CLICKSTREAM CORPORATION The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As shown in the accompanying financial statements, as of
Discovery Growth Fund, LLC
The Company has incurred significant losses since its inception and has not
demonstrated an ability to generate sufficient revenues from the sales of its
products or services to achieve profitable operations. There can be no assurance
that profitable operations will ever be achieved, or if achieved, could be
sustained on a continuing basis. In making this assessment we performed a
comprehensive analysis of our current circumstances including: our financial
position, our cash flows and cash usage forecasts for the twelve months ended
The Company expects to continue to incur significant losses from operations and have negative cash flows from operating activities for the near-term. These losses could be significant as the Company has not yet generated revenues, but has continuing operating expenses including, but not limited to, compensation costs, professional fees, software development costs and regulatory fees.
The Company's primary source of operating funds has been from cash proceeds from
the sale of common stock and the issuances of promissory notes and other debt.
The Company has experienced net losses from operations since inception, but it
expects these conditions to improve in the future as it develops its business
model. The Company had a stockholders' deficit at
Management's current business plan is primarily to: (i) pursue additional capital raising opportunities, (ii) continue to explore and execute prospective partnering or distribution opportunities? and (iii) identify unique market opportunities that represent potential positive short-term cash flow.
The Company's existence is dependent upon management's ability to develop profitable operations and to obtain additional funding sources. There can be no assurance that the Company's financing efforts will result in profitable operations or the resolution of the Company's liquidity problems.
If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company continues to explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels.
9
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
These factors create substantial doubt about the Company's ability to continue as a going concern within the twelve-month period subsequent to the date that these consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that mightbe necessary if the Company is unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the relative fair value of assets acquired, valuation of intangible assets for impairment testing, valuation of share-based compensation, and the valuation allowance on deferred tax assets. Actual results could differ from those estimates, and those estimates may be material.
Asset Acquisitions
The Company accounts for acquisitions of legal entities that do not meet the definition of a business under ASC 805 as asset acquisitions. Assets acquired and liabilities assumed are recorded at their relative fair value and no goodwill is recorded. Contingent consideration for assets acquired is measured and is recognized as an expense on the date the contingency occurs.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries
Cash
For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
At
The Company is exposed to credit risk on its cash and cash equivalents in the
event of default by the financial institutions to the extent account balances
exceed the amount insured by the
Equity Method Investment
The equity method is applied to investments in affiliated companies and joint ventures. An affiliated company is an entity which is not controlled by the Company, but for which the Company is able to exert significant influence over the decisions on financial and operating business policies. If the Company has 20% or more, but not more than 50%, of the voting rights of another entity, the Company is presumed to have significant influence over that entity. However, if a company has less than 20% of the voting rights and is able to exert significant influence, then the equity method should be applied. Under the equity method, the investment in an affiliated company or joint venture is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company's share of the net income or loss of the affiliated company or joint venture. When the Company's share of losses of an affiliated company equals or exceeds it interest in the affiliated company or joint venture, the Company discontinues recognizing its share of further losses. All intercompany profits have been eliminated in proportion to interests in affiliated companies or joint ventures.
10
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
Segments
The Company uses the "management approach" to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company's reportable segments. Management has determined that the Company has one operating segment.
Fair Value Measurements
The Company accounts for financial instruments under
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. Thehierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
? Level 1 -Observable inputs that reflect quoted market prices
(unadjusted) for identical assets or liabilities in active markets;
? Level 2-Observable inputs other than quoted prices in active markets
that are observable either directly or indirectly in the marketplace
for identical or similar assets and liabilities; and
? Level 3-Unobservable inputs that are supported by little or no market
data, which require the Company to develop its own assumptions.
The determination of fair value and the assessment of a measurement's placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management's assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.
Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.
The Company recorded intangible assets for an asset acquisition (See Note 5).
The Company performs impairment tests on these assets to reduce such asset to
their fair value as applicable. These are considered level 3 non-recurring fair
value measurements. The Company may use both qualitative and quantitative
techniques such as the income method to value such assets. At
Financial Instruments
Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10") requires disclosure of the fair value of certain financial instruments. The carrying value of accounts payable and accrued expenses, and short-term borrowings, as reflected in the consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the consolidated financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
11
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company's identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 "Impairment or Disposal of Long- Lived Assets." Events and circumstances considered by the Company in determining where the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company's business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, "Income Taxes". Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes
using the provisions of ASC 740 "Income Taxes". Using that guidance, tax
positions initially need to be recognized in the financial statements when it is
more likely than not the position will be sustained upon examination by the tax
authorities. As of
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs are included as a
component of general and administrative expense in the consolidated statements
of operations. The Company recognized
Research and Development Costs
Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company's mobile gaming applications. Costs incurred for research and development are expensed as incurred.
