Nevada
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75-2610236
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2121 NW 2nd Avenue #203, Miami, Florida
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33127
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [X]
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Smaller reporting company [X]
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Emerging growth company [ ]
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Page
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Part I
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Item 1
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Business
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4
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Item 1A
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Risk Factors
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6 |
Item 1B
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Unresolved Staff Comments
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6 |
Item 2
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Properties
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7 |
Item 3
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Legal Proceedings
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7 |
Item 4
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Mine Safety Disclosures
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7 |
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7 |
Part II
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Item 5
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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9 |
Item 6
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Selected Financial Data
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10 |
Item 7
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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17 |
Item 7A
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Quantitative and Qualitative Disclosures About Market Risk
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17 |
Item 8
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Financial Statements and Supplementary Data
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17 |
Item 9
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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17 |
Item 9A
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Controls and Procedures
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19 |
Item 9B
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Other Information
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Part III
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Item 10
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Directors, Executive Officers and Corporate Governance
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19 |
Item 11
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Executive Compensation
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21 |
Item 12
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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23 |
Item 13
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Certain Relationships and Related Transactions, and Director Independence
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24 |
Item 14
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Principal Accounting Fees and Services
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26 |
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Part IV
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Item 15
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Exhibits, Financial Statements Schedules
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27 |
Item 16
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Form 10-K Summary
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28 |
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Signatures
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29 |
As a result, several clients have joined our ecosystem in 2018, such as Corporacion El Rosado, SBD Scala, Seguros Confianza, Zingo Inc., Fleetflex Inc., Joule.Ai Inc., and Sostereo Music Group LLC.El Rosado and SBD Scala were two of the major clients of the company in 2018 and the contract with SBD was completed at the end of the 2018. The Company’s continuous business development efforts is expected to result in new business opportunities and reduce reliance on major clients.
We do not own any patents or trademarks. On November 15, 2018, the Company entered into a Trademark License Agreement with Rokk3r Labs.Pursuant to which,Rokk3r Labs granted the Company and its subsidiaries, a limited, worldwide, non-exclusive, non-transferable, license to use the trademark ROKK3R in word form and in all style and design variations used to date by Rokk3r Labs or its authorized licensees, until November 12, 2019. The agreement may automatically renew for successive one-year terms unless terminated by either party. If a party elects not to renew the agreement, that party shall provide a notice of that intention to the other party at least 30 days prior to the renewal date. Pursuant to the agreement, the Company shall pay an annual fee of $120,000, payable on the anniversary of the effective date of the agreement.
Effective March 20, 2017, DMJ Acquisitions LLC, the former principal stockholder of the Company (“DMJ”), entered into a Stock Purchase Agreement (the “Agreement”), dated January 26, 2017, with Una Taylor through Eight Dragons Acquisitions, LLC, an entity she controls (the “Buyer”), pursuant to which, among other things, DMJ agreed to sell to the Buyer, and the Buyer agreed to purchase from DMJ, a total of 290,500 shares of ourcommon stock owned by DMJ (the “Purchased Shares”). The Purchased Shares represented, at closing, approximately 80.2% of our then issued and outstanding shares of common stock. The funds for the acquisition were provided by a related party controlled by and used for the benefit of the Buyer. In connection with the transactions contemplated by the Agreement, the liabilities of Eight Dragons were forgiven and the Board of Directors appointed Ms. Taylor and Theodore Faison to fill vacancies on our Board of Directors, and the prior director resigned. The forgiven stockholder liabilities totaled $1,889,939, including $1,037,632 in principal and $852,406 in accrued interest.
On April 30, 2017, the Company completed a purchase of a non-controlling 18.72% membership interest in Rokk3r Labs LLC (“Rokk3r Labs”) for a purchase price of $1,000,000 (provided at the direction of an entity controlled by Una Taylor for the benefit of the company) and the issuance of 9,677,208 shares of its common stock valued at $12,386,826 or $1.28 per share. Rokk3r Labs is a venture builder and operator of a ‘co-building’ platform for entrepreneurs, corporations and investors to create exponential startups.
On December 26, 2017, the Company entered into a restructuring agreement (the “Restructuring Agreement”) with Ms. Taylor, the former Chief Executive Officer and Rokk3r Labs. The transactions contemplated by the Restructuring Agreement (the “Transactions”) closed on December 26, 2017. As a result of the closing of the Transactions, Rokk3r Labs acquired control of the Company from Ms. Taylor. Following the closing, Rokk3r Labs owned 89.41% of our then outstanding shares of common stock. Rokk3r Labs provides consulting services to startup companies and provides resources such as business development, investment, recruitment, legal support, training, toolsets as well as guidance from entrepreneurs to oversee and align the strategic vision of the company through its life-cycle.
On March 8, 2018, we filed Amended and Restated Articles of Incorporation (the “Amended and Restated Articles”) with the Nevada Secretary of State to increase our authorized capital from 150,000,000 shares to 550,000,000 shares of which 500,000,000 are common stock, par value $0.0001 per share (the “common stock”) and 50,000,000 are preferred stock, par value $0.0001 per share (the “preferred stock”).
On March 23, 2018, we changed our name to Rokk3r Inc. (the “Name Change”) in order to reflect our current business of providing consulting services and related value generating strategies. The Name Change was effected through a parent-subsidiary short-form merger between Rokk3r Labs and its wholly owned subsidiary, Rokk3r Inc., pursuant to Nevada Revised Statutes 92A.180. In connection with theName Change, on June 18, 2018, our trading symbol was changed to “ROKK” and CUSIP No. to 77544L104.
