UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| [X] | QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013 |
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| | OR |
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| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 000-54635
EXCELSIS INVESTMENTS, INC.
Formerly, Pub Crawl Holdings Inc.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
27-2758155
(I.R.S. Employer Identification No.)
801 West Bay Drive, Suite 470
Largo, Florida 33770
(Address of principal executive offices, including zip code.)
727-330-2731
(Registrant’s telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [ ] NO [X]
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,”“non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| | Large Accelerated Filer | [ ] | | Accelerated Filer | [ ] |
| | Non-accelerated Filer | [ ] | | Smaller Reporting Company | [X] |
| | (Do not check if smaller reporting company) | | | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
196,198,413 as of November 18, 2013.
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| Financial Statements. | 3 |
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| | Financial Statements: | |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 11 |
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| Quantitative and Qualitative Disclosures About Market Risk. | 14 |
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| Controls and Procedures. | 14 |
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| Risk Factors. | 14 |
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| Other Information. | 14 |
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| Exhibits. | 15 |
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PART I – FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
PUB CRAWL HOLDINGS INC.
Consolidated Balance Sheets
| | September 30, 2013 $ | December 31, 2012 $ |
| | (unaudited) | |
| ASSETS | | |
| Cash | 57,271 | 103,241 |
| Due from factoring of accounts receivable | 226,047 | – |
| Prepaid expenses | 4,110 | 25 |
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| Total Assets | 287,428 | 103,266 |
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| LIABILITIES | | |
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| Current Liabilities | | |
| Accounts payable and accrued liabilities | 194,731 | 20,341 |
| Derivative liabilities | 664,397 | 395,285 |
| Loan payable | 100 | – |
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| Total Current Liabilities | 859,228 | 415,626 |
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Convertible debenture, net of unamortized discount of $132,937 and $144,856, respectively | 17,063 | 5,144 |
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| Total Liabilities | 876,291 | 420,770 |
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| STOCKHOLDERS’ DEFICIT | | |
| Preferred Stock | | |
Authorized: 500,000,000 preferred shares with a par value of $0.001 per share Issued and outstanding: nil preferred shares | – | – |
| Common Stock | | |
Authorized: 750,000,000 common shares with a par value of $0.001 per share Issued and outstanding: 196,198,413 and 125,500,000 common shares, respectively | 196,199 | 125,500 |
| Additional paid-in capital | 52,167 | (125,500) |
| Accumulated deficit | (837,229) | (317,504) |
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| Total Stockholders’ Deficit | (588,863) | (317,504) |
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| Total Liabilities and Stockholders’ Deficit | 287,428 | 103,266 |
(The accompanying notes are an integral part of these consolidated financial statements)
PUB CRAWL HOLDINGS INC.
Consolidated Statements of Operations (unaudited)
| | Three months ended September 30, 2013 $ | Nine months ended September 30, 2013 $ | Accumulated from November 7, 2012 (Date of Inception) to September 30, 2013 $ |
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| Revenues | 2,140,239 | 2,190,239 | 2,190,239 |
| Cost of Sales | (1,794,871) | (1,794,871) | (1,794,871) |
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| Gross Margin | 345,368 | 395,368 | 395,368 |
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| Operating Expenses | | | |
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| Consulting | 22,290 | 25,796 | 50,796 |
| General and administrative | 142,407 | 263,959 | 270,775 |
| Payroll | 158,588 | 249,725 | 269,207 |
| Professional fees | 30,298 | 83,003 | 97,753 |
| Transfer agent fees | 120 | 360 | 360 |
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| Total Operating Expenses | 353,703 | 622,843 | 688,891 |
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| Loss Before Other Expense | (8,335) | (227,475) | (293,523) |
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| Other Income (Expense) | | | |
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Gain (Loss) on change in fair value of derivative liabilities | 50,988 | (269,112) | (514,397) |
| Interest expense | (9,860) | (23,138) | (29,309) |
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| Total Other Income (Expense) | 41,128 | (292,250) | (543,706) |
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| Net Income (Loss) | 32,793 | (519,725) | (837,229) |
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| Net Earnings (Loss) per Share – Basic | 0.00 | (0.00) | |
| Net Earnings (Loss) per Share - Diluted | 0.00 | (0.00) | |
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| Weighted Average Shares Outstanding – Basic | 188,766,391 | 148,967,062 | |
| Weighted Average Shares Outstanding – Diluted | 323,901,391 | 748,967,062 | |
(The accompanying notes are an integral part of these consolidated financial statements)
PUB CRAWL HOLDINGS INC.