Stock-Based Compensation
We account for our stock-based compensation to employees and non-employees under ASC 718 "Compensation - Stock Compensation" using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the requisite service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.
Net Loss per Common Share
The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share ("ASC 260-10"). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the "if converted" method.
12
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
The computation of basic and diluted income (loss) per share excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.
Potentially dilutive securities excluded from the computation of basic and diluted net loss per share are as follows:
Schedule of potentially dilutive equity securities
June 30,
2022 2021
Series A preferred shares 369,167,000 400,000,000
Convertible notes 44,707,814 -
Total potentially dilutive shares 413,874,814 400,000,000
Based on the potential common stock equivalents noted above at
Recent Accounting Standards
In
In
There are various other 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.
NOTE 4 - NOTE RECEIVABLE, INVESTMENT IN AND OPTION TO ACQUIRE COMMON SHARES OF WINNERS, INC., AND NOTE PAYABLE - RELATED PARTY
During the year ended
On
13
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
The asset and liability balances are as follows:
Schedule of assets and liability
June 30, September 30,
2022 2021
Notes receivable $ - $ 515,000
Accrued interest receivable - 41,000
Equity method investment in Winners, Inc. - 105,000
Total assets $ - $ 661,000
Notes payable $ 111,000 $ -
Accrued interest payable 2,000 -
Total liabilities $ 113,000 $ -
A. Notes Receivable
During the year ended
The notes were secured by all tangible and intangible assets of Winners Inc.,
bore interest at a rate of 10% per annum and matured on
During the nine months ended
The balance of the notes receivable as of
B. Accrued Interest Receivable
During the nine months ended
C. Investment in Winners, Inc.
In
The Company accounted for the investment to Winners Inc. pursuant to ASC 320, Investments - Debt and Equity, as the Company's equity interest does not give it the ability to exercise significant influence (generally less than 20% of an investee's equity) and accounts for the investment at fair value. The investment is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.
On
D. Option to Acquire Common Shares of Winners, Inc.
In
The Company followed the guidance of ASC 321, Investment -Equity Securities and accounted the option at cost of$100,000 . The remaining balance of$75,000 was paid toMr. Terwilliger and the option was exercised onSeptember 8, 2021 (See Note 7). 14CLICKSTREAM CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2022 (unaudited)
E. Investment in Equity Method Investee - Winners, Inc.
Upon payment of the remaining balance of
F. Note Payable
During
NOTE 5 - ACQUISITION OF NEBULA SOFTWARE CORP. (ASSET PURCHASE)
On
With the acquisition, the Company is able to consolidate and complement existing content operations, trained workforce, proprietary software and operating platform, and the opportunity to generate future synergies with our existing business.
The Company has included the results of operations of Nebula since its acquisition date. There were no acquisition related costs.
Pursuant to ASU 2017-01, Business Combinations (Topic 805): "Clarifying the Definition of a Business", this acquisition was determined to be that of an asset and not a business, therefore, there was not a business combination requiring acquisition accounting or related financial reporting. Since this was deemed to be an asset purchase, this did not result in the recognition of goodwill.
During the year ended
NOTE 6 - ACQUISITION OF REBEL BLOCKCHAIN, INC. ("RBI") (ASSET PURCHASE)
On
Pursuant to the agreement, the Company is required to issue milestone payments in the form of common shares as follows:
? 2,000,000 shares upon launch of Nifter™ marketplace without major
software bugs which inhibit large functionality subject to and issuable
upon the Company's common stock 10-day volume weighted minimum average
price per share of $0.30 within 15 days of the benchmark being reached.
? 3,000,000 shares upon reaching $100,000 in monthly gross merchandise
value on the Nifter™ platform subject to and issuable upon the
Company's common stock 10-day volume weighted minimum average price per
share of $0.50 within 15 days of the benchmark being reached.
? 4,000,000 shares upon reaching $1,000,000 in yearly gross merchandise
value on the Nifter™ platform subject to and issuable upon the
Company's common stock 10-day volume weighted minimum average price per
share of $0.75 within 15 days of the benchmark being reached.
