NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018 AND 2017
NOTE 1 –
ORGANIZATION
AND NATURE OF BUSINESS
Overview
Driven Deliveries Inc. (formerly Results-Based Outsourcing Inc)
(the “Company” or “Driven”), formed on July
22, 2013, is engaged in providing
delivery services of
legal cannabis products to consumers in
California.
Recent developments
On
August 29, 2018, Driven Deliveries, Inc., a Nevada company
(“Driven Nevada”), was acquired by Results-Based
Outsourcing as part of a reverse merger transaction.
As consideration for the merger,
Results-Based Outsourcing
issued the
equity holders of Driven Nevada an aggregate of 30,000,000
post-split shares of their common.
Following the merger,
the Company adopted the business plan of Driven Nevada as a
delivery company focused on deliveries for consumers of legal
cannabis products, in California. The merger was accounted for as a
recapitalization of the Company, therefore the financial statements
as presented in this report include the historical results of
Driven Nevada.
Risks and Uncertainties
The
Company has a limited operating history and has generated limited
revenues from its intended operations. The Company's business and
operations are sensitive to general business and economic
conditions in the U.S. along with local, state, and federal
governmental policy decisions. A host of factors beyond the
Company's control could cause fluctuations in these conditions.
Adverse conditions may include: changes in cannabis regulatory
environment and competition from larger more well-funded companies.
These adverse conditions could affect the Company's financial
condition and the results of its operations.
NOTE 2 – GOING CONCERN ANALYSIS
Going Concern Analysis
For the
year ended December 31, 2018, the Company had a net loss of
$2,628,817 and a working capital deficit of $380,093. The Company
will require additional capital in order to operate in the normal
course of business. Management has concluded that due to these
conditions, there is substantial doubt about the company’s
ability to continue as a going concern. The accompanying
consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.
Management’s
plans include raising capital though the sale of debt and/or
equity. While we believe in the viability of our strategy to
generate sufficient revenue, control costs and the ability to raise
additional funds, there can be no assurances to that effect. The
Company’s ability to continue as a going concern is dependent
upon its ability to raise capital to implement the business plan,
generate sufficient revenues and to control operating expenses. The
Company’s financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the matters discussed
herein.
NOTE 3 -
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America (“US GAAP”) and the rules and
regulations of the Securities and Exchange Commission
(“SEC”).
Use of estimates
The
preparation of financial statements in conformity with U.S. 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 date of the financial
statements and the reported amounts of revenue and expense during
the reporting period. Actual results could differ from those
estimates.
Concentrations of Credit Risk
The
Company maintains its cash accounts at financial institutions which
are insured by the Federal Deposit Insurance Corporation. At times,
the Company may have deposits in excess of federally insured
limits.
Cash and Cash Equivalents
The
Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash
equivalents. As of December 31, 2018, the Company did not have any
cash equivalents.
Equipment
Equipment is stated at cost less accumulated depreciation. Cost
includes expenditures for vehicles and computer equipment.
Maintenance and repairs are charged to expense as incurred. When
assets are sold, retired, or otherwise disposed of, the cost and
accumulated depreciation are removed from the accounts and any
resulting gain or loss is reflected in operations. The cost of
equipment is depreciated using the straight-line method over the
estimated useful lives of the related assets which is three years
for computer equipment and five years for vehicles. Depreciation
expense was $4,713 and $13 for the year ended
December 31,
2018 and 2017, respectively
.
Stock-Based Compensation
The Company accounts for stock-based compensation costs under the
provisions of ASC 718, “Compensation—Stock
Compensation”, which requires the measurement and recognition
of compensation expense related to the fair value of stock-based
compensation awards that are ultimately expected to vest. Stock
based compensation expense recognized includes the compensation
cost for all stock-based payments granted to employees, officers,
and directors based on the grant date fair value estimated in
accordance with the provisions of ASC 718. ASC 718 is also applied
to awards modified, repurchased, or canceled during the periods
reported.
Stock-Based Compensation for Non-Employees
The Company accounts for warrants and options issued to
non-employees under ASU 2018-07, Equity – Equity Based
Payments to Non-Employees, using the Black-Scholes option-pricing
model.
Debt Issued with Warrants
Debt
issued with warrants is accounted for under the guidelines
established by ASC 470-20 – Accounting for Debt with
Conversion or Other Options. We record the relative fair value of
warrants related to the issuance of convertible debt as a debt
discount or premium. The discount or premium is subsequently
amortized to interest expense over the expected term of the
convertible debt. The value of the warrants issued with the debt
was de minimis.
