NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY
31, 2016
(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 pre revenue stage company and operates as an internet marketing business providing clients with the latest in new
media and mobile / smart phone payment and 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 intends to specialize in developing
Internet and mobile marketing, loyalty, and communication solutions. The Company’s 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 of America (GAAP) applicable to interim financial information and with the instructions to Form
10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. For further information regarding the Company’s significant accounting
policies, refer to the audited financial statements and footnotes thereto included in the Company’s Annual Report on Form
10-K for the year ended April 30, 2015 filed with the Securities and Exchange Commission on August 13, 2015.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those
estimates. The Company’s 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.
Recent
Accounting Pronouncements
There
are various updates recently issued, most of which represented technical corrections to the accounting literature or application
to specific industries and are not expected to a have a material impact on the Company’s financial position, results of
operations or cash flows.
NEW MEDIA INSIGHT GROUP, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY 31, 2016
(unaudited)
NOTE
3. GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As
of January 31, 2016, the Company had cash of $832 and working capital deficit (current liabilities in excess of current assets)
of $234,461 During the nine months ended January 31, 2016, the Company used net cash in operating activities of $35,322.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management believes
that the Company does not have sufficient funds to meet its funding requirements.
The
Company’s primary source of operating funds since inception has been cash proceeds from private placements of common stock,
notes payable and from advances from related parties. The Company has experienced net losses and negative cash flows from operations
since inception and expects these conditions to continue for the foreseeable future. The Company has stockholders’ deficiencies
at January 31, 2016 and requires additional financing to fund future operations. Further, the Company does not have any commercial
products available for sale and there is no assurance that if approval of their products is received that the Company will be
able to generate cash flow to fund operations.
Accordingly,
the accompanying condensed financial statements have been prepared in conformity with GAAP, which contemplates continuation of
the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business.
The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable
or settlement values. The condensed financial statements do not include any adjustment that might result from the outcome of this
uncertainty.
NOTE
4. CAPITAL STOCK
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
December 10, 2014, the Company entered into an equity purchase agreement with Premier Venture Partners. 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, the Company may deliver a drawdown notice to Premier Venture which states the dollar
amount that the Company intends 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).
NEW
MEDIA INSIGHT GROUP, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY
31, 2016
(unaudited)
The
Company registered 16,397,960 shares in accordance with a certain Registration Rights Agreement and Equity Purchase Agreement,
each dated December 10, 2014. The percentage of the total outstanding common stock registered for resale by the selling security
holders was 35.5%, based on the 46,116,621 common shares outstanding as of October 31, 2015.
In consideration for the execution and delivery
of the Equity Purchase Agreement by Premier Venture, during the nine months ended January 31, 2016, the Company
issued Premier Venture 71,429 shares of common stock as initial commitment and 459,939 shares of common stock as additional commitment
and charged the fair value of $63,711 to operations as interest expense.
On
May 1, 2015, the Board of Directors authorized the issuance of 37,056 shares of common stock for cash of $1,816. The shares are
fully paid for and non-assessable and are being issued pursuant to the equity purchase agreement with the Premier Venture Partners,
LLC dated December 10, 2014 and the 1st Put Notice dated May 1, 2015.
On
May 8, 2015, the Board of Directors authorized the issuance of 37,336 shares of common stock for cash of $1,568. The shares are
fully paid for and non-assessable and are being issued pursuant to the equity purchase agreement with the Premier Venture Partners,
LLC dated December 10, 2014 and the 2nd Put Notice dated May 8, 2015.
On
June 3, 2015, the Board of Directors authorized the issuance of 58,090 shares of common stock for cash of $2,033. The shares are
fully paid for and non-assessable and are being issued pursuant to the equity purchase agreement with the Premier Venture Partners,
LLC dated December 10, 2014 and the 3rd Put Notice dated June 3, 2015.
On
October 12, 2015, the Company issued 666,667 shares of its common stock in settlement of $10,000 of convertible notes payable.
There
were 31,099,267 and 29,768,750 common shares issued and outstanding at January 31, 2016 and April 30, 2015 respectively. There
are no preferred shares outstanding.