? 6,000,000 shares upon reaching $10,000,000 in 3-year gross merchandise
value on the Nifter™ platform subject to and issuable upon the
Company's common stock 10-day volume weighted minimum average price per
share of $ 1.00 within 15 days of the benchmark being reached.
15
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
As of the issuance date of this report, no contingency has been met and no contingent shares have been issued.
Pursuant to ASU 2017-01, Business Combinations (Topic 805): "Clarifying the Definition of a Business", this acquisition was determined to be that of an asset and not a business, therefore, there was not a business combination requiring acquisition accounting or related financial reporting. Since this was deemed to be an asset purchase, this did not result in the recognition of goodwill and no assets or liabilities were recorded on the acquisition date as there was no initial consideration.
NOTE 7 - EQUITY METHOD INVESTMENT - RELATED PARTY
In fiscal 2020, the Company was granted by
As a result, the Company owns approximately 55% of Winners, Inc. common shares, but does not have voting control due to the existence of outstanding Series A preferred shares which have super-voting rights (See Below).
Winners, Inc. has outstanding Redeemable Preferred Stock with the following terms:
? 100,000,000 shares authorized
? Par value - $0.001
? Convertible - one hundred (100) shares of common stock for each one (1)
share of preferred stock
? Dividends - para passu with common stock
? Voting - equivalent to the as converted number of common shares (100:1)
? Liquidation value - no stated value but para passu with common stock on
an as converted basis Deemed liquidation provision relating to any
reorganization, recapitalization, reclassification, consolidation or
merger
? Convertible - Automatic upon the later of (a) written consent of at
least a majority of the then outstanding Series A preferred stock; or
(b) January 1, 2023
? Anti-dilution rights - Ability to maintain a 90% interest on a
fully-diluted basis of all common stock and related common stock
equivalents for the period ending January 1, 2024 There are 9,000,000 Series A preferred shares issued and outstanding. The total voting power of those shares is 900,000,000 votes.
The Company conducted an analysis to determine the proper accounting method for
its investment in Winners, Inc. Although Clickstream directly holds less than
20% of the vote of Winners, Inc. (approximately 5.5%), Clickstream can exert
influence over Winners, Inc. due to among other reasons, voting shares held by
related parties of Clickstream and board representation. Therefore, the Company
determined that the investment should be recorded pursuant ASC 323, Investment -
Accordingly, the Company has recognized the investment in Winners, Inc. and its
subsidiary
16
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
At
Schedule of purchase price allocation
Consideration Paid: Fair Value Cash$ 175,000
Pre-existing investment at fair value 17,000 Total consideration paid
$ 192,000
The Company measured the fair value per share of the outstanding capital stock
on the initial date of
A loss of
Schedule of remeasurement of fair value of equity interest
Initial recognition, September 8, 2021$ 192,000 Loss of equity method investee (87,000 )
Investment in equity method investee - Winners, Inc.,
105,000
Loss of equity method investee (105,000 )
Investment in equity method investee - Winners, Inc.,
December 31, 2021 $ -
As of
NOTE 8 - CONVERTIBLE NOTES PAYABLE
Convertible notes payable were comprised of the following as of
Schedule of convertible notes payable
June 30, September 30,
2022 2021
Discovery Growth Group LLC convertible note
payable $ 600,000 $ -
Sixth Street Lending LLC convertible note
payable 48,000 -
Sixth Street Lending LLC convertible note
payable 104,000 -
Total convertible note payable 752,000 -
Less unamortized debt discount (32,000 ) -
Add debt premium 55,000 -
Total convertible notes payable, net of
unamortized debt discount plus debt premium 775,000 -
Less current portion (775,000 ) -
Long-term portion $ - $ -
Discovery Growth Fund, LLC On
17
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
During the nine months ended
In the event of default, the entire unpaid principal and accrued interest become immediately due and payable upon the occurrence of any of the following events:
(a) any failure on the part of the Company to make any payment under this Note when due, and such failure continues for five (5) days after the due date; accrued interest shall default to the maximum legal rate;
(b) the Company's commencement (or take any action for the purpose of commencing) of any proceeding under any bankruptcy, or for the reorganization of any party liable hereon, whether as maker, endorser, guarantor, surety or otherwise, or for the readjustment of any of the debts of any of the foregoing parties, under the Federal Bankruptcy Code, as amended, or any part thereof, or under any other laws, whether state or Federal, for the relief of debtors, now or hereafter existing, by any of the foregoing parties, or against any of the foregoing parties;
(c) a proceeding shall be commenced against the Company under any bankruptcy, reorganization, arrangement, readjustment of debt, moratorium or similar law or statute and relief is ordered against such party, or the proceeding is controverted but is not dismissed within thirty (30) days after the commencement thereof;
(d) the appointment of a receiver, trustee or custodian for all or substantially all of the assets of the Company, which appointment remains in place for at least one hundred twenty (120) days, the dissolution or liquidation of the Company; or
(e) the admission by the Company of its inability to pay its debts as they mature, or an assignment for the benefit of the creditors of the Company.
