NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
1. NATURE OF BUSINESS AND GOING CONCERN
Friendable, Inc., a Nevada corporation (the “Company”),
was incorporated in the State of Nevada as Digital Yearbook
Inc.
Effective June 15, 2011, the Company completed a merger with its
subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was
incorporated solely to effect a change in the Company’s name
from “Digital Yearbook Inc.” to “Titan Iron Ore
Corp.” The Company then began to pursue business in the area
of mining exploration.
On February 3, 2014, the Company entered into an Agreement and Plan
of Merger and Reorganization (the
“Merger”)
with iHookup Operations Corp., a wholly-owned
Delaware subsidiary of the Company (“Acquisition Sub”)
and iHookup-DE, whereby iHookup-DE was the surviving entity and
became the wholly-owned subsidiary of the Company.
iHookup-DE’s former stockholders exchanged all of their 6,000
shares of outstanding common stock for 25,000 shares of the
Company’s designated Series A Preferred
Stock.
The Merger was regarded as a reverse recapitalization whereby
iHookup-DE was considered to be the accounting acquirer as its
stockholders retained control of the Company after the Merger. On
February 3, 2014, the Merger was completed and as a result,
iHookup-DE acquired the net liabilities of the
Company.
As a result of the Merger, the Company ceased its prior operations
and its business became the development and dissemination of a
“proximity based” mobile-social media application that
facilitates connections between people, utilizing the intelligence
of global positioning system and localized
recommendations.
On September 28, 2015, the Company filed a Certificate of Amendment
to its Articles of Incorporation changing the name of the Company
from “iHookup Social, Inc.” to “Friendable,
Inc.”. On October 27, 2015, the Company’s trading
symbol on the OTC Pink marketplace was changed from
“HKUP” to “FDBL”. This change was made in
conjunction with the re-branding of the Company’s app from
"iHookup Social" to "Friendable".
On June 28, 2017, the Company formed a wholly owned Nevada
subsidiary called Fan Pass, Inc.
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern,
which implies that the Company would continue to realize its assets
and discharge its liabilities in the normal course of business. The
Company has never paid any dividends and is unlikely to pay
dividends or generate earnings in the immediate or foreseeable
future. As of March 31, 2019, the Company has a working capital
deficiency of $9,482,818 and has an accumulated deficit of
$22,640,762 since inception and its operations continue to be
funded primarily from sales of its stock and issuance of
convertible debentures. These factors raise substantial doubt about
the Company’s ability to continue as a going concern. The
ability of the Company to continue as a going concern is dependent
on the Company’s ability to obtain the necessary financing
through the issuance of convertible notes and equity instruments.
The consolidated 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.
Management plans to raise financing through the issuance of
convertible notes. No assurance can be given that any such
additional financing will be available, or that it can be obtained
on terms acceptable to the Company and its
stockholders.
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
These consolidated financial statements and related notes are
presented in accordance with accounting principles generally
accepted in the United States, and are expressed in US dollars. The
Company’s fiscal year end is December 31.
Use of Estimates
The preparation of these statements in accordance with United
States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses in the
reporting period. The Company regularly evaluates estimates and
assumptions related to the useful life and recoverability of
long-lived assets, valuation of convertible debenture conversion
options, deferred income tax asset valuations, financial instrument
valuations, share-based payments, other equity-based payments, and
loss contingencies. The Company bases its estimates and assumptions
on current facts, historical experience and various other factors
that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities and the accrual of costs
and expenses that are not readily apparent from other sources. The
actual results experienced by the Company may differ materially and
adversely from the Company’s estimates. To the extent there
are material differences between the estimates and the actual
results, future results of operations will be
affected.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement
exists, delivery has occurred, the fee is fixed or determinable,
and collectability is probable. Revenue generally is recognized net
of allowances for returns and any taxes collected from customers
and subsequently remitted to governmental authorities. The Company
derives revenues from the sale of application software, unlimited
messaging subscriptions for periods varying from one to twelve
months, and arrangements for virtual gifts and access to special
features referred to as coin packs. Revenue from the sale of
application software is recognized upon download. Revenue from
messaging subscriptions is recognized as revenue ratably over the
subscription period beginning on the date the service is made
available to customers. Revenue from coin packs is recognized on a
consumption basis commensurate with the customer utilization of
such resources.
