NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2014
(Unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Effective June 15, 2012, Morgan Creek Energy Corp. effected a name change on the OTC Bulletin Board to TagLikeMe Corp. (the “Company”).
The Company is in the process of effecting a name change to Nola Energy Inc.
The Company is a development stage company that was organized to enter into the oil and gas industry. The Company intended to locate, explore, acquire and develop oil and gas properties in the United States and within North America. In May 2012, the Company changed its business focus and plan to developing online and mobile content using search and sharing technology.
Effective June 29, 2012, the Company completed and consummated a share exchange agreement dated May 14, 2012, as fully executed on May 24, 2012 (the "Share Exchange Agreement") with Glob Media Works Inc., a company incorporated under the laws of the State of Washington ("Glob Media"), and each of the shareholders of Glob Media (collectively the "Glob Media Shareholders"), whereby the Corporation has acquired all of the issued and outstanding shares of Glob Media in exchange for the issuance of 45,378,670 shares of its restricted common stock to the Glob Media Shareholders on a pro rata basis in accordance with each Glob Media Shareholder's respective percentage equity ownership in Glob Media (Note 3). Glob Media owns intellectual property rights to its internet cloud based software application related to online search and social media developed by Glob Media. As a result of the closing of the Share Exchange Agreement, Glob Media has become the Company's direct wholly owned subsidiary.
Effective July 18, 2012, the Company completed a forward stock split by the issuance of 5 new shares for each 1 outstanding share of the Company’s common stock (Note 4). Unless otherwise noted, all references herein to number of shares, price per share or weighted average shares outstanding have been adjusted to reflect this stock split on a retroactive basis.
On January 7, 2014, the Board of Directors authorized an increase in the Company's shares of common stock to 4,000,000,000 shares, par value $0.001, and to create 20,000,000 shares of blank check preferred stock, par value $0.001.
Effective February 10, 2014, our Board of Directors approved the designation of 2,000,000 shares of Series A preferred stock (the "Series A Preferred Stock"). The Designation of Series A Preferred Stock was filed with the Nevada Secretary of State on February 14, 2014.
On February 27, 2014, the Board of Directors authorized the execution of that certain securities exchange agreement dated February 27, 2014 (the "Securities Exchange Agreement") among the Company, Nola Energy Inc., a private Nevada corporation (the “Nola”), and the shareholders of Nola who hold of record the total issued and outstanding shares of common stock of Nola. In accordance with the terms and provisions of the Securities Exchange Agreement, the Corporation shall acquire all of the issued and outstanding shares of stock of Nola from its sole shareholder, Gerard Danos, thus making Nola its wholly-owned subsidiary, in exchange for the issuance to Gerard Danos of an aggregate 10,000 shares of its Series A preferred stock of the Corporation. The shares of Series A Preferred Stock have voting rights. Gerard Danos as holder of the Series A preferred stock shall have the right to vote on any matter to be voted on by the stockholders of the Corporation (including any election or removal of the directors of the Corporation) and including to the extent specifically required by Nevada law. The voting rights of all then issued and outstanding shares of Series A preferred stock shall equal two times the voting rights of the then total issued and outstanding shares of common stock.
In further accordance with the terms and provisions of the Securities Exchange Agreement: (i) Gerard Danos shall be appointed as the President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and a member of the Board of Directors; (ii) Richard Elliot-Square shall resign from all officer positions held and retain his position as a member of the Board of Directors until both parties agree as to his resignation; (iii) execution of an executive service agreement between the Corporation and Richard Elliot-Square; and (iv) execution of a settlement agreement between the Corporation and Richard Elliot-Square regarding the settlement of $225,000 in debt due and owing to Richard Elliot Square.
Thus, this Securities Exchange Agreement represents a change in control of the Company and has been treated as a reverse merger whereby the new operating activities of the Company are those solely of Nola. Nola has purchased leases to multiple oilfield properties primarily in southwest Texas. The Company is in the process of effecting a name change to Nola Energy Inc.
