Notes
to the Condensed Consolidated Financial Statements
March
31, 2018
(Unaudited)
NOTE
1. NATURE OF BUSINESS
12
Retech Corporation (“we”, “us”, “our”, “12 ReTech”, “RETC”, or the
“Company”) was incorporated under the laws of the State of Nevada, U.S. as DEVAGO INC. on September 8, 2014. On June
8, 2017, the Company amended our Articles of Incorporation to change the name to 12 Retech Corporation. At our core, we are a
software company whose technology allows retailers to combat the dual threats of Walmart and Amazon — both online and in
physical stores. Our microbrand rollup acquisition strategy allows us to demonstrate the effectiveness of our software, devise
and test new products, while providing shareholder value through immediate revenue and earnings growth. The Company operates through
our subsidiaries on three continents, Asia, North America and Europe.
Principal
subsidiaries
The
details of the principal subsidiaries of the Company are set out as follows:
Name
of Company
|
|
Place
of Incorporation
|
|
Date
of Incorporation
|
|
Acquisition
Date
|
|
Attributable
Equity Interest %
|
|
Business
|
12
Retail Corporation (“12 Retail”)
|
|
Arizona,
USA
|
|
Sept.
18, 2017
|
|
Formed
by 12 Retech Corporation
|
|
100%
|
|
As
a holding Company to execute the Company’s microbrand roll up acquisition strategy as well as to penetrate the North
American market with our technology to select retailers.
|
|
|
|
|
|
|
|
|
|
|
|
12
Hong Kong Limited (“12HK”)
|
|
Hong
Kong, China
|
|
Feb.
2, 2014
|
|
June
27 2017
|
|
100%
|
|
Development
of our technology and sales of our technology applications.
|
|
|
|
|
|
|
|
|
|
|
|
12
Japan Limited (“12JP”)
|
|
Japan
|
|
Feb.
12, 2015
|
|
July
31, 2017
|
|
100%
|
|
Consultation
and sales of technology applications.
|
|
|
|
|
|
|
|
|
|
|
|
12
Europe AG (“12EU”)
|
|
Switzerland
|
|
Aug.
22, 2013
|
|
Oct.
26,2017
|
|
100%
|
|
Consultation
and sales of technology applications.
|
|
|
|
|
|
|
|
|
|
|
|
E-motion
Apparel, Inc.
|
|
California,
USA
|
|
Sept.
9, 2010
|
|
May
1, 2018
|
|
100%
|
|
A
subsidiary of 12 Retail and is the first microbrand acquired under the microbrand acquisition roll up strategy. Operates its
own production facilities that can be utilized by all of the Company’s future microbrands.
|
NOTE
2. GOING CONCERN
The
Company accounts for going concern matters under the guidance of ASU 2014-15,
“
Presentation of Financial
Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going
Concern
” (“ASU 2014-15”). The guidance in ASU 2014-15 sets forth management’s responsibility
to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as well as required
disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management
should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue
as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation
should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial
statements are issued or are available to be issued, as well as whether it is probable that management’s plans to address
the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt.
These
interim financial statements have been prepared on a going concern basis which assumes the Company will continue to realize it
assets and discharge its liabilities in the normal course of business. As of March 31, 2018, the Company has incurred losses totaling
$3,283,969 since inception, has not yet generated significant revenue from its operations, and will require additional funds to
maintain our operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations
and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations
when they become due. The Company intends to finance operating costs over the next twelve months through continued financial support
from its shareholders, the issuance of debt securities and private placements of common stock. These interim financial statements
do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going concern.
NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of
Regulation S-X. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2018. Notes to the unaudited interim condensed consolidated financial statements
that would substantially duplicate the disclosures contained in the audited consolidated financial statements for fiscal year
2017 have been omitted. This report should be read in conjunction with the audited consolidated financial statements and the footnotes
thereto for the fiscal year ended December 31, 2017 included in the Company’s Form 10-K as filed with the Securities and
Exchange Commission on April 16, 2018.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its subsidiaries 12HK, 12JP, and 12EU and 12 Retail.