Advertising Costs
The Company’s policy regarding advertising is to expense
advertising when incurred. During the three months ended March 31,
2019, the Company incurred $6,211 (March 31, 2018: $490) in
advertising costs.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with
a maturity of three months or less to be cash
equivalents.
Intangible Assets
The Company accounts for intangible assets in accordance with ASC
350, Intangibles – Goodwill and Other. The Company assesses
potential impairments to intangible assets when there is evidence
that events or changes in circumstances indicate that the carrying
amount of an asset may not be recovered.
Intangible assets with finite lives are reviewed for impairment
when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of
intangible assets with finite lives is measured by comparing the
carrying amount of the asset to its fair value. If the future value
of the asset is lower than its carrying value, the Company
recognizes an impairment loss for the amount by which the carrying
value of the asset exceeds the related estimated fair
value.
Intangible assets with indefinite lives are tested for impairment
annually or more frequently are tested for impairment annually or
more frequently if events or changes in circumstances indicate that
it is more likely than not that the intangible asset is
impaired.
Impairment of Long-Lived Assets
The Company continually monitors events and changes in
circumstances that could indicate carrying amounts of long-lived
assets may not be recoverable. When such events or changes in
circumstances are present, the Company assesses the recoverability
of long-lived assets by determining whether the carrying value of
such assets will be recovered through undiscounted expected future
cash flows.
If the total of the future cash flows is less than the carrying
amount of those assets, the Company recognizes an impairment loss
based on the excess of the carrying amount over the fair value of
the assets. Assets to be disposed of are reported at the lower of
the carrying amount or the fair value less costs to
sell.
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Stock-based Compensation
The Company records stock-based compensation in accordance with ASC
718, Compensation – Stock Based Compensation and
ASC 505, Equity Based Payments to Non-Employees, which
requires the measurement and recognition of compensation expense
based on estimated fair values for all share-based awards made to
employees and directors, including stock options.
ASC 718 requires companies to estimate the fair value of
share-based awards on the date of grant using an option-pricing
model. The Company uses the Black-Scholes option pricing model as
its method in determining fair value. This model is affected by the
Company’s stock price as well as assumptions regarding a
number of subjective variables. These subjective variables include,
but are not limited to the Company’s expected stock price
volatility over the terms of the awards, and actual and projected
employee stock option exercise behaviors. The value of the portion
of the award that is ultimately expected to vest is recognized as
an expense in the statement of comprehensive loss over the
requisite service period.
All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair
value of the equity instrument issued, whichever is more reliably
measurable.
Allowance for Doubtful Accounts
The Company monitors its outstanding receivables for timely
payments and potential collection issues. During the three months
ended March 31, 2019 and 2018, the Company did not have any
allowance for doubtful accounts.
Financial Instruments
Financial assets and financial liabilities are recognized in the
consolidated balance sheet when the Company has become party to the
contractual provisions of the instruments.
The Company’s financial instruments consist of accounts
payable, convertible debentures and promissory note. The fair
values of these financial instruments approximate their carrying
value, due to their short term nature, and current market rates for
similar financial instruments. Fair value of a financial instrument
is defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The Company’s
financial instruments recorded at fair value in the balance sheets
are categorized based upon the level of judgment associated with
the inputs used to measure their fair value.
Basic and Diluted Loss Per Share
The Company computes net loss per share in accordance with ASC 260,
Earnings per Share. ASC 260 requires presentation of
both basic and diluted earnings per share (EPS) on the face of the
consolidated statement of comprehensive loss. Basic EPS is computed
by dividing net income (loss) available to common stockholders
(numerator) by the weighted average number of shares outstanding
(denominator) during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period
using the treasury stock method and convertible preferred stock
using the if-converted method. In computing diluted EPS, the
average stock price for the period is used in determining the
number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential
shares if their effect is anti-dilutive.
As of March 31, 2019, there were approximately 61,125,546,528
potentially dilutive shares outstanding.
