ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors
Below are the names of and certain information regarding the Company’s current executive officers and directors who were appointed effective as of the closing of the Merger:
Name
|
|
Age
|
|
Title
|
|
|
|
|
|
Robert R. Gayman
|
|
52
|
|
Chief Executive Officer, President and Director
|
|
|
|
|
|
Arnold Tinter
|
|
67
|
|
Chief Financial Officer, Treasurer, Secretary and Director
|
|
|
|
|
|
Howard Fuller
|
|
49
|
|
Director
|
Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Executive officers are appointed by the Board of Directors and serve at its pleasure.
The principal occupation and business experience during at least the past five years for our executive officers and directors is as follows:
Robert R. Gayman, Chief Executive Officer, President, Chairman of the Board of Directors
Robert R. Gayman was appointed as our Chief Executive Officer, President and Chairman of the Board of Directors on September 20, 2012. He has served as Chief Executive Officer of our wholly-owned subsidiary, LifeApps, Inc., since July 15, 2009. Mr. Gayman has been a leader in the development and commercialization of software for over 20 years. The majority of his career has been dedicated to the technology sector, focusing on emerging technologies in such fields as interactive gaming and mobile devices. From August, 2000 to May, 2012, he served as Chief Executive Officer for Dolphin Interactive Inc., a company which he started and is a sales, marketing and consultancy company specializing in sales and marketing services to technology consumer package goods companies from fortune 500 companies to start-up entities, where his responsibilities included overall operational responsibility. In addition, from 2005 Robert additionally acts as a Senior Associate to Consulting firm Fuller Jones Associates in the areas of retail, entertainment and digital media consulting projects on an assignment basis. Prior to that, from 1995 to 2000, he was the Western Regional Sales Manager at SONY Computer Entertainment of America, a diversified technology and entertainment company, where he directed sales activities to the company’s top tier accounts including Best Buy, Target and Walmart.
Mr. Gayman received a Bachelor of Arts degree in general studies in 1984 from University of Iowa.
Mr. Gayman has extensive experience with the development and commercialization of software, including sales management positions at several top gaming companies. We believe his background will provide us with invaluable insight into our customers’ needs and requirements, and makes him an ideal fit to serve as our Chief Executive Officer, President and Chairman of the Board of Directors.
Arnold Tinter, Chief Financial Officer, Treasurer, Secretary, Director
Arnold Tinter was appointed as Director, Chief Financial Officer and Secretary on September 20, 2012. Mr. Tinter founded Corporate Finance Group, Inc., a consulting firm located in Denver, Colorado, in 1992, and is its President. Corporate Finance Group, Inc. is involved in financial consulting in the areas of strategic planning, mergers and acquisitions and capital formation. Mr. Tinter provides Chief Financial Officer (“CFO”) services to a number of public companies, including LifeApps Digital Media Inc., Agrisolar Solutions, Inc., Barfresh Food Group Inc., T.O Entertainment Inc. and Arvana Inc. From 2006 to 2010 Mr. Tinter provided CFO services to Spicy Pickle Franchising, Inc., a public company, where his responsibilities included oversight of all accounting functions, including SEC reporting, strategic planning and capital formation. From May 2001 to May 2003, he served as CFO of Bayview Technology Group, LLC, a privately held company that manufactured and distributed energy-efficient products. From May 2003 to October 2004, he served as that company’s Chief Executive Officer. Prior to 1990, Mr. Tinter was Chief Executive Officer of Source Venture Capital, a holding company with investments in the gaming, printing, and retail industries. In addition to the Company, Mr. Tinter currently serves as a director of Avana Inc. and Barfresh food Group Inc., both public companies. Mr. Tinter received a B.S. degree in Accounting in 1967 from C.W. Post College, Long Island University, and is licensed as a certified public accountant in Colorado and New York.
Based upon Mr. Tinter’s years of experience as a certified public accountant and a financial consultant as described above, including his service to a number of public companies, we believe that Mr. Tinter has the specific experience, qualifications, attributes and skills necessary to serve as our Chief Financial Officer and a member of our Board of Directors.
Howard Fuller, Director
Howard Fuller was appointed as a member of our Board of Directors on September 20, 2012. Dr. Fuller is a hands-on corporate executive with over 15 years of experience in Business Management Consulting, R&D, NPI and Manufacturing. From 2004 to the present, he served as Chief Executive Officer for Fuller, Jones & Associates, Inc., a company that provides consultancy and analytic services to a variety of industries from startups to fortune 500 companies. Additionally, from 2008 to present, he was the Chief Executive Officer at SECCO2 Engines, Inc., an engine technology company serving the stationary and mobile engine markets. Prior to leading startup companies, Dr. Fuller was a corporate executive at several large organizations including Solectron, SanDisk and Amyris. Dr. Fuller is also an Adjunct Professor at San Jose State University’s Engineering Department, has published over 25 papers in leading journals, and has a Ph.D. in Industrial Engineering from the University of Wisconsin-Madison, with an M.S. in Statistics and B.S. in Mathematics.
Dr. Fuller brings to our Board a wealth of experience derived from his services as an executive in various businesses, including technology start-ups. He has demonstrated strong business acumen and ability to exercise sound judgment and has a reputation for integrity, honesty and adherence to ethical standards. Because of these factors, we believe Mr. Fuller has the appropriate qualifications to serve on our Board of Directors.
Board of Directors and Corporate Governance
Our Board of Directors consists of three (3) members. On the Closing of the Merger, Andrew Listerman and Jon Albaugh, members of Pubco’s Board of Directors, resigned, and simultaneously therewith, a new Board of Directors was appointed. The new Board consists of Robert Gayman, Arnold Tinter and Howard Fuller.
Board Independence and Committees
We are not currently listed on any national securities exchange or quoted on an inter-dealer quotation system that has a requirement that certain of the members of the Board of Directors be independent. However, the Board of Directors has made a determination as to which of its members are independent. In evaluating the independence of its members and the composition of the committees of the Board of Directors, the Board utilizes the definition of “independence” developed by the Nasdaq Stock Market and in SEC rules, including the rules relating to the independence standards in audit committee members and the non-employee director definition of Rule 16b-3 promulgated under the Exchange Act.
The Board of Directors expects to continue to evaluate whether and to what extent the members of the Board and its committees are independent. The Company intends to appoint persons to the Board and committees of the Board who will meet the corporate governance requirements imposed by a national securities exchange. Therefore, the Company expects that a majority of its directors will be independent directors of which at least one director will qualify as an “audit committee financial expert,” within the meaning of SEC rules.
Additionally, the Board of Directors is expected to appoint an audit committee, governance committee and compensation committee and to adopt charters relative to each such committee.
We believe that Mr. Fuller is currently an “independent” director as that term is defined by the listing standards of the Nasdaq Stock Market and SEC rules, including the rules relating to the independence standards for audit committee members and the non-employee director definition of Rule 16b-3 promulgated under the Exchange Act.