All inter-company accounts and transactions have been eliminated. We currently have no investments accounted for using the equity
or cost methods of accounting.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the
reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith
estimates and judgments.
Reclassifications
Certain
prior period amounts have been reclassified to conform with the current period presentation.
Software
Development Costs
At
March 31, 2018 and December 31, 2017, software development costs totaled $53,944 and $0, respectively. Capitalized
costs related to the software under development are treated as an asset until the development is completed and the software is
available for sale. The Company will amortize the software costs on a straight-line basis over the estimated life of the software
product’s expected life cycle, commencing when the software is first available for general release to customers
.
Concentrations
During
the three months ended March 31, 2018, one customer accounted for 100% of revenues. During the three months ended March 31, 2017,
two customers accounted for 99% of revenues. One customer represented 100% of the accounts receivable as of March 31, 2018 and
December 31, 2017.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC 606, “Revenue from Contracts with Customers.” The Company has evaluated
the new guidance and its adoption did not have a significant impact on the Company’s financial statements and a cumulative
effect adjustment under the modified retrospective method of adoption will not be necessary. The will be no change to the Company’s
accounting policies.
Net
Loss Per Share of Common Stock
The
Company follows ASC 260,
“Earnings per Share”
(“EPS”), which requires presentation of basic EPS
on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings (loss) per share are computed
by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
Diluted
earnings per share reflects the potential dilution that could occur if securities were exercised or converted into common stock
or other contracts to issue common stock resulting in the issuance of common stock that would then share in the Company’s
earnings subject to anti-dilution limitations. In a period in which the Company has a net loss, all potentially dilutive securities
are excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact. For the three months
ended March 31, 2018 and 2017, potentially dilutive common shares consist of common stock issuable upon the conversion of Series
A Preferred Stock (using the if converted method). All potentially dilutive securities were excluded from the computation of diluted
weighted average number of shares of common stock outstanding as they would have had an anti-dilutive impact.
Financial
Instruments
The
Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, prepaid expenses and
other current assets, accounts payable and accrued liabilities and due to stockholders. The carrying amounts of such financial
instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest
rates of these instruments.
Convertible
notes payable with characteristics of both liabilities and equity are classified as either debt or equity based on the characteristics
of its monetary value, with convertible notes classified as debt being measured at fair value, in accordance with ASC 480-10,
“Accounting for Certain Financial instruments with Characteristics of both Liabilities and Equity.”
Recent
Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements
will not have a material effect on the Company’s financial statements.
NOTE
4 – OTHER CURRENT ASSETS
Other
current assets at March 31, 2018 and December 31, 2017 consist of the following
|
|
March
31, 2018
|
|
|
December
31, 2017
|
|
|
|
|
|
|
|
|
Reimbursable
advance payments for acquisitions
|
|
$
|
36,364
|
|
|
$
|
-
|
|
Other
current assets
|
|
|
15,875
|
|
|
|
13,878
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
52,239
|
|
|
$
|
13,878
|
|
NOTE
5 – FIXED ASSETS, NET
Fixed
assets, net at March 31, 2018 and December 31, 2017 consist of the following
|
|
March
31, 2018
|
|
|
December
31, 2017
|
|
|
|
|
|
|
|
|
Office
equipment
|
|
$
|
9,019
|
|
|
$
|
7,371
|
|
Furniture
and equipment
|
|
|
607
|
|
|
|
607
|
|
Computer
|
|
|
11,937
|
|
|
|
12,998
|
|
Technical
equipment
|
|
|
23,435
|
|
|
|
23,435
|
|
|
|
|
44,998
|
|
|
|
44,411
|
|
Less:
accumulated depreciation
|
|
|
(37,020
|
)
|
|
|
(35,796
|
)
|
Equipment
|
|
$
|
7,978
|
|
|
$
|
8,615
|
|
Depreciation
expense for the three months ended March 31, 2018 and 2017 amounted to $1,149 and $3,192, respectively.
