UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NEW MEDIA INSIGHT
GROUP,INC.
(Exact name of registrant as
specified in its charter)
Nevada |
7310 |
27-2235001 |
(State or other jurisdiction of |
(Primary Standard Industrial |
(I.R.S. Employer |
incorporation or organization) |
Classification Code Number) |
Identification Number) |
28202 N. 58th Street, Cave
Creek, AZ 85311, (480) 275-2294
(Address, including zip code,
and telephone number, including area code, of registrants principal executive
offices)
With a copy to
Macdonald Tuskey
Suite 400, 570
Granville Street
Vancouver, BC, V6C 3P1
Tel: 604.689.1022
Fax:
604.681.4760
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Approximate Date of Commencement of Proposed Sale to the
Public: As soon as practicable after this Registration Statement is declared
effective.
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act Prospectus number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.
Large accelerated filer |
Accelerated filer |
Non-accelerated filer |
[X] Smaller reporting company
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Aggregate Offering
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Shares of Common Stock, par value $0.001 |
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3,688,066(5) |
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0.79 |
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3,230,770.57 |
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375.42(4) |
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(1) |
We are registering 3,688,066 shares of our common stock
that we will put to Premier Venture Partners, LLC (the Selling
Security Holder) pursuant to that certain equity purchase agreement
(the Equity Purchase Agreement). The Equity Purchase Agreement
was entered into on December 10, 2014. In the event of stock splits, stock
dividends or similar transactions involving the common stock, the number
of common shares registered shall, unless otherwise expressly provided,
automatically be deemed to cover the additional securities to be offered
or issued pursuant to Rule 416 promulgated under the Securities Act of
1933, as amended (the Securities Act). In the event that the
adjustment provisions of the Equity Purchase Agreement require the
registrant to issue more shares than are being registered in this
Registration Statement, for reasons other than those stated in Rule 416 of
the Securities Act, the registrant will file a new registration statement
to register those additional shares. |
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(2) |
Estimated for purposes of calculating the registration
fee in accordance with Rule 457 of the Securities Act of 1933 and the
price at which the Selling Security Holder will be offering their
shares. |
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(3) |
Fee calculated in accordance with Rule 457(o) of the
Securities Act of 1933. |
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Paid on filing. |
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(5) |
Including an aggregate of 71,429 shares of our common
stock issued upon the execution of the Equity Purchase Agreement
(Initial Commitment Shares). |
The information in this prospectus is not complete and may
be changed. We may not sell these securities until this Registration Statement
filed with the Securities and Exchange Commission (the SEC) is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
2
PROSPECTUS
NEW MEDIA INSIGHT GROUP, INC.
3,688,066 Shares of Common Stock
The date of this Prospectus is January 12, 2015.
This prospectus relates to the resale of up to 3,688,066 shares
of common stock of New Media Insight Group, Inc. (New Media,
we, us, our and our company), par value
$0.001 per share (the Common Stock), issuable to Premier Venture
Partners, LLC (Premier Venture) pursuant to that the Equity Purchase
Agreement. The Equity Purchase Agreement permits us to put up to $2,000,000 in
shares of our Common Stock to Premier over a period of up to thirty-six (36)
months commencing from the effectiveness of this Registration Statement, or
until the termination of the Equity Purchase Agreement in accordance with the
terms and provisions thereof (the Open Period). We will not receive any
proceeds from the resale of these shares of Common Stock. However, we will
receive proceeds from the sale of securities pursuant to our exercise of the put
right offered by Premier Venture. Premier Venture is deemed an underwriter for
our common stock.
The selling stockholder may offer all or part of the shares for
resale from time to time through public or private transactions, at either
prevailing market prices or at privately negotiated prices. We are paying all of
the registration expenses incurred in connection with the registration of the
shares except for underwriting discounts, selling commissions, brokerage fees
and related expenses.
Our common stock is quoted on the OTCQB under the ticker symbol
NMED. On December 19, 2014, the closing price of our common stock was $0.79 per
share.
Investing in our common stock involves a high degree of
risk. See Risk Factors beginning on page 9 to read about factors you should
consider before investing in shares of our common stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
3
Table of Contents
4
Item 3 Prospectus Summary
This summary highlights selected information contained
elsewhere in this Prospectus. This summary does not contain all the information
that you should consider before investing in the common stock of New Media
Insight Group, Inc. (referred to herein as our company, we, our, and
us). You should carefully read the entire Prospectus, including Risk
Factors, Managements Discussion and Analysis of Financial Condition and
Results of Operations and the accompanying financial statements and notes
before making an investment decision.
Business Overview
New Media Insight Group, Inc. was incorporated on March 29,
2010 in the State of Nevada, U.S.A. Our fiscal year end is April 30. Our
administrative offices are located at 28202 N. 58th Street, Cave Creek, AZ
85331. The telephone number is (480) 275-2294.
Recent Developments
Amendment of Articles
On March 11, 2014, our company filed a certificate of change
(the Amendment) to its Certificate of Incorporation with the Secretary
of State of the State of Nevada in order to:
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1. |
effectuate a one (1) for two (2) reverse split of our
companys shares of common stock, par value $0.001 per share (Reverse
Split); and |
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2. |
decrease the number of authorized shares of capital stock
of our company to 850,000,000 shares of common stock, par value $0.001 per
share. The certificate of change has an effective date of March 24, 2014.
Our issued and outstanding shares decreased from 59,237,500 to 29,768,750
shares of common stock, with a par value of $0.001. Our preferred shares
remained unchanged |
These amendments have been reviewed by the Financial Industry
Regulatory Authority (FINRA) and have been approved for filing with an
effective date of April 7, 2014.
The reverse split became effective with the Over-the-Counter
Bulletin Board at the opening of trading on April 7, 2014. Our trading symbol is
NMED. Our new CUSIP number is 64704U 306.
Throughout this Registration Statement, each instance that
refers to a number of shares of our common stock, refers to the number of shares
of common stock after giving effect to the Reverse Split, unless otherwise
indicated.
Our company is continuing to pursue and expand upon the same
business however is in the process of significantly enhancing its product and
service offering and is developing new and proprietary technology in the area of
mobile payments and online monetization. Our company is a development stage
company and operates as an internet marketing business providing clients with
the latest in new media and mobile / smart phone advertising solutions. We will
specialize in developing mobile marketing, loyalty, and communication solutions.
Our companys mission is to help local merchants connect, communicate and
transact with their customers in a more effective way.
Effective September 1, 2013, our company entered into an
exclusive agency agreement with PayWith Worldwide Inc. (PayWith),
pursuant to which our company will market a new product called mCards (mobile
cards) (the Platform) in the following states: Arizona, Colorado,
Nevada, Oregon, Utah and Washington (the Territories). Pursuant to the
agency agreement, our company will generate revenue associated with every mCard
transaction that takes place using the mCardNetwork. Under the agency agreement,
our company had the following obligations to PayWith:
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Achieve the following targets within the
Territories: |
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Number of Signed |
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Target Date |
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Merchant Agreements |
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6 months after effective date |
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500 |
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12 months after effective date |
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2,000 |
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18 months after effective date |
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10,000 |
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As of the date of this Registration Statement, these targets
have not been met. These targets were not met due to the slow rate of mobile
payment adoption in the United States. Pursuant to the agreement, PayWith may
revoke the exclusivity of the rights to the Platform held by us in the
Territories as these obligations were not met.
Our company has paid $150,000 to PayWith for the exclusive
licensing rights mentioned above.
Equity Purchase Agreement with Premier Venture
On December 10, 2014, we entered into the Equity Purchase Agreement with Premier Venture, a California limited liability company. Pursuant to the terms of the Equity Purchase Agreement, Premier Venture committed to purchase up to $2,000,000 of our common stock during the Open Period. From time to time during the Open Period, we may deliver a drawdown notice to Premier Venture which states the dollar amount that we intend to sell to Premier Venture on a date specified in the put notice (the "Put Notice"). The maximum investment amount per notice shall not exceed the lesser of (i) 200% of the average daily trading volume of our common stock on the five trading days prior to the day the Put Notice is received by Premier Venture and (ii) 110% of any previous put amount during the maximum thirty-six (36) month period (however the amount for the preceding (ii) shall never be less than 70,000 shares). The total purchase price to be paid, in connection to the Put Notice, by Premier Venture shall be calculated at a thirty percent (30%) discount to the lowest individual daily volume weighted average price of the common stock of our company during such trading day ("VWAP") of during the five (5) consecutive trading days immediately after the applicable date of the Put Notice, notwithstanding certain provisions pursuant to the Equity Purchase Agreement, less six hundred dollars ($600.00). We have more shares reserved than are covered in this Registration Statement. In consideration for the execution and delivery of the Equity Purchase Agreement by Premier Venture, we issued Premier Venture 71,429 shares of our common stock (the "Initial Commitment Shares").
On the effective date of this Registration Statement, we shall
issue to Premier additional commitment shares (the Additional
Commitment Shares) of its common stock representing 2.5% of $2,000,000
divided by the sum equal to the lowest of the daily VWAPs of the common stock on
the three trading days immediately preceding the effective date. The Additional
Commitment Shares shall not constitute registerable securities and shall not be
included in this Registration Statement in accordance with the terms of the
Registration Agreement.
In connection with the Equity Purchase Agreement, we also
entered into a registration rights agreement (the Registration Rights
Agreement) with Premier Venture, pursuant to which we are obligated to file
a registration statement with the SEC. We are obligated to use all commercially
reasonable efforts to maintain an effective registration statement until
termination of the Equity Purchase Agreement.
6
The 3,688,066 shares to be registered herein represent
approximately 11.0% of our common shares issued and outstanding, assuming that
the selling stockholder will sell all of the shares offered for sale.
At an assumed purchase price of $0.553 (representing 70% of the
closing price of our common stock of $0.79 on December 19, 2014), we will be
able to receive up to $2,000,000 in gross proceeds, assuming the sale of the
entire 3,688,066 shares being registered hereunder pursuant to the Equity
Purchase Agreement. Accordingly, we may be required to register additional
shares to obtain the balance from the $2,000,000 under the Equity Purchase
Agreement. We are currently authorized to issue 850,000,000 shares of our common
stock. Premier Venture has agreed to refrain from holding an amount of shares
which would result in Premier Venture owning more than 4.99% of the
then-outstanding shares of our common stock at any one time.
There are substantial risks to investors as a result of the
issuance of shares of our common stock under the Equity Purchase Agreement.
These risks include dilution of stockholders percentage ownership, significant
decline in our stock price and our inability to draw sufficient funds when
needed.
Premier Venture will periodically purchase our common stock
under the Equity Purchase Agreement and will, in turn, sell such shares to
investors in the market at the market price. This may cause our stock price to
decline, which will require us to issue increasing numbers of common shares to
Premier Venture to raise the same amount of funds, as our stock price declines.
Where You Can Find Us
Our mailing address is 28202 N.58th Street, Cave Creek, AZ
85331, and our telephone number is (480) 275-2294.
The Offering
We have 29,840,179 shares of common stock issued and
outstanding as of December 23, 2014 and are registering 3,688,066 shares (of
which 71,429 have been issued to date and the remaining may be issued in
accordance with the Equity Purchase Agreement between Premier Venture Partners,
LLC (Selling Security Holder) and the Company). In the event less than
3,688,066 are issued in accordance with the Equity Purchase Agreement, the
remaining unissued shares will be terminated. We will receive 100% of the
proceeds from the sale of the common stock to the Selling Security Holder, but
will not receive any proceeds from any future re-sale of the common shares by
the Selling Security Holder.
The following is a brief summary of this offering. Please see
the Plan of Distribution section for a more detailed description of the
terms of the offering.
Securities being offered by the Selling Security Holders,
common stock, $0.001 par value |
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3,688,066 shares of common stock, $0.001 par value to be
issued to Premier Venture Partners, LLC in accordance with a certain
Equity Purchase Agreement dated December 10, 2014. |
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Underwriter: |
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Premier Venture Partners, LLC is both the underwriter and
Selling Security Holder in this transaction. |
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Offering Price per Share by the Selling Security
Holders: |
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All shares being registered may be sold by the Selling
Security Holder without our involvement. The actual price of the stock
will be determined in accordance with the price as set forth in the Equity
Purchase Agreement. |
7
Offering Period: |
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The period during which the Company may make a "Put Notice" as defined in the Equity Purchase Agreement, is thirty-six (36) months from the effectiveness of this Registration Statement. |
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Number of Shares Outstanding Before the Offering: |
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29,840,179 common shares are currently issued and
outstanding of which 71,429 shares are being registered under this
prospectus by the Selling Security Holder. The remaining 3,616,366 shares
which may be issued in the future under the Equity Purchase Agreement.
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Minimum number of shares to be sold in this Offering: |
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None. |
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Use of Proceeds |
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All of the proceeds will be used by the Company for
working capital. We have paid and will pay all expenses incidental to the
registration of the shares (including registration pursuant to the
securities laws of certain states) other than commissions, expenses,
reimbursements and discounts of underwriters, dealers or agents, if any.
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Termination of the offering |
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The earlier of (i) thirty-six (36) months from the effectiveness of this Registration Statement, (ii) when the Company receives the full $2,000,000 under the Equity Purchase Agreement, or (iii) as otherwise provided for in the Equity Purchase Agreement. |
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Terms of the offering |
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The actual price of the stock will be determined by using
the prevailing market prices at the time of sale as adjusted in accordance
with the Equity Purchase Agreement (which is 70% of the lowest reported
trade of the our common stock during the Put Period as defined in the
Equity Purchase Agreement) and the Selling Security Holder will determine
when and how they will sell the common stock offered in this prospectus.
Our company will receive no proceeds from any future re-sale of any of the
registered shares by the Selling Security Holder. |
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Trading Market: |
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Our common stock is currently quoted in the OTCQB. The
common stock trades under the symbol NMED, but there is only a limited
trading market. The last high and low trades of our common stock for the
last 30 trading days were as follows: |
Date |
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High Trading
Price |
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Low Trading Price
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12/09/14 |
$ |
1.36 |
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12/17/14 |
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$ |
0.4613 |
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The Selling Security Holder named in this prospectus is
registering all or a portion of its shares of common stock through this
prospectus are doing in accordance with a certain Registration Rights Agreement
and Equity Purchase Agreement, each dated December 10, 2014.
We will receive 100% of the proceeds from the sale of these
shares to the Selling Security Holder in accordance with the Equity Purchase
Agreement but none of the proceeds of any future re-sale by the Selling
Shareholder.
This summary does not contain all the information that should
be considered before making an investment in New Media Insight Group, Inc.s
common stock. The entire prospectus should be read including the Risk Factors
on page 9 and financial statements before deciding to invest in our common
stock.
8
Financial Summary Information
All references to currency in this Prospectus are to U.S.
Dollars, unless otherwise noted.
The following table sets forth selected financial information,
which should be read in conjunction with the information set forth in the
Managements Discussion and Analysis of Financial Position and Results of
Operations section and the accompanying financial statements and related notes
included elsewhere in this Prospectus.
Income Statement Data
Revenues
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Three Months
Ended October 31, 2014 (Unaudited)
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Year Ended
April 30, 2014 (Audited) |
Year Ended
April 30, 2013 (Audited) |
Nil |
$241 |
Nil |
Operating Expenses |
$104,861 |
$806,978 |
$41,727 |
Net
Income (Loss) |
($104,861) |
($806,737) |
($41,727) |
Net Earnings (Loss) Per Share |
0.00 |
($0.027) |
($0.001)
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Balance Sheet Data
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As at October
31, 2014 (Unaudited) |
As at
April 30, 2014 (Audited) |
As at
April 30, 2013 (Audited) |
Working Capital (Deficit) |
$78,627 |
$277,907 |
($27,845) |
Total Assets |
$86,570 |
$295,200 |
$27 |
Total Liabilities |
$7,943 |
$17,293 |
$27,872 |
We are subject to those financial risks generally associated
with development stage enterprises. Despite currently having sufficient capital
on hand, we have sustained losses since inception. We may require additional
financing and independently seek capital to fund our development activities.
However, we may be unable to obtain such financing. Investing in our common
stock involves a high degree of risk. We are subject to risk factors specific to
our business strategy and the health and wellness industry. You should carefully
consider all the risks described below, together with other information
contained in this prospectus (including our financial statements and related
notes), before making a decision to invest in our common stock. Our business
could be harmed by any of these risks at any time. The trading price of our
common stock could decline due to any of these risks, and you may lose all or
part of your investment.
RISK FACTORS
An investment in our common stock involves a high degree of
risk. You should carefully consider the risks described below, together with all
of the other information included in this report, before making an investment
decision. If any of the following risks actually occurs, our business, financial
condition or results of operations could suffer. In that case, the trading price
of our common stock could decline, and you may lose all or part of your
investment. You should read the section entitled Special Note Regarding Forward
Looking Statements above for a discussion of what types of statements are
forward-looking statements, as well as the significance of such statements in
the context of this Registration Statement.
9
RISKS RELATED TO OUR BUSINESS
You should carefully consider the risks described below
together with all of the other information included in this Registration
Statement before making an investment decision with regard to our securities.
The statements contained in or incorporated into this Registration Statement
that are not historic facts are forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ materially
from those set forth in or implied by forward-looking statements. If any of the
following risks actually occur, our business, financial condition or results of
operations could be harmed. In that case, the trading price of our common stock
could decline, and you may lose all or part of your investment.
Our independent auditors have issued an audit opinion for
our company, which includes a statement describing our going concern status. Our
financial status creates a doubt whether we will continue as a going
concern.
As described in Note 11 of our accompanying financial
statements, our auditors have issued a going concern opinion regarding our
company. This means there is substantial doubt we can continue as an ongoing
business for the next twelve months. The financial statements do not include any
adjustments that might result from the uncertainty regarding our ability to
continue in business. As such we may have to cease operations and investors
could lose part or all of their investment in our company.
We have a minimal operating history and have losses which
we expect to continue into the future. There is no assurance our future
operations will result in profitable revenues. If we cannot generate sufficient
revenues to operate profitably, we may suspend or cease operations.
We were incorporated on March 29, 2010, and we have only
started our proposed business operations in December 2010 realizing revenues of
$38,690 through April 30, 2014. We do not have a sufficient operating history
upon which an evaluation of our future success or failure can be made. Our net
loss since inception to April 30, 2014, was $911,471. We have generated only
nominal revenues since our inception and do not anticipate that we will generate
revenues which will be sufficient to sustain our operations in the near future.
Our ability to achieve and maintain profitability and positive cash flow is
dependent upon on our ability to:
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attract customers who will buy our services;
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generate revenue through the sale of our
services. |
We may not be able to successfully achieve any of these
requirements or ever become profitable.
Based upon current plans, we expect to incur operating losses
in future periods because we will be incurring expenses in excess of revenues.
We cannot guarantee that we will be successful in generating sufficient revenues
in the future. In the event our company is unable to generate sufficient
revenues it may be required to seek additional funding. Such funding may not be
available, or may not be available on terms which are beneficial and/or
acceptable to our company. In the event our company cannot generate sufficient
revenues and/or secure additional financing, our company may be forced to cease
operations and investors will likely lose some or all of their investment in our
company.
10
We do not have any additional source of funding for our
business plans and may be unable to find any such funding if and when needed,
resulting in the failure of our business.
No other source of capital has been has been identified or
sought. If we do find an alternative source of capital, the terms and conditions
of acquiring such capital may result in dilution and the resultant lessening of
value of the shares of stockholders.
We possess minimal capital.
We possess minimal capital and must limit the amount of
marketing we can perform with respect to our website. Our business plan
contemplates the generation of revenues through the sale of goods and services
via our website. Our limited marketing activities may not attract enough paying
customers to generate sufficient revenue to operate profitably, expand our
services, implement our business plan or continue operating our business. Our
limited marketing capabilities may have a negative effect on our business and
may cause us to limit or cease our business operations which could result in
investors losing some or all of their investment in our company.
We are dependent upon our current officers and
directors.
We currently are managed by our sole officer and director,
Michael Palethorpe, and we are entirely dependent upon him in order to conduct
our operations. If our sole officer and director should resign or die, there
will be no one to run our company, and our company has no Key Man insurance. If
our current officer and director is no longer able to serve as such and we are
unable to find other persons to replace him, it will have a negative effect on
our ability to continue active business operations, and could result in
investors losing some or all of their investment in our company.
Our business mode requires the use of outside personnel,
who may not be available when needed.
Our company seeks to grow its business in the ever-expanding
niche of hyper local marketing and advertising, while maintaining a low cost of
operations. Our company will utilize a virtual workplace (employees and
independent contractors will primarily work from their residences eliminating
their need for permanent offices), will retain only a minimum number of full
time employees and instead hire a core group of independent contractors on an as
needed basis. If we are unable to hire the required talent and/or are unable to
get our technology functional, it may have a negative effect on our ability to
implement our business plan. In such an event, we may be required to change our
business plan or curtail or delay implementation of some, or all, of our
business plan.
We could face intense competition, which could result in
lower revenues and higher expenditures and could adversely affect our results of
operations.
Unless we and our partners keep pace with changing
technologies, we could lose existing customers and fail to win new customers. In
order to compete effectively in the internet marketing and mobile payments
industry, we must continually design, develop implement and market new and
enhanced technologies and strategies. Our future success will depend, in part,
upon our ability to address the changing and sophisticated needs of the
marketplace. Mobile payments technologies have not achieved widespread
commercial acceptance in Canada and the United States and our strategy of
expanding our marketing of mobile payments business could adversely affect our
business operations and financial condition.
11
We are governed by only one person serving as director
and officers which may lead to faulty corporate governance.
We have not implemented various corporate governance measures
nor have we adopted any independent committees as we presently do not have any
independent directors.
We may not be able to secure additional financing to meet
our future capital needs due to changes in general economic conditions.
We anticipate requiring significant capital to fulfill our
contractual obligations (as noted in our audited financial statements), continue
development of our planned products to meet market evolution, and execute our
business plan, generally. We may use capital more rapidly than currently
anticipated and incur higher operating expenses than currently expected, and we
may be required to depend on external financing to satisfy our operating and
capital needs. We may need new or additional financing in the future to conduct
our operations or expand our business. Any sustained weakness in the general
economic conditions and/or financial markets in the United States or globally
could adversely affect our ability to raise capital on favorable terms or at
all. From time to time we have relied, and may also rely in the future, on
access to financial markets as a source of liquidity to satisfy working capital
requirements and for general corporate purposes. We may be unable to secure debt
or equity financing on terms acceptable to us, or at all, at the time when we
need such funding. If we do raise funds by issuing additional equity or
convertible debt securities, the ownership percentages of existing stockholders
would be reduced, and the securities that we issue may have rights, preferences
or privileges senior to those of the holders of our common stock or may be
issued at a discount to the market price of our common stock which would result
in dilution to our existing stockholders. If we raise additional funds by
issuing debt, we may be subject to debt covenants, which could place limitations
on our operations including our ability to declare and pay dividends. Our
inability to raise additional funds on a timely basis would make it difficult
for us to achieve our business objectives and would have a negative impact on
our business, financial condition and results of operations.
Our business and operating results could be harmed if we
fail to manage our growth or change.
Our business may experience periods of rapid change and/or
growth that could place significant demands on our personnel and financial
resources. To manage possible growth and change, we must continue to try to
locate skilled professionals in the oil and gas industry and adequate funds in a
timely manner.
We are affected by certain law and governmental
regulations which could affect operations of our proprietary technology in the
area of mobile payments and online monetization.
While our mobile payments service has been approved in certain
states, failure to gain national or international compliance would limit
international operations. In addition, future government regulations concerning
privacy and consumer protection issues could have an adverse effect on market
acceptance or cause time delays or additional costs to meet requirements.
To the best of our knowledge, there are no laws or governmental
regulations which would prohibit the use of our proprietary technology in the
area of mobile payments and online monetization in the Territories. Use of our
technology is only subject to local operator/owner approval. Where we may be
restricted as to the introduction of our technology in foreign countries relates
only to local governmental regulations which may require the establishment of a
corporate entity in the subject country, of which we may decide against due to
costs and lack of corporate control of that new entity.
12
If our intellectual property is not adequately protected,
then we may not be able to compete effectively and we may not be profitable.