NOTE
5. PROPERTY AND EQUIPMENT
The
following table summarizes the property and equipment.
|
|
January
31, 2016
|
|
|
April
30, 2015
|
|
Property and equipment
|
|
$
|
2,079
|
|
|
$
|
2,079
|
|
Accumulated
depreciation
|
|
|
(1,120
|
)
|
|
|
(842
|
)
|
|
|
$
|
959
|
|
|
$
|
1,237
|
|
During
the three and nine months ended January 31, 2016, the depreciation was $93 and $278, respectively.
During
the three and nine months ended January 31, 2015, the depreciation was $133 and $398, respectively.
NEW
MEDIA INSIGHT GROUP, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY
31, 2016
(unaudited)
NOTE
6. OPTIONS
The
options have been granted in conjunction with an employment agreement. The following table summarizes the options at January 31,
2016:
Exercise
Prices
|
|
|
Number
of
Stock
Options
Outstanding
|
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Actual
Number
Exercisable
|
|
|
Weighted
Average
Exercise
Price
|
|
$
|
0.75
|
|
|
|
2,013,500
|
|
|
|
1.38
|
|
|
$
|
0.75
|
|
|
|
504,500
|
|
|
$
|
0.75
|
|
|
|
|
|
|
2,013,500
|
|
|
|
1.38
|
|
|
$
|
0.75
|
|
|
|
504,500
|
|
|
$
|
0.75
|
|
Transactions
involving the Company’s option issuance are summarized as follows:
|
|
Number
of
Stock
Options
|
|
|
Weighted
Average
Price
Per
Share
|
|
Outstanding at April
30, 2015
|
|
|
2,013,500
|
|
|
$
|
0.75
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Cancel
or expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding at January 31, 2016
|
|
|
2,013,500
|
|
|
$
|
0.75
|
|
Options yet
to be vested
|
|
|
1,509,000
|
|
|
|
|
|
Options vested at January 31, 2016
|
|
|
504,500
|
|
|
|
|
|
NOTE
7. WARRANTS
The
warrants were issued in conjunction with certain common stock offerings. Transactions involving the Company’s warrants issuance
are summarized as follows:
|
|
Number
of
Warrants
|
|
|
Weighted
Average
Price
Per
Share
|
|
Outstanding at April
30, 2015
|
|
|
1,100,000
|
|
|
$
|
1.00
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Cancel
or expired
|
|
|
(1,100,000
|
)
|
|
$
|
1.00
|
|
Outstanding at January 31, 2016
|
|
|
-
|
|
|
|
-
|
|
NEW
MEDIA INSIGHT GROUP, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY
31, 2016
(unaudited)
NOTE
8. DERIVATIVE LIABILITY
The
Company reviews the terms of equity purchase agreements and the terms of convertible debt issues to determine whether there are
embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for
separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative
instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted
for as a single, compound derivative instrument Bifurcated embedded derivatives are initially recorded at fair value and are then
revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or
convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities,
the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining
proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded
at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest
on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective
interest method.
Equity
Purchase Agreement with Premier Venture Partners
On
December 10, 2014, the Company entered into an equity purchase agreement with Premier Venture Partners. 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, the Company may deliver a drawdown notice to Premier Venture which states the dollar
amount that the Company intends 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).
There
was a derivative in the Equity Purchase Agreement. The Company evaluated the terms of the conversion features of the equity purchase
agreement in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined
it is indexed to the Company’s common stock and that the conversion features meet the definition of a liability and therefore
bifurcated the conversion feature and accounted for it as a separate derivative liability.
