Notes
to Consolidated Financial Statements
March 31, 2016
Note
1 – Business
The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10
of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain
all information and footnotes required by accounting principles generally accepted in the United States of America for annual
financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain
all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company
as of March 31, 2016, and the results of operations and cash flows for the periods presented. The results of operations for the
three months ended March 31, 2016, are not necessarily indicative of the operating results for the full fiscal year or any future
period. These unaudited financial statements should be read in conjunction with the financial statements and related notes thereto
included in the Company’s Amended Annual Report on Form 10-K/A for the year ended December 31, 2015, filed with the SEC
on March 21, 2017.
Metrospaces,
Inc. (the “Company”) was incorporated as “Strata Capital Corporation” on December 10, 2007, under the
laws of the State of Delaware. Urban Spaces, Inc. (“Urban Spaces”) was incorporated on April 3, 2012, under the laws
of the State of Nevada and thereafter formed Urban Properties LLC, a Delaware limited liability company as its 99.9% owned subsidiary
(“UPLLC”). Through Urban Spaces and its subsidiaries, the Company builds, sells and manages condominium properties
located in Argentina and Venezuela. On January 13, 2015, the Company acquired all of the outstanding shares of stock of Bodega
IKAL, S.A., an Argentine corporation (“IKAL”), and Bodega Silva Valent S.A., an Argentinian corporation, which collectively
own 185 acres of vineyards, from which they currently sell grapes to local wineries. Through its 60% - owned subsidiary Caribe
Mar, C.A. (“Carib Mar”), the Company is planning to build a hotel on Coche Island in the State of Nueva Esparta, Venezuela.
Note
2 – Significant accounting policies
Basis
of Consolidation
The
financial statements have been prepared on a consolidated basis, with the Company’s subsidiaries IKAL and Bodega Silva Valent
S.A. No intercompany balances or transactions exist during the period presented.
Use
of Estimates
The
preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with original maturity of three months or less to be cash equivalents.
Real
Property
Real
property is stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful
lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred.
Investments
in non-consolidated subsidiaries
Investments
in non-consolidated entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or
the Company’s ability to exercise significant influence over the operating and financial policies of the investee. When
the equity method is used, investments are recorded at original cost and adjusted periodically to recognize the Company’s
proportionate share of the investees’ net income or losses after the date of investment. When net losses from an investment
accounted for under the equity method exceed its carrying amount, the investment balance is reduced to zero and additional losses
are not provided for. The Company resumes accounting for the investment under the equity method if the entity subsequently reports
net income and the Company’s share of that net income exceeds the share of net losses not recognized during the period the
equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other
than temporary has occurred.
Business
Combinations
The
Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible
assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values
of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates
and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include,
but are not limited to, future expected cash flows from acquired users, acquired technology and trade names from a market participant
perspective, useful lives and discount rates.
Management’s
estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable
and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition
date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Long-Lived
Assets, Including Goodwill and Other Acquired Intangible Assets
The
Company evaluates the recoverability of property and equipment and finite-lived intangible assets for possible impairment whenever
events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets
is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate.
If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying
amount of such assets is reduced to fair value. We have not recorded any significant impairment charge during the years presented.
The
Company reviews goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that
the carrying value of goodwill may not be recoverable. The Company has elected to first assess the qualitative factors to determine
whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount as a basis
for determining whether it is necessary to perform the two-step goodwill impairment under Accounting Standards Update (ASU) No.
2011-08,
Goodwill and Other (Topic 350): Testing Goodwill for Impairment,
issued by the Financial Accounting Standards
Board (FASB). If it is determined that it is more likely than not that its fair value is less than its carrying amount, then the
two-step goodwill impairment test is performed. The first step, identifying a potential impairment, compares the fair value of
the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step would need to be performed;
otherwise, no further step is required. The second step, measuring the impairment loss, compares the implied fair value of the
goodwill with the carrying amount of the goodwill. Any excess of the goodwill carrying amount over the applied fair value is recognized
as an impairment loss, and the carrying value of goodwill is written down to fair value.
