The accompanying notes are an integral part of these unaudited consolidated financial statements.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
The accompanying notes are an integral part of these consolidated unaudited financial statements.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Sharing Services, Inc. (Sharing Services, we, us, or the Company) was incorporated in the State of Nevada. The Companys wholly owned subsidiary, Total Travel Media, Inc. (Total Travel Media, or TTM), was incorporated on May 5, 2017 in the State of Nevada. The fiscal year end is April 30. The Company acquired Total Travel Media on May 23, 2017. While Total Travel Media is a wholly owned subsidiary of the Company, for financial accounting purposes the transaction has been treated as a reverse acquisition (reference is made to the paragraph below entitled Recapitalization).
The Company was originally formed to launch a taxi sharing website and application. Beginning on February 1, 2017 the Company changed its business model and is now a travel and technology management company. Sharing Services is a direct-selling model with a subscription-based vacation portal.
Share Exchange and Reorganization
On May 23, 2017, Sharing Services, Inc., entered into a Share Exchange Agreement (the Agreement) with Total Travel Media, Inc. On May 23, 2017, there was a Closing of the transaction (the Closing Date). Pursuant to the terms of the Agreement, the Company acquired all of the shares of capital stock of TTM from the holders of such stock (the Equity-Holders), in exchange for the issuance of
Ten Million (10,000,000) newly-issued shares of the Companys Common Class B Stock, par value $0.0001 per share and (ii) Ten Million (10,000,000) newly-issued shares of the Companys Series B Preferred Stock, par value $0.0001 per share. Following the Closing Date, TTM will operate as a wholly-owned subsidiary of the Company.
Recapitalization
For financial accounting purposes, this transaction was treated as a reverse acquisition by Total Travel Media, and resulted in a recapitalization with Total Travel Media being the accounting acquirer and Sharing Services as the acquired company. The consummation of this reverse acquisition resulted in a change of control. Accordingly, the historical financial statements prior to the acquisition are those of the accounting acquirer, Total Travel Media, and have been prepared to give retroactive effect to the reverse acquisition completed on May 23, 2017, and represent the operations of Total Travel Media. The consolidated financial statements after the acquisition date, May 23, 2017, include the balance sheets of both companies at historical cost, the historical results of Total Travel Media and the results of the Company from the acquisition date. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization.
Going concern
These financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. To date the Company has generated no revenues from its business operations and has an accumulated deficit of $640,826. As of July 31, 2017, the Company had a working capital deficit of $167,906. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Companys ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements, promissory notes, convertible promissory notes and advances from related parties as may be required.
These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
9
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
In managements opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Use of Estimates and Assumptions
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include assumptions about the valuation and recognition of stock-based compensation expense, the valuation and recognition of derivative liability, valuation allowance for deferred tax assets and useful life of fixed assets.
Principles of Consolidation
For July 31, 2017, the unaudited consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiary, Total Travel Media, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. As of July 31, 2017, the Company had cash and cash equivalents of $73,817.
Fair value measurements
Fair value is defined as the price that the Company would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent counter-party in the principal market or in the absence of a principal market, the most advantageous market for the investment or liability. A three-tier hierarchy is established to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entitys own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs); and establishes a classification of fair value measurements for disclosure purposes.
The hierarchy is summarized in the three broad levels listed below:
|
|
|
Level 1
|
-
|
quoted prices in active markets for identical assets and liabilities
|
Level 2
|
-
|
other significant observable inputs (including quoted prices for similar assets and liabilities, interest rates, credit risk, etc.)
|
Level 3
|
-
|
significant unobservable inputs (including the Companys own assumptions in determining the fair value of assets and liabilities).
|
10
In accordance with Accounting Standards Codification (ASC) 815, the Companys debt derivative liabilities are measured at fair value on a recurring basis, and are level 3 measurements in the three-tier fair value hierarchy.