Our commercial success may depend, in part, on obtaining and
maintaining patent protection, trade secret protection and regulatory protection
of our technologies and product candidates as well as successfully defending
third-party challenges to such technologies and candidates. We will be able to
protect our technologies and product candidates from use by third parties only
to the extent that valid and enforceable patents, trade secrets or regulatory
protection cover them and we have exclusive rights to use them. The ability of
our licensors, collaborators and suppliers to maintain their patent rights
against third-party challenges to their validity, scope or enforceability will
also play an important role in determining our future.
The patent positions of technology related companies can be
highly uncertain and involve complex legal and factual questions that include
unresolved principles and issues. No consistent policy regarding the breadth of
claims allowed regarding such companies patents has emerged to date in the
United States, and the patent situation outside the United States is even more
uncertain. Changes in either the patent laws or in interpretations of patent
laws in the United States or other countries may diminish the value of our
intellectual property. Accordingly, we cannot predict with any certainty the
range of claims that may be allowed or enforced concerning our patents.
We may also rely on trade secrets to protect our technologies,
especially where we do not believe patent protection is appropriate or
obtainable. However, trade secrets are difficult to protect. While we seek to
protect confidential information, in part, through confidentiality agreements
with our consultants and scientific and other advisors, they may unintentionally
or willfully disclose our information to competitors. Enforcing a claim against
a third party related to the illegal acquisition and use of trade secrets can be
expensive and time consuming, and the outcome is often unpredictable. If we are
not able to maintain patent or trade secret protection on our technologies and
product candidates, then we may not be able to exclude competitors from
developing or marketing competing products, and we may not be able to operate
profitability.
If we are the subject of an intellectual property
infringement claim, the cost of participating in any litigation could cause us
to go out of business.
There has been, and we believe that there will continue to be,
significant litigation and demands for licenses in our industry regarding patent
and other intellectual property rights. Although we anticipate having a valid
defense to any allegation that our current products, production methods and
other activities infringe the valid and enforceable intellectual property rights
of any third parties, we cannot be certain that a third party will not challenge
our position in the future. Other parties may own patent rights that we might
infringe with our products or other activities, and our competitors or other
patent holders may assert that our products and the methods we employ are
covered by their patents. These parties could bring claims against us that would
cause us to incur substantial litigation expenses and, if successful, may
require us to pay substantial damages. Some of our potential competitors may be
better able to sustain the costs of complex patent litigation, and depending on
the circumstances, we could be forced to stop or delay our research,
development, manufacturing or sales activities. Any of these costs could cause
us to go out of business.
We could lose our competitive advantages if we are not
able to protect any intellectual property rights against infringement, and any
related litigation could be time-consuming and costly.
Our success and ability to compete depends to a significant
degree on our license to market and promote the Platform which is automatically
renewed every year unless there is sixty days of notice by either party. If any
of our competitors copies or otherwise gains access to the Platform or develops
similar technologies independently, we would not be able to compete as
effectively.
13
We also consider our trademarks invaluable to our ability to
continue to develop and maintain the goodwill and recognition associated with
our brand. These and any other measures that we may take to protect our
intellectual property rights, which presently are based upon a combination of
copyright, trade secret and trademark laws, may not be adequate to prevent their
unauthorized use.
We may need to bring legal claims to enforce or protect such
intellectual property rights. Any litigation, whether successful or
unsuccessful, could result in substantial costs and diversions of resources. In
addition, notwithstanding any rights we have secured in our intellectual
property, other persons may bring claims against us that we have infringed on
their intellectual property rights, including claims based upon the content we
license from third parties or claims that our intellectual property right
interests are not valid. Any claims against us, with or without merit, could be
time consuming and costly to defend or litigate, divert our attention and
resources, result in the loss of goodwill associated with our service marks or
require us to make changes to our website or other of our technologies.
If we fail to effectively manage our growth our future
business results could be harmed and our managerial and operational resources
may be strained.
As we proceed with the commercialization of our technology, we
expect to experience significant and rapid growth in the scope and complexity of
our business. We will need to add staff to market our services, manage
operations, handle sales and marketing efforts and perform finance and
accounting functions. We will be required to hire a broad range of additional
personnel in order to successfully advance our operations. This growth is likely
to place a strain on our management and operational resources. The failure to
develop and implement effective systems, or to hire and retain sufficient
personnel for the performance of all of the functions necessary to effectively
service and manage our potential business, or the failure to manage growth
effectively, could have a materially adverse effect on our business and
financial condition.
Our services may become obsolete and unmarketable if we
are unable to respond adequately to rapidly changing technology and customer
demands.
Our industry is characterized by rapid changes in technology
and market demands. As a result, our service and technology may quickly become
obsolete and unmarketable. Our future success will depend on our ability to
adapt to technological advances, anticipate market demands, develop new products
and enhance our current products on a timely and cost-effective basis. Further,
our products must remain competitive with those of other companies with
substantially greater resources. We may experience technical or other
difficulties that could delay or prevent the development, introduction or
marketing of new products or enhanced versions of existing products. Also, we
may not be able to adapt new or enhanced services to emerging industry or
governmental standards.
Risks Relating to Ownership of Our Securities
We do not expect to pay dividends in the foreseeable
future.
We presently do not anticipate that we will pay dividends on
any of our common stock in the foreseeable future. If payment of dividends does
occur at some point in the future, it would be contingent upon our revenues and
earnings, if any, capital requirements, and general financial condition. The
payment of any common stock dividends will be within the discretion of our Board
of Directors. We presently intend to retain all earnings to implement our
business plan; accordingly, we do not anticipate the declaration of any
dividends for common stock in the foreseeable future.
14
Applicable SEC rules governing the trading of penny
stocks will limit the trading and liquidity of our common stock, which may
affect the trading price of our common stock.
Our common stock is considered to be a penny stock and is
therefore subject to SEC rules and regulations that (i) impose limitations upon
the manner in which our shares may be publicly traded and (ii) regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges such as the
NASDAQ Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. The broker-dealer must also provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customers account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchasers written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules and may increase the difficulty investors might experience in
attempting to liquidate such securities.
The market price for our common stock is particularly
volatile given our status as a relatively small company, which could lead to
wide fluctuations in our share price. You may be unable to sell your common
stock at or above your purchase price if at all, which may result in substantial
losses to you.
Shareholders should be aware that, according to SEC Release No.
34-29093, the market for penny stocks has suffered in recent years from patterns
of fraud and abuse. Such patterns include (1) control of the market for the
security by one or a few broker-dealers that are often related to the promoter
or issuer; (2) manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases; (3) boiler room practices
involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential
and markups by selling broker-dealers; and (5) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been manipulated to
a desired level, along with the resulting inevitable collapse of those prices
and with consequent investor losses. Our management is aware of the abuses that
have occurred historically in the penny stock market. Although we do not expect
to be in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities. The occurrence of these patterns or practices
could increase the volatility of our share price.
As we are listed on the Over-the-Counter Bulletin Board
quotation system, our common stock is subject to penny stock rules which could
negatively impact our liquidity and our shareholders ability to sell their
shares.
Our common stock is currently quoted on the OTCQB. We must
comply with numerous NASDAQ MarketPlace rules in order to maintain the listing
of our common stock on the OTCQB. There can be no assurance that we can continue
to meet the requirements to maintain the quotation on the OTCQB listing of our
common stock. If we are unable to maintain our listing on the OTCQB, the market
liquidity of our common stock may be severely limited.
15
Our stock price may be volatile, which may result in
losses to our shareholders.
The stock markets have experienced significant price and
trading volume fluctuations, and the market prices of companies listed on the
OTCQB quotation system in which shares of our common stock are listed, have been
volatile in the past and have experienced sharp share price and trading volume
changes. The trading price of our common stock is likely to be volatile and
could fluctuate widely in response to many factors, including the following,
some of which are beyond our control:
|
variations in our operating results; |
|
changes in expectations of our future financial
performance, including financial estimates by securities analysts and
investors; |
|
changes in operating and stock price
performance of other companies in our industry; |
|
additions or departures of key personnel; and
|
|
future sales of our common stock.
|
Domestic and international stock markets often experience
significant price and volume fluctuations. These fluctuations, as well as
general economic and political conditions unrelated to our performance, may
adversely affect the price of our common stock.
Our common shares may become thinly traded and you may be
unable to sell at or near ask prices, or at all.
We cannot predict the extent to which an active public market
for trading our common stock will be sustained. The trading volume of our common
shares has historically been sporadically or thinly-traded meaning that the
number of persons interested in purchasing our common shares at or near bid
prices at certain given time may be relatively small or non-existent.
This situation is attributable to a number of factors,
including the fact that we are a small company which is relatively unknown to
stock analysts, stock brokers, institutional investors and others in the
investment community who generate or influence sales volume. Even if we came to
the attention of such persons, those persons tend to be risk-averse and may be
reluctant to follow, purchase, or recommend the purchase of shares of an
unproven company such as ours until such time as we become more seasoned and
viable. As a consequence, there may be periods of several days or more when
trading activity in our shares is minimal or non-existent, as compared to a
seasoned issuer which has a large and steady volume of trading activity that
will generally support continuous sales without an adverse effect on share
price. We cannot give you any assurance that a broader or more active public
trading market for our common stock will develop or be sustained, or that
current trading levels will be sustained.
Volatility in our common share price may subject us to
securities litigation.
The market for our common stock is characterized by significant
price volatility as compared to seasoned issuers, and we expect that our share
price will continue to be more volatile than a seasoned issuer for the
indefinite future. In the past, plaintiffs have often initiated securities class
action litigation against a company following periods of volatility in the
market price of its securities. We may, in the future, be the target of similar
litigation. Securities litigation could result in substantial costs and
liabilities and could divert managements attention and resources.
The elimination of monetary liability against our
directors, officers and employees under Nevada law and the existence of
indemnification rights of our directors, officers and employees may result in
substantial expenditures by our company and may discourage lawsuits against our
directors, officers and employees.
Our Articles of Incorporation contains a specific provision
that eliminates the liability of our directors and officers for monetary damages
to our company and shareholders. Further, we are prepared to give such
indemnification to our directors and officers to the extent provided for by
Nevada law. We may also have contractual indemnification obligations under our
employment agreements with our officers. The foregoing indemnification
obligations could result in our company incurring substantial expenditures to
cover the cost of settlement or damage awards against directors and officers,
which we may be unable to recoup. These provisions and resultant costs may also
discourage our company from bringing a lawsuit against directors and officers
for breaches of their fiduciary duties, and may similarly discourage the filing
of derivative litigation by our shareholders against our directors and officers
even though such actions, if successful, might otherwise benefit our company and
shareholders.
16
Our business is subject to changing regulations related
to corporate governance and public disclosure that have increased both our costs
and the risk of noncompliance.
Because our common stock is publicly traded, we are subject to
certain rules and regulations of federal, state and financial market exchange
entities charged with the protection of investors and the oversight of companies
whose securities are publicly traded. These entities, including the Public
Company Accounting Oversight Board, the SEC and FINRA, have issued requirements
and regulations and continue to develop additional regulations and requirements
in response to corporate scandals and laws enacted by Congress, most notably the
Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have
resulted in, and are likely to continue resulting in, increased general and
administrative expenses and diversion of management time and attention from
revenue-generating activities to compliance activities. Because new and modified
laws, regulations and standards are subject to varying interpretations in many
cases due to their lack of specificity, their application in practice may evolve
over time as new guidance is provided by regulatory and governing bodies. This
evolution may result in continuing uncertainty regarding compliance matters and
additional costs necessitated by ongoing revisions to our disclosure and
governance practices.
We will incur increased costs and compliance risks as a
public company.
As a public company, we will incur significant legal,
accounting and other expenses that we did not incur as a private company prior.
Our business will incur costs associated with our public
company reporting requirements. We also anticipate that we will incur costs
associated with recently adopted corporate governance requirements, including
certain requirements under the Sarbanes-Oxley Act of 2002, as well as new rules
implemented by the SEC and FINRA. We expect these rules and regulations, in
particular Section 404 of the Sarbanes-Oxley Act of 2002, to significantly
increase our legal and financial compliance costs and to make some activities
more time-consuming and costly. Like many smaller public companies, we face a
significant impact from required compliance with Section 404 of the
Sarbanes-Oxley Act of 2002. Section 404 requires management of public companies
to evaluate the effectiveness of internal control over financial reporting. The
SEC has adopted rules implementing Section 404 for public companies as well as
disclosure requirements. We are currently preparing for compliance with Section
404; however, there can be no assurance that we will be able to effectively meet
all of the requirements of Section 404 as currently known to us in the currently
mandated timeframe. Any failure to implement effectively new or improved
internal controls, or to resolve difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet
reporting obligations or result in management being required to give a qualified
assessment of our internal controls over financial reporting. Any such result
could cause investors to lose confidence in our reported financial information,
which could have a material adverse effect on our stock price.
17
We also expect these new rules and regulations may make it more
difficult and more expensive for us to obtain director and officer liability
insurance and we may be required to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. As a
result, it may be more difficult for us to attract and retain qualified
individuals to serve on our Board of Directors or as executive officers. We are
currently evaluating and monitoring developments with respect to these new
rules, and we cannot predict or estimate the amount of additional costs we may
incur or the timing of such costs.
Item 4 Use of Proceeds
We will not receive any proceeds from the sale of shares by the
Selling Security Holder. However, we will receive proceeds from the sale of
securities pursuant to the Equity Purchase Agreement. The proceeds received from
any drawdowns tendered to Premier Venture under the Equity Purchase Agreement
will be used for general corporate and working capital purposes and acquisitions
or assets, businesses or operations or for other purposes that the Board, in its
good faith deems to be in the best interest of our company.
Our company will pay all expenses of this offering estimated at
approximately $24,339. See Part II, Item 13.
Item 5 Determination of Offering Price
All shares being registered may be sold by the Selling Security
Holder without our involvement. The actual price of the stock will be determined
by prevailing market prices at the time of any Put Notice, as defined in the
Equity Purchase Agreement, which is 70% of the lowest reported trade of our
common stock during the Put Period as defined in the Equity Purchase
Agreement.
Item 6 Dilution
The common stock being registered by the Selling Shareholders
is approximately 11.0% of the currently issued and outstanding common stock of
our company when taking into account the possible future issuance of the
remaining 3,616,817 common shares of our company being registered under this
Registration Statement.
Dilution as used herein represents the difference between the
offering price per share of shares offered hereby and the net tangible book
value per share of our common stock after completion of the offering. Dilution
in the offering is primarily due to the losses previously recognized by our
company.
At an assumed purchase price of $0.553 (equal to 70% of the
closing price of our common stock of $0.79 on December 19, 2014), and the
issuance of 100% of the shares being registered, we will be required to issue an
aggregate of 3,616,817 shares of common stock, with net proceeds of $2,000,000
pursuant to the Equity Purchase Agreement.
The net tangible book value of our company at October 31, 2014
was $78,627 or approximately $0.003 per share. Net tangible book value
represents the amount of total tangible assets less total liabilities. Assuming
that 100% of the shares offered hereby were purchased by investors (a fact of
which there can be no assurance) as of December 19, 2014, the then outstanding
33,456,996 shares of common stock, which would constitute all of the issued and
outstanding equity capital of our company, would have a net tangible book value
of $2,078,627 (not after deducting commissions and offering expenses) or
approximately $0.062 per share.
18
Assuming a 50% decrease in the number of shares to be issued,
based upon the purchase price of $0.553 (equal to 70% of the closing price of
our common stock of $0.79 on December 19, 2014), we will be required to issue an
aggregate of 1,808,318 shares of common stock, with net proceeds of $1,000,000
pursuant to the Equity Purchase Agreement.
Assuming a 75% decrease in the number of shares to be issued,
based upon the purchase price of $0.553 (equal to 70% of the closing price of
our common stock of $0.79 on December 19, 2014), we will be required to issue an
aggregate of 904,159 shares of common stock, with net proceeds of $500,000
pursuant to the Equity Purchase Agreement.
The dilution associated with the offering and each of the above
scenarios is as follows:
|
|
|
|
|
50% |
|
|
75% |
|
|
|
|
|
|
Decrease |
|
|
Decrease |
|
|
|
|
|
|
in |
|
|
in |
|
|
|
|
|
|
Shares |
|
|
Shares |
|
|
|
Offering |
|
|
Issued |
|
|
Issued |
|
Offering price |
$ |
0.553 |
|
$ |
0.553 |
|
$ |
0.553 |
|
Net tangible book value before Offering (per
share) |
$ |
0.003 |
|
$ |
0.003 |
|
$ |
0.003 |
|
Net tangible book value after
Offering (per share) |
$ |
0.062 |
|
$ |
0.031 |
|
$ |
0.016 |
|
Dilution per share to investor |
$ |
0.059 |
|
$ |
(0.028 |
) |
$ |
(0.013 |
) |
Dilution percentage to
investor |
|
89% |
|
|
94% |
|
|
97% |
|
Item 7 Selling Security Holders
The Company is not making an initial public offering of its
common stock. 3,688,066 shares (only 71,429 of which shares have previously been
issued) are being registered pursuant to this Registration Statement. Only the
Selling Security Holder listed below may re-sell their shares into the public
market as soon as practical after the effective date of this Registration
Statement. We are registering, for offer and sale, 3,688,066 shares of common
stock issued, or to be issued, to the Selling Security Holder listed below. In
the event that fewer than 3,688,066 shares are issued to the Seller Security
Holder, registration of the unissued shares will be terminated.
The following table sets forth information as of the date of the filing of this Registration Statement, with respect to the beneficial ownership of our common stock by the Selling Security Holder. The shares being offered hereby are being registered in accordance with a certain Registration Rights Agreement and Equity Purchase Agreement, each dated December 10, 2014, and the Selling Security Holder may offer all or part of their shares for resale from time to time. However, the Selling Security Holder is under no obligation to sell all or any portion of such shares nor is the Selling Security Holder obligated to sell any shares immediately upon effectiveness of this Registration Statement. The termination date of this Registration Statement is the earlier of (i) thirty-six (36) months from the effectiveness of this Registration Statement, (ii) when the Company receives the full $2,000,000 under the Equity Purchase Agreement, or (iii) as otherwise provided for in the Equity Purchase Agreement.
19
Name of Selling |
Shares Owned Prior |
Percent |
Maximum Numbers |
Beneficial |
Percentage Owned |
Security Holder |
to this
Offering (1) |
%
(2) |
of Shares Being |
Ownership After |
upon Completion of |
|
|
|
Offered |
Offering |
the
Offering (2) |
|
|
|
|
|
|
Premier Venture Partners, LLC(4) 4221 Wilshire
Blvd., Suite 355, Los Angeles, California 90010 |
71,429 |
2.4% |
71,429 |
3,688,066 |
11.0%
|
|
(1) |
The number and percentage of shares beneficially owned is
determined to the best of our knowledge in accordance with the Rules of
the SEC and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the selling security holder has sole or
shared voting or investment power and also any shares which the selling
security holder has the right to acquire within 60 days of the date of
this Prospectus. |
|
(2) |
The percentages are based on 29,870,179 shares of our
common stock issued and outstanding and as at December 23, 2014. |
|
(3) |
Less than 1%. |
|
(4) |
The control person of Premier Venture Partners, LLC is
Jeffrey Maller |
Except as otherwise noted in the above list, the named party
beneficially owns and has sole voting and investment power over all the shares
or rights to the shares. The numbers in this table assume that the Selling
Security Holder will not sell shares not being offered in this Prospectus or
will purchase additional shares, and assumes that all the shares being
registered will be sold.
The Selling Security Holder has not had a material relationship
with us other than as a security holder at any time within the past three years,
or has ever been one of our officers or directors or an officer or director of
our predecessors or affiliates.
The Selling Security Holder is not a broker-dealer or affiliate
of a broker-dealer.
Item 8 Plan of Distribution
We are registering 3,688,066 shares in accordance with a
certain Registration Rights Agreement and Equity Purchase Agreement, each dated
December 10, 2014. The actual price of the stock will be determined by
prevailing market prices at the time of any Put Notice as defined in the
Equity Purchase Agreement, which is 70% of the lowest reported trade of our
common stock during the Put Period as defined in the Equity Purchase
Agreement. We will receive 100% any proceeds from the sale of the shares to the
Selling Security Holders, but will not receive any proceeds upon the re-sale of
such shares by the Selling Security Holder. The percentage of the total
outstanding common stock being registered to be offered by the Selling Security
Holders is 11.0% based upon the 33,456,816 common shares if all 3,688,066 were
to be issued.
In the event that the Selling Security Holders enter into an
agreement, after the effective date of this Registration Statement, to sell
their shares through a broker-dealer that acts as an underwriter, we will file a
post-effective amendment to this Registration Statement and file the agreement
as an exhibit to the amended Registration Statement. The amendment will identify
the underwriter, provide the required information on the plan of distribution
and revise the appropriate disclosures in the Registration Statement.
20
Any underwriter, dealer, or agent who participates in the
distribution of the securities registered in this Registration Statement may be
deemed to be an "underwriter" under the Securities Act. Further, any discounts,
commissions, or concessions received by any such underwriter, dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act. In the event an underwriter will assist in the sale of the shares, we
will disclose:
1. |
the name or names of any underwriters, dealers, or
agents, the purchase price paid by any underwriters for the shares
purchased from the Selling Security Holders, and |
|
|
2. |
any discounts, commissions, and other items constituting
compensation from the Selling Security Holders, and |
|
|
3. |
any discounts, commissions, or concessions allowed,
realized or paid to dealers, and |
|
|
4. |
the proposed selling price to the
public |
In addition and without limiting the foregoing, the Selling
Security Holder will be subject to applicable provisions, rules and regulations
under the Exchange Act with regard to security transactions during the period of
time when this Registration Statement is effective.
We will pay all expenses incidental to the registration of the
shares (including registration pursuant to the securities laws of certain
states) other than commissions, expenses, reimbursements and discounts of
underwriters, dealers or agents, if any.
Any purchasers of our securities should be aware that any
market that develops in our stock would be subject to the penny stock
restrictions.
OTCQB Considerations
OTCQB securities are not listed or quoted on the floor of an
organized national or regional stock exchange. Instead, OTCQB securities
transactions are conducted through a telephone and computer network connecting
dealers in stocks. OTCQB stocks are traditionally smaller companies that do not
meet the financial and other listing requirements of a regional or national
stock exchange.
To be quoted on the OTCQB, a market maker must file an
application on our behalf in order to make a market for our common stock. We are
not permitted to file such application on our own behalf.
The OTCQB is separate and distinct from the NASDAQ stock
market. NASDAQ has no business relationship with issuers of securities quoted on
the OTCQB. The SECs order handling rules, which apply to NASDAQ-listed
securities, do not apply to securities quoted on the OTCQB.
Although the NASDAQ stock market has rigorous listing standards
to ensure the high quality of its issuers, and can delist issuers for not
meeting those standards, the OTCQB has no listing standards. Rather, it is the
market maker who chooses to quote a security on the system, files the
application, and is obligated to comply with keeping information about the
issuer in its files. FINRA cannot deny an application by a market maker to quote
the stock of a company assuming all FINRA questions relating to its Rule 211
process are answered accurately and satisfactorily. The only requirement for
ongoing inclusion in the OTCQB is that the issuer be current in its reporting
requirements with the SEC.
21
Although we anticipate that quotation on the OTCQB will
increase liquidity for our stock, investors may have difficulty in getting
orders filled because trading activity on the OTCQB in general is not conducted
as efficiently and effectively as with NASDAQ-listed securities. As a result,
investors orders may be filled at a price much different than expected when an
order is placed.
Investors must contact a broker-dealer to trade OTCQB
securities. Investors do not have direct access to the bulletin board service.
For bulletin board securities, there only has to be one market maker.
OTCQB transactions are conducted almost entirely manually.
Because there are no automated systems for negotiating trades on the OTCQB, they
are conducted via telephone. In times of heavy market volume, the limitations of
this process may result in a significant increase in the time it takes to
execute investor orders. Therefore, when investors place market orders - an
order to buy or sell a specific number of shares at the current market price -
it is possible for the price of a stock to go up or down significantly during
the lapse of time between placing a market order and getting execution.
Because analysts do not usually follow OTCQB stocks, there may
be lower trading volume than for NASDAQ-listed securities.
Section 15(g) of the Exchange Act
Section 15(g) of the Exchange Act will cover our shares and
Rules 15g-1 through 15g-6 promulgated thereunder. Securities regulations impose
additional sales practice requirements on broker-dealers who sell our securities
to persons other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouses).