Revenue Recognition
As of January 1, 2018, the company adopted ASC 606. The adoption of
ASC 606, Revenue From Contracts With Customers, represents a change
in accounting principle that will more closely align revenue
recognition with the delivery of the Company’s services and
will provide financial statement readers with enhanced disclosures.
In accordance with ASC 606, revenue is recognized when a customer
obtains control of promised services. The amount of revenue
recognized reflects the consideration to which the Company expects
to be entitled to receive in exchange for these services. The
Company used the Modified-Retrospective Method when adopting this
standard. There was no accounting effect due to the initial
adoption. To achieve this core principle, the Company applies the
following five steps:
1)
|
Identify the contract with a customer
|
A contract with a customer exists when (i) the Company enters into
an enforceable contract with a customer that defines each
party’s rights regarding the services to be transferred and
identifies the payment terms related to these services, (ii) the
contract has commercial substance and, (iii) the Company determines
that collection of substantially all consideration for services
that are transferred is probable based on the customer’s
intent and ability to pay the promised consideration. The Company
applies judgment in determining the customer’s ability and
intention to pay.
The Company has three contracts with different customers with the
same terms. All of these qualify as contracts since they have been
approved by both parties, have identifiable rights and payment
terms regarding the services to be transferred, have commercial
substance, and it is probable that the entity will collect the
consideration in exchange for the services.
2)
|
Identify the performance obligations in the contract
|
Performance obligations promised in a contract are identified based
on the services that will be transferred to the customer that are
both capable of being distinct, whereby the customer can benefit
from the service either on its own or together with other resources
that are readily available from third parties or from the Company,
and are distinct in the context of the contract, whereby the
transfer of the services is separately identifiable from other
promises in the contract. To the extent a contract includes
multiple promised services, the Company must apply judgment to
determine whether promised services are capable of being distinct
and distinct in the context of the contract. If these criteria are
not met the promised services are accounted for as a combined
performance obligation.
The Company’s performance obligations are to (1) deliver
cannabis in compliance with California law, and (2) provide a
platform to sell the retailer’s products. These items
represent performance obligations since they are distinct services
and are distinct in the context of the contract.
3)
|
Determine the transaction price
|
The transaction price is determined based on the consideration to
which the Company will be entitled in exchange for transferring
services to the customer. To the extent the transaction price
includes variable consideration, the Company estimates the amount
of variable consideration that should be included in the
transaction price utilizing either the expected value method or the
most likely amount method depending on the nature of the variable
consideration. Variable consideration is included in the
transaction price if, in the Company’s judgment, it is
probable that a significant future reversal of cumulative revenue
under the contract will not occur. None of the Company’s
contracts as of December 31, 2018 contained a significant financing
component. Determining the transaction price requires significant
judgment, which is discussed by revenue category in further detail
below.
The company will perform delivery services in exchange for a flat
fee per delivery and an additional charge per mile.
As
mandated by The California Bureau of Cannabis Control, delivery
drivers are required to be on the payroll of a licensed retailer.
In order to fulfill the performance obligation, delivery drivers
are included on the payroll of the customer, and the Company
reimburses the customer for the drivers’ wages at a premium.
The cost of paying the drivers are considered a cost to fulfill a
contract for which the Company receives no benefit, so it is
consideration payable to the customer, which is considered in
determining the transaction price. In addition, the company
currently nets the amounts owed by the customers for deliveries
with the amounts owed to the customers for drivers’ wages. As
such, the company reduces the delivery fee by the drivers’
wages to determine the transaction price. These elements of the
transaction price are based on variable consideration determined to
be constrained and are recognized as of the later of when the
service is rendered or when the Company pays or promises to pay the
consideration, which will generally be on a monthly basis. If the
cost of the drivers’ wages exceeds the total fees for
delivery, the company would present a net negative revenue. For the
year ended December 31, 2018, the company will show net negative
revenue related to delivery of cannabis.
The
transaction price of the commissions is a variable consideration as
the price is determined to be 10% of a delivered sale from an order
generated on the Company’s online platform. The variable
consideration is also constrained as the amount of the
consideration is dependent on the cost of the products purchased;
and is further constrained as the company has little history to
predict the amount to be recognized. Transaction price for the
commissions will be determined as the company satisfies the
performance obligation
.