Consolidated Statements of Cashflows (unaudited)
| | Nine months ended September 30, 2013 | Accumulated from November 7, 2012 (date of inception) to September 30, 2013 |
| | $ | $ |
| Operating Activities | | |
| Net loss for the period | (519,725) | (837,229) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | |
| Amortization of discount on convertible debenture | 11,919 | 17,063 |
| Loss on change in fair value of derivative liabilities | 269,112 | 514,397 |
| Changes in operating assets and liabilities: | | |
| Accounts receivable | (49,432) | (49,432) |
| Prepaid expenses and deposits | (4,085) | (4,110) |
| Accounts payable and accrued liabilities | 53,041 | 73,382 |
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| Net cash used in operating activities | (239,170) | (285,929) |
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| Investing Activities | | |
| Cash received from acquisition of Career Start, Inc. | 43,000 | 43,000 |
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| Net cash provided by investing activities | 43,000 | 43,000 |
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| Financing Activities | | |
| Proceeds from issuance of common stock | 150,200 | 150,200 |
| Proceeds from issuance of convertible debentures | – | 150,000 |
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| Net cash provided by financing activities | 150,200 | 300,200 |
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| Increase (decrease) in cash | (45,970) | 57,271 |
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| Cash, beginning of period | 103,241 | – |
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| Cash, end of period | 57,271 | 57,271 |
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| Non-cash transactions | | |
| Discount on convertible note due to derivative liability | – | 150,000 |
| Effect of reverse merger | – | 125,500 |
| Fair value of shares issued for the acquisition of Career Start, Inc. | 297,000 | 297,000 |
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| Supplemental Disclosures | | |
| Interest paid | – | – |
| Income tax paid | – | – |
(The accompanying notes are an integral part of these consolidated financial statements)
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
1. Nature of Operations and Continuance of Business
Pub Crawl Holdings, Inc. (the “Company”) was incorporated in the state of Nevada on May 27, 2010. On June 14, 2010, the Company entered into an Assignment Agreement (the "Acquisistion") with PB PubCrawl.com LLC (“PubCrawl”), a California limited liability company, whereby the Company acquired a 100% interest in the member shares of PubCrawl in exchange for 5,000,000 common shares of the Company. The Acquisition was accounted for in accordance with ASC 805-50, Related Issues, as the companies were under common control prior to acquisition. On September 3, 2012, the Company sold their rights to PubCrawl to the former President and Director of the Company.
On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. (“Mobile Dynamic”), a company incorporated in the state of Florida on November 7, 2012, in exchange for the issuance of 10,000,000 common shares. As part of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director of the Company and the management and directors of Mobile Dynamic acquired 75,000,000 common shares of the Company in a private transaction with the former President and Director of the Company. Effectively, Mobile Dynamic held 73% of the issued and outstanding common shares of the Company and the transaction has been accounted for as a reverse merger, where Mobile Dynamic is deemed to be the acquirer for accounting purposes.
On July 13, 2013, the Company entered into a share exchange agreement with Career Start, Inc. (“Career”), a private corporation formed under the state of Florida on February 4, 2013. Under the terms of the agreement, the Company acquired the net assets of Career in exchange for 47,142,858 common shares of the Company and became a wholly-owned subsidiary of the Company. The acquisition was between two related parties and has been accounted on a cost basis, as disclosed in Note 4 of the financial statements.
