMA Note”).
The EMA Note accrues interest at a rate of 8% per annum and matures on June 20, 2018. Pursuant to the terms of the EMA Note, the
Company may prepay the principal amount of the note together with accrued interest at any time on or prior to December 17, 2017,
subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the outstanding principal and accrued
interest of the note are generally convertible into shares of the Company’s common stock at a discount rate of 40% of the
market price on the date of conversion, subject to certain restrictions.
On
June 15, 2017, the Company issued GS Capital Partners, LLC a convertible note in the principal amount of $82,000 (the “GS
Note”). The GS Note accrues interest at a rate of 8% per annum and matures on June 15, 2018. Pursuant to the terms of the
GS Note, the Company may prepay the principal amount of the note together with accrued interest at any time on or prior to December
12, 2017, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the outstanding principal and
accrued interest of the note are generally convertible into shares of the Company’s common stock at a discount rate of 36%
of the market price on the date of conversion, subject to certain restrictions.
On
May 17, 2017, the Company issued Auctus Fund, LLC a convertible note in the principal amount of $130,000 (the “Auctus Note”).
The Auctus Note accrues interest at a rate of 8% per annum and matures on February 17, 2018. Pursuant to the terms of the Auctus
Note, the Company may prepay the principal amount of the note together with accrued interest at any time on or prior to November
13, 2017, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the outstanding principal and
accrued interest of the note are generally convertible into shares of the Company’s common stock at a discount rate of 40%
of the market price on the date of conversion, subject to certain restrictions.
On
April 19, 2017, the Company issued JSJ Investments Inc. a convertible note in the principal amount of $125,000 (the “JSJ
Note 1”). The JSJ Note 1 accrues interest at a rate of 8% per annum and matures on January 19, 2018. Pursuant to the terms
of the JSJ Note 1, the Company may prepay the principal amount of the note together with accrued interest at any time on or prior
to October 16, 2017, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the outstanding principal
and accrued interest of the note are generally convertible into shares of the Company’s common stock at a discount rate
of 39% of the market price on the date of conversion, subject to certain restrictions.
On
April 4, 2017, the Company issued Power Up Lending Group Ltd. a convertible note in the principal amount of $38,000 (the “Power
Up Note 2”). The Power Up Note 2 accrues interest at a rate of 8% per annum and matures on January 30, 2018. Pursuant to
the terms of the Power Up Note 2, the Company may prepay the principal amount of the note together with accrued interest at any
time on or prior to October 1, 2017, subject to certain prepayment penalties. Pursuant to the terms of the convertible note, the
outstanding principal and accrued interest of the note are generally convertible into shares of the Company’s common stock
at a discount rate of 39% of the market price on the date of conversion, subject to certain restrictions.
On
February 21, 2017, the Company issued Power Up Lending Group Ltd. a convertible note in the principal amount of $78,500 (the “Power
Up Note 1”). The Power Up Note 1 accrues interest at a rate of 8% per annum and matures on November 30, 2017. Pursuant to
the terms of the Power Up Note 1, the Company may prepay the principal amount of the note together with accrued interest at any
time on or prior to August 28, 2017, subject to certain prepayment penalties. On August 25, 2017, the Company repaid the principal
and accrued interest in full on the Power Up Note 1 in the amount of $114,211.
In December 2016, one of our convertible
noteholders converted $25,000 of outstanding principal into 25,000 shares of our Series C Convertible Preferred Stock, at a price
of $1.00 per share.
On December 31, 2016, the holders of convertible
notes with aggregate outstanding principal and accrued interest balances of $1,185,624 converted their notes into
69,368,539 shares of our common stock.
In
November 2015, the Company consummated a settlement with Himmil Investments Ltd. (“Himmil”) pursuant to which we redeemed
our outstanding 7.5% convertible promissory note issued to Himmil and cancellation of their common stock purchase warrants for
$475,000.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
8: STOCKHOLDERS’ EQUITY
The total number of shares of all classes
of stock that the Company shall have the authority to issue is 1,125,000,000 shares consisting of 1,000,000,000
shares of common stock with a $0.001 par value per shares (increased from 250,000,000 as of April 7, 2017); of which
241,651,943 are outstanding as of the date of this report and 320,000,000 shares of preferred stock, par value $0.001 per share
of which (A) 120,000,000 shares have been designated as Series A Convertible Preferred of which 100,000 are outstanding as of
the date of this report, (B) 1,000,000 shares have been designated as Series B Convertible Preferred Stock, of which no
shares are outstanding as of the date of this report and (C) 1,000,000 have been designated as Series C Convertible Preferred
Stock, of which 160,000 shares are outstanding as of the date of this report.