Income Taxes
The Company accounts for income taxes using the asset and liability
method in accordance with ASC 740, Income Taxes. The asset and
liability method provides that deferred tax assets and liabilities
are recognized for the expected future tax consequences of
temporary differences between the financial reporting and tax bases
of assets and liabilities and for operating loss and tax credit
carry forwards. Deferred tax assets and liabilities are measured
using the currently enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company
records a valuation allowance to reduce deferred tax assets to the
amount that is believed more likely than not to be
realized.
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC
Topic 842) (“ASU 2016-02”), which requires lessees to
recognize at the commencement date for all leases, with the
exception of short-term leases, (i) a lease liability, which is a
lessee’s obligation to make lease payments arising from a
lease, measured on a discounted basis, and (ii) a right-of-use
asset, which is an asset that represents the lessee’s right
to use, or control the use of, a specified asset for the lease
term. ASU 2016-02 will take effect for public companies for fiscal
years, and interim periods within those fiscal years, beginning
after December 15, 2018. The ASU requires adoption using a modified
retrospective transition approach with either (a) periods prior to
the adoption date being recast or (b) a cumulative-effect
adjustment recognized to the opening balance of retained earnings
on the adoption date with prior periods not recast. The the
adoption of ASU No. 2016-02 did not have an effect on its
consolidated financial statements.
3. COMMON AND PREFERRED STOCK
Common Stock:
Issued during 2019
None.
Issued during 2018
During the 12 months ended December 31, 2018, the Company issued
543,000,000 shares of common stock to various convertible note
holders for full and partial conversion of the notes.
Preferred Stock:
The Series A Preferred Stock is convertible into nine (9) times the
number of common stock outstanding until the closing of a Qualified
Financing (i.e. the sale and issuance of the Company’s equity
securities that results in gross proceeds in excess of
$2,500,000). The number of shares of common stock issued
on conversion of preferred stock is based on the ratio of the
number of shares of preferred stock converted to the total number
of shares of preferred stock outstanding at the date of conversion
multiplied by nine (9) times the number of common stock outstanding
at the date of conversion.
Stock Subscriptions Received:
During
the quarter ended March 31, 2019, the Company sold a number of its
common shares to be issued upon the completion of the reverse split
of the Company’s stock as set forth in the Company’s
filing on Form 14C as filed with the Commission on May 7, 2018. The
total number of post-split shares to be issued is 534,000. As the
split is not yet effective, the Company has not issued these
shares. The share numbers set forth below represent the post-split
number of shares to be issued by the Company.
During
the quarter ended March 31, 2019, the Company sold 57,000 shares of
common stock for total consideration of $14,250. Additionally,
Robert Rositano, our CEO, and Dean Rositano, our president, agreed
to assign to each of the investors a number of shares equal to the
number of shares each shareholder purchased in the
offering.
Additionally,
during the period the Company sold an additional 477,000 shares of
the Company’s common stock for total consideration of
$119,250. As part of the subscription for the shares, each investor
was granted a percentage interest in the net revenues received from
Fan Pass subscriptions and subscribers. Each share is entitled to
receive .00001% of the net revenue. The shareholders in this
offering also were granted limited anti-dilution protection
providing for an additional issuance of shares from those held by
the Robert and Dean Rositano after the completion of an additional
offering by the Company.
4. SHARE PURCHASE WARRANTS
Balance of share purchase warrants as of March 31, 2019 and year
ended March 31, 2018 are:
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2018
|
1,096,335,757
|
0.004
|
|
|
|
|
|
Balance,
March 31, 2019
|
1,096,335,757
|
0.004
|
|
|
|
|
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
5. STOCK-BASED COMPENSATION
On November 22, 2011, the Board of Directors of the Company
approved a stock option plan (“2011 Stock Option
Plan”), the purpose of which is to enhance the
Company’s stockholder value and financial performance by
attracting, retaining and motivating the Company’s officers,
directors, key employees, consultants and its affiliates and to
encourage stock ownership by such individuals by providing them
with a means to acquire a proprietary interest in the
Company’s success through stock ownership. Under the 2011
Stock Option Plan, officers, directors, employees and consultants
who provide services to the Company may be granted options to
acquire common shares of the
Company.
The aggregate number of
options authorized by the plan shall not exceed 4,974 shares of
common stock of the Company.