NOTE
6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts
payable and accrued liabilities at March 31, 2018 and December 31, 2017 consists of the following:
|
|
March
31, 2018
|
|
|
December
31, 2017
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
155,260
|
|
|
$
|
30,625
|
|
Accrued
expenses
|
|
|
160,469
|
|
|
|
66,931
|
|
Accrued
interest
|
|
|
33,179
|
|
|
|
8,348
|
|
|
|
$
|
348,908
|
|
|
$
|
105,904
|
|
NOTE
7 - STOCKHOLDER TRANSACTIONS
Due
to stockholders at March 31, 2018 and December 31, 2017 consists of the following:
|
|
March
31, 2018
|
|
|
December
31, 2017
|
|
Daniel
Monteverde
|
|
|
4,324
|
|
|
|
8,214
|
|
Angelo
Ponzetta
|
|
|
526,774
|
|
|
|
500,798
|
|
Gianni
Ponzetta
|
|
|
163,752
|
|
|
|
160,114
|
|
|
|
$
|
694,850
|
|
|
$
|
669,126
|
|
On
August 12, 2017, Gianni Ponzetta loaned CHF 60,000 ($62,946 at March 31, 2018 and $61,584 at December 31, 2017) to the Company,
which is included in the March 31, 2018 and December 31, 2017 totals. The promissory note is unsecured, bears interest
at 1% per annum and is due December 31, 2019.
The
other amounts due to stockholders are non-interest bearing, unsecured and due on demand.
During
the three months ended March 31, 2018 and 2017, total advances and expenses paid directly by stockholders on behalf of the Company
were $29,722 and $40,766, respectively, and the Company repaid $16,931 and $0, respectively.
NOTE
8 – CONVERTIBLE NOTES PAYABLE
Convertible
notes payable at March 31, 2018 and December 31, 2017 consists of the following:
|
|
March
31, 018
|
|
|
December
31, 2017
|
|
Dated
September 15, 2017
|
|
$
|
412,500
|
|
|
$
|
387,500
|
|
Dated December
8, 2017
|
|
|
185,292
|
|
|
|
92,646
|
|
Dated December
8, 2017
|
|
|
185,292
|
|
|
|
92,646
|
|
Dated
March 15, 2018
|
|
|
100,000
|
|
|
|
-
|
|
Total
convertible notes payable
|
|
|
883,084
|
|
|
|
572,792
|
|
|
|
|
|
|
|
|
|
|
Less:
Unamortized debt discount
|
|
|
(106,718
|
)
|
|
|
(164,545
|
)
|
Total
convertible notes
|
|
|
776,366
|
|
|
|
408,247
|
|
|
|
|
|
|
|
|
|
|
Less:
current portion of convertible notes
|
|
|
776,366
|
|
|
|
408,247
|
|
Long-term
convertible notes
|
|
$
|
-
|
|
|
$
|
-
|
|
For
the three months ended March 31, 2018 and 2017, the Company recognized interest expense of $24,831 and $0 and amortization of
discount, included in interest expense, of $123,119 and $0, respectively.
September
15, 2017 Note
On
September 15, 2017, the Company entered into the promissory note agreement with SBI Investments LLC (“SBI”) for loans
up to a maximum of $1,250,000, together with interest at the rate of 8% per annum. The consideration to the Company for this promissory
note is up to $1,000,000, resulting in a potential original issuance discount (“OID”) of up to $250,000. The maturity
date for each tranche funded shall be six months from the effective date of the respective payment date. The promissory note may
be converted into shares of the Company’s common stock at any time on or after the occurrence of an event of default. The
conversion price shall be the 60% multiplied by the lowest trading price during the 30 trading days period ending, in holder’s
sole discretion on each conversion, on either (i) the last complete trading day prior to the conversion date or (ii) the conversion
date. All terms of the note, including but not limited to interest rate, prepayment terms, conversion discount or look-back period
will be adjusted downward if the Company offers more favorable terms to another party, while this note is in effect.