On May 10, 2018, the Board of Directors approved the incorporation of two wholly-owned subsidiaries, Rokk3r Ops Inc. to provide our "Think Phase," "Co-build," and “Scale” services, and Rokk3r Fluid Inc. to pursue our plans to launch our newly created blockchain consulting services division. Both entities were incorporated in Florida. Rokk3r Ops Inc. is fully operational, and its financials were included in the consolidated financial statements as of December 31, 2018. Rokk3r Fluid Inc. is not operational yet
Fiscal Quarter Ended
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High
|
Low
|
||||||
|
||||||||
December 31, 2018
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$
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3.25
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$
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0.55 |
||||
September 30, 2018
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$
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9.00
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$
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2.25
|
||||
June 30, 2018
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$
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15.00
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$
|
1.01
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||||
March 31, 2018
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$
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2.80
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$
|
1.80
|
Fiscal Quarter Ended
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High
|
Low
|
||||||
|
||||||||
December 31, 2017
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$
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7.00
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$
|
1.00
|
||||
September 30, 2017
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$
|
10.00
|
$
|
7.00
|
||||
June 30, 2017
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$
|
12.00
|
$
|
7.00
|
||||
March 31, 2017
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$
|
10.50
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$
|
7.50
|
·
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During the three months ended December 31, 2018, the Company sold 1,742,188 shares of Series B Preferred,
pursuant to a stock purchase agreement dated July 26, 2018, in exchange for consideration of $1,115,000 and the Company used the proceeds for continuing the development and expansion of the business operations.
|
On March 7, 2018, the Board approved, and on March 28, 2018, our shareholder approved, by written consent, the 2018 Equity Incentive Plan. The 2018 Equity Incentive Plan is intended to make available incentives that will assist us to attract, retain and motivate employees, including officers, consultants and directors. We may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards. A total of 15,000,000 shares of the Company’s common stock were reserved under the 2018 Equity Incentive Plan. The shares authorized under the 2018 Equity Incentive Plan automatically increase on January 1, 2019 and each subsequent anniversary through 2028, by an amount equal to the smaller of (a) 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board. As of December 31, 2018, no equity instruments have been issued under the plan.
As of March 22, 2019, there are currently 101,427,105shares of our common stock, zero Series A Preferred and 4,085,938 Series B Preferred, issued and outstanding.
Common Stock
·
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the original issue price of each share is $0.64 (the “Original Issue Price”),
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·
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the shares are entitled to one vote for each share of common stock that such shares of Series B Preferred
are convertible into,
|
·
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the shares do not pay dividends
|
·
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each share is convertible into shares of our common stock at a conversion rate of one share of common stock
for each share of Series B Preferred, subject to adjustment as hereinafter set forth. In the event of a breach by us of the rights, preferences, powers, restrictions and limitations of the Series B Preferred, then the number of shares
of our common stock issuable upon conversion will be increased to 1.1 shares of common stock for each share of Series B Preferred and the holder may exercise its redemption rights discussed below,
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·
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the conversion price of the Series B Preferred is subject to proportional adjustment in the event of stock
splits, stock dividends and similar corporate events. In addition, the conversion price is subject to adjustment if we issue or sell shares of our common stock in one or more capital-raising transactions which results in gross proceeds
to us of more than $500,000 at a purchase price per share of less than $0.64. If this event should occur, the number of shares of our common stock issuable upon conversion is increased on a pro-rata basis, and
|
·
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the holder of the Series B Preferred has the right to elect to have all or any portion of the then
outstanding shares of Series B Preferred redeemed by us at any time and from time to time on or after 18 months following the issuance of 3,906,250 shares or after any breach of the rights, preferences, powers, restrictions and
limitations of the Series B Preferred for a price per share equal to 122.5% of the Original Issue Price, as adjusted.
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·
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“fiscal year 2017” – January 1, 2017 through December 31, 2017
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·
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“fiscal year 2018” – January 1, 2018 through December 31, 2018
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·
|
Net cash flow used in operating activities for the year ended December 31, 2018 primarily reflected a net loss of $3,393,081
and the add-back of non-cash items consisting of depreciation expense of $1,608, common stock issued for compensation and consulting service of $75,786, non-cash interest expense of $40,994 and bad debt of $148,982. This was offset by
changes in operating assets and liabilities of $872,932 primarily related to an increase in grossaccounts receivable of $549,164, an increase in prepaid expense of $443,953, an increase receivable fromour parent company of $75,138,increase
in accounts payable of $151,606, increase in deferred revenue and increase in accrued liability of $23,717.
|
·
|
Net cash flow used in operating activities for the year ended December 31, 2017 primarily reflected a net loss of $37,898,285
and the add-back of non-cash items consisting of a gain on the extinguishment of debt of $1,889,938, common stock issued for compensation and consulting service of $25,737,856 (some of which has since been rescinded), common stock issued
for settlement pursuant to restructuring agreement of $68,750, an impairment loss of $ 12,489,226, non-cash interest expense of $560,000 and bad debt of $5,784. This was offset by changes in operating assets and liabilities of $96,202
primarily related to an increase in accounts payable of $52,619, an increase in accrued liability of $13,369, an increase in accrued interest-related party of $19,506 and an increase to due to parent company of $16,492.
|
On July 26, 2018, we completed a financing transaction for proceeds of up to $3,000,000 over a period of up to six months. We used the funds from this financing along with funds raised in private offerings during the quarter ended June 30, 2018 to continue to develop and expand our business operations. The July 26, 2018 financing transaction involved our sale of up to 4,687,500 shares of our Series B Preferred at a price of $0.64 per share for an aggregate of $3,000,000. An aggregate of 3,906,250 shares of the Series B Preferred will be issued and sold in five monthly tranches of at least 781,250 shares ($500,000) each, which commenced on July 27, 2018, the initial closing date, for an aggregate of $2,500,000. After the earlier of the four-month period after the initial closing date or the sale of 3,906,250 shares and not later than six months after the date of the initial closing, the investor may, but shall not be obligated to, purchase from us in a single closing, up to an additional 781,250 shares, not previously sold and never to exceed the number of Series B Preferred, at a price of $0.64 per share. We will use the proceeds from the issuance of the Series B Preferred for the operations of our business and for working capital purposes. During the year ended December 31, 2018, the Company sold 4,085,938 shares of Series B Preferred for net proceeds of $2,615,000. As of December 31, 2018, 4,085,938 of Series B Preferred were issued and outstanding.