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the period ended September 30, 2013, the Company has a working capital deficit of $571,800 and an accumulated deficit of $837,229. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2. Summary of Significant Accounting Policies
a) Basis of Presentation and Principles of Consolidation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. These consolidated financial statements comprise the accounts of the Company and its wholly-owned subsidiary, Career Start, Inc., a Florida Company. All intercompany transactions have been eliminated on consolidation. The Company’s fiscal year end is December 31.
b) Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
2. Summary of Significant Accounting Policies (continued)
c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at September 30, 2013 and December 31, 2012, the Company had $57,271 and $103,241 in cash, respectively.
d) Interim Financial Statements
These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
e) Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at September 30, 2013, the Company had 135,135,000 potentially dilutive shares (December 31, 2012 – 600,000,000) from the conversion feature within the convertible debenture.
f) Revenue Recognition
The Company derives revenue from contracting employees to its customers and providing consulting services. In accordance with ASC 605, Revenue Recognition, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the amount is fixed and determinable, risk of ownership has passed to the customer and collection is reasonably assured.
g) Accounts Receivable
Accounts receivable is comprised of amounts owing from customers, and is presented net of the allowance for estimated doubtful accounts. The Company determines the allowance for doubtful accounts based on historical write-off experience and current economic conditions and reviews the adequacy of its allowance for doubtful accounts on a regular basis. The Company has factored its accounts receivable to a third party company, and the accounts receivable includes the net amount receivable to the Company after commissions and charges.
h) Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
2. Summary of Significant Accounting Policies (continued)
h) Financial Instruments (continued)
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, and convertible debentures. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The following table represents assets and liabilities that are measured and recognized in fair value as of September 30, 2013, on a recurring basis:
| | Level 1 $ | Level 2 $ | Level 3 $ | Total gains and (losses) |
| Derivative liabilities | – | – | 664,397 | (269,112) |
| Total | – | – | 664,397 | (269,112) |
During the year ended December 31, 2012, the Company had a derivative liability amount of $395,285, which was classified as a Level 3 financial instrument, and a loss on change in fair value of derivative liabilities of $245,285.
i) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. Reverse Merger
On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. (“Mobile Dynamic”), a company incorporated in the state of Florida on November 7, 2012, in exchange for the issuance of 10,000,000 common shares. As part of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director of the Company and the management and directors of Mobile Dynamic acquired 75,000,000 common shares of the Company in a private transaction with the former President and Director of the Company. Effectively, Mobile Dynamic held 73% of the issued and outstanding common shares of the Company and the transaction has been accounted for as a reverse merger, where Mobile Dynamic is deemed to be the acquirer for accounting purposes.
As part of the acquisition transaction, all assets and liabilities of Pub Crawl at the date of acquisition were assumed by the former management.
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
4. Acquisition of Career Start, Inc.
On July 13, 2013, the Company entered into a share purchase agreement with Career and the shareholders of all of the issued and outstanding common shares of Career. The Company acquired 100% of the issued and outstanding shares of Career in exchange for 47,142,858 common shares of the Company. Following the close of the share exchange agreement, there are 196,198,413 common shares outstanding, of which the former shareholders of Career will control approximately 47,142,858 common shares, or 24% of the total issued and outstanding common shares of the Company. As a result, Career becomes a wholly-owned subsidiary of the Company. The Company and Career are related parties, and the acquisition of the net assets was carried at cost.
The common shares issued to the Career shareholders were determined to have a fair value of $297,000. The purchase price allocation allocated to the following assets and liabilities:
| | $ |
| Fair value of Career Start net assets – at cost | |
| Cash | 43,000 |
| Accounts receivable | 176,615 |
| Accounts payable and accrued liabilities | (121,349) |
| Due to a related party | (100) |
| | |
| Net assets on acquisition | 98,166 |
| Purchase price (47,142,858 common shares) | 297,000 |
| | |
| Excess of purchase price over net assets acquired | 198,834 |
The fair value of the common shares over the cost of Career’s net assets as at July 13, 2013, has been allocated to additional paid-in capital due to the related party nature of the transaction.
