UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENTUNDERTHE SECURITIES ACT OF 1933

 

 

REALBIZ MEDIA GROUP, INCINC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

(State or Other Jurisdiction of Incorporation or Organization)

7374

(Primary Standard Industrial Classification Code Number)

 

11-3820796  

(I.R.S. Employer Identification No.)

 

2690 Weston Road, Suite 200

Weston, FL 33331  

(954) 888-9779

(Address and telephone number of principal executive offices)

 

William Kerby

Realbiz Media Group, Inc.

2690 Weston Road, Suite 200

Weston, FL 33331  

(Name, address and telephone number of agent for service)

 

Copy to:

 

Leslie Marlow, Esq.

Hank Gracin, Esq.

Gracin & Marlow, LLP

The Chrysler Building

405 Lexington Avenue, 26th Floor

New York, New York 10174
(212) 907-6457

 

Approximate Date of Proposed Sale to the Public: From time to time after the date this registration statement becomes effective.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.x

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act of 1934.

 

Large accelerated filer¨Accelerated filer¨
Non-accelerated filer¨Smaller reporting companyx
(Do not check if a smaller reporting company)   

 

 
 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of
Securities to be Registered
 Amount to be
Registered (1)(2)
  Proposed Maximum
Offering
Price per Security(3)
  Proposed
Maximum
Aggregate
Offering Price
  Amount of
Registration
Fee
 
Common stock, par value $0.01 per share  4,703,385       
Common stock Issuable from Convertible Preferred stock of Next 1 Interactive, Inc.  10,492,293             
Common stock Issuable from warrants               
   15,195,678  $1.90  $28,871,788  $3,719 
Title of Each Class of
Securities to be Registered
 Amount to be
Registered (1)(2)
  

Proposed 

Maximum
Offering
Price per 

Security(3)

  Proposed
Maximum
Aggregate
Offering Price
  Amount of
Registration
Fee
 
Common stock, par value $0.001 per share
(Upon conversion of convertible promissory notes)
  6,500,000  $0.08  $520,000  $60.43 
                 
Common stock, par value $0.001 per share
(Upon exercise of warrants)
  975,000  $0.08  $78,000  $9.07(4) 
                 
   7,475,000      $598,000  $69.50 

 

(1)Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the shares being registered hereunder include such indeterminate number of shares of our Common Stockcommon stock as may be issuable with respect to the shares being registered hereunder to prevent dilution by reason of any stock dividend, stock split, recapitalization or other similar transaction.

 

(2)15,195,6787,475,000 shares of common stock are to be offered by the Selling StockholdersStockholder named herein and were acquired in connection with a private placementplacements consummated by the Registrant, of which 4,703,385 shares of common stock are currently issued and outstanding and 10,492,2936,500,000 are shares of common stock issuable upon conversion of Convertible Preferred Stockconvertible promissory notes and 975,000 shares are issuable upon exercise of Next1 Interactive, Inc.warrants.

 

(3)Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) of the Securities Act based upon a the closing price of the Registrant’s common stock on the OTCQB on December 6 , 2013.May 11, 2015.
(4)

Estimated solely for the purpose of calculating the registration fee for these additional shares in accordance with Rule 457(c) of the Securities Act based upon a the closing price of the Registrant’s common stock on the OTCQB on May 11, 2015.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 
 

 

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

SUBJECT TO COMPLETION, DATED DECEMBERMAY 13, 20132015

 

PRELIMINARY PROSPECTUS

 

REALBIZ MEDIA GROUP, INC.

 

15,195,6787,475,000Shares of Common Stock

 

This prospectus relates to the resale by the investorsinvestor listed in the section titled “Selling Stockholders”Stockholder”, and we refer to the investorsinvestor as the Selling StockholdersStockholder (the “Selling Stockholders”Stockholder”) of up to 15,195,6787,475,000 shares of our common stock, par value $0.001 per share (the “Shares”), of which 4,703,385 shares of common stock are currently outstanding and 10,492,293(i) 1,500,000 shares of common stock are issuable upon Conversionconversion of Convertible Preferred Stocka convertible promissory note, dated October 20, 2014, issued to the Selling Stockholder, (ii) 5,000,000 shares of Next 1 Interactive, Inc. (“Conversion Shares”common stock are issuable upon conversion of a convertible promissory note issuable to the Selling Stockholder within two trading days of the date on which the registration statement of which this prospectus forms a part is declared effective by the Securities and Exchange Commission (the “SEC”)., (iii) 300,000 shares of common stock are issuable upon exercise of a warrant, dated October 20, 2014, issued to the Selling Stockholder, and (iv) 675,000 shares of common stock are issuable upon exercise of a warrant issued to the Selling Stockholder within two trading days of the date on which the registration statement of which this prospectus forms a part is declared effective by the SEC. The sharesShares were acquired by the Selling StockholdersStockholder in connection with a private placement offerings we completed during the past year (the “Private Placement”).offerings.

 

The Selling StockholdersStockholder may offer and sell or otherwise dispose of the Shares described in this prospectus from time to time through public or private transaction at prevailing market prices, at prices related to such prevailing market prices, at varying prices determined at the time of sale, at negotiated prices, or at fixed prices. See “Plan of Distribution” beginning on page 2032 for more information.

 

We will not receive any of the proceeds from the Shares sold by the Selling Stockholders.Stockholder. However, we will receive net proceeds of any warrants exercised (unless the warrants are exercised on a cashless basis).

 

Our common stock is currently quoted on the OTCQB under the symbol “RBIZ”.“RBIZ.” The closing price of our stock on December 6, 2013May 12, 2015 was $1.90.$0.08.

 

Investing in our securities involves a high degree of risk. See Risk Factors“Risk Factors” beginning on page 74 of this prospectus for more information.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus or the prospectus to which it relates is truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is        December 13, 2013., 2015

 

 
 

 

TABLE OF CONTENTS

 

 Page
  
ABOUT THIS PROSPECTUS1
  
ABOUT FORWARD LOOKING STATEMENTS1
  
PROSPECTUS SUMMARY2
  
THE OFFERING3
  
RISK FACTORS4
  
USE OF PROCEEDS8 10
  
OUR BUSINESS11
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS15
DETERMINATION OF OFFERING PRICE 20
SELLING STOCKHOLDERSSTOCKHOLDER21
  
DETERMINATIONPLAN OF OFFERING PRICEDISTRIBUTION21 32
  
PLANDESCRIPTION OF DISTRIBUTIONSECURITIES38 34
  
DESCRIPTION OF SECURITIESEXPERTS40 37
  
EXPERTS42
 
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES4237
  
LEGAL MATTERS42 37
  
WHERE YOU CAN FIND MORE INFORMATION4237
  
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 
  
PART II45 39

 

 
 

 

ABOUT THIS PROSPECTUS

 

You should rely only on the information contained or incorporated by reference in this prospectus. Neither we nor the Selling StockholdersStockholder have authorized anyone to provide you with information that is different from such information. If anyone provides you with different or inconsistent information, you should not rely on it. The Selling Stockholders areStockholder is offering to sell common stock only in jurisdictions where offers and sales are permitted. You should not assume that the information we have included in this prospectus is accurate as of any date other than the date of this prospectus or that any information we have incorporated by reference is accurate as of any date other than the date of the document incorporated by reference. Our business, financial condition, results of operations and prospects may have changed since that date.

 

The distribution of this prospectus and the issuance of the common stockShares in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the issuance of the common stock and the distribution of this prospectus outside the United States. This prospectus does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, the common stock offered by this prospectus by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.

 

It is important for you to read and consider all of the information contained in this prospectus in making your investment decision. To understand the offering fully and for a more complete description of the offering you should read this entire document carefully, including particularly the “Risk Factors” section beginning on page 7.4. You also should read and consider the information in the documents to which we have referred you in the sections entitled “Where You Can Find Additional Information” and “Incorporation of Certain Information by Reference”.Information.”

 

As used in this prospectus, unless the context requires otherwise, the terms “we”, “us”, “our”, or “the Company” refer to RealbizRealBiz Media Group, Inc. and its subsidiaries on a consolidated basis. References to “Selling Stockholders”Stockholder” refer to those stockholders listed herein under “Selling Stockholders”Stockholder” and their successors, assignees and permitted transferees.

 

ABOUT FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act, about the Company and its subsidiaries. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, and can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “projects”, “plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”, “seeks”, “intends”, or “anticipates” or the negative thereof or comparable terminology. Forward-looking statements include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of various transactions, and statements about theour future performance, operations, products and services and of the Company and itsour subsidiaries. We caution our stockholders and other readers not to place undue reliance on such statements.

 

Our businesses and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the risk factors set forth in the section entitled “Risk Factors” beginning on page 74 of this prospectus and , the risk factors set forth in our annual report on Form 10-K for the year ended October 31, 2012,2014, and our quarterly reportsreport on Form 10-Q for the quartersquarter ended January 31, 2013, April 30, 2013 and July 31, 2013.2015.

 

All written or oral forward-looking statements attributable to us or any person acting on our behalf made after the date of this prospectus are expressly qualified in their entirety by the risk factors and cautionary statements contained in and incorporated by reference into this prospectus. Unless legally required, we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.

PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus. This summary is not intended to be complete and does not contain all of the information that you should consider before deciding to invest in our securities. We urge you to read this entire prospectus carefully, especially the “Risk Factors” section beginning on page 4. Except where the context requires otherwise, in this prospectus the terms “Company,” “Realbiz,” “we,” “us” and “our” refer to RealbizRealBiz Media Group, Inc .,Inc., a Delaware corporation. Unless otherwise included, all share amounts and per share amounts in this prospectus have been presented on apro forma basis to reflect the reverse stock split of our outstanding shares of common stock at a ratio of 1-for-200, effected on May 3, 2012.

 

Company Overview

 

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees, product sales, membership fees and advertising revenues,revenues. We currently offer technology to agents in an effort to help them attract customers such as platforms to customize their own web pages, mobile apps that integrate agent’s listing data with video, a visual tour app, a video portal of real estate broker commissionslistings and referral fees. RealBiz hasmarketing services. We have positioned itselfourselves in the following four areas summarized here and explained in more detail below:

 

1.Real Estate Video on Demand Channel – We earn fees from pre-roll/post-roll advertising, banner adsNestbuilderTM Agent:  This platform allows agents to claim and cross-market advertising promotions. We charge an $89 listing andcustomize their own web page to be used as a video marketing fee, and earn revenue from web-based and mobile advertising.platform.

2.WebsiteEzflix Mobile App: The ezflix app is the only mobile/web video editor that pre-integrates with an agent’s listing data, allowing them to edit all of their listing’s data, and Mobile Applications – We are developing a real estate web portal. This site is expected to be unique to the world of real estate search sites on multiple levels, from a consumer perspective the user experience is being designed to be completely visualconvert them into video with live video interstitial capabilities, audio recording and video centric, secondly, the site will provide local neighborhood information and allow for social interaction between home seekers and current residents who can provide an unbiased view of the selected neighborhood, and the content on the site will focus on the entire home ownership lifecycle from purchase through maintenance to home sale therefore giving the site a much deeper and more loyal audience over time.music.   

3.Agent to Agent Interaction-From an industry perspective we believe the site will be revolutionary because it includes an agent only platform that is being designed to allow for agent to agent interaction,The Virtual Tour (VT) and “App Store” for relevant video content, community events, discount coupons, industry news and agent share programs. This site will completely empower the agent with content and assets that they can use to pursue prospects and generate leads at a fraction of the cost they’re currently paying. This agent only site will interact with our Microvideo App (MVA) platform. The MVA was: These programs were developed and implemented to allow agents to access specific video based product strategies that are designed specifically to increase the SEO rank and traffic credit to real estate franchise systems and/or their brokers. This solution gives those franchises
4.NestBuilder: The world’s largest real estate video portal with over 1.5 million listings and is targeted to grow to over 3 million listings by mid-2015.  
5.NestBuilder Mobile Search App: The app, available in the Google Play Store and the Apple Store, not only allows consumers to search and view homes in video but additionally allows consumers to enter in their agent’s name, and effectively turn the NestBuilder app into the agent’s very own application where their branding follows the consumer along their home search journey, everywhere they go.
6.ReachFactor: A recently acquired full-marketing agency that specializes in real estate and offers a variety of solutions to agents and brokers asuch as web design, digital ad campaigns, blogging, social media management, reputation management, search engine optimization and much needed tool to lower their costmore.
7.Enterprise Video Production: We service some of prospect acquisition.

4.Traditionalthe largest and well known franchisor accounts in the North America Real Estate Sales – Our previous company, Webdigs, hadMarket in compiling listings into a licensed real estate brokerage division that currently has participatingVideo format and distributing to those franchisors websites, brokers and agents and lead generation platforms 24/7.
8.Home and AwayClub: Offers agents a means to stay in 48 states. We believe there are potential opportunities to take advantage of such as an improving real estate market, and that our traditional brokerage division will be able to capture leads fromcontact once the Real Estate Video on Demand Channel. The Company currently has no activities in this division.house is sold with a rewards program.

 

Our principal offices are located at 2690 Weston Road, Suite 200, Weston, FL 33331, and our telephone number at that office is (954) 888-9779. We maintain an Internet website at www.realbizmedia.com where the incorporated reports listed above can be accessed.www.realbizmedia.com. Neither this website nor the information on this website is included or incorporated in, or is a part of, this prospectus or any supplement to the prospectus.

THE OFFERING

 

IssuerRealbiz Media Group, Inc.
  
Securities offeredThis prospectus covers the sale of up to 15,195,6787,475,000 shares of common stock, of which 4,703,3851,500,000 shares of common stock are currently issuable upon conversion of a convertible promissory note, dated October 20, 2014,issued and outstanding and 10,492,293 areto the Selling Stockholder, 5,000,000 shares of common stock are issuable upon conversion of Convertible Preferred Stocka convertible promissory note issuable to the Selling Stockholder within two trading days of Next 1 Interactive, Inc.

the date on which the registration statement of which this prospectus forms a part is declared effective by the SEC, 300,000 shares of common stock that are issuable upon exercise of warrants, dated October 20, 2014, issued to the Selling Stockholder, and 675,000 shares of common stock that are issuable upon exercise of warrants issued to issuable to the Selling Stockholder within two trading days of the date on which the registration statement of which this prospectus forms a part is declared effective by the SEC.
  

Common stock to be outstanding on the date hereof

following this offering (1)

52,074,276113,943,872 shares
  
Use of ProceedsWe will not receive proceeds from the sale or other disposition of the shares of common stock covered by this prospectus.   However, we will receive net proceeds of any warrants exercised (unless the warrants are exercised on a cashless basis). See “Use of Proceeds”.Proceeds.”
  
Risk FactorsYou should carefully read and consider the information set forth under “Risk Factors,” together with all of the other information set forth in this prospectus, before deciding to invest in shares of our common stock.
  
OTCQB symbolOur common stock is quoted on the OTCQB under the symbol “RBIZ”.“RBIZ.”

 

The number of shares of common stock outstanding is based on 52,074,276 shares outstanding as of December 6, 2013 and excludes 7,983,028 shares of common stock issuable upon the exercise of warrants with a weighted average exercise price of $1.00 per share.

3(1)The number of shares of common stock outstanding is based on 106,468,872 shares outstanding as of May 12, 2015 and excludes 17,692,730 shares of common stock issuable upon the exercise of warrants with a weighted average exercise price of $0.39 per share.

RISK FACTORS

 

Investing in our common stock involves a high degree of risk, and you should be able to bear the complete loss of your investment. You should carefully consider the risks described below, the other information in this prospectus and the documents incorporated by reference herein when evaluating our company and our business. If any of the following risks actually occur, our business could be harmed. In such case, the trading price of our common stock could decline and investors could lose all or a part of the money paid to buy our common stock.

 

RISKS RELATING TO OUR BUSINESS

 

We are a recently formed company withhave no history of profitability.

 

Our former entity, Webdigs, began operations in July 2007 and to date has not generated a yearly profit. In addition, consolidated annual revenues remain around $1 million. As a young company, we are subject to all of the risks associated with a new business enterprise. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, especially in challenging and competitive industries such as residential real estate and mortgage brokerage and particularly in light of current general economic, real estate and credit market conditions.

 

We do not yet have a significant operating history which would provide you with meaningful information about our past or future operations. The Company has not yet achieved positive cash flow on a monthly basis during any fiscal year including the current fiscal year ending October 31, 20122014 and there is significant risk to the survival of the enterprise.

 

There is substantial doubt about our ability to continue as a going concern.

 

We have had net losses for the years ended October 31, 20122014 and 20112013 of $963,220($4,605,327) and $953,460($3,764,089) respectively. We had net losses of ($1,665,072) and ($1,570,474) for the three months ended January 31, 2015 and January 31, 2014. Furthermore, we had a working capital deficit as of January 31, 2015 and October 31, 20122014 of $2,311,736. For the nine months ended July 31, 2013 and 2012 we had net losses of $1,439,624 and $742,111($2,452,543), respectively. Furthermore, we had a working capital deficit as of July 31, 2013 of $2,618,378. Since the financial statements for the years ended October 2014 and 2013 were prepared assuming that we would continue as a going concern, these conditions coupled with our current liquidity position raise substantial doubt about our ability to continue as a going concern. Furthermore, since we are pursuing new business,products and services, this diminishes our ability to accurately forecast our revenues and expenses. We expect that our ability to continue as a going concern depends, in large part, on our ability to generate sufficient revenues, limit our expenses without sacrificing customer service, and obtain necessary financing. If we are unable to raise additional capital, we may be forced to discontinue our business.

 

We will require additional financing in the future, but such financing may not be available to us.

 

If adequate funds are not available on acceptable terms, we may be unable to fund the operation of our business. As a result, we would likely be forced to dramatically alter or cease operations. To date, our revenues from operations have not generated cash flow sufficient to finance our operations and growth. We will require as a result significant additional capital to continue our operations. There can be no assurance given that we will be able to secure additional financing in the future.

 

The terms of our outstanding notes could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions and an event of default under our debt agreements could harm our business.

Our existing secured notes with Himmil Investments, Ltd., contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to take actions that may be in our best interests. The notes include covenants that generally:

·do not allow us to borrow additional amounts;

·do not allow us to dispose of assets;

·do not allow us to engage in certain transactions with affiliates ;

·do not allow us to create any liens on any of our assets;

·do not allow us to pursue lines of business outside the lines of businesses currently engaged in by us; and

·do not allow us to pay cash dividends.

It is difficult for us to determine the number of shares of Common Stock that we will be required to issue upon conversion of the notes issued to Himmil Investments, Ltd.

Since the notes that we issued to Himmil Investments, Ltd. are convertible into shares of our Common Stock at the lower of $0.10 per share or 65% of the lowest of the VWAP of our Common Stock for the twelve (12) day period preceding the applicable conversion date, we cannot at this time determine the number of shares of Common Stock that we will be required to issue upon conversion of the notes. If the price of our Common Stock should decrease we will be required to issue a greater number of shares of Common Stock upon conversion of the notes and shareholders will suffer greater dilution.

We critically rely on our executive management, and the loss of certain members of management would materially and negatively affect us.

 

Our success materially depends upon the efforts of our management and other key personnel, including but not limited to Bill Kerby, CEO and Chairman, Doug Checkeris, ActingArun Srinivasan, Chief Marketing Officer, Alex Aliksanyan, Chief Operating Officer, Steven Marques, Acting President/Chief Revenue Officer, Deborah Linden, COO, and Adam Friedman, Chief Financial Officer. If we lose the services of any of these members of management, our business would be materially and adversely affected. We have entered into a formal services and non-competition agreements with Ms. LindenMessrs. Srinivasan and Mr. Checkeris.Aliksanyan; however, we have not yet entered into employment agreements with other members of management. Nevertheless, agreements do not ensure the continued availability to us of Mr. CheckerisMessrs. Srinivasan and Ms. LindenAliksanyan or any other manager or employee. Furthermore, we do not have “key person” life insurance, and we do not presently intend to purchase such insurance .insurance.

 

Our future success also depends upon our ability to attract and retain highly qualified management personnel and other employees. Any difficulties in obtaining, retaining and training qualified employees could have a material adverse effect on our results of operation or financial condition. The process of identifying such personnel with the combination of skills and attributes required to carry out our strategy is often lengthy. Any difficulties in obtaining and retaining qualified managers and employees could have a material adverse effect on our results of operation or financial condition.

 

We may be unable to obtain sufficient market acceptance of our services.

 

The market for residential real estate sales is well-established. However, the market for non-traditional residential real estate sales is relatively new, developing and even more uncertain. As is typical in the case of a new and rapidly evolving industry, demand and market acceptance for products and services are subject to tremendous uncertainty. Our future growth and financial performance will almost entirely depend upon consumers’ acceptance of our products and services. In this regard, the failure of advertisers to accept our model or the inability of our services to satisfy consumer expectations, would have a material adverse effect on our business, and could cause us to cease operations.

 

We rely on third parties for key aspects of the process of providing services to our customers, and any failure or interruption in the services provided by these third parties could harm our ability to operate our business and damage our reputation.business.

 

We rely on third-party vendors, including website providers and information technology vendors. Any disruption in access to the websites developed and hosted by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business. Any financial or other difficulties our providers face may have negative effects on our business, the nature and extent of which we cannot predict. We exercise little or no control over all of these third-party vendors, which increases our vulnerability to problems with the services they provide.

 

In addition, we license technology and related databases from third parties to facilitate aspects of our website and connectivity operations. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services could materially and negatively impact our relationship with our customers and adversely affect our brand and our business. It is possible that such errors, failures, interruptions or delays could even expose us to liabilities to our customers or other third parties.

 

Interruption or failure of our information technology and communications systems would impair our ability to effectively provide our services, which could in turn damage our reputation and harm our business.

 

Our ability to provide our services critically depends on the continuing operation of our information technology and communications systems. Any damage to or failure of our systems would likely result in interruptions in our service to customers and the closings of real estate transactions from which we principally derive revenue. Accordingly, interruptions in our service would likely reduce our revenues and profits, and our brand could be damaged, perhaps irreparably, if people believe our system and services are unreliable.

 

To our knowledge, our systems are vulnerable to damage or interruption from terrorist or malicious attacks, floods, tornados, fires, power loss, telecommunications failures, computer viruses and other attempts to harm our systems, and similar types of events. Our data centers are subject to break-ins, sabotage and intentional acts of vandalism, and to other potential disruptions. Some of our systems are not fully redundant (i.e., backed up), and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, or a decision to close a facility we are using without adequate notice for financial reasons or other unanticipated problems at our data centers, could result in lengthy interruptions in our service. Any unscheduled interruption in our service would likely place a burden on our entire organization and result in an immediate loss of revenue. The steps we have taken to increase the reliability and redundancy of our systems are expensive, reduce our operating margin and even then may not be successful in reducing the frequency or duration of unscheduled downtime.

 

Our operations are dependent upon our ability to protect our intellectual property, which could be costly.

 

Our technology is the cornerstone of our business and our success will depend in part upon protecting any technology we use or may develop from infringement, misappropriation, duplication and discovery, and avoiding infringement and misappropriation of third party rights. Our intellectual property is essential to our business, and our ability to compete effectively with other companies depends on the proprietary nature of our technologies. We do not have patent protection for our proprietary video on demand technology. We rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop, maintain, and strengthen its competitive position. Although we have confidentiality provisions in the agreements with our employees and independent contractors, there can be no assurance that such agreements can fully protect our intellectual property, be enforced in a timely manner or that any such employees or consultants will not violate their agreements with us.

 

Furthermore, we may have to take legal action in the future to protect our Nestbuilder trademark, trade secrets or know-how, or to defend them against claimed infringement of the rights of others. Any legal action of that type could be costly and time-consuming to us, and there can be no assureassurance that such actions will be successful. The invalidation of key proprietary rights which we own or unsuccessful outcomes in lawsuits to protect our intellectual property may have a material adverse effect on our business, financial condition and results of operations.

 

If we cannot adequately protect our intellectual property rights, our competitors may be able to compete more directly with us, which could adversely affect our competitive position and, as a result, our business, financial condition and results of operations.

 

Our certificate of incorporation grants our Board of Directors, without any action or approval by our stockholders, the power to issue additional shares of capital stock, including the power to designate additional classes of common and preferred stock.

 

OurOn July 31, 2014, the Board and the holders of a majority of the voting power of our shareholders approved an amendment to our articles of incorporation to increase our authorized capital consistsshares of common stock to 250,000,000 from 125,000,000 and increased the Company's shares designated as Series A Convertible Preferred Stock to 120,000,000 from 100,000,000. Additionally, on July 31, 2014, the Board designated the terms of 1,000,000 Series B Convertible Preferred Stock and on May 5, 2015, the Board designated the terms of 1,000,000 Series C Preferred Stock.

The total number of shares of all classes of stock that the Company has the authority to issue is 375,000,000 shares consisting of: 250,000,000 shares of capitalcommon stock of which 125,000,000 are authorized common shareswith a $0.001 par value per shares; and 125,000,000 are authorized Series A Preferred Shares.shares of stock which may be designated as common stock and/or preferred stock. We currently have 52,074,276106,468,872 shares of common stock outstanding and 94,016,40057,793,056 shares of Series A Preferred Stock, 15,000 shares of Series B Preferred Stock outstanding and no shares of Series C Preferred Stock outstanding.

Pursuant to authority granted by our certificate of incorporation and applicable state law, our Board of Directors, without any action or approval by our stockholders, may designate and issue shares in such classes or series (including other classes or series of preferred stock) as it deems appropriate and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of other classes or series of capital stock, including preferred stock that may be issued could be superior to the rights of the shares of common stock offered hereby. The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to the shares of our common stock. Finally, any issuances of additional capital stock (common or preferred) will dilute the percentage of ownership interest of our stockholders and may dilute the per-share book value of the Company.

On May 17, 2012, the Company affected a 1 for 200 reverse stock split. The Company retrospectively restated the outstanding shares for the earnings per share calculation.

 

There is limited public market for our common stock.

 

There is currently a limited trading market for our securities on the OTCQB over-the-counter-market. Consequently, we cannot assure you when and if an active-trading market in our shares will be established, or whether any such market will be sustained or sufficiently liquid to enable holders of shares of our common stock to liquidate their investment in our company. If an active public market should develop in the future, the sale of unregistered and restricted securities by current shareholders may have a substantial impact on any such market.

 

We are required to comply with governmental regulations, which will increase our costs and could prohibit us from conducting business in certain jurisdictions.

 

We are subject to governmental regulation by federal, state and local regulatory authorities with respect to our real estate business. Governmental bodies may change the regulatory framework within which we intend to operate, without providing any recourse for adverse effects that the change may have on our business.

 

We can give no assurance that we will be able to comply with existing laws and regulations, that additional regulations that harm our business will not be adopted, or that we will continue to maintain our licenses, approvals or authorizations. Our failure to comply with applicable laws and regulations, or the adoption of new laws and regulations restricting our intended operations, could have a material adverse effect on our business and could cause us to cease operations.

 

The efforts of the National Association of Realtors or other organizations could prevent us from operating our business, and could lead to the imposition of significant restrictions on our operations.

 

The National Association of Realtors, which represents real estate brokerages, has issued rules that attempt to block access of web-assisted real estate companies to the Multiple Listing System (MLS) and may adopt additional rules intended to reduce or eliminate competition from web-assisted (online) discount real estate businesses such as Realbiz. Our business is dependent upon theour ability to access the MLS in order for us to be competitive. We can give no assurance that the National Association of Realtors will not be successful in preventing our access to the MLS, or that it or another organization will not be successful in adopting rules or imposing other restrictions on web-assisted real estate businesses such as Realbiz. Such adoption or imposition of regulations or restrictions would have a material adverse effect on our business.

 

Competition in the traditional and online residential real estate industry is intense.

 

The residential real estate industry is highly competitive. We believe that important competitive factors in this industry include (but are not limited to) price, service, and ease of use. We presently face competition from numerous companies engaged in traditional residential real estate marketing services and we expect online competition to increase in the future from existing and new competitors. Most of our current and potential competitors have substantially greater financial, marketing and technical resources than us, as well as significant operating histories. Accordingly, we may not be able to compete successfully against new or existing competitors. Furthermore, competition may reduce the prices we are able to charge for our services, thereby potentially lowering revenues and margins, which would likely have a material adverse effect on our results of operation and financial condition.

 

The online residential real estate industry is subject to significant and rapid technological change.

 

The online residential real estate industry is subject to rapid innovation and technological change, shifting customer preferences, new service introductions and competition from traditional real estate brokerage firms. Competitors in this market have frequently taken different strategic approaches and have launched substantially different products or services in order to exploit the same perceived market opportunity. Although we believe that we are offering a unique solution, there can be no assurance that our services will be competitive technologically or otherwise, or that any other services developed by us will be competitive.

 

Our ability to compete in this industry will depend upon, among other things, broad acceptance of our services and on our ability to continually improve current and future services we may develop to meet changing customer requirements. There can be no assurance that we will successfully identify new service or product opportunities and develop and bring to the market new and enhanced solutions in a timely manner, that such products or services will be commercially successful, that we will benefit from such development, or that products and services developed by others will not render our products and services noncompetitive or obsolete. If we are unable to penetrate markets in a timely manner in response to changing market conditions or customer requirements, or if new or enhanced products or services do not achieve a significant degree of market acceptance, our business would be materially and adversely affected.

 

We may be impacted by general economic conditions within the United States residential real estate market.

 

The residential real estate market has experienced vast fluctuations in recent times. In some years, real estate home sales are brisk, while in other years the residential real estate market has been stagnant. Our ability to attract home sellers and buyers to use our website will, in part, depend upon consumers’ willingness in general to buy or sell a home. When consumers sense that the overall economy is not doing well, they are less likely to make an expensive purchase such as a home.

 

In addition, unemployment remains at the high levels by historical standards. There also remains an enormous inventory of unsold and vacant homes. In the first quarter of 2010,2014, the US Census Bureau reported there were 1917 million vacant homes in the United States.

 

We have identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

 

Our most recent evaluation of our internal controls resulted in our conclusion that our disclosure controls and procedures and that our internal control over financial reporting were not effective ..Effectiveeffective. Effective internal controls are necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. In our case, our failure to achieve and maintain an effective internal control environment could cause us to be unable to produce reliable financial reports or prevent fraud. This may cause investors to lose confidence in our reported financial information, which could in turn have a material adverse effect on our stock price.

 

Our lack of an independent audit committee and audit committee financial expert at this time may hinder our board of directors’ effectiveness in fulfilling the functions of the audit committee without undue influence from management and until we establish such committee will prevent us from obtaining a listing on a national securities exchange.

 

Although our common stock is not listed on any national securities exchange, for purposes of independence we use the definition of independence applied by NASDAQ. Currently, we have no independent audit committee. Our full board of directors functions as our audit committee and is comprised of fiveseven directors, twothree of whom are considered to be "independent"“independent” in accordance with the requirements set forth in NASDAQ Listing Rule 5605(a)(2). An independent audit committee plays a crucial role in the corporate governance process, assessing our Company's processes relating to our risks and control environment, overseeing financial reporting, and evaluating internal and independent audit processes. The lack of an independent audit committee may prevent the board of directors from being independent from management in its judgments and decisions and its ability to pursue the responsibilities of an audit committee without undue influence. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified, independent directors, the management of our business could be compromised. An independent audit committee is required for listing on any national securities exchange, therefore until such time as we meet the audit committee independence requirements of a national securities exchange we will be ineligible for listing on any national securities exchange.

 

Our board of directors actacts as our compensation committee, which presents the risk that compensation and benefits paid to those executive officers who are board members and other officers may not be commensurate with our financial performance.

 

A compensation committee consisting of independent directors is a safeguard against self-dealing by company executives. Our board of directors acts as the compensation committee and determines the compensation and benefits of our executive officers, administers our employee stock and benefit plans, and reviews policies relating to the compensation and benefits of our employees. Our lack of an independent compensation committee presents the risk that our executive officer on the board may have influence over his personal compensation and benefits levels that may not be commensurate with our financial performance.

 

Certain provisions of the General Corporation Law of the State of Delaware, ourAmended and Restated Certificate of Incorporation, as amended, and our bylaws may have anti-takeover effects which may make an acquisition of our company by another company more difficult.

 

We are subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from engaging in any business combination, including mergers and asset sales, with an interested stockholder (generally, a 15% or greater stockholder) for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. The operation of Section 203 may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest.

 

Our Amended and Restated Certificate of Incorporation and bylaws contain provisions that permit us to issue, without any further vote or action by the stockholders, up to 125,000,000 shares of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting the series and the designation of the series, the voting powers, if any, of the shares of the series, and the preferences and relative, participating, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such series.

 

Our bylaws provide that special meetings of stockholders may be called only by the chairman or by our board. Stockholders are not permitted to call a special meeting of stockholders, to require that the board call such a special meeting, or to require that our board request the calling of a special meeting of stockholders.

 

These provisions on our Amended and Restated Certificate of Incorporation and Bylaw may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest

 

We have never paid dividends and have no plans to pay dividends in the future.

 

Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our shares of our preferred or common stock and we do not expect to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our preferred or common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock.

 

Certain of our officers may have a conflict of interest.interest and lack of availability.

 

Some of our officers, including our Chief Executive Officer and our Chief Financial Officer are currently working for the Company on a part-time basis. Several of the part-time employees also work at other jobs and have discretion to decide what time they devote to our activities, which may result in a lack of availability when needed due to responsibilities at other jobs. We expect that some of these officers may join the Company on a full-time basis, but there can be no assurance given that any or all of our officers will be so employed.

 

8

Our failure to fulfill all of our registration requirements may cause us to suffer liquidated damages, which may be very costly.

Pursuant to the terms of the registration rights agreement that we entered into with the Selling Stockholder, we are required to file this registration statement with Securities and Exchange Commission with respect to securities issued to it (which time period was waived by the Selling Stockholder) within a certain time period, have the registration statement declared effective within a certain time period and maintain the effectiveness of such registration statement. The failure to do so could result in the payment of damages by us. There can be no assurance as to when this registration statement will be declared effective or that we will be able to maintain the effectiveness of any registration statement, and therefore there can be no assurance that we will not incur damages with respect to such agreements.

9

USE OF PROCEEDS

 

All of the shares of common stockShares covered by this prospectus are being sold by the Selling Stockholders.Stockholder. See “Selling Stockholders” on page 26.Stockholder.” We will not receive any proceeds from these sales of shares of our common stock. A portion of the Shares covered by this prospectus are issuable upon exercise of the Warrantswarrants to purchase our common stock. Upon any exercise of the Warrantswarrants for cash, suchthe Selling StockholdersStockholder would pay us the exercise price of the warrants.warrant. Cash received from exercise of Warrantsany warrants will be used for general corporate purposes. Additionally, the Warrants are exercisablewarrants may be exercised on a cashless basis. If any Warrantsthe warrants are exercised on a cashless basis, we would not receive any cash payment from such Selling StockholdersStockholder upon any exercise of such Warrants.the warrants.

 

The Selling Stockholders will pay any underwriting discounts and commissions and expenses incurred by the Selling Stockholders for brokerage, accounting, tax, or legal services or any other expenses incurred by the Selling Stockholders in disposing of the Shares. We will bear all other costs, fees, and expenses incurred in effecting the registration of the Shares covered by this prospectus, including, without limitation, all registration and filing fees, and fees and expenses of our counsel and our accountants.

10

 

OUR BUSINESS

 

Overview

 

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees, product sales, membership fees and advertising revenues, real estate broker commissions and referral fees.revenues. We havewere formed through the merging of three divisions: (i) our fully licensed real estate division (formerly known as Webdigs); (ii) our TV media contracts (Extraordinary(Home Preview Channel /Extraordinary Vacation Homes/ Third home)) division; and (iii) our Real Estate Virtual Tour and Media group (Realbiz 360). The cornerstoneassets of all threethese divisions were used to create a new suite of real estate products and services that create stickiness through the utilization of video, social media and loyalty programs. At the core of our programs is our proprietary video creation technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice and music. We provide video search, storage and purchasemarketing capabilities on multiple platform dynamics for web, mobile, interactivity on TV and Video On Demand.TV. Once a home, personal or community video is created using our proprietary technology, these home listing videos are automaticallyit can be published to social media, email or distributed to multiple media platforms (Television,real estate websites, broadband web and mobile)or television for consumer viewing.

 

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees, product sales, membership fees and advertising revenues, real estate broker commissions and referral fees. RealBiz hasrevenues. We have positioned itselfourselves in the following four areas summarized here and explained in more detail below:

 

1.Real Estate Video on Demand Channel – We earn fees from pre-roll/post-roll advertising, banner adsNestbuilder Agent:  This platform allows agents to claim and cross-market advertising promotions. We charge an $89 listing andcustomize their own web page to be used as a video marketing fee, and earn revenue from web-based and mobile advertising.

2.Website and Mobile Applications – We are developing a real estate web portal. Thisplatform. The site will be unique to the world of real estate search sites on multiple levels, from a consumer perspective the user experience will be completely visual and video centric, secondly, the site will provide local neighborhood information and allow for social interaction between home seekers and current residents who can provide an unbiased view of the selected neighborhood,interacts with nestbuilder.com, ezflix and the content onHAAC allowing agents to create customized video of homes, themselves or community as well as being able to pull other MLS property listings to create specialized marketing messages. Additionally, the site will focus onagent can view the entire home ownership lifecycle from purchaseeffectiveness of their marketing efforts through maintenancea dashboard that shows multiple statistics including number of views, time spent, origination and lead generation. The agent can also earn points for their marketing actions that can be converted to home sale therefore giving the site a much deeperHome and more loyal audience over time.

3.From an industry perspective the site will be revolutionary because it includes and agent only platform that allows for agent to agent interaction, and “App Store” for relevant video content, community events, discount coupons, industry news and agent share programs.Away Club rewards dollars. This site will completely empower the real estate agent with content and assets that they can use to pursue prospects and generate leads at a fraction of the cost they’rethey are currently paying.  
2.Ezflix Mobile App: The ezflix app is the only mobile/web video editor that pre-integrates with an agent’s listing data, allowing them to edit all of their listing’s data, and convert them into video with live video interstitial capabilities, audio recording and music.   Ezflix can then share videos to all social media, email, and multiple other real estate portals including NestBuilder – giving agents a way to personalize their listing videos with entertaining local relevant content.  This agent only site interacts withapplication, both Web and Mobile, was initially launched in both the Android and iOS versions in January and February 2015. This platform as it evolves will combine our VT (Virtual Tour) and MVA (Microvideo App) platform into one solution and distribute to multiple partners and resellers including Photographer and Videographer service providers’ network. This product integration is expected to be complete by Q2 of 2015.
3.The Virtual Tour (VT) and Microvideo App (MVA) platform. The MVA was: These programs were developed and implemented to allow agents to access specific video based product strategies that are designed specifically to increase the SEO rank and traffic credit to real estate franchise systems and/or their brokers. This solution gives those franchises and brokers a much needed tool to lower their cost of prospect acquisition.  Currently, the strategy is to migrate our current client base of VT users to MVA’s and combine the total core offering into our EzFlix Mobile and Web based application during the second quarter of 2015.
4.NestBuilder: The world’s largest real estate video portal with over 1.5 million listings and is targeted to grow to over 3 million listings by mid-2015.  Unlike other leaders in the space that agents are seeking alternatives to, NestBuilder focuses on building agent’s brands and delivering high-quality leads. They achieve this by offering fully customizable webpages in NestBuilder Agent that will follow their homebuyer throughout the home search, ultimately turning NestBuilder.com into each agent’s very own national portal.
5.NestBuilder Mobile Search App: The app is currently available in the Google Play Store and should be available in the iOS version by March 2015.  The app not only allows consumers to search and view homes in video but additionally  allows consumers to enter in their agent’s name, and effectively turn the NestBuilder app into the agent’s very own application where their branding follows the consumer along their home search journey, everywhere they go.
6.ReachFactor: A recently acquired full-marketing agency that specializes in real estate. ReachFactor offers a variety of solutions to agents and brokers such as web design, digital ad campaigns, blogging, social media management, reputation management, search engine optimization and much more.
7.Enterprise Video Production: We service some of the largest and well known franchisor accounts in the North America Real Estate Market in compiling listings into a Video format and distributing to those franchisor’s websites, brokers and agents and lead generation platforms 24/7. Some of these multiyear contracts produced over 10 million video listings from 2012-2014 and will be eclipsing that production in 2015 alone. This core area significantly contributes to our growth not only in this core service but continues to allow us access to national databases and directly agents and brokers to allow us access to upgrades and upsell other core products and services. 

 

8.4.Traditional Real Estate Sales – Our previous company, Webdigs, had licensedHome and AwayClub: We excel at beginning and closing the agent-buyer relationship, but the reality of real estate brokerage division currently has participating brokersis that the average homebuyer looks for a new home once every 8 years. As a result the majority of consumers have lost touch with their agent by the time their next home purchase happens. That’s why we have created the Home and Away Club so we can offer agents a means to stay in 48 states. We believe there are potential opportunitiescontact once the house is sold with a rewards program. With the Home and Away Club, agents can earn rewards dollars for completing actions as well as purchasing club memberships that can be gifted to take advantagetheir clients. Additionally agents can predetermine times and special events that they wish to have their client accounts topped up. All of an improvingthe Home and Away Club members introduced by the agent remain part of the agents “circle of clients” with personalized messaging on all gifting of rewards. The rewards dollars   allows members to purchase a broad cross section of lifestyle, travel, merchandise and home products at   greatly discounted pricing – thereby giving customers real estate market, and will be able to capture leads from the Real Estate Videovalues on Demand Channel. The Company currently has no activities in this division.products they want.

 

Background and Industry Trends

 

We believe that the real estate market is undergoing a dramatic change not dissimilar to that previously experienced by traditional stock brokerages. We believe that the most critical aspect driving this change is the advent of the Internet as a tool for searching for and researching real estate, eliminating the commitments of time and expense involved with visiting multiple properties in person. According to the National Association of Realtors’ 20102014 “Member Profile,” 74%89% of home buyers use the internet to search for a home.home, up from 74% in 2010. This actually exceedsmirrors the 69% who use a realtor for their search. Note: many buyers use both the internet and a realtor in their search. In addition, home sellers can use the Internet to check home valuations, track the housing market and research comparable sales information. The majority of consumers used the Internet frequently to search for homes (81%), with consumers aged 33 or younger being higher than average (92%) and 59-67 year olds below (although still high at 69%). Searches are often conducted on mobile devices such as iPhones (47%), iPads (40%) or Androids (24%). One of the most significant trends for our business is that 70% of homebuyers search for and watch video home tours. Also, real estate searches on Google have grown 253% over the past four years.

 

The increased use of technology throughout the entire process of a typical residential real estate transaction is an important development in the real estate market. For instance, electronic communication and electronic data storage permits a real estate brokerage to quickly reproduce standard real estate transaction documents, store such documents and store other important information about customers and properties, and communicate quickly with other parties involved in real estate transactions (e.g., title companies, insurers, surveyors, inspectors and governmental agencies), all of which permits increased efficiencies in the process of buying and selling a home. The technological changes and developments generally make it possible to effect a greater volume of transactions with less effort and expense.

