The accompanying notes are an integral part of
these unaudited financial statements.
The accompanying notes are an integral part of
these unaudited financial statements.
The accompanying notes are an integral part
of these unaudited financial statements.
The accompanying notes are an integral part
of these unaudited financial statements.
Notes to the Financial Statements
For the Three Months Ended March 31, 2020
and December 31, 2019
(Unaudited)
Note 1 – Organization and basis of accounting
Basis of Presentation and Organization
The Company incorporated in the State of Nevada on February
26, 2013. Effective April 4, 2016, the Company changed its name to Team 360 Sports Inc. The Company will provide amateur sports
clubs, leagues and teams with easy to use robust digital administration management systems.
The Company’s unaudited financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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 revenues and expenses
during the reporting period. Actual results may differ from those estimates. The accompanying unaudited financial statements reflect
all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement
of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the quarter
ended March 31, 2020 and the full year ending December 31, 2020. These unaudited financial statements should be read in conjunction
with the financial statements and related notes included in the Company’s Annual Report filed on Form 10-K for the year
ended December 31, 2019 filed on April 15, 2020.
Note 2 – Summary of significant accounting policies
Cash and Cash Equivalents
For purposes of reporting within the statements
of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all
highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Software Development Costs
Costs incurred to develop computer software
products to be sold or otherwise marketed are charged to expense until technological feasibility of the product has been established.
Once technological feasibility has been established, computer software development costs (consisting primarily of internal labor
costs) are capitalized and reported at the lower of amortized cost or estimated realizable value. Purchased software development
cost is capitalized and recorded at its estimated fair market value. When a product is ready for general release, its capitalized
costs are amortized on a product-by-product basis. The annual amortization is the greater of the amounts of: the ratio
that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product and,
the straight-line method over the remaining estimated economic life (a period of three to ten years) of the product including
the period being reported on.
Revenue Recognition
The Company records revenue in
accordance with FASB Accounting Standards Codification (“ASC”) as topic 606 (“ASC 606”). The revenue recognition
standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract
with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also
requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in
the determination of revenue.
On November 1, 2016 the Company entered
into a Licensing Agreement. The agreement grants the Licensee rights to grant sublicenses to third parties. The license agreement
calls for a one time nonrefundable fee of $10,000 and a $3,000 set up and training fee. The license agreement also calls for a
five percent (5%) royalty on further sales by licensees, but no royalty fees have been received to date. All fees and royalty
payments are to be recognized over the life of the agreement, which terminates on December 1, 2021.
The setup and training services are
essential in allowing the licensee the ability to license the software to third parties. As a result, the license and set up and
training fees are not distinct from one another, and constitute a single performance obligation under the contract. Therefore,
the one time non refundable fee and the set up and training fees are being recognized over time.
The Company
recognized $639 and $639 of revenue during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and
December 31, 2019, there was deferred revenue of $4,263 and $4,902, respectively.
Earnings (loss) per share
Basic earnings (loss) per share calculations are determined by dividing
net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations
are determined by dividing net income (loss) by the weighted average number of shares. The Company has $350,000 liabilities to
be settled in stock, representing 350,000 shares of common stock as well as $462,500 of accrued stock compensation, representing
462,500 shares of common stock not yet issued which are potentially dilutive for the quarters ended March 31, 2020 and March 31,
2019 because their effect is anti-dilutive.
Subsequent Event
The Company evaluated subsequent events through the date
when financial statements are issued for disclosure consideration.
Recently Adopted Accounting Pronouncements
In February 2016, the FASB issued an accounting
standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The new standard also
aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB's
new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification
as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative
disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising
from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim periods
within fiscal years beginning after December 15, 2020, for nonpublic entities using a modified retrospective approach. We
adopted ASU 2016-02 as of January 1, 2019 using the modified retrospective method which leaves the comparative period reporting
unchanged. The adoption of this standard did not have an impact on our financial statements.
Note 3 – Going Concern
The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. The Company has had minimal revenue and has accumulated a deficit of $2,330,956 as of March 31, 2020.
The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional
capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development
of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations
are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise
substantial doubt about the Company’s ability to continue as a going concern within one year from the date these financial
statements are issued. The financial statements of the Company do not include any adjustments that may result from the outcome
of these uncertainties.
