NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — THE COMPANY AND BASIS OF PRESENTATION
Financial Statement Presentation
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The accompanying condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include the operations and balances of NewBridge Global Ventures, Inc. (“NewBridge”) and its wholly-owned subsidiaries NABUFIT Global ApS (“NABUFIT Denmark”), NABUFIT China Limited (“NABUFIT China”), NABUFIT IP ApS (“NABUFIT IP”), and Elevated Education, Inc. (“Elevated”) (collectively “NewBridge,” “we”, or “the Company”). NewBridge was incorporated in May 1983 in the State of Colorado and re-incorporated in the State of Delaware in April 2008.
Organization
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Effective August 30, 2017, the Company entered into an Agreement on Transfer of Shares (“Transfer Agreement”) whereby it sold all of the interest held in its operating subsidiaries NABUFIT Denmark, NABUFIT China, and NABUFIT IP (“Operating Subsidiaries”) and consequently ceased its prior operations (“Operations Sale”). Prior to the Operations Sale, the Company, through its Operating Subsidiaries designed, manufactured and marketed the NABUFIT virtual training and fitness products and services (“NABUFIT Products”). After completion of the Operations Sale, all of the Company’s equity in the Operating Subsidiaries were transferred and all of its interests in the NABUFIT Product and the associated technology and intellectual property ceased.
On October 19, 2017, the shareholders approved an amendment to the Company’s Certificate of Incorporation effecting a change of the Company’s name from Nabufit Global, Inc. to NewBridge Global Ventures, Inc. to more accurately reflect its business objectives. The name change was effective as of December 12, 2017 and the Company’s new symbol is “NBGV”. On February 14, 2018, the Company elected to form Elevated Education, Inc. (“Elevated”) as a Delaware corporation and wholly owned subsidiary of the Company. On February 19, 2018, the Company entered into an Asset Purchase Agreement (“Purchase Agreement”) with Elevated Portfolio Holdings, LLC (“Elevated Portfolio”), whereby Elevated agreed to purchase the assets of Elevated Portfolio for 2,000,000 shares of the Company’s common stock, par value $0.0001 per share. Mark Mersman was the chief executive officer of Elevated Portfolio.
Nature of Business
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NewBridge is an early stage business which provides education and consulting services related to the legal medical cannabis production and distribution industries. Prior to September 2017, the Company designed, manufactured and marketed the Nabufit virtual training and fitness products and services. In September 2017, the Company sold its operating subsidiaries and the related business and as a result changed its business model.
NewBridge is currently engaged in providing education and business consulting services to several companies in the medical marijuana and cannabis related industries. Through Elevated we provide education to healthcare professionals on medical cannabis and the endocannabinoid system.
In connection with such consulting agreements, the Company provides the following services:
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Strategic advisory and services;
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Business services;
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Marketing services;
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Acquisition and development services; and
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Strategic partnership and consolidation services.
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NOTE 2 – GOING CONCERN
The accompanying condensed consolidated financial statements have been prepared with the recognition that there is considerable doubt about whether the Company can continue as a going concern. As shown in the accompanying condensed consolidated financial statements, the Company incurred a net loss of $491,475 for the three months ended March 31, 2018 and has an accumulated deficit of $9,103,587 at March 31, 2018. The Company also used cash in operating activities of $153,934 during the three months ended March 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
In order for us to continue as a going concern, we will need to obtain additional debt or equity financing. We
are regularly and continually seeking additional funding from investors and from time to time we are in various stages of negotiations. Nonetheless, to date we have not accomplished a financing of the size needed to put the Company on a stable operating basis.
There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to attain positive cash flow operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet our future obligations. All of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to cease operations.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
– The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they are condensed and do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. The results of operations for the three months ended March 31, 2018, may not be indicative of the results that may be expected for the year ending December 31, 2018.
These financial statements should be read in conjunction with the financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation.
Principles of Consolidation —
The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include operations and balances of NewBridge Global Ventures, Inc. and its wholly-owned subsidiaries NABUFIT Denmark, NABUFIT China, NABUFIT IP, and Elevated. Intercompany balances and transactions have been eliminated in consolidation. NABUFIT China and NABUFIT IP had no activity. All three NABUFIT subsidiaries were sold to an employee of NABUFIT Denmark effective August 30, 2017. As a result of this action, the disclosures reflect these operations as discontinued and prior year financial information has been restated to reflect this accounting treatment. The subsidiaries were consolidated up through August 30, 2017, the date they were sold. Elevated was formed February 14, 2018.