The OID has been accounted for as debt discount and will be amortized to interest expense using the effective interest method over the term of the note payable.
On
1800
On
18
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
On
The notes are convertible with a conversion price of 75% of the lowest trading
price during the ten trading days prior to the conversion date. The OID was
accounted for as debt discount and will be amortized to interest expense over
the term of the respective note payable. The notes will be treated as stock
settled debt. As such, the Company recorded aggregate debt premium of
There is a cross-default provision whereby the notes becomes immediately due in the event of default and the total obligation is equal to 150% of the then outstanding balance plus default interest.
If any of the following events of default listed below shall occur, and if the borrower fails to pay the default amount within five (5) business days of written notice that such amount is due and payable, then the holder shall have the right at any time, to convert the balance owed pursuant to the note including the default amount into shares of common stock of the Company as set forth herein.
Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise and such breach continues for a period of five (5) days after written notice from the Holder.
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of twenty (20) days after written notice thereof to the Borrower from the Holder.
Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
Delisting of Common Stock. The Borrower shall fail to maintain the listing of
the Common Stock on at least one of the OTC (which specifically includes the
quotation platforms maintained by the OTC Markets Group) or an equivalent
replacement exchange, the
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going concern" shall not be an admission that the Borrower cannot pay its debts as they become due.
19
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
Financial Statement Restatement. The restatement of any financial statements
filed by the Borrower with the
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term "Other Agreements" shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.
In addition, for all convertible note payable outstanding, the Company has reserved a total 43,296,296 common shares as per the requirements of the convertible notes payable agreements.
NOTE 9 - RELATED PARTY TRANSACTIONS
Consulting Agreements
During fiscal 2020, the Company executed consulting agreements with shareholders and/or officers of the Company ranging from 12 months to 36 months.
During the nine months ended
Winners, Inc.
During the nine months ended
During
NOTE 10- CONVERTIBLE SERIES A PREFERRED STOCK
Issuance of Series A Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock and has designated 4,000,000 preferred shares as Series A preferred.
The Series A has the following rights and privileges as amended:
? have a conversion rate of 100 shares of Common Stock for each share of
Preferred Stock;
? shall be treated pari passu with Common Stock except that the dividend
on each share of Preferred Stock shall be the amount of dividend
declared and paid on each share of common stock multiplied by the
Conversion rate;
? shall be treated pari passu with Common Stock except that the
liquidation payment on each share of Series A Convertible Preferred
Stock shall be equal to the amount of the payment on each share of
Common Stock multiplied by the Conversion Rate;
20
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
? shall vote on all matters as a class with the holders of Common Stock
and each share of Series A Convertible Preferred Stock shall be
entitled to the number of votes per share equal to the Conversion Rate;
? shall automatically be converted into shares of common stock at its
then effective Conversion Rate upon the latest of:
a. The closing of either a Form S-1 Registration or Form 1-A Offering
under the Securities Act of 1933, as amended, covering the offer and
sale to the public of Common Stock for the account of the Company with
$5,000,000 in cash proceeds to the Company, net of underwriting
discounts;
b. The written consent of the holders of at least a majority of the
then outstanding Series A Convertible Preferred Stock; and
c. January 1, 2022 .
? shall have anti-dilution rights (the "Anti-Dilution Rights") during the
two-year period after the Series A Convertible Preferred converted into
shares of Common Stock at its then effective conversion Rate. The
anti-dilution rights shall be applied pro-rata to the holder's
ownership of the Series A Convertible Preferred Stock. The Company
agrees to assure that the holders of the Series A Convertible Preferred
Stock shall have and maintain at all times, full ratchet anti-dilution
protection rights as to the total number of issued and outstanding
shares of common stock and preferred stock of the Company from time to
time, at the rate of 80%, calculated on a fully- diluted basis. In the
event that the Company issues any shares of common stock, preferred
stock or any security convertible into or exchangeable for common stock
or preferred stock to any person or entity, the Company agrees to
undertake all necessary measures as may be necessary or expedient to
accommodate its performance under this Series A Convertible Preferred
Stock Designation, including, without limitation, the amendment of its
articles of incorporation to the extent necessary to provide for a
sufficient number of shares of authorized common stock or preferred
stock to be issued to Series A Convertible Preferred Stock holders so
as to maintain in Series A Convertible Preferred Stock holders, an 80%
interest in the common stock and preferred stock of the Company,
calculated on a fully-diluted basis.
