Form 1-A Issuer Information UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 1-A
REGULATION A OFFERING STATEMENT
UNDER THE SECURITIES ACT OF 1933
OMB APPROVAL

FORM 1-A

OMB Number: 3235-0286


Estimated average burden hours per response: 608.0

1-A: Filer Information

Issuer CIK
0001414043
Issuer CCC
XXXXXXXX
DOS File Number
Offering File Number
024-11427
Is this a LIVE or TEST Filing? LIVE TEST
Would you like a Return Copy?
Notify via Filing Website only?
Since Last Filing?

Submission Contact Information

Name
Phone
E-Mail Address

1-A: Item 1. Issuer Information

Issuer Infomation

Exact name of issuer as specified in the issuer's charter
FRIENDABLE, INC.
Jurisdiction of Incorporation / Organization
NEVADA
Year of Incorporation
2007
CIK
0001414043
Primary Standard Industrial Classification Code
SERVICES-PREPACKAGED SOFTWARE
I.R.S. Employer Identification Number
98-0546715
Total number of full-time employees
7
Total number of part-time employees
0

Contact Infomation

Address of Principal Executive Offices

Address 1
1821 S BASCOM AVE
Address 2
SUITE 353
City
CAMPBELL
State/Country
CALIFORNIA
Mailing Zip/ Postal Code
95008
Phone
855-473-8473

Provide the following information for the person the Securities and Exchange Commission's staff should call in connection with any pre-qualification review of the offering statement.

Name
Jonathan Leinwand
Address 1
Address 2
City
State/Country
Mailing Zip/ Postal Code
Phone

Provide up to two e-mail addresses to which the Securities and Exchange Commission's staff may send any comment letters relating to the offering statement. After qualification of the offering statement, such e-mail addresses are not required to remain active.

Financial Statements

Industry Group (select one) Banking Insurance Other

Use the financial statements for the most recent period contained in this offering statement to provide the following information about the issuer. The following table does not include all of the line items from the financial statements. Long Term Debt would include notes payable, bonds, mortgages, and similar obligations. To determine "Total Revenues" for all companies selecting "Other" for their industry group, refer to Article 5-03(b)(1) of Regulation S-X. For companies selecting "Insurance", refer to Article 7-04 of Regulation S-X for calculation of "Total Revenues" and paragraphs 5 and 7 of Article 7-04 for "Costs and Expenses Applicable to Revenues".

Balance Sheet Information

Cash and Cash Equivalents
$ 8851.00
Investment Securities
$ 0.00
Total Investments
$
Accounts and Notes Receivable
$ 106314.00
Loans
$
Property, Plant and Equipment (PP&E):
$ 0.00
Property and Equipment
$
Total Assets
$ 115165.00
Accounts Payable and Accrued Liabilities
$ 4131131.00
Policy Liabilities and Accruals
$
Deposits
$
Long Term Debt
$ 0.00
Total Liabilities
$ 4131131.00
Total Stockholders' Equity
$ -4015966.00
Total Liabilities and Equity
$ 115165.00

Statement of Comprehensive Income Information

Total Revenues
$ 322671.00
Total Interest Income
$
Costs and Expenses Applicable to Revenues
$ -2812458.00
Total Interest Expenses
$
Depreciation and Amortization
$ 0.00
Net Income
$ -2489787.00
Earnings Per Share - Basic
$ -0.04
Earnings Per Share - Diluted
$ -0.04
Name of Auditor (if any)
Salberg & Company, P.A.

Outstanding Securities

Common Equity

Name of Class (if any) Common Equity
Common Stock
Common Equity Units Outstanding
21218432
Common Equity CUSIP (if any):
000000000
Common Equity Units Name of Trading Center or Quotation Medium (if any)
None

Preferred Equity

Preferred Equity Name of Class (if any)
Series A
Preferred Equity Units Outstanding
19786
Preferred Equity CUSIP (if any)
000000000
Preferred Equity Name of Trading Center or Quotation Medium (if any)
None

Preferred Equity

Preferred Equity Name of Class (if any)
Series B
Preferred Equity Units Outstanding
284000
Preferred Equity CUSIP (if any)
000000000
Preferred Equity Name of Trading Center or Quotation Medium (if any)
None

Preferred Equity

Preferred Equity Name of Class (if any)
Series C
Preferred Equity Units Outstanding
124800
Preferred Equity CUSIP (if any)
000000000
Preferred Equity Name of Trading Center or Quotation Medium (if any)
None

Preferred Equity

Preferred Equity Name of Class (if any)
Series D
Preferred Equity Units Outstanding
0
Preferred Equity CUSIP (if any)
000000000
Preferred Equity Name of Trading Center or Quotation Medium (if any)
None

Debt Securities

Debt Securities Name of Class (if any)
Debt Securities
Debt Securities Units Outstanding
0
Debt Securities CUSIP (if any):
000000000
Debt Securities Name of Trading Center or Quotation Medium (if any)
None

1-A: Item 2. Issuer Eligibility

Issuer Eligibility

Check this box to certify that all of the following statements are true for the issuer(s)

1-A: Item 3. Application of Rule 262

Application Rule 262

Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.

Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.

1-A: Item 4. Summary Information Regarding the Offering and Other Current or Proposed Offerings

Summary Infomation

Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering Tier1 Tier2
Check the appropriate box to indicate whether the financial statements have been audited Unaudited Audited
Types of Securities Offered in this Offering Statement (select all that apply)
Equity (common or preferred stock)
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? Yes No
Does the issuer intend this offering to last more than one year? Yes No
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? Yes No
Will the issuer be conducting a best efforts offering? Yes No
Has the issuer used solicitation of interest communications in connection with the proposed offering? Yes No
Does the proposed offering involve the resale of securities by affiliates of the issuer? Yes No
Number of securities offered
500000
Number of securities of that class outstanding
0

The information called for by this item below may be omitted if undetermined at the time of filing or submission, except that if a price range has been included in the offering statement, the midpoint of that range must be used to respond. Please refer to Rule 251(a) for the definition of "aggregate offering price" or "aggregate sales" as used in this item. Please leave the field blank if undetermined at this time and include a zero if a particular item is not applicable to the offering.