The following table summarizes the options outstanding and
exercisable under the 2011 Stock Option Plan as of March 31,
2019:
|
|
|
|
|
Expiry
Date
|
|
|
|
December
21, 2021
|
1,680
|
1,725
|
|
June
21, 2022
|
400
|
500
|
|
June
25, 2023
|
134
|
850
|
|
|
$
1,044
|
3,075
|
The Board of Directors and the stockholders holding a majority of
the voting power approved a 2014 Equity Incentive Plan (the
“2014 Plan”) on February 28, 2014, with a to be
determined effective date. The purpose of the 2014 Plan is to
assist the Company and its affiliates in attracting, retaining and
providing incentives to employees, directors, consultants and
independent contractors who serve the Company and its affiliates by
offering them the opportunity to acquire or increase their
proprietary interest in the Company and to promote the
identification of their interests with those of the stockholders of
the Company. The 2014 Plan will also be used to make grants to
further reward and incentivize current employees and
others.
There are 120,679 shares of common stock reserved for issuance
under the 2014 Plan. The Board shall have the power and authority
to make grants of stock options to employees, directors,
consultants and independent contractors who serve the Company and
its affiliates. Any stock options granted under the 2014 Plan shall
have an exercise price equal to or greater than the fair market
value of the Company’s shares of common stock. Unless
otherwise determined by the Board of Directors, stock options shall
vest over a four-year period with 25% being vested after the end of
one (1) year of service and the remainder vesting equally over a
36-month period. The Board may award options that may
vest based upon the achievement of certain performance milestones.
As of March 31, 2019, no options have been awarded under the 2014
Plan.
The following table summarizes the Company’s stock options
outstanding and exercisable:
|
|
Number of Options
|
|
Weighted Average Exercise Price
|
|
Weighted- Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
Outstanding and exercisable, December 31, 2017
|
3,075
|
|
1,044
|
|
6.57
|
|
-
|
|
|
Outstanding and exercisable, March 31, 2018
|
3,075
|
|
1,044
|
|
5.57
|
|
-
|
|
|
Outstanding and exercisable, March 31, 2019
|
3,075
|
|
1,044
|
|
4. 57
|
|
-
|
|
6. COMMITMENTS
The following table summarizes the Company’s significant
contractual obligations as of March 31, 2019:
|
|
$
|
|
Employment
Agreements (1)
|
300,000
|
(1) Employment agreements with related parties.
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
7. RELATED PARTY TRANSACTIONS AND BALANCES
During the three months ended March 31, 2019, the Company incurred
$114,800 (2018: $114,800) in salaries to officers and directors
with such costs being recorded as general and administrative
expenses.
During the three months ended March 31, 2019, the Company incurred
$15,000, $30,588, and $15,000 (2018: $80,000, 210,000, and $60,000)
in app hosting, app development and rent to a company with two
officers and directors in common with such costs being recorded as
app hosting, product development and general and administrative
expenses.
As of March 31, 2019, the Company had a stock subscription
receivable totaling $4,500 (December 31, 2018: $4,500) from an
officer and director and from a company with an officer and
director in common.
As of March 31, 2019, accounts payable includes $101,798 (December
31, 2018: $721,099) payable to a company with two officers and
directors in common, and $486,931 (December 31, 2018: $798,580)
payable in salaries to directors and officers of the Company. The
amounts are unsecured, non-interest bearing and are due on
demand.
During the quarter ended March 31, 2019, three officers forgave
debt totaling $400,000 and a company controlled by two officers of
the Company forgave debt totaling $600,000. The debt forgiveness
was considered a capital transaction and therefore $1,000,000 was
recorded as an increase in additional paid-in capital as of March
31, 2019.
The above transactions were recorded at their exchange amounts,
being the amounts agreed by the related parties.
8. FAIR VALUE MEASUREMENTS
ASC 820, Fair Value Measurements and Disclosures, require an entity
to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 820 establishes
a fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used to measure fair value. A
financial instrument’s categorization within the fair value
hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. ASC 820 prioritizes the
inputs into three levels that may be used to measure fair
value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted
prices in active markets for identical assets or liabilities.