On November 18, 2016, the Board and the
holders of a majority of the voting power of our shareholders approved an amendment to our articles of incorporation to affect
a 200:1 reverse split of our $0.001 par value common stock. The reverse split was not approved by FINRA due to concerns related
to the Series A Preferred Stock litigation discussed in Note 11. The Company plans to resubmit its request to FINRA for approval
of the reverse split once the outstanding litigation has been resolved.
Common
Stock
On
January 2, 2017, we granted shares of restricted stock to Mr. Alex Aliksanyan and Mr. Thomas Grbelja, the Company’s former
chief executive officer and chief financial officer, respectively, pursuant to their separate Restricted Stock Grant Agreements,
both dated January 2, 2017, and the terms of their separate Employment Agreements. Mr. Aliksanyan was granted 13,699,350 shares
of restricted common stock and Mr. Grbelja was granted 6,109,597 shares of restricted common stock. The shares of restricted common
stock issued pursuant to these grants cannot be transferred for six months. These shares were granted for services previously
performed in their roles as officers of the Company.
On
December 10, 2015, the Company retired 1,000,000 shares of its common stock with a value of $50,000 received from a former employee.
Conversion
of Convertible Notes
On December 31, 2016, the holders of convertible
notes with aggregate outstanding principal and accrued interest balances of $1,185,624 converted their notes into 69,368,539 shares
of our common stock.
Issuance of Series C Convertible
Preferred Stock
On January 6, 2017, we issued 100,000 shares
of Series C Convertible Preferred Stock to Mr. Anshu Bhatnagar, the Company’s chief executive officer, for $100,000.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In
December 2016, one of our convertible noteholders converted $25,000 of outstanding principal into 25,000 shares of our Series
C Convertible Preferred Stock, at a price of $1.00 per share.
Common
Stock Warrants
The
following table sets forth common share purchase warrants outstanding as of July 31, 2017:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
Intrinsic
|
|
|
|
Warrants
|
|
|
Price
|
|
|
Value
|
|
Outstanding, October 31, 2016
|
|
|
16,055,000
|
|
|
$
|
0.058
|
|
|
$
|
0
|
|
Warrants granted and issued
|
|
|
15,581,467
|
|
|
$
|
0.007
|
|
|
$
|
160,396
|
|
Warrants exercised/forfeited/expired
|
|
|
(14,850,000
|
)
|
|
$
|
(0.054
|
)
|
|
$
|
0
|
|
Outstanding, July 31, 2017
|
|
|
16,786,467
|
|
|
$
|
0.014
|
|
|
$
|
160,396
|
|
Range
of
|
|
|
|
|
|
Remaining
Contractual
|
|
|
Average
|
|
|
|
|
|
Average
|
|
Exercise
|
|
|
Number
|
|
|
Life
|
|
|
Exercise
|
|
|
Number
|
|
|
Exercise
|
|
Prices
|
|
|
Outstanding
|
|
|
(Years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
$
|
0.006
|
|
|
|
14,581,467
|
|
|
|
4.67
|
|
|
$
|
0.006
|
|
|
|
14,581,467
|
|
|
$
|
0.006
|
|
$
|
0.026
|
|
|
|
1,000,000
|
|
|
|
4.75
|
|
|
$
|
0.025
|
|
|
|
1,000,000
|
|
|
$
|
0.025
|
|
$
|
0.100
|
|
|
|
1,205,000
|
|
|
|
2.42
|
|
|
$
|
0.100
|
|
|
|
1,205,000
|
|
|
$
|
0.100
|
|
|
|
|
|
|
16,786,467
|
|
|
|
4.16
|
|
|
$
|
0.014
|
|
|
|
16,786,467
|
|
|
$
|
0.014
|
|
Series A
Convertible
Preferred Stock
On October 14, 2014, the Company filed a certificate
of amendment pursuant to the July 31, 2014 Board of Directors approval to increase the designated Preferred A shares from 100,000,000
shares to 120,000,000 shares. The preferred shares were issued at $.001 par and bear dividends at a rate of 10% per annum payable
on a quarterly basis when declared by the board of directors. Dividends accumulate whether or not they have been declared by the
board. At the election of the Company, Preferred Dividends may be converted into Series A Convertible Preferred Stock,
with each converted share having a value equal to the market price per share, subject to adjustment for stock splits. In order
to exercise such option, the Company delivers written notice to the holder. Each share of Series A Convertible Preferred
Stock is convertible at the option of the holder thereof at any time into a number of shares of common stock determined
by dividing the stated value of a $1 per share by the conversion price then in effect. The conversion price for
the Series A Convertible Preferred Stock is equal to $1.00 per share. Each holder of Series A Convertible Preferred
Stock shall be entitled to one vote for each whole share of common stock that would be issuable upon conversion of such share
on the record date for determining eligibility to participate in the action being taken.