In
addition to the recoverability assessment, the Company routinely reviews the remaining estimated useful lives of property and
equipment and finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, the remaining unamortized
balance would be amortized or depreciated over the revised estimated useful life.
Revenue
Recognition
The
Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605,
Revenue Recognition.
We record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the selling price to the customer
is fixed or determinable and collectability of the revenue is reasonably assured.
The
Company generally recognizes revenue from grape sales upon delivery to the customer. The Company does not have any allowance for
returns because grapes are accepted upon delivery.
Income
Taxes
The
Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740,
Income Taxes
.
Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and
(ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s
financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the
enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available
positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC
Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements
and 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. ASC Topic 740.10.40 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions
for any of the reporting periods presented.
Fair
Value Measurement
The
Company adopted the provisions of ASC Topic 820,
Fair Value Measurements and Disclosures,
which defines fair value as used
in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The
estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature
of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective
yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances
of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may
be used to measure fair value:
Level
1 — quoted prices in active markets for identical assets or liabilities
Level
2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The
derivative liability in connection with the conversion feature of the convertible debt, classified as a Level 3 liability, is
the only financial liability measured at fair value on a recurring basis.
The
change in the Level 3 financial instrument is as follows:
Balance
January 1, 2015
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$
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2,645,300
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Issued
during the year
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14,540,743
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Converted
during the year
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(4,531,387)
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Change
in fair value recognized in operations
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(749,974)
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|
|
|
|
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Balance
December 31, 2015
|
|
|
11,904,682
|
|
|
|
|
|
|
Balance
January 1, 2016
|
|
$
|
11,904,682
|
|
Issued
during the year
|
|
|
109,675
|
|
Converted
during the year
|
|
|
(273,189)
|
|
Change
in fair value recognized in operations
|
|
|
(2,109,410)
|
|
|
|
|
|
|
Balance
March 31, 2016
|
|
|
9,631,758
|
|
The
estimated fair value of the derivative instruments were valued using the Black-Scholes option pricing model, using the following
assumptions at March 31, 2016:
Estimated
Dividends
|
|
|
None
|
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Expected
Volatility
|
|
|
508%
to 1022.00%
|
|
Risk
free interest rate
|
|
|
.59%
|
|
Expected
term
|
|
|
.36
to 1.33 years
|
|
Convertible
Instruments
The
Company evaluates and account for conversion options embedded in convertible instruments in accordance with ASC 815,
Derivatives
and Hedging Activities.
Applicable
GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative
financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics
and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks
of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is
not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate
instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
The
Company accounts for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated
from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion
options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt to their stated date of redemption.
The
Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment
standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at
their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting
liabilities. During the three months ended March 31, 2016, the Company recognized a gain on extinguishment of $2,109,410 from
the conversion of convertible debt with a bifurcated conversion option.
Foreign
Currency Translation
The
functional currency of Bodega IKAL, S.A and Bodega Silva Valent S.A. is denominated in Argentine peso. Assets and liabilities
of these operations are translated into United States dollar equivalents using the exchange rates in effect at the balance sheet
date. Revenues and expenses are translated using the average exchange rates during each period. Adjustments resulting from the
process of translating foreign functional currency financial statements into U.S. dollars are included in accumulated other comprehensive
income in shareholders’ deficit.
Note
3 – Going Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the Company will
continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated minimal
revenues, has an accumulated deficit of $12,326,014, and stockholders’ deficit of $5,493,582, as of March 31, 2016. The
continuation of the Company as a going concern is dependent upon, among other things, continued financial support from its stockholders
and the attainment of profitable operations. These factors, among others, raise substantial doubt regarding the Company’s
ability to continue as a going concern. There is no assurance that the Company will be able to generate revenues in the future.
These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to continue
as a going concern.
Management
plans to alleviate the going concern issues through future equity and debt financing opportunities currently being pursued.
Note
4 – Acquisition
On
January 13, 2015, the Company acquired all of the outstanding shares of common stock of Bodega IKAL, S.A., and all of the outstanding
shares of common stock of Bodega Silva Valent S.A., both of which are Argentine corporations that collectively own 75 hectares
of vineyards that produce grapes that they sell to local wineries. The consideration for these shares was a convertible promissory
note in the principal amount of $4,500,000. The acquisitions have been recorded in accordance with the acquisition method of accounting
and have included the financial results of the acquired companies from the date of acquisition. Pro forma historical results of
operations have not been presented because they are not material to the consolidated statement of operations.