At
expiry, the Company transferred the fair value of the derivative of $854,821 from liability to equity determined by using the
following Black-Scholes assumptions:
Stock price
|
|
|
$0.007
|
|
Expected term
|
|
|
0.01
year
|
|
Expected volatility
|
|
|
237.7%
|
|
Risk free interest rate
|
|
|
0.019%
|
|
Dividend yield
|
|
|
0
|
|
NEW
MEDIA INSIGHT GROUP, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY
31, 2016
(unaudited)
The
continuity schedule of this derivative is as follows:
Balance -April 30, 2015
|
|
$
|
1,768,464
|
|
Fair Value
Adjustment
|
|
|
(913.643
|
)
|
Transferred
to equity upon expiry of equity purchase agreement
|
|
|
(854,821
|
)
|
Balance –
January 31, 2016
|
|
$
|
-
|
|
Convertible
Promissory Note with Iconic Holdings
On April 9, 2015,
we entered in a note purchase agreement with Iconic Holdings, LLC (“Iconic”). Pursuant to this agreement, we sold
a convertible promissory note representing the sum of $60,500 to Iconic for $50,000 in cash, $5,000 for due diligence services,
and $5,500 as an original issue discount. The note is due April 9, 2016, carries 10% interest per annum and may be converting
into common shares of our company at a conversion price of 60% of the lowest trading price of our common stock during the 15 consecutive
trading days prior to the date on which holder elects to convert all or part of the note. The carrying value of the note of
$41,092 on the accompanying balance sheet at January 31, 2016 is net of unamortized debt discount of $9.408. During the nine months
ended January 31, 2016, the Company amortized $51,092 to current period interest expense. As of the date of this filing, the note
is in default.
There
is a derivative in the loan agreement. Because the warrant values exceeded the note values after the beneficial conversion feature
discount, the warrants have been bifurcated out and recorded separately. The initial value was the fair value less the fair value
of the debt discount. The difference between the amortized fair value and the revalued fair value at each reporting period is
recorded as a derivative liability. This derivative liability will change every reporting period based on the current market conditions.
The
Company used the following Black-Scholes assumptions in arriving at the fair value of the derivative.
Stock price
|
|
|
$
0.009
|
|
Expected term
|
|
|
1.67
year
|
|
Expected volatility
|
|
|
231.1.7
%
|
|
Risk free interest rate
|
|
|
0.76
%
|
|
Dividend yield
|
|
|
0
|
|
The
continuity schedule of this derivative is as follows:
Balance -April 30, 2015
|
|
$
|
-
|
|
Derivative Liability
|
|
|
70,924
|
|
Transfer to (from) due to conversion
of note payable
|
|
|
(10,000
|
)
|
Fair Value
Adjustment
|
|
|
66,205
|
|
Balance –
January 31, 2016
|
|
$
|
127,129
|
|
NOTE
9. DUE TO RELATED PARTY
As
at January 31, 2016 and April 30, 2015, the Company was obligated to a director, who is also an officer, for a non-interest bearing
demand loan with a balance of $24,313 and $8,632, respectively. Interest is immaterial.
NEW
MEDIA INSIGHT GROUP, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY
31, 2016
(unaudited)
NOTE
10. RESTATEMENT
The accompanying condensed balance sheet
as of January 31, 2016, statement of operations for the three and nine months ended January 31, 2016 and the condensed statement
of cash flows for the nine months ended January 31, 2016 has been restated for the purpose of correcting an error in determining
the fair value of embedded derivatives and associated debt discount on a convertible note.
Accordingly, the Company restated the condensed
balance sheet as of January 31, 2016, statement of operations for the three and nine months ended January 31, 2016 and the condensed
statement of cash flows for the nine months ended January 31, 2016 by disclosing this error in this Form 10-Q/A.
The changes in the reported amounts are
summarized in the following reconciliation of the Company’s restated condensed balance sheet as of October 31, 2015:
NEW
MEDIA INSIGHT GROUP, INC.
CONDENSED
BALANCE SHEET
JANUARY
31, 2016
(unaudited)
|
|
|
|
(As
restated)
|
|
|
|
(As
reported)
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Total assets
(unchanged)
|
|
$
|
1,791
|
|
|
$
|
1,791
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses (minor rounding)
|
|
|
42,759
|
|
|
|
42,760
|
|
Due to related party
|
|
|
24,313
|
|
|
|
24,313
|
|
Convertible promissory note
|
|
|
41,092
|
|
|
|
50,500
|
|
Derivative liability
|
|
|
127,129
|
|
|
|
91,041
|
|
Total current liabilities
|
|
|
235,293
|
|
|
|
208,614
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
(233,502
|
)
|
|
|
(458,557
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’
deficit
|
|
$
|
1,791
|
|
|
$
|
1,791
|
|
NEW
MEDIA INSIGHT GROUP, INC.