Valuations are based on quoted prices that are readily and
regularly available in an active market and do not entail a
significant degree of judgment.
Level 2
Level 2 applies to assets or liabilities for which there are other
than Level 1 observable inputs such as quoted prices for similar
assets or liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume
or infrequent transactions (less active markets); or model-derived
valuations in which significant inputs are observable or can be
derived principally from, or corroborated by, observable market
data.
Level 2 instruments require more management judgment and
subjectivity as compared to Level 1 instruments. For instance:
determining which instruments are most similar to the instrument
being priced requires management to identify a sample of similar
securities based on the coupon rates, maturity, issuer, credit
rating and instrument type, and subjectively select an individual
security or multiple securities that are deemed most similar to the
security being priced; and determining whether a market is
considered active requires management judgment.
Level 3
Level 3 applies to assets or liabilities for which there are
unobservable inputs to the valuation methodology that are
significant to the measurement of the fair value of the assets or
liabilities. The determination of fair value for Level 3
instruments requires the most management judgment and
subjectivity.
Pursuant to ASC 825, cash is based on Level 1 inputs. The Company
believes that the recorded values of accounts receivable and
accounts payable approximate their current fair values because of
their nature or respective relatively short durations. The fair
value of the Company’s convertible debentures and promissory
note approximates their carrying values as the underlying imputed
interest rates approximates the estimated current market rate for
similar instruments.
As of March 31, 2019, there were no assets or liabilities measured
at fair value on a recurring basis presented on
the Company’s consolidated balance sheet, other than
cash.
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
9. CONVERTIBLE DEBENTURES
Current
Convertible Debentures:
|
Conversion Feature
|
Issuance
|
Net Principal ($)
|
Discount ($)
|
Carrying Value ($)
|
Interest Rate
|
Maturity Date
|
|
a
|
)
|
2-Apr-13
|
5,054
|
-
|
5,054
|
0
|
%
|
2-Jan-14
|
|
d
|
)
|
5-Aug-15
|
474,900
|
-
|
474,900
|
7
|
%
|
5-Feb-17
|
|
d
|
)
|
5-Aug-15
|
18,750
|
-
|
18,750
|
7
|
%
|
5-Feb-17
|
|
c
|
)
|
17-Feb-15
|
102,135
|
-
|
102,135
|
8
|
%
|
17-Feb-16
|
|
b
|
)
|
17-Feb-15
|
5,000
|
-
|
5,000
|
8
|
%
|
17-Feb-16
|
|
b
|
)
|
27-Feb-15
|
37,500
|
-
|
37,500
|
8
|
%
|
27-Feb-16
|
|
b
|
)
|
19-Mar-15
|
53,551
|
-
|
53,551
|
8
|
%
|
19-Mar-16
|
|
b
|
)
|
19-Mar-15
|
8,000
|
-
|
8,000
|
8
|
%
|
19-Mar-16
|
|
b
|
)
|
11-May-15
|
50,000
|
-
|
50,000
|
8
|
%
|
11-May-16
|
|
b
|
)
|
2-Jun-15
|
29,500
|
-
|
29,500
|
8
|
%
|
2-Jun-16
|
|
b
|
)
|
2-Jun-15
|
45,966
|
-
|
45,966
|
8
|
%
|
2-Jun-16
|
|
b
|
)
|
2-Jun-15
|
10,000
|
-
|
10,000
|
8
|
%
|
2-Jun-16
|
|
b
|
)
|
2-Jun-15
|
58,540
|
-
|
58,540
|
8
|
%
|
2-Jun-16
|
|
b
|
)
|
2-Jun-15
|
35,408
|
-
|
35,408
|
8
|
%
|
2-Jun-16
|
|
b