There were no transfers between the levels of the fair value hierarchy during the period of inception (May 5, 2017) to July 31, 2017.
Fair value of financial instruments
The Companys financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
The following table summarizes fair value measurements by level at July 31, 2017 measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
July 31, 2017
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Promissory Note Issued May 15, 2017
|
$
|
-
|
$
|
-
|
$
|
93,285
|
$
|
93,285
|
Promissory Note Issued June 20, 2017
|
|
-
|
|
-
|
|
57,068
|
|
57,068
|
Total liabilities
|
$
|
-
|
$
|
-
|
$
|
150,353
|
$
|
150,353
|
Related Parties
The Company follows ASC 850,
Related Party Disclosures,
for the identification of related parties and disclosure of related party transactions (see Note 8).
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Property and Equipment
Property, plant and equipment is recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets estimated useful lives using the straight-line method. Estimated useful lives of the equipment are as follows:
Office equipment - 5 years
Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.
Share-Based Expense
ASC 718,
Compensation - Stock Compensation,
prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
11
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50,
Equity - Based Payments to Non-Employees.
Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Share-based expense totaled $266,448 for the period from inception (May 5, 2017) to July 31, 2017.
Advertising Costs
The Company follows ASC 720,
Advertising Costs,
and expenses costs as incurred. Advertising and marketing expense totaled $288,417 for the period from inception (May 5, 2017) to July 31, 2017.
Income Taxes
The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year 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 recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized.
The Company uses the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At July 31, 2017, the Company did not record any liabilities for uncertain tax positions.
Basic and Diluted Net Loss per Common Share
Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. The weighted average number of shares is calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. There were convertible notes and accrued interest for approximately $103,000 and 17,754,540 convertible preferred shares issued by the Company during the period ended July 31, 2017. Potential dilutive instruments as at July 31, 2017, consisted of the following common share equivalents:
|
|
|
|
|
|
July 31,
2017
|
Convertible notes
|
|
|
243,284
|
Convertible preferred shares
|
|
|
17,754,540
|
|
|
|
17,997,824
|
Diluted loss per share is the same as basic loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would be anti-dilutive as a result of the net loss.
12
Convertible notes
Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instruments maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method.
Recently Issued Accounting Standards
In February 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-05,
Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.
The amendments clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. The amendments also define the term in substance nonfinancial asset. The amendments clarify that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. For example, a parent may transfer control of nonfinancial assets by transferring ownership interests in a consolidated subsidiary. A contract that includes the transfer of ownership interests in one or more consolidated subsidiaries is within the scope of Subtopic 610-20 if substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets. The amendments clarify that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. Effective at the same time as the amendments in Update 2014-09, Revenue from Contracts with Customers (Topic 606). Therefore, public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the amendments in this Update to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the amendments in this Update to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. All other entities may apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance earlier as of annual reporting periods beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance. An entity is required to apply the amendments in this Update at the same time that it applies the amendments in Update 2014-09. The Company is currently evaluating the potential impact this standard may have on its financial position and results of operations.
In January 2017, the FASB has issued Accounting Standards Update (ASU) No. 2017-04,
Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.
These amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Effective for public business entities that are a SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company does not anticipate the adoption of ASU 2017-04 will have a material impact on its consolidated financial statements.
13
In January 2017, the FASB issued ASU No. 2017-01,
Business Combinations (Topic 805): Clarifying the Definition of a Business.
This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018, however, early adoption is permitted with prospective application to any business development transaction.