Audit Committee Financial Expert
We have no separate audit committee at this time. The entire Board of Directors shall oversee our audits and auditing procedures.
Advisory Board
LifeApps expects to create and name members to an Advisory Board during our 2013 fiscal year. To better understand the markets we are entering into, and to make sure our products are of the highest quality and relevance to users, LifeApps will invite professional athletes and industry specialists to join an Advisory Board. These individuals will occasionally sit in on Company meetings, visit trade-shows and industry events, and provide their recommendations and advice to the Company. Individuals will be assigned to the Advisory Board for a period of one year, and can be asked to continue serving on the Advisory Board annually.
Shareholder Communications
Currently, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations.
Code of Ethics
We have adopted a written Code of Ethics. We believe that the Code of Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of our Code of Ethics will be provided to any person requesting same without charge. To request a copy of our Code of Ethics, please make written request to our Chief Executive Officer, c/o LifeApps Digital Media Inc., 5752 Oberlin Drive, #106, San Diego, CA 92121.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors, officers and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Directors, officers and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely upon our review of the copies of such forms that we received with respect to the fiscal year ended December 31, 2012, we believe that each person who at any time during the fiscal year was a director, officer or beneficial owner of more than 10% of our Common Stock, satisfied their Section 16(a) filing requirements.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning the total compensation paid or accrued by us during the fiscal years ended December 31, 2012 and 2011 to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any time during the fiscal year ended December 31, 2012; (ii) our two most highly compensated executive officers other than the principal executive officer who were serving as executive officers at the end of the fiscal year ended December 31, 2012; and (iii) up to two additional individuals who received annual compensation during the fiscal year ended December 31, 2012 in excess of $100,000 and who were not serving as executive officers of at the end of the fiscal year ended December 31, 2012.
Summary Compensation Table
Name and Principal Position
|
|
Period
|
|
Salary
($)
|
|
|
Option
Awards
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Gayman,
Chief Executive Officer
|
|
2012
|
|
$
|
43,750
|
|
|
$
|
49,099
|
(1)
|
|
$
|
92,849
|
|
|
|
2011
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arnold Tinter
Chief Financial Officer
|
|
2012
|
|
$
|
30,000
|
|
|
$
|
12,088
|
(2)
|
|
$
|
42,088
|
|
|
|
2011
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(1)
|
Amount represents the grant date fair value of an incentive stock option to purchase 850,000 shares of our common stock at exercise price of $0.07, awarded to Mr. Gayman. The award was valued using the Black-Sholes model with the following assumptions: fair value of the sock, $0.07, exercise price $0.07, term 3 years, no dividend yield, expected volatility 117%, weighted average risk free interest rate 0.36%.
|
(2)
|
Amount represents the grant date fair value of an incentive stock option to purchase 250,000 shares of our common stock at exercise price of $0.07, awarded to Mr. Tinter. The award was valued using the Black-Sholes model with the following assumptions: fair value of the sock, $0.07, exercise price $0.07, term 3 years, no dividend yield, expected volatility 117%, weighted average risk free interest rate 0.36%.
|
Employment Agreements
On September 20, 2012, Robert Gayman, our CEO, entered into an employment contract, the significant terms of which are as follows:
·
|
period of employment is twenty four (24) months;
|
·
|
annual base salary of $150,000 per annum;
|
·
|
annual bonus at such time and in such amount as may be determined by the Board of Directors; and
|
·
|
participation in 2012 Equity Incentive Plan as determined by the Board of Directors.
|
Outstanding Equity Awards at Fiscal Year Ended December 31, 2012
Pursuant to the 2012 Equity Incentive Plan, on December 24, 2012, the Board of Directors authorized the issuance of 850,000 options to purchase shares of our common stock to Robert Gayman our Chief Executive Officer and 250,000 options to Arnold Tinter our Chief Financial Officer. One third of the options vested on that date and one third vest on each of the six month and one year anniversaries of the date of grant. The exercise price of the options was equal to the fair value of our common stock on the date of grant and have a three year life.
Director Compensation for the Year ended December 31, 2012
Prior to the Merger, directors were not compensated for services on the Board of Directors. Following the Merger, our directors will be entitled to receive compensation as determined by the Board of Directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership of our common stock as of April 12, 2013, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our common stock, (ii) each of our directors and executive officers, and (iii) all of our directors and executive officers as a group. Our only class of voting securities is our common stock. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement. To our knowledge, there are no pending arrangements, including any pledges by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.
Unless otherwise indicated in the following table, the address for each person named in the table is c/o LifeApps Digital media Inc., 5752 Oberlin Drive, #106, San Diego, CA 92121.
Title of Class: Common Stock
Name and Address of Beneficial Owner
|
|
Amount and Nature
of Beneficial
Ownership
(
1)
|
|
|
Percentage
of Class
(
2)
|
|
|
|
|
|
|
|
|
Robert Gayman
|
|
|
38,783,334
(3)
|
|
|
|
50.84
|
%
|
Arnold Tinter
|
|
|
1,083,334
(4)
|
|
|
|
1.22
|
%
|
Howard Fuller
|
|
|
333,334
(5)
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (3 persons)
|
|
|
40,200,002
|
|
|
|
52.62
|
%
|
|
|
|
|
|
|
|
|
|
MarketByte LLC
4653 Carmel Mtn Rd Suite 308-402
San Diego, CA 92130
|
|
|
5,476,505
|
|
|
|
7.2
|
%
|
|
|
|
|
|
|
|
|
|
Desert Lake Advisors
PO Box 5020-106
Rancho Santa Fe, CA 92067
|
|
|
5,000,000
|
|
|
|
6.58
|
%
|
___________
*Less than 1%
1
|
Except as otherwise indicated, the persons named in this table have sole voting, investment and dispositive power with respect to all shares of common stock listed, which includes shares of common stock that such persons have the right to acquire within 60 days from April 12, 2013.
|
2
|
Percentages are based upon 76,000,000 shares of our common stock outstanding as of April 12, 2013.
|
|
|
3
|
Includes 283,334 shares of our common stock that may be issued within 60 days upon exercise of incentive stock options granted under our 2012 Equity Incentive Plan
. Does not include 566,666 shares of our common stock issuable upon vesting of options granted under our 2012 Equity Incentive Plan, which will vest in two equal installments on June 23, 2013 and December 23, 2013.
|
|
|
4
|
Includes
83,334 shares of our common stock that may be issued within 60 days upon exercise of incentive stock options granted under our 2012 Equity Incentive Plan.
Does not include 166,666 shares of our common stock issuable upon vesting of options granted under our 2012 Equity Incentive Plan, which will vest in two equal installments on June 23, 2013 and December 23, 2013.
|
|
|
5
|
Includes
33,334 shares of our common stock that may be issued within 60 days upon exercise of incentive stock options granted under our 2012 Equity Incentive Plan.