Price per security
$ 10.0000
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer
$ 5000000.00
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders
$ 0.00
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement
$ 0.00
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement
$ 0.00
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs)
$ 5000000.00

Anticipated fees in connection with this offering and names of service providers

Underwriters - Name of Service Provider
Underwriters - Fees
$
Sales Commissions - Name of Service Provider
Sales Commissions - Fee
$
Finders' Fees - Name of Service Provider
Finders' Fees - Fees
$
Audit - Name of Service Provider
Salberg & Company, P.A.
Audit - Fees
$ 10000.00
Legal - Name of Service Provider
Jonathan D. Leinwand, P.A.
Legal - Fees
$ 140000.00
Promoters - Name of Service Provider
Promoters - Fees
$
Blue Sky Compliance - Name of Service Provider
Blue Sky Compliance - Fees
$
CRD Number of any broker or dealer listed:
Estimated net proceeds to the issuer
$ 4850000.00
Clarification of responses (if necessary)

1-A: Item 5. Jurisdictions in Which Securities are to be Offered

Jurisdictions in Which Securities are to be Offered

Using the list below, select the jurisdictions in which the issuer intends to offer the securities

Selected States and Jurisdictions
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA
HAWAII
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISIANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
RHODE ISLAND
SOUTH CAROLINA
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
DISTRICT OF COLUMBIA
PUERTO RICO
ALBERTA, CANADA
BRITISH COLUMBIA, CANADA
MANITOBA, CANADA
NEW BRUNSWICK, CANADA
NEWFOUNDLAND, CANADA
NOVA SCOTIA, CANADA
ONTARIO, CANADA
PRINCE EDWARD ISLAND, CANADA
QUEBEC, CANADA
SASKATCHEWAN, CANADA
YUKON, CANADA
CANADA (FEDERAL LEVEL)

Using the list below, select the jurisdictions in which the securities are to be offered by underwriters, dealers or sales persons or check the appropriate box

None
Same as the jurisdictions in which the issuer intends to offer the securities
Selected States and Jurisdictions

1-A: Item 6. Unregistered Securities Issued or Sold Within One Year

Unregistered Securities Issued or Sold Within One Year

None

Unregistered Securities Issued

As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:

(a)Name of such issuer
Friendable, Inc.
(b)(1) Title of securities issued
Common Shares
(2) Total Amount of such securities issued
9631291
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer.
0
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof.
580110
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)).

Unregistered Securities Act

(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption
Section 4(a)(2) of the Securities Act
 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 1-A

  Amendment No. 2

 

TIER 2 OFFERING
OFFERING STATEMENT UNDER THE SECURITIES ACT OF 1933 CURRENT REPORT
 
 
FRIENDABLE, INC.
(Exact name of registrant as specified in its charter)
 
Date: March 19, 2021

 

Nevada    7372   98-0546715
(State or Other Jurisdiction
of Incorporation)
  (Primary Standard Classification Code)   (IRS Employer
Identification Number)

 

1821 S Bascom Ave., Suite 353
Campbell, California 95008
Phone: (855) 473-8473
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
 
Please send copies of all correspondence to:
 
Jonathan D. Leinwand, Esq.
Jonathan D. Leinwand, P.A.
18305 Biscayne Blvd., Suite 200
Aventura, FL 33160
Phone: (954) 903-7856
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

 

THIS OFFERING STATEMENT SHALL ONLY BE QUALIFIED UPON ORDER OF THE COMMISSION, UNLESS A SUBSEQUENT AMENDMENT IS FILED INDICATING THE INTENTION TO BECOME QUALIFIED BY OPERATION OF THE TERMS OF REGULATION A.

 

PART I - NOTIFICATION

 

Part I should be read in conjunction with the attached XML Document for Items 1-6

 

PART I – END

1

 

Preliminary Offering Circular dated March 19, 2021

 

An Offering Statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the Offering Statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the Offering Statement in which such Final Offering Circular was filed may be obtained.

 

FRIENDABLE, INC.
1821 S Bascom Ave., Suite 353
Campbell, California 95008
Phone: (855) 473-8473

 

Maximum Offering: $5,000,000
Up to a Maximum of 500,000 Series D Preferred Shares
Offering Price of $10.00 per Series D Preferred Share*

 

This is the public offering of securities of Friendable, Inc., a Nevada corporation. We are offering 500,000 shares of our Series D Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), at an offering price of $10.00 per share (the “Offered Shares”). This Offering will terminate on twelve months from the day the Offering is qualified, subject to extension for up to thirty (30) days as defined below or the date on which the maximum offering amount is sold (such earlier date, the “Termination Date”). The minimum purchase requirement per investor is 5,000 Offered Shares ($50,000); however, we can waive the minimum purchase requirement on a case-by-case basis in our sole discretion.

 

These securities are speculative securities. Investment in the Company’s stock involves significant risk. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section of this Offering Circular.

 

No Escrow

 

The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best-efforts basis. Upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.

 

Subscriptions are irrevocable and the purchase price is non-refundable as expressly stated in this Offering Circular. The Company, by determination of the Board of Directors, in its sole discretion, may issue the Securities under this Offering for cash, promissory notes, services, and/or other consideration without notice to subscribers. All proceeds received by the Company from subscribers for this Offering will be available for use by the Company upon acceptance of subscriptions for the Securities by the Company.

 

Sale of these shares will commence within two calendar days of the qualification date and it will be a continuous Offering pursuant to Rule 251(d)(3)(i)(F).

2

 

This Offering will be conducted on a “best-efforts” basis, which means our Officers will use their commercially reasonable best efforts in an attempt to offer and sell the Shares. Our Officers will not receive any commission or any other remuneration for these sales. In offering the securities on our behalf, the Officers will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended.

 

This Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the laws of any such state.

 

The Company is using the Offering Circular format in its disclosure in this Offering Circular.

 

The Preferred Stock offered hereby is convertible into common stock of the Company that is quoted on the OTC Pink marketplace under the symbol “FDBL”.

 

Investing in our Preferred Stock involves a high degree of risk. See “Risk Factors” section of this Offering Circular for a discussion of certain risks that you should consider in connection with an investment in our Preferred Stock.

 

Securities Offered by the
Company
  Price Per
Share to
Public
    Total
Number of
Shares
Being
Offered
    Broker-
Dealer
discount
and
commissions (1)
    Proceeds
to issuer (2)
 
Per Share of Common Stock   $ 10.00       500,000     $ -     $ 5,000,000  
Total Maximum   $ 5,000,000       500,000     $ -     $ 5,000,000  

 

(1) We may offer the shares of our common stock through registered broker-dealers or a selling agent and we may pay finders, although we have no current arrangements to do so. We currently do not have any specific plans or arrangements to use a selling agent, broker-dealer or finder; however, if we choose to do so in the future, information about any such broker dealer, selling agent, or finder shall be disclosed in an amendment to this Offering Circular.

 

(2) This does not account for the payment of expenses of this offering, which is currently estimated to be approximately $150,000. See “Plan of Distribution.”

 

* An Issuer may raise an aggregate of $50.0 million in a 12-month period pursuant to Tier 2 of Regulation A of the Securities Act of 1933, as amended (the “Securities Act”).

 

Our Board of Directors used its business judgment in setting a value of $10.00 per share to the Company as consideration for the stock to be issued under the Offering. The sales price per share bears no relationship to our book value or any other measure of our current value or worth.