In December 2016, the Company cancelled 44,470,101
shares of Series A Convertible Preferred Stock and 10,359,892 shares of common stock which were held
by Monaker. in connection with an over issuance of shares of common stock relating the conversion of the Monaker
dual convertible preferred shares (See Note 11).
In December 2016, the Company converted
1,155,725 of its Series A Convertible Preferred Stock into 1,155,800 shares of common stock.
There were 100,000 and 45,716,385 shares of
Series A Convertible Preferred Stock outstanding as of July 31, 2017 and October 31, 2016, respectively.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Series B
Convertible
Preferred Stock
On July 31, 2014, the Company’s Board
of Directors approved the creation of a new Series B Convertible Preferred Stock and on October 14, 2014 a certificate
of designation was filed with the state of Delaware designating 1,000,000 shares with a par value of $0.001, a stated value of
$5.00 per share and convertible into the Company’s common stock at $0.05 per share. The Series B Convertible Preferred
Stock will bear dividends at a rate of 10% per annum and shall accrue on the stated value of such shares of the Series
B Preferred Stock. Dividends accrue whether or not they have been declared by the Board of Directors. At the election of
the Company, it may satisfy its obligations hereunder to pay dividends on the Series B Convertible Preferred Stock by issuing
shares of common stock to the holders of Series B Convertible Preferred Stock on a uniform and prorated basis. Each share
of Series B Convertible Preferred Stock is convertible at the option of the holder thereof at any time into a number of
shares of common stock determined by dividing the stated value by the conversion price then in effect. The conversion price for
the Series B Convertible Preferred Stock is equal to $0.05 per share. Each holder of Series B Convertible Preferred
Stock shall be entitled to the number of votes equal to two hundred (200) votes for each share of Series B Convertible
Preferred Stock held. There were no Series B Convertible Preferred Stock outstanding as of July 31, 2017 and October
31, 2016.
Series C
Convertible
Preferred Stock
Pursuant to authority granted by our certificate
of incorporation and applicable state law, our Board of Directors, without any action or approval by our stockholders, may designate
and issue shares in such classes or series (including other classes or series of preferred stock) as it deems appropriate and
establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights. The rights
of holders of other classes or series of capital stock, including preferred stock that may be issued could be superior to the
rights of the shares of common stock offered hereby. The designation and issuance of shares of capital stock having preferential
rights could adversely affect other rights appurtenant to the shares of our common stock. Finally, any issuances of additional
capital stock (common or preferred) will dilute the percentage of ownership interest of our stockholders and may dilute the per-share
book value of the Company. Each share of our Series C Convertible Preferred Stock is convertible into the number of shares of
common stock determined by dividing (i) the stated value ($5.00) by (ii) the conversion price then in effect ($0.05). For example,
our Series C Convertible Preferred Stock contains voting rights which provide each share of Series C Convertible
Preferred Stock with 100 votes for each shares of common stock into which the Series C Convertible Preferred Stock
is convertible. Accordingly, our currently outstanding 160,000 shares of Series C Convertible Preferred Stock (which are
convertible into 16,000,000 shares of common stock) are entitled to 1,600,000,000 votes on any matter presented for a vote
to our common stockholders. This has resulted in the holders of our Series C Convertible Preferred Stock having voting
majority voting control of our corporation. There were 160,000 and 35,000 shares of Series C Convertible Preferred Stock
outstanding as of July 31, 2017 and October 31, 2016, respectively.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
9: NET LOSS PER SHARE
The
following table sets forth the computation of basic and diluted net loss per common share:
|
|
Three Months Ended July 31,
|
|
|
Nine Months Ended July 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Numerator for basic and diluted net loss per common share
|
|
$
|
(160,287
|
)
|
|
$
|
(172,426
|
)
|
|
$
|
(1,266,717
|
)
|
|
$
|
(400,747
|
)
|
Denominator for basic and diluted weighted average common shares
|
|
|
241,651,943
|
|
|
|
149,112,992
|
|
|
|
224,918,972
|
|
|
|
146,502,264
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
In accordance with the provisions of FASB
ASC Topic 260,
Earnings per Share
, basic earnings per share (“EPS”) is computed by dividing earnings available
to common shareholders by the weighted average number of shares of common stock outstanding during the period. Other potentially
dilutive common shares, and the related impact to earnings, are considered when calculating EPS on a diluted basis.