5. Convertible Debentures
On December 6, 2012, the Company entered into a convertible promissory note agreement for $150,000. Pursuant to the agreement, the loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible into common shares at a conversion price equal to 25% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on December 6, 2012.
In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $150,000. During the period ended September 30, 2013, the Company recorded accretion expense of $11,919.
6. Derivative Liabilities
As at September 30, 2013 and December 31, 2012, the following are the fair value of the derivative to account for the convertibility feature of the convertible debenture as well as the fact that there is no lower limit on the number of issuable common shares upon conversion:
| | September 30, 2013 $ (unaudited) | December 31, 2012 $ |
| Convertible promissory note, due December 5, 2014 | 664,397 | 395,285 |
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
6. Derivative Liabilities (continued)
During the period ended September 30, 2013, the Company recorded a loss on the fair value of the derivative liability of $269,112 (December 31, 2012 - $245,285). The fair value of the derivative financial liabilities was determined using the multinomial lattice models and the following assumptions:
| | Expected Volatility | Risk-free Interest Rate | Expected Dividend Yield | Expected Life (in years) |
| At December 6, 2012 (issuance date) | 318% | 0.25% | 0% | 2.00 |
| At September 30, 2013 | 240% | 0.10% | 0% | 1.18 |
7. Related Party Transactions
| a) | During the period ended September 30, 2013, the Company incurred payroll expense of $84,600 (2012 - $nil) to management and officers of the Company. |
| b) | During the period ended September 30, 2013, the Company acquired the net assets of Career Start Inc., a related company. Refer to Note 4 of the financial statements. |
8. Loan Payable
As of September 30, 2013, the Company had $100 owed to a shareholder of the Company, which is non-interest bearing, unsecured, and due on demand.
9. Common Shares
| | a) | On November 6, 2012, the Company issued 1,000,000 founders share with a fair value of $1,000 to management and directors of the Company. The amounts have been recorded as contributed capital. Upon the reverse merger as described in Note 7b), these amounts have been recorded to additional paid-in capital. |
| | b) | On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. in exchange for the issuance of 10,000,000 common shares. As part of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director of the Company and 1,000,000 founders’ shares held by the management and directors of Mobile Dynamic. |
| | c) | On May 7, 2013, the Company issued 10,000,000 common shares at $0.0075 per share for proceeds of $75,000. |
| | d) | On June 10, 2013, the Company issued 5,555,555 common shares at $0.009 per share for proceeds of $50,000. |
| | e) | On July 13, 2013, the Company issued 47,142,858 common shares with a fair value of $297,000 for the acquisition of Career, as noted in Note 4. |
| | f) | On July 17, 2013, the Company issued 8,000,000 common shares at $0.0032 per share for proceeds of $25,200. |
10. Subsequent Events
In accordance with ASC 855, we have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events.
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
On July 19, 2013, we acquired all of the issued and outstanding shares of common stock of Career Start, Inc., a Florida corporation, in consideration of 47,142,957 restricted shares of our common stock. Career Start, Inc. is a full service human resources firm that provides numerous services, including P.E.O., staffing, employee leasing, and payroll. Career Start works with governmental and charitable entities on a federal, state and local level to supplement its business. Our current website is www.careerstartinc.com.