CONDENSED
STATEMENT OF OPERATIONS
THREE
MONTHS ENDED JANUARY 31, 2016
(unaudited)
|
|
|
|
(As
restated)
|
|
|
|
(As
reported)
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (minor rounding)
|
|
$
|
716
|
|
|
$
|
715
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(14,253
|
)
|
|
|
(1,524
|
)
|
Change in fair value of derivative
liability
|
|
|
356,054
|
|
|
|
369,868
|
|
Net income
|
|
$
|
341,085
|
|
|
$
|
367,629
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
Diluted income per common share
|
|
$
|
0.01
|
|
|
$
|
0.1
|
|
NEW MEDIA INSIGHT GROUP, INC.
CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JANUARY 31,
2016
(unaudited)
|
|
(As
restated)
|
|
|
(As
reported)
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
55,249
|
|
|
$
|
55,249
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(130,166
|
)
|
|
|
(139,574
|
)
|
Change
in fair value of derivative liability
|
|
|
847,438
|
|
|
|
883,525
|
|
Net
income
|
|
$
|
662,023
|
|
|
$
|
688,702
|
|
|
|
|
|
|
|
|
|
|
Basic income per common
share
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Diluted income per common
share
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
NEW MEDIA
INSIGHT GROUP, INC.
CONDENSED
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JANUARY 31, 2016
(unaudited)
|
|
|
|
|
(As
restated)
|
|
|
|
(As
reported)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
662,023
|
|
|
$
|
688,702
|
|
Amortization of debt discounts
|
|
|
47,611
|
|
|
|
70,924
|
|
Change in fair value of derivative
liabilities
|
|
|
(847,438
|
)
|
|
|
(883,526
|
|
Other
operating activities
|
|
|
102,482
|
|
|
|
88,578
|
|
Net cash used in
operating activities
|
|
|
(35,322
|
)
|
|
|
(35,322
|
)
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities (unchanged)
|
|
|
21,098
|
|
|
|
21,098
|
|
Net decrease in
cash
|
|
|
(14,224
|
)
|
|
|
(14,224
|
)
|
Cash-beginning
of period
|
|
|
15,056
|
|
|
|
15,056
|
|
Cash-end of
period
|
|
$
|
832
|
|
|
$
|
832
|
|
NOTE 11.
SUBSEQUENT EVENTS
On
August 12, 2016, the Company sold 2,800,002 shares of its common stock for net proceeds of $2,800, issued 1,500,000 of its common
stock for services valued at $7,500 and 3,500,000 shares of its common stock in settlement of its related party loans due of $16,713.
On June 2, 2016, the Company entered into an investment agreement (the “Investment Agreement”)
with Atlanta Capital Partners, LLC (“ACP”), Summit Trading Ltd. (“Summit”) and Leone Group, LLC (“Leone”
and collectively with ACP and Summit, the “Investors”). Pursuant to the terms of the Investment Agreement, the Investors
agreed to provide funds to the Company on an as needed basis and as requested by the Company, of no more than $50,000. Such funds
may be used by the Company for transfer agent, accounting and auditing costs and fees associated with application and approval
of quotation on the OTC Pink market. No funds may be used for payments to related parties or for payments to Iconic Holdings, LLC
(“Iconic”). Pursuant to the terms of the Investment Agreement, of these funds, $5,000 will be provided upon completion
of the audit of the Company’s financial statements for the most recently completed fiscal year, together with receipt by
the Company of a final audit report by the auditor.
Each investment will be apportioned pro
rata among the Investors and the obligations of each of the Investors under the Investment Agreement are several and not joint.
Each investment will be evidenced by a convertible promissory note issued by the Company to the Investor making the investment.