 

We believe the technological developments in the real estate market and the increased amount of information available to and used by ordinary consumers appear to be circumstances that are similar to those developments that eventually gave rise to the non-traditional stock brokerages which have intruded upon the market dominance of traditional stock brokerages over the past two decades. For example, we note that the non-traditional stock brokerages developed their services and products to compete primarily on the bases of price, consumer effort and technology. Their websites, such as TD Ameritrade or e-Trade, provide not only trading capacity for the average consumer, but also a tremendous amount of information about companies. In this regard, we note that there has recently been a proliferation of various Internet-related real estate businesses that seek to provide either specific and limited services or information relating to residential real estate transactions (e.g., ForSaleByOwner.com, BuyOwner.com, Realtor.com, Trulia.com and Zillow.com). Like the non-traditional stock brokerages, these businesses typically rely on consumer effort, technology and price as the bases for competition. This is the model WebdigsRealBiz has based its business plan on.

  

Our Business Model, Products and Services

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from advertising revenues, real estate broker commissions and referral fees. RealBiz has positioned itself in the following four areas summarized here and explained in more detail below:

1.Real Estate Video on Demand Channel – We earn fees from pre-roll/post-roll advertising, banner ads and cross-market advertising promotions. We charge an $89 listing and marketing fee, and earn revenue from web-based and mobile advertising.

2.Website and Mobile Applications – We are developing a real estate web portal. This site will be unique to the world of real estate search sites on multiple levels, from a consumer perspective the user experience will be completely visual and video centric, secondly, the site will provide local neighborhood information and allow for social interaction between home seekers and current residents who can provide an unbiased view of the selected neighborhood, and the content on the site will focus on the entire home ownership lifecycle from purchase through maintenance to home sale therefore giving the site a much deeper and more loyal audience over time.

3.From an industry perspective we believe the site will be revolutionary because it includes an agent only platform that allows for agent to agent interaction, and “App Store” for relevant video content, community events, discount coupons, industry news and agent share programs. This site will completely empower the agent with content and assets that they can use to pursue prospects and generate leads at a fraction of the cost they’re currently paying. This agent only site interacts with our Microvideo App (MVA) platform. The MVA was developed and implemented to allow agents to access specific video based product strategies that are designed specifically to increase the SEO rank and traffic credit to real estate franchise systems and/or their brokers. This solution gives those franchises and brokers a much needed tool to lower their cost of prospect acquisition.

4.Traditional Real Estate Sales – Our previous company, Webdigs, had a licensed real estate brokerage division that currently has participating brokers in 48 states. We believe there are potential opportunities to take advantage of an improving real estate market, and will be able to capture leads from the Real Estate Video on Demand Channel. The Company currently has no activities in this division.

Real Estate On Demand

General

For the real estate video on demand area (“VOD”), we plan to market the approximately 120,000 “premium VOD TV residential home listings” as well as incorporate approximately over 2.5 million Multiple Listing Service (“MLS”) home listings from all major U.S. cities, with video on demand and interactive capabilities for users of our real estate website. We expect that this new interactive real estate tool may create direct referral fees, placement fees, advertising fees and possibly even mortgage financing revenue for our Company at a future date.

We recognize that in the U.S. most consumers research the buying of a home primarily through the Internet, newspapers and real estate magazines. Television does present a unique option as it provides brokers with significant “Brand awareness” in addition to individual property promotion. However as with other video mediums, traditional cable television on demand is changing as consumers increasing move to adopt new platforms like IPTV (i.e. Rovi, Roku, Netflix) to access content on demand. We believe that the VOD solutions will continue to expand thereby allowing the consumer to view, in high quality video, local listings and specialty properties (oceanfront properties, mountain homes, farms, senior communities, etc.) through their screen of choice (television, computer or mobile device). This familiar television environment is no longer centered on the baby boomer and over-40 demographic that, in many cases, are more comfortable with a remote control then they are with a mouse or touch screen. The real estate VOD solution is branded as “Home Tour Network.” RealBiz has been servicing the real estate industry for over 6 years and enjoys direct access to the nation's largest real estate companies.

Currently, our desktop solution for virtual tours has been used by over 60,000 real estate agents and brokers.

Key Trends for VOD Advertising

The VOD market shows the strong potential for giving the company and brokers a great awareness platform to drive people to targeted websites. Additionally with, traditional cable television on demand platform expanding to meet consumers increasing move to adopt new platforms like IPTV (i.e. Rovi, Roku, Netflix), VOD opportunities also expand as the new platforms no longer have restrictions for the amount of content or booking capabilities The video audience grew by 32%, and time spent grew by 12 %. According to Magna Global, VOD will outperform DVR in the US, reaching nearly 66 million households vs. 53 million households for DVR in 2015. In the VOD market, Comcast holds the lion’s share in terms of VOD views and revenues. With the acquisition of NBC Universal, Comcast will be able to serve one-fourth of the U.S pay-television households. Comcast has approximately 22.8 million cable television subscribers and 17 million high-speed Internet subscribers .

New Opportunities for VOD Advertising

VOD ad platforms support a variety of advertising formats, from traditional embedded ad spots to ad overlays, bookends and even long-form, on-demand “showcase” ads that deliver information and allow some degree of interaction. Marketer, a leading media research firm, estimates that U.S. online advertising spending will hit new peaks from 2012 to 2014, surpassing US$30 billion in 2012, and exceeding US$40 billion in 2014. Marketer expects that spending on marketing will bring double-digit growth to online advertising for five consecutive years.

We believe the real estate market in particular is well suited to use VOD technology for the following reasons:

Real estate agents and brokers generally look for more cost-effective ways to market
Agents that place their listings on TV have a distinct marketing advantage over agents that don’t
Google has made Traditional Internet websites and high-end print advertising (pay for click) very expensive
Media channels focused on real estate are better able to reach the “new consumer”
VOD is able to deliver what potential home buyers are asking for – video of a prospective home purchase, which provides valuable information to consumers
Ability to target in local markets
VOD is able to promote both listings and brand
Reach out to higher demographics - Cable viewers have higher incomes, higher education and more disposable income
Access through their television allows consumer home seekers to easily search listings with the touch of their remote

Our VOD Solution

RealBiz is becoming one of the fastest growing real estate image content management, creation and media delivery companies in the United States. In addition, we believe our approach to VOD will be beneficial due to the following factors:

·Our exclusive partnerships with several national real estate brokerage firms aimed at creating and delivering VOD Listings to TV Networks through the HomeTourNetwork
·Our proprietary Video Ad Builder tool, which we believe is the easiest way to create promotional VOD advertisements for television
·Our marketing partnerships, which we expect will allow us to scale our business across major U.S. markets quickly and efficiently

Home Tour Network

Home Tour Network currently operates in 3 strategic cities – Atlanta, Las Vegas and Chicago. The VOD platform allows for up to 3,000 television listings with a reach that ranges from hundreds of thousands of homes per market to over a million homes in some markets. Real estate agent’s listings are automatically converted from the industry’s largest data feed and then can easily be placed on our interactive television platform for a fee ranging from $50 to $90 per month. This is a fraction of the cost to run an advertisement in a newspaper and provides real feedback to the agent.

Home Tour Network gives the consumer what we believe to be a simple, effective and fun way to shop for real estate. The user can even “drive through neighborhoods” without ever leaving the comfort of their living room. The rich media listings are updated daily and allow consumers to simply “click their remote,” text or call to receive access to more information or speak to a licensed real estate agent. Home Tour Network website will deliver an extremely broad range of properties to look at and review – from local homes for sale, foreclosure properties and high-end luxury estates. This allows the user to be both informed and entertained. We believe that people greatly enjoy the social media, and voyeuristic window into our neighbors’ homes, and what they’re worth now.

Website and Mobile Applications

 

RealBiz is utilizing its proprietary technological advantageIntellectual Property along with its industry contracts to create two separate and very important critical paths for real estate professionals and their organizations to follow. By using its video processing prowesscapabilities combined with micro-site and website building techniques RealBiz has created an agent/broker micro-site product that leverages best practices in SEO (search engine optimization) on the agent/brokers behalf and delivers a web and mobile friendly rich media experience to consumers. This solution provides the broker a significant increase in organic ranking in local searches, increased site traffic and by doing so, reduces the agent/broker dependency on traditional listing aggregators. Secondly, by leveraging its relationship within the industry, RealBiz has access to a database of over 1.5 million homes. These homes are being converted into video assets and will be part of a real estate portal that unlike other listing aggregators will empower the agents with tools to push information in the form of video (their listings, other listings and useful home buyer/home owner information) to their prospect base. This solution provides the “zero listing” agent (about 70% of the agents in the U.S.) the opportunity to position themselves as a local community expert with listings and information that make him/her an asset to their prospect base. This portal and its tools willare designed to provide a much needed sense of control to the agent community while providing a significant decrease in their cost of lead acquisition.

 

Market and Competition

 

The National Association of Realtors has approximately 1.2 million members, of which we estimate roughly half are active and associated with at least one real estate brokerage firm.

 

Presently, Zillow is the largest independent real estate market site, as measured by homes in its database and unique visitors to its website. Zillow at present is the market leader in terms of unique visitors to its website however no one company has yet been able to establish a clearly dominant position. Realtor.com, Trulia, Homes.comAdditionally Zillow is looking to complete its takeover of Trulia. Trulia.com has about 60% of Zillow's traffic and is growing faster year after year. As part of the industry consolidation, NewsCorp recently acquired the 3rd largest real estate portal, Realtor.com. Additionally there are a variety of other websites allwhich have meaningful market share and listing information. Trulia.com for example, has about 60% of Zillow’s traffic and is growing faster, year-over-year. We believe that we can carve out a piece of this lucrative market utilizing our innovative agent partnership platform and significant video assets.

 

12

Industry Segments

 

We currently operate in one primary operating segment, real estate, though video on demand andmainly through web-assisted services.

 

Seasonality of Business

 

The residential real estate market has traditionally experienced seasonality, with a peak in the spring and summer seasons and a decrease in activity during the fall and winter seasons. Revenues in each quarter can be significantly affected by activity during the prior quarter, given the time lag between contract execution and closing. A typical real estate transaction has a 30 day lag between contract signing and closing of the transaction.

 

Environmental Regulation

 

We are not subject to environmental regulations that have a material effect upon our capital expenditures or otherwise.

 

Other Regulation

 

We are subject to governmental regulation by federal, state and local regulatory authorities with respect to our operations. We operate several Internet websites that we use to distribute information about and provide our services and content. Internet services are now subject to regulation in the United States relating to the privacy and security of personally identifiable user information and acquisition of personal information from children under the age of 13, including the federal Child Online Protection Act (COPA) and the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM). In addition, a majority of states have enacted laws that impose data security and security breach obligations. Additional federal and state laws and regulations may be adopted with respect to the Internet or other online services, covering such issues as user privacy, child safety, data security, advertising, pricing, content, copyrights and trademarks, access by persons with disabilities, distribution, taxation and characteristics and quality of products and services. In addition, to the extent we offer products and services to online consumers outside the United States, the laws and regulations of foreign jurisdictions, including, without limitation, consumer protection, privacy, advertising, data retention, intellectual property, and content limitations, may impose additional compliance obligations on us.

 

12

RESEARCH AND DEVELOPMENT

 

The Company spends a significant amount of time and resources in developing new software and improving its current products. The Company has spent in excess of $500,000$743,000 and $835,000, respectively in research and development in each of the fiscal years ending 20132014 and 2012.2013. We believe that 2015 will be a transition year for RealBiz as many of the key products are now complete and are being brought to market.

PROPERTIES

We maintain our principal executive offices at 2690 Weston Road, Suite 200, Weston, FL 33331. The Company’s parent Company, Next 1 Interactive, Inc. leases approximately 6,500 square feet of office space in Weston, Florida pursuant to a lease agreement with Bedner Farms, Inc. of the building located at 2690 Weston Road, Weston, Florida 33331. In accordance with the terms of the lease agreement, the Company is renting the commercial office space, for a term of five years commencing on January 1, 2011 through December 31, 2015. The Company does not currently pay rent to Next 1 Interactive, Inc.

 

INTELLECTUAL PROPERTY

 

The Company has been granted perpetual licenses of patents which the Company uses for imaging and streaming tiled images as well as 3D image and warping technologies. ..

 

Employees

 

The Company currently has 2720 full-time and sixthree part-time employees.

 

Corporate Structure and Information

 

Our principal offices are located at 2690 Weston Road, Suite 200, Weston, FL 33331, and our telephone number at that office is (954) 888-9779. Our website address iswww.realbizmedia.com. The information contained on our website or that can be accessed through our website does not constitute part of this document.

 

On October 9, 2012, we completed a share exchange (the “Exchange Transaction” ) with Next 1 Interactive, Inc., a Nevada corporation (“Next 1”), that was contemplated by that certain Share Exchange Agreement entered into on April 4, 2012 (the “Exchange Agreement”) pursuant to which we received all of the outstanding equity in Attaché Travel International, Inc., a Florida corporation and wholly owned subsidiary of Next 1 (“Attaché”) in consideration of our issuance to Next 1 of 93 million shares of our newly designated Series A Convertible Preferred Stock (our “Series A Stock). Attaché owns approximately 80% of a corporation named RealBiz Holdings Inc. which is the parent corporation of RealBiz 360, Inc. (“RealBiz”). As a condition to the closing of the Exchange Transaction, on October 3, 2012, we changed our name from “Webdigs, Inc.” to “RealBiz Media Group, Inc.”, by engaging in a short-form parent-subsidiary merger in the State of Delaware. Bill Kerby, our Chief Executive Officer is also the Chief Executive Officer of Next 1 and our Chief Financial Officer, Adam Friedman is also the Chief Financial Officer of Next 1.

 

Dividends

 

We have not paid any dividends on our common stock and do not anticipate paying any such dividends in the near future. Instead, we intend to use any earnings for future acquisitions and expanding our business. Nevertheless, at this time there are not any restrictions on our ability to pay dividends on our common stock.

 

Our Common Stock Listing and Holders

 

Our common stock is quotedlisted on the OTCQB under the symbol RBIZ. Our stock began trading under the symbol “WBDG” on December 19, 2008 and changed to “RBIZ” on October 5, 2012. The following table shows our high and low closing prices of our common stock at the end of each quarter for the fiscal years 2014 and 2013 and 2012.These stock prices below take into account the 1 for 200 reverse stock split which occurred on May 17, 2012.end of the first and second quarter of fiscal year 2015.

 

Period High Price Low Price  High Price Low Price 
     
April 30, 2015 $0.39  $0.08 
January 31, 2015 $0.37  $0.11 
        
Fiscal Year Ended October 31, 2014        
First Quarter $2.60  $0.92 
Second Quarter $1.00  $0.13 
Third Quarter $0.27  $0.11 
Fourth Quarter $0.18  $0.07 
             
Fiscal Year Ended October 31, 2013                
First Quarter $3.00  $1.50  $3.00  $1.50 
Second Quarter $3.90  $1.15  $3.90  $1.13 
Third Quarter $2.46  $0.26  $2.46  $0.34 
Fourth Quarter $4.65  $1.10  $4.65  $1.10 
Fiscal Year Ended October 31, 2012        
First Quarter $0.42  $0.24 
Second Quarter $0.32  $0.22 
Third Quarter $0.22  $0.22 
Fourth Quarter $3.00  $0.22 

 

Our closing stock price on December 6, 2013May 12, 2015 was $1.90.$0.08. As of the date of this filing, we had approximately 400466 holders of record of our common stock.stock.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

The table below sets forth certain information, as of the close of business on October 31, 2013,2014, regarding equity compensation plans (including individual compensation arrangements) under which our securities were then authorized for issuance.

 

  Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
  Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
  Number of Securities
Remaining Available for
Issuance Under Equity
Compensation Plans
(excluding securities reflected
in column a)
 
  (a)  (b)  (c) 
Equity compensation plans approved by shareholders  -   N/A   - 
             
Restricted Stock Plan and Stock Option equity compensation plans not approved by shareholders (1) (2)  600,000  $50.00   None 
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
Number of Securities
Remaining Available for
Issuance Under Equity
Compensation Plans
(excluding securities reflected
in column a)
Equity compensation plans approved by shareholders- N/A-
Restricted Stock Plan and Stock Option equity compensation plans not approved by shareholders (1)- --

_____________________

 

(1)In May 2008,Presently, we are not required by applicable state law or the Boardlisting standards of Directors approvedany self-regulatory agency (e.g., the issuanceOTCQB, NASD, NYSE MKT or NYSE) to obtain the approval of incentive stockour security holders prior to issuing any such compensatory options, totaling 600,000 shareswarrants or other rights to three of its non-employee directors, expiring in May 2013. An additional 200,000 options were granted to a new director on October 31, 2009, expiring in October 2011. All such options have expired.
(2)See Note 6 of the financial statements for more information on restricted stock grants.purchase our securities.

Presently, we are not required by applicable state law or the listing standards of any self-regulatory agency (e.g., the OTCQB, NASD, AMEX or NYSE) to obtain the approval of our security holders prior to issuing any such compensatory options, warrants or other rights to purchase our securities.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis should be read in conjunction with our audited annual consolidated financial statements and the related notes that appear elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including those set forth in the section entitled “Risk Factors”, “Special Note Regarding Forward-Looking Statements” and elsewhere in this prospectus.filing.

 

Cautionary Note Regarding Forward-Looking Statements

 

Some of the statements made in this section of our report are forward-looking statements. These forward-looking statements generally relate to and are based upon our current plans, expectations, assumptions and projections about future events. Our management currently believes that the various plans, expectations, and assumptions reflected in or suggested by these forward-looking statements are reasonable. Nevertheless, all forward-looking statements involve risks and uncertainties and our actual future results may be materially different from the plans, objectives or expectations, or our assumptions and projections underlying our present plans, objectives and expectations, which are expressed in this section.

 

In light of the foregoing, prospective investors are cautioned that the forward-looking statements included in this filing may ultimately prove to be inaccurate—even materially inaccurate. Because of the significant uncertainties inherent in such forward-looking statements, the inclusion of such information should not be regarded as a representation or warranty by RealbizRealBiz Media Group, Inc. or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. The risks discussed in the Item 1A of this filing should be considered in evaluating our prospects and future performance. Those risks and uncertainties include:

·our ability to achieve profitability;
·our ability to continue as a going concern;
·our ability to obtain adequate funding;
·our dependence upon certain members of management;
·our ability to obtain sufficient market acceptance of our services; our dependence upon third parties;
·our dependence upon our information and technology systems;
·our ability to protect our intellectual property;
·the ability of our board of directors to issue additional shares of capital stock, including preferred stock;
·the limited public market for our common stock;
·our ability to comply with governmental regulations;
·our ability to access the Multiple Listing System;
·our ability to compete in the market;
·our ability to implement and adjust to technological changes;
·the impact of general economic conditions within our industry;
·our ability to remediate our weaknesses in internal controls;
·our lack of an independent audit or compensation committee;

 

General Overview

 

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees, product sales, membership fees and advertising revenues,revenues. We currently offer technology to agents in an effort to help them attract customers such as platforms to customize their own web pages, mobile apps that integrate agent’s listing data with video, a visual tour app, a video portal of real estate broker commissionslistings and referral fees.marketing services. We have three divisions: (i) our fully licensed real estate division (formerly known as Webdigs); (ii) our TV media contracts (Extraordinary Vacation Homes/ Third home) division; and (iii) our Real Estate Virtual Tour and Media group (Realbiz 360). The cornerstone of all three divisions is our proprietary technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice and music. We provide video, search and purchase capabilities on multiple platform dynamics for web, mobile, interactivity on TV and Video On Demand. Once a video created using our proprietary technology, these home listing videos are automatically distributed to multiple media platforms (Television, broadband, web and mobile) for consumer viewing.

RealBiz has positioned itselfourselves in the following four areas summarized here and explained in more detail below:

 

1.Real Estate Video on Demand Channel – We earn fees from pre-roll/post-roll advertising, banner adsNestbuilderTM Agent:  This platform allows agents to claim and cross-market advertising promotions. We chargecustomize their own web page to be used as a video marketing platform.
2.Ezflix Mobile App: The ezflix app is the only mobile/web video editor that pre-integrates with an $89agent’s listing data, allowing them to edit all of their listing’s data, and marketing fee,convert them into video with live video interstitial capabilities, audio recording and earn revenue from web-based and mobile advertising.music.   

,Website and Mobile Applications – We are developing a real estate web portal. This site will be unique to the world of real estate search sites on multiple levels, from a consumer perspective the user experience will be completely visual and video centric, secondly, the site will provide local neighborhood information and allow for social interaction between home seekers and current residents who can provide an unbiased view of the selected neighborhood, and the content on the site will focus on the entire home ownership lifecycle from purchase through maintenance to home sale therefore giving the site a much deeper and more loyal audience over time.

3.From an industry perspective we believe the site will be revolutionary because it includesThe Virtual Tour (VT) and agent only platform that allows for agent to agent interaction, and “App Store” for relevant video content, community events, discount coupons, industry news and agent share programs. This site will completely empower the agent with content and assets that they can use to pursue prospects and generate leads at a fraction of the cost they’re currently paying. This agent only site interacts with our Microvideo App (MVA) platform. The MVA was: These programs were developed and implemented to allow agents to access specific video based product strategies that are designed specifically to increase the SEO rank and traffic credit to real estate franchise systems and/or their brokers. This solution gives those franchises
4.NestBuilder: The world’s largest real estate video portal with over 1.5 million listings and brokers a much needed toolis targeted to lowergrow to over 3 million listings by mid-2015.  
5.NestBuilder Mobile Search App: The app, available in the Google Play Store and the Apple Store,  not only allows consumers to search and view homes in video but additionally  allows consumers to enter in their cost of prospect acquisition.agent’s name, and effectively turn the NestBuilder app into the agent’s very own application where their branding follows the consumer along their home search journey, everywhere they go.

 

6.4.ReachFactor: A recently acquired full-marketing agency that specializes in real estate and offers a variety of solutions to agents and brokers such as web design, digital ad campaigns, blogging, social media management, reputation management, search engine optimization and much more.
Traditional
7.Enterprise Video Production: We service some of the largest and well known franchisor accounts in the North America Real Estate Sales – Our previous company, Webdigs, had licensed real estate brokerage division currently has participatingMarket in compiling listings into a Video format and distributing to those franchisors websites, brokers and agents and lead generation platforms 24/7.
8.Home and AwayClub: Offers agents a means to stay in 48 states. We believe there are potential opportunities to take advantage of an improving real estate market, and will be able to capture leads fromcontact once the Real Estate Video on Demand Channel. The Company currently has no activities in this division.house is sold with a rewards program.

Recent Developments

The Share Exchange

 

On October 9, 2012, we completed a share exchange (the “Exchange Transaction” ) with Next 1 Interactive, Inc., a Nevada corporation (“Next 1”),that was contemplated by that certain Share Exchange Agreement entered into on April 4, 2012 (the “Exchange Agreement”) pursuant to which we received all of the outstanding equity in Attaché Travel International, Inc., a Florida corporation and wholly owned subsidiary of Next 1 (“Attaché”) in consideration of our issuance to Next 1 of 93 million shares of our newly designated Series A Convertible Preferred Stock (our “Series A Stock). Attaché owns approximately 80% of a corporation named RealBiz Holdings Inc. which is the parent corporation of RealBiz 360, Inc. (“RealBiz”). As a condition to the closing of the Exchange Transaction, on October 3, 2012, we changed our name from “Webdigs, Inc.” to “RealBiz Media Group, Inc.”, by engaging in a short-form parent-subsidiary merger in the State of Delaware. Bill Kerby, our Chief Executive Officer is also the Chief Executive Officer of Next 1 and our Chief Financial Officer, Adam Friedman is also the Chief Financial Officer of Next 1.

 

Coincident with the closing of the Exchange Transaction, we converted all of our outstanding debt, payables and liabilities owed to Robert A. Buntz, Jr. (“Buntz”) and Edward Wicker (“Wicker”) into an aggregate of 7 million shares of Series A Stock. Specifically, Mr. Buntz received 5,983,600 shares of Series A Stock upon his conversion of approximately $401,498 in liabilities we owed him, and Wicker received 1,016,400 shares of Series A Stock upon his conversion of approximately $53,356 in liabilities we owed him. Mr. Buntz was and remains after the Exchange Transaction, a director of our Company.Company until his resignation of March 31, 2014. At the closing of the Exchange Transaction, Mr. Wicker resigned his position as a director of our Company and as our Chief Financial Officer. The Preferred A Shares for Mr. Buntz were converted to 5,990,238 Common Shares on February 27, 2013.

 

As a result of the Exchange Transaction and the conversion of liabilities referred to above, the shareholders of our Company before the Exchange Transaction retained approximately 365,176 shares of common stock (after giving effect to a reverse split effected as of May 3, 2012), representing approximately ..364% of our issued and outstanding shares of capital stock (both common and preferred) immediately after the Exchange Transaction.

 

On March 16, 2012, we sold the “Webdigs” domain, technology and certain trademarks to Fiontrai II, LLC for $15,000.These assets, which were held in Webdigs, LLC, included US Trademark No. 3,461,665 "Webdigs"“Webdigs”, along with www.webdigs.com domain name and the original webdigs.com website software and technology developed by MoCo, Inc. Included in this transaction was a royalty agreement whereby Webdigs could receive royalty payments from Fiontrai upon its licensing the technology to other third parties. Also included in this transaction was a royalty agreement for which Fiontrai II paid $1,000.00 (part of the total $15,000). RobertMr. Buntz CEO purchased the royalty agreement from us in exchange for a principal reduction of his loan to the Company of $5,000.

 

Subsequent Events.

The Company has evaluated subsequent events occurring after the balance sheet date and has identified the following:

During February and March 2015, the Company:

·On February 26, 2015, the our parent Company, Next 1, entered into an exchange agreement whereby it exchanged $441,403 of Next 1 debt, Next 1 Series A Preferred and Next 1 Series C Preferred for the issuance of 5,514,030 shares of our common stock;

·received $195,000 in proceeds and issued convertible promissory notes with interest rates of 12% per annum, maturity dates of December 31, 2016 and with a range of fixed rate conversion features;

·received $45,000 in proceeds and issued 450,000 shares of common stock; and

·On March 26, 2015, the Company obtained a Bridge Loan from the Donald P. Monaco Insurance Trust for $75,000. The loan has an interest rate of 6% and payment was due on or before April 30,2015.

16

Results of Operations for the Year Ended October 31, 2014 Compared to the Year Ended October 31, 2013

The following information should be read in conjunction with the audited financial statements and notes thereto appearing elsewhere in this Annual Report.

Revenues

Despite a 15.5% increase in total revenue in the fourth quarter 2014 from the third quarter of 2014, our total revenues decreased 5% to $1,090,674 for the year ended October 31, 20122014, compared to $1,145,540 for the year ended October 31, 2013, a decrease of $54,866. The decrease is the result of the Company's shifting away from the legacy virtual tour business towards its rollout of its new technology products and 2011its offer to agents of a free trial period before charging fees for the use of new products.

Cost of Revenue

Cost of revenues increased 588% to $414,652 for year ended October 31, 2014, compared to $60,297 for the year ended October 31, 2013, an increase of $354,355. This is predominately due to the amortization of the cost of the Nestbuilder website placed in service in March 2014 which has been classified as a cost of sale as the website is considered a revenue producing tool for the Company.

Operating Expenses

Our operating expenses, include salaries and benefits, selling and promotion, general and administrative expenses, increased 9% to $5,230,209 for the year ended October 31, 2014, compared to $4,791,247 for the year ended October 31, 2013, an increase of $438,962.This increase was substantially due to an increase in consulting fees of $228,831 and to a lesser extent due an increase in investor relations of $136,472, impairment to ReachFactor intangible assets of $125,000, amortization of intangible assets of $99,996, audit and accounting fees of $84,059, webhosting of $41,230, legal and professional fees of $26,982, depreciation of $13,576 and bank charges of $11,853. This was partially offset by a decrease in salaries and benefits of $78,825, bad debt of $76,823, office expense of $73,109, filing fees of $66,520 and to a lesser extent a decrease in rent of $16,081, telephone of $13,436 and miscellaneous operating expense of $4,243.

Other Income (Expenses)

Our other expenses decreased 12% to $51,140 for year ended October 31, 2014, compared to $58,085 of other expenses for year ended October 31, 2013, a decrease of $6,945. This decrease was substantially due to a decrease in interest expense to $3,919 for the year ended October 31, 2014, compared to $442,341for the year ended October 31, 2013, a decrease of $ 438,422 due to the lack of amortization of the beneficial conversion feature in the current fiscal year as compared to the prior fiscal year; and to a lesser extent an increase in other income to $176,100 for the year ended October 31, 2014, compared to other expense of $640 for the year ended October 31, 2013, an increase of $176,740 primarily consisting of proceeds received from a grant program in Canada to encourage research and development, and a gain on change of fair value of derivatives of $9,323 not existing in the prior fiscal year. This was partially offset by no gain on forgiveness of notes payable and accrued liabilities in the current fiscal year versus $384,304 in the prior fiscal year and to a lesser extent initial derivative liability expense of $234,303 due to the existence of an embedded derivative liability from a convertible promissory note executed during the current fiscal year end.

Net Loss

We had a net loss of $4,605,327 for the year ended October 31, 2014, compared to net loss of $3,764,089 for the year ended October 31, 2013, an increase of $841,238. The increase in loss from 2013 to 2014 was primarily due to an increase of $519,835 in the amortization of intangible assets, consulting fees of $228,831 and impairment of ReachFactor intangible assets of $125,000.

Assets and Employees; Research and Development

 

We do not currently anticipate purchasing any equipment or other assets in the near term, however, as we expand operations, we will need additional equipment and employees to create and market our products.

Liquidity and Capital Resources; Anticipated Financing Needs

At October 31, 2014, we had $20,066 cash on-hand, a decrease of $1,284,308 from $1,304,374 at the start of fiscal 2014. The decrease in cash was due primarily to operating expenses, website development costs and advances to affiliates. The Company continues to raise capital through equity financings and has raised an additional $1.0 million since October 31, 2014.

Net cash used in operating activities was $2,306,959 for the year ended October 31, 2014, an increase of $148,083 from $2,158,876 used during the year ended October 31, 2013. This increase was primarily due to an increase in amortization of intangibles, impairment of ReachFactor intangible assets, initial derivative liability expense and stock based compensation and consulting fees.

Net cash used in investing activities increased to $749,580 for the year ended October 31, 2014, compared to $470,506 for the year ended October 31, 2013, an increase of $279,074 primarily due to incurring website and software development costs and to a lesser extent the purchase of computer equipment.

Net cash provided by financing activities decreased by $2,197,740 to $1,712,974, for the year ended October 31, 2014, compared to $3,910,714 for the year ended October 31, 2013. This decrease was primarily due to the net decrease of proceeds in the issuance of common stock and the exercise of warrants of $2,366,812 offset by increases in proceeds, net of payments, of $169,072 received for convertible promissory notes, loans and subscription advances.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The discussion and analysisSEC indicated that a “critical accounting policy” is one which is both important to the portrayal of oura company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We have identified the policies below as critical to our understanding of the results of our business operations. We discuss the impact and any associated risks related to these policies on our business operations are based uponthroughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our consolidatedreported and expected financial results.

In the ordinary course of business, we have made a number of estimates and assumptions in preparing our financial statements which have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates and assumptions. The preparationfollowing critical accounting policies are those that are most important to the portrayal of theseour consolidated financial statements requires usstatements. These policies require our most difficult, subjective, and complex judgments, often as a result of the need to make estimates and judgments that affectabout the reported amountseffect of assets, liabilities, revenues and expenses, and related disclosures. We evaluate these estimates on an on-going basis. We base our estimates on historical experience and on various other assumptionsmatters that are believedinherently uncertain. For a summary of all of our significant accounting policies, including the critical accounting policies discussed below, refer to be reasonable underNote 1 ― “Summary of Significant Accounting Policies” included in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our significant estimates are determining some of the inputs for our stock option fair value calculation and assessing the valuation allowance for income taxes.“Notes to Consolidated Financial Statements”,

 

We consider the following accounting policies to be those most important to the portrayal of our results of operations and financial condition:

 

Revenue Recognition. Real estate brokerage revenues were recognized at the closing of a real estate transaction. Fees due to third party real estate agents or clients are accrued at the time of closing and treated as an offset to gross revenues.

 

Income Taxes. The Company accounts for income taxes using an asset and liability approach to financial accounting and reporting for income taxes. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the consolidated financial statements. Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will actually be paid or refunds received, as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period. The Company has recorded a full valuation allowance for its net deferred tax assets as of October 31, 2014 and 2013 because realization of those assets is not reasonably assured.

The Company will recognize a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves, or related accruals for interest and penalties has been recorded at October 31, 2014 and 2013.

Share-Based Compensation. The Company accounts for stock incentive plans by measurement and recognition of compensation expense for all stock-based awards based on estimated fair values, net of estimated forfeitures. Share-based compensation expense recognized for the years ended October 31, 2014 and 2013 includes compensation cost for restricted stock awards and stock options. The Company uses the Black- Scholes option-pricing model to determine the fair value of options granted as of the grant date.

 

Accounts Receivable.

The Company provides its marketing and promotional services to agents or brokers via a web-based portal that allows for credit card payments. The Company recognizes accounts receivable for amounts uncollected from the credit card service provider at the end of the accounting period. The Company regularly reviews the outstanding receivables on a monthly basis and receivables are considered past due when payment has not been received 30 days after a transaction closes. Management provides for probable uncollectible amountsestimated losses through a chargean allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to earningsmake required payments, economic events and a credit to a valuation allowance based on its assessmentother factors. As the financial condition of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a chargethese parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company maintains reserves for potential credit losses, and a credit to receivables. Historically,such losses traditionally have been within its expectations. For the years ended October 31, 2014 and 2013, the Company has not experienced significant losses related to receivables from individual customers. The Company considers its accounts receivable to be fully collectible and therefore, has not recorded andetermined the allowance for doubtful accounts.accounts to be $-0- and $76,823, respectively.

 

Intangible AssetsOffice Equipment and Fixtures. Office equipment and fixtures are recorded at cost. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. When items of property or equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in operating income.

 

At July 31, 2013,Depreciation is provided on the Company’s intangiblestraight-line method over the estimated useful lives of the respective assets related to a sales/marketing agreement, are as follows:

 

  July 31, 2013
  Weighted
Average
Remaining
Useful Life
 Costs  Accumulated
Amortization
  Net Carrying
Value
 
            
Sales/Marketing Agreement 2.7 Years $4,796,178  $1,109,873  $3,686,305 
               
Web Site Development Costs (not placed in service) 0.0 Years  168,610   -   168,610 
               
    $4,964,788  $1,109,873  $3,854,915 
Office equipment2 to 5 years
Furniture and fixtures3 to 7 years

Intangible Assets.

 

On October 3, 2012, Next 1 Interactive, Inc. (“Next 1”) entered a securities exchange agreement and exercised the option purchase agreement to purchase 664.1 common shares of Real Biz Holdings, Inc. Next 1 applied $300,000 of cash, issued a Series D Preferred stock subscription agreement for 380,000 shares and agreed to a $50,000 thirty day (30) day post closingpost-closing final buyout bringing the total value of the agreement to $2,250,000.

 

Next 1 accounted for the acquisition utilizing the purchase method of accounting in accordance with ASC 805 "Business Combinations".“Business Combinations.” Next 1 is the acquirer for accounting purposes and Real Biz Holdings, Inc. is the acquired Company. Accordingly, Next 1 applied push-down accounting and adjusted to fair value all of the assets and liabilities directly on the financial statements of the subsidiary, Real Biz Holdings, Inc.

 

The net purchase price, including acquisition costs paid by Next 1, was allocated to assets acquired and liabilities assumed on the records of the Next 1 as follows:

 

Cash $34,366 
Other current assets  40,696 
Intangible asset  4,796,178 
   4,871,240 
     
Accounts payable, accrued expenses and other miscellaneous payables  2,330,846 
Deferred revenue  48,569 
Convertible notes payable to officer  241,825 
   2,621,240 
Net purchase price $2,250,000 

 

For the nine months ended July 31, 2013, the Company recorded amortization of $1,109,873.

Recently Issued Accounting Pronouncements

 

ManagementIn May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the codification. Additionally, this ASU supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The guidance's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied. The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016, for public companies. Early adoption is not permitted. The Company is still evaluating the provisions of ASU 2014-09 and its impact on the Company's consolidated financial position, results of operations or cash flows.

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment,” (ASU 2014-08). This ASU changes the threshold for reporting discontinued operations and adds new disclosures. The new guidance defines a discontinued operation as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on our operations and financial results.” For disposals of individually significant components that do not qualify as discontinued operations, the Company must disclose pre-tax earnings of the disposed component. This guidance is effective for us prospectively for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted wouldexpect the adoption of this guidance to have a material effectimpact on the accompanyingour consolidated financial statements.

 

 Seasonality of Business

The residential real estate market has traditionally experienced seasonality, with a peak in the spring and summer seasons and a decrease in activity during the fall and winter seasons. Revenues in each quarter can be significantly affected by activity during the prior quarter, given the time lag between contract execution and closing. A typical real estate transaction has a 30 day lag between contract signing and closing of the transaction.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Results of Operations for the Three Months Ended January 31, 2015 Compared to Three Months Ended January 31, 2014

Revenues

 

Our total revenues decreased 25%increased 19% to $1,172,498$292,656 for the yearthree months ended OctoberJanuary 31, 2012,2015, compared to $1,556,970$246,054 for the yearthree months ended OctoberJanuary 31, 2011,2014, an increase of $46,602. The increase in sales is the reflection of additional revenue reported and collected from Century 21 Corporate automated videos contract that automatically uploads to their website along with the additional income added to the current ERA Corporate contract to host and store videos automatically created and posted to their corporate website.

Operating Expenses

Our operating expenses, which include cost of revenue, technology and development, salaries and benefits, selling and promotion and general and administrative expenses decreased to $1,684,029 for the three months ended January 31, 2015, compared to $1,704,674 for the three months ended January 31, 2014, a decrease of $384,472. The decrease is due to reduced real estate revenue from virtual tours due to drop in available listings in a tough real estate environment.

Revenues from real estate decreased 16% to $1,125,076 for the year ended October 31, 2012, compared to $1,335,577 for the year ended October 31, 2011, a decrease of $210,501. The decrease is due to the decline of virtual tours due to drop in available listings in a tough real estate environment.

Revenues from other sources, consulting, decreased 79% to $47,422 for the year ended October 31, 2012, compared to $221,393 for the year ended October 31, 2011, a decrease of $173,971.$20,645. This decrease was substantially due to reduced real estate revenue from virtual tours due to drop in available listings in a tough real estate environment.

Cost of Revenue

Cost of revenues decreased 24% to $105,116 for year ended October 31, 2012, compared to $137,557 for the year ended October 31, 2011,internal re-organization effecting a decrease use of $32,441. Thecontractors resulting a decrease in costs was primarily associated with the Company’s decrease in costs associated with the decrease in virtual tours due to drop in available listings in a tough real estate environment.

Operating Expenses

Our total operating expenses decreased 14% or $336,082 to $2,068,823 for the year ended October 31, 2012, compared to $2,404,905 for the year ended October 31, 2011. The decrease was primarily due to a decrease in: selling and promotional costs of $157,942, professional fees of $35,483, consulting fees of $320,002,$385,797 and to a lesser extent: a decrease in travel and entertainment of $46,842$62,346 due to the reduction in corporate travel needs and duesincreased use of telephone and subscriptionsvideo conference meetings, a decrease in selling and promotions of $30,030;$48,949, a decrease in miscellaneous operating expense of $28,727, a decrease in cost of revenue of $9,356 and a decrease in insurance of $17,742; this was offset by an increase in technology and development of $292,623 due to website maintenance and amortization of the Nestbuilder website and to a lessor extent: an increase in investor relations of $82,682 due to the Company's increased reliance on investor relations firms to find investors for the Company's financing needs, an increase in salaries and benefits of $161,051,$78,804 predominantly due to the hiring of a new Chief Technology Officer, a Client Success Manager, and a Drupal developer as these positions did not exist at fiscal 2014, an increase legal and accountingprofessional fees of $30,104, rent$40,662 and amortization of $7,509, telephoneintangible assets other than website development costs of $5,458, web hosting of $11,034, office expense of $16,372 and other miscellaneous operating expense of $22,688.$37,500.

 

Other Income (Expense)(Expenses)

 

InterestOur other income increased 19%decreased 4,221% to $38,221$273,699 of other expenses for the yearthree months ended OctoberJanuary 31, 2012,2015, compared to $32,032$6,642 of other income for yearthe three months ended OctoberJanuary 31, 2011,2014, an decrease of $280,341. This decrease was substantially due to an increase in the loss on change in fair value of $6,189 primarily due to additional investment. Foreign exchange gains increased 299% to $38,221derivatives.

Net Loss

We had a net loss of $1,665,072 for the yearthree months ended OctoberJanuary 31, 2012, compared to loss of $19,177 for year ended October 31, 2011, an increase of $57,398 primarily due to fluctuations in the exchange rates Gain on sale of marketable securities decrease 100% to $-0- for the year ended October 31, 2012, compared to a gain of $110,552 for the year ended October 31, 2012 primarily due to no marketable securities in 2012. Other expense decreased 100% to $-0- for the year ended October 31, 2012, compared to $59,343 for year ended October 31, 2011, a decrease of $59,343 primarily due to a one time nonrecurring charge incurred during consolidation.

Net Loss

Net loss increased 1% to $963,220 for the year ended October 31, 2012,2015 , compared to net loss of $953,460$1,451,978 for the year end Octoberthree months ended January 31, 2011,2014, an increase of $213,094. The increase in net loss from 2015 to 2014 was substantially due to an increase in technology and development of $292,623 and to a lesser extent an increase in investor relations of $82,682 and an increase in salaries and benefits of $78,804; this was offset by a decrease in consulting fees of $9,760 primarily due$385,797 and to the reduced revenue offset by reduced costs.a lesser extent: a decrease in travel and entertainment of $62,346, a decrease in selling and promotions of $48,949 along with other factors noted above.

 

Assets and Employees; Research and Development

 

We do not currently anticipate purchasing any equipment or other assets in the near term, however, as we expand operations, we will need additional equipment and employees to create and market our products.

For the three months ended July 31, 2013 compared to the three months ended July 31, 2012

Revenues

Our total revenues decreased 2.1% to $272,853 for the three months ended July 31, 2013, compared to $278,606 for the three months ended July 31, 2012, a decrease of $5,753. The decrease is due to decreased real estate advertising revenue from virtual tours due to drop in available listings.

Cost of Revenue

Cost of revenues decreased 40.4% to $15,538 for three months ended July 31, 2013, compared to $26,054 for the three months ended July 31, 2012, a decrease of $10,516. The decrease in costs was primarily associated with the Company’s decrease in costs associated with the decrease in virtual tours due to drop in available listings.

Operating Expenses

Our total operating expenses increased 65.8% or $339,466 to $855,066 for the three months ended July 31, 2013, compared to $515,600 for the three months ended July 31, 2012. The increase was primarily due to an increase in general and administrative expenses due to the amortization of intangible assets offset by a decrease in salaries and benefits.

Other Income (Expense)

Other income increased to $96 for the three months ended July 31, 2013, compared to an other expense of $78,682 for three months ended July 31, 2012.

Net Loss

Net loss increased 74.9% to $597,655 for the three months ended July 31, 2013, compared to net loss of $341,730 for the three months end July 31, 2012, an increase in loss of $255,925 primarily due to the increased amortization of intangible costs.

For the nine months ended July 31, 2013 compared to the nine months ended July 31, 2012

Revenues

Our total revenues decreased 3.6% to $864,022 for the nine months ended July 31, 2013, compared to $896,226 for the nine months ended July 31, 2012, a decrease of $32,204. The decrease is due to reduced real estate advertising revenue from virtual tours due to drop in available listings.

