NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
NOTE
1 – BASIS OF PRESENTATION AND GOING CONCERN
The
Company
Textmunication
Holdings, Inc. (Company) was incorporated on May 13, 2010 under the laws of the State of California. Textmunication is an online
mobile marketing platform service that will connect merchants with their customers and allow them to drive loyalty and repeat
business in a non-intrusive, value added medium. For merchants we provide a mobile marketing platform where they can always send
the most up-to-date offers/discounts/alerts/events schedule, such as happy hours, trivia night, and other campaigns. The consumer
can also access specials and promotions that merchants choose to distribute through Textmunication by opting in to keywords designated
to the merchant’s keywords.
On
November 16, 2013, the Company entered into a Share Exchange Agreement (SEA) with Textmunication Holdings (Holdings). a Nevada
corporation, whereby the sole shareholder of the Company received 65,640,207 new shares of common stock of Holdings in exchange
for 100% of the Company’s issued and outstanding shares.
On
July 9, 2018 the 1 – 1,000 Reverse Split of “Textmunication Holdings, Inc.” (TXHD) common stock took effect
at the open of business. All shares and per share amounts have been retroactively adjusted to reflect the reverse split.
July
9th, 2018 Textmunication Holdings, Inc. (“TXHD”) entered into Advisory Agreements with Mr. Thomas DiBenedetto and
Mr. Joseph Griffin. Mr. DiBenedetto will advise Textmunication on business execution, growth initiatives and strategic investment
opportunities. Mr. Joseph Griffin will join Textmunication as a financial investment advisor. In his role, he will advise the
company on strategic investment opportunities and investment execution.
Basis
of Presentation
Our
financial statements are presented in conformity with accounting principles generally accepted in the United States of America,
as reported on our fiscal years ending on December 31, 2018 and 2017. We have summarized our most significant accounting
policies.
Going
concern
These
consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to
a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal
course of business. As of December 31, 2018, the Company has an accumulated deficit of $15,489,993. The company’s
ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its
ability to achieve and maintain profitable operations. While the Company is expanding its best efforts to achieve the above plans,
there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise
substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance
of these financial statements. These consolidated financial statements do not include any adjustments that might arise from this
uncertainty.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
The
Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
The
Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial
institution. The balance at times may exceed federally insured limits. At December 31, 2018 and 2017 no cash balances exceeded
the federally insured limit.
Accounts
receivable and allowance for doubtful accounts
Accounts
receivable are stated at the amount management expects to collect. The Company generally does not require collateral to support
customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts
receivable, historical collection information and existing economic conditions. As of December 31, 2018, and 2017 the allowance
for doubtful accounts was $0 and bad debt expense of $0 and $0, respectively.
Revenue
Recognition
Revenues
are recognized when control of the promised is transferred to our customers, in an amount that reflects the consideration we expect
to be entitled to in exchange for those services.
The
Company currently derives a substantial majority of its revenue from fees associated with our subscription services, which generally
include mobile marketing platform services. Customers are billed for the subscription on a monthly basis. For all of the Company’s
customers, regardless of the method, the Company uses to bill them, subscription revenue is recorded as deferred revenue in the
accompanying consolidated balance sheets. As services are performed, the Company recognizes subscription revenue on a monthly
basis over the applicable service period. When the Company provides a free trial period, the Company does not begin to recognize
subscription revenue until the trial period has ended and the customer has been billed for the services.
Professional
services revenues are generated from SMS and RCS packages where client logs into a cloud-based application to send targeted SMS
messages to their subscriber base. Our custom web application SMS/RCS platform is typically billed on a fixed-price based
on the number of SMS/RCS allocated for each package our client purchases. Generally, revenue for SMS/RCS services is recognized
immediately as our clients have instant access to their web-based application to send out messages, the number of SMS/RCS messages
allocated to a client expires at the end of each month and renews beginning of each month. The Company offers whereby control
of the product passes to the customer when delivered and revenue is recognized at the time of delivery.