 

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

3

 

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

4

 

TABLE OF CONTENTS

 

  Page
IMPORTANT INFORMATION REGARDING THIS OFFERING CIRCULAR 6
STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS 6
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 7
SUMMARY 8
THE OFFERING 10
RISK FACTORS 11
USE OF PROCEEDS 31
DILUTION 32
DISTRIBUTION 33
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 36
BUSINESS 47
MANAGEMENT 57
EXECUTIVE COMPENSATION 61
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 65
PRINCIPAL STOCKHOLDERS 68
DESCRIPTION OF SECURITIES 72
SECURITIES OFFERED 77
LEGAL MATTERS 79
EXPERTS 79
WHERE YOU CAN FIND MORE INFORMATION 80
AUDITED FINANCIAL STATEMENTS F-1
EXHIBITS 81
SIGNATURES 82

5

 

In this Offering Circular, unless the context indicates otherwise, references to “Friendable, Inc.”, “Freindable”, “FDBL”, “we”, the “Company”, “our” and “us” refer to the activities of and the assets and liabilities of the business and operations of Friendable, Inc.

 

IMPORTANT INFORMATION ABOUT THIS OFFERING CIRCULAR

 

Please carefully read the information in this offering circular and any accompanying offering circular supplements, which we refer to collectively as the offering circular. You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with different information. This offering circular may only be used where it is legal to sell these securities. You should not assume that the information contained in this offering circular is accurate as of any date later than the date hereof or such other dates as are stated herein or as of the respective dates of any documents or other information incorporated herein by reference.

 

This offering circular is part of an offering statement that we filed with the SEC, using a continuous offering process. Periodically, as we have material developments, we will provide an offering circular supplement that may add, update or change information contained in this offering circular. Any statement that we make in this offering circular will be modified or superseded by any inconsistent statement made by us in a subsequent offering circular supplement. The offering statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this offering circular. You should read this offering circular and the related exhibits filed with the SEC and any offering circular supplement, together with additional information contained in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the SEC. See the section entitled “Additional Information” below for more details.

 

We, and if applicable, those selling Common Stock on our behalf in this offering, will be permitted to make a determination that the purchasers of Common Stock in this offering are “qualified purchasers” in reliance on the information and representations provided by the purchaser regarding the purchaser’s financial situation. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A (“Regulation A”) under the Securities Act of 1933, as amended (the “Securities Act”). For general information on investing, we encourage you to refer to www.investor.gov.

 

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

 

Our Common Stock is being offered and sold only to “qualified purchaser” (as defined in Regulation A). As a Tier 2 offering pursuant to Regulation A, this offering will be exempt from state law “Blue Sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that our Common Stock offered hereby is offered and sold only to “qualified purchasers” or at a time when our Common Stock is listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D under the Securities Act (“Regulation D”) and (ii) all other investors so long as their investment in our Common Stock does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons).

 

To determine whether a potential investor is an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor must be a natural person who has:

 

1. an individual net worth, or joint net worth with the person’s spouse, that exceeds $1,000,000 at the time of the purchase, excluding the value of the primary residence of such person; or

 

2. earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

6

 

If the investor is not a natural person, different standards apply. See Rule 501 of Regulation D for more details.

 

For purposes of determining whether a potential investor is a “qualified purchaser,” annual income and net worth should be calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements under “Summary”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Our Business” and elsewhere in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “should”, “will” and “would” or the negatives of these terms or other comparable terminology.

 

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Offering Circular, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

 

The speculative nature of the business;

 

Our reliance on suppliers and vendors;

 

Our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a “going concern;”

 

Our ability to effectively execute our business plan;

 

Our ability to manage our expansion, growth and operating expenses;

 

Our ability to finance our businesses;

 

Our ability to promote our businesses;

 

Our ability to compete and succeed in highly competitive and evolving businesses;

 

Our ability to respond and adapt to changes in technology and customer behavior; and

 

Our ability to protect our intellectual property and to develop, maintain and enhance our business strategy.

 

Although the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to re-issue this Offering Circular or otherwise make public statements updating our forward-looking statements.

7

 

SUMMARY

 

This summary highlights selected information contained elsewhere in this Offering Circular. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our Common Stock. You should carefully read the entire Offering Circular, including the risks associated with an investment in the company discussed in the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

 

Company Information

 

Friendable, Inc. (“FDBL”) is a mobile-focused technology and marketing company, connecting and engaging users through two distinctly branded applications. The Company initially released its flagship product Friendable, as a social application where users can create one-on-one or group-style meetups. In 2019 the Company moved the Friendable app closer to a traditional subscription based dating application with its focus on building revenue, as well as reintroducing the brand as a non-threatening, all-inclusive place where “Everything starts with Friendship”…meet, chat & date.

 

Fan Pass is the Company’s most recent or second subscription-based app/brand, released in July, 2020. Fan Pass believes in connecting Fans of their favorite celebrity or artist, to an exclusive VIP or Backstage experience, right from their smartphone or other connected devices. Fan Pass allows an artist’s fanbase to experience something they would otherwise never have the opportunity to afford or geographically attend. The Fan Pass platform supports artists at all levels, providing exclusive artist content “channels,” live event streaming, promotional support, fan subscriptions and custom merchandise designs, all of which are revenue streams for each artist.

 

The Company aims to establish both Friendable and Fan Pass as premier brands and mobile platforms that are dedicated to connecting and engaging users from anywhere around the World.

 

Friendable Inc. was founded by Robert A. Rositano Jr. and Dean Rositano, two brothers with over 27 years of experience working together on technology-related ventures. For more information about the Company, visit www.Friendable.com.

 

Dividends

 

The payment of dividends, if any, in the future, rests within the sole discretion of our board of directors. The payment of dividends will depend upon our earnings, our capital requirements and our financial condition, as well as other relevant factors. We have not declared any cash dividends since our inception and have no present intention of paying any cash dividends on our common stock in the foreseeable future.

8

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

 

1. We would not be able to pay our debts as they become due in the usual course of business; or

 

2. Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

Trading Market

 

The Preferred Stock offered hereby is convertible into common stock of the Company that is quoted on the OTC Pink marketplace under the symbol “FDBL”.

9

 

THE OFFERING

 

Issuer:   Friendable, Inc.
     
Securities offered:   500,000 shares of our Series D Preferred Stock, par value $0.0001 per share (the “Preferred Stock”) at an offering price of $10.00 per share (the “Offered Shares”). (See “Distribution.”).
     
Number of shares of Series D Preferred Stock outstanding before the offering:   0 issued and outstanding as of September 30, 2020.
     
Number of shares of Series D Preferred Stock to be outstanding after the offering:   500,000 Series D Preferred Shares, assuming all the Offered Shares are sold in this offering.
     
Price per share:   $10.00.
     
Conversion of the Series D Preferred Stock:  

Each Offered Share of Series D Preferred Stock is convertible, at the option of the holder, at any time, and from time to time, into that number of fully paid and nonassessable shares of Common Stock (whether whole or fractional) that have a Fair Market Value, in the aggregate, equal to, and based on, the Series D Conversion Price. The “Series D Conversion Price” shall initially be equal to a value of $10.00, per share. Such initial Series D Conversion Price, and the rate at which shares of Series D Preferred Stock may be further converted into shares of Common Stock, shall be subject to adjustment for Reclassification, Exchange, Substitution, Sales, Reorganizations, Mergers or Consolidations, as set forth in section 4.4 of the Series D Preferred Stock Certificate of Designation, which is an Exhibit hereto. “Fair Market Value” shall mean as of any date of determination, 80% of the average closing price of a share of Common Stock on the principal exchange or market on which such shares are then trading for the 20 trading days immediately preceding such date.