Issuance of Series A Convertible Preferred Stock
During the year ended
The Company considered accounting guidance to determine the appropriate
treatment of the Series A shares. Accordingly, based on a deemed liquidation
provision which causes potential cash redemption of the Series A shares, the
Company recorded the issuance of its Series A for cash and services with a total
amount of
Redemption of Series A Shares
On
During the nine months ended
21
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
NOTE 11 - STOCKHOLDERS' EQUITY (DEFICIT)
Issuance of Common Shares for Services
During the nine months ended
During the nine months ended
Issuance of Common Shares for Licensing and Marketing Fees
Effective
For its compensation under the Agreement, the Company will receive 10% of net
revenues from original issue NFT's and 20% of all resale net revenues. In turn,
the Company will issue to SLE: (a) 15,000,000 restricted shares of the Company's
common stock upon execution of the Agreement; and (b) 10,000,000 restricted
shares of the Company's Common Stock after in each case NFT gross sales reach
During the nine months ended
Issuance of Common Shares for Settlement of Employment Agreement
On
Issuance of Common Shares for Cash
During the nine months ended
22
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
Issuance of Common Shares Upon Conversions of Convertible Notes Payable
During the nine months ended
Issuance of Common Shares to be Issued
On
Issuance of Common Shares for Acquisition
During the nine months ended
NOTE 12 - RESEARCH AND DEVELOPMENT COSTS
Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company's mobile gaming applications. Costs incurred for research and development are expensed as incurred.
During the three and nine months ended
During the three and nine months ended
NOTE 13- COMMITMENTS AND CONTINGENCIES
Legal Matters
On
We are involved in certain legal proceedings that arise from time to time in the
ordinary course of our business. Except for income tax contingencies, we record
accruals for contingencies to the extent that our management concludes that the
occurrence is probable and that the related amounts of loss can be reasonably
estimated. Legal expenses associated with the contingency are expensed as
incurred. There was no outstanding litigation as of
Consulting Agreements
On
On
23
CLICKSTREAM CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
(unaudited)
The Company has consulting agreements with various consultants and related party
consultants with a service term ranging from 12 months up to 36 months. The
following table summarizes the Company's future payments/commitments as of
Schedule of operating leases future payments
2022$ 199,000 2023 209,000 Total minimum payments$ 408,000
Collaboration Agreement with
Effective
For its compensation under the Agreement, the Company will receive 10% of net
revenues from original issue NFT's and 20% of all resale net revenues. In turn,
the Company will issue to SLE: (a) 15,000,000 restricted shares of the Company's
common stock upon execution of the Agreement (to be issued as of
The gross sales milestones (the "Milestones") for additional share awards are
performance based and, accordingly, are accrued when it is probable the
respective performance condition shall be achieved. As of
Other Commitments
Certain asset acquisition contingent consideration may be issuable in the future if contingency conditions are met (See Note 6).