The Company has discussed ways in order to
mitigate conditions or events that may raise substantial doubt about its ability to continue as a going concern, there are no assurances
that any of these measures will successfully mitigate or be effective at all. (1) The Company shall pursue financing plans to raise
funds to judiciously spend towards operational expenses, (2) The Company shall continue to employ low cost measures to operate
its business and analyze any unnecessary cost or expense, (3) The Company will seek to avoid unnecessary expenditures, travel,
and lodging costs that are not mission critical to its business, (4) The Company shall seek to continuously maximize its assets
and business licensing strategies to increase revenue as well as to gain new customers.
The COVID-19 pandemic could have an impact
on our ability to obtain financing to fund the operations. The Company is
unable to predict the ultimate impact at this time.
Note 4 – Intangible assets
On October 31,
2019, the Company acquired the rights to four domain names from a third party. The cost to acquire the domain names was 350,000
shares of common stock valued at $1.00 per share for a total value of $350,000. The common stock has not been issued to date and
is recorded on the balance sheet as liabilities to be settled in stock in the about of $350,000. The domain names were recorded
as an intangible asset with an indefinite
useful life. The Company’s management evaluated the domain names at December 31, 2019 and determined, based on economic factors
as well as other internal factors, that the domain names be considered fully impaired and we recorded an impairment loss of $350,000
in 2019.
Note 5 – Loans Payable
During the year ended December
31, 2019, the Company received a total of $53,335. The total outstanding balance on the note as of December 31, 2019 after the
convertible note refinance of $66,240, discussed in Note 6, was $38,757 which included $37,420 of principal and $1,337 in accrued
interest. The Company recorded $1,337 of interest expense on this note for year ended December 31, 2019.
During the three months ended March
31, 2020, the Company received a total of $13,774. The total outstanding balance on the note as of March 31, 2020 was $54,945 which
included $52,531 of principal and $2,414 in accrued interest. The Company recorded $2,414 of interest expense for three months
ended March 31, 2020.
Note 6 – Convertible Note Payable
On July 9, 2019, the Company entered into
a convertible note agreement with the holder of the promissory note, whereby the holder agreed to refinance for an aggregate principal
amount of $66,240 and $25,000 for administrative and consulting fees for a total note amount of $91,240.
The note earns an interest rate equal to 10%
per annum and matures after 180 days on January 9, 2020. The Company recorded a debt discount of $25,000 as result of the original
issue discount. The note is convertible at fixed rate of $0.005 of common stock. Because of the fixed nature of the conversion
the Company determined that there was no beneficial conversion feature which would have qualified it for derivative accounting
under ASC 815-15, Derivatives and Hedging. The convertible notes maturity date was extended to January 1, 2021.
For the three months ended March 31,
2020, the Company recorded $695 amortization of the debt discount on the note leaving $0 unamortized discount on notes payable.
The Company also recorded accrued interest expense of $4,613.
Note 5 – Stockholders’
Equity
As of March 31, 2020 and December
31, 2019, a total of 5,131,612 shares of common stock were issued and outstanding, respectively.
Note 6 – Related party
transactions
On January 1, 2018, the Company amended
the January 1, 2015 Executive and Consulting Agreement with Sandor Miklos, President and member of the Board of Directors for services
rendered. The amended agreement calls for annual compensation of 450,000 common shares of the Company fully earned immediately
to be assigned and registered fully as at the end of the fiscal year.
On June 1, 2019, Sandor Miklos forgave
accrued stock compensation owed to him valued at $562,500, which represents the compensation for the full year 2018 ($450,000)
and the three months ended March 31, 2019 ($112,500). For the remaining nine months ended December 31, 2019, 337,500 shares valued
at $1.00 per share for a total of $337,500 was accrued as compensation for Sandor Miklos.
On January 1, 2020, the Company amended
the January 1, 2015 Executive and Consulting Agreement with Sandor Miklos, President and member of the Board of Directors for services
rendered. The amended agreement calls for annual compensation of 500,000 common shares of the Company fully earned immediately
to be assigned and registered fully as at the end of the fiscal year. For the three months ended March 31, 2020, 125,000 shares
valued at $1.00 per share for a total of $125,000 was accrued as compensation for Sandor Miklos. As of March 31, 2020, there is
accrued stock compensation to Sandor Miklos of $462,500.
On November 20, 2018, the Company
received a loan payable in the amount of $2,781 from a more than 5% shareholder for the payment of Company expenses. This loan
is unsecured, non-interest bearing, and has no specific terms for repayment. As of March 31, 2020 and December 31, 2019, the Company
had a loan payable of $2,781 to the same party.
Note 7 – Subsequent Events
The
Company’s management evaluated subsequent events through the date the financial statements were issued and there were no
subsequent events to report.