Management has considered all recent accounting pronouncements issued. The Companys management believes that these recent pronouncements will not have a material effect on the Companys financial statements.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at July 31, 2017:
|
|
|
|
July 31,
|
|
2017
|
Office equipment
|
$
|
3,995
|
Accumulated depreciation
|
|
(333)
|
Property and equipment, net
|
$
|
3,662
|
NOTE 4 INVESTMENT
On May 21, 2017, the Company entered into a transaction whereby the Company will acquire
a Forty-eight percent (48%) interest in 212 Technologies, LLC, a Montana limited liability company (212 Tech), in exchange for 15,628,750 shares of the Companys Series A Convertible Preferred Stock and cash in the amount of $100,000. 212 Technologies, LLC is a developer of end-to-end online marketing and direct sales software systems. Initially, the Company will acquire a Twenty-four percent (24%) interest in exchange for 5,628,750 shares of the Companys Series A Convertible Preferred Stock and cash. The Stakeholder and Investment Agreement dated May 21, 2017 also provides for the acquisition by the Company of the remaining twenty-four percent (24%) interest in 212 Tech at a future date in exchange for an additional 10,000,000 shares of the Companys Series A Preferred Stock, when the following milestones have been reached: (i) One year has passed from the original MOU; and (ii) the price per share of the Companys common stock is quoted at $10.00 or more. The Company, in exchange, received a non-exclusive, non-royalty bearing, perpetual, worldwide license of all of the Intellectual Property Rights developed and held by 212 Tech.
During the period ended July 31, 2017, the Company acquired a 24% interest in 212 Tech by paying $25,000 in cash and issuing 5,628,750 shares of Series A Convertible Preferred Stock, with a deemed value of $0.25 pure share or $1,407,188. As a result, we recorded $1,432,188 as an investment at cost.
NOTE 5 - NOTES PAYABLE
Notes Payable consisted of the following at July 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
July 31,
2017
|
|
Interest
Rate
|
|
|
Maturity
|
Dated March 20, 2017
|
|
$
|
10,000
|
|
12%
|
|
|
March 18, 2018
|
Dated May 4, 2017
|
|
|
10,000
|
|
12%
|
|
|
May 3, 2018
|
Dated May 11, 2017
|
|
|
15,000
|
|
12%
|
|
|
May 10, 2017
|
Total notes payable
|
|
|
35,000
|
|
|
|
|
|
Less: current portion of notes payable
|
|
|
35,000
|
|
|
|
|
|
Long-term notes payable
|
|
$
|
-
|
|
|
|
|
|
14
As of July 31, 2017, the Company accrued interest on these notes of $3,278 and recorded interest expense of $3,278 in interest expense for the period from inception (May 5, 2017) to July 31, 2017.
NOTE 6 - CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted of the following at July 31, 2017:
|
|
|
|
|
|
July 31, 2017
|
Dated May 15, 2017
|
|
$
|
63,000
|
Dated June 20, 2017
|
|
|
38,000
|
Total convertible notes payable
|
|
|
101,000
|
Less: debt discount and deferred financing fees
|
|
|
(78,030)
|
|
|
|
22,970
|
Less: current portion of convertible notes payable
|
|
|
22,970
|
Long-term convertible notes payable
|
|
$
|
-
|
The Company recognized amortization expense related to the debt discount and deferred financing fees of $22,970 for the period of inception (May 5, 2017) to July 31, 2017, which are included in interest expense in the consolidated statements of operations. The Company also recorded an interest of $2,140 on the convertible notes payables, during the period from inception (May 5, 2017) to July 31, 2017.
Promissory Notes Issued in Fiscal year 2017
During the period of inception (May 5, 2017) to July 31, 2017, the Company issued a total of $101,000 notes with the following terms:
|
|
|
|
--
|
Annual interest rates of 12%
|
|
|
|
|
--
|
Convertible at the option of the holders at issuance.
|
|
|
|
|
--
|
Conversion prices are typically based on the discounted (39% discount) lowest two (2) trading prices of the Companys common shares during the fifteen (15) trading day period prior to conversion.
|
The notes allow the Company to redeem the notes at rates ranging from 110% to 135% depending on the redemption date provided that no redemption is allowed after the 180
th
day. The Company received net cash of $95,000 on the convertible notes and recognized $6,000 as deferred financing fee, which is being amortized over the term of the convertible notes.