The Series B Preferred is convertible into the Company’s common stock and/or redeemable at any time at the option of the holder or the Company in the events not controlled by the Company. The Company has classified the Series B Preferred as mezzanine equity in the accompanying consolidated balance sheet in accordance with ASC 480 - "Distinguishing Liabilities from Equity" Under “Redeemable Preferred Shares”.
·
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Material Weakness – The Company did not maintain effective controls over certain aspects of the financial
reporting process because we lacked a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements.
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·
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We do not have an Audit Committee. While not being legally obligated to have an audit committee, it is
management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statements. Currently the Board of Directors acts in the capacity of the Audit
Committee and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.
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·
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We did not maintain appropriate segregation of duties. As of December 31, 2018, the Company did not require dual
signature on the Company’s bank accounts.
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Name
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Age
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Positions and Offices to be Held
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Nabyl Charania
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42
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Chief Executive Officer, Chief Financial Officer and Director
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German Montoya
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46
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Corporate Secretary and Director
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Jeffrey S. Ransdell
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50
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|
Director
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Salim Ismail | 53 | Director |
(i)
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our principal executive officer or other individual serving in a similar capacity during the fiscal year 2018
and 2017;
|
(ii)
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our two most highly compensated executive officers other than our principal executive officers who were
serving as executive officers at December 31, 2018 and 2017 whose compensation exceed $100,000; and
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(iii)
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up to two additional individuals for whom disclosure would have been required but for the fact that the
individual was not serving as an executive officer at December 31, 2018. Compensation information is shown for the fiscal year ended December 31, 2018:
|
Name and
Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
All Other
Compensation
|
Total
|
|||||||||||||||||||
Nabyl Charania,
|
2018
|
$
|
199,000
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
199,000
|
|||||||||||||
Chief Executive Officer (1)
|
2017
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||||
Una Taylor (2)
|
2017
|
$
|
—
|
$
|
—
|
$
|
12,466,668
|
$
|
—
|
$
|
220,929
|
$
|
12,687,607
|
(3) |
(1) |
Mr. Charania was appointed as Chief Executive Officer, Chief Financial Officer and a director on December 26, 2017. We have
no employment agreement with Mr. Charania and his annual salary is $199,000 and Mr. Charaniadid not receiveany compensation in 2017.
|
(2) |
Ms. Taylor resigned as our Chief Executive Officer, Chief Financial Officer and a director on December 26, 2017. On April 12, 2017, the Company issued
1,000,000 shares of Series A Preferred to Una Taylor, our former Chief Executive Officer and controlling shareholder in consideration for services rendered. In connection with the issuance of the Series A Preferred, the Company recorded
stock-based compensation expense of $37,500. On December 26, 2017, Ms. Taylor cancelled the 1,000,000 shares of Series A Preferred previously issued to her as provided for in the Rescission and Mutual Release Agreement entered into
between the Company and Ms. Taylor dated December 26, 2017 (the “Taylor Rescission Agreement”). Upon cancellation, the Company reversed the previously recorded stock-based compensation expense of $37,500.
|
(3) |
Reflects $121,429 Ms. Taylor retained in connection with DreamFu Angels, LLC (d/b/a DreamFu Ventures, LLC) (“DreamFu”) sale of convertible debentures and the
following amounts paid for the benefit of Ms. Taylor: $40,000 paid to Dreamfu Angels, LLC, $2,500 paid to Dreamfu Ventures and $57,000 paid to Taylor Group Holding.
|
·
|
the number of shares of our common stock issuable upon exercise of outstanding options that have been earned,
separately identified by those exercisable and unexercisable;
|
·
|
the number of shares of our common stock issuable upon exercise of outstanding options that have not been earned;
|
·
|
the exercise price of such option;
|
·
|
the expiration date of such option;
|
·
|
with respect to each stock award;
|
·
|
the number of shares of our common stock that have been earned but have not vested;
|
·
|
the market value of the shares of our common stock that have been earned but have not vested;
|
·
|
the total number of shares of our common stock awarded under any equity incentive plan that have not vested and
have not been earned; and
|
·
|
the aggregate market or pay-out value of our common stock awarded under any equity incentive plan that have not
vested and have not been earned.
|
OPTION AWARDS
|
|
STOCK AWARDS
|
|
|||||||||||||||||||||||||||||||||
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nabyl Charania
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
On March 7, 2018, the Board approved, and on March 28, 2018, our shareholder approved, by written consent, the 2018 Equity Incentive Plan. The 2018 Equity Incentive Plan is intended to make available incentives that will assist us to attract, retain and motivate employees, including officers, consultants and directors. We may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units and other cash-based or stock-based awards. A total of 15,000,000 shares of the Company’s common stock were reserved under the 2018 Equity Incentive Plan. The shares authorized under the 2018 Equity Incentive Plan shall automatically increase on January 1, 2019 and each subsequent anniversary through 2028, by an amount equal to the smaller of (a) 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board. As of December 31, 2018, no equity instruments have been issued under the plan.