On March 13, 2014, the Board of Directors authorized an increase in the Company's shares of common stock to 7,000,000,000 shares, par value $0.001. On March 13, 2014, the Company filed a Certificate of Amendment with the Nevada Secretary of State to increase its authorized capital to 7,000,000,000 shares of common stock, par value $0.001.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going concern
The Company commenced operations on October 19, 2004 and has not realized any revenues since inception. The ability of the Company to continue as a going concern is dependent on raising capital to fund ongoing operations and carry out its business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. To date the Company has funded its initial operations by way of private placements of common stock and advances from related parties.
Unaudited Interim Financial Statements
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. The unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.
Organization
The operating Company, Nola Energy Inc. was incorporated on January 16, 2014 in the State of Nevada. The Company’s fiscal year end is December 31.
Basis of presentation
These financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant areas requiring management’s estimates and assumptions are the determination of the fair value of transactions involving common stock and financial instruments. Other areas requiring estimates include deferred tax balances and asset impairment tests.
Cash and cash equivalents
For the statements of cash flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of March 31, 2014 that exceeded federally insured limits.
Financial instruments
The fair value of the Company’s financial assets and financial liabilities approximate their carrying values due to the immediate or short-term maturity of these financial instruments.
Earnings (loss) per common share
Basic earnings (loss) per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive earnings (loss) per share reflects the potential dilution of securities that could share in the earnings of the Company. Dilutive earnings (loss) per share is equal to that of basic earnings (loss) per share as the effects of stock options and warrants have been excluded as they are anti-dilutive.
As of March 31, 2014, the Company has 1,205,669,062 potentially if-converted dilutive shares of common stock that are derived from the outstanding convertible notes payable.
Income taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. As at March 31, 2014, the Company had net operating loss carryforwards, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for the deferred tax assets resulting from these loss carryforwards.
Recently Issued Accounting Standards
The Company has adopted all accounting pronouncements issued since December 31, 2007, none of which had a material impact on the Company’s financial statements.
NOTE 3 – STOCKHOLDERS’ EQUITY (DEFICIT)
Share Capital
The Company is authorized to issue 7,000,000,000 shares of common stock with a par value of $0.001 per share.
The Company has 4,489,304,591 common shares issued and 4,230,201,560 common shares outstanding as of March 31, 2014.
Effective February 10, 2014, our Board of Directors approved the designation of 2,000,000 shares of Series A preferred stock (the "Series A Preferred Stock"). The Designation of Series A Preferred Stock was filed with the Nevada Secretary of State on February 14, 2014.
Common shares issued and outstanding
During the three months ended March 31, 2014, the Company issued 2,695,971,257 common shares as follows:
On January 2, 2014, the Company issued 26,339,167 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 2, 2014, the Company issued 54,563,636 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 10, 2014, the Company issued 50,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 13, 2014, the Company issued 68,181,819 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 14, 2014, the Company issued 51,104,832 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 15, 2014, the Company issued 60,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 21, 2014, the Company issued 86,100,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 22, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 23, 2014, the Company issued 81,818,182 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 24, 2014, the Company issued 70,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 28, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 30, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On January 30, 2014, the Company issued 80,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 3, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 4, 2014, the Company issued 100,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 4, 2014, the Company issued 88,909,091 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 7, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 10, 2014, the Company issued 27,524 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 13, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 14, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 18, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 19, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 20, 2014, the Company issued 150,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 21, 2014, the Company issued 88,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 25, 2014, the Company issued 139,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On February 26, 2014, the Company issued 103,333,333 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On March 13, 2014, the Company issued 70,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On March 20, 2014, the Company issued 70,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On March 24, 2014, the Company issued 160,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On March 25, 2014, the Company issued 170,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
On March 28, 2014, the Company issued 180,000,000 common shares pursuant to a convertible promissory note. These common shares were outstanding as of March 31, 2014.
Common shares issued and not yet outstanding
During the three months ended March 31, 2014, the Company issued 259,103,031 common shares that are not yet outstanding as of March 31, 2014. They are as follows:
On October 31, 2013, the Company issued 95,436,364 common shares pursuant to a convertible promissory note. As of March 31, 2014, these common shares were held in escrow and not outstanding.
On November 11, 2013, the Company issued 75,000,000 common shares pursuant to a convertible promissory note. As of March 31, 2014, these common shares were held in escrow and not outstanding.
On December 31, 2013, the Company issued 88,666,667 common shares pursuant to a convertible promissory note. As of March 31, 2014, these common shares were held in escrow and not outstanding.