4)
|
Allocate the transaction price to performance obligations in the
contract
|
If the contract contains a single performance obligation, the
entire transaction price is allocated to the single performance
obligation. However, if a series of distinct services that are
substantially the same qualifies as a single performance obligation
in a contract with variable consideration, the Company must
determine if the variable consideration is attributable to the
entire contract or to a specific part of the contract. For example,
a bonus or penalty may be associated with one or more, but not all,
distinct services promised in a series of distinct services that
forms part of a single performance obligation. Contracts that
contain multiple performance obligations require an allocation of
the transaction price to each performance obligation based on a
relative standalone selling price basis unless the transaction
price is variable and meets the criteria to be allocated entirely
to a performance obligation or to a distinct service that forms
part of a single performance obligation. The Company determines
standalone selling price based on the price at which the
performance obligation is sold separately. If the standalone
selling price is not observable through past transactions, the
Company estimates the standalone selling price taking into account
available information such as market conditions and internally
approved pricing guidelines related to the performance
obligations.
The Company will allocate the
transaction price of the
delivery fees and to the deliveries
that they perform separately for the customer.
The
transaction price of the commissions will be allocated per each
sale that the Company generates for a retailer that is delivered.
There are no discounts to allocate and
there have been no changes in the transaction price to
allocate.
5)
|
Recognize revenue when or as the Company satisfies a performance
obligation
|
The Company satisfies performance obligations either over time or
at a point in time. Revenue is recognized at the time the related
performance obligation is satisfied by transferring a promised
service to a customer.
Both performance obligations are satisfied at a point in time, and
as such revenue will be recognized when the delivery is completed.
The revenue will not be recognized for orders not fulfilled, but
the delivery fee is earned even if the delivery is rejected or the
person who placed the order is not present or available at the time
of delivery. The consideration payable to the customer for
drivers’ wages is recognized over time based on the inputs to
determine the drivers’ wage obligations, but the net
transaction price is known and therefore recognized by the end of
each reporting period.
Disaggregation of Revenue
The
following table depicts the disaggregation of revenue according to
revenue type.
Revenue Type
|
Revenue for the year ended
December 31, 2018
|
Revenue for the year ended
December 31, 2017
|
Delivery
Income
|
$
43,468
|
-
|
Dispensary
Cost Reimbursements
|
(114,574
)
|
-
|
Delivery
Income, net
|
(71,106
)
|
-
|
Commission
Income
|
6,072
|
-
|
Total
|
$
(65,034
)
|
-
|
Due to this reduction of revenue from the reimbursement of wages
for the delivery couriers the Company is presenting a net negative
revenue for the year ended December 31, 2018.
Basic and Diluted Net Loss per Common Share
Basic
loss per common share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding for
each period. Diluted loss per share is computed by dividing the net
loss by the weighted average number of shares of common stock
outstanding plus the dilutive effect of shares issuable through the
common stock equivalents. The weighted-average number of common
shares outstanding excludes common stock equivalents because their
inclusion would be anti-dilutive. As of December 31, 2018, common
stock equivalents are comprised of 9,131,250 warrants and 4,854,692
options.
Recent Accounting Pronouncements
In
August 2016, the FASB issued ASU 2016-15,
“Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash
Payments”
(“ASU 2016-15”).
ASU 2016-15 will make eight targeted changes to how cash
receipts and cash payments are presented and classified in the
statement of cash flows. ASU 2016-15 is effective for
fiscal years beginning after December 15, 2017. The new standard
will require adoption on a retrospective basis unless it is
impracticable to apply, in which case it would be required to apply
the amendments prospectively as of the earliest date practicable.
The adoption of this standard did not
have a material impact on the Company’s
financial statements and related
disclosures.
In
November 2016, the FASB issued ASU 2016-18, “Statement of
Cash Flows (Topic 230)”, requiring that the statement of cash
flows explain the change in the total cash, cash equivalents, and
amounts generally described as restricted cash or restricted cash
equivalents. This guidance is effective for fiscal years, and
interim reporting periods therein, beginning after December 15,
2017 with early adoption permitted. The provisions of this guidance
are to be applied using a retrospective approach which requires
application of the guidance for all periods presented.
The adoption of this standard did not have a
material impact on the Company’s financial statements and
related disclosures.
In
February 2016, the FASB issued ASU 2016-02, "Leases," which will
require, among other items, lessees to recognize most leases as
assets and liabilities on the balance sheet. Qualitative and
quantitative disclosures will be enhanced to better understand the
amount, timing and uncertainty of cash flows arising from leases.