 

As an example, suppose Investor X purchases 10,000 Series D Preferred Shares under this Offering at $10.00 per share (for a total purchase price and value of $100,000) and the applicable average trading price of the Company’s common shares on conversion is $0.00375 per share, Investor X would be entitled to receive 33,333,333 common shares on full conversion of the original Series D Preferred investment, calculated by applying 80% of $0.00375 (or $0.003) against the original investment value of $100,000.

     
Trading Market:   Our Preferred Stock is convertible into common stock of the Company that is quoted on the OTC Pink marketplace under the symbol “FDBL”.
     
Use of Proceeds:   If we sell all of the shares being offered, our net proceeds (after our estimated offering expenses) will be $4,850,000. We will use these net proceeds for working capital and other general corporate purposes.
     
Risk factors:   Investing in our Series D Preferred Stock involves a high degree of risk. See “Risk Factors” below for additional detail.
     
Termination   This Offering will terminate on twelve months from the day the Offering is qualified, subject to extension for up to thirty (30) days as defined below or the date on which the maximum offering amount is sold (such earlier date, the “Termination Date”).

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RISK FACTORS

 

Investment in our Series D Preferred Stock involves a high degree of risk. You should carefully consider, among other matters, the following risk factors in addition to the other information in this offering, our Annual Report on Form 10K, our Quarterly Reports on Form 10Q and our other public filings when evaluating our business because these risk factors may have a significant impact on our business, financial condition, operating results or cash flow. If any of the material risks described below or in subsequent reports we file with the Securities and Exchange Commission (“SEC”) actually occur, they may materially harm our business, financial condition, operating results or cash flow. Additional risks and uncertainties that we have not yet identified or that we presently consider to be immaterial may also materially harm our business, financial condition, operating results or cash flow.

 

Risks Related to Our Business and Industry

 

Our success depends upon the continued growth and acceptance of paid subscription based access to our online/mobile applications, together with acceptance by sponsors and advertisers to online/mobile platforms, particularly paid listings, as an effective alternative to traditional, offline advertising and the continued commercial use of the internet.

 

Many online/mobile applications are access free to audiences. In addition, many sponsors and advertisers still have limited experience with mobile advertising and may continue to devote significant portions of their advertising budgets to traditional offline advertising media. Accordingly, we continue to compete with access free platforms (such as YouTube) and with traditional advertising media, including television, radio and print, in addition to a multitude of websites with high levels of traffic and mobile advertising networks, for a share of available advertising expenditures and expect to face continued competition as more emerging media and traditional offline media companies enter the online and mobile advertising markets. We believe that the continued growth and continued acceptance of paid subscription platforms and mobile advertising generally will depend, to a large extent, on its perceived effectiveness and the acceptance of paid exclusive and/or live streaming digital content , as well as related advertising models (particularly in the case of models that incorporate user targeting and/or utilize mobile devices), the continued growth in commercial use of the internet (particularly abroad) and smart devices, the extent to which web/mobile browsers, software programs and/or mobile applications that limit or prevent advertising from being displayed become commonplace and the extent to which the industry is able to effectively manage click fraud. Any lack of growth in the market for mobile advertising, particularly for paid listings, or any decrease in the effectiveness and value of mobile advertising (whether due to the passage of laws requiring additional disclosure and/or opt-in policies for advertising that incorporates user targeting or other developments) would have an adverse effect on our business, financial condition and results of operations.

 

We had substantial client concentration with one technology services client, on a per contract basis, accounting for approximately 99% of our revenues through 2020 and, although we may continue to work with this client in the future, we do not anticipate doing so and thus face an inherent risk of not being able to sustain operations from our remaining Fan Pass business segment alone.

 

To date, the Company’s revenue has been almost entirely dependent on technology services contracts with one client, Answering Legal, to support operations until the Fan Pass subscription and merchandising segment of our business gained traction. At this time, our Fan Pass subscription and merchandising segment of our business is growing, and we are reducing our dependance on Answering Legal. While we anticipate being able to gain new technology services contracts from clients to offset our operating expenses, we may need to obtain additional debt and/or equity financing in the interim and may continue to incur substantial operating losses, depending on the traction our Fan Pass subscription and merchandising segment gains in 2021. There are inherent risks whenever a large percentage of total revenues are concentrated with one primary client and when that client is no longer anticipated to be the primary source of revenue for a company. Nonetheless, we are hopeful about the Fan Pass subscription and merchandising segment of our business in 2021. As a general matter, it is not possible for us to predict the future level of demand for our services that will be generated by any clients, including Answering Legal, or the future demand for the products and services of other similar clients. The loss of Answering Legal as a primary source of revenue or the failure to retain similar clients generally could negatively affect our revenues and results of operations and/or the trading price of our common stock.

 

We depend, in part, upon arrangements with third parties to drive traffic to our various websites and distribute our products and services.

 

We engage in a variety of activities, such as search engine optimization and application search optimization, designed to attract traffic to our application and convert visitors into repeat users and customers. How successful we are in these efforts depends, in part, upon our continued ability to enter into arrangements with third parties to drive traffic to our application, as well as the continued introduction of new and enhanced features, products and services that resonate with users and customers generally.

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In addition, we have entered into a number of arrangements with third parties to promote and deliver mobile advertising to various social networks or mobile channels. Pursuant to these arrangements, third parties generally promote our application on various mobile applications, their websites or through e-mail campaigns and we either pay on a cost per impression basis (i.e. cost per view) or a fixed fee when visitors to these websites click through to or download our application. These arrangements are generally not exclusive, are short-term in nature and are generally terminable by either party given notice. If existing arrangements with third parties are terminated (or are not renewed upon their expiration) and we fail to replace this traffic and related revenues, or if we are unable to enter into new arrangements with existing and/or new third parties in response to industry trends, our business, financial condition and results of operations could be adversely affected.

 

Even if we succeed in driving traffic to our application, we may not be able to convert this traffic or otherwise retain users unless we continue to provide quality products and services. We may not be able to adapt quickly and/or in cost-effective manner to frequent changes in user and customer preferences, which can be difficult to predict, or appropriately time the introduction of enhancements and/or new products or services to the market. Our inability to provide quality products and services would adversely affect user and customer experiences, which would result in decreases in users, customers and revenues, which would adversely affect our business, financial condition and results of operations.

 

As discussed below, our traffic building and conversion initiatives also involve the expenditure of considerable sums for marketing, as well as for the development and introduction of new products, services and enhancements, infrastructure and other related efforts.

 

Marketing efforts designed to drive traffic to our various websites may not be successful or cost-effective.