Preferred shares issued
On February 27, 2014, the Board of Directors authorized the execution of that certain securities exchange agreement dated February 27, 2014 (the "Securities Exchange Agreement") among the Company, Nola Energy Inc., a private Nevada corporation (the “Nola”), and the shareholders of Nola who hold of record the total issued and outstanding shares of common stock of Nola. In accordance with the terms and provisions of the Securities Exchange Agreement, the Corporation shall acquire all of the issued and outstanding shares of stock of Nola from its sole shareholder, Gerard Danos, thus making Nola its wholly-owned subsidiary, in exchange for the issuance to Gerard Danos of an aggregate 10,000 shares of its Series A preferred stock of the Corporation. The shares of Series A Preferred Stock have voting rights. Gerard Danos as holder of the Series A preferred stock shall have the right to vote on any matter to be voted on by the stockholders of the Corporation (including any election or removal of the directors of the Corporation) and including to the extent specifically required by Nevada law. The voting rights of all then issued and outstanding shares of Series A preferred stock shall equal two times the voting rights of the then total issued and outstanding shares of common stock.
NOTE 4 – RELATED PARTY TRANSACTIONS
Management Fees
At February 27, 2014, the date of the Securities Purchase Agreement with Nola Energy Inc. which for accounting purposes was treated as a reverse merger, the Company had a due to related party balance of $245,000 which was the result of a management services agreement with the Company’s prior officers and directors. The management service agreement was cancelled upon the execution of the Securities Purchase Agreement with Nola Energy Inc. At March 31, 2014, the Company has a due to related party balance of $245,000. .
NOTE 5 – LOANS PAYABLE
During the three months ended March 31, 2014, the Company entered into one Securities Purchase Agreements with IBC Funds LLC. IBC Funds LLC was assigned $15,000 of the Company’s loans payable debt. Pursuant to the agreement, the terms of the debt were restructured to give convertible features, which are further described in note 6.
NOTE 6 – CONVERTIBLE PROMISSORY NOTES
In the three months ended March 31, 2014, the Company entered into two convertible note agreements.
IBC Funds, LLC
On January 10, 2014, the Company entered into a Securities Purchase Agreement with IBC Funds, LLC for a $175,909 convertible promissory note payable, which included an assignment of $15,000 of the Company’s loan payable debt, due interest at 10 % per annum, unsecured, and due on demand. The note is convertible into common shares of the Company at any time from the date of issuance at a conversion rate of 50% of the market price, calculated as the average of the lowest trading prices in the previous 20 trading days leading up to the date of conversion. As of March 31, 2014, IBC Funds, LLC excerised their option to convert $175,909 of convertible debt into 1,699,000,000 shares of the Company’s common stock.
Tidepool Ventures Corporation
On March 3, 2014, the Company entered into a Securities Purchase Agreement with Tidepool Ventures Corporation for an $11,000 convertible note payable due interest at 10% per annum, unsecured, and due on March 3, 2015. The note is convertible into common shares of the Company at any time from the date of issuance at a conversion rate of 50% of the market price, calculated as the average of the lowest trading prices in the previous 5 days leading up to the date of conversion.
As of March 31, 2014, Tidepool Ventures Corporation excerised their option to convert $31,000 of convertible debt into 513,333,333 shares of the Company’s common stock.
Conversion of convertible debt
In the three months ended March 31, 2014, Hanover Holdings, LLC converted $31,500 of convertible debt and $2,280 of accrued interest into 238,909,092 common shares, WHC Capital, LLC converted $38,240 of convertible debt and $2,490 of accrued interest into 244,728,832 common shares, IBC Funds, LLC converted $175,909 of convertible debt into 1,699,000,000 common shares, and Tidepool Ventures Corporation converted $31,000 of convertible debt into 513,333,333 common shares. The following table summarizes the total outstanding principle on convertible notes payable:
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|
March 31, 2014
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Convertible Notes Payable- Tidepool Ventures Corporation
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$
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32,000
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Convertible Notes Payable- Hanover Holdings I, LLC
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|
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23,000
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Convertible Notes Payable- IBC Funds, LLC
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6,348
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Convertible Notes Payable- WHC Capital, LLC
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30,000
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Convertible Notes Payable - CP-US Income, LLC
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1,355
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|
|
|
|
|
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Total Convertible Notes Payable
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$
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92,703
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Derivative liability
At March 31, 2014, the Company had $1,533,647 in derivative liability pertaining to the outstanding convertible notes which was calculated using the Black Scholes Model.