Cost of Revenue

Cost of revenues decreased 35.7% to $51,157 for nine months ended July 31, 2013, compared to $79,531 for the nine months ended July 31, 2012, a decrease of $28,374. The decrease in costs was primarily associated with the Company’s decrease in costs associated with the decrease in virtual tours due to drop in available listings in a tough real estate environment.

Operating Expenses

Our total operating expenses increased 76.3% or $1,140,144 to $2,634,308 for the nine months ended July 31, 2013, compared to $1,494,164 for the nine months ended July 31, 2012. The increase was primarily due to an increase in general and administrative expenses due to the amortization of intangible assets offset by a decrease in selling and promotions expense.

Other Income (Expense)

Gain on forgiveness of notes payable and accrued liabilities increased to $384,304 to account for expenses related to previous officers for the nine months ended July 31, 2013, compared to a loss of $960 for nine months ended July 31, 2012.

Net Loss

Net loss increased 94.0% to $1,439,624 for the nine months ended July 31, 2013, compared to net loss of $742,111 for the nine months end July 31, 2012, an increase in loss of $697,513 primarily due to increased amortization of intangible costs.

Assets and Employees; Research and Development

We do not currently anticipate purchasing any equipment or other assets in the near term, however, as we expand operations, we will need additional equipment and employees to create and market our products.

Liquidity and Capital Resources; Anticipated Financing Needs

 

At JulyJanuary 31, 2013,2015, the Company had $19,700$141,204 cash on-hand, a decreasean increase of $16,708$121,138 from $36,408$20,066 at the end of fiscal 2012.2014. The decrease in cash wasincrease is primarily due primarily to the increase of proceeds received from convertible promissory notes offset by the payment of operating expenses.

 

Net cash used in operating activities was $587,564$865,115 for the ninethree months ended JulyJanuary 31, 2013, an increase2015, a decrease of $501,500$530,195 from $86,064$1,395,310 used during the ninethree months ended JulyJanuary 31, 2012.2014. This increase was mainly due to additional amortization partiallya decrease due from affiliates offset by gainstock based compensation and consulting fees, amortization and depreciation and loss on forgivenesschange in fair value of liabilities and additional net loss.

At October 31, 2012, the Company had $36,408 cash on-hand, a decrease of $74,829 from $111,237 at the start of fiscal 2012. The decrease in cash was due primarily to operating expenses.

Net cash used in operating activities was $45,569 for the year ended October 31, 2012, a decrease of $551,307 from $596,876 used during the year ended October 31, 2011. This decrease was due to an increase in accounts payable and accrued liabilities offset by a reduction in the gain on sale and the decrease of marketable securities and deferred revenue. Net cash provided by financing activities decreased $463,161 to $29,260, for the year ended October 31, 2012, compared to $433,901 for the year ended October 31, 2011.  This decrease was primarily due to the decrease in payments on notes payable.derivative liabilities.

 

We have financed our operations since inception primarily through proceeds from equity financings and revenue derived from operations. During the ninethree months ended July 2013,January 31, 2015, we raised $802,000$1,010,000 from issuance of convertible promissory notes and from the sale of common stock and warrants. Our continued operations will primarily depend on our ability to raise additional capital from various sources including equity and debt financings, as well as our revenue derived from operations. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs or will be on favorable terms. Based on our current plans, we believe that our cash provided from the above sources will be sufficient to enable us to meet our planned operating needs for at least the next 12 months.

 

We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.

20

DETERMINATION OF OFFERING PRICE

 

The Selling StockholdersStockholder will determine at what price theyit may sell the offered Shares, and such sales may be made at prevailing market prices, or at privately negotiated prices.

 

20

SELLING STOCKHOLDERSSTOCKHOLDER

 

We have prepared this prospectus to allow the Selling StockholdersStockholder or theirits successors, assignees or other permitted transferees to sell or otherwise dispose of, from time to time, up to 15,195,6787,475,000 shares of our common stock. This prospectus covers the offer and disposition by the Selling StockholdersStockholder identified below, or theirits transferee(s), of a total of 15,195,6787,475,000 shares of our common stock. OfAll of the shares of common stock being offered under this prospectus 15,195,678 were acquired by the purchasers in our Private Placement and 7,983,028 shares are able to be acquired pursuant to the Warrants we issuedSelling Stockholder in connection with our Private Placement, which Warrants are currently exercisable.private financings.

 

The Sharessecurities upon which the shares of common stock may be issued have been sold to the Selling StockholdersStockholder in the Private Placement were soldprivate financings pursuant to an exemption from registration provided by Rule 506 of Regulation D under the Securities Act. In connection therewith,with the investorsprivate financings, the investor entered into registration rights agreements with the Selling Stockholder pursuant to which we agreed to file a registration statement to register the Shares. The investor made to us certain representations, warranties, covenants, and conditions customary for private placement investments to accredited investors.

 

The table below presents information regarding the Selling StockholdersStockholder and the Shares that theyit may sell or otherwise dispose of from time to time under this prospectus. The table is based on information supplied to us by the Selling StockholdersStockholder and reflects holdings as of December 6, 2013.April 23, 2015. Percentages of beneficial ownership are based upon 52,074,2767,475,000 shares of common stock outstanding as of December 6, 2013.April 23, 2015. Beneficial ownership is determined under Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act of 1934”) and generally includes voting or investment power with respect to securities and including any securities that grant the Selling StockholdersStockholder the right to acquire common stock within 60 days of December 6, 2013. Unless otherwise noted, each personApril 23, 2015.

Under the terms of certain outstanding convertible securities of the Company, a stockholder may not convert or group identified possesses sole voting and investment power with respectexercise such securities to the Shares, subjectextent such conversion or exercise would cause such stockholder, together with its affiliates, to community property laws where applicable.beneficially own a number of shares of common stock that would exceed 4.99% or 9.99% (as applicable) of our then outstanding shares of common stock following such conversion or exercise, excluding for purposes of such determination shares of common stock issuable upon conversion or exercise of convertible securities which have not been converted or exercised. The number of shares listed in the second column of the table lists the number of shares of our common stock beneficially owned by the Selling Stockholder without reflecting any such limitation. However, the percentage set forth in the third column does reflect this limitation.

The fourth column lists the shares of common stock being offered by this prospectus by the Selling Stockholder. Because the conversion price of the convertible notes and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The last two columns assume the sale of all of the shares offered by the Selling Stockholder pursuant to this prospectus.

 

We do not know when or in what amounts the Selling StockholdersStockholder may sell or otherwise dispose of the Shares covered hereby. We currently have no agreements, arrangements or understandings with the Selling StockholdersStockholder regarding the sale of any of the Shares by themit other than the registration rights agreements described below. The Selling StockholdersStockholder might not sell any or all of the Shares covered by this prospectus or may sell or dispose of some or all of the Shares other than pursuant to this prospectus. Because the Selling StockholdersStockholder may not sell or otherwise dispose of some or all of the Shares covered by this prospectus and because there are currently no agreements, arrangements or understandings with respect to the sale or other disposition of any of the Shares, we cannot estimate the number of the Shares that will be held by the Selling StockholdersStockholder after completion of the offering. See “Plan of Distribution.”

 

EachNeither the Selling Stockholder has indicated to us that neither it nor any of its affiliates has held any position or office or had any other material relationship with us in the past three years except as described in the footnotes to the table.

 

The Shares being offered under this prospectus may be offered for sale from time to time during the period the registration statement of which this prospectus is a part remains effective, by or for the accounts of the Selling StockholdersStockholder named below.

 

The Selling Stockholders,Stockholder, or theirits partners, pledgees, donees, transferees or other successors that receive the Shares and their corresponding registration in accordance with the registration rights agreement to which the Selling Stockholder is party, (each also a Selling Stockholder for purposes of this prospectus), may sell up to all of the Shares shown in the table below under the heading “Total Shares Offered By Selling Stockholder in the Offering Covered by this Prospectus” pursuant to this Prospectus in one or more transactions from time to time as described below under “Plan of Distribution.” However, the Selling Stockholders areStockholder is not obligated to sell any of the Shares offered by this prospectus.

 

Information about the Selling StockholdersStockholder may change from time to time. Any changed information with respect to which we are given notice will be included in prospectus supplements.

 

Name of Selling Stockholder Shares Beneficially Owned
Before the Sale of all Shares
Covered by this Prospectus
  Percentage of Beneficial Ownership Before the Sale of all Shares Covered by this Prospectus  Total Shares
Offered By
Selling
Stockholder in
the Offering
Covered by this
Prospectus
  Shares
Beneficially
Owned After
the Sale of all
Shares
Covered by
this
Prospectus
  Percentage of
Beneficial
Ownership
After the Sale
of all Shares
Covered by
this Prospectus
 
                     
Himmil Investments, Ltd. (1)  7,475,000(2)  4.99%  7,475,000   0   *%
                     
                     
                     
                     
 Total  7,475,000   4.99%  7,475,000   0   *%

  

   Selling Stockholder FN  Shares
Beneficially
Owned Before
the Sale of all
Shares Covered
by this
Prospectus
  Percentage of
Beneficial
Ownership
Before
the Sale of all
Shares Covered
by this Prospectus
  Total Shares
Offered
By Selling
Stockholder in
the Offering
Covered by this
Prospectus
  Shares
Beneficially
Owned After
the Sale of all
Shares Covered
by this
Prospectus
  Percentage of
Beneficial
Ownership
After
the Sale of all
Shares Covered
by this Prospectus
 
 1  Shifman Holdings Limited  1   2,000,000   2.6%  500,000   1,500,000   2.4%
 2  Mark Bottrill  2   180,000   *   45,000   135,000   * 
 3  Stephen Romsdahl  3   4,639,800   6.1%  555,000   4,084,800   6.7%
 4  Kenneth Forcier  4   450,000   *   112,500   337,500   * 
 5  1500985 Ontario Ltd  5   833,300   1.1%  125,000   708,300   1.2%
 6  Brian Bernardo  6   833,300   1.1%  125,000   708,300   1.2%
 7  Grant Wells  7   500,000   *   125,000   375,000   * 
 8  John Markun  8   500,000   *   125,000   375,000   * 
 9  Dr. William D. Hyman  9   1,000,000   1.3%  250,000   750,000   1.2%
 10  Glenn Woolfrey  10   800,000   1.0%  200,000   600,000   1.0%
 11  David Hembree  11   4,433,140   5.8%  500,000   3,933,140   6.4%
 12  Malcom Christopher Leslie  12   500,000   *   125,000   375,000   * 
 13  Kenneth MacAlpine  13   2,250,000   2.9%  562,500   1,687,500   2.8%
 14  George C. Hiller  14   550,000   *   125,000   425,000   * 
 15  John McLaughlin  15   500,000   *   125,000   375,000   * 
 16  Scott Niles  16   200,000   *   50,000   150,000   * 
 17  Michael N. Emmerman  17   3,000,000   3.9%  750,000   2,250,000   3.7%
 18  William La Macchia  18   5,799,820   7.6%  1,000,000   4,799,820   7.8%
 19  Berdon Venture Associates, LLC  19   220,000   *   55,000   165,000   * 
 20  Mark Fiorito  20   950,000   1.2%  237,500   712,500   1.2%
 21  Ian MacGillivray  21   20,000   *   5,000   15,000   * 
 22  Cole Fiorito  22   20,000   *   5,000   15,000   * 
 23  Bruce Gibson  23   20,000   *   5,000   15,000   * 
 24  C. Gordon Niles IRA  24   400,000   *   100,000   300,000   * 
 25  Frame Mining Corporation  25   2,333,300   3.0%  500,000   1,833,300   3.0%
 26  Carolyn Dalgarno  26   300,000   *   75,000   225,000   * 
 27  Bribak Holdings Inc.  27   500,000   *   125,000   375,000   * 
 28  Michael Stastny  28   2,550,000   3.3%  637,500   1,912,500   3.1%
 29  Sandrose Corp  29   600,000   *   150,000   450,000   * 
 30  Michigan Commerce Bank As Custodian FBO C. Gordon Niles  30   300,000   *   75,000   225,000   * 
 31  Michael Emmerman  31   1,066,560   1.4%  266,640   799,920   1.3%
 32  Peter Gray  32   733,260   1.0%  183,315   549,945   * 
 33  James Donnelly  33   733,260   1.0%  183,315   549,945   * 
 34  Craig McCotter  34   3,333,100   4.4%  708,275   2,624,825   4.3%
 35  Ricky W. Ott  35   666,600   *   166,650   499,950   * 
 36  Crystal Falls Investments LLC  36   966,600   1.3%  241,650   724,950   1.2%
 37  Glen W Keuper Trustee U/A DTD 12-09-99 Glen W. Keuper Living Trust  37   1,839,840   2.4%  429,960   1,409,880   2.3%
 38  Ronald W. Mims  38   383,300   *   83,325   299,975   * 
 39  TH Jayaram  39   933,240   1.2%  233,310   699,930   1.1%
 40  William D. Hyman  40   866,580   1.1%  216,645   649,935   1.1%
 41  Peter Quinn  41   333,300   *   83,325   249,975   * 
 42  LouWrens Van Der Linden 2004 Revocable Trust  42   333,300   *   83,325   249,975   * 
 43  Robert W. Barfield  43   746,610   1.0%  105,825   640,785   1.0%
 44  Randi Dupont Lauren  44   689,943   *   81,660   608,283   1.0%
 45  D. Michael Meyer  45   199,980   *   49,995   149,985   * 
 46  Karen Winter  46   199,980   *   49,995   149,985   * 
 47  William McLeod  47   389,973   *   82,493   307,480   * 
 48  Roberta L. Hutton  48   199,980   *   49,995   149,985   * 
 49  Thomas & Marlo Meredith  49   199,980   *   49,995   149,985   * 
 50  Christian Hipp  50   199,980   *   49,995   149,985   * 
 51  David Oliver  51   199,980   *   49,995   149,985   * 
 52  Barry Bate  52   1,123,236   1.5%  274,559   848,677   1.4%
 53  Frank Dallison  53   166,650   *   41,663   124,988   * 
 54  David Markovic  54   139,986   *   34,997   104,990   * 
 55  Doreen Margaret Kerby  55   133,320   *   33,330   99,990   * 
 56  Diane P. Mims  56   133,320   *   33,330   99,990   * 
 57  Shauna Hannan  57   99,990   *   24,998   74,993   * 
 58  Jan Hervert  58   99,990   *   24,998   74,993   * 
 59  Kim Williams  59   99,990   *   24,998   74,993   * 
 60  Richard Molinsky  60   70,660   *   17,665   52,995   * 
 61  Dr. Robert Lichtenstein  61   69,993   *   17,498   52,495   * 
 62  Vanessa K. Keuper Living Trust Vanessa K Keuper Trustee  62   126,654   *   31,664   94,991   * 
 63  Glenn Woolfrey  63   66,660   *   16,665   49,995   * 
 64  Fred Graham  64   66,660   *   16,665   49,995   * 
 65  Habib Faris  65   66,660   *   16,665   49,995   * 
 66  Bluebird Capital Group Inc  66   66,660   *   16,665   49,995   * 
 67  Wilbert Speedy  67   33,330   *   8,333   24,998   * 
 68  177728 Ontario Inc  123   200,000   *   50,000   150,000   * 
 69  Andrew Stasny  68   200,000   *   25,000   175,000   * 
 70  Anthony Byron      68,560   *   17,140   51,420   * 
 71  Arthur Thomas Siachos  69   600,000   *   75,000   525,000   * 
 72  Barbara Brittain      300,000   *   75,000   225,000   * 
 73  Brian Hinton  70   73,330   *   13,333   59,998   * 
 74  Brian Petersburg      86,658   *   21,665   64,994   * 
 75  Compass Point Partners LP  124   133,320   *   33,330   99,990   * 
 76  Corey Lambrecht  71   80,000   *   10,000   70,000   * 
 77  Craig Johnstone  72   140,000   *   17,500   122,500   * 
 78  David G Young  73   180,000   *   22,500   157,500   * 
 79  David Howard  74   379,985   *   84,996   294,989   * 
 80  David Mason  75   159,992   *   29,998   129,994   * 
 81  Dipak Rao  76   2,193,290   2.9%  468,323   1,724,968   2.8%
 82  Donald Mark Fiorito      116,660   *   29,165   87,495   * 
 83  Douglas Trotter      209,990   *   52,498   157,493   * 
 84  DPIT 1 LLC  77   461,744   *   57,769   403,976   * 
 85  Erin Bruce and Gerald Hamilton JT Ten  78   470,000   *   65,000   405,000   * 
 86  Evan Schwartz  79   120,000   *   15,000   105,000   * 
 87  George Kaufman  80   125,316   *   15,665   109,652   * 
 88  Gerald T Laurie  81   60,000   *   7,500   52,500   * 
 89  Gordon Braudaway      473,326   *   118,332   354,995   * 
 90  Gregg Olsen  82   120,000   *   15,000   105,000   * 
 91  Gregory M Davis  83   100,000   *   12,500   87,500   * 
 92  Gregory Smock & Rita Smock JTWROS  84   180,000   *   30,000   150,000   * 
 93  Gwynfor Weekes  85   8,000   *   1,000   7,000   * 
 94  Helene Shifman  86   500,000   *   62,500   437,500   * 
 95  Jack Barry Orr  87   1,369,950   1.8%  339,988   1,029,963   1.7%
 96  Jacquelynn Cooper  88   20,000   *   2,500   17,500   * 
 97  James Anthony Janick  89   60,000   *   7,500   52,500   * 
 98  James E Reasoner  90   140,000   *   17,500   122,500   * 
 99  James F Drake  91   160,000   *   20,000   140,000   * 
 100  James F Higgins  92   60,000   *   7,500   52,500   * 
 101  James M Farrell  93   60,000   *   7,500   52,500   * 
 102  Jeffrey D Peterson  94   80,000   *   10,000   70,000   * 
 103  John A Tovar & Hella M Tovar JTWROS      959,970   1.3%  239,993   719,978   1.2%
 104  John E Peterson  95   40,000   *   5,000   35,000   * 
 105  John Roper      6,000   *   1,500   4,500   * 
 106  Josephine Pottinger      3,999,950   5.2%  399,995   3,599,955   5.9%
 107  Keith Roper  96   96,660   *   20,415   76,245   * 
 108  Mammoth Corporation  97   180,000   *   22,500   157,500   * 
 109  Mark G K Christensen  98   120,000   *   15,000   105,000   * 
 110  Mark Jackson & Leeann Jackson JTWROS  99   200,000   *   25,000   175,000   * 
 111  Max Embacher  100   140,000   *   17,500   122,500   * 
 112  Max Nalder  101   80,000   *   10,000   70,000   * 
 113  Optimum Mechanical Systems Inc.  102   120,000   *   15,000   105,000   * 
 114  Paul E Deboer & Sherry A Deboer JTWROS  103   1,000,000   1.3%  125,000   875,000   1.4%
 115  Pauline Bate  104   216,650   *   47,913   168,738   * 
 116  Philip Coniglio  105   200,000   *   25,000   175,000   * 
 117  RBC Capital Markets LLC Cust FBO John Marzitelli ROTH IRA  106   80,000   *   10,000   70,000   * 
 118  Reicher Limited Partnership  107   200,000   *   25,000   175,000   * 
 119  Richard Morgan      10,000   *   2,500   7,500   * 
 120  Richard Morgan & Diane Morgan JWTROS  108   20,000   *   2,500   17,500   * 
 121  Richard Stasney  109   60,000   *   7,500   52,500   * 
 122  Ron Seales  110   40,000   *   5,000   35,000   * 
 123  Scott Smith  111   220,000   *   27,500   192,500   * 
 124  Sean Douglas      100,000   *   25,000   75,000   * 
 125  Sean McCallion      233,325   *   58,331   174,994   * 
 126  Stephen McKay  112   400,000   *   50,000   350,000   * 
 127  Stockbridge Enterprises LP  113   120,000   *   15,000   105,000   * 
 128  T H Jayaram  114   200,000   *   25,000   175,000   * 
 129  Thomas Barrow and Stephanie Barrow JTWROS      433,290   *   108,323   324,968   * 
 130  Trevor Harwood  115   1,136,658   1.5%  279,165   857,494   1.4%
 131  Warberg Opportunistic Trading Fund LP  125   333,300   *   83,325   249,975   * 
 132  Whitney Galloway  116   20,000   *   2,500   17,500   * 
 133  William Lapp  117   200,000   *   25,000   175,000   * 
 134  Pat Cioffi  118   199,980   *   49,995   149,985   * 
 135  Heather Martin  119   133,320   *   33,330   99,990   * 
 136  Orfalinda Rouse  120   83,325   *   20,831   62,494   * 
 137  Andrae Roberts      133,320   *   33,330   99,990   * 
 138  Frank Anderson  121   83,325   *   20,831   62,494   * 
 139  Nicole Vanden Heuvel  122   103,325   *   23,331   79,994   * 
                             
           76,554,284   100.0%  15,195,678   61,358,605   100.0%

** less than 1%

Footnotes to Selling Security Holder Schedule

 

(1)Shifman Holdings Limited, whose principalArthur C. Price has voting and investment power with respect to the securities owned by Himmil Investments, Ltd. Mr. Price disclaims beneficial ownership of these securities. The address of Himmil Investments, Ltd. is Shelly Shifman, owns 20,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 2,000,000 shares of RealBiz Common Shares.Rodus Building, 4th Floor, Road Town, Tortola, British Virgin Islands.

(2)Consists of 1,800 Next 1 Series B Dual Convertible Preferred Shares which can convert into 180,0006,500,000 shares of RealBiz Common Shares.

(3)Consistscommon stock issuable upon conversion of 18,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 1,800,000convertible promissory notes and 975,000 shares of RealBiz Common Shares, 60,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 1,999,800 sharescommon stock upon exercise of RealBiz Common Shares, 420,000 RealBiz Common Shares and a warrant to purchase 420,000 RealBiz Common Shares.warrants.

(4)Consists of 4,500 Next 1 Series B Dual Convertible Preferred Shares which can convert into 450,000 shares of RealBiz Common Shares.

(5)1500985 Ontario Limited, whose principal is Brian Bernardo, owns of 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares and 10,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 333,300 shares of RealBiz Common Shares.

(6)Consists of 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares and 10,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 333,300 shares of RealBiz Common Shares.

(7)Consists of 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares.

(8)Consists of 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares.

(9)Consists of 10,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 1,000,000 shares of RealBiz Common Shares.

(10)Consists of 8,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 800,000 shares of RealBiz Common Shares.

(11)Consists of 20,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 2,000,000 shares of RealBiz Common Shares, 10,000 Next 1 Series C Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares and 58,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 1,933,140 shares of RealBiz Common Shares.

(12)Consists of 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares.

(13)Consists of 22,500 Next 1 Series B Dual Convertible Preferred Shares which can convert into 2,250,000 shares of RealBiz Common Shares.

(14)Consists of 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares and a warrant to purchase 50,000 RealBiz Common Shares.
(15)Consists of 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares.

(16)Consists of 2,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 200,000 shares of RealBiz Common Shares.

(17)Consists of 30,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 3,000,000 shares of RealBiz Common Shares.

(18)Consists of 40,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 4,000,000 shares of RealBiz Common Shares, and 54,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 1,799,820 shares of RealBiz Common Shares.

(19)Berdon Venture Associates, LLC, whose principal is Frederick Berdon owns 2,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 200,000 shares of RealBiz Common Shares, and 20,000 shares of RealBiz Common Shares.

(20)Consists of 9,500 Next 1 Series B Dual Convertible Preferred Shares which can convert into 950,000 shares of RealBiz Common Shares.

(21)Consists of 200 Next 1 Series B Dual Convertible Preferred Shares which can convert into 20,000 shares of RealBiz Common Shares.

(22)Consists of 200 Next 1 Series B Dual Convertible Preferred Shares which can convert into 20,000 shares of RealBiz Common Shares.

(23)Consists of 200 Next 1 Series B Dual Convertible Preferred Shares which can convert into 20,000 shares of RealBiz Common Shares.

(24)C. Gordon Niles IRA, whose principal is C. Gordon Niles, owns 4,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 400,000 shares of RealBiz Common Shares.

(25)Frame Mining Corporation, whose principal is Clifford Frame, owns 20,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 2,000,000 shares of RealBiz Common Shares, and 10,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 333,300 shares of RealBiz Common Shares.

(26)Consists of 3,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 300,000 shares of RealBiz Common Shares.

(27)Bribak Holdings, Inc, whose principal is Brian Baker, owns 5,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 500,000 shares of RealBiz Common Shares.

(28)Consists of 25,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 2,500,000 shares of RealBiz Common Shares, and 50,000 shares of RealBiz Common Shares.

(29)Sandrose Corporation, whose principal is Garry Bond, owns 6,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 600,000 shares of RealBiz Common Shares.

(30)Michigan Commerce Bank As Custodian FBO C. Gordon Niles, whose principal is C. Gordon Niles, owns 3,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 300,000 shares of RealBiz Common Shares.
(31)Consists of 32,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 1,066,560 shares of RealBiz Common Shares.

(32)Consists of 22,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 733,260 shares of RealBiz Common Shares.

(33)Consists of 22,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 733,260 shares of RealBiz Common Shares.

(34)Consists of 70,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 2,333,100 shares of RealBiz Common Shares, 500,000 shares of RealBiz Common Shares a warrant to purchase 500,000 RealBiz Common Shares.

(35)Consists of 20,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 666,600 shares of RealBiz Common Shares.

(36)Crystal Falls Investments LLC, whose principal is Ash Mascarenhas, owns 20,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 666,600 shares of RealBiz Common Shares, and 300,000 shares of RealBiz Common Shares.

(37)Glen W. Keuper Trustee U/A DTD 12-09-99 Glen W. Keuper Living Trust, whose principal is Glen W. Keuper, owns 48,000 Next 1 Series B Dual Convertible Preferred Shares which can convert into 1,599,840 shares of RealBiz Common Shares, 120,000 shares of RealBiz Common Shares, and a warrant to purchase 120,000 RealBiz Common Shares.

(38)Consists of 10,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 333,300 shares of RealBiz Common Shares and a warrant to purchase 50,000 RealBiz Common Shares.

(39)Consists of 28,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 933,240 shares of RealBiz Common Shares.

(40)Consists of 26,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 866,580 shares of RealBiz Common Shares.

(41)Consists of 10,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 333,300 shares of RealBiz Common Shares.

(42)LouWrens Van Der Linden 2004 Revocable Trust, whose principal is LouWrens Van Der Linden, owns 10,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 333,300 shares of RealBiz Common Shares.

(43)Consists of 17,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 566,610 shares of RealBiz Common Shares, 90,000 shares of RealBiz Common Shares, and a warrant to purchase 90,000 shares.

(44)Consists of 17,100 Next 1 Series D Dual Convertible Preferred Shares which can convert into 569,943 shares of RealBiz Common Shares, and 60,000 shares of RealBiz Common Shares, and a warrant to purchase 60,000 shares.

(45)Consists of 6,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 199,980 shares of RealBiz Common Shares.

(46)Consists of 6,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 199,980 shares of RealBiz Common Shares.
(47)Consists of 8,100 Next 1 Series D Dual Convertible Preferred Shares which can convert into 269,973 shares of RealBiz Common Shares, 60,000 shares of RealBiz Common Shares, and a warrant to purchase 60,000 RealBiz Common Shares.

(48)Consists of 6,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 199,980 shares of RealBiz Common Shares.

(49)Consists of 6,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 199,980 shares of RealBiz Common Shares.

(50)Consists of 6,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 199,980 shares of RealBiz Common Shares.

(51)Consists of 6,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 199,980 shares of RealBiz Common Shares.

(52)Consists of 14,600 Next 1 Series D Dual Convertible Preferred Shares which can convert into 486,618 shares of RealBiz Common Shares, 611,618 shares of RealBiz Common Shares, and a warrant to purchase 25,000 RealBiz Common Shares.

(53)Consists of 5,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 166,650 shares of RealBiz Common Shares.

(54)Consists of 4,200 Next 1 Series D Dual Convertible Preferred Shares which can convert into 139,986 shares of RealBiz Common Shares.

(55)Consists of 4,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 133,320 shares of RealBiz Common Shares.

(56)Consists of 4,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 133,320 shares of RealBiz Common Shares.

(57)Consists of 3,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 99,990 shares of RealBiz Common Shares.

(58)Consists of 3,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 99,990 shares of RealBiz Common Shares.

(59)Consists of 3,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 99,990 shares of RealBiz Common Shares.

(60)Consists of 2,120 Next 1 Series D Dual Convertible Preferred Shares which can convert into 70,660 shares of RealBiz Common Shares.

(61)Consists of 2,100 Next 1 Series D Dual Convertible Preferred Shares which can convert into 69,993 shares of RealBiz Common Shares.

(62)Vanessa K. Keuper Living Trust Vanessa K. Keuper Trustee, whose principal is Vanessa K. Keuper, owns 3,800 Next 1 Series D Dual Convertible Preferred Shares which can convert into 126,654 shares of RealBiz Common Shares.
(63)Consists of 2,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 66,660 shares of RealBiz Common Shares.

(64)Consists of 2,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 66,660 shares of RealBiz Common Shares.

(65)Consists of 2,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 66,660 shares of RealBiz Common Shares.

(66)Bluebird Capital Group Inc, whose principal is Chris Carra, owns 2,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 66,660 shares of RealBiz Common Shares.

(67)Consists of 1,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 33,330 shares of RealBiz Common Shares.

(68)Consists of 100,000 RealBiz Common Shares and a warrant to purchase 100,000 RealBiz Common Shares.

(69)Consists of 300,000 RealBiz Common Shares and a warrant to purchase 300,000 RealBiz Common Shares.

(70)Consists of 53,330 RealBiz Common Shares and a warrant to purchase 20,000 RealBiz Common Shares.

(71)Consists of 40,000 RealBiz Common Shares and a warrant to purchase 40,000 RealBiz Common Shares.

(72)Consists of 70,000 RealBiz Common Shares and a warrant to purchase 70,000 RealBiz Common Shares.

(73)Consists of 90,000 RealBiz Common Shares and a warrant to purchase 90,000 RealBiz Common Shares.

(74)Consists of 339,985 RealBiz Common Shares and a warrant to purchase 40,000 RealBiz Common Shares.

(75)Consists of 119,992 RealBiz Common Shares and a warrant to purchase 40,000 RealBiz Common Shares.

(76)Consists of 1,873,290 RealBiz Common Shares and a warrant to purchase 320,000 RealBiz Common Shares.

(77)DPIT 1 LLC, whose principal is Sam Del Presto, owns 231,074 RealBiz Common Shares and a warrant to purchase 230,670 RealBiz Common Shares.

(78)Consists of 260,000 RealBiz Common Shares and a warrant to purchase 210,000 RealBiz Common Shares.

(79)Consists of 60,000 RealBiz Common Shares and a warrant to purchase 60,000 RealBiz Common Shares.

(80)Consists of 62,658 RealBiz Common Shares and a warrant to purchase 62,658 RealBiz Common Shares.

(81)Consists of 30,000 RealBiz Common Shares and a warrant to purchase 30,000 RealBiz Common Shares.

(82)Consists of 60,000 RealBiz Common Shares and a warrant to purchase 60,000 RealBiz Common Shares.

(83)Consists of 50,000 RealBiz Common Shares and a warrant to purchase 50,000 RealBiz Common Shares.

(84)Consists of 120,000 RealBiz Common Shares and a warrant to purchase 60,000 RealBiz Common Shares.

(85)Consists of 4,000 RealBiz Common Shares and a warrant to purchase 4,000 RealBiz Common Shares.
(86)Consists of 250,000 RealBiz Common Shares and a warrant to purchase 250,000 RealBiz Common Shares.

(87)Consists of 1,359,950 RealBiz Common Shares and a warrant to purchase 10,000 RealBiz Common Shares.

(88)Consists of 10,000 RealBiz Common Shares and a warrant to purchase 10,000 RealBiz Common Shares.

(89)Consists of 30,000 RealBiz Common Shares and a warrant to purchase 30,000 RealBiz Common Shares.

(90)Consists of 70,000 RealBiz Common Shares and a warrant to purchase 70,000 RealBiz Common Shares.

(91)Consists of 80,000 RealBiz Common Shares and a warrant to purchase 80,000 RealBiz Common Shares.

(92)Consists of 30,000 RealBiz Common Shares and a warrant to purchase 30,000 RealBiz Common Shares.

(93)Consists of 30,000 RealBiz Common Shares and a warrant to purchase 30,000 RealBiz Common Shares.

(94)Consists of 40,000 RealBiz Common Shares and a warrant to purchase 40,000 RealBiz Common Shares.

(95)Consists of 20,000 RealBiz Common Shares and a warrant to purchase 20,000 RealBiz Common Shares.

(96)Consists of 81,660 RealBiz Common Shares and a warrant to purchase 15,000 RealBiz Common Shares.

(97)Mammoth Corporation, whose principal is Brad Hare, owns 90,000 RealBiz Common Shares and a warrant to purchase 90,000 RealBiz Common Shares.

(98)Consists of 60,000 RealBiz Common Shares and a warrant to purchase 60,000 RealBiz Common Shares.

(99)Consists of 100,000 RealBiz Common Shares and a warrant to purchase 100,000 RealBiz Common Shares.

(100)Consists of 70,000 RealBiz Common Shares and a warrant to purchase 70,000 RealBiz Common Shares.

(101)Consists of 40,000 RealBiz Common Shares and a warrant to purchase 40,000 RealBiz Common Shares.

(102)Optimum Mechanical Systems Inc., whose principal is John Marzitelli, owns 60,000 RealBiz Common Shares and a warrant to purchase 60,000 RealBiz Common Shares.

(103)Consists of 500,000 RealBiz Common Shares and a warrant to purchase 500,000 RealBiz Common Shares.

(104)Consists of 191,650 RealBiz Common Shares and a warrant to purchase 25,000 RealBiz Common Shares.

(105)Consists of 100,000 RealBiz Common Shares and a warrant to purchase 100,000 RealBiz Common Shares.

(106)RBC Capital Markets LLC Cust FBO John Marzitelli ROTH IRA, whose principal is John Marzitelli, owns 40,000 RealBiz Common Shares and a warrant to purchase 40,000 RealBiz Common Shares.

(107)Reicher Limited Partnership, whose principal is Donna Perry, owns of 100,000 RealBiz Common Shares and a warrant to purchase 100,000 RealBiz Common Shares.

(108)Consists of 10,000 RealBiz Common Shares and a warrant to purchase 10,000 RealBiz Common Shares.

(109)Consists of 30,000 RealBiz Common Shares and a warrant to purchase 30,000 RealBiz Common Shares.

(110)Consists of 20,000 RealBiz Common Shares and a warrant to purchase 20,000 RealBiz Common Shares.

(111)Consists of 110,000 RealBiz Common Shares and a warrant to purchase 110,000 RealBiz Common Shares.
(112)Consists of 200,000 RealBiz Common Shares and a warrant to purchase 200,000 RealBiz Common Shares.

(113)Stockbridge Enterprises LP., whose principal is Mitchell Saltz, owns 60,000 RealBiz Common Shares and a warrant to purchase 60,000 RealBiz Common Shares.

(114)Consists of 100,000 RealBiz Common Shares and a warrant to purchase 100,000 RealBiz Common Shares.

(115)Consists of 1,116,658 RealBiz Common Shares and a warrant to purchase 20,000 RealBiz Common Shares.

(116)Consists of 10,000 RealBiz Common Shares and a warrant to purchase 10,000 RealBiz Common Shares.

(117)Consists of 100,000 RealBiz Common Shares and a warrant to purchase 100,000 RealBiz Common Shares.

(118)Consists of 6,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 199,980 shares of RealBiz Common Shares.

(119)Consists of 4,000 Next 1 Series D Dual Convertible Preferred Shares which can convert into 133,320 shares of RealBiz Common Shares.

(120)Consists of 2,500 Next 1 Series D Dual Convertible Preferred Shares which can convert into 83,325 shares of RealBiz Common Shares.

(121)Consists of 1,500 Next 1 Series D Dual Convertible Preferred Shares which can convert into 49,995 shares of RealBiz Common Shares, and 33,330 shares of RealBiz Common Shares.

(122)Consists of 2,500 Next 1 Series D Dual Convertible Preferred Shares which can convert into 83,325 shares of RealBiz Common Shares, 10,000 shares of RealBiz Common Shares, and a warrant to purchase 10,000 RealBiz Common Shares.

(123)1777728 Ontario Inc., whose principal is Vince Bergin, owns 200,000 RealBiz Common Shares.

(124)Compass Point Partners LP., whose principal is J. Eric Waguner, owns 133,320 RealBiz Common Shares.

(125)Warberg Opportunistic Trading Fund LP., whose principal is Robert Felsenthal, owns 333,300 RealBiz Common Shares.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 

Directors, Executive Officers and Other Key Employees

Our Board of Directors and management team includes:

Name Age Position(s) Independent Director
Bill Kerby 5557 Director (Chairman), Chief Executive Officer No
       
Adam Friedman 4950 Chief Financial Officer N/A
       
Donald Monaco 6162 Director Yes
       
Deborah Linden58Chief Operating Officer, DirectorNo
Robert A. Buntz, Jr.60DirectorNo
Steven Marques 5354 Chief Revenue Officer N/A
       
Pat LaVecchia48DirectorYes
Doug Checkeris 5758 ActingDirector , Former Chief Marketing Officer Director No
       
Keith A. White 5153 Director Yes
       
Patrick ScheltgenArun Srinivasan 4743 Director, Chief InformationMarketing Officer,
Former Chief Technology Officer
 N/ANo
       
Mark Lemon Alex Aliksanyan 5466  Director, Chief TechnologyInformation Officer and
Chief Operating Officer
 N/A No

Biographies for the members of our Board of Directors and our management team are set forth below:

 

William Kerby – Chief Executive Officer and Chairman:

 

On December 21, 2012, the board of directors of the Company appointed William Kerby, age 55,57, to the position of Chief Executive Officer and Chairman of the Board of the Company. Mr. Kerby age 55 is the founder of Next 1, Interactive, Inc. From 2008 to present, he has been the architect of the Next 1 model, overseeing the development and operations of the Travel, Real Estate and Media divisions of the company. From 2004 to 2008, Mr. Kerby served as the Chairman and CEO of Extraordinary Vacations Group whose operations included Cruise & Vacation Shoppes, Maupintour Extraordinary Vacations and the Travel Magazine - a TV series of 160 travel shows. From 2002 to 2004 Mr. Kerby was Chairman of Cruise & Vacation Shoppes after it was acquired by a small group of investors and management from Travelbyus. Mr. Kerby was given the mandate to expand the operations focusing on a “marketing driven travel model.” In June 2004 Cruise & Vacation Shoppe was merged into Extraordinary Vacations Group. From 1999 to 2002 Mr. Kerby founded and managed Travelbyus, a publicly traded company on the TSX and NASD Small Cap. The launch included an intellectually patented travel model that utilized technology-based marketing to promote its travel services and products. Mr. Kerby negotiated the acquisition and financing of 21Companies encompassing multiple tour operators, 2,100 travel agencies, media that included print, television, outdoor billboard and wireless applications and leading edge technology in order to build and complete the Travelbyus model. The company had over 500 employees, gross revenues exceeding $3 billion and a Market Cap over $900 million. Prior to this Mr. Kerby founded Leisure Canada – a company that included a nationwide Travel Agency, international tour operations, travel magazines and the Master Franchise for Thrifty Car Rental British Columbia.

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The Board believes that Mr. Kerby’s vast knowledge of the industry and extensive experience in senior corporate positions make him ideally qualified to help lead the Company. His executive leadership and operational experience provide him with a broad understanding of the operational, financial and strategic issues facing public companies. His service with other public companies provides him with extensive corporate governance knowledge.

 

Adam Friedman - Chief Financial Officer:

 

On December 21, 2012, the board of directors of the Company appointed Adam Friedman, age 49,50, to the position of Chief Financial Officer of the Company. Mr. Friedman has served as the Chief Financial Officer of Next 1 Interactive, Inc. since 2010. From 2006 to 2010, Mr. Friedman had previously served as Chief Financial Officer, Corporate Secretary, and Controller for MDwerks, Inc. (“MDwerks”) where his responsibilities included overseeing the company’s finances, human resources department, U.S. Securities &and Exchange Commission compliance, and Sarbanes-Oxley compliance. Prior to joining MDwerks, Mr. Friedman served as the Vice President of Finance for CSA Marketing, Inc. from 2005 to 2006. For the eleven years prior to 2005, Mr. Friedman served as the Business Manager/Controller and Director of Financial Planning at the GE/NBC/Telemundo Group, Inc. Mr. Friedman also worked as a Senior Financial Analyst for Knight-Ridder, IncInc. and as an Audit Senior Accountant for KPMG Peat Marwick. Mr. Friedman received his MBA from St. Thomas University and his BSM from Tulane University.

Don Monaco - Director:

 

On December 21, 2012, the Company appointed Don Monaco, 61,62, as a member of its Board of Directors. Since 2005, Mr. Monaco has been the principal owner of Monaco Air Duluth, LLC, a full service, fixed-base operator aviation services business at Duluth International Airport serving airline, military and general aviation customers. Mr. Monaco spent over 18 years as a Partner and Senior Executive and has 28 years as an international information technology and business management consultant with Accenture in Chicago, Illinois. Mr. Monaco also serves as a Commissioner on the Metropolitan Airports Commission in Minneapolis-St. Paul and as a Commissioner and President of the Duluth Economic Development Authority. Mr. Monaco is also thePresident of the Monaco Air Foundation, Vice-ChairmanChairman of the Miller-Dwan Foundation, Treasurer of Honor Flight Northland, Treasurer of the Duluth Aviation Institute, Co-Chair of the Northern Aero Alliance, a Director for the Destination Duluth nonprofit corporation, a member of the Duluth Chamber of Commerce Military Affairs Committee, and a member of Lake Superior College's Center for Advanced Aviation SteeringAdvisory Committee.

 

The Company believes that Mr. Monaco’s senior management and information technology experience qualifies him to be a member of the Board.

 

Deborah Linden – Chief Operating Officer and Director:

Effective October 29, 2013, the Company appointed Deborah Linden, age 58, as the Chief Operating Officer and a director of Realbiz Media Group Inc. (the “Company”) and the President and Chief Operating Officer of Next 1 Interactive, Inc. Ms. Linden, co-founded Island One Resorts in 1981 and served as CEO of the timeshare development and management company until its sale in 2011 and continued as a consultant through the transition until October 2013. At its height, the $100 million annual company had a 1,250 person staff; over 65,000 vacation owners; a points-based vacation club; 12 homeowners associations; and nine resorts throughout Florida and the Caribbean. An active volunteer to the American Resort Development Association (ARDA), she has spearheaded many timeshare industry initiatives in the arenas of legislation, sales, marketing, ethics and education. Her leadership includes over 20 years on the Board of Directors; 10 years on the Board Executive Committee; Chairman of the Board from 1993-1995; and Chairman of the Vacation Timesharing Council from 1990-1993. Ms. Linden’s contributions to business development and community outreach have been recognized with numerous awards, including ARDA’s 2000 Circle of Excellence Lifetime Achievement; Ernst & Young 2006 Entrepreneur of the Year, Florida Real Estate & Construction; and Dynetech-Crummer 2006 Entrepreneur of the Year, $50+ million category. Ms. Linden is Chairman of the Board of DL Foundation, which performs community outreach initiatives benefiting children’s charities, the community, disaster victims and families in crisis.

Ms. Linden’s travel and real estate experience qualifies her to be a member of the Board. Her executive leadership experience provides her with valuable experience.