An
initial promissory note of $200,000 was issued on September 15, 2017 and the Company received cash of $150,000 and recognized
OID of $40,000 and financing cost of $10,000 as debt discount.
On
November 14, 2017, the Company issued an additional promissory note of $187,500 and received cash of $150,000 and recognized OID
of $37,500 as debt discount.
On
March 30, 2018, the Company entered into an amendment of this note as it was originally due March 15, 2018, which indicates
that a $200,000 tranche is now eligible for conversion at a discount to market. The Company agreed to pay $25,000 to SBI for each
30-day extension as consideration. The extension amount is automatically added to the face value of the note after each 30-day
period. SBI has agreed to a minimum of a 3-month extension under these same terms. The Company determined this amendment was a
debt extinguishment and recognized $25,000 as a loss on debt extinguishment.
As
at March 31, 2018, the Company has determined that there is no reset for the conversion terms of the note.
December
8, 2017 Note
On
December 8, 2017, the Company entered into the promissory note agreement with LG Capital Funding, LLC (“LG”) for loans
totaling $185,292. The consideration to the Company is $158,824 resulting in a 15% OID. The maturity date for each note is six
months from the date of issuance. The Company shall pay a one-time interest charge of 9% of the principal amount for each note.
The notes may be converted at any time after the maturity date. The conversion price shall be 75% multiplied by the lowest trading
price during the 10 prior trading days period ending on either (i) the last complete trading day prior to conversion date or
(ii) the conversion date. All terms of the note, including but not limited to interest rate, prepayment terms, conversion
discount or look-back period will be adjusted downward if the Company offers more favorable terms to another party, while this
note is in effect. As additional consideration for the purchase of the notes, the Company issued to LG 121,903 shares of our common
stock each on January 13, 2018 and February 1, 2018, for a total of 243,806 shares, with a value equal to $46,323, based on the
previous day closing price.
The
first note of $92,646 was issued on December 8, 2017. The Company received cash of $75,000 and recognized OID of $13,234 and financing
cost of $4,412 as debt discount. The one-time interest charge of 9% of the principal amount of the note was due on January 1,
2018. In addition, the Company recorded $46,323 as debt discount for the issuance of the common shares.
On
January 10, 2018, LG funded their “back end note” which is the second half commitment from the agreements. The Company
received cash of $75,000 and recognized OID of $13,234 and financing cost of $4,412 as debt discount. The one-time interest
charge of 9% of principal amount of the note was due on February 1, 2018.
As
of March 31, 2018, as a result of reset features the conversion price shall be 60% multiplied by the lowest traded price during
the 10 prior trading day period ending on either (i) the last complete trading day prior to the conversion date or (ii) the conversion
date.
December
8, 2017 Note
On
December 8, 2017, the Company entered into the promissory note agreement with Cerberus Finance Group Ltd. (“Cerberus”)
for loans totaling $185,292. The consideration to the Company is $158,824 resulting in a 15% OID. The maturity date for each note
is six months from the date of issuance. The Company shall pay a one-time interest charge of 9% of the principal amount for each
note. The notes may be converted at any time after the Maturity Date. The conversion price shall be the 75% multiplied by the
lowest trading price during the 10 prior trading days period ending on either (i) the last complete trading day prior to conversion
date or (ii) the conversion date. All terms of the note, including but not limited to interest rate, prepayment terms, conversion
discount or look-back period will be adjusted downward if the Company offers more favorable terms to another party, while this
note is in effect. As additional consideration for the purchase of the notes, the Company issued to Cerberus 121,903 shares of
our common stock each on January 13, 2018 and February 1, 2018, for a total of 243,806 shares, with a value equal to $46,323,
based on the previous day closing price.