Each note will bear interest at a rate of 10% and will convert, at any time, at the Investor’s option, at a conversion rate
equal to 50% of the lowest trading price of the Company’s common stock during the five days prior to such notice of conversion.
Effectiveness of the Investment Agreement
and the parties’ obligations thereunder are conditioned upon, among other things, entry into subscription agreements relating
to the Company Sales (as defined below), execution of the Debt Settlement Agreement (as defined below), and execution of stock
purchase agreements relating to the Palethorpe Sales (as defined below). Such additional agreements closed on August 9, 2016.
On June 2, 2016, the Company entered into a debt settlement agreement (the “Debt Settlement Agreement”)
with Mr. Palethorpe, pursuant to which the Company and Mr. Palethorpe agreed to settle certain outstanding debt owed to Mr. Palethorpe
by the Company for services previously provided by Mr. Palethorpe to the Company. The Company agreed to (i) pay Mr. Palethorpe
$2,800 in cash on the closing date (the “Closing Date”), (ii) pay Mr.Palethorpe $5,000 upon the completion of the
audit of the Company’s financial statements for the most recently completed fiscal year, together with the receipt by the
Company of a final audit report by the auditor, and (iii) issue to Mr. Palethorpe 3,500,000 shares of Company common stock on
the Closing Date. The Debt Settlement Agreement was effective as of the closing of the various other agreements herein described
on August 8, 2016.
Effective August 9, 2016, Michael Palethorpe, the Company’s President, Chief Executive Officer,
Secretary, Treasurer, sole director and majority stockholder, sold to each of ACP, an entity wholly owned by David Kugelman, the
Company’s temporary Chief Financial Officer, Leone and Summit 5,666,666 shares of Company common stock in exchange for payment
of $567 ($1,700 in the aggregate) to Mr. Palethorpe (collectively, the “Palethorpe Sales”). Each of ACP, Leone and
Summit used his or its personal funds for such stock purchases. The Palethorpe Sales resulted in a change of control of the Company.
As a result of the Palethorpe Sales, each of ACP, Leone and Summit owned approximately 18.2% of the Company’s outstanding
common stock, based on 31,099,267 shares outstanding.
In
addition, effective August 8, 2016:
(i)
Each of ACP, Leone and Summit purchased from the Company 933,334 shares in exchange for payment of $934.00 ($2,802 in the aggregate)
to the Company (the “KLS Sales”),
(ii)
Iconic Holdings, LLC (“Iconic”) purchased from the Company 1,500,000 shares in exchange for payment of $1,500 to
the Company (the “Iconic Sale”), and
(iii)
Mr. Palethorpe purchased from the Company 3,500,000 shares valued at $3,500.00 (collectively with the KLS Sales and the Iconic
Sale, the “Company Sales”).
After
giving effect to the Palethorpe Sales and the Company Sales, there were 38,899,269 shares of Company common stock outstanding
and (i) each of ACP, Leone and Summit owned 6,600,000 shares of Company common stock, representing approximately 17.0% of the
Company’s outstanding common stock, (ii) Iconic owned 1,500,000 shares of Company common stock, representing approximately
3.9% of the Company’s outstanding common stock, and (iii) Mr. Palethorpe owned 3,500,002 shares of Company common stock
representing approximately 9.0% of the Company’s outstanding common stock.
On
August 8, 2016, Mr. Palethorpe resigned as Chief Financial Officer of the Company. Mr. Palethorpe retained the titles of President,
Chief Executive Officer, Secretary and Treasurer and remained a member of the Company’s board of directors. Mr. Palethorpe
agreed to retain his officer positions with the Company for a period not to exceed six months from the closing date of the Palethorpe
Sales. Also on August 8, 2016, the Company appointed Kugelman as the Company’s temporary Chief Financial Officer.
On
August 12, 2016, the Company sold 2,800,002 shares of its common stock for net proceeds of $2,800, issued 1,500,000 of its common
stock for services valued at $7,500 and 3,500,000 shares of its common stock in settlement of its related party loans due of $16,713.