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Doug Checkeris - Director:

On December 21, 2012, the Company appointed Doug Checkeris, 57,58, as a member of its Board of Directors. Mr. Checkeris is currently a Director of Cieslok Outdoor, a privately held digital outdoor media company, a Partner/Founder of Unreal Gaming Inc., a Pennsylvania based company that is building a platform to serve the online business for money gaming operators and casinos, and a Partner at GNR8R Media Group, a Toronto based marketing company that envisions, designs and orchestrates 21st Century operating systems.  Mr. Checkeris is a Senior Media and Advertising Executive with nearly three decades of hands-on management in all facets of interactive media. Doug’s work experience includes 14 years of service with Mediacom where he rose through the ranks to become the CEO for Mediacom North America, until recently headquartered in New York.America.  With close to $18 billion in global billings, 4,600 employees, and 116 offices in 89 countries, Mediacom provides and specializes in business-building media solutions for some of the world’s largest, well-known advertisers. Previous to Mediacom, Doug started his career in a media company in Toronto, Canada, and was a partner when the company was acquired by Grey Worldwide and the WPP.

 

Mr. Checkeris’ media and advertising experience qualifies him to be a member of the Board. His executive leadership experience provides him with valuable experience.

 

Robert A. Buntz, Jr. -Arun Srinivasan – Chief Marketing Officer and Director:

On December 21, 2012, the Company accepted the resignation of Robert Buntz, Jr., 61, as Chief Executive Officer of the Company, but retained him as a member of its Board of Directors. Mr. Buntz has served as a director of the Company, including Webdigs, LLC, since inception in May 2007. Mr. Buntz has been an entrepreneur for more than 30 years and a real estate broker for more than 25. In 1981, Mr. Buntz developed the award-winning Bluefin Bay on Lake Superior, Tofte, Minnesota, and operated that resort until 2007. Among his achievements, Mr. Buntz’s development company donated the land, time and funding to help create the North Shore Commercial Fishing Museum and Mr. Buntz created and developed one of the first rural affordable housing projects, Tofte Homestead. From 1984 through 2006, and while he was simultaneously operating Bluefin Bay, Mr. Buntz was the owner and operator of Tofte Land Co., Inc., a real estate holding and brokerage firm. He now has more than 25 years of hospitality experience as an owner-operator of destination properties. Mr. Buntz has served on27, 2014, the board of directors of the Explore Minnesota Tourism CouncilCompany appointed Arun Srinivasan, to the position of Chief Marketing Officer and Chief Technology Officer as well as a Director of the (Minnesota) Governor’s Tourism Advisory CommitteeCompany. In 2008, Mr. Srinivasan co-founded ReachFactor Inc., an award-winning social media and reputation marketing platform for real estate agents and brokerages.  From 2008 to present, he served as Chief Operating Officer of ReachFactor, overseeing all aspects of its operations as it grew to serve thousands of agents and brokerages across the country. From 1998 to 2008, he was the co-founder and Chief Technology Officer of BroadSpire Inc., one of the largest private website hosting and online marketing companies with over 250,000 clients internationally. In this role, he oversaw service delivery for all clients which included companies such as Paramount Pictures, Boston Beer Company, HBO, Dreamworks, and many of the Fortune 500. Mr. Srinivasan received his Bachelor's Degree in Economics from Yale University.

The Company believes that Mr. Srinivasan’s marketing and technology experience make him uniquely qualified to act as a director.

Pat LaVecchia - Director:

On March 31, 2014, the Company appointed Pat LaVecchia as a member of its board of directors. Mr. LaVecchia has been a founding principal and Managing Member of LaVecchia Capital LLC (“LaVecchia Capital”), a merchant banking and investment firm, since 2007 and has over 20 years of experience in the financial industry. Mr. LaVecchia has built and run several major Wall Street groups and has extensive expertise in capital markets, including initial public offerings, secondary offerings, raising capital for private companies and PIPEs as well as playing the leading role in numerous mergers, acquisitions, private placements and high yield transactions. Prior to forming LaVecchia Capital, Mr. LaVecchia ran several groups at major firms including: Managing Director and Head of the Private Equity Placement Group at Bear, Stearns and Company (1994 to 1997); Group Head of Global Private Corporate Equity Placements at Credit Suisse First Boston (1997 to 2000); Managing Director and Group Head of the Private Finance and Sponsors Group at Legg Mason Wood Walker, Inc. (2001 to 2003); co-founder and Managing Partner of Viant Group (2003-2005) and Managing Director and Head of Capital Markets at FTN Midwest Securities Corp. (2005 to 2007). Mr. LaVecchia received his B.A., magna cum laude (and elected to Phi Beta Kappa), from Clark University and an M.B.A. from The Wharton School of the University of Pennsylvania with a major in Finance and a concentration in Strategic Planning. In the past, Mr. LaVecchia has served on several public company boards, including as Vice Chairman of InfuSystems, Inc. (INFU).   Mr. LaVecchia is also currently a Managing Member of Sapphire Capital Partners. Mr. LaVecchia also sits on several advisory boards and non-profit boards.

The Company believes that Mr. LaVecchia’s investment banking and business experience allows him to contribute business and financing expertise and qualifies him to be a member of the Board.

Alex Aliksanyan – Director, Chief Information Officer and Chief Operating Officer

Mr. Aliksanyan comes to the Company with more than 15 years. Currently,25 years of Strategic Technology Planning, Implementation and Marketing experience. Mr. BuntzAliksanyan is currently President of WorldMyWay Inc. and AAJ since 2005. Mr. Aliksanyan also previously served as CEO and President of iCruise.com which he founded in 2000. Prior thereto, Mr. Aliksanyan had served as a board membermarketing consultant for several brands such as Citibank, Disney and past-chair of the board of the American Museum of Asmat Art. Mr. Buntz received the (Minnesota) Governor’s Entrepreneurship Award from Governor Rudy Perpich and the Outstanding Individual in Tourism Award from Governor Jesse Ventura.Hillshire Farms. He is also considered in the Travel industry as a graduatepioneer in the area of Grinnell College.e-commerce. Mr. Aliksanyan received his Bachelors’ Degree in Physics from New York University and an Advanced degree in marketing from the Stern School of Business in New York.

 

Mr. Buntz’s first-handAliksanyan’s technology and significant knowledge and understandingvast business experience qualifies him to be a member of our Company and its operations makethe Board. His executive leadership experience provides him awith valuable director.experience.

 

Steven Marques – Chief Revenue Officer/Acting PresidentOfficer:

 

On December 21, 2012, the Board of Directors of the Company appointed Steven Marques, 53,54, to the position of Chief Revenue Officer. Mr. Marques is Acting President and was previously President/Chief Operations Officer of RealBiz360 Inc. d/b/a RealBiz Media IncInc. which began in early 2004 prior to the merger into RealbizMediaRealBiz Media Group. He led the company to become one of top 5 leading Virtual Tour companies in North America. Steve was instrumental in overseeing the Company’s current operating plan to include the move to Video On Demand television with its partner Next 1 Interactive, which then led the company’s expansion into Video Content Syndication which is the base of its business plan today. Under his management he was instrumental for the Company’s strategic alliances and key partnerships with companies like Realogy, specifically C21, ERA, Keller Williams, Move-Realtor.com, Prudential, Coldwell Banker NRT franchises and more. Mr. Marques’ prior leadership roles include; Vice President of Global Sales for iseemedia; Sr. Vice President of Marketing for Omnigon, a San Diego based Bio-tech Company, and MGI software, leaders in consumer based photo and video software. Mr. Marques has been in the Computer and Internet industry since 1983 where he was part of the start-up management teams of Egghead Discount Software which was one of America’s first Retail Computer software chains with over 200 locations at its peak.

 

Mr. Marques’ direct involvement in overseeing and applying our operating plan and expanding its business into Video Content Syndication, as well as prior position as our Acting President, makes him uniquely qualified to act as our Chief Revenue Officer,

 

Keith A White-Director

 

Keith A. White, age 51,52, combines over 25 years of management experience in the real estate industry. Since 1995, Mr. White has been the principal owner of Marketplace Home Mortgage, LLC (“MHM”), a full service correspondence residential mortgage lender based in Edina, MN. Mr. White also owns and manages Alliance Title, LLC, Marketplace Insurance Services and various commercial office buildings. In addition, in 1999, Mr. White founded Marketline Constructions Capital, LLC, a construction lender, and operated the company through 2008. In 2000, Mr. White founded Maribella Mortgage, LLC, a wholesale mortgage lender, and managed the company until 2007. Prior to finding MHM in 1995, Mr. White culminated his nine year career with GMAC Mortgage as the Minnesota-Wisconsin Area Manager.

 

Mr. White has an undergraduate degree from St. Cloud State University with a major in finance, real estate, and economics.

 

Mr. White’s extensive experience in operating successful business ventures related to the real estate industry give Mr. White a wide ranging and diverse, entrepreneurial view of potential business opportunities that make him well- qualified to help lead the Company to becoming an even greater force in the fast-growing, high resolution, digital media arena for the real estate industry.

Patrick Scheltgen – Chief Information Officer

Patrick Scheltgen, age 47, joined the Company in October 2013 and has over 25 years experience in Information Technology and Systems Development, he is the co-founder and CEO of Filmrobot Systems, Inc. From 1999 to present, he has been the lead architect and company visionary of  the Filmrobot Systems model, overseeing the development and day to day operations of the one of the largest web design and programming companies in Vancouver B.C. with Hundreds of clients in many verticals, from film and television to large wineries and enterprise level clients. In early 2000, Mr. Scheltgen co-created and designed Agencyclick.com, an online community based website that provides casting directors actors and agents real time access to information to facilitate the casting of feature films and commercials worldwide. To date Agencyclick.com continues to be the largest online database for working performers in North America. From 2004 to 2012 Mr. Scheltgen has held senior level consultant positions with Fraser Health, the primary health services provider in British Columbia, Fortis B.C. the largest provider of gas and natural gas services to British Columbia as well as Telus B.C. one of the largest phone and cable television and network services providers in British Columbia. Mr. Scheltgen has also lead the design and development for several large British Columbia wineries with their large scale e-commerce initiatives, including but not limited to Hestercreek, and Quails Gate estate wineries. Mr. Scheltgen received his Bachelors Computer Information Systems and Business Administration,from Douglas College in New Westminster B.C.

Mark Lemon – Chief Technology Officer

Mark Lemon, age 54, joined the Company in October 2013 and is responsible for developing and guiding our technology strategy, including supporting next-generation systems and technologies, management tools, and technical standards. From 1999 to present, Mr. Lemon co-founded and served as Operations Manager for Filmrobot Systems, Inc. where his responsibilities included MS Windows and Linux server and application support for internal web development and the company's co-located and cloud-based production environments. Prior to joining the Company, Mr. Lemon gained a wide variety of experience, including almost a decade as a process engineer for Owens-Corning Fiberglas and nine years as a 3D computer animator and animation supervisor for Rainmaker Entertainment, Inc. (formerly Mainframe Entertainment Inc.). A 1981 graduate of McMaster University in Hamilton, Ontario with a bachelor’s degree in Materials Engineering (Ceramics), Mr. Lemon resides in Vancouver, B.C.

 

Corporate Governance

 

Leadership Structure

 

Our Chief Executive Officer also serves as our Chairman of the Board.  Our Board of Directors does not have a lead independent director.   Our Board of Directors has determined its leadership structure was appropriate and effective for us given our stage of development.

Board Committees

 

We presently do not have an audit committee, compensation committee or nominating committee or committee performing similar functions, as our management believes that until this point it has been premature at the early stage of our management and business development to form an audit, compensation or nominating committee.

 

Director Independence

 

Although our common stock is not listed on any national securities exchange, for purposes of independence we use the definition of independence applied by The NASDAQ Stock Market.  The Board has determined that twothree of its sixseven directors (Messrs. Monaco, LaVecchia, and White) are “independent” in accordance with such definition.

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

The following table sets forth the cash and non-cash compensation for the years ended October 31, 20132014 and 20122013 which was awarded to or earned by (i) our Chief Executive Officer during fiscal year 2014 and (ii) our other executive officers (other than the Chief Executive Officer) who served the Company and who received in excess of $100,000 in total compensation for a year (collectively, the “named executive officers”).

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Name and Principal Stock  All Other     Stock  Stock    
Position Year  Salary  Bonus  Awards  Compensation  Total 
Bill Kerby(1)  2013  $104,000  $-  $-  $-  $104,000 
Chief Executive Officer  2012  $-  $-  $-  $-  $- 
Adam Friedman(2)  2013  $52,000  $-  $-  $-  $52,000 
Chief Financial Officer  2012  $-  $-  $-  $-  $- 
Steven Marques(3)  2013  $108,125  $-  $-  $-  $108,125 
Chief Revenue Officer/Acting President  2012  $87,500  $-  $-  $-  $87,500 
Doug Checkeris(4)  2013  $120,000  $-  $-  $60,000  $180,000 
Acting Chief Marketing Officer  2012  $-  $-  $-  $60,000  $60,000 
Deborah Linden  2013  $-  $-  $-  $-  $- 
Chief Operating Officer  2012  $-  $-  $-  $-  $- 
Patrick Scheltgen  2013  $-  $-  $-  $-  $- 
Chief Information Officer  2012  $-  $-  $-  $-  $- 
Mark Lemon  2013  $-  $-  $-  $-  $- 
Chief Technology Officer  2012  $-  $-  $-  $-  $- 
Name and Principal Position 

Fiscal
Year

Ended

   All
Other
Salary
    Bonus    Stock
Awards
    Stock
Compensation
    Total 
William Kerby (1) 2014 $96,000  $-0-  $-0-  $-0-  $96,000 
CEO and Chairmen of the Board 2013 $104,000  $-0-  $-0-  $-0-  $104,000 
                       
Adam Friedman (2) 2014 $48,000  $-0-  $-0-  $-0-  $48,000 
CFO 2013 $52,000  $-0-  $-0-  $-0-  $52,000 
                       
Steven Marques (3) 2014 $145,416  $-0-  $-0-  $-0-  $145,416 
CRO/Acting President 2013 $138,958  $-0-  $-0-  $-0-  $138,958 
                       
Arun Srinivasan (4) 2014 $60,487  $-0-  $-0-  $150,000  $210,487 
CTO/CMO 2013 $-0-  $-0-  $-0-  $-0-  $-0- 
                       
Douglas Checkeris (5) 2014 $-0-  $-0-  $-0-  $190,000  $190,000 
Former CMO 2013 $120,000  $-0-  $-0-  $60,000  $180,000 
                       
Suresh Srinivasan (6) 2014 $50,974  $-0-  $-0-  $37,500  $88,474 
Former COO 2013 $-0-  $-0-  $-0-  $-0-  $-0- 

(1)Mr. Kerby’sKerby's salary has been accrued but not paid.
(2)Mr. Friedman’sFriedman's salary has been accrued but not paid.
(3)Mr. Marques’sMarques’ salary does not includeincludes $19,160 in 2014 and $30,833 in 2013 and $63,542 in 2012 that has been accrued but not paid.

(4)Mr. Srinivasan, a senior level executive employee, has been issued 1,000,000 RBIZ common shares as per his contract dated May 23, 2014.
(5)Mr. Checkeris receives $5,000 per month inwas paid 38,000 Preferred C's(valued at $190,000) and 1,900,000 warrants on Next 1 Series D Preferred Shares.as final payment for amounts owed to him through May 31, 2014 as the Company's former CMO.
(6)Mr. Srinivasan, a senior level executive employee, has been issued 1,000,000 RBIZ common shares as per his contract dated May 23, 2014. Due to Mr. Srinivasan's resignation, 750,000 shares have been returned. Mr. Srinivasan resigned from his position effective September 30, 2014.

 

Currently, the Company does not offer any executive bonus or incentive compensation plan and there are no current plans to put one in place for fiscal year 2015.

Employment Agreements with Executives and Key Personnel

On May 24, 2014, Realbiz Media Group, Inc. (the “Company”) entered into an Asset Sale Agreement with ReachFactor, Inc. (“ReachFactor”) and its two principals, Suresh Srinivasan and Arun Srinivasan pursuant to which the Company acquired substantially all of the assets of ReachFactor and the Company assumed certain liabilities of ReachFactor not to exceed $25,000 in consideration of the Company’s issuance to ReachFactor of 2,000,000 shares of the Company’s common stock.  The acquisition of the assets is subject to an unwind at the option of Suresh Srinivasan and Arun Srinivasan if on or prior to the date that is six months after the closing of the Asset Sale Agreement, the Company terminates the employment of either of Suresh Srinivasan and/ or Arun Srinivasan (each referred to as an “Executive”) without cause or either Executive terminates his employment for Good Reason. In the event of an unwind the assets revert back to ReachFactor and the 2,000,000 shares of stock revert back to the Company.

As a condition to the closing of the Asset Sale Agreement, the Company also entered into an employment agreement with each of Suresh Srinivasan (the “Suresh Employment Agreement”) and Arun Srinivasan (the “Arun Employment Agreement”).  Under the terms of the Suresh Employment Agreement, Suresh Srinivasan has been retained to serve as Chief Operating Officer of the Company for a term of 36 months commencing May 27, 2014.  Under the terms of the Arun Employment Agreement, Arun Srinivasan has been retained to serve as Chief Marketing Officer and Chief Technology Officer of the Company for a term of 36 months commencing May 27, 2014. Each Executive will receive the following compensation: a base salary of $140,000 per year with an automatic increase to $200,000 per year on the earlier to occur of (1) the one year anniversary of his employment or (2) satisfaction of any of certain specified conditions set forth in the agreement.   Additionally, each Executive will receive healthcare for himself and his dependent family members with 100% of the premiums paid by the Company, and be eligible for bonus programs commensurate with other senior executives of the Company. Each Executive will be issued 1,000,000 shares of the Company’s common stock which shares will be held in escrow to be released to each of them as follows:  ¼ of the shares every three (3) calendar months (on the final business day of the calendar month) and all of the shares immediately upon certain  triggering events described in the agreement. If the employment of either Executive is terminated for any reason, the terminated Executive, will be entitled to receive the accrued base salary, vacation pay, expense reimbursement and any other entitlements accrued by him to the extent not previously paid (the “Accrued Obligations”);provided,however , that if their employment is terminated (1) by the Company without Just Cause (as defined in the Employment Agreement) or by the Executive  for Good Reason (as defined in the Suresh and Arun Employment Agreement) then in addition to paying the Accrued Obligations, the vesting of the shares of stock held in escrow shall be accelerated and the shares held in escrow shall be released to the Executive. In the event such a termination occurs within six (6) months of the Closing Date of the Asset Sales Agreement, the Executive may elect (at its sole discretion) to initiate an “unwind event” as described above.  Arun Srinivasan was also granted the right to serve as a Board member and to be listed as a Board candidate at the Company’s next annual meeting of shareholders. The Suresh and Arun Employment Agreements also include confidentiality obligations and inventions assignments by each ExecutiveOn September 18, 2014, the Company received Suresh Srinivasan's written resignation as the Chief Operating Officer of the Company effective September 30, 2014.

34

In connection with his employment, Mr. Aliksanyan entered into a three-year employment agreement with the Company (the “Aliksanyan Employment Agreement”). The Aliksanyan Employment Agreement, dated February 20, 2015, has a term of 36 months commencing February 20, 2015 and expiring on February 19, 2018 unless earlier terminated. Mr. Aliksanyan will receive the following compensation: a base salary of $120,000 per year and $80,000 in shares of the Company’s common stock (800,000 shares at $0.10 per share). In addition, the Company will pay for healthcare for Mr. Aliksanyan and his dependent family members, and he will be eligible for bonus programs commensurate with other senior executives of the Company. In addition, Mr. Aliksanyan will be issued 1,000,000 shares of the Company’s common stock, which shares will be released to him as follows: (1) 300,000 shares if Mr. Aliksanyan is still employed by the Company on February 20, 2016 and provided that he has not served notice to “claw back” the sale of Stingy Travel to the Company; (2) 350,000 shares if certain Triggering Events (as defined in the Aliksanyan Employment Agreement) are achieved by Mr. Aliksanyan in his role as Chief Operating Officer; however, if none of the Triggering Events are met after 12 months, the Company will release a percentage of the 350,000 shares based upon the number of new paying real estate agents; and (3) 350,000 shares upon the achievement of certain activities in Mr. Aliksanyan’s role as Chief Information Officer.

If the employment of Mr. Aliksanyan is terminated, he generally will be entitled to receive the accrued base salary, vacation pay, expense reimbursement and any other entitlements accrued by him to the extent not previously paid (the “Accrued Obligations”);provided ,however , that if his employment is terminated (1) by the Company other than For Cause (as defined in the Aliksanyan Employment Agreement) or by Mr. Aliksanyan For Good Reason (as defined in the Aliksanyan Employment Agreement) then in addition to paying the Accrued Obligations, the vesting of any shares of stock held in escrow or subject to a vesting schedule shall be accelerated and the shares shall be released to Mr. Aliksanyan . In the event of a termination by the Company other than For Cause, disability or death occurs within six (6) months of the date of the Aliksanyan Employment Agreement, Mr. Aliksanyan may elect (at his sole discretion) to initiate an “unwind” event as described above. The Aliksanyan Employment Agreement also includes confidentiality obligations and inventions assignments clauses.

Outstanding Equity Awards at Fiscal Year End

There were no outstanding equity awards for the executives as of October 31, 2013.

Employment Agreements with Executives and Key Personnel

Effective October 29, 2013, Ms. Linden entered into a three-year employment agreement (the “Linden Employment Agreement”) with us and Next 1 Interactive, Inc. to serve as our Chief Operating Officer and the President and Chief Operating Officer of Next 1 Interactive, Inc. Pursuant to the Linden Employment Agreement, Ms. Linden will be entitled a monthly payment of $5,000 cash and $12,000 in stock (30,000 shares of Next 1 Interactive, Inc. Series C Preferred Stock and 600,000 shares of Next 1 Interactive, Inc. common stock) for the first 90 days after the date of the Linden Employment Agreement and thereafter if the parties determine to continue the Linden Employment Agreement she will receive an annual base salary for the first year of $200,000, increasing to $250,000 in the second year. Ms Linden will be issued a bonus of up to 2% of the consolidated EBITDA of the two companies up to a maximum of $150,000 paid in shares of our stock for each year of the Agreement, such bonus earned at the end of each year.  The Linden Employment Agreement also includes confidentiality obligations, non-compete and non-solicitation provisions.

If Ms Linden’s employment is terminated for any reason, she or her estate as the case may be, will be entitled to receive the accrued base salary, vacation pay, expense reimbursement , bonus and any other entitlements accrued by her through the date of termination to the extent not previously paid (the “Accrued Obligations”);provided,however, that if her employment is terminated: (1) by us other than for Cause, (as defined in the Linden Employment Agreement), disability or death or by Ms Linden for Good Reason (as defined in the Linden Employment Agreement) then we shall continue to pay her the Accrued Obligation for a period of 90 days;(2) by reason of her death then we shall continue to pay the Accrued Obligations through the date of death; or (3) by reason of Disability (as defined in the Linden Employment Agreement), then we shall continue to pay her Accrued Obligations earned through the calendar month of the termination .

Effective October 29, 2013, Patrick Scheltgen, age 47, was appointed our Chief Information Officer and effective October 29, 2013, Mark Lemon, age 54, was appointed our Chief Technology Officer. In connection with their appointment, Mr. Scheltgen and Mr. Lemon each entered into a one-year employment agreement (the “Scheltgen Employment Agreement” and the “Lemon Employment Agreement”) with us. Pursuant to the Scheltgen Employment Agreement, Mr. Scheltgen will be entitled a monthly payment of $5,000 payable in shares of our stock, based upon a $1 share price for the first quarter and thereafter a 50% discount to the closing price of our common stock on the last day of each quarter. Pursuant to the Lemon Employment Agreement, Mr. Lemon will be entitled a monthly payment of $2,500 payable in shares of our stock, based upon a $1 share price for the first quarter and thereafter a 50% discount to the closing price of our common stock on the last day of each quarter. Each of Mr. Scheltgen and Mr. Lemon is eligible to receive a bonus at the discretion of the board of directors. Each of the Scheltgen Employment Agreement and the Lemon Employment Agreement also includes confidentiality obligations, non-compete and non-solicitation provisions.

If either Mr. Scheltgen or Mr. Lemon’s employment is terminated for any reason, he or his estate as the case may be, will be entitled to receive the accrued base salary, vacation pay, expense reimbursement , bonus and any other entitlements accrued by him through the date of termination to the extent not previously paid (the “Accrued Obligations”);provided,however, that if his employment is terminated by reason of his death then his estate is entitled to receive the Accrued Obligations earned through the date of death and if his employment is terminated by reason of Disability (as defined in the Agreement), then we shall continue to pay his Accrued Obligations earned through the calendar month of the termination .2014.

 

Director Compensation 

 

Our non-employee directors have elected to forego any cash compensation for participating in Board of Directors and committee meetings telephonically until such time as we become profitable over the course of an entire fiscal year, at which time the Board of Directors may reconsider the structure of its director compensation. In general, director compensation will be subject to review and adjustment from time to time at the discretion of our Board of Directors.

The following table sets forth the compensation of our non-employee directors for fiscal year ending October 31, 2013:2014:

  Fees           Nonqualified       
  Earned        Non-Equity  Deferred       
  or Paid  Stock  Option  Incentive Plan  Compensation  All other    
  in Cash  Awards  Awards  Compensation  Plan  Compensation  Total 
Name $  $  $  $  $  $  $ 
Don Monaco  -   -   -   -   -   -  $- 
Robert Buntz, Jr.Keith A. White  -   -   -   -   -   -  $- 
Keith WhiteMike Craig(1)------$-
Pat LaVecchia------$-
Doug Checkeris  -   -   -   -   -   -  $- 

(1)Mr. Craig resigned as a director on February 17, 2015.

 

28

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 Update

 

The following table sets forth certain information with respect to the beneficial ownership of our issued and outstanding common stock as of December , 2013,May 12, 2015 after giving effect to the Exchange Transaction, by (i) each of our named executive officers; (ii) each of our directors; and (iii) all of our executive officers, directors and director nominees as a group. Ownership percentages are based on 52,074,276106,468,872 shares of common stock issued and outstanding as of the close of business on December 6, 2013,May 12, 2015 and 94,016,40057,793,056 shares of Series A Stock issued and outstanding as of that date which converts into 94,016,40057,793,056 shares of common stock .stock. Based on that information available to us, as of that date, no person is a beneficial owner of more than 5% of our common stock other than Next 1 Interactive, Inc. and Robert A. Buntz, Jr.

 

Beneficial ownership is determined in accordance with the rules of the SEC. To our knowledge and subject to applicable community property laws, each of the holders of stock listed below has sole voting and investment power as to the stock owned unless otherwise noted. Except as otherwise noted below, the address for each director or officer listed in the table is c/o RealBiz Media Group, Inc., 2690 Weston Road, Suite 200, Weston, FL 33331.

Name and Address Common Shares
Beneficially
Owned(1)
  Percentage of
Common Shares
 
Next 1 Interactive, Inc. (1)  93,000,000   98.9%
Robert A. Buntz, Jr. (2)  5,983,600   11.5%
William Kerby (3)  9,136,110   17.5%
Don Monaco (4)  23,750,000   45.6%
Adam Friedman (5)  1,020,000   2.0%
Deborah Linden (6)  300,000   *
Doug Checkeris (7)  1,200,000   2.3%
Keith White (8)  400,000   *
         
All current directors and officers as a group (9)  41,589,710   48%

_____________________

Name of Beneficial Owner Common
Shares Beneficially
Owned
  Percentage of Common
Shares Beneficially Owned
  Percentage of Voting Power
(1)
 
             
Next 1 Interactive, Inc. (2)  56,776,656   34.8%  33.9%
Acknew Investments, Inc. (3)  11,736,750   11.0%  7.0%
Cardar Investments, Ltd. (4)  5,514,030   5.2%  3.3%
William Kerby (5)  8,096,110   7.1%  4.8%
Don Monaco (6)  32,750,000   23.5%  19.6%
Adam Friedman (7)  500,000   0.5%  0.3%
Doug Checkeris (8)  2,500,000   2.3%  1.5%
Keith White (9)  1,700,000   1.6%  1.0%
Arun Srinivasan (10)  3,000,000   2.8%  1.8%
Pat LaVecchia (11)  2,093,333   1.9%  1.3%
Alex Aliksanyan (12)  1,000,000   0.9%  0.6%
Steve Marques     %  %
All current directors and officers as a group (9 individuals) (13)  51,639,443   33.3%  30.9%

_____________

* Does not include the 1,500,000 shares of common stock issuable upon conversion of a convertible promissory note, dated October 20, 2014, issued to the Selling Stockholder, the 5,000,000 shares of common stock issuable upon conversion of a convertible promissory note issuable to the Selling Stockholder within two trading days of the date on which the registration statement of which this prospectus forms a part is declared effective by the SEC, the 300,000 shares of common stock that are issuable upon exercise of warrants, dated October 20, 2014, issued to the Selling Stockholder, and the 675,000 shares of common stock that are issuable upon exercise of warrants issuable to the Selling Stockholder within two trading days of the date on which the registration statement of which this prospectus forms a part is declared effective by the SEC.

*(1)less thanPercentage of Total Voting Power is based on 167,261,928 votes and includes voting rights attached to all Common Shares Outstanding and all Preferred Shares Outstanding that can convert to Common Shares.  As of May 12, 2015, there were 106,468,872 shares of Common Stock Outstanding, 57,793,056 shares of Series A Preferred stock issued and outstanding and convertible into 57,793,056 shares of common stock and 15,000 shares of Series B Preferred stock issued and outstanding and convertible into 1,500,000 shares of common stock. Each shares of Series A stock is entitled to one percent.vote for each share of common stock that would be issuable upon conversion of such share. Each shares of Series B stock is entitled to two hundred votes for each share of common stock that would be issuable upon conversion of such share. The total voting power excludes warrants, accrued salaries of the Company, outstanding debt of the Company, outstanding debt of Company’s Parent Company, Next 1 Interactive, Inc., and Preferred Shares of Next 1 Interactive, Inc. each of which can be converted into Common Shares of the Company.

 (1)
(2)Next 1 Interactive, Inc. holds 93,000,00056,776,656 shares of Series A Stock that was issued in the Exchange Transaction that arewhich represents 98.2% of the issued and outstanding shares of Series A Stock and convertible into 93,000,00056,776,656. Each shares of Series A stock is entitled to one vote for each share of common stock .that would be issuable upon conversion of such share.  Next 1 is deemed to beneficially own 34.8% of the common stock which represents a right to vote 33.9% of the aggregate outstanding voting shares.

(3)Acknew Investments, Inc., an entity controlled by Harry Hart, were former controlling owners of the Company. Acknew Investments, Inc.’s is deemed to beneficially own 11.0% of the common stock which represents a right to vote 7.0% of the aggregate outstanding voting shares.
  
(2)(4)Mr. BuntzCardar Investments, Ltd., an entity controlled by Warren Kettlewell, is our former Chief Executive Officer and currently a Directordeemed to beneficially own 5.2% of the Company.common stock which represents a right to vote 3.3% of the aggregate outstanding voting shares.

(3)(5)Mr. Kerby is our Chairman of the Board and Chief Executive Officer, and has held such position since the closing of the Exchange Transaction. Mr. Kerby owns 709,611 shares of Next 1 Series A Preferred Stock which can be converted into 7,096,110 shares of the Company’s Common Stock.  Mr. Kerby, through a company that he controls, owns 100,000 shares of Next 1 Series A Preferred Stock which can be converted into 1,000,000 shares of the Company’s Common Stock. Mr. Kerby also has $104,000 of unpaid and accrued salary that can be converted intoKerby's beneficial ownership does not include shares of Next 1 Series C Preferred Stock into which can be converted into 1,040,000 shares of the Company’s Common Stock.he has a right to convert his accrued salary.   Mr. Kerby also serves as the Chief Executive Officer of Next 1.
  
(4)(6)Mr. Monaco is a director of the Company, and has held such position since the closing of the Exchange Transaction. Mr. Monaco owns 1,075,000 shares of Next 1 Series A Preferred Stock which can be converted into 10,750,000 shares of the Company’s Common Stock.  Mr. Monaco also has debt of $650,000$1,100,000 with Next 1 which can be converted into 13,000,00022,000,000 shares of the Company’s Common Stock.  Mr. Monaco also serves as a director of Next 1.
  
(5)(7)Mr. Friedman is our Chief Financial Officer, and has held such position since the closing of the Exchange Transaction. Mr. Friedman owns 15,000 shares of Next 1 Series D Preferred Stock which can be converted into 500,000 shareshares of the Company’s Common Stock. Mr. Friedman also has $52,000 of unpaid and accrued salary that can be converted intoFriedman's beneficial ownership does not include shares of Next 1 Series C Preferred Stock into which can be converted into 520,000 shares of the Company’s Common Stock.he has a right to convert his accrued salary.   Mr. Friedman also serves as the Chief Financial Officer of Next 1.
  
(6)(8)Ms. LindenMr. Checkeris is a director of the Company, and our Chief Operating Officer. Ms. Linden owns 6,000 shares of Next 1 Series C Preferred Stock which can be converted into 300,000 shares of the Company’s Common Stock. Ms. Linden also serves as the President and Chief Operating Officer of Next 1.
(7)Mr. Checkeris is our Acting Chief Marketing Officer, and has held such position since the closing of the Exchange Transaction. Mr. Checkeris owns 24,00050,000 shares of Next 1 Series C Preferred Stock which can be converted into 1,200,0002,500,000 shares of the Company’s Common Stock.  Mr. Checkeris also serves as a Director of Next 1.
  
(8)(9)

Mr. White throughis a director of the Company and is the principal owner of Marketplace Home Mortgage, LLC, which owns 200,000 shares of the Company’s Common Stock and a current for 200,000owns 15,0000 Series B Preferred Stock which can convert into 1,500,000 shares of the Company’s Common Stock.

  
(9)(10)Mr. Srinivasan is our Chief Marketing Officer, Chief Technology Officer and a Director of the Company.  Mr. Srinivasan owns 1,000,000 Common shares and is an indirect owner of 2,000,000 shares held by ReachFactor, Inc., a company in which he is an owner.
(11)

Mr. LaVecchia is a director of the Company.  Mr. LaVecchia beneficially owns 62,800 shares of Next 1 Series B Preferred Stock which can be converted into 2,093,333 shares of the Company’s Common Stock. Mr. LaVecchia also serves as a Director of Next 1.

(12)Mr. Aliksanyan is a director, Chief Information Officer and Chief Operating Officer of the Company. Mr. Aliksanyan beneficially owns 1,000,000 shares of the Company’s Common Stock to be issued upon conversion of 60,000 shares of Next 1 Series D Preferred Stock. His beneficial ownership does not include, 1,800,000 shares of common stock currently held in escrow to be released.  See “Employment Agreements with Executives and Key Personnel” for a description of the terms of the escrow.
(13)Consists of Messrs. Buntz, Kerby, Monaco, Friedman, Checkeris, White, Srinivasan, Marques, Aliksanyan and Marques and Ms. Linden.LaVecchia.

30
 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE

 

Related-Party Transaction Policy  

 

Our Board of Directors has no formal written policy regarding transactions with related persons, but we do plan to abide by conflict-of-interest statutes under Delaware law and approve any related-party transactions by a majority of disinterested directors. In general, applicable law exhorts any director proposing to enter into a related-party transaction must disclose to our Board of Directors the proposed transaction and all material facts with respect thereto. In reviewing such a proposed transaction, our board expects to consider all relevant facts and circumstances, including (1) the commercial reasonableness of the terms, (2) the benefit and perceived benefits, or lack thereof, to us, (3) the opportunity costs of alternate transactions, (4) the materiality and character of the related party’s interest, and (5) the actual or apparent conflict of interest of the related party. We expect to apply this analysis with respect to related party transactions that may involve our officers or greater-than-five-percent shareholders.

 

We do expect to adopt a formal written policy respecting related-party transactions in which our directors, officers and greater-than-five-percent shareholders may engage, consistent with Sarbanes-Oxley related internal control requirements and best practices.

 

The Company’s principal advertising agency/website developer was owed $615,264 at October 31, 2012 and 2011, respectively. The two principals of this advertising company were at the time also minority stockholders in the Company, holding approximately 1.6% of the Company’s outstanding common shares at October 31, 2012. For the years ended October 31, 2012 and 2011, the Company incurred $0 and $31,556 in services and rent from this related party, respectively. This Note was subsequently sold to a non-related third party during fiscal 2013.

As of October 31, 2011 and 2010, the Company was indebted to its then-officers (Messrs. Buntz and Wicker) for amounts totaling $3,578 and $8,345, respectively, for unreimbursed business expenses. All of the indebtedness represented non-interest bearing payables due on demand.

During the year ended October 31, 2010, the Company borrowed $355,500 from Robert A. Buntz, Jr. under a convertible promissory note accruing interest at an annual rate of 12%. At October 31, 2011 and 2010, the balances due under this note were $243,079 and $528,500, respectively. On October 12, 2010, these notes were modified to allow the Mr. Buntz to convert amounts into the Company’s common stock at $0.01 per share instead of a previous conversion price of $22 (after adjustment for reverse split). This modification resulted in a beneficial conversion charge to interest expense of $580,424 because the stock was trading at $6.00 (on a post-split basis) on that date. On March 15, 2011, Mr. Buntz converted $300,000 of the debt into 150,000 shares of common stock (on a post-split basis). For the years ended October 31, 2011 and 2010, the Company incurred $46,038 and $630,932 of interest expense in connection with this note, respectively. Accrued interest included in accrued expenses due under the note as of October 31, 2011 and 2010 was $91,962 and $51,924, respectively. The accrued interest was also convertible into the Company’s common stock at $2.00 per share (after adjustment for reverse split).

In connection with the closing of the Exchange Transaction on October 9, 2012, Messrs. Buntz and Wicker converted all of their outstanding notes, unpaid salary and all other obligations and liabilities to them owed by the Company into 5,990,238 and 1,016,400 shares of Series A Stock, respectively. The Preferred A Shares for Mr. Buntz were converted to 5,990,238 Common Shares on February 27, 2013.

Mr. Buntz was the former CEO who resigned on March 31, 2014.

 

31

PLAN OF DISTRIBUTION

 

We are registering the shares of common stock underlying convertible notes and warrants previously issued and issuable to the Selling StockholdersStockholder to permit the resale of these underlying shares of common stock by the holders of the common stockSelling Stockholder from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling StockholdersStockholder of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

 

The Selling Stockholders,Stockholder, or theirits pledges, donees, transferees, or any of their successors in interest selling shares received from athe Selling Stockholder as a gift, partnership distribution or other non-sale related transfer after the date of this prospectus, may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the Selling StockholdersStockholder will be responsible for underwriting discounts or commissions or agent's commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. The Selling StockholdersStockholder will act independently of us in making decisions with respect to the timing, manner and size of each sale. These sales may be affected in transactions, which may involve crosses or block transactions,

  

on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
in the over-the-counter market;
in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
through the writing of options, whether such options are listed on an options exchange or otherwise;
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
an exchange distribution in accordance with the rules of the applicable exchange;
privately negotiated transactions;
short sales;
through the distribution of the common stock by anythe Selling StockholdersStockholder to its partners, members or Stockholders;stockholders;
through one or more underwritten offerings on a firm commitment or best efforts basis;
sales pursuant to Rule 144;
broker-dealers may agree with the Selling StockholdersStockholder to sell a specified number of such shares at a stipulated price per share;
a combination of any such methods of sale; and
any other method permitted pursuant to applicable law.
any other method permitted pursuant to applicable law.

 

The Selling StockholdersStockholder may also transfer the Shares by gift. The Selling StockholdersStockholder may engage brokers and dealers, and any brokers or dealers may arrange for other brokers or dealers to participate in effecting sales of the Shares. These brokers, dealers or underwriters may act as principals, or as an agent of athe Selling Stockholder. Broker-dealers may agree with athe Selling Stockholder to sell a specified number of the Shares at a stipulated price per security. If the broker-dealer is unable to sell the Shares acting as agent for athe Selling Stockholder, it may purchase as principal any unsold Shares at the stipulated price. Broker-dealers who acquire Shares as principals may thereafter resell the Shares from time to time in transactions in any stock exchange or automated interdealer quotation system on which the Shares are then listed, at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. Broker-dealers may use block transactions and sales to and through broker-dealers, including transactions of the nature described above.

 

The Selling StockholdersStockholder may also sell the Shares in accordance with Rule 144144(i) under the Securities Act, rather than pursuant to this prospectus, regardless of whether the Shares are covered by this prospectus.

 

If the Selling Stockholders effectStockholder effects such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling StockholdersStockholder or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the Selling StockholdersStockholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The Selling StockholdersStockholder may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The Selling StockholdersStockholder may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.

 

The Selling StockholdersStockholder may pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of Selling StockholdersStockholder to include the pledgee, transferee or other successors in interest as a Selling StockholdersStockholder under this prospectus. The Selling StockholdersStockholder also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

In addition, athe Selling Stockholder may, from time to time, sell the Shares short, and, in those instances, this prospectus may be delivered in connection with the short sales and the Shares offered under this prospectus may be used to cover short sales.

 

The Selling StockholdersStockholder and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling StockholdersStockholder and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers. The Selling StockholdersStockholder may indemnify any broker-dealer that participates in transactions involving the sale of the shares of common stock against certain liabilities, including liabilities arising under the Securities Act.

 

Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

 

There can be no assurance that anythe Selling Stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.

 

The Selling StockholdersStockholder and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act of 1934 and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act of 1934, which may limit the timing of purchases and sales of any of the shares of common stock by the Selling StockholdersStockholder and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.

The shares of common stock offered hereby were originally issued to the Selling StockholdersStockholder pursuant to an exemption from the registration requirements of the Securities Act. We agreed to register the shares of common stock under the Securities Act, and to keep the registration statement of which this prospectus is a part effective until the earlier of the date on which the Selling StockholdersStockholder have sold all of the securities pursuant to this prospectus or one year afterRule 144 under the shares were acquired by the Selling Stockholder.Securities Act. We will pay all expenses of the registration of the shares of common stock pursuant to the Registration Rights Agreement, estimated to be $30,000 in total, including, without limitation, Commission filing fees and expenses of compliance with state securities or “Blue Sky” laws;provided,however, that athe Selling Stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the Selling StockholdersStockholder against liabilities, including some liabilities under the Securities Act, in accordance with the Registration Rights Agreement, or the Selling StockholdersStockholder will be entitled to contribution. We may be indemnified by the Selling Stockholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the Selling Stockholder specifically for use in this prospectus, in accordance with Registration Rights Agreement, or we may be entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.

 

33

DESCRIPTION OF SECURITIES

  

Our authorized capital consists of 125250 million shares of common stock, par value $0.001 per share, and 125 million shares of Preferred Stock, , of which 100,000,000120,000,000 are designated Series A Stock, par value $0.001 per share, 1,000,000 are designated as Series B Preferred stock,Stock, par value $0.001 per share and 1,000,000 are designated as Series C Preferred Stock, par value $0.001 per share. As of December 6, 2013, 52,074,276May 12, 2015, 106,468,872 shares of common stock, and 94,016,40057,793,056 shares of Series A Stock and 15,000 shares of Series B Preferred Stock were outstanding.outstanding respectively.

 

Common Stock

 

Holders of shares of common stock have the right to cast one vote for each share of common stock in their name on the books of our company, whether represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including election of directors. There is no right to cumulative voting in election of directors. Except where a greater requirement is provided by statute, by our articlescertificate of incorporation, or by our bylaws, the presence, in person or by proxy duly authorized, of the one or more holders of a majority of the outstanding shares of our common stock constitutes a quorum for the transaction of business. The vote by the holders of a majority of outstanding shares is required to effect certain fundamental corporate changes such as liquidation, merger, or amendment of our articlescertificate of incorporation.