Rule 15g-1 exempts a number of specific transactions from the
scope of the penny stock rules (but is not applicable to us).
Rule 15g-2 declares unlawful broker-dealer transactions in
penny stocks unless the broker-dealer has first provided to the customer a
standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker-dealer to
engage in a penny stock transaction unless the broker-dealer first discloses and
subsequently confirms to the customer current quotation prices or similar market
information concerning the penny stock in question.
Rule 15g-4 prohibits broker-dealers from completing penny stock
transactions for a customer unless the broker-dealer first discloses to the
customer the amount of compensation or other remuneration received as a result
of the penny stock transaction.
Rule 15g-5 requires that a broker-dealer executing a penny
stock transaction, other than one exempt under Rule 15g-1, disclose to its
customer, at the time of or prior to the transaction, information about the
sales persons compensation.
Rule 15g-6 requires broker-dealers selling penny stocks to
provide their customers with monthly account statements.
Rule 15g-9 requires broker/dealers to approve the transaction
for the customers account; obtain a written agreement from the customer setting
forth the identity and quantity of the stock being purchased; obtain from the
customer information regarding his investment experience; make a determination
that the investment is suitable for the investor; deliver to the customer a
written statement for the basis for the suitability determination; notify the
customer of his rights and remedies in cases of fraud in penny stock
transactions; and, the FINRAs toll free telephone number and the central number
of the North American Administrators Association, for information on the
disciplinary history of broker/dealers and their associated persons.
22
Rule 3a51-1 of the Exchange Act establishes the definition of a
penny stock, for purposes relevant to us, as any equity security that has a
minimum bid price of less than $4.00 per share or with an exercise price of less
than $4.00 per share, subject to a limited number of exceptions. It is likely
that our shares will be considered to be penny stocks for the immediately near
future. For any transaction involving a penny stock, unless exempt, the penny
stock rules require that a broker or dealer approve a person's account for
transactions in penny stocks and the broker or dealer receive from the investor
a written agreement to the transaction setting forth the identity and quantity
of the penny stock to be purchased.
In order to approve a person's account for transactions in
penny stocks, the broker or dealer must obtain financial information and
investment experience and objectives of the person and make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any
transaction in a penny stock, a disclosure schedule prepared by the SEC relating
to the penny stock market, which, in highlight form, sets forth:
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The basis on which the broker or dealer made
the suitability determination, and |
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That the broker or dealer received a signed,
written agreement from the investor prior to the transaction. |
Disclosure also has to be made about the risks of investing in
penny stock in both public offerings and in secondary trading and commissions
payable to both the broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies available to an
investor in cases of fraud in penny stock transactions. Additionally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
Many brokers have decided not to trade penny stocks because of
the requirements of the penny stock rules and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited. If
we remain subject to the penny stock rules for any significant period, which is
likely, it could have an adverse effect on the market, if any, for our
securities. If our securities are subject to the penny stock rules, investors
will find it difficult to dispose of our securities.
Dividend Policy
We have never paid cash or any other form of dividend on our
common stock, and we do not anticipate paying cash dividends in the foreseeable
future. Moreover, any future credit facilities might contain restrictions on our
ability to declare and pay dividends on our common stock. We plan to retain all
earnings, if any, for the foreseeable future for use in the operation of our
business and to fund the pursuit of future growth. Future dividends, if any,
will depend on, among other things, our results of operations, capital
requirements and on such other factors as our board of directors, in its
discretion, may consider relevant.
23
Regulation M
During such time as the Selling Security Holders may be engaged
in a distribution of any of the securities being registered by this Prospectus,
the Selling Security Holders are required to comply with Regulation M under the
Exchange Act. In general, Regulation M precludes any selling security holder,
any affiliated purchaser and any broker-dealer or other person who participates
in a distribution from bidding for or purchasing, or attempting to induce any
person to bid for or purchase, any security that is the subject of the
distribution until the entire distribution is complete.
Regulation M defines a distribution as an offering of
securities that is distinguished from ordinary trading activities by the
magnitude of the offering and the presence of special selling efforts and
selling methods. Regulation M also defines a distribution participant as
an underwriter, prospective underwriter, broker, dealer, or other person who has
agreed to participate or who is participating in a distribution.
Regulation M prohibits, with certain exceptions, participants
in a distribution from bidding for or purchasing, for an account in which the
participant has a beneficial interest, any of the securities that are the
subject of the distribution. Regulation M also governs bids and purchases made
in order to stabilize the price of a security in connection with a distribution
of the security. We have informed the Selling Security Holders that the
anti-manipulation provisions of Regulation M may apply to the sales of their
shares offered by this Prospectus, and we have also advised the Selling Security
Holders of the requirements for delivery of this Prospectus in connection with
any sales of the shares offered by this Prospectus.
With regard to short sales, the Selling Security Holders cannot
cover their short sales with securities from this offering. In addition, if a
short sale is deemed to be a stabilizing activity, then the Selling Security
Holders will not be permitted to engage in such an activity. All of these
limitations may affect the marketability of our common stock.
The Selling Security Holders may also elect to sell their
common shares in accordance with Rule 144 under the Securities Act, rather than
pursuant to this Prospectus. After the sale of the shares offered by this
Prospectus the Selling Security Holders will have 19,461,000 common shares. The
sale of these shares could have an adverse impact on the price of our shares or
on any trading market that may develop.
We have not registered or qualified offers and sales of shares
of common stock under the laws of any country, other than the United States. To
comply with certain states securities laws, if applicable, the Selling Security
Holders will offer and sell their shares of common stock in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states the Selling Security Holders may not offer or sell shares of common stock
unless we have registered or qualified such shares for sale in such states or we
have complied with an available exemption from registration or qualification.
All expenses of this Registration Statement, estimated to be
approximately $17,500, including but not limited to legal, accounting, printing
and mailing fees will, be paid by our company. However, any selling costs or
brokerage commissions incurred by each Selling Security Holder relating to the
sale of their shares will be paid by them. See Use of Proceeds on page 16.
Penny Stock Rules
The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges, provided that current price
and volume information with respect to transactions in such securities is
provided by the exchange or system).
24
The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the SEC which:
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contains a description of the nature and level
of risk in the market for penny stocks in both public offerings and
secondary trading; |
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contains a description of the brokers or
dealers duties to the customer and of the rights and remedies available
to the customer with respect to violations of such duties or other
requirements of federal securities laws; |
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contains a brief, clear, narrative description
of a dealer market, including bid and ask prices for penny stocks and
the significance of the spread between the bid and ask prices; |
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contains the toll-free telephone number for
inquiries on disciplinary actions; |
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defines significant terms in the disclosure
document or in the conduct of trading in penny stocks; and |
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contains such other information, and is in such
form (including language, type size, and format) as the SEC shall require
by rule or regulation. |
Prior to effecting any transaction in a penny stock, a
broker-dealer must also provide a customer with:
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the bid and ask prices for the penny stock;
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the number of shares to which such bid and ask
prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; |
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the amount and a description of any
compensation that the broker-dealer and its associated salesperson will
receive in connection with the transaction; and |
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a monthly account statement indicating the
market value of each penny stock held in the customers account.
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In addition, the penny stock rules require that prior to
effecting any transaction in a penny stock not otherwise exempt from those
rules, a broker-dealer must make a special written determination that the penny
stock is a suitable investment for the purchaser and receive (i) the purchasers
written acknowledgment of the receipt of a risk disclosure statement, (ii) a
written agreement to transactions involving penny stocks, and (iii) a signed and
dated copy of a written suitability statement. These disclosure requirements may
have the effect of reducing the trading activity in the secondary market for our
securities, and therefore our stockholders may have difficulty selling their
shares.
Blue Sky Restrictions on Resale
When a Selling Security Holder wants to sell shares of our
common stock under this Prospectus in the United States, the Selling Security
Holder will need to comply with state securities laws, also known as blue sky
laws, with regard to secondary sales. All states offer a variety of exemptions
from registration of secondary sales. Many states, for example, have an
exemption for secondary trading of securities registered under section 12(g) of
the Exchange Act or for securities of issuers that publish continuous disclosure
of financial and non-financial information in a recognized securities manual,
such as Standard & Poors. The broker for a selling security holder will be
able to advise the stockholder as to which states have an exemption for
secondary sales of our common stock.
25
Any person who purchases shares of our common stock from a
Selling Security Holder pursuant to this Prospectus, and who subsequently wants
to resell such shares will also have to comply with blue sky laws regarding
secondary sales.
When this Registration Statement becomes effective, and a
Selling Security Holder indicates in which state(s) he desires to sell his
shares, we will be able to identify whether he will need to register or may rely
on an exemption from registration.
Item 9 Description of Securities to be
Registered
Common Stock
We are authorized to issue up to 850,000,000 shares of common
stock, par value of $0.001 per share. The holders of our common stock:
(i) |
have equal ratable rights to dividends from funds legally
available, therefore, when, as and if declared by our board of
directors; |
(ii) |
are entitled to share in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution or
winding up of our affairs; |
(iii) |
do not have preemptive, subscription or conversion rights
and there are no redemption or sinking fund provisions or rights;
and |
(iv) |
are entitled to one non-cumulative vote per share on all
matters on which stockholders may vote. All shares of common stock now
outstanding are fully paid for and non-assessable and all shares of common
stock which are the subject of this Registration Statement, when issued,
will be fully paid for and non-assessable. |
Reference is made to our Articles of Incorporation, By-laws and
the applicable statutes of the State of Nevada for a more complete description
of the rights and liabilities of holders of our securities.
Preferred Stock
We are authorized to issue up to 25,000,000 shares of preferred
stock, par value of $0.001 per share. While our Certificate of Incorporation
authorizes the issuance of 25,000,000 shares of preferred stock, $0.001 par
value per share, no preferred shares have been issued nor are contemplated to be
issued in the near future. The Board of Directors is authorized to divide the
authorized shares of preferred stock into one or more series, and to fix and
determine the designations, rights, qualifications, preferences, limitations and
terms of the shares of any series of preferred stock.
Non-cumulative Voting
Holders of shares of our common stock do not have cumulative
voting rights; meaning that the holders of 50.1% of the outstanding shares,
voting for the election of directors, can elect all of the directors to be
elected, and, in such event, the holders of the remaining shares will not be
able to elect any of our directors.
26
Cash Dividends
As of the date of this Registration Statement, we have not paid
any cash dividends to stockholders. The declaration of any future cash dividend
will be at the discretion of our board of directors and will depend upon our
earnings, if any, our capital requirements and financial position, our general
economic conditions, and other pertinent conditions. It is our present intention
not to pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, in our business operations.
Anti-takeover Effects of Our Articles of Incorporation and
By-laws
Our amended and restated articles of incorporation and bylaws
contain certain provisions that may have anti-takeover effects, making it more
difficult for or preventing a third party from acquiring control of our company
or changing its board of directors and management. According to our bylaws and
articles of incorporation, neither the holders of our companys common stock
have cumulative voting rights in the election of our directors. The combination
of the present ownership by a few stockholders of a significant portion of our
companys issued and outstanding common stock and lack of cumulative voting
makes it more difficult for other stockholders to replace our companys board of
directors or for a third party to obtain control of our company by replacing its
board of directors.
Anti-takeover Effects of Nevada Law
Business Combinations
The business combination provisions of Sections 78.411 to
78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada
corporation with at least 200 stockholders from engaging in various
combination transactions with any interested stockholder: for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless the transaction is approved by the board of
directors prior to the date the interested stockholder obtained such status; or
after the expiration of the three-year period, unless:
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the transaction is approved by the board of
directors or a majority of the voting power held by disinterested
stockholders, or |
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if the consideration to be paid by the interested
stockholder is at least equal to the highest of: (a) the highest price per
share paid by the interested stockholder within the three years
immediately preceding the date of the announcement of the combination or
in the transaction in which it became an interested stockholder, whichever
is higher, (b) the market value per share of common stock on the date of
announcement of the combination and the date the interested stockholder
acquired the shares, whichever is higher, or (c) for holders of preferred
stock, the highest liquidation value of the preferred stock, if it is
higher. |
A combination is defined to include mergers or consolidations
or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in
one transaction or a series of transactions, with an interested stockholder
having: (a) an aggregate market value equal to 5% or more of the aggregate
market value of the assets of the corporation, (b) an aggregate market value
equal to 5% or more of the aggregate market value of all outstanding shares of
the corporation, or (c) 10% or more of the earning power or net income of the
corporation.
In general, an interested stockholder is a person who,
together with affiliates and associates, owns (or within three years, did own)
10% or more of a corporations voting stock. The statute could prohibit or delay
mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire our company even though such a transaction may
offer our stockholders the opportunity to sell their stock at a price above the
prevailing market price.
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Control Share Acquisitions
The control share provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS, which apply only to Nevada corporations with at least 200
stockholders, including at least 100 stockholders of record who are Nevada
residents, and which conduct business directly or indirectly in Nevada, prohibit
an acquirer, under certain circumstances, from voting its shares of a target
corporations stock after crossing certain ownership threshold percentages,
unless the acquirer obtains approval of the target corporations disinterested
stockholders. The statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of
the outstanding voting power. Once an acquirer crosses one of the above
thresholds, those shares in an offer or acquisition and acquired within 90 days
thereof become control shares and such control shares are deprived of the
right to vote until disinterested stockholders restore the right. These
provisions also provide that if control shares are accorded full voting rights
and the acquiring person has acquired a majority or more of all voting power,
all other stockholders who do not vote in favor of authorizing voting rights to
the control shares are entitled to demand payment for the fair value of their
shares in accordance with statutory procedures established for dissenters
rights.
Transfer Agent and Registrar
Our independent stock transfer agent is ClearTrust, LLC with
offices at 16540 Pointe Village Dr., Suite 206, Lutz, Florida 33558 (telephone:
(813) 235-4490 and facsimile: (813) 388-4549).
Item 10 Interests of Named Experts and
Counsel
No expert or counsel named in this Prospectus as having
prepared or certified any part thereof or having given an opinion upon the
validity of the securities being registered or upon other legal matters in
connection with the registration or offering of our common stock was employed on
a contingency basis or had or is to receive, in connection with the offering, a
substantial interest, directly or indirectly, in us. Additionally, no such
expert or counsel was connected with us as a promoter, managing or principal
underwriter, voting trustee, director, officer or employee.
Experts
The audited financial statements of our company for the two
most recent fiscal years ended April 30, 2014 and 2013 have been included in
this Prospectus in reliance upon DKM Certified Public Accountants, an
independent registered public accounting firm, as experts in accounting and
auditing.
Legal Matters
The law firm of W.L. Macdonald Law Corporation has rendered a
legal opinion regarding the validity of the shares of common stock offered by
the Selling Security Holder. It is exhibit 5.1 to the registration statement of
which this Registration Statement is a part.
Item 11 Information with Respect to Our
Company
DESCRIPTION OF BUSINESS
Forward-Looking Statements
This Prospectus contains forward-looking statements. To the
extent that any statements made in this Registration Statement contain
information that is not historical, these statements are essentially
forward-looking. Forward-looking statements can be identified by the use of
words such as expects, plans, may, anticipates, believes, should,
intends, estimates and other words of similar meaning. These statements are
subject to risks and uncertainties that cannot be predicted or quantified and,
consequently, actual results may differ materially from those expressed or
implied by such forward-looking statements. Such risks and uncertainties
include, without limitation, our ability to raise additional capital to finance
our activities; the effectiveness, profitability and marketability of our
products; legal and regulatory risks associated with the financing; the future
trading of our common stock; our ability to operate as a public company; our
ability to protect our intellectual property; general economic and business
conditions; the volatility of our operating results and financial condition; our
ability to attract or retain qualified personnel; and other risks detailed from
time to time in our filings with the SEC, or otherwise.
28
Information regarding market and industry statistics contained
in this Registration Statement is included based on information available to us
that we believe is accurate. It is generally based on industry and other
publications that are not produced for the purposes of securities offerings or
economic analysis. Forecasts and other forward-looking information obtained from
these sources are subject to the same qualifications outlined above and the
additional uncertainties accompanying any estimates of future market size,
revenue and market acceptance of products and services. We do not undertake any
obligation to publicly update any forward-looking statements.
Corporate Background and Business Development
New Media Insight Group, Inc. was incorporated on March 29,
2010 in the State of Nevada, U.S.A. Our fiscal year end is April 30. Our
administrative offices are located at 28202 N. 58th Street, Cave Creek, AZ
85331. The telephone number is (480) 275-2294.
Recent Developments
Amendment of Articles
On March 11, 2014, our company filed a certificate of change
(the Amendment) to its Certificate of Incorporation with the Secretary
of State of the State of Nevada in order to effectuate a one (1) for two (2)
reverse split of our companys shares of common stock, par value $0.001 per
share (Reverse Split) and (ii)decrease the number of authorized shares
of capital stock of our company to 850,000,000 shares of common stock, par value
$0.001 per share. The certificate of change has an effective date of March 24,
2014
On February 24, 2014, holders of a majority of the voting power
of the outstanding capital stock of our company authorized the Actions. As a
result of the reverse stock split, every two shares of our companys pre-reverse
split common stock will be combined and reclassified into one share of our
companys common stock. No fractional shares of common stock will be issued as a
result of the reverse stock split. Stockholders who otherwise would be entitled
to a fractional share shall receive the next higher number of whole shares.
These amendments have been reviewed by FINRA and have been
approved for filing with an effective date of April 7, 2014.
The reverse split became effective with the Over-the-Counter
Bulletin Board at the opening of trading on April 7, 2014. Our trading symbol is
NMED. Our new CUSIP number is 64704U 306.
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Throughout the this Registration Statement, each instance that
refers to a number of shares of our common stock, refers to the number of shares
of common stock after giving effect to the Reverse Split, unless otherwise
indicated.
Our company is continuing to pursue and expand upon the same
business however is in the process of significantly enhancing its product and
service offering and is developing new and proprietary technology in the area of
mobile payments and online monetization. Our company is a development stage
company and operates as an internet marketing business providing clients with
the latest in new media and mobile / smart phone advertising solutions. We will
specialize in developing mobile marketing, loyalty, and communication solutions.
Our companys mission is to help local merchants connect, communicate and
transact with their customers in a more effective way.
Effective September 1, 2013, our company entered into an
exclusive agency agreement with PayWith, pursuant to which our company will
market a new the Platform in the Territories. Pursuant to the agreement, our
company will generate revenue associated with every mCard transaction that takes
place using the mCardNetwork. Under the agreement, our company had the following
obligations to PayWith:
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Achieve the following targets within the
Territories: |
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Number of Signed |
Target Date |
Merchant Agreements |
6 months after effective date
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500 |
12 months after effective date |
2,000 |
18 months after effective
date |
10,000
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As of the date of this Registration Statement, these targets
have not been met. These targets were not met due to the slow rate of mobile
payment adoption in the United States. Pursuant to the agreement, PayWith may
revoke the exclusivity of the rights to the Platform held by us in the
Territories as these obligations were not met.
Our company has paid $150,000 to PayWith for the exclusive
licensing rights mentioned above.
Executive Summary
We work with local merchants and small and medium sized
businesses to help them improve their customer loyalty and attract new
customers. Our unique mobile and social marketing solutions are designed to
engage consumers in transacting using their mobile devices. Our company is
virtual in nature, meaning that employees and contractors will primarily work
from home, negating the need to retain formal office space. Our services are
highly specialized and focus on mobile payments, mobile / smart phone marketing,
mobile search engine optimization, as well as social media advertising through
Twitter, Facebook, and LinkedIn. Professional web designers, optimization
technicians, and Google AdWord specialists are retained on a contractual basis
and as demand requires. We license various aspects of our technology and then
customize the development of unique solutions via numerous development partners
so as to ensure that we have our own intellectual property and proprietary
solutions. Supporting functions such as creative and graphic design work are
also included in our portfolio to better service clients.
Strategic Initiatives
Fully optimized New Media Insight Group (NMIG)
website: We are in the late design process to launch our new and fully
search engine optimization (SEO) friendly website. The site will be
optimized to rank high on Google, Bing, and Yahoo organic searches in the
Territories.
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Direct Mail Campaign: We will use Direct Mail as a key
driver for our geographic marketing and exposure campaigns. The purpose of these
campaigns will be to target market merchants and small and medium sized
businesses, whose businesses could benefit from our marketing services and
communications technology.
Telemarketing: We are looking to engage an outside
telemarketing agency to help with our lead generation and sales of our services
to local merchants. This organizations responsibilities will be to reach the
manager, owner or decision maker at a merchant location and set up appointments
for one of our reps to do a more in depth presentation of our services and local
marketing platforms and solutions.
Mobile / Smart Phone Advertising: Our company is deeply
involved in an effort to expand our services to include smart phone marketing.
The exponential growth of smart phone use and its related marketing potential is
unprecedented, and NMIG is now positioned to capitalize on this irresistible
trend. We are looking to engage an outside agency to work with to create an
exclusive Mobile Application which our merchants can use as a Mobile Rewards
and Marketing application. We are currently in discussions with a number of
strong mobile development companies and are in the final stages of selecting our
partner for this initiative.
Competitive Business Conditions and Strategy; New Medias
Position in the Industry
Our company is a competitive company in the already existing
realm of mobile marketing and mobile advertising. Our companys main competitors
are firms offering similar services and functions.
Our strategic approach is to offer specific Pay Per Result
based services is one of the fastest growing advertising mediums in the world.
The objective will be to market our mobile marketing and communications platform
directly to local merchants who can use them to engage their existing customer
base and attract new customers through the use of cutting edge mobile marketing
and mobile communications tools. Our method will be to consult and educate our
clients on what will work best for their specific needs. In some cases, we may
provide educational seminars to groups of local merchants and educate the
marketplace on new technologies, tools and solutions that are available to them
through mobile marketing and social media communications.
Talent Sources and Names of Principal Suppliers
Our company will sell our services through our own website and
attract the required talent through network connections and recruiting
agencies.
Dependence on One or a Few Major Customers
Our companys business plan targets small to mid-size companies
that wish to improve their marketing and acquire new customers. Our company is
dependent on finding clients that fit this profile to succeed.
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Patents, Trademarks, Licenses, Agreements or Contracts
There are no aspects of our business plan which require a
patent, trademark, or product license. We have not entered into any vendor
agreements or contracts that give or could give rise to any obligations or
concessions.
Governmental Controls, Approval and Licensing
Requirements
We are not currently subject to direct federal, state or local
regulation other than regulations applicable to businesses generally or directly
applicable to electronic commerce. However, the Internet is increasingly
popular. As a result, it is possible that a number of laws and regulations may
be adopted with respect to the Internet. These laws may cover issues such as
user privacy, freedom of expression, pricing, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. Furthermore, the growth of electronic marketing may prompt
calls for more stringent consumer protection laws. Several states have proposed
legislation to limit the uses of personal user information gathered online or
require online services to establish privacy policies. The Federal Trade
Commission has also initiated action against at least one online service
regarding the manner in which personal information is collected from users and
provided to third parties. We will not provide personal information regarding
our users to third parties. However, the adoption of such consumer protection
laws could create uncertainty in web usage and reduce the demand for our
products.
We are not certain how our business may be affected by the
application of existing laws governing issues such as property ownership,
copyrights, encryption and other intellectual property issues, taxation, libel,
obscenity and export or import matters. The vast majority of such laws were
adopted prior to the advent of the Internet. As a result, they do not
contemplate or address the unique issues of the Internet and related
technologies. Changes in laws intended to address such issues could create
uncertainty in the Internet market place. Such uncertainty could reduce demand
for services or increase the cost of doing business as a result of litigation
costs or increased service delivery costs.
In addition, because our services results in the distribution
of advertisements over the Internet in multiple states and foreign countries,
other jurisdictions may claim that we are required to qualify to do business in
each such state or foreign country. We are qualified to do business only in
Nevada. Our failure to qualify in a jurisdiction where it is required to do so
could subject it to taxes and penalties. It could also hamper our ability to
enforce contracts in such jurisdictions. The application of laws or regulations
from jurisdictions whose laws currently apply to our business could have a
material adverse affect on our business, results of operations and financial
condition.
Research and Development Activities and Costs
We have not incurred any expenses and have spent no time on
specialized research and development activities, and have no plans to undertake
any research or development in the future.