The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815 - 40,
Derivatives and Hedging - Contracts in Entity's Own Stock
, and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and amortized to interest expense over the term of the note.
The Company valued the conversion feature using the Black Scholes valuation model. The fair value of the derivative liability for all the notes amounted to $156,843. $95,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $61,843 was recognized as a day 1 derivative loss.
15
NOTE 7 - DERIVATIVE LIABILITIES
The Company analyzed the conversion option for derivative accounting consideration under ASC 815,
Derivatives and Hedging,
and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of July 31, 2017. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrants is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used for the period ended July 31, 2017:
|
|
|
|
|
|
|
Date of Inception
(May 5, 2017) to
|
|
|
|
July 31,
2017
|
Expected term
|
|
|
0.56 - 0.64 years
|
Expected average volatility
|
|
|
323% - 325%
|
Expected dividend yield
|
|
|
-
|
Risk-free interest rate
|
|
|
1.07% - 1.18%
|
The following table summarizes the derivative liabilities included in the balance sheet at July 31, 2017:
|
|
|
|
Fair Value Measurements Using Significant Observable Inputs (Level 3)
|
Balance May 5, 2017
|
|
$
|
-
|
Addition of new derivatives recognized as debt discounts
|
|
|
95,000
|
Addition of new derivatives recognized as loss on derivatives
|
|
|
61,843
|
Gain on change in fair value of the derivative
|
|
|
(6,490)
|
Balance - July 31, 2017
|
|
$
|
150,353
|
ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item. The following table summarizes the loss (gain) on derivative liability included in the income statement for the period of inception (May 5, 2017) to July 31, 2017.
|
|
|
|
|
|
Date of Inception
|
|
|
(May 5, 2017) to
|
|
|
July 31,
2017
|
Day one loss due to derivative liabilities on convertible notes payable
|
|
$
|
156,843
|
Gain on change in fair value of the derivative liabilities
|
|
|
(6,490)
|
Loss on change in the fair value of derivative liabilities
|
|
$
|
150,353
|
16
NOTE 8 - RELATED PARTY CONSIDERATIONS
Alchemist Holdings, LLC
As part of the acquisition of Total Travel Media (see Note 1), Alchemist Holdings, LLC (Alchemist), received 7,500,000 shares of the Series B Convertible Preferred Stock (75% of the issued shares) and 7,500,000 shares of the Common Class B Stock (75% of the issued shares), respectively.
On March 15, 2017, the Company entered into a Consultancy and Marketing Agreement with Alchemist to provide marketing and consulting services, tools, websites, video production and event management services. The Agreement shall remain in effect until the completion of the services. The Agreement may be terminated by the Company, without cause and without liability by giving 14 calendar days written notice of such termination to Alchemist. The Services to be provided are Social Alchemy- the development of Facebook algorithm for specific alchemy related to travel; Video Production- marketing, testimonial and mini alchemy videos for travel; Event Management web development, video production, hotel negotiation and management, onsite A/V, video capture, ticket sale management and travel management; Marketing marketing and consulting of all assets, websites, brochures, social networks and management of third party vendor contracts and relationships. Total cost for these services are estimated to be $840,000 for twelve months from agreement date. The Company has paid $330,278, to the related party, pursuant to this agreement, during the three month ended July 31, 2017. Of this amount, $245,378 was paid post reverse acquisition and is included in the marketing expense in the accompanying financial statements. Subsequent to July 31, 2017, approximately $181,809 was paid for services.
Bear Bull Market Dividends, Inc.
As part of the acquisition of Total Travel Media (see Note 1), Bear Bull Market Dividends, Inc. (Bear Bull), received 2,500,000 shares of the Series B Convertible Preferred Stock (25% of the issued shares) and 2,500,000 shares of the Common Class B Stock (25% of the issued shares), respectively.
On April 7, 2017, the Company issued a Promissory Note to Bear Bull, for $16,500, due April 6, 2018. The Note carries an annual interest rate of 12%. As of July 31, 2017, the accrued interest
on the note amounted to
$499.
