Current Operations
During the period ending December 31, 2019, the Company, serves the fitness
community marketing training products in fitness centers and gyms through
automated retail solutions.
On August 26, 2016, Company entered into a purchase agreement to acquire 100% of
WOD Market LLC ("WOD"), a Colorado limited liability company a Colorado based
provider of intelligent retail solutions for gym owners and coaches in 3
separate closings with the final closing on October 15, 2016. Later, on January
10, 2017, the Company executed the first amendment to the purchase of WOD to
extend the second closing date from on or about September 15, 2016 to on or
about March 31, 2017, and further extend the third and final closing date from
on or about October 15, 2016 to on or about June 30, 2017, respectively.
On March 14, 2017, Company executed a note cancellation agreement and assignment
with Baker & Myers & Associates LLC which resulted in Elite Data Marketing LLC
no longer being a subsidiary of the Company, with no further operational effect
or obligation to the Company. On same date, Company executed a joint venture
termination agreement with H Y H Investments S.A. which resulted in Elite Gaming
Ventures LLC (and, its wholly-owned subsidiary, Elite Data Holdings S.A.) no
longer being a subsidiary of the Company, with no further operational effect or
obligation to the Company, except for certain amounts owed by the Company under
a further amendment to the Amended and Restated Redeemable Note.
In addition, on March 14, 2017, Company executed the second amendment to the
purchase agreement, which amended certain terms of the WOD purchase, including
the formation of a joint venture to further develop and manage the current WOD
business, including the management of retail sales, up front inventory
purchases, ongoing inventory management, payments, marketing, and related
services.
Under the terms of the Joint Venture, the initial ownership interest of WOD was
20% owned by the Company, with the remaining 80% owned WODH, with the option of
Company to provide additional capital contributions to WOD in increments of not
less than $10,000 up to a total of $8 million dollars in the aggregate, which
included an equity exchange of up to a total of 800 units (80%) of WOD owned
initially by WODH to the Company for a total of approximately 199,000 shares of
Series B Preferred Stock and approximately 19,801,000 shares of Common Stock of
the Company (the "Shares") to be issued to WODH upon the completion of a final
closing on or before December 31, 2018, under the terms set forth in Amendment
No. 2.
Until a minimum of at least $4 million in additional capital contributions have
been made by the Company to WOD, resulting in a controlling ownership interest
of not less than 60% of WOD by the Company, all the Shares of Company stock
earmarked for the equity exchange with WODH is being held in a Voting Trust (as
defined elsewhere in this filing), along with other key shareholder positions,
in order to recapitalize the Company post a 1:1000 reverse split (which was
previously approved), pending effectiveness after the Company becomes a current
and fully-reporting public company. The voting trust has been extended through
June 30, 2020. The Joint Venture expired on December 31, 2019.
Plan of Operations
The Company's current plan of operations for the twelve months ending December
31, 2019 involved the continued development of the business plan.
WOD serves the fitness community by allowing coaches and trainers to focus on
what's important while athletes have access to the products they need to perform
at their highest level. WOD aims to relieve gym owners and coaches of the burden
of managing retail sales including upfront inventory purchases, ongoing
inventory management, payments, marketing, etc. while also providing a service
for members to have convenient access to products that help them perform better.
WOD intends to forge a mutually beneficial relationship with each gym, customer
and vendor to ensure the best possible experience.
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Our ability to implement the phases of our business plan was dependent on us
obtaining the significant financing for these projects, which we were unable to
secure during the year ending December 31, 2019.
Going Concern
We do not currently have any financing arranged and we cannot provide investors
with any assurance that we will be able to raise sufficient funding from the
sale of our common stock to fund further phases of our business plan. In the
absence of such financing, we will not be able to complete the purchase of WOD
and our business plan will fail. Even if we are successful in obtaining equity
financing to fund our joint venture, there is no assurance that we will obtain
the funding necessary to pay our creditors and note holders on a timely basis.
If we do not continue to obtain additional financing, we may be forced to
abandon our joint venture and goal of acquiring controlling ownership interest
in WOD. As a result, investors in our common stock would most likely lose all of
their investments.
Results from Operations - For the year ended December 31, 2018 as compared to
December 31, 2019.
Operating results for the years ended December 31, 2018 and 2019 are summarized
as follows:
Years Ended December 31,
2018 2019
Revenue $ - $ -
Operating expenses 523,935 598,349
Other income (expense) 24,320,920 3,766,451
$ 23,796,985 $ 3,168,102
Our net operating gain decreased $20,628,883 for our year ended December 31,
2019 from our year ended December 31, 2018. During the year ended December 31,
2019, our operating expenses increased $74,414 from the year ended December 31,
2018. The increase in expenses was mainly comprised of increase of $96,674 in
professional fees, $88,250 in wages per contract requirements, and a reduction
of $120,000 in consulting fees. Our other income decreased $20,554,469 in the
current year of measurement from the prior year of measurement. This increase
was due to a decrease in derivative related gains of $21,201,090 and an increase
in of non-recurring gains and debt discounts plus a decrease in interest
expense, loss on equity method investment and a gain on forgiveness of debt of
$646,621.