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights (a)
|
Weighted
average
exercise price
of outstanding
options,
warrants and
rights (b)
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a) (c)
|
|||||||||
Plans approved by our shareholders:
|
||||||||||||
2017 Omnibus Equity Compensation Plan
|
—
|
$
|
—
|
5,000,000
|
||||||||
2018 Equity Incentive Plan
|
—
|
$
|
—
|
15,000,000
|
||||||||
Plans not approved by shareholders:
|
||||||||||||
None.
|
—
|
$
|
—
|
—
|
Name and Address of Beneficial Owner
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent
of Class
|
|
||
|
|
|
|
|
|
|
||
Named Executive Officers and Directors:
|
|
|
|
|
|
|
||
Nabyl Charania (1)
|
|
83,727,208
|
|
|
|
82.5
|
%
|
|
German Montoya (2)
|
|
|
83,727,208
|
|
|
|
82.5
|
%
|
Jeffrey S. Ransdell (3)
|
|
|
9,785,094
|
|
|
|
9.6
|
%
|
Salim Ismail
|
—
|
—
|
%
|
|||||
All executive officers and directors as a group (four people)
|
|
|
93,512,302
|
(6)
|
|
|
92.2
|
%
|
|
|
|
|
|
|
|
|
|
Other 5% Stockholders:
|
|
|
|
|
|
|
|
|
Rokk3r Labs LLC (4)
|
|
|
83,727,208
|
|
|
|
82.5
|
%
|
Rokk3r Fuel Fund 2, LP (5)
|
8,281,250
|
8.2
|
%
|
(1)
|
The number of shares beneficially owned by Mr. Charania includes 83,727,208 shares of
common stock owned by Rokk3r Labs. Messrs. Charania and Montoya jointly exercise voting and dispositive control over our common stock owned by Rokk3r Labs. Mr. Charania disclaims beneficial ownership of the securities owned by Rokk3r Labs,
LLC except to the extent of his pecuniary interest therein.
|
(2)
|
The number of shares beneficially owned by Mr. Montoya includes 83,727,208 shares of common
stock owned by Rokk3r Labs. Messrs. Charania and Montoya jointly exercise voting and dispositive control over our common stock owned by Rokk3r Labs. Mr. Montoya disclaims beneficial ownership of the securities owned by Rokk3r Labs, LLC
except to the extent of his pecuniary interest therein.
|
(3)
|
Includes 256,250 shares of common stock owned by Mr. Ransdell, 8,281,250 shares of common stock owned by Rokk3r Fuel Fund 2, LP
and 1,247,594 shares of common stock owned by Rokk3r Fuel Co-Invest 2, LLC Series C-1, over which Mr. Ransdell exercises voting and dispositive control.Mr. Ransdell disclaims beneficial ownership of the securities owned by Rokk3r Fuel Fund,
LP except to the extent of his pecuniary interest therein.
|
(4)
|
Messrs. Charania and Montoya jointly exercise voting and dispositive control over our
common stock owned by Rokk3r Labs.
|
(5)
|
Mr. Ransdell exercises voting and dispositive control over our common stock owned by Rokk3r Fuel Fund, LLC (“Rokk3r Fuel”). |
(6)
|
Please note that the total amount only includes the 83,727,208 of shares owned held by Rokk3r Labs LLC once, as these shares
are beneficially owned by both Mr. Montoya and Mr. Charania. Please see footnotes (1), (2) and (4) above
|
Related Parties
|
|
Relationship
|
|
|
|
Nabyl Charania
|
|
Chief Executive Officer, Chief Financial Officer and Director
|
Salim Ismail
|
Director
|
|
2018
|
2017
|
||||||
|
||||||||
Audit Fees
|
$
|
20,000
|
$
|
15,000
|
||||
Audit-Related Fees
|
—
|
—
|
||||||
Tax Fees
|
—
|
—
|
||||||
All Other Fees
|
—
|
—
|
||||||
Total
|
$
|
20,000
|
$
|
15,000
|
(a)
|
1.
|
Financial Statements
|
|
|
|
|
|
The financial statements and Report of Independent Registered Public Accounting Firm are
listed in the “Index to Financial Statements and Schedules” on page F-1 and included on pages F-2 to F- 24.
|
|
|
|
|
2.
|
Financial Statement Schedules
|
|
|
|
|
|
All schedules for which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission (the “Commission”) are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements
included herein.
|
|
|
|
|
3.
|
Exhibits (including those incorporated by reference).
|
Exhibit
No.
|
|
Description
|
|
|
|
2.1(a)
|
|
Agreement and Plan of Merger and Reorganization between Rokk3r Inc. and Park Roads
Solutions, Inc., dated June 1, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2017).
|
|
|
|
2.1(b)
|
|
Agreement and Plan of Merger, dated March 23, 2018, between Rokk3r Inc. and Eight Dragons
Company (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 29, 2018).
|
|
|
|
3.1(a)
|
|
Articles of Incorporation (incorporated by reference to Exhibit 3.i(1) to the Company’s
Current Report on Form 8-K filed with the SEC on December 12, 2007).
|
|
|
|
3.1(b)
|
|
Certificate of Designation of Series A Preferred Stock filed with the Nevada Secretary of
State on April 12, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 24, 2017).
|
|
|
|
3.1(c)
|
|
Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit A to
the Company’s Definitive Information Statement on Schedule 14C filed with the SEC on Mach 20, 2018).
|
|
|
|
3.1(d)
|
|
Articles of Merger filed with the Nevada Secretary of State on March 23, 2018
(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 29, 2018).
|
3.1(c)
|
|
Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock
(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 1, 2018).
|
3.2
|
|
Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form
8-K filed with the SEC on September 19, 2017).
|
|
|
|
10.1(a)
|
|
2017 Omnibus Equity Compensation Plan (incorporated by reference to Exhibit 3.1 to the
Company’s Current Report on Form 8-K filed on April 24, 2017).
|
|
|
|
10.1(b)
|
|
2018 Equity Incentive Plan (incorporated by reference to Exhibit B to the Company’s
Definitive Information Statement on Schedule 14C filed with the SEC on Mach 20, 2018).
|
|
|
|
10.2
|
|
Membership Unit Purchase Agreement between Rokk3r Inc. and Rokk3r Labs LLC dated April
30, 2017 (incorporated by reference to Exhibit 10.1 the Company’s Current Report on Form 8-K filed on May 16, 2017).