|
)
|
2-Jun-15
|
20,758
|
-
|
20,758
|
8
|
%
|
2-Jun-16
|
|
c
|
)
|
11-Jun-15
|
50,000
|
-
|
50,000
|
8
|
%
|
27-Mar-16
|
|
b
|
)
|
19-Jun-15
|
30,464
|
-
|
30,464
|
8
|
%
|
19-Jun-16
|
|
b
|
)
|
19-Jun-15
|
30,000
|
-
|
30,000
|
8
|
%
|
19-Jun-16
|
|
b
|
)
|
19-Jun-15
|
35,408
|
-
|
35,408
|
8
|
%
|
19-Jun-16
|
|
b
|
)
|
24-Jun-15
|
37,500
|
-
|
37,500
|
8
|
%
|
27-Feb-16
|
|
b
|
)
|
24-Jun-15
|
35,000
|
-
|
35,000
|
8
|
%
|
12-Feb-16
|
|
b
|
)
|
24-Jun-15
|
37,500
|
-
|
37,500
|
8
|
%
|
12-Mar-16
|
|
b
|
)
|
7-Jul-15
|
75,000
|
-
|
75,000
|
8
|
%
|
7-Oct-15
|
|
b
|
)
|
1-Aug-15
|
17,408
|
-
|
17,408
|
8
|
%
|
4-Aug-16
|
|
b
|
)
|
1-Aug-15
|
30,000
|
-
|
30,000
|
8
|
%
|
1-Aug-16
|
|
b
|
)
|
1-Aug-15
|
35,408
|
-
|
35,408
|
8
|
%
|
1-Aug-16
|
|
b
|
)
|
21-Sep-15
|
64,744
|
-
|
64,744
|
8
|
%
|
21-Sep-16
|
|
b
|
)
|
3-May-16
|
50,000
|
-
|
50,000
|
8
|
%
|
3-May-17
|
|
b
|
)
|
3-May-16
|
50,000
|
-
|
50,000
|
8
|
%
|
11-May-16
|
|
b
|
)
|
3-May-16
|
29,500
|
-
|
29,500
|
8
|
%
|
2-Jun-16
|
|
b
|
)
|
3-May-16
|
45,965
|
-
|
45,965
|
8
|
%
|
2-Jun-16
|
|
b
|
)
|
24-May-16
|
61,571
|
-
|
61,571
|
8
|
%
|
24-May-17
|
|
b
|
)
|
24-May-16
|
30,464
|
-
|
30,464
|
8
|
%
|
19-Jun-16
|
|
b
|
)
|
26-May-16
|
157,500
|
-
|
157,500
|
8
|
%
|
26-May-17
|
|
b
|
)
|
15-Jun-16
|
5,000
|
-
|
5,000
|
8
|
%
|
15-Jun-17
|
|
d
|
)
|
3-Jun-16
|
160,000
|
-
|
160,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
3-Jun-16
|
4,000
|
-
|
4,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
15-Jun-16
|
50,000
|
-
|
50,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
15-Jun-16
|
1,250
|
-
|
1,250
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
17-May-16
|
100,000
|
-
|
100,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
17-May-16
|
2,500
|
-
|
2,500
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
20-May-16
|
110,000
|
-
|
110,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
20-May-16
|
2,750
|
-
|
2,750
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
27-Jan-16
|
250,000
|
-
|
250,000
|
7
|
%
|
27-Jul-17
|
|
d
|
)
|
8-Mar-16
|
110,000
|
-
|
110,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
27-Jan-16
|
18,750
|
-
|
18,750
|
7
|
%
|
27-Jul-17
|
|
d
|
)
|
8-Mar-16
|
5,000
|
-
|
5,000
|
7
|
%
|
8-Sep-17
|
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
9. CONVERTIBLE DEBENTURES (CONTINUED)
|
d
|
)
|
8-Mar-16
|
90,000
|
-
|
90,000
|
8
|
%
|
8-Sep-17
|
|
b
|
)
|
8-Jul-16
|
50,000
|
-
|
50,000
|
7
|
%
|
8-Sep-17
|
|
b
|
)
|
4-Aug-16
|
110,000
|
-
|
110,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
15-Aug-16
|
157,000
|
-
|
157,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
12-Sep-16
|
83,000
|
-
|
83,000
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
8-Jul-16
|
1,250
|
-
|
1,250
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
4-Aug-16
|
2,750
|
-
|
2,750
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
15-Aug-16
|
3,925
|
-
|
3,925
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
12-Sep-16
|
2,075
|
-
|
2,075
|
7
|
%
|
8-Sep-17
|
|
d
|
)
|
4-Aug-16
|
110,000
|
-
|
110,000
|
8
|
%
|
4-Aug-17
|
|
b
|
)
|
15-Aug-16
|
157,500
|
-
|
157,500
|
8
|
%
|
15-Aug-17
|
|
b
|
)
|
8-Sep-16
|
80,000