The gain on derivative instruments incurred in the current year of measurement
is associated with twelve convertible notes. The changes in derivative financial
instruments are non-cash items and arise from adjustments to record the
derivative financial instruments at fair values in accordance with pronounced
accounting standards. These changes are attributable mainly to adjustments to
record the initial fair value and the subsequent change in fair value for the
embedded conversion feature of derivative financial instruments and changes in
the market price of our common stock, which is a component of the calculation
model. The Black-Scholes option pricing model to estimate the fair value of the
derivative financial instruments.
Liquidity and Capital Resources
As of December 31, 2019, we had cash of $0 and our working capital deficit was
$8,285,725. In 2019, we generated revenues of $0 and a net loss of $598,349 from
operations and a gain of $3,766,451 from other income making the net gain
$3,168,102 as compared to 2018 revenues of $0 and a net loss from operations of
$523,935, a gain from other income of $24,320,920 and a net gain of $23,796,985.
The net gain for the current period of measurement is mainly comprised of
non-cash expenses related to derivative valuations, wages, professional fees,
interest expense and a gain on debt settlement. We are illiquid and need cash
infusions from investors and/or current shareholders to deploy our current
business plan.
The Company expects significant capital expenditures during the next 12 months,
contingent upon raising additional capital. We anticipate that we will need a
minimum of $1,500,000 for operations for the next 12 months.
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The source of such capital is uncertain, and there is no assurance that the
Company will be successful in obtaining such capital on commercially reasonable
terms, or at all. We have a working capital deficit and will need cash infusions
from investors and/or current shareholders to deploy our current business plan
and joint venture.
To implement our business plan, we will need to continue to raise working
capital in the form of equity in an amount up to $2,000,000 over the
twelve-month period ending December 31, 2020 on terms and conditions to be
determined. If we were unable to raise any funds from the sale of equity,
management may elect to seek subsequent interim or "bridge" financing in the
form of debt as may be necessary.
At this time, management is unable to determine the specific amounts and terms
of such future financings, or whether or not we will be successful in raising
such funds on a basis acceptable to us.
In order to finance the operations of the Company during the twelve months
ending December 31, 2019 and 2018, the Company's management and/or shareholders
entered a series of convertible note transactions or accounts payable totaling
$0 and 0, respectively.
Prior Funding Facilities
On August 26, 2016, the Company executed that certain definitive agreement (the
"Definitive Agreement") with WOD Market LLC ("WOD") for the acquisition of WOD
in a series of closings, which included certain advances from WOD and a separate
third party to the Company totaling Forty Thousand Dollars (USD $40,000.00),
represented by two (2) separate promissory notes (the "WOD Notes") to finance
certain expenses related to the WOD acquisition. The principal balance at
December 31, 2019 was $40,000 with accrued interest of $13,395.
On May 20, 2016, the Company executed that certain definitive agreement (the
"Definitive Agreement") with Properties of Merit Inc. ("POM") for the
acquisition of POM in a series of closings, which included certain advances from
POM to the Company totaling Seventeen Thousand Five Hundred Dollars (USD
$17,500.00), represented by a promissory note (the "Original Note") to finance
certain expenses related to the POM acquisition. On or about July 22, 2016, the
Company terminated the Definitive Agreement with POM in the form of an executed
termination agreement (the "Termination Agreement"), which included the
execution of an amended convertible redeemable note for $17,500 (the "Amended
Note"), on even date therewith, which replaced the Original Note set forth in
the Definitive Agreement. This debt was acquired by Birch First advisors in
2018. The principal balance at December 31, 2019 was $17,500 with accrued
interest of $3,241.
On June 11, 2015, we issued a 12% convertible note to JSJ Investments, Inc.
("JSJ") in the principal amount of $100,000 (net $88,000 to the company after
payment of related legal and broker fees) which bears interest at the rate of
12% per annum with a maturity date of December 11, 2015. At any time after the
Maturity Date, JSJ is entitled to convert all the outstanding and unpaid
principal amount of the Note into Common Stock at a 45% discount to the lowest
trading price during the previous twenty (20) trading days to the date of the
conversion notice. The embedded conversion option qualifies for derivative
accounting and bifurcation under ASC 815-15 Derivatives and Hedging. Pursuant to
ASC 815, "Derivatives and Hedging". The Company recognized the fair value of the
embedded conversion features as a derivative liability on the date in which the
note became convertible on December 11, 2015 of $82,754 and a derivative expense
of the same amount. During the year ended JSJ converted $14,417 of the principle
into common stock and as of December 31, 2015, the balance outstanding on the
Note was $85,583 and, accrued interest was $6,625. On January 28, 2016, JSJ made
a formal demand for repayment of the Note payable by February 26, 2016 and has
threatened litigation if payment is not tendered. This could be considered an
event of default where by JSJ could enforce the Company to redeem all or any
portion of the Note so demanded (including all accrued and unpaid interest), in
cash, at a price equal to 150% of the outstanding balance, plus accrued Interest
and Default Interest and any other amounts then due under this Note. At the time
of the filing of this Report, JSJ has converted a total of $20,690 of the
principal into shares of the Company's common stock, the principal balance at
December 31, 2019 was $78,097 with accrued interest of $44,891.