Use of Estimates
– The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
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Fair Value
– The fair values of the Company’s financial assets and liabilities approximate their carrying amounts at the reporting date.
Foreign Currency Transactions and Translations
– The functional currency of NABUFIT Denmark was the Danish Krone (DKK), the functional currency of NABUFIT China was the China Yuan Renminbi (CNY), and the functional currency of NewBridge, Elevated and the reporting currency is U.S. dollars (USD). The Company translated the assets and liabilities of NABUFIT Denmark and NABUFIT China from the functional currency to U.S. dollars at the appropriate spot rates as of the balance sheet date. Equity balances were translated using historical exchange rates. Changes in the carrying value of these assets and liabilities attributable to fluctuations in spot rates were recognized in foreign currency translation adjustment, a component of accumulated other comprehensive income. Income statement accounts were translated using the average exchange rate during the period.
Monetary assets and liabilities denominated in a currency that is different from the functional currency must first be remeasured from the applicable currency to the functional currency. The effect of this remeasurement process was recognized translation adjustments in our statement of comprehensive loss.
The Company had no foreign currency transaction gains or losses during the three months ended March 31, 2018.
Cash and Cash Equivalents
– The balance in cash and cash equivalents consists of cash reserves held in bank accounts. The Company maintains cash balances in bank accounts that, at times, exceed federally insured limits. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant risk with respect to cash.
Revenue Recognition
– The Company adopted Topic 606
Revenue from Contracts with Customers
with a date of initial application of January 1, 2018. Since the Company had no revenue prior to 2018, the adoption of this standard had no effect on prior periods. The Company generates revenue through consulting arrangements. The revenue will be recognized at the point in time that the service is performed and delivered to the customer. This policy will be modified if necessary as the Company grows and develops multiple revenue sources.
Software Development Costs
– The Company expenses software development costs until the Company has a working business model for the software.
Income Taxes
– The Company accounts for income taxes pursuant to Accounting Standards Codification (ASC) 740, Income Taxes, which requires the use of the asset and liability method of accounting for deferred income taxes. We recognize deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years.
All allowances against deferred income tax assets are recorded in whole or in part, when it is more likely than not those deferred income tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The 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.
A valuation allowance is required to the extent it is more-likely-than-not that a deferred tax asset will not be realized. ASC 740 also requires reporting of taxes based on tax positions that meet a more-likely-than-not standard and are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits.
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Basic and Diluted Loss Per Share
– Basic loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period giving effect to potentially dilutive common stock equivalents. As of March 31, 2018, the Company had 1,017,086 common stock equivalents outstanding.
New Accounting Pronouncements
– The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.
NOTE 4 – ASSET PURCHASE AGREEMENT
On February 19, 2018, the Company entered into an Asset Purchase Agreement (“Purchase Agreement”) with Elevated Portfolio Holdings, LLC (“Elevated Portfolio”), whereby Elevated Education Inc., a wholly owned subsidiary of the Company (“Elevated”) agreed to purchase the assets of Elevated Portfolio for 2,000,000 shares of the Company’s common stock, par value $0.0001 per share. Elevated Portfolio offers medically focused education modules to health professionals about the use of cannabis for health and wellness. The Purchase Agreement was closed on March 5, 2018. As a result, the Company is able to use the acquired assets to continue its consulting business and provide key educational products as part of its service offering.
Elevated acquired intangible assets from Elevated Portfolio and assumed $38,500 of liabilities. The liabilities consisted of $19,000 payable to NewBridge, which was eliminated in consolidation. The remaining assumed liabilities of $19,500 are payable Mustang Capital, LLC, a related party. Elevated Portfolio and Mustang Capital, LLC are both related parties since Mark Mersman, the chief executive officer of NewBridge is the principal executive in these entities as well.
The purchase of the intangible assets of Elevated Portfolio was valued at predecessor cost. As a result, the Company has recorded payables to related parties of $19,500, and the shares at par value.