The
first note of $92,646 was issued on December 8, 2017. The Company received cash of $75,000 and recognized OID of $13,234 and financing
cost of $4,412 as debt discount. The one-time interest charge of 9% of the amount of the Note was due on January 1, 2018. In addition,
the Company recorded $46,323 as debt discount for the issuance of the common shares.
On
January 11, 2018, Cerberus funded their “back end note” which is the second half commitment from the agreements. The
Company received cash of $75,000 and recognized OID of $13,234 and financing cost of $4,412 as debt discount. The one-time interest
charge of 9% of the principal amount of the note was due on February 1, 2018.
As
of March 31, 2018, as a result of reset features the conversion price shall be 60% multiplied by the lowest traded price during
the 10 prior trading day period ending on either (i) the last complete trading day prior to the conversion date or (ii)
the conversion date.
March
15, 2018 Note
On
March 14, 2018, the Company entered into a into the promissory note agreement with Eagle Equities, LLC (“Eagle”) for
loans totaling totaling $100,000. The consideration to the Company is $95,000 resulting in a 5% OID. The maturity
date of each note is one year from the date of issuance. The notes carry an interest rate of 12% per annum and interest payments
are to be made in common shares of the Company. The conversion price of the note is 60% multiplied by the lowest
trading price of the Common Stock for the ten prior trading days and the holder can convert the note at the earlier
of an uncured default or 181 days from issuance. The note may be redeemed by the Company at rates ranging from 105%
to 130% depending on the redemption date provided that no redemption is allowed after the 180
th
day. All terms of the
note, including but not limited to interest rate, prepayments terms, conversion discount or look-back period will be adjusted
downward if the Company offers more favorable terms to another part, while this note is in effect. As additional consideration,
the Company is to issue to Eagles Equities, LLC shares of common stock with a value equal to 25% of each note, determined at
the time of signing of each note.
The
first note of $50,000 was issued on March 15, 2018. The Company received cash of $47,500 and recognized financing cost of $2,500
as debt discount. The Company issued to Eagle Equities, LLC 137,363 shares of common stock with a value equal to $12,500. Eagle
Equities has LLC has not yet funded the back end note for the remaining $50,000 at this time.
March
15, 2018 Note
On
March 14, 2018, the Company entered into a into the promissory note agreement with with Adar Bays Capital, LLC (“Adar Bays
Capital”) for loans totaling totaling $100,000. The consideration to the Company is $95,000 resulting in a
5% OID. The maturity date of each note is one year from the date of issuance. The notes carry an interest rate of 12%
per annum and interest payments are to be made in common shares of the Company. The conversion price of the note is
60% multiplied by the lowest trading price of the Common Stock for the ten prior trading days and the holder can convert
the note at the earlier of an uncured default or 181 days from issuance. The note may be redeemed by the
Company at rates ranging from 105% to 130% depending on the redemption date provided that no redemption is allowed after the 180
th
day. All terms of the note, including but not limited to interest rate, prepayment terms, conversion discount or look-back
period will be adjusted downward in the Company offers more favorable terms to another party, while this note is in effect. As
additional consideration, the Company is to issue to Adar Bays Capital shares of common stock with a value equal to 25% of
each note, determine at the time of signing of each note.
The first note of $50,000 was
issued on March 15, 2018. The Company received cash of $47,500 and recognized financing cost of $2,500 as debt discount. The
Company issued to Adar Bays Capital 137,363 shares of our common stock with a value equal to $12,500. Adar Bays Capital, LLC
has not yet funded the back end note for the remaining $50,000 at this time.
NOTE
9 - STOCKHOLDERS’ EQUITY
Amendments
to Articles of Incorporation
On
January 29, 2018, the Company amended its Articles of Incorporation giving its Board of Directors the power to issue up to 50,000,000
shares of Preferred Stock, and to fix the rights, preferences and privileges of each class of preferred stock so created. No shareholder
approval is required in connection with the creation of classes of preferred stock under this authority and the setting of the
rights, preferences and privileges of such shares. The Board of Directors acted to create new series of preferred stock, entitled
Series B Preferred Stock, Series C Preferred Stock, and Series D Preferred Stock.