On June 16, 2015 ("Effective Date"), we entered into a securities purchase
agreement with LG Capital Funding, LLC, ("LG Capital") pursuant to which LG
Capital agreed to provide our company with an aggregate investment of $52,500 in
consideration of our issuance of a convertible promissory note with 6% interest
commencing June 16, 2015 and due June 16, 2016 which was convertible into common
shares six months from the Effective Date at a price equal to 58% of the lowest
closing bid price of our common stock for the ten trading days on or prior to
the date upon which notice of conversion is received. The note became
convertible on December 16, 2016 and cannot be paid back in cash unless
expressly permitted by LG Capital. At the time of the filing of this Report, LG
Capital has converted a total of $10,261of the principal and interest of $374
into shares of the Company's common stock, resulting in principal balance
remaining of $42,239 with accrued interest of $11,587 at December 31, 2019.
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We entered into a securities purchase agreement dated as of June 16, 2015
("Effective Date") with Adar Bays, LLC, pursuant to which Adar agreed to provide
our company with an aggregate investment of $52,500 in consideration of our
issuance of a convertible promissory note with 6% interest commencing June 16,
2015 and due June 16, 2016 which was convertible into common shares six months
from the Effective Date at a price equal to 58% of the lowest closing bid price
of our common stock for the ten trading days on or prior to the date upon which
notice of conversion is received. The note became convertible on December 16,
2016 and cannot be paid back in cash unless expressly permitted by Adar. At the
time of the filing of this Report, Adar has converted a total of $37,713
principal into shares of the Company's common stock, resulting in principal
balance remaining of $14,787 and accrued interest of $5,560.
On July 14, 2015, ("Effective Date"), the Company entered into a Securities
Purchase Agreement (the "SPA") with EMA Financial, LLC ("EMA"), whereby EMA
agreed to invest $156,500 in our Company in exchange for a convertible
promissory note that bears interest at 12% per annum. The Company netted cash
proceeds of $135,000 after brokerage and legal fees additionally issuing EMA
100,000 shares of Common Stock of the Company as a loan fee. Six months after
the effective date of the note, EMA can convert any unpaid balance of the note
into common stock at either the closing sale price of the Common Stock on the
Principal Market on the Trading Day immediately preceding the closing date or
60% of the lowest sale price for the Common Stock on the Principal Market during
the 20 consecutive Trading Days immediately preceding the Conversion Date. The
note became convertible on January 14, 2016. At December 31, 2019, EMA has
converted a total of $156,500 of principal into shares of the Company's common
stock, resulting in a principal balance remaining of $0 and accrued interest of
$20,376. Accrued interest remains in the amount of $53,337.
On July 14, 2015, we entered into an Equity Purchase Agreement (the "Purchase
Agreement" or "Equity Line") and Registration Rights Agreement (the
"Registration Agreement") with Tarpon Bay Partners LLC ("Tarpon") whereby Tarpon
is obligated, providing the Company has met certain conditions, including the
filing of a Form S-1 Registration Statement for the shares to be acquired, to
purchase up to $5,000,000 of the Company's common stock at the rates set forth
in the Purchase Agreement. The S-1 Registration Statement was filed on September
28, 2015. On May 17, 2016, the Company filed a letter with the Securities and
Exchange Commission for the withdrawal of the Form S-1 registration statement
filed on September 28, 2015 due to unfavorable market conditions.
On May 24, 2016, the Company and Tarpon Bay Partners LLC ("Tarpon") executed a
Termination Agreement (the "Termination Agreement"), in which the parties agreed
to cancel the original Equity Purchase Agreement (the "Original Purchase
Agreement"), dated July 14, 2015 (except for the original Promissory Notes (the
"Original Tarpon Note") which was amended and restated as set forth below), in
the original amount of USD $50,000, issued by the Company to Tarpon as
additional compensation pursuant to Original Purchase Agreement), which gave the
Company the right to issue and sell to Tarpon any of the Five Million Dollars
($5,000,000) of the Company's common stock.