 

There are no restrictions in our articlescertificate of incorporation or bylaws that prevent us from declaring dividends. We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future.

 

Holders of shares of our common stock are not entitled to preemptive or subscription or conversion rights, and no redemption or sinking fund provisions are applicable to our common stock. All outstanding shares of common stock are, and the shares of common stock sold in the offering, will when issued be fully paid and non-assessable.

 

Warrants

Outstanding Warrants

 

As of December 6, 2013,January 31, 2015, we had issued and outstanding a total of 52,074,276 and 7,983,02817,692,730 warrants respectively, to purchase our common stock outstanding at a weighted-average price of $1.00$0.39 respectively. 975,000 of these warrants are exercisable for a period of two years from the date of issuance and provides for a cashless exercise. It also provides for an adjustment in the exercise price upon the happening of certain events, including the issuance of securities at a price lower than the fixed conversion price. The holder was not entitled to exercise any conversion right that would result in the holder owning more than 4.99% or 9.99% of our common stock, as applicable to each warrant.

Notes Outstanding

On October 20, 2014, we issued an unsecured convertible note to Himmil Investments, Ltd. with a face value of $150,000 and a warrant to purchase 300,000 shares of our common stock having an exercise price of $0.10 per share, subject to adjustment, in exchange for $130,000 cash, net of $20,000 in legal fees. The note ranks pari passu with the other note issued to Himmil Investments, Ltd. and senior to all other Indebtedness (as defined in the note”).The note is convertible into shares of our common stock and bears interest at the rate of 7.5% per annum, which interest was payable in cash or common stock, at the election of the holder, and matures on October 19, 2016. The conversion price, as well as the formula for determining the number of shares needed to repay the note and any interest thereon, is the lower of $0.10 per share or 65% of the lowest of the VWAP for the twelve days prior to the conversion date. The conversion price is subject to adjustment upon the happening of certain events, including the issuance of securities at a price lower than the fixed conversion price. If we fail to timely issue shares of Common Stock after receipt of a conversion notice, we obligated to pay to the holder 1% of the product of the number of shares of Common Stock not timely issued and the closing sale price of the Common Stock on the trading day preceding the last possible date which we could have issued the shares of Common Stock to the holder. In addition, we are also required to pay the buy-in price under certain circumstances. The holder is entitled to exercise any conversion right that would result in the holder owning more than 9.99% of our common stock. This note can be prepaid by us at any time after issuance date at a prepayment penalty of 125% of the balance outstanding, including interest thereon. We have agreed to certain covenants, including certain restrictions on incurrence of indebtedness, liens, cash dividend payments, transfer of assets, until such time as the note is converted, redeemed or paid in full.

Within two trading days of the date on which the registration statement of which this prospectus forms a part is declared effective by the SEC, we will issue, and Himmil Investments, Ltd. will purchase, an unsecured convertible note with a face value of $500,000 and a warrant to purchase 675,000 shares of our common stock having an exercise price of $0.10 per share, subject to adjustment, in exchange for $500,000 cash. The note will rank pari passu with the other note issued to Himmil Investments, Ltd. and senior to all other Indebtedness (as defined in the note). The note will be convertible into shares of our common stock and will bear interest at the rate of 7.5% per annum, which interest is payable in cash or common stock, at the election of the holder, and will mature on the second anniversary of the issuance date. The conversion price, as well as the formula for determining the number of shares needed to repay the note and any interest thereon, will be the lower of $0.10 per share or 65% of the lowest of the VWAP for the twelve days prior to the conversion date. The conversion price will be subject to adjustment upon the happening of certain events, including the issuance of securities at a price lower than the fixed conversion price. If we fail to timely issue shares of Common Stock after receipt of a conversion notice, we will be obligated to pay to the holder 1% of the product of the number of shares of Common Stock not timely issued and the closing sale price of the Common Stock on the trading day preceding the last possible date which we could have issued the shares of Common Stock to the holder. In addition, we will also be required to pay the buy-in price under certain circumstances. The holder is not entitled to exercise any conversion right that would result in the holder owning more than 4.99% of our common stock. This note can be prepaid by us at any time after the issuance date at a prepayment penalty of 125% of the balance outstanding, including interest thereon. We have agreed to certain covenants, including certain restrictions on incurrence of indebtedness, liens, cash dividend payments, transfer of assets, until such time as the note is converted, redeemed or paid in full.

 

Preferred Stock

 

Our Boardboard of Directorsdirectors has the authority, without action by our stockholders, to designate and issue up to 125,000,000 million shares of preferred stock in one or more series or classes and to designate the rights, preferences and privileges of each series or class, which may be greater than the rights of our common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of our common stock until our Boardboard of Directorsdirectors determines the specific rights of the holders of the preferred stock. However, the effects might include:

 

  restricting dividends on our common stock;
    
  diluting the voting power of our common stock;
    
  impairing liquidation rights of our common stock; or
delaying or preventing a change in control of us without further action by our stockholders.
delaying or preventing a change in control of us without further action by our stockholders.

 

The Board of Directors’directors’ authority to issue preferred stock without stockholder approval could make it more difficult for a third-party to acquire control of our company, and could discourage such attempt. We have no present plans to issue any shares of preferred stock.

 

Series A Preferred Stock

 

We currently have 94,016,40066,801,653 shares of Series A Preferred Stock issued and outstanding. The preferred shares were issued at $.001$0.001 par value, bear dividends at an annual rate of 10% per annum payable on a quarterly basis when declared by the board of directors. Dividends accrue whether or not they have been declared by the board. At our election, Preferred Dividendspreferred dividends may be converted into Series A Stock, with each converted share having a value equal to the Market Pricemarket price per share, subject to adjustment for stock splits. In order to exercise such option, we will deliver written notice to the holder. Each share of Series A Stock is convertible at the option of the holder thereof at any time into a number of shares of Common Stockcommon stock determined by dividing the Stated Valuestated value by the conversion price then in effect. The conversion price for the Series A Stock is currently equal to $1.00 per share.

Series B Preferred Stock

We currently have 15,000 shares of Series B Preferred Stock issued and outstanding. The preferred shares were issued at $0.001 par value, bear dividends at an annual rate of 10% per annum payable on a quarterly basis when declared by the board of directors. Dividends accrue whether or not they have been declared by the board. At our election, preferred dividends may be converted into Series B Stock, with each converted share having a value equal to the market price per share, subject to adjustment for stock splits. In order to exercise such option, we will deliver written notice to the holder. Each share of Series B Stock is convertible at the option of the holder thereof at any time into a number of shares of common stock determined by dividing the stated value by the Conversion Price then in effect. The conversion price for the Series AB Stock is equal to $1.00$5.00 per share.

Series C Preferred Stock

On May 5, 2015, we filed a Certificate of Designations for 1,000,000 shares of Series C Preferred Stock with the Secretary of State of the State of Delaware.We currently have zero shares of Series C Preferred Stock issued and outstanding. The shares of Series C Preferred Stock have a stated value of $5.00 per share and rank, as to the payment of dividends and the distribution of the assets upon our liquidation, dissolution or winding:  (a) senior to our common stock; (b) on parity with our Series A and Series C Convertible Preferred Stock; and (c) senior to or on parity with all other classes and series of our preferred stock. The Series C Preferred Stock accrues dividends at the rate of ten percent (10%) per annum, is convertible initially into our common stock at a conversion price of $0.05 per share and votes as a single class on any matter presented to the holders of our common stock for their action or consideration at any meeting of our stockholders. Each holder of Series C Preferred Stock is entitled to the number of votes equal to one hundred (100) votes for each share of our common stock into which the Series C Preferred Stock could be converted. The Series C Preferred Stock is convertible, at the option of the holder, into a number of shares of our common stock determined by dividing (i) the stated value by (ii) the conversion price then in effect (initially the conversion price is $0.05).

  

Potential Anti-Takeover Effects

 

Certain provisions set forth in our Amended and Restated Certificate of Incorporation, as amended, in our bylaws and in Delaware law, which are summarized below, may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over the market price for the shares held by stockholders.

 

Blank Check Preferred Stock. Our Certificate of Incorporation and bylaws contain provisions that permit us to issue, without any further vote or action by the stockholders, up to 125,000,000 shares of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting the series and the designation of the series, the voting powers, if any, of the shares of the series, and the preferences and relative, participating, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such series.

 

Special Meetings of Stockholders. Our bylaws provide that special meetings of stockholders may be called only by the chairman or by our board. Stockholders are not permitted to call a special meeting of stockholders, to require that the board call such a special meeting, or to require that our board request the calling of a special meeting of stockholders.

 

While the foregoing provisions of our certificate of incorporation, bylaws and Delaware law may have an anti-takeover effect, these provisions are intended to enhance the likelihood of continuity and stability in the composition of the Board of Directorsdirectors and in the policies formulated by the Board of Directorsdirectors and to discourage certain types of transactions that may involve an actual or threatened change of control. In that regard, these provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.

 

Delaware Takeover Statute

 

In general, Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation that is a public company from engaging in any “business combination” (as defined below) with any “interested stockholder” (defined generally as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with such entity or person) for a period of three years following the date that such stockholder became an interested stockholder, unless: (1) prior to such date, the Board of Directorsdirectors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (2) on consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (3) on or subsequent to such date, the business combination is approved by the Board of Directorsdirectors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 of the Delaware General Corporation Law defines “business combination” to include: (1) any merger or consolidation involving the corporation and the interested stockholder; (2) any sale, transfer, pledge or other disposition of ten percent or more of the assets of the corporation involving the interested stockholder; (3) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; (4) any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or (5) the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

  

Listing of Common Stock

 

Our common stock is currently quoted on the OTCQB under the trading symbol “RBIZ.”

 

Transfer Agent

 

We have retained PacificAmerican Stock Transfer & Trust Company LLC as our transfer agent. They are located at, 4045 South Spencer Street, Suite 403, Las Vegas, Nevada 89119.6201 15th Avenue, Brooklyn, NY 11219. Their telephone number is (702) 361-3033.(718) 921-8200.

 

36

EXPERTS

 

The financial statements as of October 31, 20122014 and 20112013 and for the years then ended included in this Form S-1 Registration Statement have been so included in reliance on the reports of D’Arelli Pruzansky, P.A., an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

 

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION

FOR SECURITIES ACT LIABILITIES

 

Our directors and officers are indemnified as provided by the Delaware General Corporation Law and our Amended and Restated Certificate of Incorporation. Section 145 of the Delaware General Corporation Law provides that a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that: (1) his act or failure to act constituted a breach of his fiduciary duties as a director or officer; and (2) his breach of those duties involved intentional misconduct, fraud or a knowing violation of law. Our Certificate of Incorporation provides for indemnification of our directors and officers to the fullest extent permitted by Section 145 of the Delaware General Corporation Law.

 

This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. As a consequence of this provision, stockholders of our company will be unable to recover monetary damages against directors or officers for action taken by them that may constitute negligence or gross negligence in performance of their duties unless such conduct falls within one of the foregoing exceptions. The provision, however, does not alter the applicable standards governing a director’s or officer’s fiduciary duty and does not eliminate or limit the right of our company or any stockholder to obtain an injunction or any other type of non-monetary relief in the event of a breach of fiduciary duty.

 

LEGAL MATTERS

 

The validity of our common stock offered hereby will be passed upon for us by Gracin & Marlow, LLP, New York, New York.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We are subject to the informational requirements of the Exchange Act of 1934, and file annual and current reports, proxy statements and other information with the Commission. These reports, proxy statements and other information filed by us can be read and copied at the Commission’s Public Reference Room at 100 F Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The Commission also maintains a website that contains reports, proxy statements, information statements and other information concerning our company located at http://www.sec.gov. This prospectus does not contain all the information required to be included in the registration statement (including the exhibits), which we have filed with the Commission under the Securities Act and to which reference is made in this prospectus.

 

You may obtain, free of charge, a copy of any of our filings by writing or calling us at the following address and telephone number: 2690 Weston Road, Suite 200, Weston, Florida or calling (954) 888-9779. Our website address iswww.realbizmedia.com. The information contained on our website or that can be accessed through our website does not constitute part of this document.

REALBIZ MEDIA GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE AND NINE MONTH
PERIODS ENDED JULY 31, 2013 AND 2012
REALBIZ MEDIA GROUP, INC.
TABLE OF CONTENTS
PAGE
Consolidated Financial Statements:
Consolidated Balance SheetsF-2
Consolidated Statements of Operations and Comprehensive Income (Loss)F-3
Consolidated Statements of Cash FlowsF-4
Notes to Consolidated Financial StatementsF-5
F-1

RealBiz Media Group, Inc.  
Consolidated Balance Sheets
  July 31, 2013 October 31, 2012 
  (unaudited)    
ASSETS       
Current Assets:       
Cash and cash equivalents $19,700 $36,408 
Accounts receivable, net  134,623  31,669 
Stock subscription receivable  5,000  - 
Prepaid and other assets  10,233  - 
Total current assets  169,556  68,077 
        
Property, plant and equipment, net  42,149  - 
Intangible assets  3,854,915  4,796,978 
Total Assets $4,066,620 $4,865,055 
        
LIABILITIES AND SHAREHOLDERS' EQUITY       
Current Liabilities:       
Accounts payable and accrued liabilities $860,478 $836,961 
Deferred revenue  35,821  41,859 
Due to affiliate  1,257,020  835,729 
Convertible Notes Payable  605,000  615,264 
Loans payable  29,615  50,000 
Total current liabilities  2,787,934  2,379,813 
        
Total liabilities  2,787,934  2,379,813 
        
Shareholders' Equity       
Series A Preferred stock, $.001 par value; 125,000,000 authorized; and 94,009,762 shares issued and outstanding at July 31, 2013 and 100,000,000 shares issued and outstanding at October 31, 2012, respectively  94,010  100,000 
Common stock, $.001 par value; 125,000,000 shares authorized; 24,849,831 shares issued and outstanding at July 31, 2013 and 383,651 shares issued and outstanding at October 31, 2012, respectively  24,850  383 
Additional paid in capital  11,440,736  8,482,483 
Affiliate advances  (2,369,875)  - 
Other comprehensive income (loss)  25,763  (5,849) 
Accumulated deficit  (7,936,798)  (6,091,775) 
Total Shareholders' Equity  1,278,686  2,485,242 
        
Total Liabilities and Shareholders' Equity $4,066,620 $4,865,055 
See accompanying notes to unaudited consolidated financial statements.
F-2

RealBiz Media Group, Inc.
Consolidated Statements of Operations
(unaudited)
  For the Three Months ended July 31, For the Nine Months ended July 31, 
  2013 2012 2013 2012 
              
Revenues $272,853 $278,606 $864,022 $896,226 
              
Cost of revenues  15,538  26,054  51,157  79,531 
              
Gross profit  257,315  252,552  812,865  816,695 
              
Operating expenses             
Salaries and benefits expenses  175,062  388,851  802,871  846,128 
Selling and promotion expenses  40,146  28,220  156,261  394,165 
General and administrative expenses  639,858  98,529  1,675,176  253,871 
Total Costs and Expenses  855,066  515,600  2,634,308  1,494,164 
              
Operating Loss  (597,751)  (263,048)  (1,821,443)  (677,469) 
              
Other income (expense)             
Loss on conversion of debt to equity  (1,066)  -  (1,066)  - 
(Loss) Gain on forgiveness of debt  -  -  384,304  (960) 
Exchange gain (loss)  (1,419)  5,097  (1,419)  5,097 
Other income (expense)  2,581  (83,779)  -  (68,779) 
Total Other Income (Expense), net  96  (78,682)  381,819  (64,642) 
              
Net Loss $(597,655) $(341,730) $(1,439,624) $(742,111) 
              
Preferred Stock Dividend  (125,261)  -  (405,399)  - 
              
Net Loss Applicable to Common Shareholders  (722,916)  (341,730)  (1,845,023)  (742,111) 
              
Weighted average numbers of shares outstanding  23,379,147  383,651  9,667,400  388,651 
              
Basic and diluted net loss per share $(0.03) $(0.89) $(0.19) $(1.91) 
Consolidated Statements of Comprehensive Loss
  For the Three Months ended July 31, For the Nine Months ended July 31, 
  2013  2012 2013 2012 
Net Loss $(722,916) $(341,730) $(1,845,023) $(742,111) 
Other comprehensive income (loss)             
Unrealized gains (losses) on currency translation adjustments  11,665  -  31,612  14,362 
Comprehensive loss $(711,251) $(341,730) $(1,813,411) $(727,749) 
See accompanying notes to unaudited consolidated financial statements.
F-3

RealBiz Media Group, Inc.  
Consolidated Statements of Cash Flows
  For the nine months ended 
  July 31, 
  2013 2012 
Cash flows from operating activities:       
Net loss $(1,439,624) $(742,111) 
Adjustments to reconcile net loss to net cash from operating activities:       
Gain on forgiveness of debt  (384,304)  - 
Other comprehensive loss  31,612  14,362 
Amortization of debt discount  -  - 
Amortization of intangibles  1,109,873  - 
Stock based compensation and consulting fees  63,418  - 
Gain on sale of royalty agreement to CEO  -  - 
Changes in operating assets and liabilities:       
(Increase) decrease in accounts receivable  (102,154)  1,252 
(Increase) decrease in subscription receivable  (5,000)  - 
(Increase) in due to/from affiliates  162,728  512,514 
(Increase) decrease in prepaid expenses  (691)  - 
(Increase) decrease in security deposits  (9,542)  - 
(Decrease) increase in accounts payable and accrued expenses  (7,842)  128,496 
(Decrease) increase in deferred revenue  (6,038)  (577) 
Decrease in other current liabilities  -  - 
Net cash used in operating activities  (587,564)  (86,064) 
        
Cash flows from investing activities:       
Purchase of computer equipment  (42,149)  - 
Payments towards website development costs  (168,610)  - 
Net cash used in investing activities  (210,759)  - 
        
Cash flows from financing activities:       
Proceeds from officer/shareholder convertible promissory note  -  - 
Principal payments on capital lease obligations  -  - 
Proceeds from loans payable  35,000  - 
Payments applied to loans payable  (55,385)  - 
Proceeds from the sale of common stock and warrants  802,000  - 
Net cash provided by financing activities  781,615  - 
Net decrease in cash  (16,708)  (86,064) 
        
Cash at beginning of period  36,408  111,237 
        
Cash at end of period $19,700 $25,173 
        
Supplemental disclosure:       
Cash paid for interest $1,066 $- 
Supplemental disclosure of non-cash investing and financing activity:       
Shares/Warrants issued for consulting:       
Common stock:       
Value $63,418 $- 
Shares  124,500  - 
Warrants  2,000  - 
        
Series A Preferred shares converted to common stock:       
Value $299,512 $- 
Shares  5,990,238  - 
        
Next 1 Interactive, Inc. Preferred Series B shares converted to common stock:       
Value $44,250 $- 
Shares  885,000  - 
        
Next 1 Interactive, Inc. Preferred Series C shares converted to common stock:       
Value $150,000 $- 
Shares  1,500,000  - 
        
Next 1 Interactive, Inc. Preferred Series D shares converted to common stock:       
Value $1,860,686 $- 
Shares  14,334,942  - 
        
Next 1 Interactive, Inc. convertible promissory notes converted to common stock:       
Value $56,376 $- 
Shares  27,500  - 
        
Conversion of convertible notes payable and accrued interest to common stock:       
Value $- $36,624 
Shares  -  18,312 
See accompanying notes to unaudited consolidated financial statements.
F-4

REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial information has been prepared by Realbiz Media Group, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities Act of 1933, as amended.  Accordingly, it does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of this financial information have been included.  Financial results for the interim period presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period.  This financial information should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10K for the year ended October 31, 2012. 

NOTE 2: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
On October 9, 2012 RealBiz Holdings, Inc. (RealBiz) n.k.a. Realbiz Media Group, Inc., formerly a private entity, was party to two transactions. In the first transaction shares of its common stock were acquired by an unrelated public company, Next 1 Interactive, Inc. (the Parent). This transaction was accounted for by the Parent as a business combination using the acquisition method of accounting. Accordingly, the fair value adjustments were "pushed down" to RealBiz's books in accordance with the SEC Staff Accounting Bulletin Topic 5J "New Basis of Accounting Required in Certain Circumstances. In the second transaction RealBiz entered into a reverse acquisition transaction with another public company, Webdigs, Inc. (Webdigs) whereby Webdigs acquired 100% of RealBiz in exchange for Webdigs issuing a voting preferred stock to the Parent giving the Parent control over Webdigs. This transaction was accounted for as a recapitalization of RealBiz. Webdigs then changed its name to Realbiz Media Group, Inc.
The chronological historical events leading to the above transactions are as follows:
On August 8, 2012, Next 1 Interactive, Inc., a Nevada corporation (“Next 1”) together with its subsidiary Next One Realty (the trade name for Next 1’s wholly owned subsidiary Attaché Travel International, Inc.) entered into a Purchase Agreement (“Acknew Purchase Agreement”) with Acknew Investments Inc. (“Acknew”) and RealBiz Holdings Inc. Under the Acknew Purchase Agreement, Next 1 had agreed to acquire from Acknew common shares of RealBiz Holdings, Inc. representing approximately an 85% ownership interest in RealBiz Holdings, Inc. RealBiz Holdings Inc. is the parent corporation of RealBiz 360, Inc. and RealBiz 360 Enterprise (Canada), Inc. (together referred to as “RealBiz”).
Pursuant to the Acknew Purchase Agreement, Next 1 and Webdigs, Inc. (“Webdigs” or the “Company”) would consummate a share exchange transaction contemplated by a Share Exchange Agreement dated April 5, 2012 (“Share Exchange Agreement”) by and between Next 1 and Webdigs. In that contemplated share exchange transaction, Next 1 would receive a controlling interest in Webdigs through its receipt of approximately 93 million shares of newly designated preferred stock representing approximately 92% of the total outstanding capital stock of Webdigs immediately after the transaction. In exchange, Next 1 would transfer its entire share ownership in Attaché Travel International, Inc. (Next One Realty) to Webdigs.
On October 9, 2012, Webdigs and Next 1 completed the transactions contemplated by the Share Exchange Agreement. Under the Share Exchange Agreement, Webdigs received all of the outstanding equity in Attaché Travel International, Inc. (“Attaché”). In exchange for Webdigs’s receipt of the Attaché shares from Next 1, Webdigs issued to Next 1 a total of 93 million shares of our newly designated Series A Convertible Preferred Stock (our “Series A Stock”). The exchange of Attaché shares in exchange for the Series A Stock of Webdigs is referred to as the “Exchange Transaction.”
As a condition to the closing of the Exchange Transaction, the Company changed its name from “Webdigs, Inc.” to “RealBiz Media Group, Inc.” on October 9, 2012, by engaging in a short-form parent-subsidiary merger in the State of Delaware.
F-5
REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 2: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Nature of Business
We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from advertising revenues, real estate broker commissions and referral fees. We have three divisions: (i) our fully licensed real estate division (formerly known as Webdigs); (ii) our TV media contracts (Extraordinary Vacation Homes/ Third home) division; and (iii) our Real Estate Virtual Tour and Media group (Realbiz 360). The cornerstone of all three divisions is our proprietary technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice and music. We provide video, search and purchase capabilities on multiple platform dynamics for web, mobile, interactivity on TV and Video On Demand. Once a video created using our proprietary technology, these home listing videos are automatically distributed to multiple media platforms (Television, broadband, web and mobile) for consumer viewing.
A more detailed description of our three sources of revenue is set forth below:
1.
Our Real Estate Virtual Tour and Media Group allows real estate agents to have a video created of their customer’s homes and then posted on television, over 200 real estate websites, You Tube, and mobile applications for a monthly fee of $89. The Company currently works with over 20,000 agents monthly. Though photos and virtual tours are listed as highly important on the home buyer’s lists, the astonishing growth of YouTube and Social Media fueled by the change in consumer demographics has left the Real Estate Industry scrambling to keep up. Our direct feed services into listing databases provide for the automated creation and syndication of Virtual Tours and YouTube Videos posted directly to YouTube Channels and promoted on Social Networks. These solutions continue to support our Agent/Broker revenue base through setup and monthly recurring fees. Due to the broad media exposure of highly targeted consumers, we believe that we will also be able to generate revenue from pre-roll/post-roll advertising for televisions, lead generation fees, banner ads and cross market advertising promotions, however to date our revenue from this division has been solely derived from the monthly fee paid to us by real estate agents. All of the Company’s revenue is currently derived from this division
2.
Through our Realtor.com Partnership we have expanded our home tour networks to include Video Portal, Widget and Mobile applications. We currently operate an INTERACTIVE VOD Network for Real Estate in conjunction with our partner Realtor.com. The network is branded under the name of Home Tour Network and is carried on Cox Communications and Comcast stations. In late May 2012, we signed a multiyear partnership with Realtor.com that included agreements to rebrand the network to “Realtor.com channel” and expand the network into 55 million households. Additionally we have been commissioned to develop a major real estate web portal and enhanced Widget/Microvideo app platforms to work in conjunction with Realtor.com and other major real estate brokerage groups. 
3.
Our fully licensed real estate division (formerly known as Webdigs) can derive revenue from its licensed broker that engage in traditional real estate sales We have participating brokers licensed in 38 states and believe that this division is positioned to take advantage of the improving real estate market. 
F-6
REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 2: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of Consolidation
The consolidated financial statements for the three and nine months ended July 31, 2013 and 2012 include the operations of Webdigs, Inc., which includes the dormant wholly owned subsidiaries of Home Equity Advisors, LLC, and Credit Garage, LLC from the recapitalization date of October 9, 2012, and the historical operations of RealBiz Media Group, Inc, which includes its subsidiaries RealBiz 360 Enterprise (Canada), Inc. and RealBiz 360, Inc. All significant intercompany accounts and transactions have been eliminated in the consolidation.
On May 17, 2012, the Company effected a 1 for 200 reverse stock split. All share and per share information in the consolidated financial statements presented has been retrospectively adjusted for the split.
Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted. Significant estimates are used in accounting for certain items such as allowance for doubtful accounts, depreciation, amortization and stock based compensation.
Cash and Cash Equivalents
For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents.
Accounts Receivable
The Company provides its marketing and promotional services to agents or brokers via a web-based portal that allows for credit card payments. The Company recognizes accounts receivable for amounts uncollected from the credit card service provider at the end of the accounting period. The Company regularly reviews outstanding receivables and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company maintains reserves for potential credit losses, and such losses traditionally have been within its expectations. 
Intangible Assets
In accordance with ASC 350-30-65 “Goodwill and Other Intangible Assets, the Company assesses the impairment of identifiable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include the following:
1.Significant underperformance to expected historical or projected future operating results;
2.Significant changes in the manner or use of the acquired assets or the strategy for the overall business; and
3.Significant negative industry or economic trends.
When the Company determines that the carrying value of an intangible asset may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flow, the Company records an impairment charge equal to the amount book value exceeds fair value. The Company measures fair value based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent to the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
Intangible assets that have finite useful lives are amortized over their estimated useful lives.
F-7
REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Convertible Debt Instruments
The Company records debt net of debt discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and loans payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
Revenue Recognition
The Company provides its marketing and promotional services to agents or brokers via a web-based portal that allows for credit card payments. Customers may pay a monthly recurring fee or an annual fee. Some customers additionally pay a one-time set up fee. Monthly recurring fees are recognized in the month the service is rendered. Collection of one-time set up fees and annual services fees give rise to recognized monthly revenue in the then-current month as well as deferred revenue liabilities representing the collected fee for services yet to be delivered.
Cost of Revenues
Cost of revenues includes costs attributable to services sold and delivered. These costs include such items as credit card fees, sales commission to business partners, expenses related to our participation in industry conferences, and public relations expenses.
Share-Based Compensation
The Company computes share based payments in accordance with Accounting Standards Codification 718-10 “Compensation” (ASC 718-10). ASC 718-10 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services at fair value, focusing primarily on accounting for transactions in which an entity obtains employees services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of an entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50 “Equity Based Payments to Non-Employees”. The Company estimates the fair value of stock options by using the Black- Scholes option pricing model. 
In March 2005, the SEC issued SAB No. 107, Share-Based Payment (“SAB 107”) which provides guidance regarding the interaction of ASC 718-10 and certain SEC rules and regulations. The Company has applied the provisions of SAB 107 in its adoption of ASC 718-10.
Other Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) and items defined as other comprehensive income (loss). Items defined as other comprehensive income (loss) include items such as foreign currency translation adjustments and unrealized gains and losses on certain marketable securities. For the nine months ended July 31, 2013 and 2012, the accumulated comprehensive gain was $31,612 and $14,362, respectively.
F-8
REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 2:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.
ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
Income (Loss) Per Share
Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period.
Diluted net income (loss) per common share is computed in the same manner, but also considers the effect of common stock shares underlying the following: 
  July 31,
2013
 July 31,
2012
 
Common stock options  1,000  4,000 
Common stock warrants  1,571,000  1,000 
Convertible note  4,033,000  - 
All of the common shares underlying the stock options and warrants above were excluded from diluted weighted average shares outstanding for the three and nine months ended July 31, 2013 and 2012 respectively because their effects were considered anti-dilutive.
Concentrations, Risks and Uncertainties
The Company’s operations are related to the real estate industry and its prospects for success are tied indirectly to interest rates and the general housing and business climates in the United States.
Recently Issued Accounting Pronouncements
In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04 ("ASU 2012-04"). The amendments in this update cover a wide range of topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not have a material impact on financial position or results of operations of the Company.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
F-9

REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 3: GOING CONCERN
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.
The Company has incurred net losses of $1,439,624 and $742,111 for the nine months ended July 31, 2013 and 2012 respectively. At July 31, 2013, the Company had a working capital deficit of $2,618,378 and an accumulated deficit of $7,936,798. It is management’s opinion that these facts raise substantial doubt about the Company’s ability to continue as a going concern without additional debt or equity financing. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
In order to meet its working capital needs through the next twelve months, the Company may consider plans to raise additional funds through the issuance of additional shares of common stock and or through the issuance of debt instruments. Although we intend to obtain additional financing to meet our cash needs, we may be unable to secure any additional financing on terms that are favorable or acceptable to us, if at all.

NOTE 4: INTANGIBLE ASSETS
At July 31, 2013, the Company’s intangible assets, related to a sales/marketing agreement, are as follows:
  July 31, 2013 
  Weighted
Average
Remaining
Useful Life
 Costs Accumulated
Amortization
 Net Carrying
Value
 
         ��   
Sales/Marketing Agreement 2.7 Years $4,796,178 $1,109,873 $3,686,305 
             
Web Site Development Costs (not placed in service) 0.0 Years  168,610  -  168,610 
             
    $4,964,788 $1,109,873 $3,854,915 
On October 3, 2012, Next 1 Interactive, Inc. (“Next 1”) entered a securities exchange agreement and exercised the option purchase agreement to purchase 664.1 common shares of Real Biz Holdings, Inc. Next 1 applied $300,000 of cash, issued a Series D Preferred stock subscription agreement for380,000 shares and agreed to a $50,000 thirty day (30) day post closing final buyout bringing the total value of the agreement to $2,250,000.
Next 1 accounted for the acquisition utilizing the purchase method of accounting in accordance with ASC 805 "Business Combinations". Next 1 is the acquirer for accounting purposes and Real Biz Holdings, Inc. is the acquired Company. Accordingly, Next 1 applied push-down accounting and adjusted to fair value all of the assets and liabilities directly on the financial statements of the subsidiary, Real Biz Holdings, Inc.
The net purchase price, including acquisition costs paid by Next 1, was allocated to assets acquired and liabilities assumed on the records of Next 1 as follows:
Cash $34,366 
Other current assets  40,696 
Intangible asset  4,796,178 
   4,871,240 
     
Accounts payable, accrued expenses and other miscellaneous payables  2,330,846 
Deferred revenue  48,569 
Convertible notes payable to officer  241,825 
   2,621,240 
Net purchase price $2,250,000 
For the nine months ended July 31, 2013, the Company recorded amortization of $1,109,873.
F-10

REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 5: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
At July 31, 2013, the Company’s accounts payable and accrued liabilities are as follows:
  July 31, 2013 
Trade payables and accruals $322,202 
Preferred stock dividend accruals  413,900 
Payroll and commissions  124.376 
Total accounts payable and accrued liabilities $860,478 

NOTE 6: ADVANCES FROM NEXT 1 INTERACTIVE, INC.
During the normal course of business, Next 1, our parent, makes operating advances for operating expenses to RealBiz. As of July 31, 2013, RealBiz owed Next 1 $1,257,020 as a result of such advances. 

NOTE 7: LOANS AND NOTES PAYABLE
As of July 31, 2013, as part of the Acknew Purchase Agreement, the remaining obligation to Acknew totaled $-0-. This payment obligation of $50,000 was satisfied on March 22, 2013 resulting in a gain on forgiveness of notes and loans payable of $374,040.
As of July 31, 2013, the Company has Convertible Notes Payable in the aggregate of $605,000 outstanding. This Note is convertible into the Company’s common stock at $0.15 per share and bears no interest. The original Convertible Note Payable of $615,264 was sold by the Note holder and $10,264 was forgiven.
As of July 31, 2013, the Company has a one year Loan Payable with a remaining obligation of $29,615. The Original Loan of $35,000 was used to purchase equipment and bears interest of19%.

NOTE 8: SHARE-BASED COMPENSATION
The Company recognizes compensation expense for stock option grants over the requisite service period for vesting of the award.
Stock Options outstanding, after taking into account a200 for 1 reverse stock split on May 17, 2012, at July 31, 2013, are1,000 options at $50 per share and the weighted average remaining term is1.5 years. The aggregate intrinsic value represents the difference between the closing stock price on July 31, 2013 and the exercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised their options on July 31, 2013.  There were no options exercised during the three and nine months ended July 31, 2013.
F-11

REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 9: SHAREHOLDERS’ EQUITY
As of July 31, 2013, the Company had 125,000,000 shares of common stock authorized with a par value of $0.001 and125,000,000 shares of preferred stock authorized with a par value of $0.001.
Common Stock
On October 9, 2012 the Company recapitalized by being acquired by a public company which resulted in a deemed issuance of383,009 shares of common stock to the original shareholders of the public entity, a deemed issuance of7,000,000 Preferred Series A voting shares to the original shareholders of the public entity, and a new issuance of93,000,000 Preferred Series A voting shares. Total net liabilities of $977,575 were assumed in the recapitalization.
During the nine months ended July 31, 2013, the Company:
·
Issued1,604,000 shares of its common stock along with1,569,000 one year warrants with an exercise price of $1 for cash proceeds of $802,000, or $0.50 per unit.
·
Issued124,500 shares of its common stock along with2,000 one year warrants with an exercise price of $1 for a total value of $63,418 for consulting fees rendered. The value of the common stock issued was based on the fair value of the stock, based on quoted traded prices, at the time of issuance. The value of the warrants was estimated at the time of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of0.12%, dividend yield of -0-%, volatility factor of177.07% and expected life of one year.
·
Issued16,747,442 shares of its common stock valued at $2,111,311 upon the conversion by parent company investors of convertible preferred shares and promissory notes of the parent company Next 1 Interactive, Inc. These common share issuances are treated as an equity distribution to the parent company.
·
Issued5,990,238 shares of its common stock valued at $299,512 upon the conversion of 5,990,238 shares of the Company's Series A Preferred stock to the former CEO of Webdigs.
Entered into a stock subscription agreement for20,000 common shares valued at $10,000, receiving cash proceeds of $5,000, leaving a stock subscription receivable of $5,000. This receivable was collected in August 2013.
Common Stock Warrants
At July 31, 2013, there were 1,571,000 warrants outstanding with a weighted average exercise price of $1.00 and weighted average life of1 year. During the three months ended July 31, 2013, the Company issued1,119,000 warrants, none were exercised and none expired.
Preferred Stock Series A
As of July 31, 2013, the Company had 94,009,762 shares of Series A Preferred stock issued and outstanding respectively. The Preferred shares were issued pursuant to the recapitalization and share exchange in fiscal 2012 (Note1). The preferred shares were issued at $.001 par, bear dividends at an annual rate of10% per annum payable on a quarterly basis when declared by the board of directors. Dividends accrue whether or not they have been declared by the board. At the election of the Company, Preferred Dividends may be converted into Series A Stock, with each converted share having a value equal to the Market Price per share, subject to adjustment for stock splits. In order to exercise such option, the Company delivers written notice to the holder. Each share of Series A Stock is convertible at the option of the holder thereof at any time into a number of shares of Common Stock determined by dividing the Stated Value ($1.00 per share) by the Conversion Price then in effect. The conversion price for the Series A Stock is equal to $1.00 per share.
F-12
REALBIZ MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended July 31, 2013 and 2012
NOTE 9: SHAREHOLDERS’ EQUITY (continued)
As a result of push-down accounting applied in October 2012 (See Note 1) the Company originally recorded $5,016,506 of additional paid-in-capital.
Accrued but unpaid preferred stock dividends on the outstanding preferred shares totaled $413,900 as of July 31, 2013 and are included in accrued liabilities.
On February 27, 2013, the former CEO of Webdigs converted5,990,238 Series A Preferred Stock into 5,990,238 shares of Realbiz Common Stock.
During the nine months ended July 31, 2013, holders of preferred stock and convertible promissory notes of our Company’s parent company, Next 1 Interactive, Inc., converted their holdings into our common shares creating an Affiliate advance of $2,369,875.

NOTE 10: RELATED PARTY TRANSACTIONS
Advance from Affiliate
As of July 31, 2013, the Company owes $1,257,020 to Next 1 Interactive, Inc. due to advances received from Next 1 Interactive, Inc.

NOTE 11: SUBSEQUENT EVENTS
In May 2009, the FASB issued accounting guidance now codified as FASC Topic 855, “SubsequentEvents,” which establishes general standards of accounting for, and disclosures of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. ASC Topic 855 is effective for interim or fiscal periods ending after June 15, 2009. Accordingly, the Company adopted the provisions of ASC Topic 855 on June 30, 2009. The Company evaluated subsequent events for the period after July 31, 2013, and has determined that all events requiring disclosure have been made.
DuringAugust and Septemberof2013,theCompany:
·
received $559,860 in proceeds, net of $140 of bank charges, and issued1,220,000 shares of common stock and 1,220,000 one (1) year warrants with an exercise price of $1.00 valued at $560,000.
·
issued850,000 shares of common stock valued at $42,500 as requested by holders of Series B Preferred stock of our parent company, Next 1 Interactive, Inc, converting8,500 shares.
·
issued200,000 shares common stock as requested by convertible promissory debt holder of the Parent Company, Next 1 Interactive, Inc, converted principal valued at $10,000.
·
issued 356,300 shares of common stock and28,800 one (1) year warrants with an exercise price of $1.00 in exchange for services rendered valued at $202,467. The value of the common stock issued was based on the fair value of the stock at the time of issuance. The value of the warrants was estimated at date of grant using Black-Scholes option pricing model with the following assumptions: risk free interest rate from 0.13% to 0.14%, dividend yield of -0-%, volatility factor of 320.85% to 355.26% and expected life of1 year.
·Issued 200,000 shares of common stock as requested by the holder of the Convertible Notes Payable.  The principal amount converted was $10,000.
F-13

Financial Statements

DescriptionPage
Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statement of Stockholders’ Deficit F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Stockholders and Board of Directors

RealBiz Media Group, Inc.

 

 

We have audited the accompanying consolidated balance sheets of RealBiz Media Group, Inc. as of October 31, 20122014 and 20112013 and the related consolidated statements of operations and comprehensive loss andincome (loss), changes in stockholders’ equity, (deficit), and cash flows for each of the two years then ended.in the period ended October 31, 2014. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RealBiz Media Group, Inc. as of October 31, 20122014 and 20112013 and the results of theirits operations and theirits cash flows for each of the two years thenin the period ended October 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred net losses of $963,220$4,605,327 and $953,460$3,764,089 for the years ended October 31, 20122014 and 2011,2013, respectively and the Company had an accumulated deficit of $6,091,775$15,376,638 and a working capital deficit of $2,311,736$2,319,305 at October 31, 2012.2014. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ D’Arelli Pruzansky, P.A.

/s/ D’Arelli Pruzansky, P.A.

Certified Public Accountants

 

Boca Raton, Florida

February 14,12, 2015

RealBiz Media Group, Inc.

Consolidated Balance Sheets

  October 31, 
  2014  2013 
       
Assets        
Current Assets        
Cash $20,066  $1,304,374 
Accounts receivable, net of allowance for doubtful accounts  118,408   76,047 
Prepaid expenses  3,300   272 
Security deposits  -   345 
Total current assets  141,774   1,381,038 
         
Property and equipment, net  45,778   56,357 
Website development costs and intangible assets, net  3,701,144   4,254,582 
Due from affiliates  131,086   4,199 
Total assets $4,019,782  $5,696,176 
         
Liabilities and Stockholders' Equity        
Current Liabilities        
Accounts payable and accrued expenses $1,880,294  $1,257,032 
Deferred revenue  45,565   31,310 
Derivative liabilities  305,220   - 
Convertible notes payable, net of discount of $-0- and $-0-, respectively  60,000   280,000 
Loans payable  170,000   191,214 
Total current liabilities  2,461,079   1,759,556 
         
Convertible notes payable - long term, net of discount of $147,395 and $-0-, respectively  2,605   - 
         
Total liabilities  2,463,684   1,759,556 
         
Stockholders' Equity        
Series A convertible preferred stock, $.001 par value; 120,000,000 authorized and 66,801,653 shares issued and outstanding at October 31,2014; 100,000,000 authorized and 94,009,762 shares issued and outstanding at October 31, 2013.  66,802   94,010 
         
Series B convertible preferred stock, $.001 par value; 1,000,000 authorized and -0- shares issued and outstanding at October 31,2014 and 2013, respectively.  -   - 
         
Common stock, $.001 par value; 250,000,000 authorized and 84,980,282 shares issued and outstanding at October 31,2014; 125,000,000 authorized and 49,039,511 shares issued and outstanding at October 31, 2013.  84,980   49,040 
         
Additional paid-in-capital  16,610,912   14,179,044 
Subscription advances  130,000   13,500 
Accumulated other comprehensive income (loss)  40,042   (19,215)
Accumulated deficit  (15,376,638)  (10,379,759)
Total stockholders' equity  1,556,098   3,936,620 
Total liabilities and stockholders' equity $4,019,782  $5,696,176 

The accompanying notes are an integral part of these consolidated financial statements

RealBiz Media Group, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

  For the years ended 
  October 31, 
  2014  2013 
       
Revenues        
Real estate media revenue $1,090,674  $1,145,540 
         
Cost of revenues  414,652   60,297 
         
Gross profit  676,022   1,085,243 
         
Operating expenses        
Salaries and benefits  1,152,600   1,231,425 
Selling and promotions expense  254,575   253,628 
Impairment of intangible assets  125,000   - 
General and administrative  3,698,034   3,306,194 
Total operating expenses  5,230,209   4,791,247 
         
Operating loss  (4,554,187)  (3,706,004)
         
Other income (expense)        
Interest expense  (3,919)  (442,341)
Derivative liability expense  (234,303)  - 
Gain on change on fair value of derivative liabilities  9,323   - 
Gain on forgiveness of notes payable and accrued expenses  -   384,304 
Exchange gain (loss)  1,659   592 
Other income (expense)  176,100   (640)
Total other income (expense)  (51,140)  (58,085)
         
Net loss $(4,605,327) $(3,764,089)
         
Preferred Stock Dividend  (391,552)  (523,895)
         
Net loss attributable to common stockholders $(4,996,879) $(4,287,984)
         
Weighted average number of shares outstanding  65,628,920   16,258,725 
         
Basic and diluted net loss per share $(0.08) $(0.26)
         
Comprehensive income (loss):        
Unrealized gain (loss) on currency translation adjustment  59,257   (13,366)
Comprehensive loss $(4,937,622) $(4,301,350)

The accompanying notes are an integral part of these consolidated financial statements.