Results
for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted
and continue to be reported in accordance with our historic accounting under Topic 605
We
did not have a cumulative impact as of January 1, 2018 due to the adoption of Topic 606 and there was not an impact to our consolidated
statement of operations for the year ended December 31, 2018 as a result of applying Topic 606.
Fair
Value of Financial Instruments
The
carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair
values due to the short maturities of these items.
As
required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted
prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly
or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity
to develop its own assumptions.
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
The
three levels of the fair value hierarchy are described below:
Level
1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities;
Level
2: Quoted prices in markets that are not active, or inputs that is observable, either directly or indirectly, for substantially
the full term of the asset or liability;
Level
3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(supported by little or no market activity).
The
fair value of the accounts receivable, accounts payable, notes payable are considered short term in nature and therefore their
value is considered fair value.
As
of December 31, 2018 there’s no financial assets and liabilities measured at fair value.
Financial
assets and liabilities measured at fair value on a recurring basis are summarized below for the year ended December 31, 2017:
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
Financial Instruments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
319,041
|
|
|
$
|
319,041
|
|
Net
income (loss) per Common Share
Basic
net income (loss) per share is computed by dividing the net loss attributable to the common stockholders by the weighted average
number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss
per share except that the denominator is increased to include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common shares were dilutive.
Property
and equipment
Property
and equipment are stated at cost, less accumulated depreciation provided on the straight-line method over the estimated useful
lives of the assets, which range from three to seven years. Expenditures for renewals or betterments are capitalized, and repairs
and maintenance are charged to expense as incurred the cost and accumulated depreciation of assets sold or otherwise disposed
of are removed from the accounts, and any gain or loss thereon is reflected in operations. Company policy capitalize property
and equipment for cost over $1,000, asset acquired under $1,000 are charge to operations.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized. Because the Company has no net income, the tax benefit
of the accumulated net loss has been fully offset by an equal valuation allowance.
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Stock-Based
Compensation
The
Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation –
Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized
in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation
expense and credited to additional paid-in capital over the period during which services are rendered.
The
Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants
and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services
provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value
of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly
to compensation expense and additional paid-in capital over the period during which services are rendered.
Software
Development Costs
The
Company applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed (“ASC 985-20”). ASC 985-20 requires that software development costs incurred in conjunction with product
development be charged to research and development expense until technological feasibility is established. Thereafter, until the
product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or
net realizable value of the related product.
The
Company also applies the principles of FASB ASC 350-40, Accounting for the Cost of Computer Software Developed or Obtained for
Internal Use (“ASC 350-40”). ASC 350-40 requires that software development costs incurred before the preliminary project
stage be expensed as incurred. We capitalize development costs related to these software applications once the preliminary project
stage is complete and it is probable that the project will be completed, and the software will be used to perform the function
intended.
During
the 3rd quarter of the year management determine that the software is unable to handle the expanding business and decided to scrap
the entire project and recognize as loss for the year. A total cost of $85,092 was written off in the 3
rd
quarter.
Advertising
Expenses
Advertising
expenses are included in General and administrative expenses in the Statements of Operations and are expensed as incurred. The
Company incurred $13,873 and $26,389 in advertising expenses for the year ended December 31, 2018 and 2017,
respectively.
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
Recent
Accounting Pronouncements
In
March 2016, the FASB issued ASU 2016-08,
Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations
(Reporting Revenue Gross versus Net)
. ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations
and includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred
to the customers. ASU 2016-08 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09.
In
April 2016, the FASB issued ASU 2016-10,
Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations
and Licensing.
The amendments in ASU 2016-10 clarify the following
two
aspects
of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles
for those areas. ASU 2016-10 was effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09.
In
May 2016, the FASB issued ASU 2016-12,
Revenue from Contracts from Customers (Topic 606): Narrow-Scope Improvements and Practical
Expedients.