The
Company has estimated the fair value assets acquired and liabilities assumed as part of the acquisition and is currently undergoing
a formal valuation and will adjust these estimates accordingly within the one year measurement period.
The
following table summarizes the estimated fair values assigned to the assets acquired and liabilities assumed:
Net
current assets
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$
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376,514
|
|
Land
|
|
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3,911,486
|
|
Equipment
|
|
|
212,000
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|
Net
Assets Acquired
|
|
|
4,500,000
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|
Consideration
|
|
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4,500,000
|
|
Note
5 – Advance payment for Real Property
The
Company purchased from GBS Capital Partners, Inc. (“GBS”), a related party, the right to receive 9 loft-type condominium
units from their builder upon the completion of these units (See note 9). As consideration for this purchase, the Company agreed
to pay $750,000 to GBS, without interest (See note 6). The Company has imputed interest on this obligation at the rate of 8% per
annum and has recorded the advance payment net of such imputed interest at a cost of $665,984.
On
December 5, 2014, the Company entered into an agreement with GBS to return 4 of the 9 loft-type condominium units in exchange
for $350,000 of the debt. The value assigned to the units returned was $295,993 which after the exchange of the debt resulted
in a gain of $54,007, which has been recorded as an equity transaction with related parties. The remaining 5 units will be offered
for sale upon their acquisition.
Note
6 – Investment in non-consolidated subsidiary
On
December 3, 2012, UPLLC assigned to GBS Fund I, LLC, a Florida limited liability company (the “Fund”), UPLLC’s
rights to acquire all of the outstanding shares of Promotora Alon-Bell, C.A., a Venezuelan corporation which owns vacant land
located in Venezuela upon which a condominium project is to be constructed. UPLLC had acquired such rights from a stockholder
of the Company in exchange for a promissory note in the principal amount of $150,000. (See note 7.) This stockholder had acquired
his rights to acquire these shares under an agreement with their holders, pursuant to which he paid them $150,000 in cash. This
investment, which represents an interest of 26.32% in the Fund, is being accounted for under the cost method of accounting due
to the Company not having any significant influence. The Fund acquired the shares in Promotora Alon-Bell, C.A. on December 16,
2012.
Note
7 – Long Term Debt – Related Party
On
April 13, 2012, the Company entered into an agreement to purchase nine condominium units from GBS Capital Partners (“GBS”),
a related party of the Company, in exchange for a two-year non-interest bearing note payable. Interest has been imputed at the
rate of 8% per annum.
The
Company has recorded an initial debt discount of $84,016 related to the imputed interest which was amortized on the effective
interest rate method over the term of the note, which was fully amortized as of December 31, 2014.
On
December 5, 2014, the Company entered into an agreement with GBS to return 4 of the 9 loft-type condominium units in exchange
for $350,000 of the debt leaving a remaining balance of $400,000 on December 31, 2014, which was past due.
On
February 19, 2015, the Company exchanged the remaining $400,000 of debt to GBS in exchange for 450,000 shares of newly designated
shares of Series B Preferred Stock.
Note
8 – Notes Payable – Related Parties
Notes
Payable – related party
|
(a)
|
$150,000
promissory note payable to a shareholder of the Company incurred for the transfer of
an option to purchase the outstanding shares of Promotora Alon-Bell, C.A. (See Note 6),
which was due April 20, 2014, and bears interest at the rate of 11% per annum. Interest
expense for the year ended December 31, 2014 charged to the statement of operations was
$16,500.
|
On
February 19, 2015, the Company exchanged the $150,000 of debt in exchange for 150,000 shares of newly designated shares of series
B preferred stock.
Convertible
Note Payable – related party
The
Company issued a Convertible Promissory Note, dated May 1, 2014, in the principal amount of $66,944 and bearing interest at the
rate of 0.33% per annum, to the prior president and sole director of the Company (the “Existing Note”). The Existing
Note is subject to and entitled to the benefits of the Convertible Note Exchange Agreement, dated May 1, 2014, between MSPC and
prior president and sole director (the “Existing Note Exchange Agreement”), as amended by an Agreement of Amendment
and Rescission, dated as of July 11, 2014, by and among the Company, the former officer and director and one of his affiliates.