Does not include 66,666 shares of our common stock issuable upon vesting of options granted under our 2012 Equity Incentive Plan, which will vest in two equal installments on June 23, 2013 and December 23, 2013.
|
Securities Authorized for Issuance Under Equity Compensation Plans
On September 10, 2012, our Board of Directors and stockholders owning a majority of our outstanding shares adopted our 2012 Equity Incentive Plan. A total of 10,000,000 shares of our common stock are reserved for issuance under the 2012 Plan. If an incentive award granted under the 2012 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2012 Plan.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information as of December 31, 2012, with respect to the shares of common stock that may be issued under our existing equity compensation plans:
Plan Category
|
|
Number of shares
to be issued upon
exercise of
outstanding
options, warrants
and rights
|
|
|
Weighted-
Average
exercise price
of outstanding options,
warrants and rights
|
|
|
Number of shares
remaining available
for future issuance
under equity
compensation plans
(excluding shares
reflected in the first
column)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
2,300,000
|
|
|
$
|
0.07
|
|
|
|
7,700,000
|
|
Equity compensation plans not approved by securities holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,300,000
|
|
|
|
|
|
|
|
10,000,000
|
|
As of the date of this Annual Report, we have authorized for issuance stock options under the 2012 Plan to employees to purchase an aggregate of 10,000,000 shares of our common stock. Of these 2012 Plan options, (i) three-year options for 1,400,000 shares, with an exercise price of $0..07 per share, have been granted and (ii) three-year options for 900,000 shares, with an exercise price of $0.07 per share, have been granted.
See “Executive Compensation” for information regarding individual equity compensation arrangements received by our executive officers pursuant to their employment agreements with us.
2012 Equity Incentive Plan
The Board of Directors and stockholders owning a majority of our outstanding shares adopted the 2012 Equity Incentive Plan (the “2012 Plan”) on September 10, 2012. A total of 10,000,000 shares of our common stock are reserved for issuance under the 2012 Plan. If an incentive award granted under the 2012 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2012 Plan.
Shares issued under the 2012 Plan through the settlement, assumption or substitution of outstanding awards or obligations to grant future awards as a condition of acquiring another entity are not expected to reduce the maximum number of shares available under the 2012 Plan. In addition, the number of shares of common stock subject to the 2012 Plan and the number of shares and terms of any incentive award are expected to be adjusted in the event of any stock dividend, spin-off, split-up, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares or similar transaction.
Administration
It is expected that the compensation committee of the Board, or the Board in the absence of such a committee, will administer the 2012 Plan. Subject to the terms of the 2012 Plan, the compensation committee would have complete authority and discretion to determine the terms of awards under the 2012 Plan.
Eligible Recipients
Any officer or other employee of the Company or its affiliates, or an individual that the Company or an affiliate has engaged to become an officer or employee, or a consultant or advisor who provides services to the Company or its affiliates, including a non-employee director of the Board, is eligible to receive awards under the 2012 Plan.
Grants
The 2012 Plan authorizes the grant to eligible recipients of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and stock appreciation rights, as described below:
Ÿ
|
Options granted under the 2012 Plan entitle the grantee, upon exercise, to purchase a specified number of shares from us at a specified exercise price per share. The exercise price for shares of common stock covered by an option cannot be less than the fair market value of the common stock on the date of grant unless agreed to otherwise at the time of the grant. Such awards may include vesting requirements.
|
Ÿ
|
Restricted stock awards and restricted stock units may be awarded on terms and conditions established by the compensation committee, which may include performance conditions for restricted stock awards and the lapse of restrictions on the achievement of one or more performance goals for restricted stock units.
|
Ÿ
|
The compensation committee may make performance grants, each of which will contain performance goals for the award, including the performance criteria, the target and maximum amounts payable, and other terms and conditions.
|
Ÿ
|
Stock awards are permissible. The compensation committee will establish the number of shares of common stock to be awarded and the terms applicable to each award, including performance restrictions.
|
Ÿ
|
Stock appreciation rights or SARs, entitle the participant to receive a distribution in an amount not to exceed the number of shares of common stock subject to the portion of the SAR exercised multiplied by the difference between the market price of a share of common stock on the date of exercise of the SAR and the market price of a share of common stock on the date of grant of the SAR.
|
Duration, Amendment, and Termination
The Board may amend, suspend or terminate the 2012 Plan without stockholder approval or ratification at any time or from time to time. No change may be made that increases the total number of shares of common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year. Unless sooner terminated, the 2012 Plan terminates ten years after it is adopted.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions Involving LFAP and/or LFAP Stockholders
Split-Off and Release
Immediately following the closing of the Merger, LFAP transferred all of its pre-Merger operating assets and liabilities to Split Corp. through the exchange of 90,000,000 shares of our common stock held by the Split-Off Shareholder for all of the issued and outstanding shares of common stock of Split Corp.
Transactions involving LifeApps and/or LifeApps Stockholders
Employment Agreements
On September 20, 2012, Robert Gayman, our CEO, entered into an employment contract, the significant terms of which are as follows:
•
|
period of employment is twenty four (24) months;
|
•
|
annual base salary of $150,000 per annum;
|
•
|
annual bonus at such time and in such amount as may be determined by the Board of Directors; and
|
•
|
participation in 2012 Equity Incentive Plan as determined by the Board of Directors.
|
Lock-up Agreements
Officers, directors, key employees and holders of 10% or more of the Company’s common stock have agreed to “lock-up” and not sell or otherwise transfer or hypothecate any of their Company shares, including shares that maybe issued upon exercise of Merger warrants for a term of 12 months from the Closing Date, except in certain limited circumstances.
Sales by LifeApps
On September 7, 2012, LifeApps LLC, a California limited liability company, was converted into LifeApps, a Nevada corporation. Upon completion of this conversion, LifeApps LLC ceased to exist by operation of law. As a result of this conversion, the members of LifeApps LLC, in exchange for their units of limited liability company membership interest in LifeApps LLC, received an aggregate of 10,000 shares of common stock of LifeApps. The issuance of these LifeApps shares was not registered under the Securities Act in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act which exempts transactions by an issuer not involving any public offering.
Sales by Pubco
In connection with the Merger, we agreed to issue an aggregate of 40,000,000 shares of our common stock to the stockholders of LifeApps. The issuance of shares of our common stock to the LifeApps stockholders in connection with the Merger was not registered under the Securities Act in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act, which exempts transactions by an issuer not involving a public offering. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement.
We sold an aggregate of 6,000,000 PPO Units in an Offering of securities at a price of $0.20 per PPO Unit for gross proceeds of $1,200,000. We incurred cost of $14,748 for net proceeds of $1,185,252. Each unit consists of one share of our common stock and a warrant to purchase one share of our common stock at a purchase price of $1.00 per full share. The Offering was made only to accredited investors, as defined under Regulation D, Rule 501(a) and non-“U.S. Persons” as defined in Regulations S.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “Independent Directors.”