RealBiz Media Group, Inc.

Consolidated Statement of Changes in Stockholders' Equity

For the years ending October 31, 2014 and 2013

 

  Preferred Stock A  Common Stock                
  # of shares  Par  # of shares  Par  Additional
Paid-In
Capital
  Subscription
Advances
  Other
Comprehensive
Income
  Accumulated
Deficit
  Total
Stockholders'
Equity
 
Balance, October 31, 2012  100,000,000  $100,000   383,651  $383  $8,482,483  $-  $(5,849) $(6,091,775) $2,485,242 
                                     
Shares issued for cash proceeds          7,646,000   7,646   3,818,354               3,826,000 
Exercise of warrants for cash proceeds          50,000   50   49,950               50,000 
Shares issued for consulting          607,600   608   645,422               646,030 
Shares issued for conversion of Series A Preferred shares  (5,990,238)  (5,990)  5,990,238   5,990                   - 
Shares issued for conversion of Next 1 Interactive, Inc. Preferred stock:                                    
Series B          10,495,000   10,495   514,255               524,750 
Series C          1,500,000   1,500   148,500               150,000 
Series D          19,122,624   19,123   2,850,250               2,869,373 
Shares issued upon conversion of promissory notes issued by the parent          977,732   978   3,752,171               3,753,149 
Constructive distributions related to the conversion of preferred shares and debt issued by the parent into shares of the Company's common stock                  (7,263,074)              (7,263,074)
Shares issued for conversion of convertible promissory notes          2,166,666   2,167   322,833               325,000 
Beneficial conversion feature of convertible promissory notes                  440,000               440,000 
Shares issued for  website development costs          100,000   100   417,900               418,000 
Preferred stock dividend(s)                              (523,895)  (523,895)
Other comprehensive loss                          (13,366)      (13,366)
Advances                      13,500           13,500 
Net Income (Loss)                              (3,764,089)  (3,764,089)
Balance, October 31, 2013  94,009,762  $94,010   49,039,511  $49,040  $14,179,044  $13,500  $(19,215) $(10,379,759) $3,936,620 
                                     
Shares issued for cash proceeds          4,163,712   4,164   838,504               842,668 
Exercise of warrants for cash proceeds          2,975,111   2,975   663,545               666,520 
Shares issued for consulting          2,134,430   2,134   967,931               970,065 
Shares issued for ReachFactor assets          2,000,000   2,000   298,000               300,000 
Shares issued to ReachFactor executives as part of assets purchase price          2,000,000   2,000   298,000               300,000 
Shares issued for conversion of Next 1 Interactive, Inc. Preferred stock:                                    
Series B          14,765,000   14,765   723,485               738,250 
Series C          1,300,000   1,300   128,700               130,000 
Series D          1,937,973   1,939   288,786               290,725 
Shares issued upon conversion of promissory notes issued by the parent          3,100,000   3,100   151,900               155,000 
Constructive distributions related to the conversion of preferred shares and debt issued by the parent into shares of the Company's common stock                  (10,932,591)              (10,932,591)
Shares issued for conversion of convertible promissory notes          1,466,666   1,467   218,533               220,000 
Warrants exercised in lieu of consulting fees          70,879   71   12,686               12,757 
Issuance of Series A Preferred shares based upon the "top up" provision in the certificate of designation  25,990,238   25,990           5,170,730               5,196,720 
Reduction of Series A Preferred for conversion of Next 1 Interactive, Inc. Preferred stock and convertible debt  (53,198,347)  (53,198)          (1,233,884)              (1,287,082)
Warrants issued for debt modification of Next 1 Interactive, Inc. convertible promissory note                  4,809,308               4,809,308 
Warrants issued with convertible promissory note                  14,760               14,760 
Preferred stock dividend(s)                              (391,552)  (391,552)
Other comprehensive income (loss)                          59,257       59,257 
Settlement of prior year advances by issuance of common shares          27,000   27   13,473   (13,500)          - 
Advances                      130,000           130,000 
Net Income (Loss)                              (4,605,327)  (4,605,327)
Balance, October 31, 2014  66,801,653  $66,802   84,980,282  $84,892  $16,610,910  $130,000  $40,042  $(15,376,638) $1,556,098 

 

 The accompanying notes are an integral part of these consolidated financial statements.

RealBiz Media Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

RealBiz Media Group, Inc.
Consolidated Balance Sheets
  For the years ended 
  October 31, 
  2014  2013 
Cash flows from operating activities:        
Net loss $(4,605,327) $(3,764,089)
Adjustments to reconcile net loss to net cash from operating activities:        
Gain on forgiveness of notes payable and accrued expenses  -   (384,304)
Amortization and depreciation  1,791,202   1,380,186 
Amortization of beneficial conversion feature  -   440,000 
Impairment of intangible assets  125,000   - 
Gain on change in fair value of derivative liabilities  (9,323)  - 
Initital derivative liability expense  234,303   - 
Bad debt expense  -   76,823 
Consulting fees incurred from loans payable  -   120,000 
Stock based compensation and consulting fees  982,823   646,030 
Changes in operating assets and liabilities:        
Increase in accounts receivable  (42,361)  (120,401)
Increase in prepaid expenses  (3,028)  (272)
Decrease (increase) in security deposits  345   (345)
Increase  in accounts payable and accrued expenses  231,708   263,776 
Decrease in due to/from affiliates  (1,026,556)  (805,731)
Increase (decrease) in deferred revenue  14,255   (10,549)
Net cash used in operating activities  (2,306,959)  (2,158,876)
         
Cash flows from investing activities:        
Purchase of computer equipment  (5,835)  (59,195)
Payments towards software developments costs  (52,190)  - 
Payments towards website development costs  (691,555)  (411,311)
Net cash used in investing activities  (749,580)  (470,506)
         
Cash flows from financing activities:        
Proceeds from loans payable  -   85,000 
Proceeds from convertible promissory notes  95,000   - 
Payments applied to loans payable  (21,214)  (63,786)
Proceeds from subscription advances  130,000   13,500 
Proceeds from the sale of common stock and warrants  842,668   3,826,000 
Proceeds from the exercise of outstanding warrants  666,520   50,000 
Net cash provided by financing activities  1,712,974   3,910,714 
         
Effect of exchange rate changes on cash  59,257   (13,366)
         
Net decrease in cash  (1,284,308)  1,267,966 
         
Cash at beginning of period  1,304,374   36,408 
         
Cash at end of period $20,066  $1,304,374 
         
Supplemental disclosure:        
Cash paid for interest $1,314  $2,341 

 

  For the years ended 
  October 31, 
  2014  2013 
       
Supplemental disclosure of non-cash investing and financing activity:        
Series A Preferred shares converted to common stock        
Value $-  $299,512 
Shares  -   5,990,238 
         
Shares issued for the conversion of convertible promissory notes        
Value $220,000  $325,000 
Shares  1,466,666   2,166,666 
         
Shares issued for the ReachFactor agreement:        
Value $600,000  $- 
Shares  4,000,000   - 
         
Preferred stock dividends accrued:        
Value $391,552  $523,895 
         
Common shares issued for website development costs:        
Value $-  $418,000 
Shares  -   100,000 
         
Settlment of prior year advances for subscriptions of common stock:        
Value $13,500  $- 
Shares  27,000   - 
Warrants  9,000   - 
         
Next 1 Interactive, Inc. Preferred Series B shares converted to common stock:        
Value $738,250  $524,750 
Shares  14,765,000   10,495,000 
         
Next 1 Interactive, Inc. Preferred Series C shares converted to common stock:        
Value $130,000  $150,000 
Shares  1,300,000   1,500,000 
         
Next 1 Interactive, Inc. Preferred Series D shares converted to common stock:        
Value $290,725  $3,753,149 
Shares  1,937,973   19,122,624 
         
Next 1 Interactive, Inc. convertible promissory notes converted to common stock:        
Value $155,000  $3,753,149 
Shares  3,100,000   977,732 
         
Warrants issued for Next 1, Interactive Inc. debt modifications:        
Value $4,809,308  $- 
Warrants  12,000,000   - 
  For the years ended 
  October 31, 
  2014  2013 
       
Supplemental disclosure of non-cash investing and financing activity (continued):        
Series A Preferred shares issued for "top up" provision:        
Value $5,196,720  $- 
Shares  25,990,238   - 
         
Reduction of Series A Preferred shares for conversion of Next 1 Interactive, Inc.'s Preferred Shares and Debt:        
Value $1,287,082  $- 
Shares  53,198,347   - 
         
Costs associated with convertible promissory notes:        
Derivative liability expense $234,303  $- 
         
Loan origination fees $55,000  $- 

 

  October 31, 2012  October 31, 2011 
ASSETS     
Current Assets:        
Cash and cash equivalents $36,408  $111,237 
Accounts receivable, net  31,669   28,582 
Total current assets  68,077   139,819 
         
Intangible assets  4,796,978   - 
         
Total Assets $4,865,055  $139,819 
         
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)        
Current Liabilities:        
Accounts payable and accrued liabilities $836,961  $107,735 
Deferred revenue  41,859   51,112 
Advances from affiliate  835,729   201,660 
Loans payable  50,000   369,040 
Shareholder loans  615,264   - 
Total current liabilities  2,379,813   729,547 
         
Total liabilities  2,379,813   729,547 
         
Shareholders' Equity (Deficit):        
Common stock $.001 par value, 625,000 authorized, 383,651 and 642 issued and outstanding at October 31, 2012 and 2011 respectively.  383   1 
Preferred series A shares $.001 par value 100,000,000 authorized, 100,000,000 and 0 issued and outstanding at October 31, 2012 and 2011 respectively.  100,000   - 
Additional paid in capital  8,482,483   4,543,933 
Other comprehensive income (loss)  (5,849)  (5,107)
Accumulated deficit  (6,091,775)  (5,128,555)
Total Shareholders' Equity (deficit)  2,485,242   (589,728)
         
Total Liabilities and Shareholders' Equity (Deficit) $4,865,055  $139,819 

SeeThe accompanying notes toare an integral part of these consolidated financial statements.

 

RealBiz Media Group, Inc.
Consolidated Statements of OperationsF-7

  For the years ended October 31, 
  2012  2011 
       
Revenues        
Real estate revenues $1,125,077  $1,335,577 
Other revenue  47,421   221,393 
Total Revenue  1,172,498   1,556,970 
         
Cost of revenues  105,116   137,557 
         
Gross profit  1,067,382   1,419,413 
         
Operating expenses        
Salaries and benefits expenses  890,174   729,123 
Selling and promotion expenses  307,266   465,208 
General and administrative expenses  871,383   1,210,574 
Total Costs and Expenses  2,068,823   2,404,905 
         
Operating Loss  (1,001,441)  (985,492)
         
Other income (expense)        
Foreign exchange gain / (loss)  38,221   (19,177)
Gain on sale of marketable securities  -   110,552 
Other income (expense)  -   (59,343)
Total Other Income (Expense), net  38,221   32,032 
         
Net Loss $(963,220) $(953,460)
         
Other comprehensive income (loss)        
Unrealized gains (losses) on currency translation adjustments  (742)  13,403 
Other comprehensive income (loss)  (742)  13,403 
Comprehensive loss $(963,962) $(940,057)
         
Weighted average numbers of shares outstanding  383,651   642 
         
Basic and diluted net loss per share $(2.51) $(1,485.14)

See accompanying notes to consolidated financial statements.

RealBiz Media Group, Inc.
Consolidated Statements of Cash Flows

  For the years ended October 31, 
  2012  2011 
       
Cash flows from operating activities:        
Net loss $(963,220) $(953,460)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Gain on sale marketable securities  -   (110,552)
Changes in operating assets and liabilities:        
(Increase) decrease in accounts receivable  (3,087)  52,895 
Decrease in marketable securities  -   274,680 
(Increase) decrease in prepaid and other assets  -   2,079 
Increase in accounts payable & accrued libilities  378,319   31,460 
Increase in advances from affiliates  551,672   201,660 
Decrease in deferred revenue  (9,253)  (95,638)
Net cash used in operating activities  (45,569)  (596,876)
         
Cash flows from financing activities        
Proceeds from notes payable  -   513,490 
Payments of notes payable  (29,260)  (79,589)
Net cash used in financing activities  (29,260)  433,901 
         
Net decrease in cash and cash equivalents  (74,829)  (162,975)
         
Cash and equivalents, at beginning of period  111,237   274,212 
         
Cash and equivalents, at end of period $36,408  $111,237 
         
Supplemental disclosure of non-cash investing and financing activities:        
Push down fair value adjustment to net asset and additional paid-in-capital $5,016,506  $- 
Increase in liabilities - in connection with recapitalization of company $(1,077,957) $- 

See accompanying notes to consolidated financial statements.

RealBiz Media Group, Inc.
Consolidated Statement of Changes in Stockholders' Equity (Deficit)

Years Ending October 31, 2012 and 2011

       Other  Total 
              Additional     Comprehensive  Stockholders' 
  Preferred Series A  Common Stock  Paid-in  Accumulated  Income  Equity 
  Shares  Amount  Shares  Amount  Capital  Deficit  (Loss)  (Deficit) 
                                 
Balances at October 31, 2010  -  $-   642  $1  $4,543,933  $(4,175,095) $(18,510) $350,329 
                                 
                                 
Net Loss  -   -   -   -   -   (953,460)  13,403   (940,057)
                                 
Balances at October 31, 2011     $-   642  $1  $4,543,933  $(5,128,555) $(5,107) $(589,728)
                                 
Push down fair value adjustment  -   -   -   -   5,016,507   -   -   5,016,507 
                                 
Recapitalization of Company  100,000,000   100,000   383,009   382   (1,077,957)  -   -   (977,575)
                                 
Net Loss  -   -   -   -   -   (963,220)  (742)  (963,962)
                                 
Balances at October 31, 2012  100,000,000  $100,000   383,651  $383  $8,482,483  $(6,091,775) $(5,849) $2,485,242 

See accompanying notes to consolidated financial statements.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 20122014 and 2011

2013

 

NOTE 1: ORGANIZATION AND NATURE OF BUSINESS

 

Organization

 

On October 9, 2012 RealBiz Holdings, Inc. (RealBiz) n.k.a. RealbizRealBiz Media Group, Inc., formerly a private entity, was party to two transactions. In the first transaction it wasshares of its common stock were acquired by an unrelated public company, Next 1 Interactive, Inc. (the Parent). This transaction was accounted for by the Parent as a business combination using the acquisition method of accounting. Accordingly, the fair value adjustments were "pushed down" to RealBiz's books in accordance with the SEC Staff Accounting Bulletin Topic 5J "New Basis of Accounting Required in Certain Circumstances. In the second transaction the Parent, in order to make its new subsidiary, RealBiz a public company, had RealBiz enterentered into a reverse acquisition transaction with another public company, Webdigs, Inc. (Webdigs) whereby Webdigs acquired 100% of RealBiz in exchange for Webdigs issuing a voting preferred stock to the Parent giving the Parent control over Webdigs. This transaction was accounted for as a recapitalization of RealBiz. Webdigs then changed its name to RealbizRealBiz Media Group, Inc.

 

The chronological historical events leading to the above transactions are as follows:

 

On August 8, 2012, Next 1 Interactive, Inc., a Nevada corporation (“Next 1”) together with its subsidiary Next One Realty (the trade name for Next 1’s wholly owned subsidiary Attaché Travel International, Inc.) entered into a Purchase Agreement (“Acknew Purchase Agreement”) with Acknew Investments Inc. (“Acknew”) and RealBiz Holdings Inc. Under the Acknew Purchase Agreement, Next 1 hashad agreed to acquire from Acknew common shares of RealBiz Holdings, Inc. representing approximately an 85% ownership interest in RealBiz Holdings, Inc.RealBiz Holdings Inc. is the parent corporation of RealBiz 360, Inc. and RealBiz 360 Enterprise (Canada), Inc. (together referred to as “RealBiz”).

 

Pursuant to the Acknew Purchase Agreement, Next 1 and Webdigs, Inc. (“Webdigs” or the “Company”) would consummate a share exchange transaction contemplated by a Share Exchange Agreement dated April 5, 2012 (“Share Exchange Agreement”) by and between Next 1 and Webdigs. In that contemplated share exchange transaction, Next 1 would receive a controlling interest in Webdigs through its receipt of approximately 93 million shares of newly designated preferred stock representing approximately 92% of the total outstanding capital stock of Webdigs immediately after the transaction. In exchange, Next 1 would transfer its entire share ownership in NextAttaché Travel International, Inc. (Next One RealtyRealty) to Webdigs.

 

On October 9, 2012, Webdigs and Next 1 completed the transactions contemplated by the Share Exchange Agreement. Under the Share Exchange Agreement, Webdigs received all of the outstanding equity in Attaché Travel International, Inc. (“Attaché”). In exchange for our Webdigs’s receipt of the Attaché shares from Next 1, Webdigs issued to Next 1 a total of 93 million shares of our newly designated Series A Convertible Preferred Stock (our “Series A Stock”). The exchange of Attaché shares in exchange for ourthe Series A Stock of Webdigs is referred to as the “Exchange Transaction.”

  

As a condition to the closing of the Exchange Transaction, ourthe Company changed its name from “Webdigs, Inc.” to “RealBiz Media Group, Inc.” on October 9, 2012, by engaging in a short-form parent-subsidiary merger in the State of Delaware.

 

Nature of Business

 

RealBiz is aWe are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees, product sales, membership fees and advertising revenues. The company was formed through the merging of three divisions: (i) our fully licensed real estate division (formerly known as Webdigs); (ii) our TV media contracts (Home Preview Channel /Extraordinary Vacation Homes/) division; and (iii) our Real Estate Virtual Tour and Media group (Realbiz 360). The assets of these divisions were used to create a new suite of real estate products and services company that provides marketingcreate stickiness through the utilization of video, social media and promotional services to listing agents and brokers through itsloyalty programs. At the core of the company’s programs is our proprietary video processingcreation technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice and music. We provide video search, storage and marketing capabilities on multiple platform dynamics for web, mobile, and TV. Once a home, personal or virtual home tours.community video is created using our proprietary technology, it can be published to social media, email or distributed to multiple real estate websites, broadband or television for consumer viewing.

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees, product sales, membership fees and advertising revenues. RealBiz has positioned itself in the following three areas:areas summarized here and explained in more detail below:

 

1.Real Estate Video on Demand Channel - WeNestbuilder Agent:  This platform allows agents to claim and customize their own web page to be used as a video marketing platform. The site interacts with nestbuilder.com, ezflix and the HAAC allowing agents to create customized video of homes, themselves or community as well as being able to pull other MLS property listings to create specialized marketing messages. Additionally, the agent can view the effectiveness of their marketing efforts through a dashboard that shows multiple statistics including number of views, time spent, origination and lead generation. Additionally the agent can earn commissionspoints for their marketing actions that can be converted to Home & Away Club rewards dollars. This site will completely empower the real estate agent with content and fees on home sales, pre-roll/post-roll advertising, banner adsassets that they can use to pursue prospects and cross-market advertising promotions. We chargegenerate leads at a fraction of the cost they are currently paying.  
2.Ezflix Mobile App: The ezflix app is the only mobile/web video editor that pre-integrates with an agent’s listing data, allowing them to edit all of their listing’s data, and marketing feeconvert them into video with live video interstitial capabilities, audio recording and earn revenue from web-basedmusic.   Ezflix can then share videos to all social media, email, and mobile advertising.multiple other real estate portals including NestBuilder – giving agents a way to personalize their listing videos with entertaining local relevant content.  This application, both Web and Mobile, was initially launched in both the Android and iOS versions in January and February 2015. This platform as it evolves will combine our VT (Virtual Tour) and MVA (Microvideo App) platform into one solution and distribute to multiple partners and resellers including Photographer and Videographer service providers’ network. This product integration is expected to be complete by Q2 of 2015.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 1: ORGANIZATION AND NATURE OF BUSINESS (continued)

Nature of Business (continued)

  

3.2.WebsiteThe Virtual Tour (VT) and Mobile Applications - WeMicrovideo App (MVA): was developed and implemented to allow agents to access specific video based product strategies that are developing adesigned specifically to increase the SEO rank and traffic credit to real estate franchise systems and/or their brokers. This solution gives those franchises and brokers a much needed tool to lower their cost of prospect acquisition.  Currently, the strategy is to migrate our current client base of VT users to MVA’s and combine the total core offering into our EzFlix Mobile and Web based application during the second quarter of 2015.
4.NestBuilder: The world’s largest real estate video portal with over 1.5 million listings and is targeted to grow to over 3 million listings by mid 2015.  Unlike other leaders in the space that agents are seeking legitimate alternatives to, NestBuilder focuses on building agent’s brands and delivering high-quality leads. They achieve this by offering fully customizable webpages in NestBuilder Agent that will follow their homebuyer throughout the home search, ultimately turning NestBuilder.com into each agent’s very own national portal.
5.NestBuilder Mobile Search App: The app is currently available in the Google Play Store and should be available in the iOS version by March 2015.  The  app not only allows consumers to search and view homes in video but additionally  allows consumers to enter in their agent’s name, and effectively turn the NestBuilder app into the agent’s very own application where their branding follows the consumer along their home search journey, everywhere they go.

6.ReachFactor: A recently acquired full-marketing agency that specializes in real estate. ReachFactor offers a variety of solutions to agents and brokers such as web portaldesign, digital ad campaigns, blogging, social media management, reputation management, search engine optimization and much more.
7.

Enterprise Video Production: We service some of the largest and well known Franchisor accounts in the North America Real Estate Market in compiling listings into a Video format and distributing to work in conjunction with our national Video on Demand (VOD) Television Platform. This sitethose franchisors websites, brokers and agents and lead generation platforms 24/7. Some of these multiyear contracts have the Company producing over 10 million video listings from 2012-2014 and will be uniqueeclipsing that production in 2015 alone. This core area significantly contributes to the worldCompany’s growth not only in this core service but continues to allow us access to national databases and directly agents and brokers to allow the Company access to upgrades and upsell other core products and services.

8.Home and AwayClub: RealBiz excels at beginning and closing the agent-buyer relationship, but the reality of real estate search sites on multiple levels, firstis that the user experience willaverage homebuyer looks for a new home once every 8 years. As a result the majority of consumers have lost touch with their agent by the time their next home purchase happens. That’s why RealBiz has created the Home and Away Club so they can offer agents a means to stay in contact once the house is sold with a rewards program. With the Home and Away club, agents can earn rewards dollars for completing actions as well as purchasing club memberships that can be completely visualgifted to their clients. Additionally agents can predetermine times and video centric, secondly, the site will focus on local neighborhood participation for social interaction between home seekers and current residents who can provide an unbiased viewspecial events that they wish to have their client accounts topped up. All of the selected neighborhoodHome & Away Club members introduced by the agent remain part of the agents “circle of clients” with personalized messaging on all gifting of rewards. The rewards dollars   allows members to purchase a broad cross section of lifestyle, travel, merchandise and lastly the contenthome products at   greatly discounted pricing – thereby giving customers real values on the site will focus on the entire home ownership lifecycle from purchase through maintenance to home sale therefore giving the site a much deeper and more loyal audience over time.

3.Traditional Real Estate Sales - Our previous company, Webdigs, had licensed real estate brokerage division currently has participating brokers in 19 states. We believe there are potential opportunities to take advantage of an improving real estate market.products they want.

  

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation

 

The consolidated financial statements for the years ended October 31, 20122014 and 20112013 include the operations of Webdigs,RealBiz Media Group, Inc. and its wholly-owned subsidiary, Webdigs, LLC, which includes the dormant wholly owned subsidiaries of Home Equity Advisors, LLC, and Credit Garage, LLC from the recapitalization date of October 9, 2012 and the historical operations of RealBiz Media Group, Inc, which includes its subsidiaries RealBiz 360 Enterprise (Canada), Inc. and RealBiz 360, Inc. All significant intercompany accounts and transactions have been eliminated in the consolidation.

 

On May 17, 2012, the Company affected a 1 for 200 reverse stock split. All share and per share information in the consolidated financial statements presented has been retrospectively adjusted for the split.

Use of Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.

 

Cash and Cash Equivalents

 

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. There were no cash equivalents for the years ended October 31, 2014 and 2013.

F-9

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Accounts Receivable

 

The Company provides its marketing and promotional services to agents or brokers via a web-based portal that allows for credit card payments. The Company recognizes accounts receivable for amounts uncollected from the credit card service provider at the end of the accounting period.The Company regularly reviews outstanding receivables and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company maintains reserves for potential credit losses, and such losses traditionally have been within its expectations. For the years ended October 31, 2014 and 2013, the Company determined the allowance for doubtful accounts to be $-0- and $76,823, respectively.

 

Property and Equipment

All expenditures on the acquisition for property and equipment are recorded at cost and capitalized as incurred, provided the asset benefits the Company for a period of more than one year. Expenditures on routine repairs and maintenance of property and equipment are charged directly to operating expense. The property and equipment is depreciated based upon its estimated useful life after being placed in service. The estimated useful life of computer equipment is 3 years. When equipment is retired, sold or impaired, the resulting gain or loss is reflected in earnings. The Company incurred depreciation expense of $16,414 and $2,838 for the years ended October 31, 2014 and 2013, respectively.

Impairment of Long-Lived Assets

In accordance with Accounting Standards Codification 360-10, “Property, Plant and Equipment”, the Company periodically reviews its long- lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. For the years ended October 31, 2014 and 2013, the Company did not impair any long-lived assets.

Website Development Costs

The Company accounts for website development costs in accordance with Accounting Standards Codification 350-50 “Website Development Costs”. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day to day operation of the website are expensed as incurred.

Software Development Costs

The Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by "ASC 985-20-25" Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requiring certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software and hardware technologies. Amortization of the capitalized software development costs begins when the product is available for general release to customers. Capitalized costs are amortized based on the greater of (a) the ratio of current gross revenues to the total current and anticipated future gross revenues, or (b) the straight-line method over the remaining estimated economic life of the product. For the year ended October 31, 2014, the Company has capitalized of costs associated with the development of a mobile app that has not been placed into service.

Goodwill and Other Intangible Assets

In accordance with ASC 350-30-65 “Goodwill and Other Intangible Assets,Assets", the Company assesses the impairment of identifiable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include the following:

 

1.Significant underperformance compared to expected historical or projected future operating results;

 

2.Significant changes in the manner or use of the acquired assets or the strategy for the overall business; and

 

3.Significant negative industry or economic trends.

F-10

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Goodwill and Other Intangible Assets (continued)

 

When the Company determines that the carrying value of an intangible manymay not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flow, the Company records an impairment charge equal to the amount that the book value exceeds fair value. The Company measures fair value based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent to the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. The Company did not consider it necessary to record an impairment charge of $125,000 and $-0- on its intangible assets during the years ended October 31, 20122014 and 2011.2013, respectively.

 

Intangible assetsIntellectual properties that have finite useful lives are amortized over their useful lives. The Company incurred amortization expense of $1,772,183 and $1,377,348 for the years ended October 31, 2014 and 2013, respectively.

Derivative Instruments

The Company enters into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument.

The Company estimates fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered consistent with the objective measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as freestanding warrants, the Company generally uses the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and assumption changes. Under the terms of the new accounting standard, increases in the trading price of the Company’s common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.

Based upon ASC 815-25 the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible debentures. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date. 

 

Convertible Debt Instruments

 

The Company records debt net of debt discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt.

 

Fair Value of Financial Instruments

 

The Company adopted ASC topic 820, “Fair Value Measurements and Disclosures” (ASC 820), formerly SFAS No. 157 “Fair Value Measurements,” effective January 1, 2009. ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There was no impact relating to the adoption of ASC 820 to the Company’s consolidated financial statements.

F-11

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments (continued)

ASC 820 also describes three levels of inputs that may be used to measure fair value:

Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Financial instruments consist principally of cash, and cash equivalents, accounts receivable, prepaid expenses, due from affiliates, accounts payable, accrued expenses, notes payable, commissionsliabilities and fees payable, and interest payable.other current liabilities. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their respective estimatedfair values due to their relatively short- term nature. The fair value dueof long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities. The carrying amounts approximate fair value. It is management’s opinion that the Company is not exposed to the short-term maturities and approximate market interest rates ofany significant currency or credit risks arising from these financial instruments.

 

Revenue Recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exits; (2) delivery has occurred or services have been rendered; (3) the Company's price to its customer is fixed or determinable and (4) collectability is reasonably assured.

 

The Company provides its marketing and promotional services to agents or brokers via a web-based portal that allows for credit card payments. Customers may pay a monthly recurring fee or an annual fee. Some customers additionally pay a one-time set up fee. Monthly recurring fees are recognized in the month the service is rendered. Collection of one-time set up fees and annual services fees give rise to recognized monthly revenue in the then-current month as well as deferred revenue liabilities representing the collected fee for services yet to be delivered.

 

Cost of Revenues

 

Cost of revenues includes costs attributable to services sold and delivered. These costs include such items as credit card fees, sales commission to business partners, expenses related to our participation in industry conferences, and public relations expenses.

 

Advertising Expense

Advertising costs are charged to expense as incurred and are included in selling and promotions expense in the accompanying unaudited consolidated financial statements. Advertising expense for the years ended October 31, 2014 and 2013 was $46,380 and $138,226, respectively.

Share-Based Compensation

 

The Company computes share based payments in accordance with Accounting Standards Codification 718-10 “Compensation” (ASC 718-10). ASC 718-10 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services at fair value, focusing primarily on accounting for transactions in which an entity obtains employees services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of an entity’s equity instruments or that may be settled by the issuance of those equity instruments.

In March 2005, the SEC issued SAB No. 107, Share-Based Payment (“SAB 107”) which provides guidance regarding the interaction of ASC 718-10 and certain SEC rules and regulations. The Company has applied the provisions of SAB 107 in its adoption of ASC 718-10. The Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50, Equity Based Payments to Non-Employees. The Company estimates the fair value of stock options by using the Black-Scholes option pricing model.

 

Foreign Currency and Other Comprehensive Income (Loss)

 

ComprehensiveThe functional currency of our foreign subsidiaries is typically the applicable local currency. The translation from the respective foreign currencies to United States Dollars (U.S. Dollar) is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income (loss) includes net income (loss) and items definedstatement accounts using a weighted average exchange rate during the period. Gains or losses resulting from such translation are included as a separate component of accumulated other comprehensive income. Gains or losses resulting from foreign currency transactions are included in foreign currency income (loss). Items defined asor loss except for the effect of exchange rates on long-term inter-company transactions considered to be a long-term investment, which are accumulated and credited or charged to other comprehensive income (loss) include items such as foreign currency translation adjustmentsincome.

F-12

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and unrealized2013

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency and Other Comprehensive Income (Loss) (continued)

Transaction gains and losses are recognized in our results of operations based on certain marketable securities.the difference between the foreign exchange rates on the transaction date and on the reporting date. The Company recognized net foreign exchange gains of $1,659 and $592 for years ended October 31, 2014 and 2013, respectively. The foreign currency exchange gains and losses are included as a component of other (income) expense, net, in the accompanying Consolidated Statements of Operations. For the years ended October 31, 20122014 and 2011,2013, the increase in accumulated comprehensive gain was $59,257 and a loss of $19,215, respectively.

The exchange rate adopted for the foreign exchange transactions are the rates of exchange as quoted on an internet website. Translation of amount from Canadian dollars into United States dollars was ($5,849) and ($5,107), respectively.made at the following exchange rates for the respective periods:

·As of October 31, 2014 - Canadian dollar $0.89330 to US $1.00

·For the year ended October 31, 2014 - Canadian dollar $0.92341 to US $1.00

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities and net operating loss and tax credit carryforwards given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.

 

ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company's tax returns for its October 31, 2013, 2012 and 2011 tax years may be selected for examination by the taxing authorities as the statute of limitations remains open.

 

Income (Loss)Earnings Per Share

 

Basic net income (loss)earnings per common share is computed by dividing the net income (loss) attributable to common shareholdersstockholders by the weighted average number of shares of common stock outstanding during the period.

 

Diluted earnings per share is computed by dividing net income (loss)attributable to common stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Diluted loss per common share is computed in the same manner, but also considers the effect ofconsidered to be equal to basic because it is anti-dilutive. The Company’s common stock shares underlyingequivalents include the following:

 

  October 31, 2012  October 31, 2011 
Common stock options  4,000   4,000 
Common stock warrants  -   200,000 
  October 31,
2014
  October 31,
2013
 
Series A convertible preferred stock issued and outstanding  66,801,653   94,009,762 
Warrants to purchase common stock issued, outstanding and exercisable  15,378,858   8,325,832 
Stock options issued, outstanding and exercisable  -   1,000 
Shares on convertible promissory notes  3,476,923   1,866,667 
   85,657,434   104,203,261 

F-13

 

All ofREALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the common shares underlying the stock options and warrants above were excluded from diluted weighted average shares outstanding for the years endedYears Ended October 31, 20122014 and October 31, 2011 respectively because their effects were considered anti-dilutive.2013

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Concentrations, Risks and Uncertainties

 

The Company’s operations are related to the real estate industry and its prospects for success are tied indirectly to interest rates and the general housing and business climates in the United States.

 

Reclassifications

Certain reclassifications have been made in the consolidated financial statements for comparative purposes.  These reclassifications have no effect on the results of operations or financial position of the Company.

Recently Issued Accounting Pronouncements

 

Effective January 1, 2012,In May 2014, the Company adoptedFASB issued ASU 2011-05, PresentationNo. 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Undernonfinancial assets unless those contracts are within the two-statement approach, the first statement would include components of net income, and the second statement would include componentsscope of other comprehensive income.standards (for example, insurance contracts or lease contracts). This ASU doeswill supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the codification. Additionally, this ASU supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The guidance's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied. The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016, for public companies. Early adoption is not changepermitted. The Company is still evaluating the items that must be reported in other comprehensive income. . The adoptionprovisions of ASU 2011-05 did not have a material2014-09 and its impact on the Company’s interim unaudited consolidated financial statements.

Effective January 1, 2012, the Company adopted ASU 2011-08, Intangibles – Goodwill and Other (“ASU 2011-08”). ASU 2011-08 permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity concludes it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it need not perform the two-step impairment test. The adoption of ASU 2011-08 did not have a material impact on the Company’s interim unaudited consolidated financial statements.

In July 2012, the Financial Accounting Standards Board (FASB) amended ASC 350, “Intangibles — Goodwill and Other”. This amendment is intended to simplify how an entity tests indefinite-lived assets other than goodwill for impairment by providing entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. The amended provisions will be effective for the Company beginning in the first quarter of 2014, and early adoption is permitted. This amendment impacts impairment testing steps only, and therefore adoption will not have an impact on the Company’sCompany's consolidated financial position, results of operations or cash flows.

 

In August 2012,April 2014, the FASB issued Accounting Standards Update (“ASU”) 2012-03, “Technical AmendmentsASU 2014-08, “Presentation of Financial Statements and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250,Property, Plant, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)Equipment,(ASU 2014-08). This ASU changes the threshold for reporting discontinued operations and adds new disclosures. The new guidance defines a discontinued operation as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on our operations and financial results.” For disposals of individually significant components that do not qualify as discontinued operations, the Company must disclose pre-tax earnings of the disposed component. This guidance is effective for us prospectively for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant tofinancial statements previously issued or available for issuance. The Company does not expect the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expectedthis guidance to have a material impact on financial position or results of operations of the Company.

In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04 ("ASU 2012-04"). The amendments in this update cover a wide range of topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on financial position or results of operations of the Company.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanyingour consolidated financial statements.

 

NOTE 3: GOING CONCERN

 

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.

 

The Company has incurred a net losses of $963,220$4,605,327 and $953,460$3,764,089 for the years ended October 31, 20122014 and 20112013, respectively. At October 31, 2012,2014, the Company had a working capital deficit of $2,311,736,$2,319,305, and an accumulated deficit of $6,091,775.$15,376,638. It is management’s opinion that these facts raise substantial doubt about the Company’s ability to continue as a going concern without additional debt or equity financing. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

In order to meet its working capital needs through the next twelve months, the Company may consider plans to raise additional funds through the issuance of additional shares of common or preferred stock and or through the issuance of debt instruments. Although we intendthe Company intends to obtain additional financing to meet our cash needs, wethe Company may be unable to secure any additional financing on terms that are favorable or acceptable to us, if at all.

 

F-10F-14
 

 

NOTEREALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

Note 4: INTANGIBLE ASSETSProperty and Equipment

 

At October 31, 20122014 and 2011,2013, the Company’s intangible assetsCompany's property and equipment are as follows:

 

  Gross
Carrying
Amount
  Accumulated
Amortization
  Net
Carrying
Amount
 
2011 $-  $-  $- 
2012 $4,796,978  $-  $4,796,178*
  October 31, 2014
  Remaining    Accumulated  Net Carrying 
  Useful Life Cost  Depreciation  Value 
            
Computer equipment - office 1.7 Years $22,881  $9,892  $12,989 
Computer equipment - Nestbuilder website 2.3 Years  42,149   9,360   32,789 
    $65,030  $19,252  $45,778 

  October 31, 2013
  Remaining    Accumulated  Net Carrying 
  Useful Life Cost  Depreciation  Value 
            
Computer equipment - office 2.5 years $17,046  $2,838  $14,208 
Computer equipment - Nestbuilder website 3.0 years  42,149   -0-   42,149 
    $59,195  $2,838  $56,357 

 

AmortizationThe Company has recorded $16,414 and $2,838 of depreciation expense amounted to $nil and $nil for the years ended October 31, 20122014 and 2011,2013, respectively.

On October 9, 2012, the Company entered a Share Exchange Agreement (Note 1). The Company accountedThere was no property and equipment impairment recorded for the acquisition utilizing the purchase method of accounting in accordance with ASC 805 "Business Combinations". The Company is the aquiree for accounting purposes. Accordingly, the Company applied push-down accountingyears ended October 31, 2014 and has recorded the intangible asset as described herein.

* The Company is in review of the facts and circumstances surrounding events to determine if the carrying amount of held-and-used identifiable amortizable intangibles acquired during the October 2012 acquisition may be reallocated under the provisions of ASC 350 and ASC 805. The Company has until October 2013 (12 months) to determine the final allocations and it is studying a reallocation with more emphasis on “customer relationships and customer lists”. No amortization has been calculated based on the original allocations.2013.

 

NOTE 5: INTANGIBLE ASSETS AND BUSINESS COMBINATION

The following table sets forth the intangible assets, both acquired and developed, including accumulated amortization:

  October 31, 2014
  Remaining    Accumulated  Net Carrying 
  Useful Life Cost  Amortization  Value 
            
Sales/Marketing agreement 1.5 Years $4,796,178  $2,754,696  $2,041,482 
Website development costs 2.4 Years  1,527,307   294,839   1,232,468 
Web platform/customer relationships - ReachFactor acquisition 2.5 Years  600,000   224,996   375,004 
Software development costs (not placed in service) 3.0 Years  52,190   -0-   52,190 
    $6,975,675  $3,274,531  $3,701,144 

F-15

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 5: INTANGIBLE ASSETS AND BUSINESS COMBINATION (continued)

  October 31, 2013
  Remaining    Accumulated  Net Carrying 
  Useful Life Cost  Amortization  Value 
            
Sales/Marketing agreement 2.5 years $4,796,178  $1,377,348  $3,418,830 
Website development costs (not placed in service) 3.0 years  835,752   -0-   835,752 
    $5,631,930  $1,377,348  $4,254,582 

During the year ended October 31, 2014, the Company incurred expenditures of $691,555 for website development costs as a new development team was brought in to assess the quality of the website. Upon their recommendation, significant changes, upgrades and modifications were recommended and have been ongoing since the post launch date of March 4, 2014. This is being done to ensure that the site works capably as the Company's "revenue driver". This capitalization falls with the scope of ASC 350-50-25-15 wherein costs of upgrades and enhancements should be capitalized as they will result in added functionality of the website.

During the year ended October 31, 2014, the Company incurred expenditures of $52,190 for software development costs to develop a mobile app called "EZ FLIX" as a tool to assist users in converting still pictures to video. The Company capitalized internal software development costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by "ASC 985-20-25" Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requiring certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software and hardware technologies. Amortization of the capitalized software development costs begins when the product is available for general release to customers anticipated to be available in the fourth quarter of the current fiscal year. Capitalized costs are amortized based on the greater of (a) the ratio of current gross revenues to the total current and anticipated future gross revenues, or (b) the straight-line method over the remaining estimated economic life of the product. As of October 31, 2014, the app has not been placed into service.

On May 24, 2014, RealBiz Media Group, Inc. (the “RBIZ”) entered into an Asset Purchase Agreement with ReachFactor, Inc. (“ReachFactor”) and its two principals, Suresh Srinivasan and Arun Srinivasan pursuant to which the Company acquired substantially all of the assets of ReachFactor and the Company assumed certain liabilities of ReachFactor not to exceed $25,000 in consideration of RBIZ's issuance to ReachFactor of 2,000,000 shares of RBIZ's common stock. The acquisition of the assets is subject to an unwind at the option of Suresh Srinivasan and Arun Srinivasan if on or prior to the date that is six months after the closing of the Asset Purchase Agreement, the Company terminates the employment of either of Suresh Srinivasan and/ or Arun Srinivasan (each referred to as an “Executive”) without cause or either Executive terminates his employment for good reason. In the event of an unwind the assets revert back to ReachFactor and the 2,000,000 shares of stock revert back to RBIZ. The purpose for this acquisition was for RealBiz to obtain ReachFactor's intellectual property consisting of a web platform, along with ReachFactor's customer relationships and to facilitate the addition of ReachFactor's principals to the management of RealBiz.

The value of the common stock of RealBiz was based on the fair value of the stock at the closing date which was $0.15 per share and RBIZ capitalized $600,000 as intangible assets consisting of a web platform and customer relationships, to be amortized over a three year period beginning June 1, 2014. The $600,000 included the capitalization of $300,000, related to the acquisition, representing the value of an additional 2,000,000 shares of RBIZ's common stock that were issued on the acquisition date to an escrow account and is considered as part of the purchase price consideration. These additional shares are to be released to Suresh Srinivasan and Arun Srinivasan at the rate of 500,000 shares every three months. The transaction represents an asset acquisition that is accounted for as a business combination under ASC 805 and noted in the tables below:

Purchase Price
Recipients Value
per
share
  Number of
shares
issued
  Total
Value
 
ReachFactor, Inc $0.15   2,000,000  $300,000 
Suresh Srinivasan $0.15   1,000,000  $150,000 
Arun Srinivasan  $0.15   1,000,000  $150,000 
         4,000,000  $600,000 

Assets Acquired
          Total
Value
 
Web platform and customer relationships         $600,000 
Purchase price           $600,000 

F-16

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 5: INTANGIBLE ASSETS AND BUSINESS COMBINATION (continued)

On September 18, 2014, the Company received Suresh Srinivasan’s written resignation as the Chief Operating Officer of the Company effective September 30, 2014 and the outstanding 750,000 shares of RealBiz common stock, held in escrow, were returned on December 5, 2014. The Company impaired the remaining un-amortized cost of $125,000 representing Suresh's interest in the ReachFactor intangible assets.