(the “Rescission Agreement”), including, without limitation, its provisions in respect of the conversion of the principal
amount thereof and interests thereon into shares of Common Stock. The Existing Note was issued pursuant to the Existing Note Exchange
Agreement solely in exchange for a Convertible Promissory Note, dated February 19, 2014, and maturing 1 year later, in the original
principal amount of $260,000, the outstanding principal of which and interest accrued thereon at the time of the exchange, was
$66,944 (the “First Exchange Note”). The Existing Note Exchange Agreement was amended by the Rescission Agreement
to increase the conversion price from the par value of the Common Stock ($0.000001 per share), as provided in the Existing Note
Exchange Agreement, to 2.5% of its Current Market Value, as that term is defined therein.
The
First Exchange Note was acquired by the prior president and sole director pursuant to a Promissory Note Exchange Agreement, dated
February 19, 2014, between the Company and him (the “First Exchange Agreement”) solely in exchange for a promissory
note, dated August 13, 2012, and maturing one year later, made by the Company and him in the principal amount of $260,000 and
bearing interest at the rate of 0.24% per annum, which was amended on August 12, 2013, by a letter agreement between the Company
and him (the “Letter Agreement”) to extend its maturity date to April 14, 2014 (as so amended, the “Original
Note”).
The
prior president and sole director was issued the Original Note pursuant to an Exchange Agreement, dated August 13, 2012 (the “Original
Note Exchange Agreement”), under which he surrendered to the Company for cancellation a certificate representing 10,000,000
shares of its Series A Preferred Stock and extinguished $170,146 of the Company’s indebtedness to him as consideration for
the Original Note.
The
Company has determined that the conversion feature embedded in the notes constitutes a derivative and has been bifurcated from
the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt, on the accompanying
balance sheet, and revalued to fair market value at each reporting period.
Note
9 – Acquisition note payable
In
connection with the acquisition referred to in note 4, the Company issued a convertible promissory note in the principal amount
of $4,500,000. The note was convertible at, at any time at the option of the holder, into shares of Common Stock, as provided
therein. The Company has determined that the conversion feature embedded in the note constituted a derivative and it has been
bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt
or a charge to interest expense where the derivative exceeds the carrying value of the note, on the accompany balance sheet, and
revalued to fair market value at each reporting period. During the year ended December 31, 2015, the Company made principal payments
aggregating $56,100. On May 29, 2015, the Company exchanged the unpaid $4,443,900 of the note for 100,000 shares of newly designated
shares of Series C Preferred Stock.
Note
10 – Notes Payable
On
August 28, 2013, the Company received a $10,000 bridge loan from a nonrelated party. The loan bears interest at 15% per annum
and matured on February 14, 2014. The loan remains past due and the Company has continued to accrue interest on the note until
an agreement with the lender for repayment has been reached.
Note
11 – Convertible Note Payable
At
March 31, 2016, and December 31, 2015, convertible notes payable consisted of the following:
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March 31
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December 31,
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2016
|
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2015
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On February 25, 2014, the Company entered
into a Convertible Note Agreement in the principal amount of $40,000 with an unrelated third party, and an additional $42,000
on February 10, 2015. The notes bear interest at 8% per annum and are convertible into shares of the Company’s
common stock at the option of the holder at a purchase price equal to 58% of the lowest closing bid price of the Company’s
common stock for fifteen prior trading days upon which a notice of conversion is received by the Company. The note
matures on February 10, 2016, but may be redeemed by the Company for a) an amount equal to 125% of the unpaid principal if
redeemed within the first 90 days of the note, b) an amount equal to 140% of the unpaid principal if redeemed after the 91st
day but before the 151st day of the note, or c) an amount equal to 150% of the unpaid principal if redeemed after the 151st
day but before the 180th day of the note. The note may not be redeemed by the Company after 180 days. Since the inception
of the note $40,0000 of principal of the note was converted into shares of common stock according to the terms of the convertible
instrument.