Compliance with Environmental Laws
There are no special environmental laws for offering marketing
and advertising services on the Internet.
Number of Employees
On April 1, 2013, we entered into an employment agreement with
Michael Palethorpe, our sole director and officer, with an effective date of May
1, 2013. Pursuant to the terms of the employment agreement, Mr. Palethorpe will
as president and chief executive officer of our company, until April 30, 2014
after which the base salary will be reviewed for May 1, 2014 and beyond in
exchange for:
32
1. |
$6,000 per month in cash; and |
2. |
$6,000 per month in our common stock. The deemed price of
the stock will be the closing price of our common stock on the last
trading day immediately prior to the month that the stock is
due. |
Mr. Palethorpe is also entitled to an annual stock option grant
equal to 30% of his base salary to be granted at the beginning of the calendar
year and vest equally over the year. The price of the options will be the fair
market value of our companys stock at the time the options are granted (at the
beginning of the year), exercisable into a common share of our company at a
price of $0.75 and will expire three years after the date of grant. Further, Mr.
Palethorpe is received 2,000,000 stock options upon execution of the employment
agreement. These options vest at the rate of 500,000 options every six months at
an exercise price of $0.75 per share and expire three years after the date of
issuance. On May 1, 2014, we entered into an amending agreement with Mr.
Palethorpe whereby we agreed to renew his agreement and suspend the grant of
$6,000 in our common stock as of May 1, 2013. In addition, the vesting of stock
options equal to 30% of his cash base salary and the vesting of the remainder of
Mr. Palethorpes 2,000,000 options have also been suspended as of April 30,
2014.
As at the date of this Registration Statement, an aggregate of
2,013,500 options have been granted and, of those options, 504,500 options have
vested (but the vested options have not been converted to common stock).
We have no other employees, and do not foresee hiring any
additional employees in the near future. We will continue to seek additional
independent contractors through network connections and recruiting agencies.
PROPERTIES
Our companys address is 28202 N. 58th Street, Cave Creek, AZ
85331 and the telephone number is (480) 275-2294. The executive office is the
principle residence of our president, Michael Palethorpe, and our company pays,
as per December 2014, a rent of $250 per month. We do not have any formal rental
agreement and therefore, this arrangement can be broken by either party at any
time, without any prescribed amount of notice. We have access to an office space
of approximately 150 sq. ft. that includes computer equipment, fax machine and
internet access. We have no intention of finding, in the near future, another
office space to rent during the development stage of our company.
Our intellectual property includes an exclusive license to a
product called mCards (mobile cards) (the Platform) in the Territories.
The Platform is a mobile payments and rewards mobile application that allows
merchants to accept payments by mobile phone and market to consumers through
their phones.
Under the agreement, our company had the following obligations
to PayWith:
|
Achieve the following targets within the
territory: |
|
Number of Signed |
Target Date |
Merchant Agreements |
6 months after effective date
|
500 |
12 months after effective date |
2,000 |
18 months after effective
date |
10,000
|
As of the date of this Registration Statement, these targets
have not been met. These targets were not met due to the slow rate of mobile
payment adoption in the United States. Pursuant to the agreement, PayWith may
revoke the exclusivity of the rights to the Platform held by us in the
Territories as these obligations were not met.
33
Our company does not currently have any investments or
interests in any real estate, nor do we have investments or an interest in any
real estate mortgages or securities of persons engaged in real estate
activities.
LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings
against us, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our company.
From time to time, we may become involved in various lawsuits
and legal proceedings which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties and an adverse result in these
or other matters may arise from time to time that may harm our business.
MARKET INFORMATION
Our common stock is quoted on the OTCQB under the symbol
NMED. The following quotations, obtained from Stockwatch, reflect the high and
low bids for our common shares based on inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
|
|
OTC
Bulletin Board(1) |
|
Quarter Ended |
|
High |
|
|
Low |
|
October 31, 2014 |
$ |
1.09 |
|
$ |
0.36 |
|
July 31, 2014 |
$ |
1.77 |
|
$ |
1.00 |
|
April 30, 2014 |
$ |
2.50 |
|
$ |
1.87 |
|
January 31, 2014 |
$ |
2.60 |
|
$ |
1.00 |
|
October 31, 2013 |
$ |
2.70 |
|
$ |
2.40 |
|
July 31, 2013 |
$ |
1.60 |
|
$ |
1.60 |
|
April 30, 2013 |
$ |
10.00 |
|
$ |
1.10 |
|
January 31, 2013 |
$ |
1.10 |
|
$ |
1.10 |
|
October 31, 2012(2) |
$ |
1.10 |
|
$ |
1.10 |
|
(1) |
Over-the-counter market quotations reflect inter-dealer
prices without retail mark-up, mark-down or commission, and may not
represent actual transactions. |
(2) |
There were no trades during this
period. |
OTCQB securities are not listed and traded on the floor of an
organized national or regional stock exchange. Instead, OTCQB securities
transactions are conducted through a telephone and computer network connecting
dealers. OTCQB issuers are traditionally smaller companies that do not meet the
financial and other listing requirements of a national or regional stock
exchange. We cannot assure you that there will be a market in the future for our
common stock.
Our common shares are issued in registered form. ClearTrust,
LLC, 16540 Pointe Village Dr., Suite 206, Lutz, Florida 33558 Telephone: (813)
235-4490; Facsimile: (813) 388-4549 is the registrar and transfer agent for our
common shares.
34
As of December 23, 2014, we have 17 shareholders of record.
This number does not include shares held by brokerage clearing houses,
depositories or others in unregistered form.
Dividend Policy
We have not paid any cash dividends on our common stock and
have no present intention of paying any dividends on the shares of our common
stock. Our current policy is to retain earnings, if any, for use in our
operations and in the development of our business. Our future dividend policy
will be determined from time to time by our board of directors.
Equity Compensation Plan Information
We do not have in effect any compensation plans under which our
equity securities are authorized for issuance. As at the date of this
Registration Statement, an aggregate of 2,013,500 options have been granted and,
of those options, 504,500 options have vested (but the vested options have not
been converted to common stock).
Rule 144 Shares
In general, under Rule 144, a person who is not one of our
affiliates and who is not deemed to have been one of our affiliates at any time
during the three months preceding a sale and who has beneficially owned shares
of our common stock for at least six months would be entitled to sell them
without restriction, subject to the continued availability of current public
information about us (which current public information requirement is eliminated
after a one-year holding period).
A person who is an affiliate and who has beneficially owned
shares of a companys common stock for at least six months, subject to the
continued availability of current public information about us, is entitled to
sell within any three month period a number of shares that does not exceed the
greater of:
1. |
one percent of the number of shares of our companys
common stock then outstanding, which, in our case, will equal
approximately 298,402 shares as of the date of this Prospectus;
or |
|
|
2. |
the average weekly trading volume of our companys common
stock during the four calendar weeks preceding the filing of a notice on
form 144 with respect to the sale. |
Rule 144 is not available for either a reporting or
non-reporting shell company, as defined under Rule 405 of the Securities Act,
unless our company: has ceased to be a shell company; is subject to the Exchange
Act reporting obligations; has filed all required Exchange Act reports during
the preceding twelve months; and at least one year has elapsed from the time the
company filed with the SEC, current Form 10 type information reflecting its
status as an entity that is not a shell company.
Registration Rights
We are paying the expenses of the offering because we seek to finance our business operations. On December 10, 2014, we entered into the Equity Purchase Agreement with Premier Venture. Pursuant to the terms of the Equity Purchase Agreement, Premier Venture committed to purchase up to $2,000,000 of our common stock during the Open Period. From time to time during the Open Period, we may deliver a drawdown notice to Premier Venture which states the dollar amount that we intend to sell to Premier Venture on a date specified in the Put Notice. The maximum investment amount per notice shall not exceed the lesser of (i) 200% of the average daily trading volume of our common stock on the five trading days prior to the day the Put Notice is received by Premier Venture and (ii) 110% of any previous put amount during the maximum thirty-six (36) month period (however the amount for the preceding Section 2.2(ii) shall never be less than 70,000 shares). The total purchase price to be paid, in connection to the Put Notice, by Premier Venture shall be calculated at a thirty percent (30%) discount to the lowest individual daily VWAP of during the five (5) consecutive trading days immediately after the applicable date of the Put Notice, notwithstanding certain provisions pursuant to the Equity Purchase Agreement, less six hundred dollars ($600). We have more shares reserved than are covered in this Registration Statement. In consideration for the execution and delivery of the Equity Purchase Agreement by Premier Venture, we issued Premier Venture the Initial Commitment Shares.
35
In connection with the Equity Purchase Agreement, we also
entered into the Registration Rights Agreement with Premier Venture, pursuant to
which we are obligated to file this Registration Statement with the SEC. We are
obligated to use all commercially reasonable efforts to maintain an effective
registration statement until termination of the Equity Purchase Agreement.
In the near future, in order for us to continue with our
business plan, we may need to raise additional capital.
FINANCIAL STATEMENTS
This Prospectus includes the following financial statements:
|
Unaudited interim financial statements for the
three and six month periods ended October 31, 2014 and 2013; and |
|
Audited financial statements of our company for
fiscal years ended April 30, 2014 and 2013. |
Our financial statements are prepared in accordance with United
States generally accepted accounting principles and are stated in United States
Dollars (US$). The financial statements appear beginning on page F-1.
36
INDEX TO INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED OCTOBER 31, 2014
(UNAUDITED)
F-1
New Media Insight Group, Inc.
Balance Sheets
|
|
As at |
|
|
As at |
|
|
|
October 31, |
|
|
April 30, |
|
|
|
2014 |
|
|
2014 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash |
$ |
51,734 |
|
$ |
210,099
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
51,734 |
|
|
210,099 |
|
Intangible Asset, net |
|
33,334 |
|
|
83,334 |
|
Property and
Equipment, net |
|
1,502 |
|
|
1,767 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
86,570 |
|
$ |
295,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUTIY
(DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
$ |
7,343 |
|
$ |
12,372 |
|
Due to related
party |
|
600 |
|
|
4,921 |
|
Total Current
Liabilities |
|
7,943 |
|
|
17,293 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
7,943 |
|
|
17,293 |
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY (DEFICIT) |
|
|
|
|
|
|
Preferred
stock, par value $0.001, 25,000,000
shares authorized, none
issued and outstanding |
|
- |
|
|
- |
|
Common Stock, par value
$0.001, 850,000,000
shares authorized, 29,768,750
shares issued and outstanding |
|
29,769 |
|
|
29,769 |
|
Additional
paid-in capital |
|
1,159,609 |
|
|
1,159,609 |
|
Accumulated deficit |
|
(1,110,751 |
) |
|
(911,471 |
) |
Total Stockholders Equity (Deficit) |
|
78,627 |
|
|
277,907 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY (DEFICIT) |
$ |
86,570 |
|
$ |
295,200 |
|
The accompanying notes are an integral part of these financial
statements.
F-2
New Media Insight Group, Inc.
Interim Statements of
Operations
(Unaudited)
|
|
Three Months
ended October 31, |
|
|
Six Months
ended October 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES: |
|
- |
|
|
- |
|
|
- |
|
|
241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
advertising |
|
19,687 |
|
|
720 |
|
|
47,983 |
|
|
720 |
|
General and |
|
|
|
|
|
|
|
|
|
|
|
|
administrative
|
|
1,769 |
|
|
1,652 |
|
|
5,351 |
|
|
3,822 |
|
Officer Salary including |
|
|
|
|
|
|
|
|
|
|
|
|
payroll taxes
|
|
19,377 |
|
|
19,517 |
|
|
38,754 |
|
|
39,111 |
|
Stock Compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Depreciation and
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
25,133 |
|
|
16,744 |
|
|
50,265 |
|
|
16,822 |
|
Travel Cost |
|
2,706 |
|
|
- |
|
|
6,172 |
|
|
- |
|
Professional fees |
|
36,189 |
|
|
11,991 |
|
|
50,755 |
|
|
25,930 |
|
Total Operating
Expenses |
|
104,861 |
|
|
50,624 |
|
|
199,280 |
|
|
86,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
$ |
(104,861 |
) |
$ |
(50,624 |
) |
|
(199,280 |
) |
|
(86,164 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common
Share |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
|
(0.01 |
) |
|
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Common Weighted
Shares Outstanding |
|
29,768,750 |
|
|
29,768,750 |
|
|
29,768,750 |
|
|
29,723,913 |
|
The accompanying notes are an integral part of these financial
statements.
F-3
New Media Insight Group, Inc.
Interim Statements
of Changes in Stockholders Equity (Deficit)
For the Period from
April 30, 2013 to October 31, 2014
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Total |
|
|
|
Common Shares |
|
|
Paid-In |
|
|
|
|
|
Stockholders |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance April 30, 2013 |
|
29,218,750 |
|
$ |
29,219 |
|
$ |
47,670 |
|
$ |
(104,734 |
) |
$ |
(27,845 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
at $1.00 per share |
|
550,000 |
|
|
550 |
|
|
549,450 |
|
|
- |
|
|
550,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options issued to CEO
|
|
|
|
|
|
|
|
562,489 |
|
|
|
|
|
562,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period |
|
|
|
|
|
|
|
|
|
|
(806,737 |
) |
|
(806,737 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance April 30, 2014 |
|
29,768,750 |
|
$ |
29,769 |
|
$ |
1,159,609 |
|
$ |
(911,471 |
) |
$ |
277,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period |
|
|
|
|
|
|
|
|
|
|
(199,280 |
) |
|
(199,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance October 31, 2014
|
|
29,768,750 |
|
$ |
29,769 |
|
$ |
1,159,609 |
|
$ |
(1,110,751 |
) |
|
78,627 |
|
The accompanying notes are an integral part of these financial
statements.
F-4
New Media Insight Group, Inc.
Interim Statements of Cash
Flows
(Unaudited) |
|
Six Months
Ended October 31, |
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net loss for the period |
$ |
(199,280 |
) |
$ |
(86,164 |
) |
Adjustments to reconcile net
loss to net cash used in operations: |
|
|
|
|
|
|
Depreciation and Amortization |
|
50,265 |
|
|
16,822 |
|
Expenses paid by shareholder
|
|
- |
|
|
- |
|
Stock Compensation |
|
- |
|
|
- |
|
Changes in operating assets
and Liabilities: |
|
|
|
|
|
|
Decrease in accounts receivable
|
|
- |
|
|
(1,530 |
) |
Increase
(decrease) in accounts payable and |
|
|
|
|
|
|
accrued liabilities |
|
(5,029 |
) |
|
(21,851 |
) |
Net cash used
in operating activities |
|
(154,044 |
) |
|
(92,723 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
Purchase of intangible Asset |
|
- |
|
|
(150,000 |
) |
Purchase of property or
Equipment |
|
- |
|
|
(2,079 |
) |
Net cash provided
by (used in) investing activities |
|
- |
|
|
(152,079 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
Advance from
(payments to) related party |
|
(4,321 |
) |
|
(50 |
) |
Issuance of common stock for
cash |
|
- |
|
|
550,000 |
|
Net
cash provided by (used in) financing activities |
|
(4,321 |
) |
|
549,950 |
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash and cash equivalents |
|
(158,365 |
) |
|
305,148 |
|
|
|
|
|
|
|
|
Cash and cash equivalents
- beginning of period |
|
210,099 |
|
|
27 |
|
|
|
|
|
|
|
|
Cash and cash equivalents
- end of period |
$ |
51,734 |
|
$ |
305,175 |
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Disclosure: |
|
|
|
|
|
|
Cash paid for interest |
$ |
- |
|
$ |
- |
|
Cash paid
for income taxes |
$ |
- |
|
$ |
- |
|
The accompanying notes are an integral part of these financial
statements.
F-5
New Media Insight Group, Inc.
Notes to Interim Financial
Statements
October 31, 2014
(Unaudited)
NOTE 1. |
ORGANIZATION AND DESCRIPTION OF BUSINESS
|
New Media Insight Group, Inc. (the
Company) was incorporated on March 29, 2010 in the State of Nevada, U.S.A. Our
fiscal year end is April 30. Our administrative offices are located in Cave
Creek, AZ.
The Company is a development stage
company and operates as an internet marketing business providing clients with
new media and mobile / smart phone advertising solutions. The Company is
continuing to pursue and expand upon the same business, however, it is in the
process of significantly enhancing its product and service offering and is
developing new and proprietary technology in the area of mobile payments and
online monetization. The Company will specialize in developing mobile marketing,
loyalty, and communication solutions. The Companys mission is to help local
merchants connect, communicate and transact with their customers in a more
effective way.
The Company has devoted substantially
all of its efforts to raising capital, planning and implementing the principal
operations. The Company may continue to incur significant operating losses and
to generate negative cash flow from operating activities. The Company's ability
to eliminate operating losses and to generate positive cash flow from operations
in the future will depend upon a variety of factors, many of which it is unable
to control.
NOTE 2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Interim Financial Statements
The interim financial information
referred to above has been prepared and presented in conformity with accounting
principles generally accepted in the United States applicable to interim
financial information and with the instructions to Form 10-Q and Article 8 of
Regulation S-X. The interim financial information has been prepared on a basis
consistent with prior interim periods and years and includes all disclosures
that are necessary and required by applicable laws and regulations.
The unaudited financial statement and
notes are presented in accordance with accounting principles generally accepted
in the United States of America (GAAP). These interim financial statements
include all adjustments that, in the opinion of management, are necessary in
order to make the financial statements not misleading.
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 amount
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. The Companys periodic filings with the Securities
and Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and markets that could affect the financial
statements and future operations of the Company.
F-6
Cash and Cash Equivalents
Cash and cash equivalents include cash
in banks, money market funds, and certificates of term deposits with maturities
of less than three months from inception, which are readily convertible to known
amounts of cash and which, in the opinion of management, are subject to an
insignificant risk of loss in value. The Company had $51,734 and $210,099 in
cash and cash equivalents at October 31, 2014 and April 30, 2014,
respectively.
Start-Up Costs
In accordance with ASC 720,
Start-up Costs, the Company expenses all costs incurred in connection
with the start-up and organization of the Company.
Net Income or (Loss) Per Share of
Common Stock
The Company has adopted ASC 260,
Earnings per Share, (EPS) which requires presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation. In the accompanying financial statements, basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the period.
The following table sets forth the
computation of basic and diluted earnings per share:
|
|
|
Six Months
Ended October 31, |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
Net Income (loss) applicable
to Common Shares |
$ |
(199,280 |
) |
$ |
(86,164 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common
shares |
|
|
|
|
|
|
|
Outstanding (Basic) |
|
29,768,750 |
|
|
29,723,913 |
|
|
Options |
|
- |
|
|
- |
|
|
Warrants |
|
- |
|
|
- |
|
|
Weighted average common
shares |
|
|
|
|
|
|
|
Outstanding (Diluted) |
|
29,768,750 |
|
|
29,723,913 |
|
|
|
|
|
|
|
|
|
|
Net loss per share (Basic and Diluted) |
$ |
(0.01 |
) |
$ |
(0.00 |
) |
Basic income (loss) per share is
calculated by dividing the Companys net income (loss) applicable to common
shareholders by the weighted average number of common shares during the period.
Diluted earnings per share is calculated by dividing the Companys net income
(loss) available to common shareholders by the diluted weighted average number
of shares outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for any
potentially dilutive debt or equity. Under the treasury stock method, the
exercise price of an award, if any, the amount of compensation cost, if any, for
future service that the Company has not yet recognized, and the estimated tax
benefits that would be recorded in paid-in capital, if any, when an award is
settled are assumed to be used to repurchase shares in the current period.
Concentrations of Credit Risk
The Companys financial instruments
that are exposed to concentrations of credit risk primarily consist of its cash
and cash equivalents and related party payables it will likely incur in the near
future. The Company places its cash and cash equivalents with financial
institutions of high credit worthiness. At times, its cash and cash equivalents
with a particular financial institution may exceed any applicable government
insurance limits. The Companys management plans to assess the financial
strength and credit worthiness of any parties to which it extends funds, and as
such, it believes that any associated credit risk exposures are limited.
F-7
Accounts Receivable
Accounts receivable consist of charges
for service provided to customers. An allowance for doubtful accounts is
considered to be established for any amounts that may not be recoverable, which
is based on an analysis of the Companys customer credit worthiness, and current
economic trends. Based on managements review of accounts receivable, no
allowance for doubtful accounts was considered necessary. Receivables are
determined to be past due, based on payment terms of original invoices. The
Company does not typically charge interest on past due receivables.
Sales and Advertising
The costs of sales and advertising are
expensed as incurred. Sales and advertising expense was $47,983 and $720 for the
six months ended October 31, 2014 and 2013, respectively.
Revenue Recognition
The Company recognizes revenue from the
sale of services in accordance with ASC 605, Revenue Recognition.
Revenue consists of internet marketing services; focusing on website design,
search engine optimization, and viral social media marketing. Sales income is
recognized only when all of the following criteria have been met:
|
i) |
Persuasive evidence for an agreement exists; |
|
|
|
|
ii) |
Service has been provided; |
|
|
|
|
iii) |
The fee is fixed or determinable; and |
|
|
|
|
iv) |
Revenue is reasonably assured. |
Recent Accounting Pronouncements
The ASU pronouncement 2014-10
(Development Stage) which eliminates certain financial reporting requirements
has been adopted. Management has considered all recent accounting pronouncements
issued since the last audit of our consolidated financial statements. The
Companys management believes that these recent pronouncements will not have a
material effect on the Companys consolidated financial statements.
Authorized Stock
The Company has authorized 850,000,000
common shares and 25,000,000 preferred shares, both with a par value of $0.001
per share. Each common share entitles the holder to one vote, in person or
proxy, on any matter on which action of the stockholders of the corporation is
sought.
Share Issuance
On March 11, 2014, the Company filed a
certificate of amendment (the Amendment) to its Certificate of Incorporation
with the Secretary of State of the State of Nevada in order to (i) effectuate a
two (2) for one (1) reverse split of the Companys shares of common stock, par
value $0.001 per share (Reverse Split) and (ii) decrease the number of
authorized shares of capital stock of the Company to 850,000,000 shares of
common stock, par value $0.001 per share. The certificate of Change has an
effective date of March 24, 2014.
F-8
On February 24, 2014, holders of a
majority of the voting power of the outstanding capital stock of the Company
authorized the Actions. As a result of the reverse stock split, every two shares
of the Companys pre-reverse split common stock will be combined and
reclassified into one share of the Companys common stock. No fractional shares
of common stock will be issued as a result of the reverse stock split.
Stockholders who otherwise would be entitled to a fractional share shall receive
the next higher number of whole shares.
These amendments have been reviewed by
the Financial Industry Regulatory Authority (FINRA) and have been approved for
filing with an effective date of April 7, 2014.
The reverse split became effective with
the Over-the-Counter Bulletin Board at the opening of trading on April 7, 2014.
Our trading symbol is "NMED". Our new CUSIP number is 64704U 306.
Since inception (March 29, 2010), the
Company has issued 17,000,000 common shares at $0.0006 per share for $10,000 in
cash, and 12,218,750 common shares at $0.005 per share for $57,500 in cash.
Effective May 16, 2013, we entered into a private placement agreement with one
person for the issuance of 550,000 common shares at a purchase price of $1.00
per share, for $550,000 in cash, for total proceeds of $617,500. The total value
of common stock is $29,769 and Capital in excess of par value is $597,121.
There were 29,768,750 and 29,218,750
common shares issued and outstanding at October 31, 2014 and 2013
respectively. There are no preferred shares outstanding.
On August 8, 2014, and on September 8,
2014 Michael Palethorpe, our sole director and officer, has acquired from two
previous stockholders 8,500,000 restricted shares each, for a total of
17,000,000 restricted shares, which gives him a 57.11% ownership of the total
outstanding shares.
The holding of restricted shares is as
follows:
|
Total of
Restricted Shares: |
17,550,000 |
|
Total of Non-Restricted Shares:
|
12,218,750 |
|
Total of
Outstanding Shares: |
29,768,750
|
NOTE 4. |
EMPLOYMENT AGREEMENT |
The stock options and stock
compensation under the employment agreement, effective May 1, 2013, with Michael
Palethorpe, our sole director and officer, have been suspended as of May 1,
2014.