|
|
|
|
10.3
|
|
Restructuring Agreement, dated as of December 26, 2017 by and between the Company, Una
Taylor and Rokk3r Labs LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 2, 2018).
|
|
|
|
10.4
|
|
Asset and Intellectual Property Contribution and Assignment Agreement dated as of
December 26, 2017 by and between Rokk3r Labs LLC and Rokk3r Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 2, 2018).
|
10.5
|
|
Rescission and Mutual Release Agreement dated as of December 26, 2017 by and between the
Company and Una Taylor (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on January 2, 2018).
|
|
|
|
10.6
|
|
Release Agreement dated as of December 26, 2017 by and between Rokk3r Inc., Una Taylor
and Rokk3r Labs LLC (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on January 2, 2018).
|
|
|
|
10.7
|
|
Rescission and Mutual Release Agreement, dated as of November 19, 2017 by and between
Rokk3r Inc. and Protect Pharmaceuticals Corporation (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on January 2, 2018).
|
|
|
|
10.8
|
|
Stock Redemption and Release Agreement dated as of November 21, 2017 by and between
Rokk3r Inc. and Trident capX Corporation (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on January 2, 2018).
|
|
|
|
10.9
|
|
Stock Issuance and Release Agreement dated as of December 4, 2017 by and between Rokk3r
Inc., Rokk3r Fuel Fund 2, LP and Rokk3r Fund Fuel 2 GP, LLC (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on January 2, 2018).
|
|
|
|
10.10
|
|
Form of Amendment to Convertible Debenture. (Incorporated by reference to Exhibit 10.10
of the Company’s Annual Report on Form 10-K filed on April 17, 2018)
|
|
|
|
10.11
|
|
Settlement Agreement between Eight Dragons Company and Firstfire Global Opportunities
Fund, LLC dated November 15, 2017. (Incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K filed on April 17, 2018)
|
|
|
|
10.13
|
Collaboration Agreement between Rokk3r Inc. and Rokk3r Labs, LLC dated as of April 9,
2018. (Incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K filed on April 17, 2018)
|
|
10.14
|
Amendment to Settlement Agreement and Stipulation between Rokk3r Inc. and Firstfire
Global Opportunities Fund, LLC dated June 15, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 21, 2018).
|
|
10.15
|
Stock Purchase Agreement dated July 26, 2018 (incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K filed on August 1, 2018).
|
|
10.16
|
Security and Pledge Agreement dated July 26, 2018 (incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed on August 1, 2018).
|
|
10.17
|
Investor Rights Agreement dated July 26, 2018 (incorporated by reference to Exhibit 10.3
to the Company’s Current Report on Form 8-K filed on August 1, 2018).
|
|
10.18
|
Stock Purchase Agreement entered into between Rokk3r Inc. and ExO Foundation Inc. dated
November 2, 2018 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 8, 2018).
|
|
10.19
|
Director Retainer Agreement entered into between Rokk3r Inc. and Salim Ismail dated
November 2, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 8, 2018).
|
|
10.20
|
Simple Agreement for Future Equity with Token Allocation entered into between Rokk3r Inc.
and ExO Foundation Inc. dated November 2, 2018 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 8, 2018).
|
|
10.21*
|
Trademark License Agreement between Rokk3r Inc. and Rokk3r Labs LLC dated November 15,
2018.
|
|
|
||
10.22*
|
Service Agreement between Rokk3r Inc. and with PCG Advisory Inc. dated February 5, 2019.
|
|
|
||
10.23*
|
Strategic Alliance Agreement between Rokk3r Inc. and IDE Business School dated November 30,
2018
|
|
21.1*
|
|
List of Subsidiaries.
|
31.1* | Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934. | |
|
|
|
31.2*
|
|
Certification by the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
|
|
|
|
32.1*
|
|
Certification of Periodic Financial Report by the Chief Executive Officer and Chief
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
ROKK3R INC.
|
||
|
|
|
|
|
|
|
|
Date: April 1, 2019
|
By:
|
/s/ Nabyl Charania
|
|
|
|
Nabyl Charania
Chief Executive Officer and Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Nabyl Charania
|
|
Chief Executive Officer, Chief Financial Officer and Director
|
|
April 1, 2019
|
Nabyl Charania
|
|
(principal executive officer and principal financial and accounting officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ German Montoya
|
|
Director
|
|
April 1, 2019
|
German Montoya
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jeff Ransdell
|
|
Director
|
|
April 1, 2019
|
Jeff Ransdell
|
|
|
|
|
/s/ Salim Ismail
|
|
Director
|
|
April 1, 2019
|
Salim Ismail
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Financial Statements:
|
|
|
|
Consolidated Balance Sheets - As of December 31, 2018 and 2017
|
F-3
|
|
|
Consolidated Statements of Operations - For the Years Ended December 31,
2018 and 2017
|
F-4
|
|
|
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) -
For the Years Ended December 31, 2018 and 2017
|
F-5
|
|
|
Statements of Cash Flows – For the Years Ended December 31, 2018 and 2017
|
F-6
|
|
|
Notes to Financial Statements
|
F-7 to F-24
|
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Rokk3r, Inc. (f/k/a Eight Dragons Company) (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, changes in shareholders’ deficit, and cash flows for the years ended December 31, 2018 and 2017, and the related notes to the consolidated financial statements (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Other Matter
As discussed in Note 3 to the consolidated financial statements, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered significant losses from operations that raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments to reflect the outcome of this uncertainty. Our opinion is not modified with respect to these matters.