On July 23, 2015, the Convertible Note Agreement of remaining principal amount of $42,000 was amended. The note bears interest
at 8% per annum and is convertible into shares of the Company’s common stock at the option of the holder at a purchase
price equal to 30% multiplied by the average of the lowest closing bid price for the common stock during 30 trading day period
ending on the latest complete trading day prior to the conversion date.
On August 20, 2015, $6,000 of the note was converted into 200,000 shares of common stock.
On October 1, 2015, $83 of the note was converted into 276,667 shares of common stock.
On October 8, 2015, $386 of the note was converted into 1,286,667 shares of common stock.
On October 14, 2015, $265 of the note was converted into 883,333 shares of common stock.
As of March 31, 2016, a total of $46,734 of the notes have been converted.
As of March 31, 2016, the note is presented net of a discount of $16,255.
|
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67,266
|
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73,500
|
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On March 23 2015, the Company entered into
a Convertible Note Agreement in the principal amount of $29,000 with an unrelated third party and an additional $37,000 on
April 8, $21,936 on April 17, $9,800 on April 29, 2015. The notes bear interest at 10% per annum and are convertible
into shares of the Company’s common stock at the option of the holder at a purchase price equal to 2.5% of the current
market price which is the average of the daily closing price for a share of common stock for the three consecutive trading
days ending on the trading day immediately prior to the day on which a conversion notice is delivered. The notes mature on
the date which is one year after the agreement date.
On September 23, 2015, the Company entered into an agreement to extend the maturity date of the following notes; $37,000
on April 8, $21,936 on April 17, and $9,800 on April 29, 2015. The new maturity date was extended by 1 year from the original
maturity date.
During the three months ended March 31, 2016, $36,578 of the notes were converted into 468,872,740 common shares.
As of March 31, 2016, a total of $36,578 of the notes have been converted.
As of March 31, 2016, the notes are presented net of a discount of $57,556.
|
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102,893
|
|
|
97,736
|
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On May 8, 2015, the Company entered into a
Convertible Note Agreement in the principal amount of $7,000 with an unrelated third party and an additional $25,000 on May
29, 2015, $10,000 on July 8, 2015, $16,000 on July 28, $8,000 on August 11, 2015, $17,600 on August 25, 2015 and $6,000 on
September 24, 2015. The notes bears interest at 10% per annum and are convertible into shares of the Company’s
common stock at the option of the holder at a purchase price equal to 2.5% of the current market price which is the average
of the daily closing price for a share of common stock for the three consecutive trading days ending on the trading day immediately
prior to the day on which a conversion notice is delivered. The note matures on the date which is one year after the agreement
date.
On September 23, 2015, the Company entered into an agreement to extend the maturity date of the following notes; $7,000 on
May 8, 2015, $25,000 on May 29, 2015, $10,000 on July 8, 2015, and $16,000 on July 28. The new maturity date was extended
by 1 year from the original maturity date.
On October 23, November 3, ,November 19, and November 24, 2015, the Comany entered into a Convertible Note Agreement in the
principal amount for $12,000, $4,500, $13,000 and $2,000 respectively. The notes bears interest at 10% per
annum and are convertible into shares of the Company’s common stock at the option of the holder at a purchase price
equal to 2.5% of the current market price which is the average of the daily closing price for a share of common stock for
the three consecutive trading days ending on the trading day immediately prior to the day on which a conversion notice is
delivered. The notes matures on the date which is one year after the agreement date.
On March 3, 2016, and March 4, 2016, the Comany entered into a Convertible Note Agreement in the principal amount for $16,000,
and $4,400 respectively. The notes bear interest at 10% per annum and are convertible into shares of the
Company’s common stock at the option of the holder at a purchase price equal to 2.5% of the current market price which
is the average of the daily closing price for a share of common stock for the three consecutive trading days ending on the
trading day immediately prior to the day on which a conversion notice is delivered. The notes matures on the date which is
one year after the agreement date.
During the three months ended March 31, 2016, the Company repaid $48,807 of the notes.