The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective. The core principle
of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. The amendments in ASU 2016-12 do not change the core principle of the guidance in Topic 606, but instead affect only
the narrow aspects noted in Topic 606. ASU 2016-12 was effective January 1, 2018 to be in alignment with the effective
date of ASU 2014-09. The Company will adopt the provisions of Topic 606 effective in January 1, 2018 the adoption did not
have a material impact on the Company’s consolidated financial statements.
In
January 2016, the FASB issued ASU 2016-01,
Financial Instruments-Overall: Recognition and Measurement of Financial Assets and
Financial Liabilities.
ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of
financial instruments including requirements to measure most equity investments at fair value with changes in fair value recognized
in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately
present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying
notes to the financial statements. ASU 2016-01 was effective for the Company beginning on January 1, 2018 and will be applied
by means of a cumulative effect adjustment to the balance sheet, except for effects related to equity securities without readily
determinable values, which will be applied prospectively. The adoption did not have a material impact to the consolidated
financial statements.
In
February 2016, the FASB issued ASU 2016-02,
Leases
, which requires an entity to recognize long-term lease arrangements
as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will
be recorded for all long-term leases, whether operating or financing, while the income statement will reflect lease expense for
operating leases and amortization/interest expense for financing leases. The amendments also require certain new quantitative
and qualitative disclosures regarding leasing arrangements. ASU 2016-02 will be effective for the Company beginning on January
1, 2019. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning
of the earliest comparative period presented in the financial statements. Early adoption is permitted. Management does not believe
the adoption of ASU 2016-02 will have a material impact on the Company’s consolidated financial statements.
In
March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging: Effect of Derivative Contract Novations on Existing Hedge Accounting
Relationships, which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging
instrument would not, in and of itself, be considered a termination of the derivative instrument, provided that all other hedge
accounting criteria continue to be met. ASU 2016-05 is effective for the Company beginning on January 1, 2017. Early adoption
is permitted, including in an interim period. Management evaluated ASU 2016-05 and determined that the adoption of this new accounting
standard did not have a material impact on the Company’s consolidated financial statements.
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
In
August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments” (“ASU 2016-15”). ASU 2016-15 targeted changes to how cash receipts and cash payments are
presented and classified in the statement of cash flows. ASU 2016-15 was effective for fiscal years beginning after December 15,
2017. The new standard requires adoption on a retrospective basis unless it is impracticable to apply, in which case it would
be required to apply the amendments prospectively as of the earliest date practicable. The adoption did not have a material
impact to the consolidated financial statements.
In
May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. The amendments
in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity
to apply modification accounting in Topic 718. The amendments in this Update were effective for all entities for annual
periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption was permitted,
including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements
have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made
available for issuance. The adoption did not have a material impact to the consolidated financial statements.
In
July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic
815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments
(or embedded features) with down round features. When determining whether certain financial instruments should be classified as
liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument
is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified
instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be
accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity
classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic
260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction
of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down
round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20,
Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of
this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content
in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the
amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after
December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for
all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments
should be reflected as of the beginning of the fiscal year that includes that interim period.
NOTE
3 – RELATED PARTY TRANSACTIONS
Loans
due to related parties are due on demand and have no interest. Amounts outstanding as of December 31, 2018 and 2017 was approximately
$11,750 and $11,750, respectively
NOTE
4 - CONVERTIBLE NOTE PAYABLE
Convertible
notes payable consists of the following:
|
|
December
31, 2018
|
|
|
December
31, 2017
|
|
Total
convertible notes payable
|
|
|
20,000
|
|
|
|
214,764
|
|
Less
discounts
|
|
|
-
|
|
|
|
(42,534
|
)
|
Convertible
notes, net of discount
|
|
$
|
20,000
|
|
|
$
|
172,230
|
|
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
The
Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No. 815-15
“Derivatives and Hedging; Embedded Derivatives” (“Topic No. 815-15”). Topic No. 815-15 requires the Company
to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible
debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for’ any unrealized
change in fair value as a component of results of operations. The Company values the embedded derivatives using the Black-Scholes
pricing model.