/s/ Montgomery Coscia Greilich LLP
|
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash
|
$
|
2,297,902
|
$
|
-
|
||||
Accounts receivable, net
|
400,182
|
-
|
||||||
Prepaid expenses - related party
|
425,000
|
-
|
||||||
Prepaid expenses
|
18,953
|
-
|
||||||
Receivable from parent company
|
75,138
|
-
|
||||||
Total Current Assets
|
3,217,175
|
-
|
||||||
Furniture and equipment, net
|
19,015
|
-
|
||||||
Investment in parent company - cost method
|
1,000,000
|
1,000,000
|
||||||
Total Assets
|
$
|
4,236,190
|
$
|
1,000,000
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
|
$
|
192,225
|
$
|
40,619
|
||||
Accrued expenses
|
18,407
|
21,244
|
||||||
Accrued expenses - related party
|
15,000
|
-
|
||||||
Deferred revenue
|
20,000
|
-
|
||||||
Convertible note payable, net
|
-
|
540,000
|
||||||
Notes payable - other
|
12,000
|
12,000
|
||||||
Due to parent company
|
-
|
16,492
|
||||||
Total Current Liabilities
|
257,632
|
630,355
|
||||||
Redeemable Series B Convertible Preferred stock - $0.0001 par value; 4,687,500 shares authorized; 4,085,938 and
nil
|
||||||||
issued and outstanding at December 31, 2018 and 2017, respectively (liquidation preference of
$2,719,419)
|
2,719,419
|
-
|
||||||
SHAREHOLDERS' EQUITY:
|
||||||||
Preferred stock - $0.0001 par value; 50,000,000 shares authorized; Series A non-convertible
preferred stock, 1,000,000
|
||||||||
authorized; $0.0001 par value; no shares issued and outstanding at December 31, 2018 and 2017,
respectively
|
-
|
-
|
||||||
Common stock - $0.0001 par value; 500,000,000 shares authorized; 101,427,105 and 94,828,287
shares issued and
|
||||||||
outstanding at December 31, 2018 and 2017, respectively
|
10,143
|
9,483
|
||||||
Common stock issuable; 1,000,000 and nil shares issuable at December 31, 2018 and 2017
|
100
|
-
|
||||||
Additional paid in capital
|
76,217,441
|
71,814,487
|
||||||
Accumulated deficit
|
(74,968,545
|
)
|
(71,454,325
|
)
|
||||
Total Shareholders' Equity
|
1,259,139
|
369,645
|
||||||
Total Liabilities and Shareholders' Equity
|
$
|
4,236,190
|
$
|
1,000,000
|
For the Years Ended
|
||||||||
December 31,
|
||||||||
2018
|
2017
|
|||||||
Revenues
|
$
|
2,301,939
|
$
|
-
|
||||
Operating Expenses:
|
||||||||
Consulting fees - parent
|
2,701,250
|
-
|
||||||
Consulting fees - other
|
529,432
|
13,449,969
|
||||||
Compensation expense
|
505,943
|
12,687,607
|
||||||
Contract labor
|
770,887
|
-
|
||||||
Legal expense
|
385,859
|
72,305
|
||||||
Professional fees
|
243,955
|
51,435
|
||||||
Bad debt expense
|
148,982
|
5,784
|
||||||
General and administrative expenses
|
383,434
|
439,073
|
||||||
Impairment loss
|
-
|
12,489,226
|
||||||
Total Operating Expenses
|
5,669,742
|
39,195,399
|
||||||
Loss from Operations
|
(3,367,803
|
)
|
(39,195,399
|
)
|
||||
Other Income (Expense)
|
||||||||
Gain on extinguishment of debt (Note 1)
|
-
|
1,889,938
|
||||||
Interest expense
|
(40,993
|
)
|
(592,824
|
)
|
||||
Other expense
|
(1,005
|
)
|
-
|
|||||
Total Other Income (Expense)
|
(41,998
|
)
|
1,297,114
|
|||||
Loss Before Provision for Income Taxes
|
(3,409,801
|
)
|
(37,898,285
|
)
|
||||
Provision for income taxes
|
-
|
-
|
||||||
Net Loss
|
$
|
(3,409,801
|
)
|
$
|
(37,898,285
|
)
|
||
Net Loss per Share of Common Stock Outstanding -
|
||||||||
Basic and Diluted
|
$
|
(0.03
|
)
|
$
|
(1.39
|
)
|
||
Weighted-average number of shares outstanding –
|
||||||||
Basic and Diluted
|
99,662,397
|
27,267,239
|
Additional
|
||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Common Stock Issuable | paid-in | Accumulated | ||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
deficit
|
Total
|
||||||||||||||||||||||||||||
Balances at December 31, 2016
|
-
|
$
|
-
|
362,200
|
$
|
36
|
-
|
$
|
-
|
$
|
31,690,302
|
$
|
(33,556,040
|
)
|
$
|
(1,865,702
|
)
|
|||||||||||||||||||
Series A Preferred stock issued to officer for services rendered
|
1,000,000
|
37,500
|
9,710,295
|
971
|
-
|
-
|
12,428,207
|
-
|
12,466,678
|
|||||||||||||||||||||||||||
Common stock issued to consultants for services rendered or to be rendered
|
-
|
-
|
16,518,108
|
1,652
|
-
|
-
|
21,141,526
|
-
|
21,143,178
|
|||||||||||||||||||||||||||
Cancellation of Series A Preferred stock issued to officer pursuant to restructuring agreement
|
(1,000,000
|
)
|
(37,500
|
)
|
(10,000,795
|
)
|
(1,000
|
)
|
-
|
-
|
38,500
|
-
|
-
|
|||||||||||||||||||||||
Cancellation of stock previously issued in exchange for consulting services pursuant to restructuring agreement