Effective
March 14, 2018, the Company filed a Certificate of Amendment to its Articles of Incorporation with the state of Nevada to increase
the number of authorized shares of capital stock to 1,050,000,000 shares. The Company increased the number of authorized shares
of common stock to 1,000,000,000. There was no change to the number of shares of authorized preferred stock.
PREFERRED
STOCK
The
Preferred Stock may be divided into such number of series as the Board of Directors may determine. The Board of Directors is authorized
to determine and alter the rights, preferences, privileges and restrictions granted to and imposed upon any wholly unissued series
of Preferred Stock, and to fix the number of shares of any series of Preferred Stock and the designation of any such series of
Preferred Stock. The Board of Directors, within the limits and restrictions stated in any resolution or resolutions of the Board
of Directors originally fixing the number of shares constituting any series, may increase or decrease (but not below the number
of shares such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series.
Series
A Preferred Stock
There
were no issuances of the Series A Preferred Stock during the three months ended March 31, 2018
As
of March 31, 2018, and December 31, 2017, 5,000,000 shares of Series A Preferred Stock were issued and outstanding.
Series
B Preferred Stock
During
the three months ended March 31, 2018, the Company issued Series B Preferred Stock as follows,
|
●
|
On
January 31, 2018, the Company sold 203,000 shares of Series B Preferred Stock to Geneva Roth Remark Holdings, Inc. (“Geneva”)
in exchange for $203,000 before fees.
|
|
|
|
|
●
|
On
March 20, 2018, Geneva agreed to purchase an additional 63,000 Series B Preferred shares for $63,000 under the same terms
as the initial purchase on January 31, 2018.
|
As
of March 31, 2018 and December 31, 2017, 266,000 and 0 shares of Series B Preferred Stock were issued and outstanding, respectively.
Series
C Preferred Stock
There
were no issuances of the Series C Preferred Stock during the three months ended March 31, 2018.
No
shares of Series C Preferred Stock were issued and outstanding as of March 31, 2018.
Series
D Preferred Stock
There
were no issuances of the Series D Preferred Stock during the three months ended March 31, 2018.
No
shares of Series D Preferred Stock were issued and outstanding as of March 31, 2018.
Common
Stock
The
Company is authorized to issue 1,000,000,000 shares of common stock at a par value of $0.00001.
During
the three months ended March 31, 2018, the Company issued 762,338 shares of common stock, with a value of $117,646, as additional
consideration for the issuance of convertible notes (see Note 8).
As
of March 31, 2018, and December 31, 2017, 82,962,338 and 82,200,000 shares of common stock were issued and outstanding, respectively.
NOTE
10 - SEGMENTS
The
Company does business on three continents (Asia, North America and Europe) in four different jurisdictions (Hong Kong-special
economic zone of the People’s Republic of China, Japan, United States of America, and The European common market through
Switzerland). These segments are components of the Company about which separate financial information is available and regularly
evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting
policies of the segments are the same as those described in Note 3, Summary of Significant Accounting Policies.
The
following table shows operating activities information by geographic segment for the three months ended March 31, 2018 and 2017.