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate fees billed to us by Eide Bailly LLP, our principal accountant for professional services rendered during the fiscal years ended December 31, 2012 and 2011 are set forth in the table below:
Fee Category
|
|
Fiscal year ended
December 31, 2012
|
|
|
Fiscal year ended
December 31, 2011
|
|
|
|
|
|
|
|
|
Audit fees (1)
|
|
$
|
12,585
|
|
|
$
|
9,300
|
|
Audit-related fees (2)
|
|
|
-
|
|
|
|
-
|
|
Tax fees (3)
|
|
|
-
|
|
|
|
-
|
|
All other fees (4)
|
|
|
-
|
|
|
|
-
|
|
Total fees
|
|
$
|
12,585
|
|
|
$
|
9,300
|
|
(1)
|
Audit fees consist of fees incurred for professional services rendered for the audit of consolidated financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.
|
(2)
|
Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.”
|
(3)
|
Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.
|
(4)
|
All other fees consist of fees billed for all other services.
|
Audit Committee’s Pre-Approval Practice
Prior to our engagement of our independent auditor, such engagement was approved by our board of directors. The services provided under this engagement may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Pursuant our requirements, the independent auditors and management are required to report to our board of directors at least quarterly regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. Our board of directors may also pre-approve particular services on a case-by-case basis. All audit-related fees, tax fees and other fees incurred by us for the year ended December 31, 2012, were approved by our board of directors.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements
See Index to Financial Statements immediately following the signature page of this report.
Financial Statement Schedules
All financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
Exhibits
In reviewing the agreements included as exhibits to this Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
•
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
•
|
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
•
|
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
|
•
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
The following exhibits are included as part of this report:
Exhibit No.
|
|
SEC
Report
Reference
No.
|
|
Description
|
|
|
|
|
|
2.1
|
|
2.1
|
|
Agreement and Plan of Merger and Reorganization dated as of September 20, 2012 by and among Registrant, LifeApps Acquisition Corp., and LifeApps Inc. (1)
|
|
|
|
|
|
2.2
|
|
2.2
|
|
Articles of Merger dated as of September 20, 2012 for the merger of LifeApps Acquisition Corp. into LifeApps Inc. (1)
|
|
|
|
|
|
2.3
|
|
2.1
|
|
Asset Acquisition Agreement Among the Registrant, LifeApps Inc. and Edward D. Laffey dated March 29, 2013 (4)
|
|
|
|
|
|
3.1
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Registrant dated August 23, 2012 (1)
|
|
|
|
|
|
3.2
|
|
3.2
|
|
Amended and Restated By-Laws of the Registrant (incorporated by reference from Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 29, 2012 (2)
|
|
|
|
|
|
4.1
|
|
4.1
|
|
Form of Investor Warrant issued the investors in the September 2012 Private Placement Offering (1)
|
|
|
|
|
|
10.1
|
|
10.1
|
|
Split-Off Agreement, dated as of September 20, 2012, by and among the Registrant, Prime Time Travel Split Corp., and Andrew Listerman (1)
|
|
|
|
|
|
10.2
|
|
10.2
|
|
General Release Agreement, dated as of September 20, 2012, by and among the Registrant, Prime Time Travel Split Corp. and Andrew Listerman (1)
|
|
|
|
|
|
10.3
|
|
10.3
|
|
Form of Subscription Agreement between Registrant and the investors in the Private Placement Offering (1)
|
|
|
|
|
|
10.4
|
|
10.4
|
|
Subscription Escrow Agreement dated August 27, 2012, by and among the Registrant and Gottbetter & Partners, LLP (1)
|
|
|
|
|
|
10.5
|
|
10.5
|
|
Employment Agreement dated September 20, 2012 between Registrant and Robert R. Gayman (1)
|
|
|
|
|
|
10.6
|
|
10.6
|
|
Registrant’s 2012 Equity Incentive Plan (1)
|
|
|
|
|
|
10.7
|
|
10.7
|
|
Form of Lock-Up Agreement (1)
|
|
|
|
|
|
10.8
|
|
10.8
|
|
Mobile App Agreement between LifeApps and Rachel Buehler dated May 7, 2012 (1)
|
|
|
|
|
|
14.1
|
|
14.1
|
|
Code of Ethics (1)
|
|
|
|
|
|
16.1
|
|
16.1
|
|
Letter, dated November 5, 2012, from Li & Company, P.C. (3)
|
|
|
|
|
|
21.1
|
|
21.1
|
|
List of Subsidiaries (1)
|
31.1
|
|
*
|
|
Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
31.2
|
|
*
|
|
Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.1
|
|
*
|
|
Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
|
|
|
|
|
32.2
|
|
*
|
|
Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
|
|
|
|
|
101.INS
|
|
*
|
|
XBRL Instance Document***
|
|
|
|
|
|
101.SCH
|
|
*
|
|
XBRL Schema Document***
|
|
|
|
|
|
101.CAL
|
|
*
|
|
XBRL Calculation Linkbase Document***
|
|
|
|
|
|
101.DEF
|
|
*
|
|
XBRL Definition Linkbase Document***
|
|
|
|
|
|
101.LAB
|
|
*
|
|
XBRL Label Linkbase Document***
|
|
|
|
|
|
101.PRE
|
|
*
|
|
XBRL Presentation Linkbase Document***
|
___________
* Filed/Furnished herewith.
** This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except if and to the extent that the Registrant specifically incorporates it by reference.
*** This XBRL exhibit is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
(1)
|
Filed with the Securities and Exchange Commission on September 25, 2012 as an exhibit, numbered as indicated above, to the Registrant’s Current Report on Form 8-K dated September 20, 2012, which exhibit is incorporated herein by reference.
|
(2)
|
Filed with the Securities and Exchange Commission on March 29, 2012 as an exhibit, numbered as indicated above, to the Registrant’s Current Report on Form 8-K dated March 29, 2012, which exhibit is incorporated herein by reference.
|
(3)
|
Filed with the Securities and Exchange Commission on November 6, 2012 as an exhibit, numbered as indicated above, to the Registrant’s Current Report on Form 8-K dated October 31, 2012, which exhibit is incorporated herein by reference.
|
(4)
|
Filed with the Securities and Exchange Commission on April 4, 2013 as an exhibit, numbered as indicated above, to the Registrant’s Current Report on Form 8-K dated March 29, 2013, which exhibit is incorporated herein by reference.