NOTE 14- SUBSEQUENT EVENTS
On
On
24
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this Quarterly Report on Form 10-Q are
"forward-looking statements" within the meaning of the safe harbor from
liability established by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding our current beliefs,
goals and expectations about matters such as our expected financial position and
operating results, our business strategy and our financing plans. The
forward-looking statements in this report are not based on historical facts, but
rather reflect the current expectations of our management concerning future
results and events. The forward-looking statements generally can be identified
by the use of terms such as "believe," "expect," "anticipate," "intend," "plan,"
"foresee," "may," "guidance," "estimate," "potential," "outlook," "target,"
"forecast," "likely" or other similar words or phrases. Similarly, statements
that describe our objectives, plans or goals are, or may be, forward-looking
statements. Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be different from any future results, performance and
achievements expressed or implied by these statements. We cannot guarantee that
our forward-looking statements will turn out to be correct or that our beliefs
and goals will not change. Our actual results could be very different from and
worse than our expectations for various reasons. You should review carefully all
information, including the discussion of risk factors under "Part I. Item 1A:
Risk Factors" and "Part II. Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations" of the Form 10-K for the year
ended
Throughout this Quarterly Report on Form 10-Q, the terms "CLIS," "we,"
"us," "our," "the company" and "our company" refer to
Our corporate history
We were incorporated in
The address of our virtual executive office is
Overview
Over the last few years, there has been a substantial increase in the
availability and quality of applications readily available from sources such as
In
25
Recent Developments
Issuance of Common Shares for Services
During the nine months ended
Issuance of Common Shares for Licensing and Marketing Fees
Effective
For its compensation under the Agreement, the Company will receive 10% of net
revenues from original issue NFT's and 20% of all resale net revenues. In turn,
the Company will issue to SLE: (a) 15,000,000 restricted shares of the Company's
common stock upon execution of the Agreement; and (b) 10,000,000 restricted
shares of the Company's Common Stock after in each case NFT gross sales reach
During the nine months ended
Issuance of Common Shares for Settlement of Employment Agreement
On
Issuance of Common Shares for Cash
During the nine months ended
Issuance of Common Shares Upon Conversions of Convertible Notes Payable
During the nine months ended
Issuance of Common Shares to be Issued
On
Results of Operations-Comparison of the Three Months Ended
Research and Development Expenses
Research and development expenses for the three months ended
26
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended
Interest Expense
Interest expense for the three months ended
Interest Income
Interest income for the three months ended
Results of Operations-Comparison of the Nine Months Ended
Research and Development Expenses
Research and development expenses for the nine months ended
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the nine months ended
Settlement of Employment Agreement
During the nine months ended
Interest Expense
Interest expense for the nine months ended
Interest Income
Interest income for the nine months ended
Liquidity and Capital Resources
As of
27
Application of Critical Accounting Policies
We believe that our critical accounting policies are as follows:
? Research and Development Costs; ? Share-Based Compensation; ? Fair Value Measurements; ? Equity Method Investments; and ? Asset Acquisitions.
Research and Development Costs
Research and development costs consist of expenditures for the research and development of new products and technology. These costs are primarily expenses to vendors contracted to perform research projects and develop technology for the Company's mobile gaming applications. Costs incurred for research and development are expensed as incurred.
Share-Based Compensation
We account for our stock-based compensation to employees and non-employees under ASC 718 "Compensation - Stock Compensation" using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the requisite service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.
Fair Value Measurements
We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, from time to time, we may be required to record certain assets at fair value on a non-recurring basis, such as certain impaired loans held for investment and securities held to maturity that are other-than-temporarily impaired or goodwill. These non-recurring fair value adjustments typically involve write-downs of individual assets due to application of lower-of-cost or market accounting or other accounting standards.
We have established and documented a process for determining fair value. We maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. Whenever there is no readily available market data, management uses its best estimate and assumptions in determining fair value, but these estimates involve inherent uncertainties and the application of management's judgment. As a result, if other assumptions had been used, our recorded earnings or disclosures could have been materially different from those reflected in these financial statements. For detailed information on our use of fair value measurements and our related valuation methodologies, see Note 3 to the Consolidated Financial Statements of this report.
Equity Method Investments
The equity method is applied to investments in affiliated companies and joint ventures. An affiliated company is an entity which is not controlled by the Company but for which the Company is able to exert significant influence over the decisions on financial and operating business policies. If the Company has 20% or more but not more than 50% of the voting rights of another entity, the Company is presumed to have significant influence over that entity however, if a company has less than 20% of the voting rights and is able to exert significant influence the equity method should be applied. Under the equity method, the investment in an affiliated company or joint venture is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company's share of the net income or loss of the affiliated company or joint venture. When the Company's share of losses of an affiliated company equals or exceeds it interest in the affiliated company or joint venture, the Company discontinues recognizing its share of further losses. All intercompany profits have been eliminated in proportion to interests in affiliated companies or joint ventures.
28
Asset Acquisitions
The Company accounts for acquisitions of legal entities that do not meet the definition of a business under ASC 805 as asset acquisitions. Assets acquired and liabilities assumed are recorded at their relative fair value and no goodwill is recorded. Contingent consideration for assets acquired is measured and is recognized as an expense on the date the contingency occurs.
Recently Issued Accounting Standards
See discussion in Note 3 to the condensed consolidated financial statements.
Inflation
We believe that inflation has not had a material adverse impact on our business or operating results during the periods presented.
Off-balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
© Edgar Online, source