Working Capital
| | September 30, 2013 $ | December 31, 2012 $ |
| Current Assets | 287,428 | 103,266 |
| Current Liabilities | 859,228 | 415,626 |
| Working Capital (Deficit) | (571,800) | (312,360) |
Cash Flows
| | September 30, 2013 $ | September 30, 2012 $ |
| Cash Flows from (used in) Operating Activities | (239,170) | N/A |
| Cash Flows from (used in) Investing Activities | 43,000 | N/A |
| Cash Flows from (used in) Financing Activities | 150,200 | N/A |
| Net Increase (decrease) in Cash During Period | (45,970) | N/A |
Operating Revenues
During the three months ended September 30, 2013, the Company earned revenues of $2,140,239 and gross profit of $345,368 from contracting and consulting services.
During the nine months ended September 30, 2013, the Company earned revenues of $2,190,239 and gross profit of $395,368 from contracting and consulting services.
Operating Expenses and Net Loss
During the three months ended September 30, 2013, the Company recorded operating expenses of $353,703. Operating expenses were comprised of $158,588 for payroll costs incurred for management and head office salaries, $142,407 for general and administrative expenses relating to overhead costs incurred for the Company’s head office and business operations, $22,290 for consulting expenses, and $30,298 for professional fees relating to accounting, audit, and legal fees incurred for the Company’s SEC filings.
During the nine months ended September 30, 2013, the Company recorded operating expenses of $622,843. Operating expenses were comprised of $249,725 for payroll costs incurred for management and head office salaries, $263,959 for general and administrative expenses relating to overhead costs incurred for the Company’s head office and business operations, $25,796 for consulting expenses, and $83,003 for professional fees relating to accounting, audit, and legal fees incurred for the Company’s SEC filings.
For the three months ended September 30, 2013, the Company had a net income of $32,793 and basic and diluted net income per share of $nil. In addition to operating expenses, the Company also incurred a gain of $50,988 for the change in fair value of derivative liabilities relating to the floating conversion price of its’ convertible debenture, and interest expense of $9,860 relating to interest charges incurred on its’ convertible debenture.
For the nine months ended September 30, 2013, the Company had a net loss of $519,725 and loss per share of $nil. In addition to operating expenses, the Company also incurred a loss of $269,112 for the change in fair value of derivative liabilities relating to the floating conversion price of its’ convertible debenture, and interest expense of $23,138 relating to interest charges incurred on its’ convertible debenture.
Liquidity and Capital Resources
As at September 30, 2013, the Company had a cash balance of $57,271 and asset total of $287,428 compared with $103,241 of cash and total assets of $103,266 as at December 31, 2012. The decrease in cash is due to the fact that the Company has incurred more cash for operating activities relating to overhead costs relating to the business operations of the Company and its wholly-owned subsidiary. The increase in total assets is due to the acquisition of Career Start, Inc. including accounts receivable of $226,047.
The overall working capital deficit increased from $312,360 at December 31, 2012 to $571,800 at September 30, 2013 due in part to the fact that the Company had a higher value of derivative liability relating to the fair value of the floating conversion price of the convertible debenture.
During the nine months ended September 30, 2013, the Company raised $150,200 from the issuance of 23,555,555 common shares, and also issued 47,142,858 common shares for the acquisition of Career Start, Inc., the Company’s wholly-owned subsidiary.
Cashflow from Operating Activities
During the nine months ended September 30, 2013, the Company used $239,170 of cash for operating activities, which is reflective of the cash used for day-to-day business operations which included the operations of the Company and its wholly-owned subsidiary, Career Start Inc.
Cashflow from Investing Activities
During the nine months ended September 30, 2013, the Company received cash of $43,000 from the acquisition of Career Start, Inc.
Cashflow from Financing Activities
During the nine months ended September 30, 2013, the Company received cash of $150,200 from the issuance of common shares.
Convertible Promissory Note
On December 6, 2012, the Company entered into a convertible promissory note agreement for $150,000. Pursuant to the agreement, the loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible into common shares at a conversion price equal to 25% of the average of the three
lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on December 6, 2012.
In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $150,000. During the period ended September 30, 2013, the Company recorded accretion expense of $11,919.