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
LIFEAPPS DIGITAL MEDIA INC.
|
|
|
|
|
|
Dated: April 12, 2013
|
By:
|
/s/ Robert Gayman
|
|
|
Name:
|
Robert Gayman
|
|
|
Title:
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
Dated: April 12, 2013
|
By:
|
/s/ Arnold Tinter
|
|
|
Name:
|
Arnold Tinter
|
|
|
Title:
|
Chief Financial Officer
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Robert Gayman
|
|
Chief Executive Officer (Principal Executive Officer) and Chairman of
|
|
April 12, 2013
|
Robert Gayman
|
|
the Board of Directors
|
|
|
|
|
|
|
|
/s/
Arnold Tinter
|
|
Chief Financial Officer (Principal
|
|
April 12, 2013
|
Arnold Tinter
|
|
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/
Howard Fuller
|
|
Director
|
|
April 12, 2013
|
Howard Fuller
|
|
|
|
|
LifeApps Digital Media Inc.
Index to Consolidated Financial Statements
|
|
Page
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
F-1
|
|
|
|
|
|
|
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
|
|
F-2
|
|
|
|
|
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011 and the period from July 15, 2009 (inception) through December 31, 2012
|
|
|
F-3
|
|
|
|
|
|
|
Consolidated Statements of Equity for the period from July 15, 2009 (inception) through December 31, 2012
|
|
|
F-4
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011 and the period from July 15, 2009 (inception) through December 31, 2012
|
|
|
F-5
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
F-6
|
|
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of LifeApps Digital Media Inc.
We have audited the accompanying consolidated balance sheets of LifeApps Digital Media Inc. as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2012 and 2011 and for the period from July 15, 2009 (inception) through December 31, 2012. LifeApps Digital Media Inc’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LifeApps Digital Media Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years ended December 31, 2012 and 2011 and the period from July 15, 2009 (inception) through December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is in the development stage and has suffered recurring losses which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Eide Bailly LLP
Greenwood Village, Colorado
April 12, 2013
|
|
|
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
December 31, 2012 and 2011
|
|
2012
|
|
|
2011
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
791,065
|
|
|
$
|
698
|
|
Prepaid expenses
|
|
|
5,985
|
|
|
|
10,000
|
|
Other current assets
|
|
|
39,375
|
|
|
|
-
|
|
Total current assets
|
|
|
836,425
|
|
|
|
10,698
|
|
Intangible asset, net of amortization
|
|
|
4,666
|
|
|
|
4,531
|
|
Total Assets
|
|
$
|
841,091
|
|
|
$
|
15,229
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
37,988
|
|
|
$
|
425
|
|
Accrued liabilities
|
|
|
9,712
|
|
|
|
-
|
|
Amount due to related party
|
|
|
6,834
|
|
|
|
10,784
|
|
Total current liabilities
|
|
|
54,534
|
|
|
|
11,209
|
|
|
|
|
|
|
|
|
|
|
Stockholders'' Equity
|
|
|
|
|
|
|
|
|
Preferred stock, $.001 par value, 10,000,000 shares authorized, none issued or outstanding
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 300,000,000 shares authorized, 76,000,000 and 40,000,000 shares issued and outstanding, as of December 31, 2012 and 2011, respectively
|
|
|
76,000
|
|
|
|
40,000
|
|
Additional paid in capital
|
|
|
1,195,937
|
|
|
|
7,479
|
|
Deficit accumulated during development stage
|
|
|
(485,380
|
)
|
|
|
(43,459
|
)
|
Total stockholders’ equity
|
|
|
786,557
|
|
|
|
4,020
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
841,091
|
|
|
$
|
15,229
|
|
See the accompanying notes to the financial statements
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
|
|
For the year ended December 31,
|
|
|
For the period from July 15, 2009 (Inception) through
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,870
|
|
|
$
|
3,098
|
|
|
$
|
6,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
33,892
|
|
|
|
-
|
|
|
|
33,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss)
|
|
|
(32,022
|
)
|
|
|
3,098
|
|
|
|
(27,582
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
402,528
|
|
|
|
8,237
|
|
|
|
445,897
|
|
Amortization
|
|
|
3,337
|
|
|
|
3,020
|
|
|
|
7,867
|
|
Total operating expenses
|
|
|
405,865
|
|
|
|
11,257
|
|
|
|
453,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(437,887
|
)
|
|
|
(8,159
|
)
|
|
|
(481,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of interest income of $23
|
|
|
4,034
|
|
|
|
-
|
|
|
|
4,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(441,921
|
)
|
|
$
|
(8,159
|
)
|
|
$
|
(485,380
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information - Basic and fully diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
50,058,152
|
|
|
|
40,000,000
|
|
|
|
42,514,538
|
|
Net (loss) per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
See the accompanying notes to the financial statements
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Consolidated Statements of Equity
For the Period From July 15, 2009 (Inception) to December 31, 2012
|
|
Common Stock
|
|
|
Additional paid in
|
|
|
Deficit Accumulated During Development
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, $0.001 par value (restated)
|
|
|
40,000,000
|
|
|
$
|
40,000
|
|
|
$
|
(39,000
|
)
|
|
$
|
-
|
|
|
$
|
1,000
|
|
Net (loss) for the period from July 15, 2009 to December 31, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,299
|
)
|
|
|
(2,299
|
)
|
Additional capital contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
42,489
|
|
|
|
-
|
|
|
|
42,489
|
|
Net loss for the year ended December 31, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(33,001
|
)
|
|
|
(33,001
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2010
|
|
|
40,000,000
|
|
|
|
40,000
|
|
|
|
3,489
|
|
|
|
(35,300
|
)
|
|
|
8,189
|
|
Additional capital contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
3,990
|
|
|
|
-
|
|
|
|
3,990
|
|
Net (loss) for the year ended December 31, 2011
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,159
|
)
|
|
|
(8,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2011
|
|
|
40,000,000
|
|
|
|
40,000
|
|
|
|
7,479
|
|
|
|
(43,459
|
)
|
|
|
4,020
|
|
Issuance of stock and warrants for cash
|
|
|
6,000,000
|
|
|
|
6,000
|
|
|
|
1,179,252
|
|
|
|
-
|
|
|
|
1,185,252
|
|
Effect of reverse merger and recapitalization
|
|
|
30,000,000
|
|
|
|
30,000
|
|
|
|
(30,000
|
)
|
|
|
-
|
|
|
|
-
|
|
Fair value of stock option
|
|
|
-
|
|
|
|
-
|
|
|
|
39,206
|
|
|
|
-
|
|
|
|
39,206
|
|
Net loss for the year ended December 31, 2012
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(441,921
|
)
|
|
|
(441,921
|
)
|
Balance December 31, 2012
|
|
|
76,000,000
|
|
|
$
|
76,000
|
|
|
$
|
1,195,937
|
|
|
$
|
(485,380
|
)
|
|
$
|
786,557
|
|
See the accompanying notes to the financial statements
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
|
|
For the Year Ended December 31,
|
|
|
For the period from
July 15, 2009
(Inception) through
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period
|
|
$
|
(441,921
|
)
|
|
$
|
(8,159
|
)
|
|
$
|
(485,380
|
)
|
Adjustments to reconcile net loss to net cash used in
|
|
|
|
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of patent
|
|
|
3,337
|
|
|
|
3,020
|
|
|
|
7,867
|
|
Equity based payments
|
|
|
39,206
|
|
|
|
-
|
|
|
|
39,206
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
4,015
|
|
|
|
(10,000
|
)