Other
During the period from May 5, 2017 to July 31, 2017, the Company paid to our CEO management fees of $8,900.
NOTE 9 - STOCKHOLDERS DEFICIT
Preferred Stock
The Company has authorized 200,000,000 preferred shares with a par value of $0.0001 per share. The Board of Directors is authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.
Series A Convertible Preferred Stock
The Company has authorized the issuance of one hundred million (100,000,000) shares of Series A Preferred Stock. The Series A Preferred shares are senior in ranking to the Series C Preferred shares, but junior to the Series B Preferred shares. The affirmative vote of the holders of Eighty-six percent (86%) of the issued and outstanding shares of Series A Preferred Stock shall be required for the Board of Directors to: (i) declare dividends upon shares of common stock unless the Series A Preferred shares are to receive the same dividend as the common shares, on an as converted basis; (ii) redeem the shares of Series A Preferred Stock at a price of $0.001 per share; (iii) authorize or issue additional or other capital stock that is junior or equal rank to the Series A Preferred shares with respect to the preferences as to distributions and payments upon the liquidation or dissolution and winding up of the Company; and (iv) amend, alter, change, or repeal any of the powers, designations, preferences, and rights of the Series A Preferred Stock. Upon the dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, the holders of the Series A Preferred Stock shall receive out of the assets of the Company the sum of $0.001 per shares before any payment or distribution shall be made on the Common Stock, or any other class of
17
capital stock of the Company ranking junior to the Series A Preferred Stock. For a period of ten (10) years from the date of issuance of shares of Series A Preferred Stock, the holders may elect to convert each share of Series A Preferred Stock into one share of the Companys Common Stock. Each share of Series A Preferred Stock is entitled to one vote when voting as a class or together with shares of Common Stock.
On May 31, 2017, we issued 5,628,750 shares of Series A Convertible preferred stock to 212 Technologies, LLC, as part of an equity investment for 24% of 212 technologies, LLC. The shares were issued for a deemed value of $0.25 per share or $1,407,188 (see Note 4).
During the period ended July 31, 2017, we issued 1,065,790 shares of Series A Convertible preferred stock to consultants for a deemed value of $0.25 per share or $266,448.
As of July 31, 2017, 6,694,540 shares of series A Convertible Preferred Stock were issued and outstanding.
Series B Convertible Preferred Stock
The Company has authorized the issuance of ten million (10,000,000) series of Series B Preferred Stock. The Series B Preferred shares are senior in ranking to the Series A and Series C Preferred shares. The affirmative vote of the holders of Eighty-six percent (86%) of the issued and outstanding shares of Series B Preferred Stock shall be required for the Board of Directors to: (i) declare dividends upon shares of common stock unless the Series B Preferred shares are to receive the same dividend as the common shares, on an as converted basis; (ii) redeem the shares of Series B Preferred Stock at a price of $0.001 per share; (iii) authorize or issue additional or other capital stock that is senior, junior or equal rank to the Series B Preferred shares with respect to the preferences as to distributions and payments upon the liquidation or dissolution and winding up of the Company; and (iv) amend, alter, change, or repeal any of the powers, designations, preferences, and rights of the Series B Preferred Stock. Upon the dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, the holders of the Series B Preferred Stock shall receive out of the assets of the Company the sum of $0.001 per shares before any payment or distribution shall be made on the Common Stock, or any other class of capital stock of the Company ranking junior to the Series B Preferred Stock. For a period of ten (10) years from the date of issuance of shares of Series B Preferred Stock, the holders may elect to convert each share of Series B Preferred Stock into one share of the Companys Common Stock. Each share of Series B Preferred Stock is entitled to one vote when voting as a class and one thousand votes when voting together with shares of Common Stock.