As of March 31, 2016, the notes are presented net of a discount of $54,319.
|
|
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92,733
|
|
|
121,100
|
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On July 28, 2015, the Company entered into
a Convertible Note Agreement in the principal amount of $25,000 with an unrelated third party. The notes bears
interest at 12% per annum and are convertible into shares of the Company’s common stock at the option of the holder
at a purchase price equal to 50% multiplied by the lowest closing bid price for the Common Stock during the 30 trading day
period ending on the latest complete trading day prior to the conversion date. The note matures on January 28, 2017.
On February 19, 2016, the Company entered into a Convertible Note Agreement in the principal amount of $20,000 with an unrelated
third party. The notes bears interest at 12% per annum and are convertible into shares of the Company’s common
stock at the option of the holder at a purchase price equal to 50% multiplied by the lowest closing bid price for the Common
Stock during the 30 trading day period ending on the latest complete trading day prior to the conversion date. The note matures
on August 19, 2016.
As of March 31, 2016, the notes are presented net of a discount of $29,404.
|
|
|
45,000
|
|
|
25,000
|
|
|
|
|
|
|
|
On July 28, 2015, the Company
entered into a Convertible Note Agreement in the principal amount of $25,000 with an unrelated third party. The
note bears interest at 12% per annum and are convertible into shares of the Company’s common stock at the option of
the holder at a purchase price equal to 50% multiplied by the lowest closing bid price for the Common Stock during the 30
trading day period ending on the latest complete trading day prior to the conversion date. The note matures on January 28,
2017.
As of March 31, 2016, the notes are presented net of a discount of $16,255.
|
|
|
6,667
|
|
|
32,000
|
|
|
|
|
|
|
|
On February 2, 2016, the Company entered into
a Convertible Note Agreement, with an unrelated third party for $30,000. The note bears interest at 10% per annum, and
is convertible into shares of the Company’s common stock at the option of the holder at a purchase price equal to 60%
multiplied by the lowest closing bid price for the Common Stock during the 30 trading day period ending on the latest complete
trading day prior to the conversion date. The notes mature on February 2, 2017.
An amount of $1,992 was converted during the period ended March 31, 2016.
As of March 31, 2016, the note is presented net of a discount of $26,246.
|
|
|
30,000
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Convertible Notes
|
|
|
344,560
|
|
|
394,729
|
Discount of Convertible Notes
|
|
|
(189,377)
|
|
|
(178,452)
|
Total Convertible Notes
|
|
|
155,183
|
|
|
216,277
|
|
|
|
|
|
|
|
Less: current portion of convertible loan
|
|
|
-
|
|
|
(90,033)
|
|
|
|
|
|
|
|
Long-term convertible notes payable
|
|
$
|
155,183
|
|
$
|
126,244
|
The
remaining principal balance of the convertible notes at March 31, 2016, was $344,560. The Company has determined that the conversion
feature embedded in the notes constitutes a derivative and has been bifurcated from the note and recorded as a derivative liability,
with a corresponding discount recorded to the associated debt, on the accompany balance sheet, and revalued to fair market value
at each reporting period. The notes are presented net of a discount of $189,377.
Note
12 – Related Party Transactions
A
stockholder is a 33% partner in GBS Capital Partners (see Note 4), the entity from which the Company acquired the deposit of nine
condominium units.
The
stockholder referred to above is entitled to receive a monthly salary of $1,250. The Company has accrued an amount of $3,750 for
the three months ended March 31, 2016, and $9,970 for the years ended December 31, 2015, for salary. The Company has accrued an
aggregate amount of $56,970 since inception which is reflected in accrued expenses in the accompanying Balance Sheet at March
31, 2016.
On
February 19, 2015, the Company issued 600,000 shares of newly designated shares of Series B Preferred Stock to the Company’s
executive officer as payment under his employment agreement.
See
Notes 4 and 6 regarding the assignment of the right to acquire 9 condominium units from an entity in which a stockholder of the
Company has an interest.
Note
14 – Stockholders Equity
Common
stock
The
Company is authorized to issue 10,000,000,000 shares of common stock, par value of $0.000001 per share.
On
September 11, 2015, the Company amended its Certificate of Incorporation, as amended, to effect a 1-for-1000 reverse stock split
of its issued and outstanding shares of common stock. All relevant information relating to numbers of shares and per share information
have been retrospectively adjusted to reflect the reverse stock split for all periods presented.