The Board of Directors has approved the
suspension of the stock options and stock compensation, until a new employment
agreement has been agreed upon or after the securing of a financing deal.
Pursuant to the terms of the employment agreement, Mr. Palethorpe was granted
2,000,000 stock options that were to vest at a rate of 500,000 options every 6
months. Each option had an exercise price of $0.75 and would have expired after
three years. These provisions have been suspended. The vesting provisions have
also been suspended, resulting in the associated expense to be delayed until a
new employment agreement has been has been agreed upon.
F-9
In addition, the annual stock option
grant equal to 30% of his base salary has also been suspended.
Of the 2,013,500 options granted on
April 30, 2014, 504,500 stock options have been vested. Until a new employment
agreement has been agreed upon no further options are to be granted and the
vesting of the issued options haves been suspended.
The new agreement may have different
terms related to the granting, vesting, exercise price, and contractual life of
the above and future stock options.
NOTE 5. |
PROPERTY AND EQUIPMENT |
The following table summarizes the
Property and Equipment as follows
|
|
|
October 31, 2014 |
|
|
April 30, 2014 |
|
|
Property and Equipment |
|
2,079 |
|
|
2,079 |
|
|
Acc. Depreciation |
|
577 |
|
|
312 |
|
|
|
|
1,502 |
|
|
1,767 |
|
In the three months ending October 31,
2014, the depreciation is $133, compared to $78 in 2013.
In the six months ending October 31,
2014, the depreciation is $265, compared to $156 in 2013.
The following table summarizes the
Intangible Asset as follows
|
|
|
October 31, 2014 |
|
|
April 30, 2014 |
|
|
Intangible Asset |
|
150,000 |
|
|
150,000 |
|
|
Acc. Amortization |
|
116,666 |
|
|
66,666 |
|
|
|
|
33,334 |
|
|
83,334 |
|
In the three months ending October 31,
2014, the amortization is $25,000, compared to 16,666 in 2013.
In the six months ending October 31,
2014, the amortization is $50,000, compared to $16,666 in 2013.
The options have been granted in
conjunction with an employment agreement. The year ended April 30, 2014 issued
2,013,500 options. At October 31, 2014 no options have expired. The options had
$0.05 intrinsic value at October 31, 2014.
F-10
As of May 1, 2014, no new stock options
have been granted as the Company amended the agreement with the party to suspend
the certain parts of the agreement, until a new employment agreement has been
agreed upon after the securing of a financing deal. The vesting provisions have
also been suspended, resulting in the associated expense to be delayed until a
new employment agreement has been has been agreed upon. In addition, the annual
stock option grant equal to 30% of his base salary has also been suspended.
Of the 2,013,500 options granted on
April 30, 2014, 504,500 stock options have been vested. Until a new employment
agreement has been agreed upon no further options are to be granted and the
vesting of the issued options haves been suspended.
The new agreement may have different
terms related to the granting, vesting, exercise price, and contractual life of
the above and future stock options.
The following table summarizes the
options at October 31, 2014.
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Average |
|
|
Weighted |
|
|
|
|
|
Weighted |
|
|
|
|
of Stock |
|
|
Remaining |
|
|
Average |
|
|
Actual |
|
|
Average |
|
|
Exercise |
|
Options |
|
|
Contractual |
|
|
Exercise |
|
|
Number |
|
|
Exercise |
|
|
Prices |
|
Outstanding |
|
|
Life (Years) |
|
|
Price |
|
|
Exercisable |
|
|
Price |
|
|
$0.75 |
|
2,013,500 |
|
|
2.63 |
|
$ |
0.75 |
|
|
504,500 |
|
$ |
0.75 |
|
|
|
|
2,013,500 |
|
|
2.63 |
|
$ |
0.75 |
|
|
504,500 |
|
$ |
0.75 |
|
Transactions involving the Companys
option issuance are summarized as follows:
|
|
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
|
Average Price |
|
|
|
|
Stock Options |
|
|
Per Share |
|
|
Outstanding at April 30, 2014
|
|
2,013,500 |
|
$ |
0.75 |
|
|
Granted |
|
- |
|
|
- |
|
|
Exercised |
|
- |
|
|
- |
|
|
Cancel or expired |
|
- |
|
|
- |
|
|
Outstanding at October 31,
2014 |
|
2,013,500 |
|
$ |
0.75 |
|
|
Suspended options yet to be vested |
|
1,509,000 |
|
|
|
|
|
Suspended options vested at
October 31, 2014 |
|
504,500 |
|
|
|
|
The warrants were issued in conjunction
with certain common stock offerings and no warrant expense was recognized during
the three months ended October 31, 2014. For the year ended April 30, 2014, the
Company issued 1,100,000 warrants. The warrants expire in two years. As at
October 31, 2014 no warrants had expired. The warrants had $0.20 intrinsic value
at October 31, 2014.
The following table summarizes the
stock purchase warrants at October 31, 2014.
F-11
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
|
|
|
Weighted |
|
|
|
|
Number |
|
|
Remaining |
|
|
Average |
|
|
Actual |
|
|
Average |
|
|
Exercise |
|
of Warrants |
|
|
Contractual |
|
|
Exercise |
|
|
Number |
|
|
Exercise |
|
|
Prices |
|
Outstanding |
|
|
Life (Years) |
|
|
Price |
|
|
Exercisable |
|
|
Price |
|
|
$1.00 |
|
1,1,00,000 |
|
|
1.50 |
|
$ |
1.00 |
|
|
1,100,000 |
|
$ |
1.00 |
|
|
|
|
1,100,000 |
|
|
1.50
|
|
$ |
1.00
|
|
|
1,100,000 |
|
$ |
1.00
|
|
Transactions involving the Companys
warrants issuance are summarized as follows:
|
|
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
|
Average Price |
|
|
|
|
Warrants |
|
|
Per Share |
|
|
Outstanding at April 30, 2014
|
|
1,100,000 |
|
$ |
1.00 |
|
|
Granted |
|
- |
|
|
- |
|
|
Exercised |
|
- |
|
|
- |
|
|
Cancel or expired |
|
- |
|
|
- |
|
|
Outstanding at October 31,
2014 |
|
1,100,000 |
|
$ |
1.00 |
|
All warrants will expire by May 16,
2015.
NOTE 9. |
PROVISION FOR INCOME TAXES |
The Company recognizes the tax effects
of transactions in the year in which such transactions enter into the
determination of net income, regardless of when reported for tax purposes.
Deferred taxes are provided in the financial statements under ASC 740-10-25 to
give effect to the resulting temporary differences which may arise from
differences in the bases of fixed assets, depreciation methods, allowances, and
start-up costs based on the income taxes expected to be payable in future
years.
Minimal deferred tax assets arising as
a result of net operation loss carry-forwards have been offset completely by a
valuation allowance due to the uncertainty of their utilization in future
periods.
The Company follows the provisions of
uncertain tax positions as addressed in ASC 740-10-65-1. The Company recognized
approximately no increase in the liability for unrecognized tax benefits.
The Company has no tax position at
October 31, 2014 for which the ultimate deductibility is highly certain but for
which there is uncertainty about the timing of such deductibility. The Company
recognizes interest accrued related to unrecognized tax benefits in interest
expense and penalties in operating expenses. No such interest or penalties were
recognized during the periods presented. The Company had no accruals for
interest and penalties at October 31, 2014. The open tax years with the Internal
Revenue Service are April 30, 2010 through 2014.
NOTE 10. |
DUE TO RELATED PARTY |
During the period ended October 31,
2014, a director and officer provided a non-interest bearing demand loan with a
balance of $600.
NOTE 11. |
GOING CONCERN AND LIQUIDITY CONSIDERATIONS
|
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern,
which contemplates the realization of assets and the liquidation of liabilities
in the normal course of business. As at October 31, 2014, the Company had a loss
from operations, for the period ended, of $199,280 an accumulated deficit of
$1,110,751, and working capital of $43,791 and has earned $38,690 in revenues
since inception. The Company has not yet established an ongoing source of
revenues to cover its growth and operating costs.
F-12
The Company depends upon capital to be
derived from future financing activities such as subsequent offerings of its
common stock or debt financing in order to operate and grow the business. There
can be no assurance that the Company will be successful in raising such capital.
The key factors that are not within the Company's control and that may have a
direct bearing on operating results include, but are not limited to, acceptance
of the Company's business plan, the ability to raise capital in the future, the
ability to expand its customer base, and the ability to hire key employees to
provide services. There may be other risks and circumstances that management may
be unable to predict.
The 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 possible inability of the Company to continue as a going
concern.
NOTE 12. |
SUBSEQUENT EVENTS |
The Company has evaluated subsequent
events from the balance sheet date through the date the financial statements
were issued. No subsequent events exist.
F-13
NEW MEDIA INSIGHT GROUP, INC.
INDEX TO AUDITED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 29, 2010 (INCEPTION) TO APRIL 30,
2014
F-14
|
2451 N. McMullen Booth Road
|
Suite.308 |
Clearwater, FL 33759
|
|
Toll fee: 855.334.0934
|
|
Fax: 800.581.1908
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
New Media Insight
Group
We have audited the accompanying balance sheet of New Media
Insight Group (a development stage company) as of April 30, 2014 and 2013, and
the related statement of operations, stockholders deficiency, and cash flows
from Inception (March 29, 2010) through April 30, 2014 and the years then ended.
These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of New Media
Insight Group as from Inception (March 29, 2010) through April 30, 2014, and the
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As shown in the
accompanying financial statements, the Company has significant net losses and
cash flow deficiencies. Those conditions raise substantial doubt about the
Companys ability to continue as a going concern. Managements plans regarding
those matters are described in Note 11. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ DKM Certified Public Accountants
DKM Certified Public Accountants
Clearwater, Florida
July 18, 2014
PCAOB Registered
AICPA Member
F-15
New Media Insight Group, Inc.
(A Development
Stage Company)
Balance Sheets
As at April 30,
2014 and 2013
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash |
$ |
210,099
|
|
$ |
27 |
|
|
|
|
|
|
|
|
Total Current Assets |
|
210,099 |
|
|
27 |
|
Intangible asset, net |
|
83,334 |
|
|
0 |
|
Property and Equipment, net
|
|
1,767 |
|
|
0 |
|
TOTAL ASSETS |
$ |
295,200 |
|
$ |
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts payable
and accrued liabilities |
$ |
12,372 |
|
$ |
27,222 |
|
Due to related party (note 9)
|
|
4,921 |
|
|
650 |
|
Total Current
Liabilities |
|
17,293 |
|
|
27,872 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
17,293 |
|
|
27,872 |
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY (note
3) |
|
|
|
|
|
|
Preferred stock, par value
$0.001, 25,000,000
shares authorized, none
issued and outstanding |
|
- |
|
|
- |
|
Common
Stock, par value $0.001, 850,000,000
shares authorized, 29,768,750
and 29,218,750 shares issued and
outstanding for April 30,
2014 and 2013 |
|
29,769 |
|
|
29,219 |
|
Additional paid-in capital |
|
1,159,609 |
|
|
47,670 |
|
Accumulated
deficit |
|
(911,471 |
) |
|
(104,734 |
) |
Total
Stockholders Equity |
|
277,907 |
|
|
(27,845 |
) |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY |
$ |
295,200 |
|
$ |
27 |
|
The accompanying notes are an integral part of these financial
statements.
F-16
New Media Insight Group, Inc.
(A Development
Stage Company)
Statements of Operations
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
|
From Inception |
|
|
|
|
|
|
|
|
|
(March 29, 2010) to |
|
|
|
Year Ended
April 30, |
|
|
April 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
REVENUES: |
$ |
241 |
|
$ |
0 |
|
$ |
38,690 |
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
Selling and Advertising |
|
38,936 |
|
|
0 |
|
|
68,036 |
|
Depreciation and
Amortization |
|
66,978 |
|
|
0 |
|
|
66,978 |
|
Officer Salary including
payroll taxes |
|
78,529 |
|
|
0 |
|
|
78,529 |
|
Stock
Compensation |
|
562,489 |
|
|
0 |
|
|
562.489 |
|
General and administrative |
|
12,023 |
|
|
13,423 |
|
|
36,199 |
|
Professional
fees |
|
48,023 |
|
|
28,304 |
|
|
137,930 |
|
|
|
|
|
|
|
|
|
|
|
Total Operating
Expenses |
|
806,978 |
|
|
41,727 |
|
|
950,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
$ |
(806,737 |
) |
$ |
(41,727 |
) |
$ |
(911,471 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common
Share |
$ |
(0.027 |
) |
$ |
(0.001 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common
Shares Outstanding |
|
29,746,147 |
|
|
29,218,750 |
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
F-17
New Media Insight Group, Inc.
(A Development
Stage Company)
Statements of Changes in Stockholders
Equity
For the Period Beginning March 29, 2010 (Inception) to April
30, 2014
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Total |
|
|
|
Common Shares |
|
|
Paid-In |
|
|
|
|
|
Stockholders |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance- March 29, 2010
(Inception) |
|
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
Common shares issued for cash at $0.0006 per
share |
|
8,500,000 |
|
|
8,500 |
|
|
(3,500 |
) |
|
|
|
|
5,000 |
|
Loss for the period |
|
- |
|
|
- |
|
|
- |
|
|
(1,844 |
) |
|
(1,844 |
) |
Balance April 30, 2010 |
|
8,500,000 |
|
|
8,500 |
|
|
(3,500 |
) |
|
(1,844 |
) |
|
3,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500,000 |
|
|
|
|
|
(3,500 |
) |
|
- |
|
|
5,000 |
|
Common shares issued for cash
at $0.0006 per share |
|
|
|
|
8,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
at $0.005 per share |
|
12,218,750 |
|
|
12,219 |
|
|
45,281 |
|
|
- |
|
|
57,500 |
|
Loss for the year |
|
|
|
|
|
|
|
|
|
|
(24,374 |
) |
|
(24,374 |
) |
Balance April 30, 2011 |
|
29,218,750 |
|
|
29,219 |
|
|
38,281 |
|
|
(26,218 |
) |
|
41,282 |
|
Loss for the year |
|
|
|
|
|
|
|
|
|
|
(36,789 |
) |
|
(36,789 |
) |
Balance April 30, 2012 |
|
29,218,750 |
|
|
29,219 |
|
|
38,281 |
|
|
(63,007 |
) |
|
4,493 |
|
Capital Contr. by S/H |
|
|
|
|
|
|
|
9,389 |
|
|
|
|
|
9,389 |
|
Loss for the year |
|
|
|
|
|
|
|
|
|
|
(41,727 |
) |
|
(41,727 |
) |
Balance April 30, 2013 |
|
29,218,750 |
|
|
29,219 |
|
|
47,670 |
|
|
(104,734 |
) |
|
(27,845 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash at $1.00 per
share |
|
550,000 |
|
|
550 |
|
|
549,450 |
|
|
- |
|
|
550,000 |
|
Stock options issued to CEO
|
|
|
|
|
|
|
|
562,489 |
|
|
|
|
|
562,489 |
|
Loss for the period |
|
|
|
|
|
|
|
|
|
|
(806,737 |
) |
|
(806,737 |
) |
Balance April 30, 2014 |
|
29,768,750 $ |
|
|
29,769 |
|
$ |
1,159,609 |
|
$ |
(911,471 |
) |
$ |
277,907 |
|
The accompanying notes are an integral part of these financial
statements.
F-18
New Media Insight Group, Inc.
(A Development
Stage Company)
Statements of Cash Flows
|
|
|
|
|
|
|
|
Cumulative |
|
|
|
|
|
|
|
|
|
from Inception |
|
|
|
|
|
|
|
|
|
(March 29, |
|
|
|
|
|
|
|
|
|
2010) to April |
|
|
|
Year Ended
April 30, |
|
|
30, 2014 |
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net
loss to net cash used in operations: |
$ |
(806,737 |
) |
$ |
(41,727 |
) |
|
(911,471 |
) |
Depreciation and Amortization: |
$ |
66,978 |
|
|
|
|
|
66,978 |
|
Expenses paid by shareholder
|
|
- |
|
|
9,389 |
|
|
9,389 |
|
Stock Compensation |
|
562,489 |
|
|
|
|
|
562,489 |
|
Changes in operating assets
and Liabilities: |
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts
receivable |
|
- |
|
|
5,175 |
|
|
- |
|
Increase (decrease)
in accounts payable and
accrued liabilities |
|
(14,850 |
) |
|
23,247 |
|
|
12,372 |
|
Net cash used in operating activities |
|
(192,120 |
) |
|
(3,916 |
) |
|
(260,243 |
) |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of intangible
Asset |
|
(150,000 |
) |
|
- |
|
|
(150,000 |
) |
Purchase of Property and Equipment |
|
(2,079 |
) |
|
- |
|
|
(2,079 |
) |
Net cash provided by (used in) investing
activities |
|
(152,079 |
) |
|
- |
|
|
(152,079 |
) |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advance from (payments to)
related party |
|
4,271 |
|
|
650 |
|
|
4,921 |
|
Issuance of common stock for cash |
|
550,000 |
|
|
- |
|
|
617,500 |
|
Net cash provided by (used in) financing
activities |
|
554,271 |
|
|
650 |
|
|
622,421 |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash
equivalents |
|
210,072 |
|
|
(3,266 |
) |
|
210,099 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period |
|
27 |
|
|
3,293 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period |
$ |
210,099 |
|
$ |
27 |
|
|
210 ,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Disclosure: |
|
|
|
|
|
|
|
|
|
Cash paid for interest |
$ |
- |
|
$ |
- |
|
|
- |
|
Cash paid for income taxes |
$ |
- |
|
$ |
- |
|
|
- |
|
The accompanying notes are an integral part of these financials.
F-19
New Media Insight Group, Inc.
(A Development
Stage Company)
Notes to Financial Statements
April 30,
2014 and 2013
NOTE 1. |
ORGANIZATION AND DESCRIPTION OF BUSINESS
|
New Media Insight Group, Inc. (the
Company) was incorporated on March 29, 2010 in the State of Nevada, U.S.A. Our
fiscal year end is April 30. Our administrative offices are located in Cave
Creek, AZ.
The Company is a development stage
company and operates as an internet marketing business providing clients with
the latest in new media and mobile / smart phone advertising solutions. The
Company is continuing to pursue and expand upon the same business; however, it
is in the process of significantly enhancing its product and service offering
and is developing new and proprietary technology in the area of mobile payments
and online monetization. The Company will specialize in developing mobile
marketing, loyalty, and communication solutions. The Companys mission is to
help local merchants connect, communicate and transact with their customers in a
more effective way.
The Company has devoted substantially
all of its efforts to raising capital, planning and implementing the principal
operations. The Company may continue to incur significant operating losses and
to generate negative cash flow from operating activities. The Company's ability
to eliminate operating losses and to generate positive cash flow from operations
in the future will depend upon a variety of factors, many of which it is unable
to control.
NOTE 2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
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 amount
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. The Companys periodic filings with the Securities
and Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and markets that could affect the financial
statements and future operations of the Company.
Cash and Cash Equivalents
Cash and cash equivalents include cash
in banks, money market funds, and certificates of term deposits with maturities
of less than three months from inception, which are readily convertible to known
amounts of cash and which, in the opinion of management, are subject to an
insignificant risk of loss in value. The Company had $210,099 and $27 in cash
and cash equivalents at April 30, 2014 and 2013, respectively.
F-20
Net Income or (Loss) Per Share of
Common Stock
The Company has adopted ASC 260,
Earnings per Share, (EPS) which requires presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation. In the accompanying financial statements, basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the
period.
F-21
The following table sets forth the
computation of basic and diluted earnings per share:
|
|
|
Year Ended April 30, |
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
Net loss applicable to Common Shares |
$ |
(806,737 |
) |
$ |
(41,727 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
(Basic) |
|
29,746,147 |
|
|
29,218,750 |
|
|
Options |
|
- |
|
|
- |
|
|
Warrants
|
|
- |
|
|
- |
|
|
Weighted average common shares outstanding (Diluted) |
|
29,746,147 |
|
|
29,218,750 |
|
|
|
|
|
|
|
|
|
|
Net loss per share (Basic and Diluted) |
$ |
(0.027 |
) |
$ |
(0.001 |
) |
Basic income (loss) per share is
calculated by dividing the Companys net income (loss) applicable to common
shareholders by the weighted average number of common shares during the period.
Diluted earnings per share is calculated by dividing the Companys net income
(loss) available to common shareholders by the diluted weighted average number
of shares outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for any
potentially dilutive debt or equity. Under the treasury stock method, the
exercise price of an award, if any, the amount of compensation cost, if any, for
future service that the Company has not yet recognized, and the estimated tax
benefits that would be recorded in paid-in capital, if any, when an award is
settled are assumed to be used to repurchase shares in the current period.
Due to the net loss, the options and
warrants are not used in the calculation of earnings per share because the
options and warrants are considered to be antidilutive.
Concentrations of Credit Risk
The Companys financial instruments
that are exposed to concentrations of credit risk primarily consist of its cash
and cash equivalents and related party payables it will likely incur in the near
future. The Company places its cash and cash equivalents with financial
institutions of high credit worthiness. At times, its cash and cash equivalents
with a particular financial institution may exceed any applicable government
insurance limits. The Companys management plans to assess the financial
strength and credit worthiness of any parties to which it extends funds, and as
such, it believes that any associated credit risk exposures are limited.
Accounts Receivable
Accounts receivable consist of charges
for service provided to customers. An allowance for doubtful accounts is
considered to be established for any amounts that may not be recoverable, which
is based on an analysis of the Companys customer credit worthiness, and current
economic trends. Based on managements review of accounts receivable, no
allowance for doubtful accounts was considered necessary. Receivables are
determined to be past due, based on payment terms of original invoices. The
Company does not typically charge interest on past due receivables.
F-22
Sales and Advertising
The costs of sales and advertising are
expensed as incurred. Sales and advertising expense was $38,936 and $0 for the
year ended April 30, 2014 and 2013, respectively.
Revenue Recognition
The Company recognizes revenue from the
sale of services in accordance with ASC 605, Revenue Recognition.
Revenue consists of mobile and social marketing related services; focusing
on new customer acquisition, customer loyalty and viral social media marketing.
Sales income is recognized only when all of the following criteria have been
met:
|
i) |
Persuasive evidence for an agreement exists; |
|
|
|
|
ii) |
Results have been delivered and tracked through our
system; |
|
|
|
|
iii) |
The fee is fixed or determinable; and |
|
|
|
|
iv) |
Revenue is reasonably assured. |
Recent Accounting Pronouncements
Management has considered all recent
accounting pronouncements issued since the last audit of our consolidated
financial statements. The Companys management believes that these recent
pronouncements will not have a material effect on the Companys consolidated
financial statements.
Stock-based Compensation
The Company uses the Black-Scholes
option pricing model to estimate the fair value of stock-based awards on the
date of grant, using assumptions for volatility, expected term, risk-free
interest rate and dividend yield. We have used one grouping for the assumptions
as our option grants were primarily basic with similar characteristics. The
expected term of options granted has been derived based upon our history of
actual exercise behavior and represents the period of time that options granted
were expected to be outstanding. Historical data was also used to estimate
option exercises and employee terminations. Estimated volatility was based upon
our historical market price at consistent points in a period equal to the
expected life of the options. The risk-free interest rate was based on the U.S.
Treasury yield curve in effect at the time of grant and the dividend yield was
based on the historical dividend yield. Compensation expense for stock based
compensation is recognized over the vesting period.
Authorized Stock
The Company has authorized 850,000,000
common shares and 25,000,000 preferred shares, both with a par value of $0.001
per share. Each common share entitles the holder to one vote, in person or
proxy, on any matter on which action of the stockholders of the corporation is
sought.
F-23
Share Issuance
On March 11, 2014, the Company filed a
certificate of amendment (the Amendment) to its Certificate of Incorporation
with the Secretary of State of the State of Nevada in order to (i) effectuate a
two (2) for one (1) reverse split of the Companys shares of common stock, par
value $0.001 per share (Reverse Split) and (ii) decrease the number of
authorized shares of capital stock of the Company to 850,000,000 shares of
common stock, par value $0.001 per share. The certificate of Change has an
effective date of March 24, 2014
On February 24, 2014, holders of a
majority of the voting power of the outstanding capital stock of the Company
authorized the Actions. As a result of the reverse stock split, every two shares
of the Companys pre-reverse split common stock will be combined and
reclassified into one share of the Companys common stock. No fractional shares
of common stock will be issued as a result of the reverse stock split.