This guidance is effective for the Company's 2019 interim and
annual financial statements. The Company plans to adopt ASU 2016-02
on January 1, 2019, for leases existing at, or entered into after,
the beginning of the earliest comparative periods presented in the
financial statements. The Company believes the primary effect of
adopting the new standard will be to record right-of-use assets and
obligations for current operating leases with immaterial increases
in reported assets and liabilities. The Company is still finalizing
its calculation of the cumulative effect of accounting change to be
recognized upon adoption. The Company is currently working to
complete the implementation and updating accounting policies in
connection with the adoption of the new standard.
The
FASB issues ASUs to amend the authoritative literature in ASC.
There have been several ASUs to date, that amend the original text
of ASC. Management believes that those issued to date either (i)
provide supplemental guidance, (ii) are technical corrections,
(iii) are not applicable to us or (iv) are not expected to have a
significant impact our financial statements.
NOTE 4 – NOTES PAYABLE
On
November 7, 2017 the Company entered into a promissory note for
$75,000 that accrues interest of 6% annually. The promissory note
is due on the earlier of January 31, 2018 or in the event of
default, as defined in the agreement. As of the date of this
report, $25,000 of the promissory note has been repaid and the
remaining amount is in default.
The terms of the promissory note
provide that the principal amount of the note is convertible into
the same security that is sold and issued pursuant to the next
Qualified Financing Round completed by the Company, except that the
conversion price shall be at a ten percent (10%) discount to the
equity price per share raised in such Qualified Financing Round.
Qualified Financing Round is defined as
an
equity financing of the Company that
is consummated during the term which results in gross proceeds of
not less than $925,000.
On
February 1, 2018, the Company entered into a convertible bridge
loan for $50,000 convertible into shares the Company’s common
stock. The bridge loan is due March 31, 2018 and has an annual
interest rate of 6%. The bridge loan is convertible into shares of
common stock of the Company at a 10% discount to the equity price
per share that is sold and issued in the next Qualified Financing
Round completed by the Company. Qualified Financing Round is
defined as
an
equity financing of the Company that
is consummated during the term which results in gross proceeds of
not less than $925,000.
The
Company agreed to issue to the lender a three year warrant to
purchase 12,500 shares of common stock of the Company at an
exercise price of $0.50 per share. This note is currently in
default.
On
October 25, 2018, the Company issued a convertible promissory note
in the principal amount of $50,000 which is convertible into shares
the Company’s common stock at a price of $0.20 per share.
This note accrues interest of 8% annually. The note is due October
25, 2019.
NOTE 5 - STOCKHOLDERS’ DEFICIT
Common Stock
The Company is authorized to issue 200,000,000 shares of common
stock, par value $0.0001 per share.
During the year ended December 31, 2018, the company issued
40,875,014 shares of stock, 28,340,000 shares of common stock was
issued to founders, 500,000 shares of common stock was issued for
services, 5,725,014 shares of common stock was issued for cash of
$625,000 (total subscriptions of $725,000 less a stock subscription
receivable for $100,000), and 6,310,000 shares of common stock
issued as part of the recapitalization due to merger and forward
stock split.
Preferred Stock
The Company is authorized to issue 15,000,000 shares of preferred
stock, par value $0.0001 per share. The preferred stock may be
issued from time to time in one or more series as the
Company’s Board may authorize. None of the preferred stock
have been designated and none are issued and
outstanding.
Stock Split
On
August 29, 2018, the Company filed amended and restated
Certificate of Incorporation to effect a forward stock split in the
ration of 12.35 for 1.
All share and
per share amounts for the common stock herein have been
retroactively restated to give effect to the forward
split.
Warrants
A summary of warrant issuances are as follows:
|
|
|
Weighted Average
Remaining
|
|
|
|
|
Warrants
|
|
|
|
|
|
|
|
Outstanding January
1, 2018
|
18,750
|
$
0.50
|
2.85
|
Granted
|
9,112,500
|
0.19
|
3.83
|
Outstanding
December 31, 2018
|
9,131,250
|
$
0.19
|
3.83
|
Options
A summary of options issuances are as follows:
|
|
|
Weighted Average
Remaining
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
Outstanding January
1, 2018
|
-
|
$
-
|
-
|
$
-
|
Granted
|
4,854,692
|
0.04
|
3.00
|
0.19
|
Outstanding
December 31, 2018
|
4,854,692
|
$
0.04
|
3.00
|
$
0.19
|
Nonvested
Shares
|
|
Nonvested at
December 31, 2017
|
-
|
Granted
|
4,854,692
|
Vested
|
(1,213,673
)
|
Forfeited
|
-
|
Nonvested at
December 31, 2018
|
3,641,019
|
NOTE 6 – COMMITMENTS AND CONTINGENCIES
On
February 2, 2018, the Company entered into a consulting agreement
for business and financial advisory services for a twelve-month
term. Pursuant to the terms of the consulting agreement, the
consultant will be paid $15,000.