|
-
|
80,000
|
8
|
%
|
8-Sep-17
|
|
b
|
)
|
11-Nov-16
|
80,000
|
-
|
80,000
|
8
|
%
|
11-Nov-17
|
|
b
|
)
|
5-Dec-16
|
88,000
|
-
|
88,000
|
8
|
%
|
5-Dec-17
|
|
b
|
)
|
9-Jan-17
|
84,000
|
-
|
84,000
|
8
|
%
|
6-Jan-18
|
|
b
|
)
|
13-Mar-17
|
32,000
|
-
|
32,000
|
8
|
%
|
13-Mar-18
|
|
c
|
)
|
2-Feb-17
|
90,198
|
-
|
90,198
|
8
|
%
|
2-Feb-18
|
|
c
|
)
|
15-Mar-17
|
96,000
|
-
|
96,000
|
8
|
%
|
15-Mar-18
|
|
d
|
)
|
7-Oct-16
|
465,000
|
-
|
465,000
|
7
|
%
|
7-Apr-18
|
|
d
|
)
|
7-Nov-16
|
295,000
|
-
|
295,000
|
7
|
%
|
7-May-18
|
|
d
|
)
|
12-Dec-16
|
295,000
|
-
|
295,000
|
7
|
%
|
12-Jun-18
|
|
d
|
)
|
18-Jan-17
|
295,000
|
-
|
295,000
|
7
|
%
|
7-Apr-18
|
|
b
|
)
|
7-Apr-17
|
25,000
|
-
|
25,000
|
8
|
%
|
7-Apr-18
|
|
b
|
)
|
3-May-17
|
27,000
|
-
|
27,000
|
8
|
%
|
3-May-18
|
|
c
|
)
|
5-May-17
|
30,000
|
-
|
30,000
|
8
|
%
|
5-May-18
|
|
b
|
)
|
2-Jun-17
|
27,000
|
-
|
27,000
|
8
|
%
|
2-Jun-18
|
|
s) d
|
)
|
21-Jul-17
|
790,965
|
-
|
790,965
|
10
|
%
|
21-Jul-18
|
|
s) d
|
)
|
14-Aug-18
|
30,000
|
-
|
30,000
|
10
|
%
|
31-Dec-18
|
|
s) d
|
)
|
21-Jul-17
|
24,000
|
-
|
24,000
|
10
|
%
|
21-Jul-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,299,407
|
-
|
6,299,407
|
|
|
|
a)
The
conversion price per share equal to the lower of:
i.
100%
of the average price of the Company’s common stock for the 5
trading days preceding the conversion date;
ii.
70%
of the daily average price of the Company’s common stock for
the 10 trading days preceding the conversion date.
b)
The
conversion price is equal to 50% of the lowest closing bid price of
the Company’s common stock for the 15-20 trading days
preceding the conversion date subject to a maximum conversion price
ranging from $0.0005-$0.05.
c)
The
conversion price equal to 50% of the lowest closing bid price of
the Company’s common stock in the 20-25 trading days prior to
the conversion.
d)
The
conversion price is fixed ranging from $0.0003 -
$0.0078.
s)
Convertible
debenture is secured.
FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2019
(Expressed in US dollars)
9. CONVERTIBLE DEBENTURES (CONTINUED)
At March 31, 2019, convertible debentures with the principal amount
of $6,299,407 are subject to a General Security Agreement covering
substantially all of the Company’s assets.
The Company has evaluated whether separate financial instruments
with the same terms as the conversion features above would meet the
characteristics of a derivative instrument as described in
paragraphs ASC 815-15-25. The terms of the contracts do not permit
net settlement, as the shares delivered upon conversion are not
readily convertible to cash. The Company’s trading history
indicated that the shares are thinly traded and the market would
not absorb the sale of the shares issued upon conversion without
significantly affecting the price. As the conversion features would
not meet the characteristics of a derivative instrument as
described in ASC 815-15-25, the conversion features are not
required to be separated from the host instrument and accounted for
separately. As a result, at March 31, 2019 the conversion features
and non-standard anti-dilution provisions would not meet derivative
classification.