Stockholders who otherwise would be entitled to a fractional share shall receive
the next higher number of whole shares.
These amendments have been reviewed by
the Financial Industry Regulatory Authority (FINRA) and have been approved for
filing with an effective date of April 7, 2014.
The reverse split became effective with
the Over-the-Counter Bulletin Board at the opening of trading on April 7, 2014.
Our trading symbol is "NMED". Our new CUSIP number is 64704U 306.
Since inception (March 29, 2010), the
Company has issued 17,000,000 common shares at $0.0006 per share for $10,000 in
cash, and 12,218,750 common shares at $0.005 per share for $57,500 in cash.
Effective May 16, 2013, we entered into a private placement agreement with one
person for the issuance of 550,000 common shares at a purchase price of $1.00
per share, for $550,000 in cash, for total proceeds of $617,500. The total value
of common stock is $29,769 and Capital in excess of par value is $597,121.
There were 29,768,750 and 29,218,750
common shares issued and outstanding at April 31, 2014 and 2013 respectively.
There are no preferred shares
outstanding.
NOTE 4. |
EMPLOYMENT AGREEMENT |
Currently, we have an employment
agreement, effective May 1, 2013, with Michael Palethorpe, our sole director and
officer. Pursuant to the terms of the employment agreement, Mr. Palethorpe was
granted 2,000,000 stock options, which vest at a rate of 500,000 every 6 months.
Each option has an exercise price of $0.75 and will expire after three
years.
Pursuant to the terms of the Employment
Agreement, Michael Palethorpe is entitled to an annual stock option grant equal
to 30% of his base salary to be granted at the beginning of the calendar year.
The value of the Annual Options is $21,600. Currently 13,500 options have been
granted.
NOTE 5. |
PROPERTY AND EQUIPMENT |
The following table summarizes the
property and Equipment at April 30, 2014.
F-24
|
|
|
April 30 |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
Property and |
|
|
|
|
|
|
|
Equipment |
|
2,079 |
|
|
0 |
|
|
Acc. Depreciation |
|
312 |
|
|
0 |
|
|
|
|
1,767 |
|
|
0 |
|
In the year ending April 30, 2014, the
depreciation is $312, compared to nil in 2013
The following table summarizes the
Intangible Asset at April 30, 2014.
|
|
|
April 30 |
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
Intangible Asset |
|
150,000 |
|
|
0 |
|
|
Acc. Amortization |
|
66,666 |
|
|
0 |
|
|
|
|
83,334 |
|
|
0 |
|
In the year ending April 30, 2014, the
amortization is $66,666, compared to nil in 2013.
The options have been granted in
conjunction with an employment agreement. The year ended April 30, 2014 issued
2,013,500 options. At April 30, 2014 no options had expired. The options had
$0.05 intrinsic value at April 30, 2014.
The following table summarizes the
options at April 30, 2014.
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Average |
|
|
Weighted |
|
|
|
|
|
Weighted |
|
|
|
|
of Stock |
|
|
Remaining |
|
|
Average |
|
|
Actual |
|
|
Average |
|
|
Exercise |
|
Options |
|
|
Contractual |
|
|
Exercise |
|
|
Number |
|
|
Exercise |
|
|
Prices |
|
Outstanding |
|
|
Life (Years) |
|
|
Price |
|
|
Exercisable |
|
|
Price |
|
|
$0.75 |
|
2,013,500 |
|
|
3.13 |
|
$ |
0.75 |
|
|
504,500 |
|
$ |
0.75 |
|
|
|
|
2,013,500 |
|
|
3.13 |
|
$ |
0.75 |
|
|
504,500 |
|
$ |
0.75 |
|
Transactions involving the Companys
option issuance are summarized as follows:
|
|
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
|
Average Price |
|
|
|
|
Stock Options |
|
|
Per Share |
|
|
Outstanding at April 30, 2013
|
|
- |
|
|
- |
|
|
Granted |
|
2,013,500 |
|
$ |
0.75 |
|
|
Exercised |
|
- |
|
|
- |
|
|
Cancel or expired |
|
- |
|
|
- |
|
|
Outstanding at April 30, 2014
|
|
2,013,500 |
|
$ |
0.75 |
|
|
Option yet to be vested |
|
1,509,000 |
|
|
|
|
|
|
|
504,500 |
|
|
|
|
F-25
Due to these options, the company
recognized and expensed stock compensation of $562,489 and increased paid in
capital by $562,489
The warrants were issued in conjunction
with certain common stock offerings and no warrant expense was during the nine
months ended April 30, 2014. For the year ended April 30, 2014 issued 1,100,000
warrants. Warrants expire in two years. As April 30, 2014 no warrants had
expired. The warrants had $0.20 intrinsic value at April 30, 2014.
The following table summarizes the
stock purchase warrants at April 30, 2014.
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Weighted |
|
|
|
|
|
Weighted |
|
|
|
|
Number |
|
|
Remaining |
|
|
Average |
|
|
Actual |
|
|
Average |
|
|
Exercise |
|
of Warrants |
|
|
Contractual |
|
|
Exercise |
|
|
Number |
|
|
Exercise |
|
|
Prices |
|
Outstanding |
|
|
Life (Years) |
|
|
Price |
|
|
Exercisable |
|
|
Price |
|
|
$1.00 |
|
1,1,00,000 |
|
|
1.50 |
|
$ |
1.00 |
|
|
1,100,000 |
|
$ |
1.00 |
|
|
|
|
1,100,000 |
|
|
1.50 |
|
$ |
1.00 |
|
|
1,100,000 |
|
$ |
1.00 |
|
Transactions involving the Companys
warrants issuance are summarized as follows:
|
|
|
|
|
|
Weighted |
|
|
|
|
Number of |
|
|
Average Price |
|
|
|
|
Warrants |
|
|
Per Share |
|
|
Outstanding at April 30, 2013
|
|
- |
|
|
- |
|
|
Granted |
|
1,100,000 |
|
$ |
1.00 |
|
|
Exercised |
|
- |
|
|
- |
|
|
Cancel or expired |
|
- |
|
|
- |
|
|
Outstanding at April 30, 2014
|
|
1,100,000 |
|
$ |
1.00 |
|
All warrants will expire by May 16,
2014.
The Company recognizes the tax effects
of transactions in the year in which such transactions enter into the
determination of net income, regardless of when reported for tax purposes.
Deferred taxes are provided in the financial statements to give effect to the
resulting temporary differences which may arise from differences in the bases of
fixed assets, depreciation methods, allowances, and startup costs based on the
income taxes expected to be payable in future years.
Minimal deferred tax assets arising as
a result of net operation loss carry forwards have been offset completely by a
valuation allowance due to the uncertainty of their utilization in future
periods. Operating loss carry forwards generated during the period from March
29, 2010 (date of inception) through April 30, 2014 of $911,471 will begin to
expire in 2031. Accordingly, deferred tax liability of approximately $319,000
(assuming an effective maximum statutory rate of 35%) were offset by the
valuation allowance that increased by approximately $282,300 and $14,600 for the
year ended April 30, 2014 and 2013, respectively.
F-26
The Company follows the provisions of
uncertain tax positions. The Company recognized approximately no increase in the
liability for unrecognized tax benefits.
The Company has no tax position at
April 30, 2014 for which the ultimate deductibility is highly certain but for
which there is uncertainty about the timing of such deductibility. The Company
recognizes interest accrued related to unrecognized tax benefits in interest
expense and penalties in operating expenses. No such interest or penalties were
recognized during the periods presented. The Company had no accruals for
interest and penalties at April 30, 2013. The open tax years are from 2010
through 2014.
NOTE 10. |
DUE TO RELATED PARTY |
As at April 30, 2014 and 2013, the
Company was obligated to a director, who is also an officer, for a non-interest
bearing demand loan with a balance of $4,921 and $650, respectively.
NOTE 11. |
GOING CONCERN AND LIQUIDITY CONSIDERATIONS
|
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern,
which contemplates the realization of assets and the liquidation of liabilities
in the normal course of business. As at April 30, 2014, the Company had a loss
from operations, for the year ended, of $806,737, an accumulated deficit of
$911,471, and working capital of $192,806 and has earned $38,690 in revenues
since inception. The Company has not yet established an ongoing source of
revenues sufficient to cover its operating costs and allow it to continue as a
going concern. The Company depends upon capital to be derived from future
financing activities such as subsequent offerings of its common stock or debt
financing in order to operate and grow the business. There can be no assurance
that the Company will be successful in raising such capital. The key factors
that are not within the Company's control and that may have a direct bearing on
operating results include, but are not limited to, acceptance of the Company's
business plan, the ability to raise capital in the future, the ability to expand
its customer base, and the ability to hire key employees to provide services.
There may be other risks and circumstances that management may be unable to
predict.
The 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 possible inability of the Company to continue as a going
concern.
NOTE 12. |
SUBSEQUENT EVENTS |
The Company has evaluated subsequent
events from the balance sheet date through the date the financial statements
were issued. No subsequent events exist.
F-27
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our
audited financial statements and the related notes for the years ended April 30,
2014 and 2013 and our interim financial statements and related notes for the
three and six month periods that end on October 31, 2014 that appear elsewhere
in this Prospectus. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to
those discussed below and elsewhere in this annual report, particularly in the
section entitled Risk Factors beginning on page 9 of this Prospectus.
Our financial statements are stated in United States Dollars
and are prepared in accordance with United States Generally Accepted Accounting
Principles.
Cash Requirements
Over the next 12 months we intend to carry on business as a
development stage company that operates as an internet marketing business
providing clients with the latest in new media and mobile / smart phone
advertising solutions. We anticipate that we will incur the following operating
expenses during this period:
Estimated Funding Required During the Next 12 Months |
Expense |
Amount ($) |
Consulting Fees
for Research and Development |
20,000 |
Engineering |
40,000 |
Fixed asset
purchases |
30,000 |
Management
Consulting Fees |
40,000 |
Professional fees
|
40,000 |
Rent |
10,000 |
Sales, Travel and
Marketing |
250,000 |
Other general
administrative expenses |
70,000 |
Total |
500,000 |
We will require funds of approximately $500,000 over the next
twelve months to operate our business. These funds may be raised through equity
financing, debt financing, or other sources, which may result in further
dilution in the equity ownership of our shares. There is no assurance that we
will be able to maintain operations at a level sufficient for an investor to
obtain a return on their investment in our common stock. Further, we may
continue to be unprofitable.
Purchase of Significant Equipment
We do not anticipate the purchase or sale of any plant or
significant equipment during the next 12 months.
38
General Overview
On March 11, 2014, our company filed a certificate of change
(the Amendment) to its Certificate of Incorporation with the Secretary
of State of the State of Nevada in order to effectuate a one (1) for two (2)
reverse split of our companys shares of common stock, par value $0.001 per
share (Reverse Split) and (ii) decrease the number of authorized shares
of capital stock of our company to 850,000,000 shares of common stock, par value
$0.001 per share. The certificate of change has an effective date of March 24,
2014
On February 24, 2014, holders of a majority of the voting power
of the outstanding capital stock of our company authorized the Actions. As a
result of the reverse stock split, every two shares of our companys pre-reverse
split common stock will be combined and reclassified into one share of our
companys common stock. These amendments have been reviewed by FINRA and have
been approved for filing with an effective date of April 7, 2014.
The reverse split became effective with the Over-the-Counter
Bulletin Board at the opening of trading on April 7, 2014. Our trading symbol is
NMED. Our new CUSIP number is 64704U 306.
Throughout this Registration Statement, each instance that
refers to a number of shares of our common stock, refers to the number of shares
of common stock after giving effect to the Reverse Split, unless otherwise
indicated.
Our company is continuing to pursue and expand upon the same
business however is in the process of significantly enhancing its product and
service offering and is developing new and proprietary technology in the area of
mobile payments and online monetization. Our company is a development stage
company and operates as an internet marketing business providing clients with
the latest in new media and mobile / smart phone advertising solutions. We will
specialize in developing mobile marketing, loyalty, and communication solutions.
Our companys mission is to help local merchants connect, communicate and
transact with their customers in a more effective way.
Effective September 1, 2013, our company entered into an
exclusive agency agreement with PayWith, pursuant to which our company will
market a new the Platform in the Territories. Pursuant to the agreement, our
company will generate revenue associated with every mCard transaction that takes
place using the mCardNetwork. Under the agreement, our company has not achieved
its obligations to PayWith, but will continue its efforts to sign merchant
agreements.
Under the agreement, our company had the following obligations
to PayWith:
|
Achieve the following targets within the
Territories: |
|
Number of Signed |
Target Date |
Merchant Agreements |
6 months after effective date
|
500 |
12 months after effective date |
2,000 |
18 months after effective
date |
10,000
|
As of the date of this Registration Statement, these targets
have not been met. These targets were not met due to the slow rate of mobile
payment adoption in the United States. Pursuant to the agreement, PayWith may
revoke the exclusivity of the rights to the Platform held by us in the
Territories as these obligations were not met.
39
As of the date of this Registration Statement, our company has
paid an aggregate of $150,000 to PayWith for the exclusive rights pursuant to
the agreement above.
On August 8, 2014, and on September 8, 2014 Michael Palethorpe,
our sole director and officer, has acquired 17,000,000 restricted shares from
two previous stockholders, which gives him a 57.11% ownership of the total
outstanding shares.
Results of Operations
The following summary of our results of operations should be
read in conjunction with our audited financial statements for the year ended
April 30, 2014 and our unaudited interim financial statements and related notes
for the three and six month periods that end on October 31, 2014.
Our operating results for the six month periods ended October
31, 2014 and 2013 are summarized as follows:
|
|
Six Months
Ended |
|
|
Three
Months Ended |
|
|
|
October
31, |
|
|
October
31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Revenue |
$ |
Nil |
|
$ |
241 |
|
$ |
Nil |
|
$ |
Nil |
|
Operating Expenses |
$ |
199,280 |
|
$ |
86,405 |
|
$ |
104,861 |
|
$ |
50,624 |
|
Operating Loss |
$ |
(199,280 |
) |
$ |
(86,164 |
) |
$ |
(104,861 |
) |
$ |
(50,624 |
)
|
Revenue
Our company earned its initial revenues starting in the third
quarter of the fiscal year ended April 30, 2011. The revenues were from the sale
of website designs, search engine optimization programs, and viral social media
marketing campaigns, and were recognized upon the completion of these programs.
We earned revenues of $0 for the six months ended October 31, 2014 compared to
revenues of $241 for the six months ended October 31, 2013. Minimal revenues in
2014 can be attributed to a conscious decision on the part of our directors to
retrench their efforts and spend the requisite time needed to both understand
and exploit the burgeoning use of mobile technology. Until our re-sharpened
efforts gain traction, growth will remain slow.
Expenses
Our total expenses for the six month periods ended October 31,
2014 and 2013 are outlined in the table below:
|
|
Six Months
Ended |
|
|
Three
Months Ended |
|
|
|
October
31, |
|
|
October
31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Selling and Advertising |
$ |
47,983 |
|
|
720 |
|
$ |
19,687 |
|
|
720 |
|
General and administrative |
$ |
5,351 |
|
|
3,822 |
|
$ |
1,769 |
|
|
1,652 |
|
Officer Salary |
$ |
38,754 |
|
|
39,111 |
|
$ |
19,377 |
|
|
19,517 |
|
Amortization/Depreciation |
$ |
50,265 |
|
|
16,822 |
|
$ |
25,133 |
|
|
16,744 |
|
Travel Cost |
$ |
6,172 |
|
|
Nil |
|
$ |
2,706 |
|
|
Nil |
|
Professional fees |
$ |
50,755 |
|
|
25,930 |
|
$ |
36,189 |
|
|
11,991 |
|
Total |
$ |
199,280
|
|
|
86,405 |
|
$ |
104,861
|
|
|
50,624 |
|
40
Expenses for the six month period ended October 31, 2014,
increased substantially compared to the comparative period in 2013. The
increases for the six month period ended October 31, 2014 were primarily as a
result of a significant increase in selling and advertising cost and
amortization due to an exclusive agency agreement with a company in the business
of developing and operating an internet based marketing platform.
Liquidity and Financial Condition
Working Capital
|
|
At |
|
|
At |
|
|
|
|
|
|
October 31, |
|
|
April 30, |
|
|
|
|
|
|
2014 |
|
|
2014 |
|
|
Change |
|
Current Assets |
$ |
51,734 |
|
$ |
210,099
|
|
$ |
(158,365 |
) |
Current Liabilities |
$ |
7,943 |
|
$ |
17,293 |
|
$ |
(93,50 |
) |
Working Capital (Deficit) |
$ |
43,791 |
|
$ |
192,806
|
|
$ |
(149,015 |
)
|
Cash Flows
|
|
Six Months
Ended |
|
|
|
|
|
|
October 31, |
|
|
|
2014 |
|
|
2013 |
|
Net Cash Used in Operating Activities |
$ |
(154,044 |
) |
$ |
(92,723 |
) |
Net Cash Used by Investing Activities |
$ |
Nil |
|
$ |
(152,079 |
) |
Net Cash Used In Financing Activities |
$ |
(4,321 |
) |
$ |
541,950 |
|
Net Increase (Decrease) in Cash During the Period |
$ |
(158,365 |
) |
$ |
305,148 |
|
We require additional funds to fund our budgeted expenses in
the near future. There is no assurance that we will be able to maintain
operations at a level sufficient for an investor to obtain a return on their
investment in our common stock. Further, we may continue to be unprofitable.
Additionally, there is no assurance that any party will advance additional funds
to us in order to enable us to sustain our plan of operations or to repay our
liabilities.
Liquidity and Capital Resources
Growth of our operations will be based on our ability to
internally finance from cash flow and raise equity and/or debt to increase sales
and production. Our primary sources of liquidity are: (i) cash from sales of our
services; and (ii) financing activities. Our cash balance as of October 31, 2014
was $51,734.
Limited Operating History; Need for Additional Capital
The report of our auditors on our audited financial statements
for the fiscal year ended April 30, 2014, contains a going concern qualification
as we have suffered losses since our inception. We have minimal assets and have
not yet established an ongoing source of revenues sufficient to cover our
operating costs and allow it to continue as a going concern. Unless and until we
commence material operations and achieve material revenues, we will remain
dependent on financings to continue our operations.
There is no historical financial information about us on which
to base an evaluation of our performance. We are a development stage company and
have not generated revenues from operations. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources and possible cost overruns due to the price and cost increases in and
services.
41
At present, we do not have enough cash on hand to cover
operating costs for the next 12 months. If we are unable to meet our needs for
cash from either the money that we raised from our offering, or possible
alternative sources, then we may be unable to continue, develop, and expand our
operations. There are also no plans or expectations to acquire or sell any plant
or plant equipment in the first full year of operations.
Plan of Operation and Cash Requirements
Our company began selling its services in December 2010. Our
company saw its revenues fall in 2012, primary due to a decision on the part of
the directors to retrench and devote a lot of their energies toward the
development of smart phone marketing initiatives. Our company is now the
exclusive agent of an internet based marketing platform in the Territories. Our
plan of action over the next twelve months is to diligently market and promote
the platform, to develop promotional materials for the platform, and participate
in trade shows and exhibitions. The success of our operations will be based on
our ability to grow by financing the operation through internal cash flow or to
raise funds through equity and/or debt financing to invest in marketing and
sales of our services. Our company has not been able to generate adequate
capital in this challenging market for credit. If the company does not secure
additional funding some of our marketing plans will have to be delayed. The
availability of future equity and/or debt financings remains uncertain.
We expect to continue a number of marketing initiatives that we
started last quarter including the following:
|
Continued development of a fully optimized
website; |
|
Embrace the use and expansion of mobile
marketing technology; |
|
Extensive social media marketing including the
leveraging of Facebook, Twitter, LinkedIn, and You Tube; |
|
Facebook (
https://www.facebook.com/pages/New-Media-Insight-Group/136275216429613);
|
|
Twitter (http://twitter.com/NMIGroup);
|
|
You Tube
(http://www.youtube.com/user/NewMediaInsightGroup); |
|
Continued recruitment of talent (Craigslist
listing); and |
|
Networking for sales leads at local Seattle and
Portland technology events |
As our business is a marketing and advertising company we are
able to complete most of our marketing initiatives without incurring additional
outside expenses by completing the work internally hence being able to keep our
advertising and marketing costs to a minimum. Over the next 12 months, we
anticipate that our company will not require additional funds to meet our
working capital requirements. In the event that we need additional funds in
addition to the cash on hand, we will endeavor to proceed with our plan of
operations by locating alternative sources of financing.
We do not anticipate hiring any staff during the next 12 months
of operation, and will rely on the services of our officers and directors.
If we are unable to increase sales and cash flow we do not have
sufficient working capital to implement our strategy for the next 12 months.
This could cause us to curtail or suspend our operations and may eventually
cause our business to fail.
42
Investing Activities
We used cash of $152,079 in investing activities during the
year ended April 30, 2014 compared to $Nil in April 30, 2013.
Financing Activities
We have financed our operations primarily from loans with
related parties, the issuance of equity and debt instruments. For the six months
ended October 31, 2014, we loss $4,321 from financing activities. For the six
months ended October 31, 2013, we generated $549,950 from financing activities.
Cash provided from financing activities was $554,271 for the
fiscal year ended April 30, 2014 compared to cash provided from financing
activities of $650 for the fiscal year ended April 30, 2013. The increase in
cash from financing activities was primarily due to issuance of our common stock
for cash.
Going Concern
There is significant doubt about our ability to continue as a
going concern.
As shown in the accompanying financial statements, we have
incurred net losses of $1,110,751 since inception. This condition raises
substantial doubt as to our ability to continue as a going concern. In response
to these conditions, we may raise additional capital through the sale of equity
securities, through an offering of debt securities or through borrowings from
financial institutions or individuals. The financial statements do not include
any adjustments that might be necessary if we are unable to continue as a going
concern.
Contractual Obligations
As a smaller reporting company, we are not required to
provide tabular disclosure obligations.
Inflation
Inflation and changing prices have not had a material effect on
our business and we do not expect that inflation or changing prices will
materially affect our business in the foreseeable future.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.Seasonality
Our operating results and operating cash flows historically
have not been subject to seasonal variations. This pattern may change, however,
in the event that we succeed in bringing our technology to market and acquire
oil and gas assets.
Critical Accounting Policies
The financial statements and the related notes of our company
are prepared in accordance with generally accepted accounting principles in the
United States and are expressed in US dollars.
43
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 amount of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Our companys periodic filings with the Securities and
Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and markets that could affect the financial
statements and future operations of our company.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market
funds, and certificates of term deposits with maturities of less than three
months from inception, which are readily convertible to known amounts of cash
and which, in the opinion of management, are subject to an insignificant risk of
loss in value. Our company had $51,734 and $210,099 in cash and cash equivalents
at October 31, 2014 and April 30, 2014, respectively.
Start-Up Costs
In accordance with ASC 720, Start-up Costs, our
company expenses all costs incurred in connection with the start-up and
organization of our company.
Net Income or (Loss) Per Share of Common Stock
Our company has adopted ASC 260, Earnings per Share,
(EPS) which requires presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. In the
accompanying financial statements, basic earnings (loss) per share is computed
by dividing net income (loss) by the weighted average number of shares of common
stock outstanding during the period.
The following table sets forth the computation of basic and
diluted earnings per share:
|
|
Six Months
Ended October 31, |
|
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
Net Income (loss) applicable
to Common Shares |
$ |
(199,280 |
) |
$ |
(86,164 |
) |
|
|
|
|
|
|
|
Weighted average common
shares |
|
|
|
|
|
|
Outstanding (Basic)
|
|
29,768,750 |
|
|
29,723,913 |
|
Options |
|
- |
|
|
- |
|
Warrants |
|
- |
|
|
- |
|
Weighted average common
shares |
|
|
|
|
|
|
Outstanding
(Diluted) |
|
29,768,750 |
|
|
29,723,913 |
|
|
|
|
|
|
|
|
Net loss per share (Basic and Diluted) |
$ |
(0.01 |
) |
$ |
(0.00 |
) |
Basic income (loss) per share is calculated by dividing our net
income (loss) applicable to common shareholders by the weighted average number
of common shares during the period. Diluted earnings per share is calculated by
dividing our net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity. Under the treasury
stock method, the exercise price of an award, if any, the amount of compensation
cost, if any, for future service that we have not yet recognized, and the
estimated tax benefits that would be recorded in paid-in capital, if any, when
an award is settled are assumed to be used to repurchase shares in the current
period.