In exchange for the Termination Agreement, the Company agreed to:
(F) amend and restate the terms of the Original Tarpon Note, in the form of the
issuance of an amended and restated convertible redeemable note (the "Amended
Tarpon Note"), in the principal amount of $50,000, at ten percent (10%) interest
per annum commencing on July 14, 2015 (the "Effective Date"), to be due and
payable to Tarpon by the Company in four (4) separate equal quarterly payments
of Twelve Thousand Five Hundred Dollars (USD $12,500), plus accrued interest to
date, due on the first day of each quarter beginning on July 1,
2016, convertible into shares of the Company's common stock at a conversion
price equal to fifty-eight percent (58%) of the lowest trading price for the ten
(10) prior trading days, subject to aggregate conversion limitations of 9.99%
and other terms and conditions set forth therein, and
(b) execute a new Equity Purchase Agreement (the "New Purchase Agreement"),
pursuant to which the Company would have the right to issue and sell to Tarpon a
total of Fifteen Million Dollars ($15,000,000) of the Company's common stock,
under the same terms as the Original Purchase Agreement, except for no
additional compensation in lieu of the Amended Tarpon Note, to be executed on
such mutually agreed upon date in the future after the Company is current on all
SEC filings and is relisted on the Over-the-Counter (OTC) OTCBB and OTCQB
markets.
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The principal value of this note at December 31, 2019 was $50,000 with accrued
interest of $22,110. This note was purchased by SeaCor Capital LLC in 2018.
Certain notes were transacted between their owners causing the changes in
ownership in the table below.
The table below shows the notes payable categorized by their remaining term at
the years ending December 31, 2018 and 2019.
Short Term Short Term
Holder 2018 2019 Remarks
Note 7 50,000 50,000
Note 5 149,500 149,500
Note 1 300,000 300,000
Note 2 1,400,000 1,000,000
Note 6 27,500 27,500
Note 8 17,500 17,500
Note 9 78,098 78,097
Note 10 42,239 42,239
Note 11 14,787 14,787
Note 12 135,076 -
Note 13 40,000 40,000
Note 14 40,000 40,000
Note 15 40,000 40,000
Note 16 40,000 40,000
Note 17 98,195 98,195
Note 18 2,200,000 2,100,000
Note 19 500,000 -
Total 5,172,895 4,037,818
Cash Flow
Cash Flows
Years Ended
December 31,
2018 2019
Net cash used in operating activities $ - $ -
Net cash provided by financing activities - -
Net increase (decrease) in cash $ - $ -
Cash used in operating activities for year ended December 31, 2018 and 2019 was
primarily for expenses related to general operations and for Company incurred
administrative expenses.
Going Concern
Management believes that our current financial condition, liquidity and capital
resources will not satisfy our cash requirements for the next twelve months to
deploy our current business plan, and as such we will need to either raise
additional proceeds through financing facilities, sales of securities and our
officers and directors will need to make additional financial commitments to our
Company, neither of which is guaranteed. We plan to satisfy our future cash
requirements, primarily the working capital required to execute on our current
business and fund our necessary operating expenses, through financial
commitments from future debt facilities and equity sales, if and when possible.
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Management believes that we may generate some revenues within the next 12 months
of 2020, but that these revenues will not satisfy our cash requirements to
implement our current business plan for the funding of the WOD joint venture,
which is subject to change depending upon pending business opportunities and
available financing.
We had no committed source for funds as of December 31, 2019 other than our
convertible debt instruments. No representation is made that any funds will be
available when needed. In the event that funds cannot be raised when needed, we
may not be able to carry out our business plan, may never achieve revenue, and
could fail to satisfy our future cash requirements as a result of these
uncertainties.
It will be necessary to raise working capital funds through equity and debt
financing facilities, which are extremely difficult for an early stage company
to secure and may not be available to us or on a basis favorable to us. However,
if such debt financing is available, we would likely have to pay additional
costs associated with high-risk loans and be subject to above market interest
rates.
The Company and has accumulated a deficit of $26,660,177 at December 31, 2019.
We currently have only limited working capital with which continue our operating
activities. The amount of capital required to sustain operations is subject to
future events and uncertainties, but the Company anticipates it will need to
obtain approximately $2,000,000 in additional working capital in the form of
debt and/or equity in order to cover our current expenses over the next 12
months in furtherance of our business plan. Whether such capital will be
obtainable or obtainable on commercially reasonable terms is at this date
uncertain. These circumstances raise substantial doubt about the Company's
ability to continue as a going concern.
Critical Accounting Policies
Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America, which
require us to make estimates and judgments that significantly affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements. Note 3, "Summary of Significant Accounting Policies" in
the Notes to the Consolidated Financial Statements for the year ended December
31, 2019, describes our significant accounting policies which are reviewed by
management on a regular basis.
Capital Expenditures
We have not incurred any material capital expenditures.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources and would be considered
material to investors.
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