|
|
|
(5,985
|
)
|
Deposits
|
|
|
(39,375
|
)
|
|
|
-
|
|
|
|
(39,375
|
)
|
Accounts payable
|
|
|
37,563
|
|
|
|
425
|
|
|
|
37,988
|
|
Accrued expenses
|
|
|
9,712
|
|
|
|
-
|
|
|
|
9,712
|
|
Net cash used in operations
|
|
|
(387,463
|
)
|
|
|
(14,714
|
)
|
|
|
(435,967
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in intangible assets
|
|
|
(3,472
|
)
|
|
|
-
|
|
|
|
(12,533
|
)
|
Net Cash used in investing activities
|
|
|
(3,472
|
)
|
|
|
-
|
|
|
|
(12,533
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for cash
|
|
|
1,185,252
|
|
|
|
-
|
|
|
|
1,185,252
|
|
Capital contribution
|
|
|
-
|
|
|
|
3,990
|
|
|
|
47,479
|
|
Advances from related party
|
|
|
29,500
|
|
|
|
12,684
|
|
|
|
42,184
|
|
Repayments to related party
|
|
|
(33,450
|
)
|
|
|
(1,900
|
)
|
|
|
(35,350
|
)
|
Short term borrowing
|
|
|
115,000
|
|
|
|
-
|
|
|
|
115,000
|
|
Repayment of short term borrowing
|
|
|
(115,000
|
)
|
|
|
-
|
|
|
|
(115,000
|
)
|
Net cash provided by financing activities
|
|
|
1,181,302
|
|
|
|
14,774
|
|
|
|
1,239,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
790,367
|
|
|
|
60
|
|
|
|
791,065
|
|
Cash at beginning of period
|
|
|
698
|
|
|
|
638
|
|
|
|
-
|
|
Cash at end of period
|
|
$
|
791,065
|
|
|
$
|
698
|
|
|
$
|
791,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
4,055
|
|
|
$
|
-
|
|
|
$
|
4,055
|
|
See the accompanying notes to the financial statements
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note 1. Nature of Business
LifeApps Digital Media Inc., which was formerly known as Prime Time Travel Inc., (“we,” “us,” “our,” "LFAP" and the “Company”) was incorporated on November 23, 2010 in the State of Delaware. The Company was originally formed as a sports travel company that created and managed trips to destinations for youth basketball teams. As the result of a merger, more fully described below, we are now engaged in business to operate as a digital media company focusing on health, fitness and sports digital publications and next-generation social networks.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplates our continuation as a going concern. We are in the development stage as defined under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 Development Stage Entities (“ASC915”). We have not as of yet generated significant operating revenues and have incurred losses from inception, July 15, 2009, through December 31, 2012 of $485,380. To date, we have funded our operations through advances from related parties and funding through third party equity and debt financing. We plan on continuing to seek out additional third party financing until such time as our operations produce positive cash flow. There is no certainty that funding will be available as needed. These factors raise substantial doubt about our ability to continue operating as a going concern. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to generate profitable operations, and if needed the ability to raise capital sufficient to fund our commitments and ongoing losses.
Reorganization and recapitalization
On September 20, 2012 we entered into a Merger Agreement whereby, we acquired 100% of the issued and outstanding stock of LifeApps Inc. (“LifeApps”), a Nevada corporation, in exchange for 40,000,000 shares of our $0.001 par value common stock (the “Merger”). We will continue the existing business operations of LifeApps as our wholly owned subsidiary.
In conjunction with the Merger and immediately following the Merger, we split off (the “Split-Off”) our wholly owned subsidiary, Prime Time Split Corp., a Delaware corporation (“Split Corp.”). The Split-Off was accomplished through the exchange of 90,000,000 shares of our common stock held by the prior Chief Executive Officer and a significant shareholder for all of the issued and outstanding shares of common stock of Split Corp. All of the assets and liabilities of LFAP immediately following the Merger, excluding any LifeApps assets and liabilities assumed in the Merger, were transferred to Split Corp. We executed a Split-Off Agreement and General Release Agreement with the Split-Off Shareholder.
For financial reporting purposes, the transaction will be accounted for as a “reverse merger” rather than a business combination, because the sellers of LifeApps effectively control the combined companies immediately following the transaction. As such, LifeApps is deemed to be the accounting acquirer in the transaction and, consequently, the transaction is being treated as a reverse acquisition by LifeApps. Accordingly, the assets and liabilities and the historical operations, from its inception July 15, 2009, that will be reflected in our ongoing financial statements, will be those of LifeApps and will be recorded at the historical cost basis of LifeApps. The Company’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of LifeApps after consummation of the transaction. Our historic capital accounts will be retroactively adjusted to reflect the equivalent number of shares issued by it in the transaction while LifeApps historical retained earnings will be carried forward. Our historical financial statements before the transaction will be replaced with the historical financial statements of LifeApps before the transaction in all future filings with the Securities and Exchange Commission, or SEC. The Merger is intended to be treated as a tax-free exchange under Section 368(a) of the Internal Revenue Code of 1986, as amended.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiary, Lifeapps. All material inter-company transactions and balances have been eliminated in consolidation.
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less, at the time of purchase, to be cash equivalents.
Concentration of Credit Risk
The amount of cash on deposit with financial institutions exceeds the $250,000 federally insured limit at December 31, 2012. However, we believe that cash on deposit that exceeds $250,000 in the financial institutions is financially sound and the risk of loss is minimal.
Intangible Assets
Intangible assets are comprised of internet domain name costs, net of amortization. The internet domain name costs are being amortized over the expected useful life of the domain name which we estimate to be is three years from the date of registering the domain name. In accordance with ASC Topic 350
Intangibles – Goodwill and Other
(“ASC 350”), the costs to obtain and register an internet domain shall be capitalized.
Long-Lived Assets
In accordance with ASC 350, an intangible asset that is subject to amortization shall be reviewed for impairment in accordance with the ASC Topic 360
Property, Plant and Equipment
(“ASC 360”). Under ASC 360, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is determined using forecasted cash flows discounted using an estimated average cost of capital. There has been no impairment as of December 31, 2012 or 2011.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
Fair Value Measurement
ASC Topic 820,
Fair Value Measurements and Disclosures
(“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.
Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.
Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Our financial instruments consist of accounts payable, accrued expenses and amounts due to shareholder. The carrying value of accounts payable, accrued expenses and amounts due to shareholder approximates its fair value due to their short maturity.