On May 23, 2017, pursuant to the Share Exchange Agreement (See Note 1), the Company issued 10,000,000 shares of Series B convertible preferred stock to the stockholders of Total Travel Media in exchange for 10,000,000 shares of Total Travel Medias common stock, representing 100% of its issued and outstanding common stock. As a result of the reverse acquisition accounting, these shares issued to the former Total Travel Media stockholders are treated as being outstanding from the date of issuance of the Total Travel Media shares.
As of July 31, 2017, 10,000,000 shares of series B Preferred Stock were issued and outstanding.
Series C Convertible Preferred Stock
The Company has authorized the issuance of ten million (10,000,000) series of Series C Preferred Stock. The Series C Preferred shares are junior in ranking to the Series A and Series B Preferred shares. The affirmative vote of the holders of Eighty-six percent (86%) of the issued and outstanding shares of Series C Preferred Stock shall be required for the Board of Directors to: (i) declare dividends upon shares of common stock unless the Series C Preferred shares are to receive the same dividend as the common shares, on an as converted basis; (ii) redeem the shares of Series C Preferred Stock at a price of $0.001 per share; (iii) authorize or issue additional or other capital stock that is junior or equal rank to the Series C Preferred shares with respect to the preferences as to distributions and payments upon the liquidation or dissolution and winding up of the Company; and (iv) amend, alter, change, or repeal any of the powers, designations, preferences, and rights of the Series C Preferred Stock. Upon the dissolution, liquidation, or winding up of the Company, whether voluntary or involuntary, the holders of the Series C Preferred Stock shall receive out of the assets of the Company the sum of $0.001 per shares before any payment or distribution shall be made on the Common Stock, or any other class of capital stock of the Company ranking junior to the Series C Preferred Stock. For a period of ten (10) years from the date of issuance of shares of Series C Preferred Stock, the holders may elect to convert each share of Series C Preferred Stock into one share of the
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Companys Common Stock. Each share of Series C Preferred Stock is entitled to one vote when voting as a class or together with shares of Common Stock.
During the period ended July 31, 2017, we issued 1,060,000 shares of Series C Convertible Preferred Stock for $0.25 per share, for proceeds of $265,000.
As of July 31, 2017, 1,060,000 shares of series C Preferred Stock were issued and outstanding.
Common Stock
The Company has authorized the issuance of Class A common stock and Class B common stock. We are authorized to issue 500,000,000 shares of Class A common stock and 10,000,000 shares of Class B common stock, each with a par value of $0.0001 per share. Holders of our Class A common stock and Class B common stock are entitled to dividends when, as and if, declared by our board of directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. The shares of each class of Common Stock shall be identical except that the holders of the Class B Common Stock shall be entitled to elect a majority of the Board of Directors and the holders of the Class A Common Stock shall elect the remainder of the directors. Each share of Class B Common Stock shall be convertible at any time into one share of Common Stock at the option of the holder. Class A common stock and Class B common stock are referred to as common stock throughout the notes to these financial statements, unless otherwise noted.
On May 23, 2017, pursuant to the Share Exchange Agreement (See Note 1), the Company issued 10,000,000 shares of Class B common stock to the stockholders of Total Travel Media in exchange for 10,000,000 shares of Total Travel Medias common stock, representing 100% of its issued and outstanding common stock. As a result of the reverse acquisition accounting, these shares issued to the former Total Travel Media stockholders are treated as being outstanding from the date of issuance of the Total Travel Media shares.
As of July 31, 2017, there were 53,360,000 shares and 10,000,000 shares of Class A common stock and Class B common stock, respectively, issued and outstanding.
Shares Subscribed
As of July 31, 2017, the Company has received subscriptions for Series C Convertible Preferred Stock totaling $151,000.
NOTE 10 - SUBSEQUENT EVENTS
Subsequent to July 31, 2017, the Company received $203,500 as share subscriptions for Series C Convertible Preferred Stock at $0.25 per share, and issued 720,000 shares of Series C Convertible Preferred Stock.
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