In
computing diluted EPS, only potential common shares that are dilutive, those that reduce EPS or increase loss per share, are included.
The effect of contingently issuable shares are not included if the result would be anti-dilutive, such as when a net loss is reported.
Therefore, basic and diluted EPS are computed using the same number of weighted average shares for the three and nine months ended
July 31, 2017 and 2016 as we incurred a net loss for those periods. As of July 31, 2017, there were outstanding warrants to
purchase 16,786,467 shares of the Company’s common stock and approximately 427,000,000 shares of the Company’s common
stock are reserved for convertible notes which may dilute future earnings per share.
Note
10: Segment reporting
The Company has two reportable segments: Real Estate and Food Business. The Real Estate segment provides service
in the form of video creation and production and website hosting (ReachFactor) and product sales (Nestbuilder Agent 2.0 and Microvideo
app). The Food Business segment is an international supplier of consumer food products, marketing its own brand primarily to supermarkets,
hotels and other members of the wholesale trade. The Food Business commenced operations in January 2017.
The Company evaluates segment performance
based on segment net income (loss). Costs excluded from segment net income (loss) and reported as “Other” consist
of corporate general and administrative costs which are not allocable to the two reportable segments. Legal fee expense incurred
for general corporate matters are considered a component of the Other segment. Legal fee expense specific to other segments’
activities has been allocated to those segments.
Management of the Company reviews assets
on a consolidated basis only and, therefore, assets by reportable segment have not been included in the disclosure below.
REALBIZ
MEDIA GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following financial information represents
the operating results of the reportable segments of the Company for the nine months ended July 31, 2017:
|
|
Real
Estate
|
|
|
Food
Business
|
|
|
Other
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
299,982
|
|
|
$
|
2,033,644
|
|
|
$
|
-
|
|
|
$
|
2,333,626
|
|
Cost of revenues
|
|
|
120,402
|
|
|
|
1,769,302
|
|
|
|
-
|
|
|
|
1,889,704
|
|
Gross Profit
|
|
|
179,580
|
|
|
|
264,342
|
|
|
|
-
|
|
|
|
443,922
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
141,123
|
|
|
|
834,283
|
|
|
|
-
|
|
|
|
975,406
|
|
Selling and promotions
expense
|
|
|
5,494
|
|
|
|
965
|
|
|
|
-
|
|
|
|
6,459
|
|
General and administrative
|
|
|
91,769
|
|
|
|
420,361
|
|
|
|
150,000
|
|
|
|
662,130
|
|
Total Operating Expenses
|
|
|
238,386
|
|
|
|
1,150,987
|
|
|
|
150,000
|
|
|
|
1,643,995
|
|
Operating Loss
|
|
|
(58,806
|
)
|
|
|
(886,645
|
)
|
|
|
(150,000
|
)
|
|
|
(1,200,073
|
)
|
Other Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(760
|
)
|
|
|
-
|
|
|
|
(97,603
|
)
|
|
|
(98,363
|
)
|
Loss on legal
settlement of accounts payable
|
|
|
-
|
|
|
|
-
|
|
|
|
(23,716
|
)
|
|
|
(23,716
|
)
|
Total Other Expenses
|
|
|
(760
|
)
|
|
|
-
|
|
|
|
(121,319
|
)
|
|
|
(122,079
|
)
|
Net Loss
|
|
$
|
(59,566
|
)
|
|
$
|
(886,645
|
)
|
|
$
|
(271,319
|
)
|
|
$
|
(1,322,152
|
)
|
NOTE
11: COMMITMENTS AND CONTINGENCIES
In December 2016, Monaker filed a lawsuit
against us in Eleventh Circuit Federal Court seeking an injunction against our action to cancel 44,470,101 shares of Series A
Convertible Preferred Stock and 10,359,892 shares of common stock which were issued to Monaker (see Note 8). On
January 15, 2017, the court denied Monaker’s motion for a preliminary injunction.
On May 11, 2016, we filed a lawsuit in the
United States District Court for the Southern District of Florida against Monaker seeking collection of the balance owed to us,
in the amount of $1,287,517, for advances on operating expenses and various debt obligation conversions to and from Monaker (see
Note 6). Currently, a trial date of May 2018 has been scheduled.
NOTE 12: SUBSEQUENT
EVENTS
Effective August
9, 2017, the Company appointed Mark Lindsey to serve as Chief Financial Officer.
Effective August
11, 2017, the Board of Directors of the Company appointed Mr. Michael O’ Gorman, Mr. Thomas Butler Fore and Mr. Lalit Lal
to serve as directors of the Board, effective immediately.