The
following table presents details of the changes in the Company’s derivative liabilities associated with its convertible
notes for the year ended December 31, 2018:
|
|
Amount
|
|
Balance
December 31, 2017
|
|
$
|
319,041
|
|
Adjustment
to derivative liability due to debt conversion
|
|
|
(199,671
|
)
|
Change
in fair market value of derivative liabilities
|
|
|
(119,370
|
)
|
Balance
December 31, 2018
|
|
$
|
-
|
|
Settlement
Agreements
During
the nine months ended September 30, 2018, the Company entered into certain cancellation agreements with the holder of a certain
notes payable in the amounting to $96,721, including accrued interest issued from December 10, 2015 through August 27, 2017. The
face value of the canceled debt of $96,721 has been recorded as a gain on settlement of notes payable as of September 30, 2018.
The company also have settled convertible notes amounting to $172,230 for a total amount of $32,500
On
October 12, 2018, Textmunication Holdings, Inc. entered into a Settlement Agreement and Release (the “Agreement”)
with Lester Einhaus (“Holder”) concerning a $25,000 convertible note issued by the Company to the Holder on September
23, 2015 (the “Note”).
The
Agreement requires the Company to issue to the Holder 475,000 shares of the Company’s common stock, subject to the condition
that the Holder does not own more than 4.99% of the Company’s outstanding shares at any time. As such, the shares will be
issued out in tranches, with the first such tranche due within 10 days of signing the Agreement for 198,000 shares. The Holder
agreed to a daily leak out of the greater of 10,000 shares or 15% of the trading volume
NOTE
6 – INVESTMENT IN ASPIRE CONSULTING GROUP, LLC
On
January 5, 2016, the Company entered into a Share Exchange Agreement with Aspire Consulting Group, LLC, a Virginia limited liability
company and certain members of Aspire. Pursuant to the terms of the Exchange Agreement, the Company agreed to acquire 49% of all
of the issued and outstanding membership units of Aspire in exchange for the issuance of 66,667 shares of the Company’s
newly created Series B Convertible Preferred Stock to the Members valued at $460,002.
The
Company has concluded that it has the ability to exercise significant influence, but not control, over an Aspire through its acquired
49% equity interest and therefore has accounted for the acquisition of the interest under the equity method.
The
following table presents details of the Company’s investment is Aspire as of December 31, 2017 and 2016:
|
|
Amount
|
|
Balance December 31, 2016
|
|
$
|
454,062
|
|
Loss
from equity method investee
|
|
|
(1,726
|
)
|
Balance December 31, 2017
|
|
$
|
452,336
|
|
Loss
from equity method
|
|
|
(1,653
|
)
|
Balance December
31, 2018
|
|
$
|
450,683
|
|
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
NOTE
7 – COMMITMENTS AND CONTINGENCIES
Office
Lease
On
January 6, 2015 the Company signed an amendment to its lease originally signed on May 9, 2008. The amended lease commenced January
1, 2015 and expires on thirty days’ notice. Current month to month lease is for $1,838 a month. Rent expense was approximately
$22,294 and $22,908 for the years ended December 31, 2017 and 2016, respectively.
Executive
Employment Agreement
The
Company has an employment agreement with the CEO/Chairman to perform duties and responsibilities as may be assigned by
the Board of Directors. The base salary is in the amount of $132,000 per annum plus an annual discretionary bonus plus benefits
commencing on December 17, 2013 and ending May 1, 2019 with an automatic renewal on each anniversary date (May 1) thereafter.