44
Concentrations of Credit Risk
Our companys financial instruments that are exposed to
concentrations of credit risk primarily consist of its cash and cash equivalents
and related party payables it will likely incur in the near future. Our company
places its cash and cash equivalents with financial institutions of high credit
worthiness. At times, its cash and cash equivalents with a particular financial
institution may exceed any applicable government insurance limits. Our companys
management plans to assess the financial strength and credit worthiness of any
parties to which it extends funds, and as such, it believes that any associated
credit risk exposures are limited.
Accounts Receivable
Accounts receivable consist of charges for service provided to
customers. An allowance for doubtful accounts is considered to be established
for any amounts that may not be recoverable, which is based on an analysis of
the Companys customer credit worthiness, and current economic trends. Based on
managements review of accounts receivable, no allowance for doubtful accounts
was considered necessary. Receivables are determined to be past due, based on
payment terms of original invoices. The Company does not typically charge
interest on past due receivables.
Sales and Advertising
The costs of sales and advertising are expensed as incurred.
Sales and advertising expense was 47,983 and $720 for the six months ended
October 31, 2014 and 2013, respectively.
Revenue Recognition
We recognize revenue from the sale of services in accordance
with ASC 605, Revenue Recognition. Revenue consists of internet marketing
services; focusing on website design, search engine optimization, and viral
social media marketing. Sales income is recognized only when all of the
following criteria have been met:
|
i) |
Persuasive evidence for an agreement exists; |
|
ii) |
Service has been provided; |
|
iii) |
The fee is fixed or determinable; and |
|
iv) |
Revenue is reasonably assured. |
Recently Issued Accounting Pronouncements
The ASU pronouncement 2014-10 (Development Stage) which
eliminates certain financial reporting requirements has been adopted. Management
has considered all recent accounting pronouncements issued since the last audit
of our financial statements. Our management believes that these recent
pronouncements will not have a material effect on our financial statements.
45
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Previous Independent Auditors:
On December 26, 2014, DKM Certified Public Accountants declined
to stand for re-appointment as our independent accountant.
DKMs report on the financial statements for the years ended
April 30, 2014, and 2013, contained no adverse opinion or disclaimer of opinion
and was not qualified or modified as to audit scope or accounting, except that
the report contained an explanatory paragraph stating that there was substantial
doubt about our ability to continue as a going concern.
Our board of directors participated in and approved the
decision to change independent accountants. Through the period covered by the
financial review of financial statements of the quarterly period October 31,
2014, there have been no disagreements with DKM on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of DKM,
would have caused them to make reference thereto in their report on the
financial statements. Through the interim period December 26, 2014 (the date of
resignation of the former independent accountant), there have been no
disagreements with DKM on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of DKM would have caused them
to make reference thereto in their report on the financial statements.
We have authorized DKM to respond fully to the inquiries of the
successor accountant.
During the interim period through December 26, 2014, there have
been no reportable events with us as set forth in Item 304(a)(1)(iv) of
Regulation S-K.
We provided a copy of the foregoing disclosures to DKM prior to
the date of the filing of this Registration Statement and requested that DKM
furnish a letter addressed to the Securities & Exchange Commission stating
whether or not it agrees with the statements in this Report.
New Independent Accountants:
On December 26, 2014, we engaged Green & Company CPAs of
Tampa, Florida, as its new registered independent public accountant. During the
years ended April 30, 2014, and 2013, and prior to December 26, 2014 (the date
of the new engagement), we did not consult with Green & Company CPAs
regarding (i) the application of accounting principles to a specified
transaction, either completed or proposed (ii) the type of audit opinion that
might be rendered on our financial statements by Green & Company CPAs, in
either case where written or oral advice provided by Green & Company CPAs
would be an important factor considered by us in reaching a decision as to any
accounting, auditing or financial reporting issues or (iii) any other matter
that was the subject of a disagreement between us and our former auditor or was
a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of
Regulation S-K, respectively).
46
We have not had any changes in or disagreements with our
independent public accountants since our inception.
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Directors and Executive Officers
The following sets forth information about our directors and
executive officers as of the date of this report:
NAME |
AGE |
POSITION |
Michael Palethorpe (1) |
44 |
President, Chief Executive Officer, Chief
Financial Officer, Secretary, Treasurer and Director
|
|
(1) |
Michael Palethorpe was appointed as a President, Chief
Executive Officer, Chief Financial Officer, Secretary, Treasurer and
Director on December 31, 2012. |
Our directors will serve in that capacity until our next annual
shareholder meeting or until his successor is elected or appointed and
qualified. Officers hold their positions at the will of our Board of Directors.
There are no arrangements, agreements or understandings between non-management
security holders and management under which non-management security holders may
directly or indirectly participate in or influence the management of our
affairs.
Executive Management
Our management represents a significant depth of experience in
domestic and international technology business development and with public
companies. The team represents a cross-disciplinary approach to management and
business development.
Michael Palethorpe - President, Chief Executive Officer,
Chief Financial Officer, Secretary, Treasurer and Director
Michael Palethorpe was appointed as our president, chief
executive officer, chief financial officer, secretary, treasurer and director on
December 31, 2012. Mr. Palethorpe has been successful in business in a variety
of newly emerging industries such as the technology industry. He brings both
experience and success in both public and private companies and in the
for-profit and non-profit worlds. Since 1998 Mr. Palethorpe has founded several
successful companies including a US public company and world leader in XML
technologies in 1999, the worlds second largest mountain bike web site, which
had over 20,000 unique users a day in 2000, and was regional manager of a global
educational enterprise, doubling participation in its courses in 2004 and 2005.
In 2008, Michael Palethorpe was the top US account manager with
Metasoft Systems, a leader in foundation funding for charities, and he expanded
their reach and scope in the non-profit world. From 2009 to 2011, Mr. Palethorpe
managed a team of account managers. He has over 25 years of experience in
various capacities of both for-profit and non-profit organizations.
Our company believes that our director has the educational
background, operational and business experience gives him the qualifications and
skills necessary to serve as director and officer of our company. Our board of
directors consists solely of Mr. Palethorpe.
47
Significant Employees
Other than the foregoing named officers and directors, we have
no employees whose services are materially significant to our business and
operations.
Family Relationships
There are no family relationships between any of our directors
and officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or
executive officers has, during the past ten years:
1. |
been convicted in a criminal proceeding or been subject
to a pending criminal proceeding (excluding traffic violations and other
minor offences); |
|
|
2. |
had any bankruptcy petition filed by or against the
business or property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive
officer, either at the time of the bankruptcy filing or within two years
prior to that time; |
|
|
3. |
been subject to any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or temporarily
enjoining, barring, suspending or otherwise limiting, his involvement in
any type of business, securities, futures, commodities, investment,
banking, savings and loan, or insurance activities, or to be associated
with persons engaged in any such activity; |
|
|
4. |
been found by a court of competent jurisdiction in a
civil action or by the SEC or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated; |
|
|
5. |
been the subject of, or a party to, any federal or state
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any settlement
of a civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or
regulation, any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil money
penalty or temporary or permanent cease-and-desist order, or removal or
prohibition order, or any law or regulation prohibiting mail or wire fraud
or fraud in connection with any business entity; or |
|
|
6. |
been the subject of, or a party to, any sanction or
order, not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in
Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or
any equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member. |
Compliance with Section 16(a) of the Securities Exchange Act
of 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors and persons who own more
than 10% of a registered class of our equity securities to file with the SEC
initial statements of beneficial ownership, reports of changes in ownership and
annual reports concerning their ownership of our shares of common stock and
other equity securities, on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by the SEC regulations
to furnish us with copies of all Section 16(a) reports they file.
48
Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that during fiscal year ended April 30, 2012, all filing requirements applicable
to our officers, directors and greater than 10% percent beneficial owners were
complied with.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that
applies to, among other persons, members of our board of directors, our
company's officers including our president, chief executive officer and chief
financial officer, employees, consultants and advisors. As adopted, our Code of
Business Conduct and Ethics sets forth written standards that are designed to
deter wrongdoing and to promote:
1. |
honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of interest between personal and
professional relationships; |
2. |
full, fair, accurate, timely, and understandable
disclosure in reports and documents that we file with, or submit to, the
Securities and Exchange Commission and in other public communications made
by us; |
3. |
compliance with applicable governmental laws, rules and
regulations; |
4. |
the prompt internal reporting of violations of the Code
of Business Conduct and Ethics to an appropriate person or persons
identified in the Code of Business Conduct and Ethics; and |
5. |
accountability for adherence to the Code of Business
Conduct and Ethics. |
Our Code of Business Conduct and Ethics requires, among other
things, that all of our company's senior officers commit to timely, accurate and
consistent disclosure of information; that they maintain confidential
information; and that they act with honesty and integrity.
Nomination Process
As of April 30, 2014, we did not effect any material changes to
the procedures by which our shareholders may recommend nominees to our board of
directors. Our board of directors does not have a policy with regards to the
consideration of any director candidates recommended by our shareholders. Our
board of directors has determined that it is in the best position to evaluate
our companys requirements as well as the qualifications of each candidate when
the board considers a nominee for a position on our board of directors. If
shareholders wish to recommend candidates directly to our board, they may do so
by sending communications to the president of our company at the address on the
cover of this Registration Statement.
Committees of the Board
All proceedings of our board of directors were conducted by
resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the corporate laws of the state of Nevada and the
bylaws of our company, as valid and effective as if they had been passed at a
meeting of the directors duly called and held.
49
Our company currently does not have nominating, compensation
committees or committees performing similar functions nor does our company have
a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
our directors.
Our company does not have any defined policy or procedure
requirements for shareholders to submit recommendations or nominations for
directors. The directors believe that, given the early stage of our development,
a specific nominating policy would be premature and of little assistance until
our business operations develop to a more advanced level. Our company does not
currently have any specific or minimum criteria for the election of nominees to
the board of directors and we do not have any specific process or procedure for
evaluating such nominees. Our directors assess all candidates, whether submitted
by management or shareholders, and make recommendations for election or
appointment.
A shareholder who wishes to communicate with our board of
directors may do so by directing a written request addressed to our president,
at the address appearing on the first page of this Registration Statement.
Audit Committee
Currently our company is developing a comprehensive board of
directors and does not have an Audit Committee. Our company intends to appoint
audit, compensation and other applicable committee members as it appoints
individuals with pertinent expertise.
Audit Committee and Audit Committee Financial Expert
Our board of directors has determined that it does not have a
member of its audit committee that qualifies as an audit committee financial
expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and is independent
as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.
We believe that our board of directors is capable of analyzing
and evaluating our financial statements and understanding internal controls and
procedures for financial reporting. We believe that retaining an independent
director who would qualify as an audit committee financial expert would be
overly costly and burdensome and is not warranted in our circumstances given the
early stages of our development and the fact that we have not generated any
material revenues to date. In addition, we currently do not have nominating,
compensation or audit committees or committees performing similar functions nor
do we have a written nominating, compensation or audit committee charter. Our
directors do not believe that it is necessary to have such committees because
they believe the functions of such committees can be adequately performed by the
members of our board of directors.
EXECUTIVE COMPENSATION
Summary Compensation Table Fiscal Years of Our Company
Ended April 30, 2013 and April 30, 2014
The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No other executive
officer received total annual salary and bonus compensation in excess of
$100,000.
50
SUMMARY COMPENSATION
TABLE |
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
Non- |
Pension |
|
|
|
|
|
|
|
|
Equity |
Value and |
|
|
|
|
|
|
|
|
Incentive |
Nonqualified |
All |
|
Name |
|
|
|
|
|
Plan |
Deferred |
Other |
|
and |
|
|
|
Stock |
Option |
Compensa- |
Compensation |
Compensa- |
|
Principal |
|
Salary |
Bonus |
Awards |
Awards |
tion |
Earnings |
tion |
Total |
Position |
Year |
($) |
($) |
($) |
($) |
($) |
($) |
($) |
($) |
Michael |
2014 |
72,000 |
0 |
0 |
1,271,000 |
0 |
0 |
0 |
1,343,000 |
Palethorpe(1) President, Chief Executive
Officer, Chief Financial Officer,
Secretary, Treasurer and Director |
2013 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
(1) |
Michael Palethorpe was appointed as our president, chief
executive officer, chief financial officer, secretary, treasurer and
director on December 31, 2012. |
Summary of Employment Agreements and Material Terms
On April 1, 2013, we entered into an employment agreement with
Michael Palethorpe, our sole director and officer, with an effective date of May
1, 2013. Pursuant to the terms of the employment agreement, Mr. Palethorpe act
as president and chief executive officer of our company, until April 30, 2014
after which the base salary will be reviewed for May 1, 2014 and beyond in
exchange for:
1. |
$6,000 per month in cash; and |
2. |
$6,000 per month in our common stock. The deemed price of
the stock will be the closing price of our common stock on the last
trading day immediately prior to the month that the stock is
due. |
Mr. Palethorpe is also entitled to an annual stock option grant
equal to 30% of his base salary to be granted at the beginning of the calendar
year and vest equally over the year. The price of the options will be the fair
market value of our companys stock at the time the options are granted (at the
beginning of the year), exercisable into a common share of our company at a
price of $0.75 and will expire three years after the date of grant. Further, Mr.
Palethorpe is entitled to receive 2,000,000 stock options upon execution of the
employment agreement. These option vest at the rate of 500,000 options every six
months at an exercise price of $0.75 per share and expire three years after the
date of issuance. On May 1, 2014, we entered into an amending agreement with Mr.
Palethorpe whereby we agreed to renew his agreement and suspend the grant of
$6,000 in our common stock as of May 1, 2013. In addition, the vesting of stock
options equal to 30% of his cash base salary and the vesting of the remainder of
Mr. Palethorpes 2,000,000 options have also been suspended as of April 30,
2014.
As at the date of this Registration Statement, the vested
options have not been converted to common stock.
51
Narrative Disclosure to Summary Compensation Table
Currently we have an employment agreement, effective May 1,
2013, with Michael Palethorpe, for acting as president and chief executive
officer of our company. Pursuant to the terms of the employment agreement, Mr.
Palethorpe, has been granted 2,000,000 stock options, which vest at a rate of
500,000 options every 6 months. Each option has an exercise price of $0.75 and
will expire after three years. As at the date of this report, the vested options
have not been converted to common stock.
Michael Palethorpe was awarded $72,000 in the year ended April
30, 2014 and $12,000 for his March and April 2013 services, in his capacity as
an officer.
Stock Option Plan
Pursuant to the terms of the Employment Agreement, Michael
Palethorpe is entitled to an annual stock option grant equal to 30% of his base
salary to be granted at the beginning of the calendar year and vest equally over
the year. The value of the annual options is $21,600. Currently, 4,500 options
have vested of the 13,500 options that have been granted. Each vested option is
exercisable into one common share of our company at a price of $0.75. However,
our company has not adopted a formal stock option plan.
On May 1, 2014, we entered into an amending agreement with Mr.
Palethorpe whereby we agreed to renew his agreement and suspend the grant of
$6,000 in our common stock as of May 1, 2013. In addition, the vesting of stock
options equal to 30% of his cash base salary and the vesting of the remainder of
Mr. Palethorpes 2,000,000 options have also been suspended as of April 30,
2014.Stock Options/SAR Grants
Effective May 1, 2013, we granted 2,000,000 stock options to
Michael Palethorpe, pursuant to the terms of his employment agreement. The stock
options vest at a rate of 500,000 options every 6 months. Each option has an
exercise price of $0.75 and will expire after three years. As at the date of
this report, the vested options have not been converted to common stock. As of
the date of this Registration Statement 504,500 options have vested and are
eligible for exercise.
Outstanding Equity Awards at Fiscal Year End
There were no outstanding equity awards at the year ended April
30, 2014.
Option Exercises and Stock Vested
During our fiscal year ended April 30, 2014 there were no
options exercised by our named officers.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the board of directors or
a committee thereof.
52
Indebtedness of Directors, Senior Officers, Executive
Officers and Other Management
None of our directors or executive officers or any associate or
affiliate of our company during the last two fiscal years, is or has been
indebted to our company by way of guarantee, support agreement, letter of credit
or other similar agreement or understanding currently outstanding.
Compensation of Directors
No other member of our board of directors received any
compensation for his services as a director during the year ended April 30, 2014
than Mr. Palethorpe.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of December 23,
2014, by: (i) each of our directors; (ii) each of our named executive officers;
and (iii) each person or group known by us to beneficially own more than 5% of
our outstanding shares of common stock. Unless otherwise indicated, the
shareholders listed below possess sole voting and investment power with respect
to the shares they own.
Name and Address of Beneficial
Owner |
Amount and Nature of
Beneficial Ownership(1) |
Percentage
of
Class |
Michael Palethorpe(2) 28202 N. 58th
Street
Cave Creek, AZ 85331 |
17,000,000
|
57.1%
|
Directors and Executive Officers as
a Group |
17,000,000
|
57.1%
|
Other Shareholders |
17,000,000 |
57.1%
|
|
(1) |
Under Rule 13d-3, a beneficial owner of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or shares: (i)
voting power, which includes the power to vote, or to direct the voting of
shares; and (ii) investment power, which includes the power to dispose or
direct the disposition of shares. Certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share
the power to vote or the power to dispose of the shares). In addition,
shares are deemed to be beneficially owned by a person if the person has
the right to acquire the shares (for example, upon exercise of an option)
within 60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned
by such person (and only such person) by reason of these acquisition
rights. As a result, the percentage of outstanding shares of any person as
shown in this table does not necessarily reflect the persons actual
ownership or voting power with respect to the number of shares of common
stock actually outstanding on December 23, 2014. As of December 23, 2014
there were 29,768,750 shares of our companys common stock issued and
outstanding. |
|
(2) |
Michael Palethorpe is our companys president, chief
executive officer, chief financial officer, treasurer, secretary and
director. Mr. Palethorpe also holds 504,500 vested stock options
exercisable for $0.75 for three years upon
issuance. |
53
Changes in Control
Other than as disclosed, we are unaware of any contract or
other arrangement or provisions of our Articles or Bylaws the operation of which
may at a subsequent date result in a change of control of our company. There are
not any provisions in our Articles or Bylaws, the operation of which would
delay, defer, or prevent a change in control of our company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
Transactions with Related Persons of Our Company
The following includes a summary of transactions since the
beginning of the April 30, 2014 fiscal year, or any currently proposed
transaction, in which our company was or is to be a participant and the amount
involved exceeded or exceeds the lesser of $120,000 or one percent of the
average of our total assets at year end for the last two completed fiscal years,
and in which any related person had or will have a direct or indirect material
interest (other than compensation described under Executive Compensation). We
believe the terms obtained or consideration that we paid or received, as
applicable, in connection with the transactions described below were comparable
to terms available or the amounts that would be paid or received, as applicable,
in arms-length transactions.
Mr. Palethorpe, our only director, is not independent director
as he also serves as our executive officers.
On April 1, 2013, we entered into an employment agreement with
Michael Palethorpe, our sole director and officer, with an effective date of May
1, 2013. Pursuant to the terms of the employment agreement, Mr. Palethorpe act
as president and chief executive officer of our company, until April 30, 2014
after which the base salary will be reviewed for May 1, 2014 and beyond in
exchange for:
1. |
$6,000 per month in cash; and |
2. |
$6,000 per month in our common stock. The deemed price of
the stock will be the closing price of our common stock on the last
trading day immediately prior to the month that the stock is
due. |
Mr. Palethorpe is also entitled to an annual stock option grant
equal to 30% of his base salary to be granted at the beginning of the calendar
year and vest equally over the year. The price of the options will be the fair
market value of our companys stock at the time the options are granted (at the
beginning of the year), exercisable into a common share of our company at a
price of $0.75 and will expire three years after the date of grant. Further, Mr.
Palethorpe is entitled to receive 2,000,000 stock options upon execution of the
employment agreement. These option vest at the rate of 500,000 options every six
months at an exercise price of $0.75 per share and expire three years after the
date of issuance. As at the date of this Registration Statement, the vested
options have not been converted to common stock.
On May 1, 2014, we entered into an amending agreement with Mr.
Palethorpe whereby we agreed to renew his agreement and suspend the grant of
$6,000 in our common stock as of May 1, 2013. In addition, the vesting of stock
options equal to 30% of his cash base salary and the vesting of the remainder of
Mr. Palethorpes 2,000,000 options have also been suspended as of April 30,
2014.As of April 30, 2014, our company was obligated to Michael Palethorpe for a
non-interest bearing demand loan with a balance of $4,921. There is no written
agreement regarding this loan.
Our company has not had any other transaction since the last
two fiscal years ended April 30, 2013 and 2013, or any currently proposed
transaction, in which our company was or is to be a participant and the amount
involved exceeded or exceeds the lesser of $120,000 or one percent of the
average of our total assets at year end for the last two completed fiscal years,
and in which any related person had or will have a direct or indirect material
interest (other than compensation described under Executive Compensation).
54
Promoters and Certain Control Persons
We have no promoters of the company other than the management
of our company.
CORPORATE GOVERNANCE
We currently act with one director, consisting of Michael
Palethorpe.
We do not have a standing audit, compensation or nominating
committee, but our entire board of directors acts in such capacities. We believe
that our board of directors is capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for financial
reporting. The board of directors of our company does not believe that it is
necessary to have a standing audit, compensation or nominating committee because
we believe that the functions of such committees can be adequately performed by
the board of directors. Additionally, we believe that retaining an independent
director who would qualify as an audit committee financial expert would be
overly costly and burdensome and is not warranted in our circumstances given the
early stages of our development.
Director Independence
We currently do not have any independent directors, as the term
independent is defined by the rules of the NASDAQ Stock Market.
Item 12A Disclosure of Commission Position on
Indemnification of Securities Act Liabilities
Our Bylaws provide that we indemnify our directors and officers
to the fullest extent not prohibited by Nevada law.
The general effect of the foregoing is to indemnify a control
person, officer or director from liability, thereby making us responsible for
any expenses or damages incurred by such control person, officer or director in
any action brought against them based on their conduct in such capacity,
provided they did not engage in fraud or criminal activity.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers or control persons
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
We are incorporated under the laws of the State of Nevada.
Section 78.138 of the Nevada Revised Statutes (NRS) provides that
neither a director nor an officer of a Nevada corporation can be held personally
liable to the corporation, its stockholders or its creditors unless the director
or officer committed both a breach of fiduciary duty and such breach was
accompanied by intentional misconduct, fraud, or knowing violation of law.
Nevada does not exclude breaches of the duty of loyalty or instances where the
director has received an improper personal benefit.
55
A Nevada corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with the action, suit or proceeding, if he is not liable
under NRS 78.138 (see above), acted in good faith and in a manner he
reasonably believed to be in and not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. However, with respect to
actions by or in the right of the corporation, no indemnification shall be made
with respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper. A director or
officer who is successful, on the merits or otherwise, in defense of any
proceeding subject to the Nevada corporate statutes indemnification provisions
must be indemnified by the corporation for reasonable expenses incurred in
connection therewith, including attorneys fees.
Our companys Bylaws provide that the corporation shall, to the
maximum extent and in the manner permitted by the NRS, indemnify and hold
harmless any and all persons whom it shall have power to indemnify under said
provisions from and against any and all liabilities (including expenses) imposed
upon or reasonably incurred by him or her in connection with any action, suit or
other proceeding in which he or she may be involved or with which he or she may
be threatened, or other matters referred to in or covered by said provisions
both as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director or officer of the corporation. Our companys Bylaws do
not modify Nevada law in this respect.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and persons controlling
us pursuant to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
We have no liability insurance.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until a date, which is 90 days after the date of this
Prospectus, all dealers that effect transactions in these securities whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
PART II INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13 Other Expenses of Issuance and
Distribution
No expenses will be borne by the Selling Security Holders. Our
estimated expenses in connection with the issuance and distribution of the
securities being registered in this Prospectus are as follows:
56
Commission filing fee |
$ |
339 |
|
Legal fees and expenses |
|
10,000 |
|
Accounting fees and expenses
|
|
3,000 |
|
Printing and marketing expenses |
|
6,000 |
|
Miscellaneous |
|
5,000 |
|
Total |
$ |
24,339 |
|
Item 14 Indemnification of Directors and
Officers
Section 78.138 of the NRS provides that a director or officer
will not be individually liable unless it is proven that (i) the directors or
officers acts or omissions constituted a breach of his or her fiduciary duties,
and (ii) such breach involved intentional misconduct, fraud or a knowing
violation of the law.