 

Traffic building and conversion initiatives involve considerable expenditures for online, mobile and offline advertising and marketing. We plan to make significant expenditures for online and mobile display advertising, event-based marketing and traditional offline advertising in connection with these initiatives, which may not be successful or cost-effective. In the case of paid advertising generally, the policies of sellers and publishers of advertising may limit our ability to purchase certain types of advertising or advertise some of our products and services, which could affect our ability to compete effectively and, in turn, adversely affect our business, financial condition and results of operations.

 

In addition, search engines have increasingly expanded their offerings into other, non-search related categories, and have in certain instances displayed their own integrated or related product and service offerings in a more prominent manner than those of third parties within their search engine results. Continued expansion and competition from search engines could result in a substantial decrease in traffic to our various websites, as well as increased costs if we were to replace free traffic with paid traffic, which would adversely affect our business, financial condition and results of operations.

 

Lastly, as discussed above, we also have and will enter into various arrangements with third parties in an effort to increase traffic, which arrangements are generally more cost-effective than traditional marketing efforts. If we are unable to renew existing (and enter into new) arrangements of this nature, sales and marketing costs as a percentage of revenue would increase over the long-term.

 

Any failure to attract and acquire new, and retain existing, traffic, users and customers in a cost-effective manner could adversely affect our business, financial condition and results of operations.

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We rely in part on application marketplaces and Internet search engines to drive traffic to our products and services, and if we fail to appear high up in the search results or rankings, traffic to our platform could decline and our business and operating results could be adversely affected.

 

We rely on application marketplaces, such as Apple’s App Store, to drive downloads of our mobile applications. In the future, Apple or other operators of application marketplaces may make changes to their marketplaces which may make access to our products and services more difficult. Our rankings in Apple’s App Store may also drop based on the following factors:

 

the size and diversity of our registered member and subscriber bases relative to those of our competitors;

 

the functionality of our application and the attractiveness of their features and our services and offerings generally to consumers relative to those of our competitors;

 

how quickly we can enhance our existing technology and services and/or develop new features and localized opportunities and venue-based monetization opportunities in response to:

 

new, emerging and rapidly changing technologies;

 

the introduction of product and service offerings by our competitors;

 

changes in consumer requirements and trends in the single community relative to our competitors; and

 

our ability to engage in cost-effective marketing efforts, including by way of maintaining relationships with third parties with which we have entered into alliances, and the recognition and strength of our various brands relative to those of our competitors.

 

Our estimated income taxes could be materially different from income taxes that we ultimately pay.

 

We are subject to income taxes in the United States. Significant judgment and estimation is required in determining our provision for income taxes and related matters. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determinations are uncertain or otherwise subject to interpretation. Our determination of our income tax liability is always subject to review by applicable tax authorities and we are currently subject to audits in a number of jurisdictions. Although we believe our income tax estimates and related determinations are reasonable and appropriate, relevant taxing authorities may disagree. The ultimate outcome of any such audits and reviews could be materially different from estimates and determinations reflected in our historical income tax provisions and accruals. Any adverse outcome of any such audit or review could have an adverse effect on our financial condition and results of operations.

 

A variety of new laws, or new interpretations of existing laws, could subject us to claims or otherwise harm our business.

 

We are subject to a variety of laws in the U.S. and abroad that are costly to comply with, can result in negative publicity and diversion of management time and effort and can subject us to claims or other remedies. Some of these laws, such as income, sales, use, value-added and other tax laws and consumer protection laws, are applicable to businesses generally and others are unique to the various types of businesses in which we are engaged. Many of these laws were adopted prior to the advent of the internet and related technologies and, as a result, do not contemplate or address the unique issues of the internet and related technologies. Laws that do reference the internet are being interpreted by the courts, but their applicability and scope remain uncertain.

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For example, through our various businesses we post and link to third party content, including third party advertisements, links and websites, as well as content submitted by users, such as comments, photographs and videos. We could be subject to liability for posting or linking to third party content, and while we generally require third parties to indemnify us for related claims, we may not be able to enforce our indemnification rights. Some laws, including the Communications Decency Act, or CDA, and the Digital Millennium Copyright Act, or DMCA, limit our liability for posting or linking to third party content. For example, the DMCA generally protects online service providers from claims of copyright infringement based on use of third party content, so long as certain statutory requirements are satisfied. However, the scope and applicability of the DMCA are subject to judicial interpretation and, as such, remain uncertain, and the U.S. Congress may enact legislation limiting the protections afforded by the DMCA to online service providers. Moreover, similar protections may not exist in other jurisdictions in which our products are used. As a result, claims could be threatened and filed under both U.S. and foreign laws based upon use of third party content asserting, among other things, defamation, invasion of privacy or right or publicity, copyright infringement or trademark infringement.

 

Any failure on our part to comply with applicable laws may subject us to additional liabilities, which could adversely affect our business, financial condition and results of operations. In addition, if the laws to which we are currently subject are amended or interpreted adversely to our interests, or if new adverse laws are adopted, our products and services might need to be modified to comply with such laws, which would increase our costs and could result in decreased demand for our products and services to the extent that we pass on such costs to our customers. Specifically, in the case of tax laws, positions that we have taken or will take are subject to interpretation by the relevant taxing authorities. While we believe that the positions we have taken to date comply with applicable law, there can be no assurances that the relevant taxing authorities will not take a contrary position, and if so, that such positions will not adversely affect us. Any events of this nature could adversely affect our business, financial condition and results of operations.

 

We may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property rights of third parties.

 

We regard our intellectual property rights, including trademarks, domain names, trade secrets, copyrights and other similar intellectual property, as critical to our success. For example, we currently rely heavily on the trademark “Fan Pass” and “Fan Pass Live” to market our products and seek to build and maintain brand loyalty and recognition. We intend, in due course, subject to legal advice, to apply for trademark, copyright and/or patent protection in the United States and other jurisdictions. We regard our intellectual property, including our software and trademark, as valuable assets and intend to vigorously defend them against infringement. Effective trademark protection may not be available or may not be sought in every country in which products and services are made available and contractual disputes may affect the use of marks governed by private contract. We have reserved and registered certain domain names, however not every variation of a domain name may be available or be registered, even if available.

 

While there can be no assurance that registered trademarks and copyrights will protect our proprietary information, we intend to assert our intellectual property rights against any infringer. Although any assertion of our rights can result in a substantial cost to, and diversion of effort by, our Company, management believes that the protection of our intellectual property rights is a key component of our operating strategy.

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Our application also relies upon trade secrets and certain copyrightable and patentable proprietary technologies relating to its software and related features, products and services.

 

We will rely on a combination of laws and contractual restrictions with employees, customers, suppliers, affiliates and others to establish and protect our various intellectual property rights. For example, we plan to apply to register and renew, or secure by contract where appropriate, trademarks and service marks as they are developed and used, and continue to reserve, register and renew domain names as we deem appropriate.