Litigations
Claims and Assessments
On
October 12, 2018, Textmunication Holdings, Inc. (“Company”), Wais Asefi, the Company’s CEO, and David Thielen,
the Company’s COO, entered into a Settlement Agreement and Release (the “Agreement”) with Lester Einhaus (“Holder”)
concerning a $25,000 convertible note issued by the Company to the Holder on September 23, 2015 (the “Note”). Case
detail as follows:
Lester
Einhaus vs. Textmunication
United
States District Court – Northern District
Filed
on 6/14/2017
Case:
1:17-cv-04478
As
of December 31, 2018, there are no pending case against Textmunication Inc.
NOTE
8 – INCOME TAXES
For
the year ended December 31, 2018, the cumulative net operating loss carry-forward from continuing operations is approximately
$12,281,083 and will expire beginning in the year 2030.
The
cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows as
of December 31, 2018 and 2017:
|
|
2018
|
|
|
2017
|
|
Deferred
tax asset attributable to:
|
|
|
|
|
|
|
|
|
Net
operating loss carryover
|
|
$
|
2,579,027
|
|
|
$
|
2,583,438
|
|
Valuation
allowance
|
|
|
(2,579,027
|
)
|
|
|
(2,583,438
|
)
|
Net
deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Due
to the enactment of the Tax Reform Act of 2017, the corporate tax rate for those tax years beginning with 2018 has been reduced
to 21%.
TEXTMUNICATION
HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2018 and 2017
(AUDITED)
(RESTATED)
Note
9 – STOCKHOLDERS’ EQUITY
The
Company is authorized to issue an aggregate of 100,000,000 shares of common stock with a par value of $0.0001. The Company
is also authorized to issue 10,000,000 shares of “blank check” preferred stock with a par value of $0.0001, which
includes 4,000,000 shares of Series A preferred stock (“Series A”), 66,667 shares of Series B preferred stock (“Series
B”), and 2,000,000 shares of Series C preferred stock (“Series C”).
Under
the Certificate of Designation, holders of Series A Preferred Stock will participate on an equal basis per-share with holders
of our common stock in any distribution upon winding up, dissolution, or liquidation. Holders of Series A Preferred Stock are
entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of three hundred
(300) votes for each share held.
On
January 5, 2016, pursuant to Article III of our Articles of Incorporation, the Company’s Board of Directors voted to designate
a class of preferred stock entitled Series B Convertible Preferred Stock, consisting of up 66,667 shares, par value $0.0001. Under
the Certificate of Designation, holders of Series B Convertible Preferred Stock participate on an equal basis per-share with holders
of the Company’s common stock and Series A Preferred Stock in any distribution upon winding up, dissolution, or liquidation.
Holders of Series B Convertible Preferred Stock are not entitled to voting rights.
On
May 9, 2017, the Board of Directors voted to designate a class of preferred stock entitled Series C Convertible Preferred Stock,
consisting of up to 2,000,000 shares, par value $0.0001. Under the Certificate of Designation, holders of Series C Convertible
Preferred Stock will participate on an equal basis per-share with holders of common stock, Series A Preferred Stock and Series
B Preferred Stock in any distribution upon winding up, dissolution, or liquidation. Holders of Series C Convertible Preferred
Stock are entitled to vote together with the holders of our common stock on all matters submitted to shareholders at a rate of
875 votes for each share held. Holders of Series C Convertible Preferred Stock are entitled to convert each share held for 875
shares of common stock.
On
February 16, 2017, the Company issued a total of 2,000,000 shares of our common stock (post-split) to our officer and director,
Wais Asefi, as compensation for services rendered. During the year ended December 31, 2017, the officer exchanged the common shares
for 2,000,000 shares of newly designated Series C Preferred stock.
During
the year ended December 31, 2017, the Company issued 1,608,877 shares of common stock (post-split) for the partial conversion
and settlements of $765,217. The converted portion of the notes also had associated derivative liabilities with fair values on
the date of conversion of $1,271,691. The conversion of the derivative liabilities has been recorded through additional paid-in
capital.