Intangible assets are amortized on a straight-line basis over their expected useful lives, estimated to be 4 years, except for the website(s), which is 3 years. Amortization expense related to website development costs and intangible assets was $1,772,183 and $1,109,873, for years ended October 31, 2014 and 2013, respectively.

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED LIABILITIESEXPENSES

 

AtFor the years ended October 31, 20122014 and 2011,2013, the Company’s accounts payable and accrued liabilitiesexpenses are as follows:

 

  October 31, 2012  October 31, 2011 
Trade payables and accruals $392,795  $105,836 
Professional Fees  30,000   - 
Payroll and commissions (1)  413,416   1,899 
Other liabilities  750   - 
Total accounts payable and accrued liabilities $836,961  $107,735 

(1)Includes deferred payroll expenses payable to a related party. (See Note 10)
  October 31, 
  2014  2013 
Trade payables and accruals $281,352  $161,847 
Accrued preferred stock dividends  915,447   523,895 
Payroll and commissions  456,875   352,266 
Other liabilities  226,620   219,024 
Total accounts payable and accrued expenses $1,880,294  $1,257,032 

  

NOTE 6: ADVANCES FROM NEXT 1 INTERACTIVE, INC.7: DUE FROM/TO AFFILIATES

 

During the normal course of business, Next 1 made operatingthe Company receives and/or makes advances for operating expenses to RealBiz 360 Enterprise (Canada), Inc. and Webdigs, Inc., prior to the consummation of the Exchange Agreement. As of October 31, 2012, advances to RealBiz 360 Enterprise (Canada), Inc. totaled $753,332 and $82,397 to Webdigs,to/from our parent Company, Next 1 Interactive, Inc. As of October 31, 2011, advances to RealBiz 360 Enterprise (Canada), Inc. totaled $201,6602014 and $nil to Webdigs, Inc.2013, the Company is due $131,086and $4,199, respectively as a result of such transactions.

 

F-17

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

 

NOTE 7: LOANS8: CONVERTIBLE NOTES PAYABLE

 

During the fiscalyear ended October 31, 2014, the Company:

·issued 1,366,666 shares at the conversion rate of $0.15 per share, upon the noteholder's request, to convert $205,000 in principal.

·issued 100,000 shares at the conversion rate of $0.15 per share, upon the noteholder's request, to convert $15,000 in principal leaving a remaining principal balance of $60,000.

·On October 20, 2014, the Company issued a two (2) year, 7.5% convertible promissory note maturing on October 19, 2016 with a non-related third party investor valued at $150,000 and received $95,000 in cash proceeds net of $55,000 in loan origination fees included in the calculation of the debt discount. As an incentive, the Company issued 300,000 warrants to the holder with a two-year life and a fair value of approximately $14,760 to purchase shares of the Company’s common stock, $0.001 par value, per share, at an exercise price of $0.17 per share included as part of the debt discount. The fair value of the warrants was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate between 0.94% and 1.51%, dividend yield of -0-%, volatility factor between 115.05% and 124.65% and an expected life of 1.5 years. The value of these warrants was charged to interest expense with the offset to additional paid-in-capital. The noteholder, at their option, has the right from time to time, and at any time on or prior to the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock at the Conversion Price. The conversion price means the lower of the fixed conversion price of $0.20 or the variable conversion price. The variable conversion price shall mean 65% multiplied by the lowest of the VWAP (volume weighted average price) of the common stock during the twelve (12) consecutive trading day period ending on and including the trading day immediately preceding the conversion date.

As required, the Company evaluated the conversion feature of the note, determined that there was no beneficial conversion feature (“BCF”) and assigned a value of $80,240 as additional derivative liability expense. Total debt discount of $150,000 is to be amortized to interest expense over the life of the note. Additionally, the Company accounted for the embedded conversion option liability in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard.  In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. Additionally, the Company determined the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument.

The initial fair value of the embedded conversion option liability associated with the funds received on October 20, 2014, was valued using the Black-Scholes model, resulting in an initial fair value of $314,543 and recorded as a current liability. The assumptions used in the Black-Scholes option pricing model at the date the funds were received are as follows: (1) dividend yield of 0%; (2) expected volatility of 359.58%, (3) risk-free interest rate of 0.37%, and (4) expected life of 2.00 years. The value of the conversion option liability underlying the convertible promissory note at October 31, 2014 was $305,220 and the assumptions used in the Black-Scholes pricing model at October 31, 2014 are as follows: (1) dividend yield of 0%; (2) expected volatility of 356.68%, (3) risk-free interest rate of 0.50%, and (4) expected life of 2.00 years. The Company recognized a gain from the decrease in the fair value of the conversion option liability in the amount of $9,323 during the year ended October 31, 2014, representing the change in fair value. The Company recognized a derivative liability expense of $234,303. Interest charged to operations relating to this note for year ended October 31, 2014 and 2013 amounted to $2,605 and $0 respectively.

During the year end October 31, 2013:

·the $60,500 was satisfied and the $605,000 promissory note replaced the original debt of $615,264, resulting in a gain on settlement of debt of $10,264.

·$440,000 of principal was assigned to various non-related third party investors and the Company issued non-interest bearing convertible promissory notes that are due on demand. The conversion feature of $0.15 of these notes was evaluated and determined that $440,000 should be allocated to the beneficial conversion feature ("BCF") and amortized as interest expense over the life of the note. The convertible promissory notes are due on demand, therefore $440,000 of the BCF was charged to interest expense for the year ended October 31, 2013.

·various noteholders converted $325,000 of principal at a conversion rate of $0.15 per share and the Company issued 2,166,666 shares of its common stock and the remaining principal balance at October 31, 2013 is $280,000.

F-18

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 9: LOANS PAYABLE

For the years ended October 31, 2010, 2011,2014 and 2012, Acknew, along with one of its officers, made interest-free operating2013, the Company’s loans to RealBiz 360 Enterprise (Canada), Inc. and RealBiz Holdings, Inc. As ofpayable is summarized follows:

  October 31, 
  2014  2013 
Promissory note $-0-  $21,214 
Non-related third party investors  170,000   170,000 
Total Loans payable $170,000  $191,214 

During the year ended October 31, 2011, these loans, in aggregate, totaled $369, 040. As part of2014:

·the Company made $21,214 in principal payments and incurred $1,314 in interest expense for the promissory note.

·there was no activity for the year ended October 31, 2014 for the non-related third party investors.

During the Acknew Purchase Agreement, in addition to other consideration, portions of these obligations were retired. As ofyear ended October 31, 2012, the remaining obligation to Acknew totaled $50,000.2013:

 

  October 31, 2012  October 31, 2011 
Acknew loans $50,000  $369,040 
Total accounts payable and accrued liabilities $50,000  $369,040 
·the Company received $50,000 in proceeds from a non-related third party investor. The Company anticipates that this loan will be converted into either a formal debt or equity instrument. As of the date of this audit report its status has remained unchanged.

·the Company incurred consulting fees in the amount of $120,000 which were recorded as loans from a non-related third party investor. The Company anticipates that this loan will be converted into either a formal debt or equity instrument. As of the date of this audit report its status has remained unchanged.

 

NOTE 8:10: SHARE-BASED COMPENSATION

 

The Company recognizes compensation expense for stock option grants over the requisite service period for vesting of the award.

 

Stock Options consist of the following for the years ended October 31, 20122014 and 2011,2013, after taking into account a 200 for 1 reverse stock split:

 

           Weighted 
     Weighted     average 
     average  Aggregate  remaining 
  Number of  exercise  intrinsic  contractual 
  options  price  value  term (years) 
             
Outstanding at October 31, 2010  4,000  $50.00  $-   2.54 
Granted  -   -   -   - 
Exercised  -   -   -   - 
Forfeited  -   -   -   - 
                 
Outstanding at October 31, 2011  4,000   50.00   -   1.54 
Granted  -   -   -   - 
Exercised  -   -   -   - 
Forfeited  -   -   -   - 
                 
Outstanding at October 31, 2012  4,000  $50.00  $-   0.54 

           Weighted 
     Weighted     average 
     average  Aggregate  remaining 
  Number of  exercise  intrinsic  contractual 
  options  price  value  term (years) 
             
Outstanding at October 31, 2012  4,000  $50.00  $-   0.94 
Granted  -   -   -   - 
Exercised  -   -   -   - 
Forfeited  3,000   -   -   - 
                 
Outstanding at October 31, 2013  1,000   50.00   -   1.00 
Granted  -   -   -   - 
Exercised  -   -   -   - 
Forfeited  1,000   50.00   -   1.00 
                 
Outstanding at October 31, 2014  -  $-  $-   - 

 

The aggregate intrinsic value in the table above represents the difference between the closing stock price on October 31, 20122014 and the exercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised their options onat October 31, 2012.2014.  There were no options exercised during the years ended October 31, 20122014 and 2011.

Stock Warrants

As2013 and as of October 31, 2011,2014 all options have expired.

F-19

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Company has 200,000 warrants outstanding with the exercise price of $0.30. The warrants expired on December 12, 2011. No additional warrants were issued in during the twelve months endedYears Ended October 31, 2012.

2014 and 2013

 

NOTE 9: SHAREHOLDERS’11: STOCKHOLDERS’ EQUITY

 

AsOn July 31, 2014, the Board and the holders of October 31, 2010,a majority of the Company had 125,000,000voting power of our shareholders approved an amendment to our articles of incorporation to increase our authorized shares of common stock authorized with a par valueto 250,000,000 from 125,000,000 and increased the Company's Series A Convertible Preferred Stock to 120,000,000 from 100,000,000. Additionally, on July 31, 2014, the Board designated the terms of $0.001, with another 125,000,000 authorizedSeries B Convertible Preferred Stock and 1,000,000 shares designated as common or preferred stock. On May 17, 2012,were authorized.

The total number of shares of all classes of stock that the Company effectuated a 1 for 200 reverse stock split for its common stock shares. Adjusted forshall have the stock split, the Company has 625,000authority to issue is 376,000,000 shares consisting of: 250,000,000 shares of common stock authorized with a $0.001 par value of $0.001.per shares; and 125,000,000 shares which may be designated as Series A Convertible Preferred Stock with a $0.001 par value per share and 1,000,000 shares designated as Series B Preferred stock with a $0.001 par value per share.

 

Common Stock

 

OnDuring the year ended October 9, 201231, 2014, the Company recapitalized by being acquired by a public company which resulted in a deemed issuance of 383,009Company:

·issued 4,163,712 shares of its common stock along with 3,532,389 one year warrants with an exercise price between a $0.18 to $1.25 for cash proceeds of $842,668 .

·issued 2,975,111 shares of its common stock upon exercise of 2,975,111 outstanding warrants for cash proceeds of $666,520 .

·issued 2,134,430 shares of its common stock along with 235,780 one year warrants with an exercise price between $0.05 to $1.00 for a total value of $970,065 for consulting fees rendered. The value of the common stock issued was based on the fair value of the stock at the time of issuance. The value of the warrants was estimated at the time of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate between 0.10% and 0.14%, dividend yield of -0-%, volatility factor between 318.89% to 611.08% and expected life of one year.

·On May 24, 2014, the Company issued 2,000,000 shares of common stock as part of employment agreements in place with executives valued at $300,000. This was part of the purchase price under the ReachFactor Asset Purchase Agreement. The value of the common stock was based on the fair value of the stock, representing its quoted trading price, at the time of issuance.

·On May 24, 2014, the Company issued 2,000,000 shares of common stock upon execution of an Asset Purchase Agreement with ReachFactor, Inc. pursuant to which the Company acquired substantially all of the assets of ReachFactor and the Company assumed certain liabilities of ReachFactor not to exceed $25,000. The value of the common stock was based on the fair value of the stock, representing its quoted trading price, at the time of issuance and totaled $300,000.

·issued 14,765,000 shares of its common stock valued at $738,250 upon the conversion of the holders of convertible Series B preferred shares held in its parent company Next 1 Interactive, Inc. These common shares were valued at the carrying value of the converted parent company Series B preferred shares.

·issued 1,300,000 shares of its common stock valued at $130,000 upon the conversion of the holders of convertible Series C preferred shares held in its parent company Next 1 Interactive, Inc. These common shares were valued at the carrying value of the converted parent company Series C preferred shares.

·issued 1,937,973 shares of its common stock valued at $290,725 upon the conversion of the holders of convertible Series D preferred shares held in its parent company Next 1 Interactive, Inc. These common shares were valued at the carrying value of the converted parent company Series D preferred shares.

·issued 3,100,000 shares of its common stock valued at $155,000 upon the conversion of the holders of convertible promissory notes held in its parent company Next 1 Interactive, Inc. These common shares were valued at the carrying value of the converted parent promissory notes.

·issued 12,000,000 one (1) year common stock warrants with an exercise price of $0.50 for a debt modification of convertible promissory notes held in its parent company Next 1 Interactive, Inc valued at $4,809,308. The value of the warrants was estimated at the time of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 0.35%, dividend yield of -0-%, volatility factor of 324.34% and expected life of one year.

·issued 1,466,666 shares of common stock upon conversion of convertible promissory notes of $220,000.

·issued 70,879 shares upon the exercise of 70,879 warrants in settlement of consulting fees valued at $12,758 at an exercise price of $1.

F-20

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the original shareholders of the public entity, a deemed issuance of 7,000,000 Preferred Series A voting shares to the original shareholders of the public entity,Years Ended October 31, 2014 and a new issuance of 93,000,000 Preferred Series A voting shares. Total net liabilities of $977,575 were assumed in the recapitalization.2013

NOTE 11: STOCKHOLDERS’ EQUITY (continued)

 

Common Stock (continued)

During the year ended October 31, 2014, the Company (continued):

·issued 27,000 shares of its common stock along with 9,000 one year warrants with an exercise price between $0.18 to $1.00 as settlement of $13,500 of proceeds received in advance for prior fiscal year subscription agreements.

·On May 5, 2014, the Company's board of directors authorized a special warrant exercise pricing available to warrant holders of record as of May 5, 2014. The Board agreed to reduce the pricing on the warrants to $0.18 from their current level of $1.00 to $1.25 for the month of May 2014 only. The Company evaluated the incremental value of the modified warrants, as compared to the original warrant value, concluding that modification expense incurred was immaterial and the modification expense not recorded.

·All of the conversions of Next 1 Interactive, Inc. securities were accounted for as constructive distributions.

During the year ended October 31, 2013, the Company:

·issued 7,646,000 shares of its common stock along with 7,614,000 one year warrants with an exercise price between a $1.00 and $1.25 for cash proceeds of $3,826,000.

·issued 50,000 shares of its common stock upon execution of 50,000 outstanding warrants for cash proceeds of $50,000.

·received $13,500 in advance for subscription agreements totaling 27,000 shares of its common stock and as of October 31, 2013 the shares have not been issued.

·issued 607,600 shares of its common stock along with 71,600 one year warrants with an exercise price of $1 for a total value of $646,030 for consulting fees rendered. The value of the common stock was issued was based on the fair value of the stock at the time of issuance. The value of the warrants was estimated at the time of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate between 0.10% and 0.14%, dividend yield of -0-%, volatility factor between 177.07% and 353.06% and expected life of one year.

·issued 32,095,356 shares of its common stock and 690,232 one year warrants with an exercise price of $1 valued at $7,297,272 upon the conversion of the holders of convertible preferred shares and promissory notes held in its parent company Next 1 Interactive, Inc. The value of the warrants was estimated at the time of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate between 0.10% and 0.14%, dividend yield of -0-%, volatility factor between 315.81% and 356.43% and expected life of one year.

·issued 5,990,238 shares of its common stock valued at $299,512 upon the conversion of 5,990,238 shares of the Company's Convertible Series A Preferred stock.

·on October 3, 2013, contracted with an un-related entity and issued 100,000 shares of its common stock valued at $418,000 in website development costs. The value of the common stock was issued was based on the fair value of the stock at the time of issuance. Effective October 29, 2013, two shareholders of this entity became employees and executive officers of our Company.

·issued 2,166,666 shares of its common stock valued at $325,000 upon complying with conversion requests of various non-related third party convertible promissory note holders.

·evaluated the conversion feature of new issued convertible promissory note and recorded a $440,000 beneficial conversion feature.

F-21

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 11: STOCKHOLDERS’ EQUITY (continued)

Common Stock Warrants

The following table sets forth common share purchase warrants outstanding as of October 31, 2014:

  Warrants  Weighted
Average
Exercise
Price
  Intrinsic
Value
 
Outstanding, October 31, 2013  8,325,832  $1.04  $1.56 
Warrants granted and issued  15,957,169  $0.47  $0.00 
Warrants exercised/forfeited  (8,904,143) $(1.00) $0.00 
Outstanding, October 31, 2014  15,378,858  $0.48  $0.00 
             
Common stock issuable upon exercise of warrants  15,378,858  $0.48  $0.00 

   Common Stock Issuable Upon Exercise of
Warrants Outstanding
  Common Stock Issuable 
Upon Warrants 
Exercisable
 
Range of
Exercise
Prices
Prices
  Number
Outstanding
at October
31, 2014
  Weighted
Average
Remaining
Contractual
Life (Years)
  Weighted
Average
Exercise
Price
  Number
Exercisable
at October
31, 2014
  Weighted
Average
Exercise
Price
 
$0.17   300,000   1.97  $0.17   300,000  $0.17 
$0.18   2,224,530   0.42  $0.18   2,224,530  $0.18 
$0.50   12,140,000   0.32  $0.50   12,140,000  $0.50 
$1.00   247,050   0.04  $1.00   247,050  $1.00 
$1.25   467,278  ��0.13  $1.25   467,278  $1.25 
                       
     15,378,858   0.35  $0.48   15,378,858  $0.48 

The following table sets forth common share purchase warrants outstanding as of October 31, 2013:

  Warrants  Weighted
Average
Exercise
Price
  Intrinsic
Value
 
Outstanding, October 31, 2012  -0-  $-0-  $-0- 
Warrants granted and issued  8,375,832  $1.04  $1.56 
Warrants exercised/forfeited  (50,000) $(1.00) $(1.60)
Outstanding, October 31, 2013  8,325,832  $1.04  $1.56 
             
Common stock issuable upon exercise of warrants  8,325,832  $1.04  $1.56 

F-22

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 11: STOCKHOLDERS’ EQUITY (continued)

Common Stock Warrants (continued)

   Common Stock Issuable Upon Exercise of
Warrants Outstanding
  Common Stock Issuable 
Upon Warrants 
Exercisable
 
Range of
Exercise
Prices
Prices
  Number
Outstanding
at October
31, 2013
  

Weighted

Average

Remaining

Contractual

Life (Years)

  

Weighted

Average

Exercise

Price

  Number
Exercisable
at October
31, 2013
  Weighted
Average
Exercise
Price
 
$1.00   6,917,832   0.78  $1.00   6,917,832  $1.00 
$1.25   1,408,000   1.00  $1.25   1,408,000  $1.25 
                       
     8,325,832   0.82  $1.04   8,325,832  $1.04 

Convertible Preferred Stock Series A

 

On October 14, 2014, the Company filed a certificate of amendment pursuant to the July 31st, 2014 Board of Directors approval to increase the Preferred A shares from 100,000,000 shares to 120,000,000 shares. As of October 31, 2012 and 2011,2014, the Company had 100,000,00066,801,653 shares of Convertible Preferred Stock Series A Preferred stock issued and outstanding respectively. The Preferred shares were issued pursuant to the recapitalization and share exchange (Note1).outstanding. The preferred shares were issued at $.001 par and bear dividends at an annuala rate of 10% per annum payable on a quarterly basis when declared by the board of directors. Dividends shall accrue whether or not they have been declared by the board.At the election of the Company, Preferred Dividends may be converted into Series A Stock, with each converted share having a value equal to the Market Pricemarket price per share, subject to adjustment for stock splits. In order to exercise such option, the Company shall deliverdelivers written notice to the holder.

Each share of Series A Stock is convertible at the option of the holder thereof at any time into a number of shares of Common Stock determined by dividing the Stated Value of a $1 per share by the Conversion Price then in effect. The conversion price for the Series A Stock is equal to $1.00 per share. Each holder of Series A stock shall be entitled to one vote for each whole share of common stock that would be issuable upon conversion of such share on the record date for determining eligibility to participate in the action being taken.

In the event of (a) the sale, conveyance, exchange, exclusive license, lease or other disposition of all or substantially all of the intellectual property or assets of the Company, (b) any acquisition of the Company by means of consolidation, stock exchange, stock sale, merger of other form of corporate reorganization of the Company with any other entity in which the Company's stockholders prior to the consolidation or merger own less than a majority of the voting securities of the surviving entity, or (c) the winding up or dissolution of the Company, whether voluntary or involuntary (each such event in clause (a), (b) or (c) a "liquidation event"), the Board shall determine in good faith the amount legally available for distribution to stockholders after taking into account the distribution of assets among, or payment thereof over to, creditors of the Company (the "net assets available for distribution"). The holders of the Series A stock then outstanding shall be entitled to be paid out of the net assets available for Distribution (or the consideration received in such transaction) before any payment or distribution shall be made to the holders of any class of preferred stock ranking junior to the Series A Stock or to the Common Stock, an amount for each share of Series A Stock equal to all accrued and unpaid Preferred Dividends plus the Stated Value, as adjusted (the "Series A Liquidation Amount").

Accrued and declared preferred stock dividends on the outstanding preferred shares as of October 31, 2014 and 2013 totaled $915,447 and $523,895, respectively and are included in accounts payable and accrued expenses in the accompanying balance sheet. These preferred stock dividends were declared on December 28, 2014, to holders of record on August 31, 2014. Additional preferred stock dividends accruing, but have not been declared, on the outstanding preferred shares as of October 31, 2014 were $73,753.

During the year ended October 31, 2014, the Company:

·issued 25,983,600 Series A Preferred Shares to Next 1 Interactive, Inc., based upon the "top up" provision in the certificates of designations, valued at $5,196,720 and approved by the Board of Directors on May 15, 2014 . The conversion price of $0.20 per common share was based upon the closing price of the Company's common stock on May 15, 2014.

·retired 53,198,347 Series Preferred Series A shares held by Next 1 Interactive, at the cost of $1,287,082, based upon the original securities and purchase agreement of October 2012 and retirement was approved by the Board of Directors on May 15, 2014. This was based upon the issuances of RealBiz common shares issued for conversion from Next 1 Interactive, Inc. preferred stock and convertible promissory notes.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 11: STOCKHOLDERS’ EQUITY (continued)

Convertible Preferred Stock Series A (continued)

During the year ended October 31, 2013, the Company:

·on February 27, 2013, the former CEO of Webdigs converted 5,990,238 Series A Preferred Stock into 5,990,238 shares of RealBiz Common Stock.

Convertible Preferred Stock Series B

On July 31, 2014, the Company's Board of Directors approved the creation of a new Series B Preferred stock and on October 14, 2014 a certificate of designation was filed with the state of Delaware designating 1,000,000 shares with a par value of $0.001, a stated value of $5.00 per share and convertible into the Company's common stock at $0.05 per share. As of October 31, 2014, the Company had -0- shares of Convertible Preferred Stock Series B issued and outstanding. The Series B Preferred stock will bear dividends at a rate of 10% per annum and shall accrue on the stated value of such shares of the Series B Stock. Dividends accrue whether or not they have been declared by the Board of Directors. At the election of the Company, it may satisfy its obligations hereunder to pay dividends on the Series B stock by issuing shares of common stock to the holders of Series B stock on a uniform and prorated basis. Each share of Series B Stock is convertible at the option of the holder thereof at any time into a number of shares of Common Stock determined by dividing the Stated Value by the Conversion Price then in effect. The initial conversion price for the Series AB Stock shall beis equal to $0.05 per share. Each holder of Series B stock shall be entitled to the number of votes equal to two hundred (200) votes for each shares of Series B stock held by them.

 

As a resultIn the event of push-down accounting applied in October 2012 (See Note 1)(a) the sale, conveyance, exchange, exclusive license, lease or other disposition of all or substantially all of the intellectual property or assets of the Company, recorded $5,016,506(b) any acquisition of additional paid-in-capital.the Company by means of consolidation, stock exchange, stock sale, merger of other form of corporate reorganization of the Company with any other entity in which the Company's stockholders prior to the consolidation or merger own less than a majority of the voting securities of the surviving entity, or (c) the winding up or dissolution of the Company, whether voluntary or involuntary (each such event in clause (a), (b) or (c) a "liquidation event"), the Board shall determine in good faith the amount legally available for distribution to stockholders after taking into account the distribution of assets among, or payment thereof over to, creditors of the Company (the "net assets available for distribution"). The holders of the Series A stock then outstanding shall be entitled to be paid out of the net assets available for Distribution (or the consideration received in such transaction) before any payment or distribution shall be made to the holders of any class of preferred stock ranking junior to the Series B Stock or to the Common Stock, an amount for each share of Series B Stock equal to all accrued and unpaid Preferred Dividends plus the Stated Value, as adjusted (the "Series B Liquidation Amount").

As of October 31, 2014 and 2013, there have been no shares issued or dividends accrued.

 

NOTE 12: OTHER INCOME

Other income for the year ended October 31, 2014 represents primarily the proceeds from a Canadian grant program encouraging research and development activities.

NOTE 13: RELATED PARTY TRANSACTIONS

In connection with the closing of the Exchange Transaction on October 9, 2012, Messrs. Buntz and Wicker converted all of their outstanding notes, unpaid salary and all other obligations and liabilities to them owed by the Company into 5,990,238 and 1,016,400 shares of Series A Stock, respectively. The Preferred A Shares for Mr. Buntz were converted to 5,990,238 Common Shares on February 27, 2013.

During the year ended October 31, 2013, the Company paid $800 a month in rent for office space on behalf of an officer of the Company.

Equity transactions with the Company's parent are described in Note 11.

F-12F-24
 

 

NOTE 10: RELATED PARTY TRANSACTIONSREALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Due to - Minority Stockholder

The Company’s former principal advertising agency/website developer was owed $615,264 atFor the Years Ended October 31, 20122014 and 2011, respectively. The two principals of this advertising company are also minority stockholders in the Company - holding approximately 1.6% of the Company’s outstanding shares at October 31, 2012.

Due to Officers

As of October 31, 2012 and October 31, 2011, the Company was indebted to certain related parties for amounts totaling $69,327 and $3,578, respectively, for deferred salary and unreimbursed business expenses. All of the indebtedness represented non-interest bearing payables due on demand. These amounts have been included in Accounts Payable and Accrued Liabilities on our consolidated balance sheets.2013

 

NOTE 11:14: INCOME TAXES

 

The Company accounts for income taxes taking into account deferred tax assets and liabilities which represent the future tax consequences of the differences between financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year the change is enacted.


The provision (benefit) for income taxes consists of the following for the years ended October 31:

 

  2012   2011   2014  2013 
                
Current $-  $-  $-  $- 
Deferred  -   -   -   - 
                
Provision for income taxes $-  $-  $-  $- 

  



The provision for income taxes varies from the statutory rate applied to the totalnet loss as follows for the years ended October 31:

 

  2012  2011 
       
Federal income tax benefit at statutory rate (35%) $(337,127) $(333,711)
State taxes, net of federal benefit  (43,626)  (43,184)
Effect of Canadian tax rates  89,687   107,094 
Nondeductible expenses  3,171   5,426 
         
Change in valuation allowance  287,895   264,375 
         
Provision for income taxes $-  $- 

  2014  2013 
       
Federal income tax benefit at statutory rate (35%) $(1,611,864) $(1,317,431)
State taxes, net of federal benefit  (208,584)  (170,483)
Effect of Canadian tax rates  19,318   66,704 
Nondeductible expenses  1,113,360   978,453 
Change in valuation allowance  687,770   442,757 
         
Provision for income taxes $-  $- 

 

Significant components of the Company’s estimated deferred tax balances at October 31, 20122014 and 20112013 consist of:

 

Deferred tax assets (liabilities)        
Net operating loss carryforwards (U.S.) $100,986  $33,655 
Net operating loss carryforwards (Canada)  423,882   230,720 
Accrued Salaries  27,402   - 
         
Net deferred tax assets  552,270   264,375 
Valuation allowance  (552,270)  (264,375)
         
Provision for income taxes $-  $- 

  2014  2013 
Deferred tax assets (liabilities)        
Net operating loss carryforwards (U.S.) $893,020  $281,009 
Net operating loss carryforwards (Canada)  609,255   567,626 
Bad debt  -   30,368 
Accrued salaries  180,521   116,024 
         
Net deferred tax assets  1,682,796   995,027 
Valuation allowance  (1,682,796)  (995,027)
         
Provision for income taxes $-  $- 

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has recorded a full valuation allowance against its net deferred tax assets because it is not currently able to conclude that it is more likely than not that these assets will be realized. The amount of deferred tax assets considered to be realizable could be increased in the near term if estimates of future taxable income during the carryforward period are increased. The valuation allowance increased by $287,895$687,769 during the fiscal year ended October 31, 2012.2014.

F-25

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended October 31, 2014 and 2013

NOTE 14: INCOME TAXES (continued)

 

The Company has a total net operating loss carryforward of approximately $1,825,000,$4,515,000, of which approximately $255,000$2,259,000 relates to domestic entities and $1,570,000$2,256,000 relates to wholly owned Canadian subsidiaries. Net operating loss carryforwards expire through 2032.2033. Under the Internal Revenue Code Section 382 (IRC 382) and the Canadian Tax Act, certain stock transactions which significantly change ownership, including the sale of stock to new investors, the exercise of options to purchase stock, or other transactions between shareholders could limit the amount of net operating loss carryforwards that may be utilized on an annual basis to offset taxable income in future periods.

NOTE 15: FAIR VALUE MEASUREMENT AND DISCLOSURE

The Company has adopted ASC 820,Fair Market Measurement and Disclosures including the application of the statement to non-recurring, non-financial assets and liabilities. The adoption of ASC 820 did not have a material impact on the Company’s fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair Value Measurements at October 31, 2013 and 2014 respectively using:

Description Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
  

Significant Other

Observable Inputs
(Level 2)

  

Significant

Unobservable Inputs
(Level 3)

  Total 
             
Cash $1,304,374  $-  $-  $1,304,374 
October 31, 2013 $1,304,374  $-  $-  $1,304,374 
                 
Cash $20,066  $-  $-  $20,066 
Convertible promissory note with embedded conversion option  -   -   305,220   305,220 
October 31, 2014 $20,066  $-  $305,220  $325,286 

NOTE 16: SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring after the balance sheet date and through February 12, 2015, the date that these financial statements were issued and has identified the following:

During December 2014 and January 2015, the Company:

·received $460,000 in proceeds and issued convertible promissory notes with interest rates of 12% per annum, maturity dates of December 31, 2016 and with a range of fixed rate conversion features.

·received $75,000 in proceeds and issued 750,000 common shares and 750,000 one year warrants with an exercise price of $0.18.

·the Company is currently analyzing the above transactions for proper accounting treatment.

·signed a joint venture agreement on January 23, 2015 with Harmon Media Group This co-syndication agreement is to provide enhanced listing data for parties to increase site traffic, enhanced products and services, agent usage, agent subscriptions, which causes associated fees and advertising revenues to both parties.

·on December 23, 2014, the board of directors determined that it is in the best interests of the Company to declare the $915,447 of dividends which currently have been accrued on the books of the Corporation, but not declared, in respect of the Corporation's Preferred Series A shares, to holders of record date on August 31, 2014.

REALBIZ MEDIA GROUP, INC.

CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIOD ENDED JANUARY 31, 2015


REALBIZ MEDIA GROUP, INC.


TABLE OF CONTENTS

PAGE
Consolidated Unaudited Financial Statements:
Consolidated Balance SheetsF-2
Consolidated Unaudited Statements of Operations and Comprehensive Income (Loss)F-3
Consolidated Unaudited Statements of Cash FlowsF-4
Notes to the Consolidated Unaudited Financial StatementsF-6

F-1

RealBiz Media Group, Inc.

Consolidated Balance Sheets

  January 31  October 31 
  2015  2014 
  (Unaudited)    
       
Assets        
Current Assets        
Cash $141,204  $20,066 
Accounts receivable, net of allowance for doubtful accounts  93,337   118,408 
Prepaid expenses  3,300   3,300 
Total current assets  237,841   141,774 
         
Property and equipment, net  40,363   45,778 
Website development costs and intangible assets, net  3,223,845   3,701,144 
Due from affiliates  337,093   131,086 
Total assets $3,839,142  $4,019,782 
         
Liabilities and Stockholders' Equity        
Current Liabilities        
Accounts payable and accrued expenses $1,853,151  $1,880,294 
Deferred revenue  35,603   45,565 
Derivative liabilities  571,630   305,220 
Convertible notes payable, net of discount of $-0- and $-0-, respectively  60,000   60,000 
Loans payable  170,000   170,000 
Total current liabilities  2,690,384   2,461,079 
         
Convertible notes payable - long term, net of discount of $819,976 and $147,395, respectively  265,024   2,605 
         
Total liabilities  2,955,408   2,463,684 
         
Stockholders' Equity        
Series A convertible preferred stock, $.001 par value; 120,000,000 authorized and 66,801,653 shares issued and outstanding at January 31,2015 and October 31, 2014, respectively  66,802   66,802 
         
Series B convertible preferred stock, $.001 par value; 1,000,000 authorized and 26,000 shares issued and outstanding at January 31, 2015 and -0- shares issued and outstanding at October 31, 2014, respectively  26   - 
         
Common stock, $.001 par value; 250,000,000 authorized and 88,664,744 shares issued and outstanding at January 31,2015 and 84,980,282 shares issued and outstanding at October 31, 2014, respectively  88,664   84,980 
         
Additional paid-in-capital  17,721,847   16,610,912 
Subscription advances  -   130,000 
Accumulated other comprehensive income  48,105   40,042 
Accumulated deficit  (17,041,710)  (15,376,638)
Total stockholders' equity  883,734   1,556,098 
Total liabilities and stockholders' equity $3,839,142  $4,019,782 

The accompanying notes are an integral part of these consolidated financial statements

RealBiz Media Group, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

  For the three months ended 
  January 31, 
  2015  2014 
       
Revenues        
Real estate media revenue $292,656  $246,054 
         
Operating expenses        
Cost of revenue (exclusive of amortization)  12,634   21,990 
Technology and development  292,623   - 
Salaries and benefits  331,717   252,913 
Selling and promotions expense  39,095   88,044 
General and administrative  1,007,960   1,341,727 
Total operating expenses  1,684,029   1,704,674 
         
Operating loss  (1,391,373)  (1,458,620)
         
Other income (expense)        
Interest expense  (49,385)  (870)
Loss on change on fair value of derivatives  (266,410)  - 
Gain on legal settlement of accounts payable  32,483   - 
Foreign exchange gain  9,613   7,512 
Total other income (expense)  (273,699)  6,642 
         
Net loss $(1,665,072) $(1,451,978)
         
Preferred Stock Dividend  -   (118,496)
         
Net loss attributable to common stockholders $(1,665,072) $(1,570,474)
         
Weighted average number of shares outstanding  87,598,484   54,473,194 
         
Basic and diluted net loss per share $(0.02) $(0.03)
         
Comprehensive income (loss):        
Unrealized gain (loss) on currency translation adjustment  8,063   205,529 
Comprehensive loss $(1,657,009) $(1,364,945)

The accompanying notes are an integral part of these consolidated financial statements.

RealBiz Media Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

  For the three months ended 
  January 31, 
  2015  2014 
Cash flows from operating activities:        
Net loss $(1,665,072) $(1,451,978)
Adjustments to reconcile net loss to net cash from operating activities:        
Gain on legal settlement of accounts payable  (32,483)  - 
Amortization and depreciation  547,723   346,098 
Loss on change in fair value of derivative liabilities  266,410   - 
Stock based compensation and consulting fees  173,865   649,404 
Changes in operating assets and liabilities:        
Decrease in accounts receivable  25,071   10,656 
Decrease in prepaid expenses  -   145 
Decrease  in security deposits  -   22 
Increase (decrease)  in accounts payable and accrued expenses  5,340   (57,991)
Decrease in due to/from affiliates  (176,007)  (891,199)
Decrease in deferred revenue  (9,962)  (467)
Net cash used in operating activities  (865,115)  (1,395,310)
         
Cash flows from investing activities:        
Purchase of computer equipment  -   (2,058)
Payments towards software developments costs  (31,810)  - 
Payments towards website development costs  -   (177,401)
Net cash used in investing activities  (31,810)  (179,459)
         
Cash flows from financing activities:        
Proceeds from convertible promissory notes  935,000   - 
Payments applied to loans payable  -   (8,807)
Proceeds from the sale of common stock and warrants  75,000   80,000 
Proceeds from the exercise of outstanding warrants  -   160,000 
Net cash provided by financing activities  1,010,000   231,193 
         
Effect of exchange rate changes on cash  8,063   205,529 
         
Net increase (decrease) in cash  121,138   (1,138,047)
         
Cash at beginning of period  20,066   1,304,374 
         
Cash at end of period $141,204  $166,327 
         
Supplemental disclosure:        
Cash paid for interest $-  $870 

  For the three months ended 
  January 31, 
  2015  2014 
       
Supplemental disclosure of non-cash investing and financing activity:        
Settlement of prior year advances for subscriptions of common stock:        
Value $30,000  $13,500 
Shares  100,000   27,000 
Warrants  100,000   9,000 
         
Next 1 Interactive, Inc. Preferred Series B shares converted to common stock:        
Value $45,000  $349,750 
Shares  900,000   7,895,000 
         
Next 1 Interactive, Inc. Preferred Series C shares converted to common stock:        
Value $77,000  $- 
Shares  770,000   - 
         
Next 1 Interactive, Inc. Preferred Series D shares converted to common stock:        
Value $82,500  $122,625 
Shares  549,945   817,418 
         
Series B shares issued for settlement of prior year's proceeds and Next 1 Interactive, Inc. debt:        
Value of shares issued $100,000  $- 
Value of Next 1, Interactive debt settled $30,000  $- 
Shares  13,000   - 

The accompanying notes are an integral part of these consolidated financial statements.

F-5

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1: NATURE OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business

RealBiz Media Group, Inc. ("RealBiz") is engaged in the business of providing digital media and marketing services for the real estate industry. RealBiz currently generates revenue from advertising revenues and through real estate agent and broker service fees, membership fees and product sales.

Basis of Presentation

The unaudited interim consolidated financial information furnished herein reflects all adjustments, consisting only of normal recurring items, which in the opinion of management are necessary to fairly state RealBiz Media Group, Inc. and its subsidiaries’ (collectively, the “Company” or “we,” “us” or “our”) financial position, results of operations and cash flows for the dates and periods presented and to make such information not misleading. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”); nevertheless, management of the Company believes that the disclosures herein are adequate to make the information presented not misleading.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended October 31, 2014, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 13, 2015. The results of operations for the three months ended January 31, 2015, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending October 31, 2015.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. There were no cash equivalents at January 31, 2015 and October 31, 2014.

Accounts Receivable

The Company provides its marketing and promotional services to agents or brokers via a web-based portal that allows for credit card payments. The Company recognizes accounts receivable for amounts uncollected from the credit card service provider at the end of the accounting period. The Company regularly reviews outstanding receivables and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company maintains reserves for potential credit losses, and such losses traditionally have been within its expectations. The allowance for doubtful accounts at January 31, 2015 and October 31, 2014, respectively is $-0-.

Property and Equipment

All expenditures on the acquisition for property and equipment are recorded at cost and capitalized as incurred, provided the asset benefits the Company for a period of more than one year. Expenditures on routine repairs and maintenance of property and equipment are charged directly to operating expense. The property and equipment is depreciated based upon its estimated useful life after being placed in service. The estimated useful life of computer equipment is 3 years. When equipment is retired, sold or impaired, the resulting gain or loss is reflected in earnings. The Company incurred depreciation expense of $5,415 and $1,761 for the three months ended January 31, 2015 and 2014, respectively.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of Long-Lived Assets

In accordance with Accounting Standards Codification 360-10, “Property, Plant and Equipment”, the Company periodically reviews its long- lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. As of January 31, 2015, the Company did not impair any long-lived assets.

Website Development Costs

The Company accounts for website development costs in accordance with Accounting Standards Codification 350-50 “Website Development Costs”. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day to day operation of the website are expensed as incurred.

Software Development Costs

The Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by "350-40" Internal Use Software, requiring certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software and hardware technologies. Amortization of the capitalized software development costs begins when the product is available for general release to customers. Capitalized costs are amortized based on the greater of (a) the ratio of current gross revenues to the total current and anticipated future gross revenues, or (b) the straight-line method over the remaining estimated economic life of the product and is included in operating expenses in the accompanying statement of operations. For the three months ended January 31, 2015, the Company has capitalized $31,810 of costs associated with the development of a mobile app that has been placed into service on February 4, 2015 and will begin amortization of all capitalized costs in the second quarter of the current fiscal year.

Goodwill and Other Intangible Assets

In accordance with ASC 350-30-65 “Goodwill and Other Intangible Assets", the Company assesses the impairment of identifiable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include the following:

1.Significant underperformance compared to historical or projected future operating results;

2.Significant changes in the manner or use of the acquired assets or the strategy for the overall business; and

3.Significant negative industry or economic trends.

When the Company determines that the carrying value of an intangible may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flow, the Company records an impairment charge equal to the amount that the book value exceeds fair value. The Company measures fair value based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent to the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. The Company did not consider it necessary to record an impairment charge on its intangible assets during the three months ended January 31, 2015 and 2014.

Intellectual properties that have finite useful lives are amortized over their useful lives. The Company incurred amortization expense related to website development costs and other intangible assets of $509,109 and $344,337 for the three months ended January 31, 2015 and 2014, respectively. This amortization is included in technology and development expenses and general and administrative expenses in the accompanying statement of operations.

F-7

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derivative Instruments

The Company enters into financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument.

The Company estimates fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered consistent with the objective measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as freestanding warrants, the Company generally uses the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and assumption changes. Under the terms of the new accounting standard, increases in the trading price of the Company’s common stock and increases in fair value during a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application of non-cash derivative income.

Based upon ASC 815-25 the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible debentures. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date. 

Convertible Debt Instruments

The Company records debt net of debt discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt.

Fair Value of Financial Instruments

The Company adopted ASC topic 820, “Fair Value Measurements and Disclosures” (ASC 820), formerly SFAS No. 157 “Fair Value Measurements,” effective January 1, 2009. ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There was no impact relating to the adoption of ASC 820 to the Company’s unaudited consolidated financial statements.

ASC 820 also describes three levels of inputs that may be used to measure fair value:

Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Financial instruments consist principally of cash, accounts receivable, prepaid expenses, due from affiliates, accounts payable, accrued liabilities and other current liabilities. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short- term nature. The fair value of long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities. The carrying amounts approximate fair value. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exits; (2) delivery has occurred or services have been rendered; (3) the Company's price to its customer is fixed or determinable and (4) collectability is reasonably assured.

The Company provides its marketing and promotional services to agents or brokers via a web-based portal that allows for credit card payments. Customers may pay a monthly recurring fee or an annual fee. Some customers additionally pay a one-time set up fee. Monthly recurring fees are recognized in the month the service is rendered. Collection of one-time set up fees and annual services fees give rise to recognized monthly revenue in the then-current month as well as deferred revenue liabilities representing the collected fee for services yet to be delivered.