Section 78.7502 of NRS permits a company to indemnify its
directors and officers against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending or completed action, suit or proceeding if the officer or director (i)
is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner
the officer or director reasonably believed to be in or not opposed to the best
interests of the corporation and, if a criminal action or proceeding, had no
reasonable cause to believe the conduct of the officer or director was
unlawful.
Section 78.751 of NRS permits a Nevada company to indemnify its
officers and directors against expenses incurred by them in defending a civil or
criminal action, suit or proceeding as they are incurred and in advance of final
disposition thereof, upon receipt of an undertaking by or on behalf of the
officer or director to repay the amount if it is ultimately determined by a
court of competent jurisdiction that such officer or director is not entitled to
be indemnified by the company. Section 78.751 of NRS further permits the company
to grant its directors and officers additional rights of indemnification under
its articles of incorporation or bylaws or otherwise.
Section 78.752 of NRS provides that a Nevada company may
purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the
company, or is or was serving at the request of the company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or
agent, or arising out of his status as such, whether or not the company has the
authority to indemnify him against such liability and expenses.
Our Articles of Incorporation provide that no director or
officer of our company will be personally liable to our company or any of its
stockholders for damages for breach of fiduciary duty as a director or officer;
provided, however, that the foregoing provision shall not eliminate or limit the
liability of a director or officer (i) for acts or omissions which involve
intentional misconduct, fraud or knowing violation of law, or (ii) the unlawful
payment of dividends. In addition, our bylaws permit for the indemnification and
insurance provisions in Chapter 78 of the NRS.
Insofar as indemnification by us for liabilities arising under
the Securities Act may be permitted to our directors, officers or persons
controlling our company pursuant to provisions of our articles of incorporation
and bylaws, or otherwise, we have been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
57
In the event that a claim for indemnification by such director,
officer or controlling person of us in the successful defense of any action,
suit or proceeding is asserted by such director, officer or controlling person
in connection with the securities being offered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
us is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding, which may result in a claim for such
indemnification.
Further, in the normal course of business, we may have in our
contracts indemnification clauses, written as either mutual where each party
will indemnify, defend, and hold each other harmless against losses arising from
a breach of representations or covenants, or out of intellectual property
infringement or other claims made against certain parties; or single where we
have agreed to hold certain parties harmless against losses etc.
Our Bylaws
Our bylaws provide that we will indemnify our directors and
officers to the fullest extent not prohibited by Nevada law.
The general effect of the foregoing is to indemnify a control
person, officer or director from liability, thereby making us responsible for
any expenses or damages incurred by such control person, officer or director in
any action brought against them based on their conduct in such capacity,
provided they did not engage in fraud or criminal activity.
Item 15 Recent Sales of Unregistered
Securities
On December 10, 2014, we entered into an equity purchase
agreement (the Purchase Agreement) with Premier. Under the terms of the
Purchase Agreement, Premier has agreed to invest up to $2,000,000 to purchase
shares of our common stock. We also entered into a registration rights agreement
(the Registration Agreement) with Premier, which governs the filing of
a registration statement, intended to cover the securities acquired under the
Purchase Agreement.
The Purchase Agreement allows, but does not require us to issue
and sell up to the number of shares of common stock having an aggregate purchase
price of $2,000,000 to Premier. Subject to the terms and conditions of the
Purchase Agreement and the Registration Agreement, we may, in our sole
discretion, deliver notice to Premier which states the dollar amount which it
intends to sell to Premier on a certain date. The amount that we shall be
entitled to sell to Premier shall not exceed (i) 200% of the average daily
trading volume of the Companys common stock for the five trading days prior to
the applicable notice date and (ii) 110% of the highest amount on any notice
delivered by us to Premier, (however, never less than 70,000 shares). The amount
cannot exceed 4.99% of our outstanding shares. The purchase price for the shares
issued to Premier will be the amount multiplied by 70% of the lowest individual
daily VWAP of the common stock during the pricing period. The shares sold by us
to Premier must be registered stock, pursuant to the Registration Agreement.
On execution of the Purchase Agreement, we the Initial
Commitment Shares to Premier.
58
On the effective date of this Registration Statement, we shall
issue to Premier the Additional Commitment Shares of its common stock
representing 2.5% of $2,000,000 divided by the sum equal to the lowest of the
daily VWAPs of the common stock on the three trading days immediately preceding
the effective date. The Additional Commitment Shares shall not constitute
registerable securities and shall not be included in this Registration Statement
in accordance with the terms of the Registration Agreement.
On December 10, 2014, we issued 71,429 shares of its common
stock pursuant to an exemption from registration relying on Section 4(2) and
Rule 506 of Regulation D, under the Securities Act of 1933, as amended.
Item 16 Exhibits
Exhibit |
Exhibit |
Number |
Description |
|
|
3.1 |
Articles of Incorporation of New Media Insight Group,
Inc. (incorporated by reference to our Registration Statement on Form S-1
filed on July 19, 2010 as Exhibit 3.1). |
|
|
3.2 |
Bylaws of New Media Insight Group, Inc. (incorporated by
reference to our Current Report on Form 8-K filed on July 8, 2011 as
Exhibit 3.1). |
|
|
3.3 |
Certificate of Change of New Media Insight Group, Inc.
(incorporated by reference to our Current Report on Form 8-K filed on
February 4, 2014 as Exhibit 3.1). |
|
|
4.1 |
Instrument Defining the Right of Holders Form of Share
Certificate (incorporated by reference to our Current Report on Form 8-K
filed on August 21, 2013 as Exhibit 4.1). |
|
|
5.1 |
Legal Opinion of W.L. Macdonald Law Corporation.
|
|
|
10.1 |
Exclusive Agency Agreement between our company and
PayWith Worldwide Inc. dated September 1, 2013 (incorporated by reference
to our Current Report on Form 8-K filed on September 3, 2013 as Exhibit
10.1). |
|
|
10.2 |
Equity Purchase Agreement dated December 10, 2014 between
our company and Premier Venture Partners, LLC (incorporated by reference
to our Current Report on Form 8-K filed on December 17, 2014 as Exhibit
10.1). |
|
|
10.3 |
Registration Rights Agreement dated December 10, 2014
between our company and Premier Venture Partners, LLC (incorporated by
reference to our Current Report on Form 8-K filed on December 17, 2014 as
Exhibit 10.2). |
|
|
10.4 |
Employment Agreement dated April 1, 2013 between our
company and Michael Palethorpe. |
|
|
10.5 |
Amending Agreement dated May 1, 2014 between our
company and Michael Palethorpe. |
|
|
14.1 |
Code of Ethics and Business Conduct (incorporated by
reference to our Annual Report on Form 10-K filed on July 29, 2011 as
Exhibit 14.1). |
|
|
23.1 |
Consent of DKM Certified Public Accountants. |
|
|
23.2 |
Consent of W.L. Macdonald Law Corporation (incorporated
in Exhibit 5.1). |
59
Item 17 Undertakings
The registrant hereby undertakes:
1. |
To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement: |
|
(i) |
To include any prospectus required by section 10(a)(3) of
the Securities Act; |
|
|
|
|
(ii) |
To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering price
set forth in the Calculation of Registration Fee table in the effective
registration statement; and |
|
|
|
|
(iii) |
To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; |
2. |
That for the purpose of determining liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; |
|
|
|
3. |
To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering; and |
|
|
|
4. |
That, for the purpose of determining liability of the
registrant under the Securities Act to any purchaser in the initial
distribution of the securities, the registrant undertakes that in a
primary offering of securities of the registrant pursuant to this
registration statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the
registrant will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser: |
|
|
|
|
(i) |
Any preliminary prospectus or prospectus of the
registrant relating to the offering required to be filed pursuant to Rule
424; |
|
|
|
|
(ii) |
Any free writing prospectus relating to the offering
prepared by or on behalf of the registrant or used or referred to by the
registrant; |
|
|
|
|
(iii) |
The portion of any other free writing prospectus relating
to the offering containing material information about the registrant or
its securities provided by or on behalf of the registrant;
and |
60
|
(iv) |
Any other communication that is an offer in the offering
made by the registrant to the purchaser. |
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
61
Signatures
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Cave Creek,
Arizona, on January 12, 2015.
|
NEW MEDIA INSIGHT GROUP, INC.
|
|
|
|
|
By: |
/s/
Michael Palethorpe |
|
|
Michael Palethorpe |
|
|
President and Director |
In accordance with the requirements of the Securities Act, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURES |
|
TITLE |
DATE |
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Michael
Palethorpe |
|
Director, President and Chief |
January 12, 2015 |
Michael Palethorpe |
|
Executive Officer |
|
January 9, 2015
New Media Insight Group, Inc.
28202 N. 58th Street
Cave Creek, Arizona 85311
Dear Sirs:
Re: Common Stock of New
Media Insight Group, Inc., Registered on Form S-1, filed on January
9, 2015 |
We have acted as counsel to New Media Insight Group, Inc. (the
Company), a corporation incorporated under the laws of the State of
Nevada, in connection with the filing, on January 9, 2015, of a registration
statement on Form S-1 (the Registration Statement) under the
Securities Act of 1933, as amended (the Securities Act) of up to
3,688,066 shares of common stock for sale by the Company (the
Registered Shares).
In connection with rendering the opinion set forth
below, we have reviewed: (a) the Registration Statement and exhibits thereto;
(b) the Company's Articles of Incorporation; (c) the Company's Bylaws; (d)
certain records of the proceedings of the Board of Directors of the Company
relating to the proposed issuance of the Shares; and (e) such statutes, records
and other documents and matters as we have deemed necessary.
We have also examined the originals or copies of such
corporate records of the Company and/or public officials and such other
documents and have made such other factual and legal investigations as we have
deemed relevant and necessary as the basis for the opinion set forth below. In
our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies or as
facsimiles of copies or originals, which assumptions we have not independently
verified.
We have made such inquiries with respect thereto as we
consider necessary to render this opinion with respect to a Nevada corporation.
This opinion letter is opining upon and is limited to the current federal laws
of the United States, including the statutory provisions, all applicable
provisions of Nevada law and reported judicial decisions interpreting those
laws, as such laws presently exist and to the facts as they presently exist. We
express no opinion with respect to the effect or applicability of the laws of
any other jurisdiction. We assume no obligation to revise or supplement this
opinion letter should the laws of such jurisdiction be changed after the date
hereof by legislative action, judicial decision or otherwise.
Based upon the foregoing and the examination of
such legal authorities as we have deemed relevant, and subject to the
qualifications and further assumptions set forth herein, we are of the opinion
that the Registered Shares have been, or will be, duly authorized by all
requisite corporate action and are, or will be, legally issued, fully paid and
non-assessable under Nevada law, including the statutory provisions, all
applicable provisions of Nevada law and all reported judicial decisions
interpreting those laws.
We hereby consent to the filing of this opinion as
an exhibit to the Registration Statement. In giving this consent, we do not
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the General Rules and Regulations of
the Securities and Exchange Commission.
|
Very truly yours, |
|
|
|
|
|
/s/ W.L. Macdonald Law Corporation |
|
On the behalf of |
|
W.L. Macdonald Law Corporation
|
April 1, 2013
Michael Palethorpe
28202 N 58th Street
Cave Creek, AZ,
85331
USA
Dear Michael:
New Media Insight Group, Inc. (NMED) is pleased to have you as
part of its team in changing the world through monetizing the Internet.
The details of the offer are as follows:
POSITION: |
President & CEO, New Media Insight Group,
Inc. |
|
28202 N 58th Street, Cave Creek, AZ, 85331, USA
|
|
|
REPORTING DATE: |
May 1, 2013 |
|
|
REPORTS TO: |
Board of Directors, New Media Insight Group,
Inc. |
|
|
SALARY: |
$6,000 per month to April 31st, 2014. After which the
base salary will be reviewed for May 1st, 2014 and beyond. **Note
please review Schedule A, section 1 for salary and stock option
compensation during periods prior to April 31st, 2014.
|
|
|
|
Performance reviews within the Company are conducted
annually. Your salary will be subject to adjustment from time to time in
accordance with the prevailing compensation policy. This policy is subject
to change in the sole discretion of the Company with or without notice.
|
|
|
STOCK: |
As a full time employee, you have the opportunity to
purchase shares at Fair Value. Fair Value is determined as the net
equity per share until the stock is listed. Once listed the Fair Value of
the stock is the current listed price. |
|
|
STOCK OPTION PLAN: |
As a full time employee you will be entitled to an annual
stock option grant equal to 30% of your base salary. These options will be
granted at the beginning of the calendar year and vest equally to you over
the year. The price of the option is the fair market value of the
companys stock at the time the options are granted. The option will
expire three years after it is received by you. The terms & conditions
of the stock option plan and its continuance is at the sole discretion of
the company. |
|
|
|
Upon your acceptance and execution of the agreement, you
are eligible to receive 2,000,000 stock options, which vest at a rate of
500,000 every 6 months. Each option has an exercise price of $0.75 USD and
will expire three years after it is received by you. |
|
|
TIME OFF: |
In addition to recognized statutory holidays, you will be
entitled to four (4) weeks of vacation per year. Should additional time be
needed, a formal request should be made well in advance and if approved,
the additional time required will be paid by the company. |
|
|
BENEFITS |
All reasonable expenses incurred in the normal course of
Company business, including parking and cell phone will be reimbursed upon
submission of original receipts on a monthly basis. All expenses exceeding
$1000.00 are to be approved in advance by the Chief Operating Officer.
|
|
|
INTELLECTUAL PROPERTY: |
You acknowledge the patent, copyright, trademark and
other intellectual property rights, under statute or at common law
(Intellectual Property Rights) in the developments, inventions,
creations, methods, processes, know how, trade secrets, data, literary
works, artistic works or software (Work or Works) you create, develop,
generate or reduce to practice in the performance of your normal duties,
or duties outside your normal duties, in the course of employment shall
vest in and be deemed to be owned by NMED. You hereby assign and transfer
to NMED, and agree that NMED shall be the exclusive owner of, all of your
Intellectual Property Rights, in the Works. If and to the extent that this
assignment is not effective in respect of any Work, you will hold in trust
for the sole benefit of NMED, and will assign exclusively to NMED, all of
your right, title and interest, including Intellectual Property Rights in
and to that Work. |
|
|
|
You agree to co-operate fully at all times during and
subsequent to your employment with NMED with respect to signing further
documents and doing such acts or other things reasonably requested by NMED
to confirm such transfer or ownership of rights, including Intellectual
Property Rights, effective at or after the time any Work is created and to
obtain patents, copyrights, trade-marks and other protection covering the
Works. |
|
|
|
If NMED is unable to secure your signature to apply for a
patent, copyright, trade- mark or other protection for any such Work, you
hereby irrevocably designate and appoint NMED and its duly authorized
officers and agents as your agent and grant to NMED a Power of Attorney to
act for you and on your behalf instead, in order to execute and file any
such applications and to do all other lawfully permitted acts to further
the prosecution and issuance of patents, copyrights, trade-marks or other
protection for any work with the same legal force and effect as if
executed or done by you. |
|
|
|
You agree that NMED, its assignees and its licensees are
not required to designate you as the author of any Works and you hereby
waive in whole all moral rights which you may have in the Works, including
the right to the integrity of the Works, the right to be associated with
the Works, the right to restrain or claim damages for any distortion,
mutilation or other modification of the Works, and the right to restrain
use or reproduction of the Works in any context and in connection with any
product, service, cause or institution. |
|
|
|
If, prior to your employment with NMED, you created any
works or inventions, which shall be exempt from this provision, a list of
all such works or inventions shall be attached hereto as Schedule A. If
no Schedule A is attached, you represent that you have made no such
works or inventions as of the date of acceptance of this offer. |
|
|
CONFIDENTIALITY: |
You agree to observe the strictest discretion in regard
to all matters relating to the business of the Company and its customers,
which will come to your knowledge. You shall not either during your
employment with the Company or thereafter, except in the proper course of
your duties, divulge to any person any information concerning the business
or finances of the Company or any of its customers, transactions or
affairs. You shall use your best endeavors to prevent unauthorized
publication or disclosure of any information concerning the business or
finances of the Company or any of its customers, transactions, or affairs.
|
TERMINATION: |
Your employment may be terminated on the following basis:
|
|
|
|
|
a. |
You shall be entitled to terminate your employment with
the Company upon giving written notice to the Company of eight weeks. The
Company may terminate your employment by giving you the same notice or pay
in lieu thereof or such additional notice as may be required by applicable
legislation. |
|
b. |
Your employment may be terminated without notice, or
without payment in lieu of notice, for violation by you of any terms of
your employment or for just cause. |
|
|
|
SEVERANCE: |
You will be entitled to a severance package as detailed
in Schedule A, section 2 upon termination of your employment by the
Company, for whatsoever reason other than violation by you of any terms of
your employment or for just cause. |
|
|
|
SECONDMENT: |
You acknowledge and agree that as part of your employment
with the Company, in the event you are seconded to one or more of the
Companys subsidiaries or affiliates, you will have the same obligations
and responsibilities to those subsidiaries and affiliates as you have to
the Company. |
|
|
|
ENTIRE AGREEMENT: |
This letter represents the entire agreement between you
and the Company regarding your employment and supersedes any and all prior
representations, understandings, arrangements or agreements, oral or
otherwise, which you may have had. |
Michael, it is indeed a pleasure to have you be part of the
NMED team and continuing to take the Company forward.
Yours truly,
___________________________
Michael Palethorpe
New Media
Insight Group Inc.
NOTE: To be reviewed and resigned by Company Board Members or
the Companies Independent Audit Committee once assembled.
___________________________________________________________________________________________________
I HEREBY ACKNOWLEDGE AND AGREE TO THE TERMS AND CONDITIONS
OUTLINED ABOVE IN THIS OFFER OF EMPLOYMENT:
Yours truly,
|
|
April 1, 2013 |
Michael Palethorpe |
|
Date |
Schedule A
1. Salary and Stock Option
Compensation:
The CEO's annual salary will be set by the compensation
committee and board once assembled. The starting salary will be 72k per year in
cash compensation plus the below listed stock option and incentives plan.
Normal base salary |
- |
$12,000/month |
Cash & Stock Option compensation |
- |
$6,000/month cash plus $6,000 USD worth of
Company stock each month in lieu of salary |
Formal communications via letter or email will be sent to
inform you when this compensation option is being initiated.
2. Severance
You will be entitled to the following severance package following
termination of your employment by the Company:
|
a) |
Cash - You will receive cash compensation as outlined by
Nevada Labor Laws. |
|
b) |
Stock Options Any stock options that were granted to
you during your employment will be given an extension to their expiry date
by a period of 2 (two) years. E.g. stock options granted Jan 2013 with an
expiry date of December 2015 will have the expiry date extended to
December 2017. |
|
c) |
Vacation you will be entitled to be paid for any unused
vacation during the last year of your
employment. |
THIS AMENDING AGREEMENT is effective as of the 1st day
of May, 2014.
BETWEEN: |
NEW MEDIA INSIGHT GROUP, INC., with an office at 28202
N. 58th Street, Cave Creek, Arizona 85311. |
|
(the Company) |
AND: |
MICHAEL PALETHORPE with an address at 28202 N. 58th
Street, Cave Creek, Arizona 85311. |
|
(the Employee) |
|
WHEREAS: |
A. |
the Company and the Employee have previously entered into
an employment agreement on April 1, 2013 (the Employment
Agreement); and |
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B. |
the Company and the Employee wish to make certain
amendments to the provisions of the Employment
Agreement. |
NOW THEREFORE THIS AMENDING AGREEMENT WITNESSETH that in
consideration for the premises and mutual covenants and agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is also hereby acknowledged by each of the parties hereto,
the parties hereto hereby agree as follows:
1. |
All capitalized terms not otherwise defined herein shall
have the meanings set out in the Employment Agreement, as
applicable. |
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2. |
The heading Stock Option Plan on page 1 of the
Employment Agreement is deleted in its entirety and replaced with Stock
Options. |
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3. |
The paragraph pursuant to the heading Stock Options on
page 1 of the Employment Agreement is deleted in its entirety and replaced
with the following: |
As a full time employee you will be
entitled to an annual stock option grant equal to 30% of your cash base salary.
These options will be granted at the beginning of the calendar year and vest
equally to you over the year. The deemed price of the options is the fair market
value of NMEDs stock at the time the options are granted at the beginning of
the calendar year. The options will expire three years after it is received by
you and exercisable at a price of $0.75 per option. The terms & conditions
of the stock option plan and the continuance of the grant of stock options is at
the sole discretion of NMED.
Upon your acceptance and execution of
the agreement, you are eligible to receive an additional 2,000,000 stock
options, which vest at a rate of 500,000 at the end of every 6 months from the
date of this Agreement. Each option has an exercise price of $0.75 USD and will
expire three years after it is received by you.
4. |
The heading Cash & Stock Option compensation in
Schedule A of the Employment Agreement is deleted in its entirety and
replaced with Cash & Stock Compensation. |
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5. |
The paragraph pursuant to the heading Cash & Stock
Compensation in Schedule A of the Employment Agreement is deleted in
its entirety and replaced with the following: |
$6,000/month cash and $6,000 USD worth
of NMED stock each month. The deemed price of the stock will be the closing
price of common stock of the Company on the last trading day immediately prior
to the month that the stock is due. The grant of the $6,000 USD worth of NMED
stock each month shall continue at the sole discretion of the NMED.
6. |
As of May 1, 2013, the Company has exercised its sole
discretion to suspend any grant of stock under Schedule A under the
paragraph referencing Cash & Stock Compensation until further notice
from the Company to the Employee. |
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7. |
As of April 30, 2014, the Company has exercised its sole
discretion to suspend the vesting: |
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(a) |
of any stock options under the paragraph referencing
Stock Options on page 1 of the Employment Agreement until further notice
from the Company to the Employee. The Company and Employee agree that only
500,000 options have vested as a result of the grant of 2,000,000 options
pursuant to this paragraph of the Employment Agreement; and |
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(b) |
of stock options under the paragraph referencing Stock
Options on page 1 of the Employment Agreement until further notice from
the Company to the Employee. The Company and Employee agree that only
4,500 options have vested as a result of the grant of options equal to 30%
the cash base salary (being 13,500 options) pursuant to this paragraph of
the Employment Agreement. |
8. |
In all other respects the terms and conditions of the
Employment Agreement shall continue in full force and effect and the
parties hereby agrees and confirms that the Employment Agreement is in
good standing and each of the parties hereto is not in default of any of
its obligations under the Employment Agreement. |
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9. |
Each of the parties hereto agrees to do and/or execute
all such further and other acts, deeds, things, devices, documents and
assurances as may be required in order to carry out the true intent and
meaning of this Amending Agreement. |
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10. |
This Amending Agreement shall enure to the benefit of and
be binding upon the parties hereto and each of their successors and
permitted assigns, as the case may be. |
11. |
This Amending Agreement may be executed in counterparts
and by electronic or facsimile transmission, each of which shall be deemed
to be an original and all of which shall constitute one and the same
document. |
IN WITNESS WHEREOF, the parties hereto have executed
this Amending Agreement as of the day and year first above written.
NEW MEDIA INSIGHT GROUP, INC.
Per: |
/s/Michael Palethorpe |
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Name: Michael Palethorpe |
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Title: President |
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MICHAEL PALETHORPE
___________________________________
/s/Michael Palethorpe
Consent of Independent Registered Public Accounting Firm
We consent to the inclusion in this Form S-1, of our audit
report dated July 18, 2014 relative to the financial statements of New Media
Insight Group, Inc. as of April 30, 2014 and 2013 and the period from Inception
(March 29, 2010) through April 30, 2014 and for each of the years then ended.
We also consent to the reference to our firm under the caption
"Interests of Named Experts and Counsel" in such Registration Statement.
/s/ DKM Certified Public Accountants
DKM Certified Public Accountants
Clearwater, Florida
January 9, 2015