Critical Accounting Policies and Estimates
We prepared our financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes. We identified certain accounting policies as critical based on, among other things, their impact on the portrayal of our financial condition, results of operations, or liquidity and the degree of difficulty, subjectivity, and complexity in their deployment. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. Management routinely discusses the development, selection, and disclosure of each of the critical accounting policies. The following is a discussion of our most critical accounting policies:
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective.
Management’s assessment identified several material weaknesses in our internal control over financial reporting. These material weaknesses include the following:
| - | Insufficient number of qualified accounting personnel governing the financial close and reporting process |
| - | Lack of proper segregation of duties |
There was no change in our internal control over financial reporting during the quarter ended September 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 5. OTHER INFORMATION.
On July 19, 2013, we acquired all of the issued and outstanding shares of common stock of Career Start, Inc., a Florida corporation, in consideration of 47,142,957 restricted shares of our common stock. Career Start, Inc. is a full service human resources firm that provides numerous services, including P.E.O., staffing, employee leasing, and payroll. Career Start works with governmental and charitable entities on a federal, state and local level to supplement its business. Our current website is www.careerstartinc.com. The foregoing shares of common stock were issued pursuant to exemption from registration contained in section 4(a)(2) of the Securities Act of 1933, as amended.
| Exhibit | | Incorporated by reference | Filed |
| Number | Document Description | Form | Date | Number | Herewith |
| | | | | | |
| 2.1 | Exchange Agreement between Pub Crawl Holdings, Inc. and Mobile Dynamic Marketing, Inc. | 8-K | 1/30/13 | 2.1 | |
| | | | | | |
| 2.2 | Exchange Agreement between Pub Crawl Holdings, Inc. and Career Start, Inc. | | | | X |
| | | | | | |
| 3.1 | Articles of Incorporation - Pub Crawl | S-1 | 10/07/10 | 3.1 | |
| | | | | | |
| 3.2 | Articles of Incorporation - Mobile Dynamic Marketing, Inc. | 10-K/A | 4/16/13 | 3.2 | |
| | | | | | |
| 3.3 | Bylaws - Pub Crawl Holdings, Inc. | S-1 | 10/07/10 | 3.2 | |
| | | | | | |
| 3.4 | Bylaws - Mobile Dynamic Marketing, Inc. | S-1 | 6/14/13 | 3.4 | |
| | | | | | |
| 10.1 | Assignment Agreement between the Company, Peter Kremer, and PBPubCrawl.com, LLC dated June 14, 2010 | S-1 | 10/07/10 | 10.1 | |
| | | | | | |
| 10.2 | Form of Management Agreement between the Company and Peter Kremer dated June 22, 2010 | S-1 | 10/07/10 | 10.2 | |
| | | | | | |
| 10.3 | Promissory Note between the Company and Sun Valley Investments dated August 5, 2010 | S-1 | 10/07/10 | 10.3 | |
| | | | | | |
| 10.4 | Consulting Agreement between the Company and Voltaire Gomez dated September 23, 2010 | S-1 | 10/07/10 | 10.4 | |
| | | | | | |
| 10.5 | Settlement Agreement between the Company and Sun Valley Investments dated May 25, 2012 | 8-K | 08/11/11 | 10.1 | |
| | | | | | |
| 10.6 | Promissory Note between the Company and Deville Enterprises, Inc. dated June 1, 2012 | 8-K | 08/11/11 | 10.2 | |
| | | | | | |
| 14.1 | Code of Ethics | S-1 | 10/07/10 | 14.1 | |
| | | | | | |
| 21.1 | List of Subsidiaries | S-1 | 6/14/13 | 21.1 | |
| | | | | | |
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 101.INS | XBRL Instance Document. | | | | X |
| | | | | | |
| 101.SCH | XBRL Taxonomy Extension – Schema. | | | | X |
| | | | | | |
| 101.CAL | XBRL Taxonomy Extension – Calculations. | | | | X |
| | | | | | |
| 101.DEF | XBRL Taxonomy Extension – Definitions. | | | | X |
| | | | | | |
| 101.LAB | XBRL Taxonomy Extension – Labels. | | | | X |
| | | | | | |
| 101.PRE | XBRL Taxonomy Extension – Presentation. | | | | X |
Pursuant to the requirements of the Securities Exchange Act of 1934, this registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 19th day of November, 2013.