March
31, 2018
|
|
North
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
8,942
|
|
|
$
|
-
|
|
|
$
|
8,942
|
|
Cost of revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Operating
expense excluding depreciation
|
|
$
|
451,563
|
|
|
$
|
184,962
|
|
|
$
|
68,548
|
|
|
$
|
705,073
|
|
Depreciation
|
|
$
|
-
|
|
|
$
|
1,022
|
|
|
$
|
127
|
|
|
$
|
1,149
|
|
Operating
loss
|
|
$
|
(451,563
|
)
|
|
$
|
(177,042
|
)
|
|
$
|
(68,675
|
)
|
|
$
|
(697,280
|
)
|
Interest
expense
|
|
$
|
(147,950
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(147,950
|
)
|
Loss
on debt extinguishment
|
|
$
|
(25,000
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(25,000
|
)
|
Net
loss
|
|
$
|
(623,778
|
)
|
|
$
|
(177,777
|
)
|
|
$
|
(68,675
|
)
|
|
$
|
(870,230
|
)
|
March
31, 2017
|
|
North
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
34,379
|
|
|
$
|
-
|
|
|
$
|
34,379
|
|
Cost of revenue
|
|
$
|
-
|
|
|
$
|
451
|
|
|
$
|
-
|
|
|
$
|
451
|
|
Operating
expenses excluding depreciation
|
|
$
|
-
|
|
|
$
|
77,961
|
|
|
$
|
171
|
|
|
$
|
77,862
|
|
Depreciation
|
|
$
|
-
|
|
|
$
|
3,192
|
|
|
$
|
-
|
|
|
$
|
3,192
|
|
Operating
loss
|
|
$
|
-
|
|
|
$
|
(46,955
|
)
|
|
$
|
(171
|
)
|
|
$
|
(47,126
|
)
|
Interest
expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
loss
|
|
$
|
-
|
|
|
$
|
(46,955
|
)
|
|
$
|
(171
|
)
|
|
$
|
(47,126
|
)
|
The
following table shows assets information by geographic segment at March 31, 2018 and December 31, 2017.
March
31, 2018
|
|
North
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Fixed
assets, net
|
|
$
|
-
|
|
|
$
|
6,845
|
|
|
$
|
1,133
|
|
|
$
|
7,978
|
|
Total
assets
|
|
$
|
55,308
|
|
|
$
|
112,533
|
|
|
$
|
1,598
|
|
|
$
|
169,439
|
|
December
31, 2017
|
|
North
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
Fixed
assets, net
|
|
$
|
-
|
|
|
$
|
7,383
|
|
|
$
|
1,232
|
|
|
$
|
8,615
|
|
Total
assets
|
|
$
|
20,394
|
|
|
$
|
84,206
|
|
|
$
|
27,886
|
|
|
$
|
132,486
|
|
NOTE
11 - SUBSEQUENT EVENTS
The
Company evaluated all events and transactions that occurred after March 31, 2018 and through the date of this filing in accordance
with FASB ASC 855, “Subsequent Events.” The Company determined that it does have a material subsequent events to disclose
as follows;
Subsequent
Events:
On
April 12, 2018, the Company entered into an engagement agreement with Tellson Securities, Inc. F/K/A 41 North Securities (“Tellson”)
whereby Tellson was hired to raise $5 million in preferred equity for the Company to make acquisitions and expand operations and
at the appropriate time to assist the Company for up-listings to a recognized exchange like the NASDAQ Market.
On
April 27, 2018 the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC (“Auctus”) whereby the
Company issued to a 9% Convertible Note (“Note”) to Auctus n the principal amount of $100,000 and a maturity date
of April 25, 2019. The conversion price of the Note is $.05 per share, provided, however, that on or after the earlier of an event
of default or 181 days after issuance date, the conversion price shall equal the lesser of (i) $0.05 per share, (ii) the lowest
trading price during the previous twenty days ending on the last trading day prior to the date of the note, and (iii) 60% of the
lowest trading price of the Common stock for the twenty prior trading days prior to the conversion date. The holder can
convert the Note, at any time, after issuance until the maturity date or the date payment of the default amount. The Company was
to issue 700,000 of its common shares as a commitment/collateral fee. As of the date of the filing this report, the shares have
not been issued.
On
May 1, 2018, the Company completed the acquisition of E-motion Apparel, Inc. (“EAI”) a California corporation, pursuant
to a Share Exchange Agreement whereby the Company exchanged 1 million of its common shares for 100% of the equity of EAI in a
third-party transaction. EAI owns five microbrands which were included in this transaction which target specific niche markets:
Lexi-Luu Dancewear, Punkz Gear, Cleo VII, Skipjack Dive & Dance Wear and Emotion Apparel.