Convertible debentures with maturity dates prior to March 31, 2019
are now due on demand.
10. PROMISSORY NOTE
On December 14, 2018, the Company issued a
promissory note for proceeds of $100,000 at 12% interest per annum.
The maturity date of the note is December 14, 2019. The note
includes a conversion feature that entitles the holder to receive
1.63% equity ownership of Friendable, Inc. and 18.2% equity
ownership of Fan Pass, Inc. upon conversion. During the three
months ended March 31, 2019,
the note was converted into
100,000 shares (post-split) of common stock of the Company, or a
1.63% ownership. Additionally, the holder will be entitled to
2,000,000 shares, or a 18.2% ownership of Fan Pass, Inc (a wholly
owned subsidiary of the Company). As of March 31, 2019 none of the
shares have been issued.
The Company has evaluated whether separate financial instruments
with the same terms as the conversion features above would meet the
characteristics of a derivative instrument as described in
paragraphs ASC 815-15-25. The terms of the contracts do not permit
net settlement, as the shares delivered upon conversion are not
readily convertible to cash. The Company’s trading history
indicated that the shares are thinly traded and the market would
not absorb the sale of the shares issued upon conversion without
significantly affecting the price. As the conversion features would
not meet the characteristics of a derivative instrument as
described in ASC 815-15-25, the conversion features are not
required to be separated from the host instrument and accounted for
separately. As a result, at March 31, 2019 the conversion features
and non-standard anti-dilution provisions would not meet derivative
classification.
11. DEBT RESTRUCTURE AGREEMENT
On March 26, 2019, the Company entered into a Debt Restructuring
Agreement with related parties Robert A. Rositano Jr., Dean
Rositano, Frank Garcia, and Checkmate Mobile, Inc. and Alpha
Capital Anstalt, Coventry Enterprises, LLC, Palladium Capital
Advisors, LLC, EMA Financial, LLC, Michael Finkelstein, and Barbara
R. Mittman, each being a debt holder of the Company.
The debt holders have agreed to convert their debt into certain
amounts of common stock as set forth in the Agreement upon the
Company meeting certain milestones including but not limited to:
the Company effecting a reverse stock split and maintaining a stock
price of $1.00 per share; being current with its periodic report
filings pursuant to the Securities Exchange Act; Checkmate Mobile,
Inc. and Company officers forgiving an aggregate of $1,000,000 in
amounts owed to them; the Company raising not less than $400,000 in
common stock at a post-split price of not less than $0.20 per
share; and certain other things as further set forth in the
Agreement. The debt holders will be subject to certain lock up and
leak out provisions as contained in the Agreement.
12. CONTINGENCY
Integrity Media, Inc. (“Integrity”) had previously
filed a lawsuit against the Company and the CEO of the Company for
$500,000 alleging breach of contract alleging the Company failed to
deliver marketable securities in exchange for services. The Company
answered the allegations in court and Integrity filed a motion
attacking the Company’s answers. The court did not strike the
answers but the clerk of the court entered a default judgment
against the Company in the amount of $1,192,875 plus 10% interest.
On May 8, 2019, the Company received a tentative ruling on the
Company’s motion to vacate the default judgement whereby the
previously entered default judgement has now been voided and a
trial date of August 26, 2019 has been set. The Company fully
intends to defend itself against these allegations and believes
that the claim is without merit.
13. SUBSEQUENT EVENTS
Subsequent to March 31, 2019, the Company entered into
subscriptions for the sale 420,000 post-split common shares for
total consideration of $105,000. As the Company’s reverse
split as set forth on the Company’s filing on Form 14C on May
7, 2019 has not yet become effective the Company has not yet issued
the shares. As part of the subscription for the shares, each
investor was granted a percentage interest in the net revenues
received from Fan Pass subscriptions and subscribers. Each share is
entitled to receive .00001% of the net revenue. The shareholders in
this offering also were granted limited anti-dilution protection
providing for an additional issuance of shares from those held by
the Robert and Dean Rositano after the completion of an additional
offering by the Company.