|
-
|
-
|
(15,860,295
|
)
|
(1,586
|
)
|
-
|
-
|
(7,870,414
|
)
|
-
|
(7,872,000
|
)
|
|||||||||||||||||||||||
Common stock issued to purchase investment in Rock3r Labs, LLC
|
-
|
-
|
9,677,208
|
968
|
-
|
-
|
12,385,858
|
-
|
12,386,826
|
|||||||||||||||||||||||||||
Common stock issued upon conversion of debt
|
-
|
-
|
1,355,783
|
135
|
-
|
-
|
1,517,665
|
-
|
1,517,800
|
|||||||||||||||||||||||||||
Common stock issued to convertible debt holders pursuant to restructuring agreement
|
-
|
-
|
1,185,783
|
119
|
-
|
-
|
(119
|
)
|
-
|
-
|
||||||||||||||||||||||||||
Common stock issued for convertible debt financing
|
-
|
-
|
250,000
|
25
|
-
|
-
|
319,975
|
-
|
320,000
|
|||||||||||||||||||||||||||
Common stock issued for investment in Protect Pharmaceutical Solutions
|
-
|
-
|
3,000,000
|
300
|
-
|
-
|
3,839,700
|
-
|
3,840,000
|
|||||||||||||||||||||||||||
Cancellation of common stock issued for investments in Protect Pharmaceutical Solutions pursuant to restructuring
agreement
|
-
|
-
|
(3,000,000
|
)
|
(300
|
)
|
-
|
-
|
(3,839,700
|
)
|
-
|
(3,840,000
|
)
|
|||||||||||||||||||||||
Common stock issued for purchase of Park Road Solutions
|
-
|
-
|
80,000
|
8
|
-
|
-
|
102,392
|
-
|
102,400
|
|||||||||||||||||||||||||||
Common stock issued for settlement of default and release with Rokk3r Fuel Fund 2, LP pursuant to restructuring agreement
|
-
|
-
|
7,500,000
|
750
|
-
|
-
|
68,000
|
-
|
68,750
|
|||||||||||||||||||||||||||
Common stock issued for contribution of intangible assets to Rokk3r Labs, LLC pursuant to restructuring agreement
|
-
|
-
|
74,050,000
|
7,405
|
-
|
-
|
(7,405
|
)
|
-
|
-
|
||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(37,898,285
|
)
|
(37,898,285
|
)
|
|||||||||||||||||||||||||
Balances at December 31, 2017
|
-
|
-
|
94,828,287
|
9,483
|
-
|
-
|
71,814,487
|
(71,454,325
|
)
|
369,645
|
||||||||||||||||||||||||||
Common stock issued for cash to investors pursuant to subscription agreements
|
-
|
-
|
5,836,532
|
584
|
-
|
-
|
3,734,796
|
-
|
3,735,380
|
|||||||||||||||||||||||||||
Common stock issued to consultants for services
|
-
|
-
|
12,286
|
1
|
-
|
-
|
25,799
|
-
|
25,800
|
|||||||||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
49,986
|
-
|
49,986
|
|||||||||||||||||||||||||||
Common stock issuable in connection with stock-based compensation
|
-
|
-
|
-
|
-
|
1,000,000
|
100
|
(100
|
)
|
-
|
-
|
||||||||||||||||||||||||||
Common stock issued upon conversion of debt
|
-
|
-
|
750,000
|
75
|
-
|
-
|
482,473
|
-
|
482,548
|
|||||||||||||||||||||||||||
Reclassification of note premium upon debt conversion
|
-
|
-
|
-
|
-
|
-
|
-
|
110,000
|
-
|
110,000
|
|||||||||||||||||||||||||||
Series B Preferred stock redemption premium
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(104,419
|
)
|
(104,419
|
)
|
|||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,409,801
|
)
|
(3,409,801
|
)
|
|||||||||||||||||||||||||
Balances at December 31, 2018
|
-
|
$
|
-
|
101,427,105
|
$
|
10,143
|
1,000,000
|
$
|
100
|
$
|
76,217,441
|
$
|
(74,968,545
|
)
|
$
|
1,259,139
|
For the Years ended
|
||||||||
December 31,
|
||||||||
2018
|
2017
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(3,409,801
|
)
|
$
|
(37,898,285
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization expense
|
1,608
|
-
|
||||||
Gain on the extinguishment of debt
|
-
|
(1,889,938
|
)
|
|||||
Stock-based compensation
|
49,986
|
-
|
||||||
Common stock issued for compensation and consulting services
|
25,800
|
25,737,856
|
||||||
Common stock issued for settlement pursuant to restructuring agreement
|
-
|
68,750
|
||||||
Impairment loss
|
-
|
12,489,226
|
||||||
Non-cash interest expense
|
40,994
|
560,000
|
||||||
Bad debt
|
148,982
|
5,784
|
||||||
Change in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(549,164
|
)
|
(5,784
|
)
|
||||
Receivable from affiliate
|
(75,138
|
)
|
-
|
|||||
Prepaid expenses
|
(443,953
|
)
|
-
|
|||||
Accounts payable
|
151,606
|
52,619
|
||||||
Deferred revenue
|
20,000
|
-
|
||||||
Accrued expense
|
23,717
|
13,369
|
||||||
Due to parent company
|
-
|
16,492
|
||||||
Accrued interest payable - related party
|
-
|
19,506
|
||||||
Net cash used in operating activities
|
(4,015,363
|
)
|
(830,405
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Investment in Rock3r Labs, LLC
|
-
|
(1,000,000
|
)
|
|||||
Purchases of property and equipment.