 

We also plan to apply for copyrights and patents or for other similar statutory protections as we deem appropriate, based on then current facts and circumstances. No assurances can be given that any copyright or patent application we file will result in a copyright or patent being issued, or that any future copyright or patent will afford adequate protection against competitors and similar technologies. In addition, no assurances can be given that third parties will not create new products or methods that achieve similar results without infringing upon copyrights or patents we may own in the future.

 

Despite these measures, our intellectual property rights may still not be protected in a meaningful manner, challenges to contractual rights could arise or third parties could copy or otherwise obtain and use our intellectual property without authorization. The occurrence of any of these events could result in the erosion of our brands and limitations on our ability to control marketing on or through the internet using our various domain names, as well as impede our ability to effectively compete against competitors with similar technologies, any of which could adversely affect our business, financial conditions and results of operations.

 

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, patents and other intellectual property rights held by third parties. In addition, litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or to determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations. Patent litigation tends to be particularly protracted and expensive.

 

If we fail to grow our user base, or if user engagement or ad engagement on the platform declines, the revenue, business and operating results may be harmed.

 

The size of the user base and the users’ level of engagement are critical to our success. The financial performance has been and will continue to be significantly determined by success in growing the number of users and increasing their overall level of engagement on the platform as well as the number of ad engagements. We generate a substantial majority of our revenue based upon the number of downloads, migration to subscription accounts and engagement by the users with the ads that we display. If people do not perceive the services to be useful, reliable and trustworthy, we may not be able to attract users or increase the frequency of their engagement with the platform and the ads that we display. There is no guarantee that we will be successful in attracting more users or not suffer erosion of the user base or engagement levels. A number of factors could potentially negatively affect user growth and engagement, including if:

 

users engage with other products, services or activities as an alternative;

 

influential users, such as celebrities, athletes, journalists and brands or certain age demographics conclude that an alternative product or service is more relevant;

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we are unable to convince potential new users of the value and usefulness of its products and services;

 

there is a decrease in the perceived quality of the content generated by our platform;

 

we fail to introduce new and improved products or services or if we introduce new or improved products or services that are not favorably received or that negatively affect user engagement;

 

technical or other problems prevent us from delivering our products or services in a rapid and reliable manner or otherwise affect the user experience;

 

we are unable to present users with content that is interesting, useful and relevant to them;

 

users believe that their experience is diminished as a result of the decisions we make with respect to the frequency, relevance and prominence of ads that we display;

 

there are user concerns related to privacy and communication, safety, security or other factors;

 

we become subject to hostile or inappropriate usage on our platform;

 

there are adverse changes in our products or services that are mandated by, or that we elect to make to address, legislation, regulatory authorities or litigation, including settlements or consent decrees;

 

we fail to provide adequate customer service to users; or

 

we do not maintain our brand image or its reputation is damaged.

 

If users do not continue to download and use our application and their engagement is not valuable to other users, we may experience a decline in the number of users accessing the products and services and user engagement, which could result in the loss of advertisers and revenue.

 

Our success depends on our ability to provide users with valuable content, which in turn depends on the profile descriptions and use of the app by others. We believe that one of our competitive advantages is the quality, quantity and real-time nature of the content on iHookup, and that access to unique or real-time content is one of the main reasons users visit us. We seek to foster a broad and engaged user community, and we encourage celebrities, athletes, and others to use our products and services to meet people and form relationships. If users do not continue to contribute profiles and we are unable to provide users with valuable and timely content or other people to engage with, our user base and user engagement may decline. Additionally, if we are not able to address user concerns regarding the safety and security of our products and services or if we are unable to successfully prevent abusive or other hostile behavior on the platform, the size of the user base and user engagement may decline.

 

If we are unable to compete effectively for users and advertiser spend, the business and operating results could be harmed.

 

Competition for users of its products and services is intense. Although we have developed a new platform for public self-expression and meeting people in real time, we face strong competition in this business. We compete against many companies to attract and engage users, including companies which have greater financial resources and substantially larger user bases, such as eHarmony, Match.com and others which offer a variety of Internet and mobile device-based products, services and content. As a result, competitors may acquire and engage users at the expense of the growth or engagement of our user base, which would negatively affect the business.

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We believe that our ability to compete effectively for users depends upon many factors both within and beyond our control, including:

 

the popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors;

 

the amount, quality and timeliness of content generated by our users;

 

the timing and market acceptance of our products and services;

 

the adoption of our products and services internationally;

 

its ability, and the ability of our competitors, to develop new products and services and enhancements to existing products and services;

 

the frequency and relative prominence of the ads displayed by us or our competitors;

 

our ability to establish and maintain relationships with platform partners that integrate with our platform;

 

changes mandated by, or that we elect to make to address, legislation, regulatory authorities or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us;

 

government action regulating competition;

 

our ability to attract, retain and motivate talented employees, particularly engineers, designers and product managers;

 

acquisitions or consolidation within our industry, which may result in more formidable competitors; and

 

our reputation and the brand strength relative to our competitors.

 

We also face significant competition for advertiser spend. We compete against online and mobile businesses, including those referenced above, and traditional media outlets, such as television, radio and print, for advertising budgets. In order to grow our revenue and improve our operating results, we must increase our share of spending on advertising relative to our competitors, many of which are larger companies that offer more traditional and widely accepted advertising products. In addition, some of our larger competitors have substantially broader product or service offerings and leverage their relationships based on other products or services to gain additional share of advertising budgets.

 

We believe that our ability to compete effectively for advertiser spend depends upon many factors both within and beyond our control, including:

 

the size and composition of our user base relative to those of our competitors;

 

our ad targeting capabilities, and those of our competitors;

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the timing and market acceptance of our advertising services, and those of our competitors;

 

our marketing and selling efforts, and those of our competitors;

 

the pricing for our products relative to the advertising products and services of our competitors;

 

the return our advertisers receive from their advertising services, compared to those of our competitors; and

 

our reputation and the strength of our brand relative to our competitors.

 

If we are not able to compete effectively for users and advertiser spend our business and operating results would be materially and adversely affected.

 

User growth and engagement depend upon effective interoperation with operating systems, networks, and devices, that we do not control.

 

Currently, our application is available only on Apple’s iOS. We are dependent on the interoperability of our products and services with popular devices, and mobile operating systems that we do not control. Any changes in such systems or devices that degrade the functionality of our products and services or give preferential treatment to competitive products or services could adversely affect usage of our products and services. Further, if the number of platforms for which we develop our product expands, it will result in an increase in our operating expenses. In order to deliver high quality products and services, it is important that our products and services work with a range of operating systems and devices that we do not control. In addition, because our users access our products and services through mobile devices, we are particularly dependent on the interoperability of our products and services with mobile devices and operating systems. We may not be successful in developing or maintaining relationships with key participants in the mobile industry or in developing products or services that operate effectively with these operating systems and devices. In the event that it is difficult for our users to access and use our products and services on their mobile devices, our user growth and engagement could be harmed, and our business and operating results could be adversely affected.