| | EXCELSIS INVESTMENTS, INC. |
| | Formerly, Pub Crawl Holdings Inc. |
| | |
| | BY: | BRIAN MCFADDEN |
| | | Brian McFadden |
| | | Principal Executive Officer and Director |
| | | |
| | BY: | MICHELLE PANNONI |
| | | Michelle Pannoni |
| | | Principal Financial Officer, Principal Accounting Officer and Treasurer |
| Exhibit | | Incorporated by reference | Filed |
| Number | Document Description | Form | Date | Number | Herewith |
| | | | | | |
| 2.1 | Exchange Agreement between Pub Crawl Holdings, Inc. and Mobile Dynamic Marketing, Inc. | 8-K | 1/30/13 | 2.1 | |
| | | | | | |
| 2.2 | Exchange Agreement between Pub Crawl Holdings, Inc. and Career Start, Inc. | | | | X |
| | | | | | |
| 3.1 | Articles of Incorporation - Pub Crawl | S-1 | 10/07/10 | 3.1 | |
| | | | | | |
| 3.2 | Articles of Incorporation - Mobile Dynamic Marketing, Inc. | 10-K/A | 4/16/13 | 3.2 | |
| | | | | | |
| 3.3 | Bylaws - Pub Crawl Holdings, Inc. | S-1 | 10/07/10 | 3.2 | |
| | | | | | |
| 3.4 | Bylaws - Mobile Dynamic Marketing, Inc. | S-1 | 6/14/13 | 3.4 | |
| | | | | | |
| 10.1 | Assignment Agreement between the Company, Peter Kremer, and PBPubCrawl.com, LLC dated June 14, 2010 | S-1 | 10/07/10 | 10.1 | |
| | | | | | |
| 10.2 | Form of Management Agreement between the Company and Peter Kremer dated June 22, 2010 | S-1 | 10/07/10 | 10.2 | |
| | | | | | |
| 10.3 | Promissory Note between the Company and Sun Valley Investments dated August 5, 2010 | S-1 | 10/07/10 | 10.3 | |
| | | | | | |
| 10.4 | Consulting Agreement between the Company and Voltaire Gomez dated September 23, 2010 | S-1 | 10/07/10 | 10.4 | |
| | | | | | |
| 10.5 | Settlement Agreement between the Company and Sun Valley Investments dated May 25, 2012 | 8-K | 08/11/11 | 10.1 | |
| | | | | | |
| 10.6 | Promissory Note between the Company and Deville Enterprises, Inc. dated June 1, 2012 | 8-K | 08/11/11 | 10.2 | |
| | | | | | |
| 14.1 | Code of Ethics | S-1 | 10/07/10 | 14.1 | |
| | | | | | |
| 21.1 | List of Subsidiaries | S-1 | 6/14/13 | 21.1 | |
| | | | | | |
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | | X |
| | | | | | |
| 101.INS | XBRL Instance Document. | | | | X |
| | | | | | |
| 101.SCH | XBRL Taxonomy Extension – Schema. | | | | X |
| | | | | | |
| 101.CAL | XBRL Taxonomy Extension – Calculations. | | | | X |
| | | | | | |
| 101.DEF | XBRL Taxonomy Extension – Definitions. | | | | X |
| | | | | | |
| 101.LAB | XBRL Taxonomy Extension – Labels. | | | | X |
| | | | | | |
| 101.PRE | XBRL Taxonomy Extension – Presentation. | | | | X |