|
(20,623
|
)
|
-
|
|||||
Net cash used in investing activities
|
(20,623
|
)
|
(1,000,000
|
)
|
||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from parent advances
|
(16,492
|
)
|
12,605
|
|||||
Cash proceeds from notes payable
|
-
|
1,517,800
|
||||||
Proceeds from convertible note payable
|
-
|
300,000
|
||||||
Cash proceeds from sale of common stock
|
3,735,380
|
-
|
||||||
Cash proceeds from sale of Series B convertible preferred shares
|
2,615,000
|
-
|
||||||
Net cash provided by financing activities
|
6,333,888
|
1,830,405
|
||||||
Increase in Cash
|
2,297,902
|
-
|
||||||
Cash at beginning of year
|
-
|
-
|
||||||
Cash at end of year
|
$
|
2,297,902
|
$
|
-
|
||||
Supplemental Disclosure of Interest and Income Taxes Paid:
|
||||||||
Interest paid
|
$
|
-
|
$
|
-
|
||||
Income taxes paid
|
$
|
-
|
$
|
-
|
||||
Supplemental schedule of non-cash investing and financing activities
|
||||||||
Stock issued for debt conversion
|
$
|
482,548
|
$
|
1,517,800
|
||||
Reclassification of note premium upon conversion of debt
|
$
|
110,000
|
$
|
-
|
||||
Stock issued for acquisition of Park Road Solutions
|
$
|
-
|
$
|
102,400
|
||||
Stock issued to purchase interest in Rock3r Labs, LLC
|
$
|
-
|
$
|
12,386,826
|
||||
Common stock issued for settlement pursuant to restructuring agreement
|
$
|
-
|
$
|
68,750
|
||||
Accounts payable converted to note payable
|
$
|
-
|
$
|
12,000
|
·
|
The Company and Eight Dragons Acquisition, LLC (“Eight Dragons LLC”), an affiliate of Ms. Taylor, rescinded
certain transactions between the Company and Eight Dragons LLC, and in connection therewith Eight Dragons LLC returned to the Company 290,500 shares of common stock, for no additional consideration.
|
·
|
The Company and Ms. Taylor rescinded certain transactions between the Company and Ms. Taylor, and in connection
therewith Ms. Taylor returned to the Company 9,710,295 shares of common stock and 1,000,000 shares of preferred stock, par value $0.0001 per share, of the Company, for no additional consideration. In connection therewith, the Company
and Ms. Taylor entered into the Taylor Rescission Agreement.
|
·
|
Pursuant to an Asset and Intellectual Property Contribution and Assignment Agreement entered into between the
Company and Rokk3r Labs dated December 26, 2017 (the “Contribution and Assignment Agreement”), Rokk3r Labs contributed to the capital of the Company certain intellectual property assets of Rokk3r Labs in exchange for the issuance to
Rokk3r Labs of 74,050,000 shares of unregistered common stock. The Contribution and Assignment Agreement was entered into as one of the conditions to the Restructuring Agreement.
|
December 31,
|
||||||||
|
2018
|
2017
|
||||||
|
||||||||
Convertible debt
|
$ |
—
|
$
|
430,000
|
1.
|
Clarify that certain transactions between collaborative arrangement participants should be accounted for as
revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement,
presentation, and disclosure requirements.
|
2.
|
Add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good
or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606.
|
3.
|
Require that in a transaction with a collaborative arrangement participant that is not directly related to
sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer
|
|
December 31,
|
|||||||
|
2018
|
2017
|
||||||
Related party – prepaid consulting fee pursuant to Consulting Services Agreement with ExO
|
$
|
250,000
|
$
|
—
|
||||
Related party – prepaid consulting fee – parent
|
175,000
|
|||||||
Other
|
18,953
|
—
|
||||||
|
$
|
443,953
|
$
|
—
|
December 31,
|
||||||||
|
2018
|
2017
|
||||||
|
||||||||
Principal amount
|
$
|
—
|
$
|
430,000
|
||||
Add: debt premium liability
|
—
|
110,000
|
||||||
Convertible notes payable, net
|
$
|
—
|
$
|
540,000
|
·
|
the original issue price of each share is $0.64 (the “Original Issue Price”),
|
·
|
the shares are entitled to one vote for each share of common stock that such shares of Series B Preferred
are convertible into,
|
·
|
the shares do not pay dividends,
|
·
|
each share is convertible into shares of our common stock at a conversion rate of one share of common stock
for each share of Series B Preferred, subject to adjustment as hereinafter set forth. In the event of a breach by us of the rights, preferences, powers, restrictions and limitations of the Series B Preferred, then the number of shares
of our common stock issuable upon conversion will be increased to 1.1 shares of common stock for each share of Series B Preferred and the holder may exercise its redemption rights discussed below,
|
·
|
the conversion price of the Series B Preferred is subject to proportional adjustment in the event of stock
splits, stock dividends and similar corporate events. In addition, the conversion price is subject to adjustment if we issue or sell shares of our common stock in one or more capital-raising transactions which results in gross proceeds
to us of more than $500,000 at a purchase price per share of less than $0.64. If this event should occur, the number of shares of our common stock issuable upon conversion is increased on a pro-rata basis, and
|
·
|
the holder of the Series B Preferred has the right to elect to have all or any portion of the then
outstanding shares of Series B Preferred redeemed by us at any time and from time to time on or after 18 months following the issuance of 3,906,250 shares or after any breach of the rights, preferences, powers, restrictions and
limitations of the Series B Preferred for a price per share equal to 122.5% of the Original Issue Price, as adjusted.
|
|
Years Ended December 31,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
Income tax benefit at U.S. statutory rate of 21% in 2018 and 34% in 2017
|
$
|
(716,058
|
)
|
$
|
(12,885,417
|
)
|
||
Income tax benefit – state
|
(187,539
|
)
|
(1,894,914
|
)
|
||||
Non-deductible expenses
|
69,098
|
14,389,886
|
||||||
Effect of change in effective rate
|
—
|
130,148
|
||||||
Change in valuation allowance
|
834,499
|
260,297
|
||||||
Total provision for income tax
|
$
|
—
|
$
|
—
|
|
Years Ended December 31,
|
|||||||
2018
|
2017
|
|||||||
|
||||||||
Net operating loss carryforward
|
$
|
1,350,223
|
$
|
507,297
|
||||
Total deferred tax asset
|
1,350,223 |
507,297
|
||||||
Less: Valuation allowance
|
(1,350,223
|
)
|
(507,297
|
)
|
||||
Net deferred tax asset
|
$
|
—
|
$
|
—
|