 

We have a limited operating history in a new and unproven market for our platform, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

 

We have developed a mobile app for public self-expression and meeting people in real time, and the market for our products and services is relatively new and may not develop as expected, if at all. People who are not our users may not understand the value of our products and services and new users may initially find our products confusing. Convincing potential new users of the value of our products and services is critical to increasing our user base and to the success of our business

 

We have a limited operating history which makes it difficult to effectively assess our future prospects or forecast future results. We encounter or may encounter many risks in this developing and rapidly evolving market. These risks and challenges include its ability to, among other things:

 

increase its number of users and user engagement;

 

successfully expand our business;

 

develop a reliable, scalable, secure, high-performance technology infrastructure that can efficiently handle increased usage;

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convince advertisers of the benefits of our products compared to alternative forms of advertising;

 

develop and deploy new features, products and services;

 

successfully compete with other companies, some of which have substantially greater resources and market power than us, that are currently in, or may in the future enter, its industry, or duplicate the features of our products and services;

 

attract, retain and motivate talented employees, particularly engineers, designers and product managers;

 

process, store, protect and use personal data in compliance with governmental regulations, contractual obligations and other obligations related to privacy and security;

 

continue to earn and preserve its users’ trust, including with respect to their private personal information; and

 

defending ourselves against litigation, regulatory, intellectual property, privacy or other claims.

 

If we fail to educate potential users and potential advertisers about the value of our products and services, if the market for our platform does not develop as we expect or if we fail to address the needs of this market, our business will be harmed. We may not be able to successfully address these risks and challenges or other unforeseen risks and challenges. Failure to adequately address these risks and challenges could harm our business and cause our operating results to suffer.

 

Our business depends on the continued and unimpeded access to our products and services on mobile devices by our users and advertisers. If we or our users experience disruptions in service or if mobile service providers are able to block, degrade or charge for access to our products and services, we could incur additional expenses and the loss of users and advertisers.

 

We depend on the ability of our users and advertisers to access mobile devices. Currently, this access is provided by companies that have significant market power in the broadband and telecommunications access marketplace, including incumbent telephone companies, cable companies, mobile communications companies, government-owned service providers, device manufacturers and operating system providers, any of whom could take actions that degrade, disrupt or increase the cost of user access to our products or services, which would, in turn, negatively impact our business. We also rely on other companies to maintain reliable communications network systems that provide adequate speed, data capacity and security to us and our users. As the number of mobile device users continues to grow, frequency of use and amount of data transmitted, the communications infrastructure that we and our users rely on may be unable to support the demands placed upon it. The failure of the mobile communications infrastructure that we and/or our users rely on, even for a short period of time, could undermine our operations and harm our operating results.

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Abusive activities by certain users could diminish the user experience on our platform, which could damage our reputation and deter our current and potential users from using our products and services.

 

There are a range of abusive activities that are prohibited by the our terms of service and are generally defined as unsolicited, repeated actions that negatively impact other users with the general goal of drawing user attention to a given person, account, site, product or idea. This includes posting large numbers of unsolicited mentions of a user, duplicate outlets, misleading links (e.g., to malware or click-jacking pages) or other false or misleading content, and aggressively following and un-following accounts, adding users to lists, sending invitations to inappropriately attract attention. Our terms of service also prohibit the creation of serial or bulk accounts, both manually or using automation, for disruptive or abusive purposes. Although we continue to invest resources to reduce spam and other abusive behavior, we expect spammers and abusers will continue to seek ways to act inappropriately on our platform. We will continuously combat spam and other abusive behaviors, including by suspending or terminating accounts we believe to be spammers and launching algorithmic changes focused on curbing abusive activities. Combatting spam and other abusive behaviors require the diversion of significant time and focus of our engineering team from improving our products and services. If spam or abusive behavior increase, this could hurt our reputation for delivering relevant content or reduce user growth and user engagement and result in continuing operational cost to us.

 

If we fail to effectively manage our growth, our business and operating results could be harmed.

 

If we experience rapid growth in our headcount and operations, it will place significant demands on our management, operational and financial infrastructure. We intend to continue to make substantial investments to expand our operations, research and development, sales and marketing and general and administrative organizations. We face significant competition for employees, particularly engineers, designers and product managers, from other Internet and high-growth companies, which include both publicly-traded and privately-held companies, and we may not be able to hire new employees quickly enough to meet our needs. To attract highly skilled personnel, we will need to continue to offer, highly competitive compensation packages. As we continue to grow, we are subject to the risks of over-hiring, over-compensating our employees and over-expanding our operating infrastructure, and to the challenges of integrating, developing and motivating a rapidly growing employee base. If we fail to effectively manage our hiring needs and successfully integrate new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and operating results could be adversely affected.

 

Our business and operating results may be harmed by a disruption in our service, or by our failure to timely and effectively scale and adapt our existing technology and infrastructure.

 

Some of the reasons people use our platforms is for real-time information, personal contact and live streaming of music content. We may, in the future, experience service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, hardware failure, capacity constraints due to an overwhelming number of people accessing our products and services simultaneously, computer viruses and denial of service or fraud or security attacks. Although we are investing significantly to improve the capacity, capability and reliability of our infrastructure, we are not currently serving traffic equally through the data centers that support our platforms. Accordingly, in the event of a significant issue at the data center supporting most of our network traffic, some of our products and services may become inaccessible to the public or the public may experience difficulties accessing our products and services. Any disruption or failure in our infrastructure could hinder our ability to handle existing or increased traffic on our platform, which could significantly harm our business.

 

As the number of our users increases and our users generate more content, including photos and videos hosted by us, we may be required to expand and adapt our technology and infrastructure to continue to reliably store, serve and analyze this content. It may become increasingly difficult to maintain and improve the performance of our products and services, especially during peak usage times, as our products and services become more complex and our user traffic increases. This would negatively impact our ability to attract users and advertisers and increase engagement of our users. We expect to continue to make significant investments to maintain and improve the capacity, capability and reliability of our infrastructure. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and infrastructure to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.

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If we are unable to maintain and promote our brands, our business and operating results may be harmed.

 

We believe that maintaining and promoting our brands is critical to expanding our base of users and advertisers. Maintaining and promoting our brands will depend largely on our ability to continue to provide useful, reliable and innovative products and services, which we may not do successfully. We may introduce new features, products, services or terms of service that users, platform partners or advertisers do not like, which may negatively affect our brand. Additionally, the actions of platform partners may affect our brands if users do not have a positive experience using third-party applications. Our brands may also be negatively affected by the actions of users that are hostile or inappropriate to other people, by users impersonating other people, by users identified as spam, by users introducing excessive amounts of spam on its platform or by third parties obtaining control over users’ accounts. Maintaining and enhancing our brands may require iHookup to make substantial investments and these investments may not achieve the desired goals. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business and operating results could be adversely affected.

 

Negative publicity could adversely affect our business and operating results.