On May
3, 2018, the Company entered into a consulting agreement for
business and financial advisory services for a twelve-month term.
As part of the agreement the consultant purchased 1,900,000 shares
of the Company’s common stock for aggregate consideration of
$100,000.
On May
15, 2018, the Company entered into a three (3) year lease to rent
office space for its principal executive office, with an effective
date of June 1, 2018. The lease provides for monthly rent of $2,800
per month for the first year of the lease, $3,780 per month for the
second year and $3,920 per month for the third year. The Company is
also required to pay a monthly common area maintenance fee of
$420.
The future minimum lease payments under the lease is are
follows:
2019
|
$
126,215
|
2020
|
136,160
|
2021
|
71,841
|
|
$
334,216
|
On May
17, 2018, the Company entered into a consulting agreement for
business and financial advisory services. Pursuant to the
agreement, the Company agreed to issue the consultant 430,000
shares of the Company’s common stock and pay a cash
consideration of $20,000. On October 31, 2018, the consulting
agreement was cancelled.
On June
4, 2018, the Company entered into a consulting agreement for
business and financial advisory services with a twelve-month term.
Pursuant to terms of the agreement, the Company agreed to issue
500,000 shares of its common stock to the consultant. This stock
will vest over 24 months. As of December 31, 2018, 124,998 shares
vested. Additionally, as part of the agreement the consultant
agreed to purchase 950,000 shares of the Company’s common
stock for $50,000.
On
September 14, 2018, the Company entered into a consulting agreement
with IRTH Communications for investor and public relations services
for a term of twelve-months. Pursuant to the terms of the
agreement, the Company agreed to pay the consultant $7,500 per
month and reimburse any and all reasonable out-of-pocket costs and
expenses. Additionally, the Company agreed to pay a one-time
refundable deposit of $10,000. This deposit has not been paid as of
December 31, 2018. The Company also issued 500,000 shares of its
common stock to the consultant
upon entering into the contract,
which was expensed immediately. This stock was valued at $100,000.
As of December 31, 2018, the Company has accrued $7,500 in
consulting expenses.
On
December 15, 2018, the Company entered into a consulting agreement
for business consulting services. Pursuant to the terms of the
consulting agreement, the Company issued a warrant to purchase
1,100,000 warrants shares of the Company’s common stock.
These warrants have a term of 7 years and an exercise price of
$0.10. These warrants were valued at $214,946.
NOTE 7 – RELATED PARTY TRANSACTIONS
On
February 12, 2018, the Company entered into a delivery contractor
agreement with a retailer. This retailer is a related party due to
the Company’s CEO having an ownership interest in the
retailer. As part of this agreement the Company will provide
delivery services for the retailer. The retailer will pay the
Company an $8 delivery fee and a 10% commission based on the gross
revenue generated from the sale for each delivery. The Company will
also reimburse the retailer for delivery couriers’ wages.
During the year ended December 31, 2018 the Company received
$18,432 in delivery income and $8,769 in commissions. The Company
also paid $43,568 in reimbursements during the year ended December
31, 2018. At December 31, 2018, the Company owes the retailer
$25,700.
During
the year ended December 31, 2018, the Company entered into a loan
agreement with the Company’s CFO, Brian Hayek, pursuant to
which Mr. Hayek extended an interest free loan to the Company in
the amount of $30,705. As of December 31, 2018, the amount due on
this loan was $11,705.
NOTE 8 – INCOME TAX PROVISION
At
December 31, 2018, the Company has available for U.S. federal
income tax purposes a net operating loss (“NOL”)
carry-forwards of approximately $961,000 that may be used to offset
future taxable income through the fiscal year ending December 31,
2038. If not used, these NOLs may be subject to limitation under
Internal Revenue Code Section 382 should there be a greater than
50% ownership change as determined under the regulations. No tax
benefit has been reported with respect to these net operating loss
carry-forwards in the accompanying financial statements since the
Company believes that the realization of its net deferred tax asset
of approximately $201,770 was not considered more likely than not
and accordingly, the potential tax benefits of the net loss
carry-forwards are fully offset by a valuation allowance of
$201,770.