Revenue recognition
Revenue is derived primarily from the sale of software application designed for use on mobile devices such as smart phones and tablets. Revenue is recognized only when persuasive evidence of an arrangement exists, the fee is fixed or determinable, the product or service has been delivered, and collectability is probable.
We sell our software directly via Internet download through third party agents. We recognize revenue when payment is received from the agent. Payment is received net of commission paid to the agent, usually 70% to us and 30% to the agent. We record the net amount received as revenue.
We also publish and sell digital magazines through the internet. Magazines can be purchased as individual volumes or as a subscription. To date subscription sales have been insignificant.
Cost of Revenue
Cost of revenue includes the cost of amounts paid for articles, photography, editorial and production cost of the magazine and ongoing web hosting costs.
Research and Development Costs, Website Development Costs, and Software Development Costs
All research and development costs are expensed as incurred. Software development costs eligible for capitalization under ASC 350-50,
Website Development Cost
, and ASC 985-20,
Software-Costs of Software to be Sold, Leased or Marketed
, were not material to our financial statements for the years ended December 31, 2012 and 2011. Research and development expenses amounted to $112,248 and $3,891 for the years ended December 31, 2012 and 2011, respectively, and $143,173 for the period from inception, July 15, 2009, to December 31, 2012 and were included in general and administrative expenses.
Advertising Costs
The Company recognizes advertising expense when incurred. Advertising expense was $39,002 and $1,854 for years ended December 31, 2012 and 2011, respectively, and $43,485 for the period from inception, July 15, 2009, to December 31, 2012.
Income Taxes
The provision for income taxes is determined in accordance with the provisions of ASC Topic 740,
Accounting for Income Taxes
(“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements, uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the years ended December 31, 2012 and 2011 and for the period from July 15, 2009 (inception) to December 31 2012 we did not have any interest and penalties or any significant unrecognized uncertain tax positions.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Rent Expense
We recognizes rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840,
Leases
(“ASC 840”). Our lease is short term and will be renewed on a month to month basis. Rent expense for the year ended December 31, 2012 was $11,185. There was no rent expense in any periods prior to the year ended December 31, 2012.
Equity-Based Compensation
Stock-based compensation is presented in accordance with the guidance of ASC Topic 718,
Compensation – Stock Compensation
(“ASC 718”). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statement of operations.
We issued options to purchase our common stock to employees under our 2012 Equity Incentive Plan which is a qualified stock option plan.
We used the Black-Scholes option-pricing model (“Black-Scholes model”) to determine fair value. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.
The weighted average fair value of options granted during 2012 of $0.048 was estimated on the grant date using the Black-Scholes model with the following weighted average assumptions: expected volatility of 117% (derived using comparable companies as the Company does not have sufficient trading history), expected term of 3 years, risk-free interest rate of .36% and no expected dividend yield.
Total compensation expense for the year ended December 31, 2012 of all stock based compensation recognized under ASC 718 was $23,865. There was no stock based compensation in any period prior to the year ended December 31, 2012.
Recent Pronouncements
We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of operations.
Note 3. Intangible Assets
At December 31, 2012 and 2011, intangible assets consist of the following:
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Internet domain names
|
|
$
|
12,533
|
|
|
$
|
9,061
|
|
Less accumulated amortization
|
|
|
(7,867
|
)
|
|
|
(4,530
|
)
|
|
|
$
|
4,666
|
|
|
|
4,531
|
|
The amounts carried on the balance sheet represent the cost of acquiring the internet domain names from third parties and the costs relating to the registration of the internet domain names incurred by us.
The amount charged to expenses for amortization of the internet domain names for the years ended December 31, 2012 and 2011 were $3,337 and $3,020, respectively and $7,867 for the period from inception, July 15, 2009, to December 31, 2012.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Estimated future amortization expense related to the intangibles as of December 31, 2012 is as follows:
Year
|
|
Amortization
|
|
|
|
|
|
|
2013
|
|
|
2,667
|
|
2014
|
|
|
1,157
|
|
2015
|
|
|
842
|
|
|
|
$
|
4,666
|
|
Note 4. Amount Due to Related Party
Parties, which can be a corporation or individual, are considered to be related if we have the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Amount due related party represents amounts paid on our behalf by an officer and shareholder of the Company. These advances are non-interest bearing, short term in nature and due on demand. The balance at December 31, 2012 and 2011 was $6,834 and $10, 784, respectively. The maximum amount owed to the related party during the years ended December 31, 2012 and 2011 were $27,334 and $10,784, respectively.
Note 5. Debt Financing
During the year ended December 31, 2012, we borrowed and repaid two notes in the aggregate amount of $115,000. The notes bore interest at a rate of 10% per annum. Interest expense paid on the notes was $4,057.
Note 6. Stockholders’ Equity
As stated in Note 1 these financial statements are presented as if the Merger took place at the beginning of the periods presented.
Upon the initial formation of the company, we were authorized to issue 100,000,000 shares of which 5,000,000 shares were to be preferred shares with a par value of $0.000001 per share and 95,000,000 shares were to be common shares with a par value of $0.000001 per share.
No preferred shares were issued.
Prior to the Merger we had issued 8,000,000 shares of the $0.000001 par value common stock.
During August 2012, we filed Amended and Restated Certificate of Incorporation with the Delaware Secretary of State to, among other things, (i) change our name from Prime Time Travel, Inc. to LifeApps Digital Media Inc.; (ii) increase our authorized capitalization from 100,000,000 shares, consisting of 95,000,000 shares of common stock, $0.000001 par value per share, and 5,000,000 shares of preferred stock, $0.000001 par value per share, to 310,000,000 shares, consisting of 300,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of blank check preferred stock, $0.001 par value per share; and (iii) limit the liability of our officers and directors to us, our stockholders and our creditors to the fullest extent permitted by Delaware law.
In September 2012, we effected a 15-for-1 forward stock split of our common stock in the form of a dividend with a record date of September 4, 2012 and a payment date of September 5, 2012.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
All share amounts in these financial statements give effect to the forward stock split including those applicable to periods prior to the forward stock split.
Concurrently with the Merger we completed the closing of a private offering (the “Offering”) of 6,000,000 units of our securities (the “PPO Units”), at a price of $0.20 per PPO Unit for aggregated consideration of $1,200,000. Expenses of the offering were $14,748. Each PPO Unit consists of one share of our common stock and a redeemable warrant (the “Investor Warrant”) to purchase one share of our common stock. The Investor Warrants are exercisable for a period of five years at a purchase price of $1.00 per share of our common stock.