NOTE 7 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than listed below, no other material subsequent events exist.
Convertible Promissory Notes Converted:
On May 8, 2014, Hanover Holdings LLC exercised its option to convert $14,000 of debt into 148,400,000 common shares.
On May 9, 2014, WHC Capital LLC exercised its option to convert $17,068 of debt into 170,685,000 common shares.
Common shares issued and not yet outstanding
On April 24, 2014, the Company issued 280,000,000 common shares pursuant to a convertible promissory note. As of May 9, 2014, these common shares were held in escrow and not outstanding.
Executive Service Agreement
On May 1, 2014, the Board of Directors of Nola Energy Inc. ( formerly TagLikeMe Corp.), a Nevada corporation (the “Corporation”), authorized the execution of that certain six month executive service agreement dated May 1, 2014 (the "Executive Service Agreement") between the Corporation and Richard Eliot-Square, its Chief Executive Officer, Chief Financial Officer and member of the Board of Directors (the "Executive"). The Corporation acknowledged that it had retained the Executive in such capacity since July 1, 2012, and desired to continue to retain the Executive on an independent contractor basis, and the Executive desired to continue to provide such related services to the Company as memoralized in the Executive Service Agreement. In accordance with the terms and provisions of the Executive Service Agreement: (i) the Corporation agreed to pay to the Executive a base monthly salary of $10,225 from July 1, 2012 through April 30, 2014 and confirmed that the aggregate amount due and owing to the Executive from July 1, 2012 through April 30, 2014 was $225,000; (ii) the Corporation agreed thereafter to pay to the Executive a minimum 10% finders' fee and/or commission on consummated transactions introduced by the Executive to the Corporation based upon the negotiated terms of such transactions and as agreed upon by the Executive and the Corporation (the “Executive Fee”); and (iii) the Executive agreed to continue to provide such executive consultant services to the Corporation in his capacity as Chief Executive Officer and Chief Financial Officer focusing on financing, administrative and the organizational structure of the Corporation.
Any party can terminate the Executive Service Agreement upon thirty (30) days written notice (herein called “Notice of Termination”) to the other parties. If the Corporation terminates the Executive Service Agreement prior to the termination date for any reason other than the Executive’s gross negligence, the Corporation shall pay the Executive the amount of the Executive Fee as required monthly up and to the termination date and an amount equal to forty-eight (48) months of Executive Fee from the termination date (the "Severance Pay"). If the Executive terminates the Executive Service Agreement prior to the termination date for any reason, the Corporation shall pay the Executive the severance pay from the date of early termination by the Executive.
Convertible Promissory Note
On May 1, 2014, the Board of Directors further authorized the execution of that certain convertible promissory note dated May 1, 2014 (the "Convertible Note") in the principal amount of $225,000 issued by the Corporation to the Executive. The Convertible Note provided that such amounts due and owing by the Corporation from July 1, 2012 through April 30, 2014 under the Executive Service Agreement would be evidenced in a convertible note, which convertible note would be convertible into shares of common stock of the Company at a discounted rate of 20% of the average trading price of the Corporation's shares of common stock on the OTC Markets for the three trading days prior to the date of receipt by the Corporation of a conversion notice. Under the terms and provisions of the Convertible Note, the Corporation agreed to pay to the order of the Executive the sum of $225,000, which amount represents those funds due and owing to the Executive commencing July 1, 2012 through April 30, 2014 for services rendered in accordance with the terms and provisions of the Executive Services Agreement. The Convertible Note shall not bear interest and is payable upon demand.
The Executive shall have the right, exercisable in whole or in part, to convert the outstanding principal into a number of fully paid and nonassessable whole shares of the Corporation's common stock. The number of whole shares of common stock into which the Convertible Note may be voluntarily converted shall be determined by dividing the aggregate principal amount borrowed by that amount equal to a 20% discount of the average trading price of the Corporation's shares of common stock on the OTC Market three days prior to receipt by the Corporation of a notice of conversion (the “Note Conversion Price”).
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.