Deferred
tax assets consist primarily of the tax effect of NOL
carry-forwards. The Company has provided a full valuation allowance
on the deferred tax assets because of the uncertainty regarding its
realizability. In assessing the realization of deferred tax assets,
management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon
future generation for taxable income. After consideration of all
the information available, Management believes that significant
uncertainty exists with respect to future realization of the
deferred tax assets and has therefore established a full valuation
allowance. The valuation allowance increased by $190,771 for the
period from December 31, 2017 through December 31,
2018.
|
Tax deductions
for
the year
ended
December 31,
2018
|
Book Net Operating
Loss
|
$
2,634,455
|
Depreciation
|
(120
)
|
Meals and
entertainment
|
(11,000
)
|
Stock based
compensation
|
(1,714,901
)
|
Tax Net Operating
Loss
|
$
908,434
|
Components
of deferred tax assets are as follows:
|
|
|
Net deferred tax
assets – Non-current:
|
|
|
|
|
|
Expected income tax
benefit from NOL carry-forwards
|
$
201,770
|
$
10,999
|
Less valuation
allowance
|
(201,770
)
|
(10,999
)
|
Deferred tax
assets, net of valuation allowance
|
$
-
|
$
-
|
A
reconciliation of the federal statutory income tax rate and the
effective income tax rate as a percentage of income before income
taxes is as follows:
|
For the year
ended
December 31,
2018
|
For the Period
from
November 3, 2017
through
December 31,
2017
|
|
|
|
Federal statutory
income tax rate
|
21
%
|
21
%
|
|
|
|
Change in valuation
allowance on net operating loss carry-forwards
|
(21
)%
|
(21
)%
|
|
|
|
Effective income
tax rate
|
-
%
|
-
%
|
NOTE 9 - SUBSEQUENT EVENTS
On April 1, 2019 the Company entered into a consulting agreement
for business advisory services. As part of this agreement the
Company will pay the consultant $20,000 per month. Additionally,
the Company will issue 500,000 warrants to purchase its common
stock. These warrants will have an exercise price of $0.20 and a
term of 7 years.
On February 22, 2019, the Company entered into a consulting
agreement for public and media relations services. As part of this
agreement the Company will $4,000 per month to the
consultant.
On
April 3, 2019, the Company appointed Christian Schenk as a Director
to the Company. In connection with his appointment the Company
agreed to issue to Mr. Schenk, options to purchase 112,500 shares
of common stock which will vest immediately upon grant. The company
will also issue options to purchase 28,125 shares of common stock
per quarter for three years so long as Mr. Schenk remains on the
board.
During
the first quarter of 2019, the Company issued warrants to purchase
1,533,000 shares of common stock of the Company at an exercise
price of $0.10 per shares. The warrants may be exercised on a
cashless basis and have a term of seven years. The warrants were
issued for consulting services.
On
January 16, 2019, the Company appointed Jerrin James as the
Company’s COO. Pursuant to the terms of the agreement with
Mr. James, the Company agreed to issue 2,900,000 shares either in
the form of stock options or warrants, common stock 25% of which
will vest immediately upon grant with the remainder vesting
quarterly over three years.
On
March 5, 2019, the Company appointed Adam Berk as a Director to the
Company. In connection with his appointment the Company agreed to
issue to Mr. Berk, options to purchase 112,500 shares of common
stock which will vest immediately upon grant.
On
March 7, 2019, the Company entered into a consulting agreement for
business advisory services. Pursuant to the terms of the consulting
agreement, the Company agreed to pay cash compensation of
$10,416.66 per month. The Company also agreed to pay a one-time
payment of $5,000 within 5 days of the execution of the agreement.
The Company also agreed to issue the consultant 125,000 options to
purchase shares of the Company’s common stock, which options
will vest quarterly over a 3 year period.
On February 1, 2019, the Company entered into a twelve-month lease
for office space in Las Vegas, Nevada. The lease requires a monthly
payment of $1,764 and terminates on February 14,
2020.
The
Company assumed a three (3) year lease, with an effective date of
February 5, 2019, from a related party
. The Company paid
$20,839 upon signing the assignment. The lease provides for monthly
rent of $5,345 per month through June 30, 2019, $5,880 per month
through June 30, 2020 and $6,468 per month through June 30, 2021.
The Company is also required to pay a monthly common area
maintenance fee of $695.