NOTE 5 – STOCK OPTIONS
Incentive Plan
An Incentive Plan was approved by the NewBridge Board on October 18, 2017 and by a majority of the stockholders on October 19, 2017. The Incentive Plan permits NewBridge to grant “Awards,” that may consist of stock options, the grant or sale of restricted stock (“Restricted Stock”), stock appreciation rights (“SARs”), or hypothetical units issued with reference to NewBridge common stock (“Restricted Stock Units”), for up to 4,000,000 shares of common stock. Awards may be granted under the Incentive Plan to employees, directors, and consultants of NewBridge and its subsidiaries, including also subsidiaries that NewBridge may form or acquire in the future. The Incentive Plan will be administered by the NewBridge Board or by a committee authorized by the NewBridge Board (the “Committee”), which will make all determinations with regard to the grant and terms of Awards, subject to the terms of the Incentive Plan.
On October 12, 2017, the Company granted options to Mark Merman, CEO and Scott Cox, President and COO, to purchase 1,508,543 shares of common stock each (3,017,086 total). The options have an exercise price of $0.01 per share and expire December 31, 2018. The options are exercisable upon achievement of various milestones. As of December 31, 2017, none of the options were exercisable. The combined stock options were valued at $1,518,884 using Black-Scholes. The Company recognized share-based compensation on these stock options of $272,572 during 2017 and had $1,246,312 of unrecognized share-based compensation. For the three months ended March 31, 2018 and 2017, the Company recognized $311,578 and $40,670, respectively, of share-based compensation and had $934,734 of unrecognized share-based compensation as of March 31, 2018 that will be recognized ratable over the remaining nine months of 2018. On February 6, 2018, options of 2,817,085 vested upon Board approval. The remaining 200,000
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options have not yet vested but are still expected to vest. During the quarter ended March 31, 2018, 2,000,000 of the vested shares were exercised leaving 817,085 options that have vested but have not been exercised.
NOTE 6 – SHAREHOLDERS’ EQUITY
We have authorized capital stock consisting of 100,000,000 shares of $0.0001 par value common stock and 400,000 shares of $0.0001 par value preferred stock. At March 31, 2018 and December 31, 2017, we had 8,034,354 and 3,695,604 shares of common stock issued and outstanding, respectively, and no shares of preferred stock issued and outstanding.
During March 2017, the Company recorded a credit to additional paid-in capital of $87,020 for the beneficial conversion feature described in Note 5.
During the quarter ended March 31, 2018, the Company issued 338,750 shares of common stock to investors at $0.40 per share for cash totaling $135,500.
On March 2, 2018, the Company issued 2,000,000 shares of common stock for $0.01 per share for a total of $20,000. These shares were issued to Mark Mersman and Scott Cox upon exercise of stock options.
On March 5, 2018, the Company issued 2,000,000 shares of common stock as part of the asset purchase agreement described in Note 4. Due to Elevated Portfolio Holdings being a related party, the net assets acquired were recorded at predecessor cost.
NOTE 7 – RELATED PARTY TRANSACTIONS
As of March 31, 2018 and December 31, 2017, the Company had related party payables of $19,500 and $1,988, respectively. The 2018 payable was to Mustang Capital, a company owned by Mark Mersman, and was assumed as part of the asset purchase agreement described in Note 4. The 2017 payable was to a former CEO for expenses related to the operation of the business. These payables are due on demand with no interest.
As described in Note 4, the asset purchase agreement between the Company, Elevated Portfolio and Elevated Education is considered a related party transaction since Mark Mersman was the chief executive officer in all companies involved.
Elevated Portfolio and Mustang Capital, LLC are both related parties since Mark Mersman, the chief executive officer of NewBridge is the principal executive in these entities as well.
NOTE 8 – SUBSEQUENT EVENTS
Effective May 4, 2018, the Company entered into a Securities Purchase Agreement (“Auctus Purchase Agreement”) dated April 30, 2018 with Auctus Fund, LLC (“Auctus”). In conjunction with the Auctus Purchase Agreement, the Company signed a Convertible Promissory Note for $250,000 (“Auctus Note”). The Auctus Note is convertible into shares of the Company’s common stock and has an initial maturity date of nine months from the issue date of each funding tranche. The first $125,000 was received May 3, 2018. In connection with the Purchase Agreement and the Note, the Company also entered into a Registration Rights Agreement pursuant to which the Company agreed to register the conversion shares for resell by Auctus. The conversion price is equal to (1) the lessor of the lowest trading price during the previous 25 day trading period ending on April 27, 2018, the last full trading day prior to the date of the note, which was $0.41 or (2) a variable conversion price equal to 50% of the lowest trading price during the 25 trading days leading up to the date of the conversion.
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