Cost of Revenues

Cost of revenues includes costs attributable to services sold and delivered. These costs include such items as credit card fees, sales commission to business partners, expenses related to our participation in industry conferences, and public relations expenses.

Technology and Development

Costs to research and develop our products are expensed as incurred. These costs consist of primarily of technology and development related expenses including third party contractor fees and technology software services. Technology and development also includes amortization of capitalized costs of the Nestbuilder website associated with the development of our marketplace. The amortization of the Nestbuilder website for the three months ending January 31, 2015 and 2014 is $127,272 and $-0-, respectively.

Advertising Expense

Advertising costs are charged to expense as incurred and are included in selling and promotions expense in the accompanying unaudited unaudited consolidated financial statements. Advertising expense for the three months ended January 31, 2015 and 2014 was $-0- and $25,880, respectively.

Share-Based Compensation

The Company computes share based payments in accordance with Accounting Standards Codification 718-10 “Compensation” (ASC 718-10). ASC 718-10 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services at fair value, focusing primarily on accounting for transactions in which an entity obtains employees services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of an entity’s equity instruments or that may be settled by the issuance of those equity instruments. In March 2005, the SEC issued SAB No. 107, Share-Based Payment (“SAB 107”) which provides guidance regarding the interaction of ASC 718-10 and certain SEC rules and regulations. The Company has applied the provisions of SAB 107 in its adoption of ASC 718-10. The Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50, Equity Based Payments to Non-Employees. The Company estimates the fair value of stock options by using the Black-Scholes option pricing model.

Foreign Currency and Other Comprehensive Income (Loss)

The functional currency of our foreign subsidiaries is typically the applicable local currency. The translation from the respective foreign currencies to United States Dollars (U.S. Dollar) is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income statement accounts using a weighted average exchange rate during the period. Gains or losses resulting from such translation are included as a separate component of accumulated other comprehensive income. Gains or losses resulting from foreign currency transactions are included in foreign currency income or loss except for the effect of exchange rates on long-term inter-company transactions considered to be a long-term investment, which are accumulated and credited or charged to other comprehensive income.

Transaction gains and losses are recognized in our results of operations based on the difference between the foreign exchange rates on the transaction date and on the reporting date. We recognized net foreign exchange gain of $9,613 and $7,512 for three months ended January 31, 2015 and 2014, respectively. The foreign currency exchange gains and losses are included as a component of other (income) expense, net, in the accompanying Unaudited Consolidated Statements of Operations. For the three months ended January 31, 2015 and 2014, the accumulated comprehensive gain was $8,063 and $205,529, respectively

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency and Other Comprehensive Income (Loss) (continued)

The exchange rate adopted for the foreign exchange transactions are the rates of exchange as quoted on an internet website. Translation of amount from Canadian dollars into United States dollars was made at the following exchange rates for the respective periods:

·As of January 31, 2015 - Canadian dollar $0.78970 to US $1.00

·For the three months ended January 31, 2015 - Canadian dollar $0.87365 to US $1.00

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities and net operating loss and tax credit carryforwards given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.

ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the unaudited consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Diluted loss per common share is considered to be equal to basic because it is anti-dilutive. The Company’s common stock equivalents include the following:

January 31,
2015
Series A convertible preferred stock issued and outstanding66,801,653
Series B convertible preferred stock issued and outstanding520,000
Warrants to purchase common stock issued, outstanding and exercisable17,017,730
Shares on convertible promissory notes11,458,119
95,797,502

Concentrations, Risks and Uncertainties

The Company’s operations are related to the real estate industry and its prospects for success are tied indirectly to interest rates and the general housing and business climates in the United States.

Reclassifications

Certain reclassifications have been made in the unaudited consolidated financial statements for comparative purposes.  These reclassifications have no effect on the results of operations or financial position of the Company.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an accounting standard update on revenue recognition that will be applied to all contracts with customers. The update requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be required to be applied on a retrospective basis, using one of two methodologies, and will be effective for annual reporting periods beginning after December 15, 2016, with early application not being permitted. The Company is currently evaluating the impact that this guidance will have on its financial position and results of operations.

In August 2014, the FASB issued an accounting standard update which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The update requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. It also requires management to provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. This guidance will be required for annual reporting periods ending after December 15, 2016, and interim reporting periods thereafter, with early application permitted. The Company is currently evaluating the impact that this guidance will have on its financial position and results of operations.

NOTE 3: GOING CONCERN

The accompanying unaudited 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.

The Company has incurred net losses of $1,665,072 for the three months ended January 31, 2015. At January 31, 2015, the Company had a working capital deficit of $2,452,543 and an accumulated deficit of $17,041,710. It is management’s opinion that these facts raise substantial doubt about the Company’s ability to continue as a going concern without additional debt or equity financing. The unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In order to meet its working capital needs through the next twelve months, the Company may consider plans to raise additional funds through the issuance of additional shares of common or preferred stock and or through the issuance of debt instruments. Although the Company intends to obtain additional financing to meet our cash needs, the Company may be unable to secure any additional financing on terms that are favorable or acceptable to it, if at all.

Note 4: Property and Equipment

At January 31, 2015, the Company's property and equipment are as follows:

  January 31, 2015
  Remaining    Accumulated  Net Carrying 
  Useful Life Cost  Depreciation  Value 
            
Computer equipment - office 1.5 Years $22,881  $11,797  $11,084 
               
Computer equipment - Nestbuilder website 2.1 Years  42,149   12,870   29,279 
               
    $65,030  $24,667  $40,363 

The Company has recorded $5,415 and $1,761 of depreciation expense for the three months ended January 31, 2015 and 2014, respectively. There was no property and equipment impairment recorded for the three months ended January 31, 2015 and 2014.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 5: INTANGIBLE ASSETS AND BUSINESS COMBINATION

The following table sets forth the intangible assets, both acquired and developed, including accumulated amortization:

  January 31, 2015
  Remaining    Accumulated  Net Carrying 
  Useful Life Cost  Amortization  Value 
               
Sales/Marketing agreement 1.2 Years $4,796,178  $3,099,033  $1,697,145 
               
Website development costs 2.2 Years  1,527,307   422,111   1,105,196 
               
Web platform/customer relationships - ReachFactor acquisition 2.3 Years  600,000   262,496   337,504 
               
Software development costs (not placed in service) 3.0 Years  84,000   -0-   84,000 
    $7,007,485  $3,783,640  $3,223,845 

During the three months January 31, 2015, the Company incurred expenditures of $31,810 for software development costs to develop a mobile app called "EZ FLIX" as a tool to assist users in converting still pictures to video. The Company capitalized internal software development costs subsequent to establishing technological feasibility of a software application in accordance with guidelines established by "350-40" Internal Use Software, requiring certain software development costs to be capitalized upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software and hardware technologies. Amortization of the capitalized software development costs begins when the product is available for general release to customers anticipated to be available on February 4, 2015. Capitalized costs are amortized based on the greater of (a) the ratio of current gross revenues to the total current and anticipated future gross revenues, or (b) the straight-line method over the remaining estimated economic life of the product. The app was placed in service on February 4, 2015 and amortization will begin in the second quarter of the current fiscal year.

Intangible assets are amortized on a straight-line basis over their expected useful lives, estimated to be 4 years, except for the website(s), which is 3 years. Amortization expense related to website development costs and intangible assets was $509,109 and $344,377 for three months ended January 31, 2015 and 2014, respectively.

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

At January 31, 2015, the Company’s accounts payable and accrued expenses are as follows:

  

January 31,

2015

 
Trade payables and accruals $218,240 
Accrued preferred stock dividends  915,447 
Accrued payroll and commissions  500,875 
Other liabilities  218,589 
  Total accounts payable and accrued expenses $1,853,151 

NOTE 7: DUE FROM/TO AFFILIATES

During the normal course of business, the Company receives and/or makes advances for operating expenses to/from its parent Company, Next 1 Interactive, Inc. As of January 31, 2015, the Company is due $337,093 as a result of such transactions.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 8: CONVERTIBLE NOTES PAYABLE

During the three months ended January 31, 2015, the Company:

·During December 2014 and January 2015, the Company received $935,000 in proceeds and issued two (2) year, 12% convertible promissory notes maturing on December 31, 2016 to various non-related third party investors. Interest shall accrue on the principal of the note at a rate equal to 12.0% per annum in cash and 12.0% in stock per annum based upon $0.10 (ten) cents per share. The noteholder, at their option, shall have the right, but not the obligation, at any time and from time to time, to convert all or any portion of the principal and interest into fully paid and non-assessable shares of Company common stock at the conversion price of $0.10 per share.

The Company evaluated the conversion feature of the promissory notes and determined the Company's common stock exceeded the conversion price as stated in each of the convertible promissory notes. Management determined that the favorable exercise price represented a beneficial conversion feature. Using the intrinsic value method at the convertible promissory note date, a total discount of $705,780 was recognized. The discount is being amortized over the terms of the convertible promissory notes using the straight-line method, which approximated the effective interest method. During the three months ending January 31, 2015, $14,399 of the debt discount has been amortized and recorded as interest expense. Stated interest charged to operations relating to this note for the three months ended January 31, 2015 and 2014 amounted to $11,955 and $-0-, respectively. As of January 31, 2015, the remaining principal balance is $935,000 and the remaining un-amortized discount balance was $691,441.

·On October 20, 2014, the Company issued a two (2) year, 7.5% convertible promissory note maturing on October 19, 2016 with a non-related third party investor valued at $150,000 and received $95,000 in cash proceeds net of $55,000 in loan origination fees included in the calculation of the debt discount. As an incentive, the Company issued 300,000 warrants to the holder with a two-year life and a fair value of approximately $14,760 to purchase shares of the Company’s common stock, $0.001 par value, per share, at an exercise price of $0.17 per share included as part of the debt discount. The fair value of the warrants was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate between 0.94% and 1.51%, dividend yield of -0-%, volatility factor between 115.05% and 124.65% and an expected life of 1.5 years. The value of these warrants was charged to interest expense with the offset to additional paid-in-capital. The noteholder, at their option, has the right from time to time, and at any time on or prior to the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock at the Conversion Price. The conversion price means the lower of the fixed conversion price of $0.20 or the variable conversion price. The variable conversion price shall mean 65% multiplied by the lowest of the VWAP (volume weighted average price) of the common stock during the twelve (12) consecutive trading day period ending on and including the trading day immediately preceding the conversion date.

Additionally, the Company accounted for the embedded conversion option liability in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determined the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. The fair value of embedded conversion option liability at January 31, 2015 was valued using the Black-Scholes model, resulting in a fair value of $571,630, previously valued at $305,220 resulting in a loss in the change in the fair value of derivatives totaling $266,410. The assumptions used in the Black-Scholes pricing model at January 31, 2015 are as follows: (1) dividend yield of 0%; (2) expected volatility of 359.42%, (3) risk-free interest rate of 0.47%, and (4) expected life of 1.70 years. During the three months ending January 31, 2015, $18,260 of the debt discount has been amortized and recorded as interest expense. Stated interest charged to operations relating to this note for the three months ended January 31, 2015 and 2014 amounted to $4,233 and $-0-, respectively. As of January 31, 2015, the remaining principal balance is $150,000 and the remaining un-amortized discount balance was $128,535.

NOTE 9: LOANS PAYABLE

There was no activity for the three months ended January 31, 2015 for the non-related third party investors and the remaining principal balance is $170,000.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 10: STOCKHOLDERS’ EQUITY

On July 31, 2014, the Board and the holders of a majority of the voting power of our shareholders approved an amendment to our articles of incorporation to increase our authorized shares of common stock to 250,000,000 from 125,000,000 and increased the Company's Series A Convertible Preferred Stock to 120,000,000 from 100,000,000. Additionally, on July 31, 2014, the Board designated the terms of Series B Convertible Preferred Stock and 1,000,000 shares were designated Series B Convertible Preferred stock.

The total number of shares of all classes of stock that the Company shall have the authority to issue is 375,000,000 shares consisting of: 250,000,000 shares of common stock with a $0.001 par value per shares; and 120,000,000 shares which may be designated as Series A Convertible Preferred stock with a $0.001 par value per share and 1,000,000 shares designated as Series B Preferred stock with at $0.001 par value per share.

Common Stock

During the three months ended January 31, 2015, the Company:

·issued 816,667 shares of its common stock along with 750,000 one year warrants with an exercise of $0.18 for cash proceeds of $75,000.

·issued 1,271,350 shares of its common stock for a total value of $170,685 for consulting fees rendered. The value of the common stock issued was based on the fair value of the stock at the time of issuance.

·issued 26,500 shares of its common stock valued at $3,180 to its employees as stock compensation. The value of the common stock issued was based on the fair value of the stock at the time of issuance.

·issued 900,000 shares of its common stock valued at $45,000 upon the conversion of the holders of Next 1 dual convertible Series B preferred shares held in its parent company Next 1 Interactive, Inc. These common shares were valued at the carrying value of the converted parent company Series B preferred shares.

·issued 770,000 shares of its common stock valued at $77,000 upon the conversion of the holders of Next 1 dual convertible Series C preferred shares held in its parent company Next 1 Interactive, Inc. These common shares were valued at the carrying value of the converted parent company Series C preferred shares.

·issued 549,945 shares of its common stock valued at $82,500 upon the conversion of the holders of Next 1 dual convertible Series D preferred shares held in its parent company Next 1 Interactive, Inc. These common shares were valued at the carrying value of the converted parent company Series D preferred shares.

·issued 100,000 shares of its common stock along with 100,000 one year warrants with an exercise price of $0.50 as settlement of prior year cash advances to purchase shares by third party investors valued at $30,000.

·evaluated the conversion feature of the convertible promissory notes and determined the Company's common stock exceeded the conversion price as stated in each of the convertible promissory notes representing a beneficial conversion feature. Using the intrinsic value method at the convertible promissory note date, a total discount of $705,780 was recognized as part of additional paid in capital.

·received 750,000 shares of its common stock originally held in escrow for Suresh Srinivasan, former Chief Operating Officer. These shares were retired at par valued at $750.

Common Stock Warrants

At January 31, 2015, there were 17,017,730 warrants outstanding with a weighted average exercise price of $0.40 and weighted average life of .21 years. During the three months ended January 31, 2015, the Company granted 2,350,000 warrants and 711,128 expired.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 10: STOCKHOLDERS’ EQUITY (continued)

Convertible Preferred Stock Series A

On October 14, 2014, the Company filed a certificate of amendment pursuant to the July 31st, 2014 Board of Directors approval to increase the Preferred A shares from 100,000,000 shares to 120,000,000 shares. As of January 31, 2015, the Company had 66,801,653 shares of Convertible Preferred Stock Series A issued and outstanding. The preferred shares were issued at $.001 par and bear dividends at a rate of 10% per annum payable on a quarterly basis when declared by the board of directors. Dividends accrue whether or not they have been declared by the board. At the election of the Company, Preferred Dividends may be converted into Series A Stock, with each converted share having a value equal to the market price per share, subject to adjustment for stock splits. In order to exercise such option, the Company delivers written notice to the holder. Each share of Series A Stock is convertible at the option of the holder thereof at any time into a number of shares of Common Stock determined by dividing the Stated Value of a $1 per share by the Conversion Price then in effect. The conversion price for the Series A Stock is equal to $1.00 per share. Each holder of Series A stock shall be entitled to one vote for each whole share of common stock that would be issuable upon conversion of such share on the record date for determining eligibility to participate in the action being taken.

In the event of (a) the sale, conveyance, exchange, exclusive license, lease or other disposition of all or substantially all of the intellectual property or assets of the Company, (b) any acquisition of the Company by means of consolidation, stock exchange, stock sale, merger of other form of corporate reorganization of the Company with any other entity in which the Company's stockholders prior to the consolidation or merger own less than a majority of the voting securities of the surviving entity, or (c) the winding up or dissolution of the Company, whether voluntary or involuntary (each such event in clause (a), (b) or (c) a "liquidation event"), the Board shall determine in good faith the amount legally available for distribution to stockholders after taking into account the distribution of assets among, or payment thereof over to, creditors of the Company (the "net assets available for distribution"). The holders of the Series A stock then outstanding shall be entitled to be paid out of the net assets available for Distribution (or the consideration received in such transaction) before any payment or distribution shall be made to the holders of any class of preferred stock ranking junior to the Series A Stock or to the Common Stock, an amount for each share of Series A Stock equal to all accrued and unpaid Preferred Dividends plus the Stated Value, as adjusted (the "Series A Liquidation Amount").

Accrued and declared preferred stock dividends on the outstanding preferred shares as of January 31, 2015 totaled $915,447 and are included in accounts payable and accrued expenses in the accompanying balance sheet. These preferred stock dividends were declared on December 28, 2014, to holders of record on August 31, 2014. Additional preferred stock dividends accruing, but have not been declared, on the outstanding preferred shares as of January 31, 2015 were $158,209.

During the three months ended January 31, 2015, the Company recorded no activity.

Convertible Preferred Stock Series B

On July 31, 2014, the Company's Board of Directors approved the creation of a new Series B Preferred stock and on October 14, 2014 a certificate of designation was filed with the state of Delaware designating 1,000,000 shares with a par value of $0.001, a stated value of $5.00 per share and convertible into the Company's common stock at $0.05 per share. As of January 31, 2015, the Company had 26,000 shares of Convertible Preferred Stock Series B issued and outstanding. The Series B Preferred stock will bear dividends at a rate of 10% per annum and shall accrue on the stated value of such shares of the Series B Stock. Dividends accrue whether or not they have been declared by the Board of Directors. At the election of the Company, it may satisfy its obligations hereunder to pay dividends on the Series B stock by issuing shares of common stock to the holders of Series B stock on a uniform and prorated basis. Each share of Series B Stock is convertible at the option of the holder thereof at any time into a number of shares of Common Stock determined by dividing the Stated Value by the Conversion Price then in effect. The conversion price for the Series B Stock is equal to $0.05 per share. Each holder of Series B stock shall be entitled to the number of votes equal to two hundred (200) votes for each shares of Series B stock held by them.

In the event of (a) the sale, conveyance, exchange, exclusive license, lease or other disposition of all or substantially all of the intellectual property or assets of the Company, (b) any acquisition of the Company by means of consolidation, stock exchange, stock sale, merger of other form of corporate reorganization of the Company with any other entity in which the Company's stockholders prior to the consolidation or merger own less than a majority of the voting securities of the surviving entity, or (c) the winding up or dissolution of the Company, whether voluntary or involuntary (each such event in clause (a), (b) or (c) a "liquidation event"), the Board shall determine in good faith the amount legally available for distribution to stockholders after taking into account the distribution of assets among, or payment thereof over to, creditors of the Company (the "net assets available for distribution"). The holders of the Series B stock then outstanding shall be entitled to be paid out of the net assets available for Distribution (or the consideration received in such transaction) before any payment or distribution shall be made to the holders of any class of preferred stock ranking junior to the Series B Stock or to the Common Stock, an amount for each share of Series B Stock equal to all accrued and unpaid Preferred Dividends plus the Stated Value, as adjusted (the "Series B Liquidation Amount"). Preferred stock dividends accruing, but have not been declared, on the outstanding preferred shares as of January 31, 2015 were $5,540.

REALBIZ MEDIA GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 10: STOCKHOLDERS’ EQUITY (continued)

Convertible Preferred Stock Series B (continued)

During the three months ended January 31, 2015, the Company:

·issued 26,000 shares of its Series B Preferred stock along with 1,250,000 five (5) year Next 1 Interactive, Inc. common stock warrants with exercise prices between $0.01 to $0.05 valued at $130,000, based on subscription agreements. $100,000 was in settlement of prior year cash advances to purchase shares by third party investors and the balance of $30,000 was applied to Next 1 Interactive, Inc debt obligation.

NOTE 11: RELATED PARTY TRANSACTIONS

During the three months ended January 31, 2015, the Company paid $800 a month in rent for office space on behalf of an officer of the Company, for Company use.

Equity transactions with the Company's parent are described in Note 10.

 

NOTE 12: FAIR VALUE MEASUREMENT AND DISCLOSURE

 

The Company has adopted ASC 820,Fair Market Measurement and Disclosures including the application of the statement to non-recurring, non-financial assets and liabilities. The adoption of ASC 820 did not have a material impact on the Company’s fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

 

Level 1-Quoted prices in active markets for identical assets or liabilities.
Level 2-Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3-Unobservable inputs based on the Company’s own assumptions,

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

Fair Value Measurements at OctoberJanuary 31, 2011 and 2012 respectively using:2015 is summarized below:

 

Description Quoted Prices in Active Markets for Identical Assets
(Level 1)
  Significant Other Observable Inputs
(Level 2)
  Significant Unobservable Inputs
(Level 3)
  Total 
             
Cash Equivalents $111,237  $-  $-  $111,237 
October 31, 2011 $111,237  $-  $-  $111,237 
Cash Equivalents $36,408  $-  $-  $36,408 
October 31, 2012 $36,408  $-  $-  $36,408 

Description Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable Inputs
(Level 3)
  Total 
             
Cash $141,204  $-  $-  $141,204 
Derivative liabilities  -   -   517,630   571,630 
January 31, 2015 $141,204  $-  $517,630  $712,834 

 

NOTE 13: SUBSEQUENT EVENTS

 

Pursuant to FASB ASC 855, managementThe Company has evaluated allsubsequent events occurring after the balance sheet date and through March 17, 2015, the date that these financial statements have been issued, has identified the following subsequent events and analyzing the transactions that occurred from November 1, 2012 through the date of issuance of the financial statements. During this period we did not have any significant subsequent events, except as disclosed below:for proper accounting treatment:

 

During February and March 2015, the Company:

·On February 26, 2015, the our parent Company, Next 1, entered an exchange agreement hereby exchanging $441,403 of Next 1 debt, Next 1 Series A Preferred and Next 1 Series B Preferred for the issuance of 5,514,030 shares of RealBiz common stock.

·received $195,000 in proceeds and issued convertible promissory notes with interest rates of 12% per annum, maturity dates of December 31, 2016 and with a range of fixed rate conversion features.

·received $15,000 in proceeds and issued 150,000 shares of common stock.

 

 

15,195,678

7,475,000 SHARES OF COMMON STOCK

 

REALBIZ MEDIA GROUP, INC.

 

PROSPECTUS

 

December 13, 2013

 

Neither we nor the Selling StockholdersStockholder have authorized any dealer, salesperson or other person to give any information or to make any representations not contained in this prospectus or any prospectus supplement. You must not rely on any unauthorized information. This prospectus is not an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. The information in this prospectus is current as of the date of this prospectus. You should not assume that this prospectus is accurate as of any other date.

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

 

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

 

We estimate that expenses in connection with the distribution described in this registration statement (other than brokerage commissions, discounts or other expenses relating to the sale of the shares of common stock underlying the Warrantssecurities held by the selling security holders)Selling Stockholder) will be as set forth below. We will pay all of the expenses with respect to the distribution, and such amounts, with the exception of the Securities and Exchange Commission registration fee, are estimates.

 

SEC registration fee $4,000  $113 
Accounting fees and expenses  5,000   5,000 
Legal fees and expenses  15,000   20,000 
Printing and related expenses  3,000   3,000 
Transfer agent fees and expenses  5,000   5,000 
Miscellaneous  -   0 
Total $32,000  $33,113 

 

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act of 1933, as amended, or the Securities Act.

 

Our amended and restated certificate of incorporation provides for indemnification of our directors and executive officers to the maximum extent permitted by the Delaware General Corporation Law, and our amended and restated bylaws provide for indemnification of our directors and executive officers to the maximum extent permitted by the Delaware General Corporation Law.

 

In any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us, within the meaning of the Securities Act, against certain liabilities.

 

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

 

The following information sets forth certain information with respect to all securities which we have sold during the last three years.  We did not pay any commissions in connection with any of these sales.

 

Set forth below is information regarding securities sold by us during the three months ended January 31, 2015 that were not registered under the Securities Act:

·issued 816,667 shares of its common stock along with 750,000 one year warrants with an exercise of $0.18 for cash proceeds of $75,000.

·issued 1,271,350 shares of its common stock for a total value of $170,685 for consulting fees rendered.

·issued 26,500 shares of its common stock valued at $3,180 to its employees as stock compensation.

·issued 900,000 shares of its common stock valued at $45,000 upon the conversion of the holders of convertible Series B preferred shares held in its parent company Next 1 Interactive, Inc.

·issued 770,000 shares of its common stock valued at $77,000 upon the conversion of the holders of convertible Series C preferred shares held in its parent company Next 1 Interactive, Inc.

·issued 549,945 shares of its common stock valued at $82,500 upon the conversion of the holders of convertible Series D preferred shares held in its parent company Next 1 Interactive, Inc.

·issued 100,000 shares of its common stock along with 100,000 one year warrants with an exercise price of $0.50 as settlement of prior year cash advances to purchase shares by third party investors valued at $30,000.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated there under), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

Set forth below is information regarding securities sold by us subsequent to October 31, 2014 that were not registered under the Securities Act:

In connection with an Asset Purchase Agreement, we issued 1,800,000 shares of our common stock to Alex Aliksanyan and 500,000 shares of common stock to Julio Fernandez. In addition, Next 1 Interactive, Inc. issued 60,000 shares of its Series D Preferred Stock to the sellers under the Asset Purchase Agreement, which is convertible into 2,000,000 shares of our common stock.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated there under), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

Set forth below is information regarding securities sold by us during the three months ended October 31, 2014 that were not registered under the Securities Act:

·Issued 1,513,600 shares of our common stock for a total value of $197,040 for consulting fees rendered.  The value of the common stock issued was based on the fair value of the stock at the time of issuance.

·Issued 5,700,00 shares of our common stock valued at $285,000 upon the conversion of the holders of convertible Series B preferred shares held in its parent company Next 1 Interactive, Inc.

·Issued 1,300,000 shares of our common stock valued at $130,000 upon the conversion of the holders of convertible Series C preferred shares held in its parent company Next 1 Interactive, Inc.

·Issued 1,049,895 shares of our common stock valued at $157,500 upon the conversion of the holders of convertible Series D preferred shares held in its parent company Next 1 Interactive, Inc.

·issued 1,500,000 shares at the conversion rate of $0.05 per share, upon request of Next 1 Interactive Inc. noteholders, to convert $75,000 in principal.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated there under), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

Set forth below is information regarding securities sold by us during the three months ended July 31, 2014 that were not registered under the Securities Act:

·Issued 3,213,546 shares of our common stock along with 2,342,223 one year warrants with an exercise price of $0.18 for cash proceeds of $407,568.
·issued 2,815,111 shares of its common stock upon exercise of 2,815,111 outstanding warrants for cash proceeds of $506,520.
·Issued 246,080 shares of our common stock along with 44,530 one year warrants with an exercise price of $1 for a total value of $55,937 for consulting fees rendered.  The value of the common stock issued was based on the fair value of the stock at the time of issuance.
·Issued 970,000 shares of our common stock valued at $48,500 upon the conversion of the holders of convertible Series B  preferred shares held in its parent company Next 1 Interactive, Inc.
·Issued 70,660 shares of our common stock valued at $10,600 upon the conversion of the holders of convertible Series D preferred shares held in its parent company Next 1 Interactive, Inc.
·issued 2,000,000 shares of common stock as part of employment agreements in place with executives valued at $300,000. The value of the common stock was based on the fair value of the stock at the time of issuance.
·issued 2,000,000 shares of common stock upon execution of an Asset Sale Agreement with ReachFactor, Inc. pursuant to which the Company acquired substantially all of the assets of ReachFactor and the Company assumed certain liabilities of ReachFactor not to exceed $25,000. The value of the common stock was based on the fair value of the stock at the time of issuance and totaled $300,000.
·issued 1,366,666 shares at the conversion rate of $0.15 per share, upon the noteholder's request, to convert the remaining principal balance of $205,000.
·issued 100,000 shares at the conversion rate of $0.15 per share, upon the noteholder's request, to convert $15,000 in principal leaving a remaining principal balance of $60,000.
·issued 70,789 shares upon the exercise of 70,879 warrants in settlement of consulting fees valued at $12,758.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated there under), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

Set forth below is information regarding securities sold by us during the three months ended April 30, 2014 that were not registered under the Securities Act:

·Issued 626,833 shares of our common stock along with 626,833 one year warrants with an exercise price between a $1.00 and $1.25 for cash proceeds of $355,100.

·Issued 75,900 shares of our common stock along with 8,400 one year warrants with an exercise price of $1 for a total value of $67,683 for consulting fees rendered.  The value of the common stock issued was based on the fair value of the stock at the time of issuance.

·Issued 200,000 shares of our common stock valued at $10,000 upon the conversion of the holders of convertible Series B preferred shares held in its parent company Next 1 Interactive, Inc.

·Issued 1,600,000 shares of our common stock valued at $80,000 upon the conversion of the holders of convertible Series D preferred shares held in its parent company Next 1 Interactive, Inc.

·Issued 12,000,000 one (1) year common stock warrants with an exercise price of $0.50 for a debt modification of convertible promissory notes held in its parent company Next 1 Interactive, Inc. valued at $4,809,308.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

Set forth below is information regarding securities sold by us during the three months ended January 31, 2014 that were not registered under the Securities Act:

·Issued 110,000 shares of our common stock along with 110,000 one year warrants with an exercise price between a $1.00 and $1.25 for cash proceeds of $80,000.

·Issued 160,000 shares of our common stock upon exercise of 160,000 outstanding warrants for cash proceeds of $160,000.

·Issued 27,000 shares of our common stock along with 9,000 one year warrants with an exercise price $1.00 as settlement of $13,500 of proceeds received in advance for prior fiscal year subscription agreements.

·Issued 298,850 shares of our common stock along with 182,850 one year warrants with an exercise price of $1 for a total value of $649,405 for consulting fees rendered.  The value of the common stock issued was based on the fair value of the stock at the time of issuance.

·Issued 8,712,418 shares of our common stock valued at $517,375 upon the conversion of the holders of convertible preferred shares held in its parent company Next 1 Interactive, Inc.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

 Set forth below is information regarding securities sold by us during the year ended October 31, 2013 that were not registered under the Securities Act.

·Issued 7,646,000 shares of our common stock along with 7,609,000 one year warrants with an exercise price of $1 for cash proceeds of $3,826,000.
·Issued 607,600 shares of its common stock along with 133,018 one year warrants with an exercise price of $1 for a total value of $646,030 for consulting fees rendered.  The value of the common stock was issued was based on the fair value of the stock at the time of issuance.
·Issued 32,095,356 shares of its common valued at $6,741,012 upon the conversion of the holders of convertible preferred shares and promissory notes held in its parent company Next 1 Interactive, Inc.
·

Issued 2,166,660 shares of its common stock valued at $0.15 per share upon the conversion of notes in the aggregate principal amount of $325,000. These shares were issued in reliance upon the exemption provided under Section 3(a)(9) of the Securities Act of 1933

Issued 5,990,238 shares of its common stock valued at $299,512 upon the conversion of 5,990,238 shares of the Company's Series A Preferred stock. These shares were issued in reliance upon the exemption provided under Section 3(a)(9) of the Securities Act of 1933

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

41

Issuance of Securities Upon Exchange Transaction

 

For sales of unregistered securities made by the Company in the Exchange Transaction (i.e., the issuance of an aggregate of 100,000,000 shares of Series A Stock, including the issuance of an aggregate of 7,000,000 shares of Series A Stock to our Chief Executive Officer and former Chief Financial Officers, Messrs. Buntz and Wicker), we relied on the exemption from registration provided under Sections 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), on the basis that there were only three recipients of such shares and they were either accredited investors or took the shares as a result of a private negotiation with restrictions placed on all such shares limiting future transfers except in accordance with the Securities Act. In consideration of the share issuance to Messrs. Buntz and Wicker, those individuals relinquished their right to payment of approximately (i) in the case of Mr. Buntz, $246,835 in principal amount of loans earlier made to the Company, together with related accrued but unpaid interest thereon of approximately $106,663, and accrued but unpaid salary in the amount of $48,000, and (ii) in the case of Mr. Wicker, accrued but unpaid salary in the amount of approximately $53,536.

Issuances by Company Prior to Exchange Transaction (Webdigs, Inc.)

In March 2012, the Company sold the “Webdigs” domain, technology and certain trademarks to Fiontrai II, LLC for $15,000. In connection with this transaction, the obtained a royalty agreement with Fiontrai II pursuant to which Webdigs will be owed royalties from Fiontrai upon Fiontrai’s licensing to third parties of the technology purchased from the Company. The Company subsequently sold its royalty rights to Robert A. Buntz, Jr., its Chief Executive Officer and a director and significant shareholder, in exchange for a $5,000 principal reduction in an earlier loan Mr. Buntz had made to the Company to furnish working capital.

 

On April 3, 2012, a convertible note of $30,000 plus accrued interest of $6,624 was converted into 3,662,400 shares of common stock at a conversion price of $0.01 per share. The issuance was not a public offering as defined in Regulation S promulgated under the Securities Act of 1933, because the offer and sale was made to an insubstantial number of persons and because of the manner of the offering.  promulgated under the Securities Act and  Each investor represented, among other things, that he or she was not a “U.S. person,” as that term is defined in Rule 902(k) of Regulation S, that he or she was outside the United States when receiving and executing their subscription agreement, that their principal address is outside the United States, that they have no present intention of becoming a resident of (or moving their principal place of business to) the United States and that the shares were being acquired solely for their own account and not for the account or the benefit of a U.S. Person.  

  

In March 2012, the Company sold the “Webdigs” domain, technology and certain trademarks to Fiontrai II, LLC for $15,000. In connection with this transaction, the obtained a royalty agreement with Fiontrai II pursuant to which Webdigs will be owed royalties from Fiontrai upon Fiontrai’s licensing to third parties of the technology purchased from the Company. The Company subsequently sold its royalty rights to Robert A. Buntz, Jr., its Chief Executive Officer and a director and significant shareholder, in exchange for a $5,000 principal reduction in an earlier loan Mr. Buntz had made to the Company to furnish working capital.

On March 11, 2011, the Company’s Board of Directors granted the Company’s then-Chief Financial Officer, Edward Wicker, the right to convert up to $96,384 of accrued salary into shares of the Company’s common stock at a price of $2.00 per share (on a post-split basis). On March 11, 2011, the Chief Financial Officer exercised this right and converted $96,384 of his accrued but unpaid compensation owed to him by the Company, acquiring 48,192 common shares.

On March 15, 2011, the Company’s then-Chairman and Chief Executive Officer, Robert A. Buntz, Jr., exercised his right to convert into common shares a $300,000 in principal amount of the convertible promissory note of the Company at a price of $2.00 per share (on a post-split basis) resulting in the issuance of an additional 150,000 common shares.

In May 2010, the Company granted 500 shares of treasury stock to an employee as compensation. The shares were valued at $4,000 ($8.00 per share).

For these issuances of common stock, unless otherwise stated we relied on the exemption from federal registration under Section 4(a)(2) of the Securities Act and, in those instances where the issuances were made to affiliates or accredited investors, upon Rule 506 promulgated thereunder. In that regard, we relied on Rule 506 based on the fact that the investors who purchased these securities qualified as an “accredited investors” under Rule 501 of the Securities Act. In all cases, investors had knowledge and experience in financial and business matters such that they were capable of evaluating the risks of the investment. The securities offered and sold in the transactions were not registered under the Securities Act and therefore may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

ITEM 16. EXHIBITS

 

3.1Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 10-12b filed with the Securities and Exchange Commission on June 20, 2008)2008, File No. 001-34106)
  
3.2Amendment to Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.2 of the Registrant’s Form 10-12b filed with the Securities and Exchange Commission on June 20, 2008)2008, File No. 001-34106)
  
3.3Bylaws.Bylaws (Incorporated by reference to Exhibit 3.3 of the Registrant’s Form 10-12b filed with the Securities and Exchange Commission on June 20, 2008)2008, File No. 001-34106)
  
3.4Certificate of Ownership (Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on October 15, 2012)2012, File No. 001-34106)
3.5Certificate of Designations for Series A Convertible Preferred Stock(Incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on September 23, 2013, File No. 001-34106)
3.6Amendment to the Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.6 of the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2015, File No. 001-34106)
3.7Amendment to the Certificate of Designations for Series A Preferred Stock (Incorporated by reference to Exhibit 3.7 of the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2015, File No. 001-34106)
3.8Certificate of Designations for Series B Preferred Stock (Incorporated by reference to Exhibit 3.8 of the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2015, File No. 001-34106)
3.9Certificate of Designations of Series C Preferred Stock (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 8, 2015, File No. 001-34106)
4.1Certificate of Designations for Next 1 Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 4.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on September 23, 2013, File No. 001-34106)
4.2Certificate of Designations for Next 1 Series C Convertible Preferred Stock(Incorporated by reference to Exhibit 4.2 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on September 23, 2013, File No. 001-34106)
4.3Certificate of Designations for Next 1 Series D Convertible Preferred Stock(Incorporated by reference to Exhibit 4.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on September 23, 2013, File No. 001-34106)
4.4Note Amendment between Next 1 and Mark A. Wilton, as countersigned by Realbiz Media Group, Inc. dated February 24, 2014 (Incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 2014, File No. 001-34106)
4.5Warrant issued by Realbiz Media Group, Inc. to Mark A. Wilton (Incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 2014, File No. 001-34106)
4.6Convertible Note for Himmil Investments, Ltd., dated October 20, 2014 (1)
4.7Warrant for Himmil Investments, Ltd., dated October 20, 2014 (1)
4.8Registration Rights Agreement, dated October 20, 2014 (1)
4.9Form of Convertible Note for Himmil Investments, Ltd.(1)
4.10Form of Warrant for Himmil Investments, Ltd. (1)
4.11Form of Registration Rights Agreement (1)
4.12Form of Amendment No. 1 to Convertible Note (1)
4.13

Form of 12% + 12% Convertible Promissory Note (Incorporated by reference to Exhibit 4.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 17, 2015, File No. 001-34106)

  
5.1Legal Opinion of Gracin & Marlow, LLP (2)(1)
10.1Employment Agreement with Deborah Linden (Incorporated by reference to Exhibit 10.1 of the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2014, File No. 001-34106)*

10.2Employment Agreement with  Patrick Scheltgen (Incorporated by reference to Exhibit 10.2 of the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2014, File No. 001-34106)*
10.3Employment Agreement with Mark Lemon (Incorporated by reference to Exhibit 10.3 of the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2014, File No. 001-34106)*
10.4Asset Purchase Agreement with ReachFactor (Incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014, File No. 001-34106)*
10.5Employment Agreement with Suresh Srinivasan (Incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014, File No. 001-34106)*
10.6Employment Agreement with Suresh Srinivasan (Incorporated by reference to Exhibit 10.3 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 30, 2014, File No. 001-34106)*
10.7Employment Agreement with Alex Alikanyan (Incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 23, 2015, File No. 001-34106)*
10.8Securities Purchase Agreement between the Company and Himmil Investments, Ltd., dated October 20, 2014 (1)
10.9Securities Purchase Agreement between the Company and Himmil Investments, Ltd., dated May 12, 2015 (1)
  
21List of Subsidiaries (Incorporated by reference to Exhibit 10.3410.21 of the Registrant’s Annual Report on Form 10-K filed March 30, 2012.)February 13, 2015)
  
23.1Consent of Independent Registered Accounting Firm (1)
23.2Consent of Gracin & Marlow, LLP (included in Exhibit 5.1)(1)
24Power of Attorney (1)

 

23.2(2)
  
 24Power of Attorney (Included on signature page)

_____________  

(1)Filed herewith.

(2)To be filed by Amendment

 

* Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report

 

 

ITEM 28.17. UNDERTAKINGS

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants, pursuant to the provisions described under Item 15 or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification by it is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

The undersigned Registrant hereby undertakes:

 

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;

 

(ii) to reflect in the prospectus any acts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement (notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement); and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; provided, however, that subparagraphs (i), (ii) and (iii) do not apply if the information required to be included in a post-effective amendment by those subparagraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, that are incorporated by reference in this registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

 

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) To remove from registration, by means of a post-effective amendment, any of the securities being registered which remain unsold at the termination of the offering.

  

(4) That, for the purpose of determining liability under the Securities Act to any purchaser:

(i) if the Registrant is relying on Rule 430B: (A) each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and (B) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

(ii) if the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) That, for the purpose of determining liability under the Securities Act to any purchaser in the initial distribution of the securities the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and (iv) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

 

(6) That,(5) Insofar as indemnification for purposes of determining any liabilityliabilities arising under the Securities Act each filingmay be permitted to directors, officers and controlling persons of the Registrant’s annual reportCompany pursuant to Section 13(a)the foregoing provisions, or Section 15(d)otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of 1934 thatexpenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is incorporatedasserted by referencesuch director, officer or controlling person in this registration statement shallconnection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be deemedgoverned by the final adjudication of such issue.

(6) Each prospectus filed pursuant to beRule 424(b) as part of a new registration statement relating to the securities offered therein, and thean offering, of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(7) That for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectusother than registration statements relying on Rule 430B or other than prospectuses filed as part of this registration statement in reliance uponon Rule 430A, and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of thisand included in the registration statement as of the date it is first used after effectiveness.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time itof contract of sale prior to such first use, supersede or modify any statement that was declared effective.made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(8) That, for(7) The undersigned registrant hereby undertakes that:

(1)For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

B. Request for Acceleration of Effective Date

Insofar as indemnification for liabilities arising under the Securities Act each post-effective amendment that contains a formmay be permitted to directors, officers and controlling persons of prospectus shall be deemed to be a new registration statement relatingthe Company pursuant to the securities offered therein, andforegoing provisions, or otherwise, the offering of such securities atCompany has been advised that time shall be deemed to bein the initial bona fide offering thereof.

(9) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2)opinion of the Securities Act.and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on the Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Weston, State of Florida, DecemberMay 13, 2013.2015.

 

 REALBIZ MEDIA GROUP, INC.
    
 By:/s/ William Kerby 
 William Kerby
 Chief Executive Officer and Director
 (Principal Executive Officer)
 Date: DecemberMay 13, 20132015

 

 By:/s/ Adam Friedman 
 Adam Friedman
 Chief Financial Officer
 (Principal Financial and Principal Accounting Officer)
 Date: DecemberMay 13, 20132015

 

POWER OF ATTORNEY

 

We, the undersigned hereby severally constitute and appoint each of William Kerby and Adam Friedman our true and lawful attorney and agent, with full power to each to sign for us, and in our names in the capacities indicated below, any and all amendments to this registration statement, any subsequent registration statements pursuant to Rule 462 of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney may be executed in counterparts.

 

Pursuant to the requirements of the Securities Act 1933, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

  By:/s/ William Kerby 
Date: DecemberMay 13, 20132015 William Kerby
  Chief Executive Officer and Chairman
  (Principal Executive Officer)

 

  By:/s/ Adam Friedman 
Date: DecemberMay 13, 20132015 Adam Friedman 
  Chief Financial Officer 
  (Principal Financial and Principal Accounting Officer) 
    
Date: DecemberMay 13, 20132015 By:/s/ Don Monaco 
  Don Monaco 
  Director 

 

Date: DecemberMay 13, 20132015 By:/s/ Doug Checkeris 
  Doug Checkeris
  Director
   
Date: DecemberMay 13, 20132015 By:/s/ Deb LindenAlex Aliksanyan 
  Alex Aliksanyan
  Director
   
Date: DecemberMay 13, 2013By:/s/ Robert Buntz
Director

Date: December 13, 20132015 By:/s/ Keith White 
  Keith White
  Director

 

Date: May 13, 2015By:/s/ Arun Srinivasan
Arun Srinivasan
Director

Date: May 13, 2015By:/s/ Pat LaVecchia
Pat LaVecchia
Director

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