The fair value of the Investor Warrants, $654,120, was estimated at the date of grant using the Black-Sholes option pricing model, with an allocation of the proceeds applied to the warrants. The difference between the warrant allocation and the proceeds was allocated to the shares of common stock issued. The fair value of the Investor Warrants of $654,120 has been included in the total additional paid in capital value of $1,179,252 on the consolidated statement of equity. The following assumptions were used in the Black-Scholes option pricing model:
Expected life (in years)
|
|
|
5
|
|
Volatility
|
|
|
117.00
|
% (derived using comparable companies)
|
Risk Free interest rate
|
|
|
0.35
|
%
|
Dividend yield (on common stock)
|
|
|
-
|
|
Note 7. Stock Based Compensation
During September 2012, our Board of Directors adopted the 2012 Equity Incentive Plan (“2012 Plan”), which was approved by our shareholders. The 2010 Plan provides for the issuance of up to 10,000,000 shares of our common stock. The plan provides for the award of options, stock appreciation rights, performance share awards, and restricted stock and stock units. The plan is administered by the Board of Directors.
During the year ended December 31, 2012, the Board of Directors authorized the issuance of 1,400,000 options to purchase shares of our common stock to employees and directors, and 900,000 options to purchase our common stock to non-employees of the Company who provide consulting services.
Amounts charged to expense for the options paid to employees and non-employees was $23,865 and $15,341, respectively, for the year ended December 31, 2012. There were no expenses for any period prior to the year ended December 31, 2012.
The following is a summary of stock option issued to employees and directors:
|
|
Options
|
|
|
|
|
|
Weighted Average
Remaining
Contractual Term
(in years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2012
|
|
|
-
|
|
|
$
|
|
|
|
|
|
|
$
|
-
|
|
Granted
|
|
|
1,400,000
|
|
|
$
|
0.07
|
|
|
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
$
|
|
|
|
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
$
|
|
|
|
|
|
|
|
-
|
|
Outstanding December 31, 2012
|
|
|
1,400,000
|
|
|
$
|
0.07
|
|
|
|
3
|
|
|
$
|
-
|
|
Exercisable December 31, 2012
|
|
|
466,667
|
|
|
$
|
0.07
|
|
|
|
3
|
|
|
$
|
-
|
|
We will recognize compensation expense of $43,827 in future periods through December 31, 2013.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
The following is a summary of stock options issued to non-employees:
|
|
Options
|
|
|
|
|
|
Weighted Average
Remaining
Contractual Term
(in years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2012
|
|
|
-
|
|
|
$
|
|
|
|
|
|
|
$
|
-
|
|
Granted
|
|
|
900,000
|
|
|
$
|
0.07
|
|
|
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
$
|
|
|
|
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
$
|
|
|
|
|
|
|
|
-
|
|
Outstanding December 31, 2012
|
|
|
900,000
|
|
|
$
|
0.07
|
|
|
|
3
|
|
|
$
|
-
|
|
Exercisable December 31, 2012
|
|
|
300,000
|
|
|
$
|
0.07
|
|
|
|
3
|
|
|
$
|
-
|
|
We will recognize expense of $28,175 in future periods through December 31, 2013.
There were no options granted in any period prior to the year ended December 31, 2012.
Note 8. Outstanding Warrants
The following is a summary of outstanding warrants as of December 31, 2012:
|
|
Number of warrants
|
|
Exercise price per share
|
|
|
Average remaining
term in years
|
|
|
Aggregate intrinsic
value at date of grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued in connection with private placement of units
|
|
|
6,000,000
|
|
|
$
|
1.00
|
|
|
|
4.72
|
|
|
$
|
-
|
|
Note 9. Income Taxes
We account for income taxes under ASC 740. ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
Prior to September 20, 2012 our wholly owned subsidiary, Lifeapps, was a limited liability company, accordingly no provision for income taxes has been made in the accompanying financial statements for the period from January 1, 2012 until September 20, 2012 nor for the year ended December 31, 2011, as taxable income or losses are reportable on the tax returns of the members of the Company.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Income tax provision (benefit) for the year ended December 31, 2012, is summarized below:
Current:
|
|
|
|
Federal
|
|
$
|
-
|
|
State
|
|
|
-
|
|
Total current
|
|
|
-
|
|
Deferred:
|
|
|
|
|
Federal
|
|
|
(71,500
|
)
|
State
|
|
|
(19,300
|
)
|
Total deferred
|
|
|
(90,800
|
)
|
Increase in valuation allowance
|
|
|
90,800
|
|
Total provision
|
|
$
|
-
|
|
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences as of December 31, 2012
are as follows:
Income tax provision at the federal statutory rate
|
|
|
34.0
|
%
|
State income taxes, net of federal benefit
|
|
|
5.5
|
%
|
Effect of net operating loss
|
|
|
(39.5
|
%)
|
|
|
|
0.0
|
%
|
Components of the net deferred income tax assets at December 31, 2012 were as follows:
Net operating loss carryovers
|
|
$
|
74,300
|
|
Effect of stock options
|
|
|
16,500
|
|
Valuation allowance
|
|
|
(90,800
|
)
|
|
|
$
|
-
|
|
In accordance with ASC 740, at December 31, 2012 we determined that a valuation allowance should be recognized against deferred tax assets because, based on the weight of available evidence, it is more likely than not (i.e., greater than 50% probability) that some portion or all of the deferred tax asset will not be realized in the future. We recognized a reserve of 100% of the amounts of the deferred tax benefit in the amount of $90,800.
There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns for the years ended December 31, 2010, 2011 and 2012. Our policy is to account for income tax related interest and penalties in income tax expense in the consolidated statement of operations. There have been no income tax related interest or penalties assessed or recorded.
ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Note 10. Earnings Per Share
The Company calculates earnings per share in accordance with ASC Topic 260 “Earnings Per Share”, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options, warrants and convertible note (using the if-converted method). The dilutive earnings per share was not calculated because the Company recorded net losses for the years ended December 31, 2012 and 2011 and for the period from inception, July 15, 2009, to December 31, 2012, and the outstanding stock options, warrants and convertible note are anti-dilutive.
LifeApps Digital Media Inc.
(Formerly Prime Time Travel Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note 11. Business Segments
We operate in only one segment and geographic location.
Our sales are normally made through third party portals and no single customer accounts for 10% or more of our revenue.
Note 12. Subsequent Events
We evaluated all of our activity and concluded the following subsequent events would require recognition or disclosure in our financial statements:
On April 1, 2013, we entered into an Asset Purchase Agreement with Sports One Group and Performance Gear (“Sports One Group”), a sole proprietorship, to purchase certain assets related to a gateway platform which matches sports apparel manufacturers with distributors and purchasers. The purchase price of the assets is $99,500. In accordance with the guidance of ASC Topic 805,
Business Combinations
(“ASC 8058”) we determined that the assets acquired constitute a business and we acquired 100% of the business. We acquired the business in order to expand our electronic and mobile commerce (e-commerce and m-commerce) businesses to include health fitness and sports apparel.
No amount of revenue or earnings of Sports One Group were recognized in the period from July 15, 2009 (inception) through December 31, 2012.