During
the three months ended March 31, 2016, $38,569 of principal of the convertible notes payable referred to in Note 11 was converted
into 478,872,704 shares of common stock according to the terms of the convertible instrument.
As
of March 31, 2016, and December 31, 2015, respectively, 2,263,334,686 and 1,784,461,982 shares of common stock were issued and
outstanding.
Preferred
Stock
The
Company is authorized to issue 8,000,000 shares of preferred stock at a par value of $0.000001 per share in series. As of December
31, 2015 and, 2014, no shares of preferred stock were issued and outstanding.
Series
B Preferred Stock
The
Board of Directors of the Company has designated 2,000,000 shares of preferred stock as Series B PIK Convertible Preferred Stock
(“Series B Preferred Stock”).
On
February 19, 2015, the Company exchanged the $400,000 of debt to GBS referred to in Note 7 for 450,000 shares of Series B Preferred
Stock and the $150,000 of debt to the Company’s shareholder referred to in note 8 for 150,000 shares of Series B Preferred
Stock and issued 600,000 shares of newly designated shares of Series B Preferred Stock to the Company’s executive officer
for the $50,000 of compensation.
As
of March 31, 2016, and December 31, 2015, 1,200,000 shares of Series B Preferred Stock were issued and outstanding.
Series
C Preferred Stock
The
Board of Directors of the Company has designated 100,000 shares of preferred stock as Series C PIK Convertible Preferred Stock
(“Series C Preferred Stock”).
On
May 29, 2015, the Company exchanged the unpaid $4,443,900 of acquisition note payable referred to in Note 9 for 100,000 shares
of newly designated shares of Series C Preferred Stock. The Company accounted for the conversion as an extinguishment of debt,
whereby it recorded the fair value of the Series C Preferred Stock, based on a third party valuation of the Series C, and recorded
the difference between the fair value, the carrying value of the debt (net of discount) and the bifurcated conversion option,
which aggregated $1,687,807 and recorded as a gain on extinguishment of debt.
As
of March 31, 2016, and December 31, 2015, 100,000 shares of series C preferred stock were issued and outstanding.
Note
15 – Stock-Based Compensation
On
November 4, 2014, the Board of Directors adopted the Metrospaces, Inc. Restricted Stock Plan. The plan is administered by the
board’s compensation committee. Also on November 4, 2014, the compensation committee granted an award of 800,000 shares
of common stock (800,000,000 shares prior to the reverse split referred to in note 14) under the plan to Oscar Brito, who was
then the Company’s principal executive officer and a director. The shares awarded shall vest as follows:
1.
|
After
the Corporation publishes its audited annual financial statement for the year ended December 31, 2019, the Grantee shall receive
a number of shares (subject to the Base Amount and Additional Annual Amount), free of all restrictions, equal to the market
value on the date of such publication, determined on the basis of the Last Price, of twenty percent (20%) of the sum of the
amounts, if any, shown as net income on the Corporation’s statement of operations for the years ended December 31, 2019,
2018, 2017, 2016 and 2015.
|
2.
|
For
each of the years ended December 31, 2020, 2021, 2022, 2023 and 2024, when the Corporation publishes its audited annual financial
statements with respect to such year, the Grantee shall receive a number of shares (subject to the Base Amount and Additional
Annual Amount), free of all restrictions, equal to the market value on the date of such publication, determined on the basis
of the Last Price, of twenty percent (20%) of the amount, if any, shown as net income on the Corporation’s statement
of operations for such year.
|
3.
|
Shares
of Restricted Stock that have not Vested on the date of the publication of the Corporation’s audited annual financial
statements for the year ended December 31, 2024, shall never Vest and the Grantee shall have no further rights with respect
to them.
|
As
of March 31, 2016, none of the awards had vested and no compensation cost had been recorded in the Company’s financial statements.
Note
16 – Subsequent Events
Subsequent to year-end, the Company issued 1,628,844,000 shares of common stock upon the conversion of $18,275 of principal
amount of convertible promissory notes and $27,180 of interest accrued thereon.