During
the year ended December 31, 2017, the Company issued 299,397 shares of common stock (post-split) valued at $109,571 for the settlement
of debt related to a 3a10 settlement.
During
the year ended December 31, 2017, the Company issued 77,500 shares of common stock (post-split) for services valued at $115,100.
During
the year ended December 31, 2018,
|
●
|
the
Company’s Board of Directors approved a one to one thousand (1:1000) reverse stock
split, which became effective July 9, 2018. The Company consolidated financial statements
have been retroactively restated to the reflect the effect of the stock split
|
|
●
|
the
Company entered into a subscription agreement for 9.98% of the company common
shares outstanding for $100,000.
|
During
the year ended December 31, 2018, the Company issued 1,380,933 shares of common stock
with a fair value of $354,010 for the conversion of convertible notes payable. The converted
portion of the notes also had associated derivative liabilities with fair values on the
date of conversion of 866,361. The conversion of the derivative liabilities has been
recorded through additional paid-in capital
NOTE
10 – SUBSEQUENT EVENTS
On
February 12, 2019, Textmunication signed a Letter of Intent to acquire Off Day Trainer (“ODT”), a patented software
platform designed to help fitness pros and health clubs scale their businesses through automated messaging and communication management. In
addition to owning the ODT software platform, the acquisition will include all branding, media (social), source code, patent associated
with the platform and all existing ODT clients.
On
March 19, 2019 the Company completed its 2019 Stock Equity Plan. The purpose of the Plan is to attract and retain the best available
personnel for positions of substantial responsibility with the Company, to provide additional incentive to employees, directors
and consultants of the Company, and to promote the success of the Company’s business. Under the Plan the Company may issue
up to an aggregate total of 10,000,000 shares of the Company’s common stock. As of March 29, 2019, the Company has issued
6,500,000 shares of common stock under the Plan.
NOTE
11 – RESTATEMENT
The
financial statements for the year ended December 31, 2018 have been restated to accrue for a settlement agreement with Oscaleta
Partners LLC executed during 2018 that was previously not accrued. Under the agreement, the Company agreed to issue 200,000 shares
of common stock at inception, 150,000 shares if the average of the closing prices of the Company’s common stock during January
2019 is less than $3.50 per share (otherwise 75,000 shares of common stock) and 90,000 shares if the average of the closing prices
of the Company’s common stock during February 2019 is less than $5.00 per share (otherwise 0 shares of common stock) The
following summarizes the impact of the restatement.
|
|
Previously
|
|
|
|
|
|
|
|
|
|
Stated
|
|
|
Adjustments
|
|
|
Restated
|
|
Current assets
|
|
$
|
83,029
|
|
|
$
|
-
|
|
|
$
|
83,029
|
|
Total assets
|
|
|
533,712
|
|
|
|
-
|
|
|
|
533,712
|
|
Current liabilities
|
|
|
257,180
|
|
|
|
360,756
|
|
|
|
617,936
|
|
Total liabilities
|
|
|
257,180
|
|
|
|
360,756
|
|
|
|
617,936
|
|
Total stockholders’ equity
|
|
|
276,532
|
|
|
|
(360,756
|
)
|
|
|
(84,224
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
751,770
|
|
|
|
-
|
|
|
|
751,770
|
|
Operating expenses
|
|
|
1,058,498
|
|
|
|
-
|
|
|
|
1,058,498
|
|
Loss from operations
|
|
|
(306,728
|
)
|
|
|
-
|
|
|
|
(306,728
|
)
|
Other income
|
|
|
329,383
|
|
|
|
(360,756
|
)
|
|
|
(31,373
|
)
|
Loss from equity method investee
|
|
|
(1,652
|
)
|
|
|
-
|
|
|
|
(1,652
|
)
|
Net income (loss)
|
|
$
|
21,003
|
|
|
|
(360,756
|
)
|
|
$
|
(339,753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
|
|
$
|
0.005
|
|
|
|
|
|
|
$
|
(0.080
|
)
|