 

Negative publicity about us, including about our product quality and reliability, changes to our products and services, privacy and security practices, litigation, regulatory activity, the actions of our users or user experience with our products and services, even if inaccurate, could adversely affect our reputation and the confidence in and the use of our products and services. For example, service outages could result in widespread media reports. Such negative publicity could also have an adverse effect on the size, engagement and loyalty of our user base and result in decreased revenue, which could adversely affect our business and operating results.

 

We focus on product innovation and user engagement rather than short-term operating results.

 

We encourage employees to quickly develop and help us launch new and innovative features. We focus on improving the user experience for our products and services and on developing new and improved products and services for the advertisers on our platform. We prioritize innovation and the experience for users and advertisers on our platform over short-term operating results. We may make product and service decisions that may reduce our short-term operating results if we believe that the decisions are consistent with its goals to improve the user experience and performance for advertisers, which we believe will improve our operating results over the long term. These decisions may not be consistent with the short-term expectations and may not produce the long-term benefits that we expect, in which case our user growth and user engagement, our relationships with advertisers and our business and operating results could be harmed. In addition, our focus on the user experience may negatively impact our relationships with existing or prospective advertisers. This could result in a loss of advertisers, which could harm our revenue and operating results.

 

Our products and services may contain undetected software errors, which could harm our business and operating results.

 

Our products and services incorporate complex software and we encourage our employees to quickly develop and help us launch new and innovative features. Our software may now or in the future contain, errors, bugs or vulnerabilities. Some errors in the software code may only be discovered after the product or service has been released. Any errors, bugs or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of users, loss of platform partners, loss of advertisers or advertising revenue or liability for damages, any of which could adversely affect our business and operating results.

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Our business is subject to complex and evolving U.S. laws and regulations. These laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to its business practices, monetary penalties, increased cost of operations or declines in user growth, user engagement or ad engagement, or otherwise harm our business.

 

We are subject to a variety of laws and regulations in the United States that involve matters central to our business, including privacy, rights of publicity, data protection, content regulation, intellectual property, competition, protection of minors, consumer protection and taxation. Many of these laws and regulations are still evolving and being tested in courts and could be interpreted or applied in ways that could harm our business, particularly in the new and rapidly evolving industry in which we operate. The introduction of new products or services may subject us to additional laws and regulations. There have been a number of recent legislative proposals in the United States, at both the federal and state levels, that would impose new obligations in areas such as privacy. The U.S. government, including the Federal Trade Commission, or the FTC, and the Department of Commerce, has announced that it is reviewing the need for greater regulation for the collection of information concerning user behavior on the Internet and over mobile devices, including regulation aimed at restricting certain tracking and targeted advertising practices.

 

Additionally, recent amendments to U.S. patent laws may affect the ability of companies to protect their innovations and defend against claims of patent infringement. Having personal information may subject us to additional regulation. Further, it is difficult to predict how existing laws and regulations will be applied to its business and the new laws and regulations to which we may become subject, and it is possible that they may be interpreted and applied in a manner that is inconsistent with our practices. These existing and proposed laws and regulations can be costly to comply with and can delay or impede the development of new products and services, result in negative publicity, significantly increase our operating costs, require significant time and attention of management and technical personnel and subject us to inquiries or investigations, claims or other remedies, including fines or demands that we modify or cease existing business practices.

 

Even though our platform is for public self-expression conversation and personal interaction, user trust regarding privacy is important to the growth of users and the increase in user engagement on our platform, and privacy concerns relating to our products and services could damage our reputation and deter current and potential users and advertisers from using our products and services.

 

From time to time, concerns have been expressed by governments, regulators and others about whether mobile products, services or practices compromise the privacy of users and others. Concerns about, governmental or regulatory actions involving practices with regard to the collection, use, disclosure or security of personal information or other privacy-related matters, even if unfounded, could damage our reputation, cause us to lose users and advertisers and adversely affect our operating results. While we will strive to comply with applicable data protection laws and regulations, as we strive to comply with our own posted privacy policies and other obligations we may have with respect to privacy and data protection, the failure or perceived failure to comply may result, in inquiries and other proceedings or actions against us by governments, regulators or others. These inquiries could result in negative publicity and damage to our reputation and brand, each of which could cause us to lose users and advertisers, which could have an adverse effect on our business.

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Any systems failure or compromise of our security that results in the unauthorized access to or release of our users’ or advertisers’ data could significantly limit the adoption of our products and services and cause harm to our reputation and brand and, therefore, our business. We expect to continue to expend significant resources to protect against security breaches. The risk that these types of events could seriously harm our business is likely to increase as we expand the number of products and services we offer, increase the size of our user base and operate in other countries.

 

If our security measures are breached, or if our products and services are subject to attacks that degrade or deny the ability of users to access our products and services, our products and services may be perceived as not being secure, users and advertisers may curtail or stop using our products and services and our business and operating results could be harmed.

 

Our products and services involve the storage and transmission of users’ and advertisers’ information, and security breaches expose us to a risk of loss of this information, litigation and potential liability. We may experience cyber-attacks of varying degrees, and as a result, unauthorized parties may obtain, and may in the future obtain, access to its data or its users’ or advertisers’ data. Our security measures may also be breached due to employee error, malfeasance or otherwise. Additionally, outside parties may attempt to fraudulently induce employees, users or advertisers to disclose sensitive information in order to gain access to our data or our users’ or advertisers’ data or accounts, or may otherwise obtain access to such data or accounts. Since our users and advertisers may use their accounts to establish and maintain online identities, unauthorized communications from our accounts that have been compromised may damage their reputations. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation and a loss of confidence in the security of our products and services that could have an adverse effect on our business and operating results. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of security occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose users and advertisers and we may incur significant legal and financial exposure, including legal claims and regulatory fines and penalties. Any of these actions could have a material and adverse effect on our business, reputation and operating results.

 

We depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain and motivate its personnel, we may not be able to grow effectively.

 

Our future success will depend upon our continued ability to identify, hire, develop, motivate and retain highly skilled personnel, including senior management, engineers, designers and product managers. Our ability to execute efficiently is dependent upon contributions from our employees, in particular our senior management team. We do not maintain key person life insurance for any employee. In addition, from time to time, there may be changes in our senior management team that may be disruptive to our business. If our senior management team, including any new hires that we may make, fails to work together effectively and to execute our plans and strategies on a timely basis, our business could be harmed. Our growth strategy also depends on our ability to expand our organization with highly skilled personnel. Identifying, recruiting, training and integrating qualified individuals will require significant time, expense and attention. Competition for highly skilled personnel is intense, particularly in the San Francisco Bay Area, where our headquarters is located. We may need to invest significant amounts of cash and equity to attract and retain new employees and we may never realize returns on these investments. If we are not able to effectively add and retain employees, our ability to achieve our strategic objectives will be adversely impacted, and our business will be harmed.

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Our business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism.

 

A significant natural disaster, such as an earthquake, fire, flood or significant power outage could have a material adverse impact on our business, operating results, and financial condition. Our headquarters is located in the San Francisco Bay Area, a region known for seismic activity. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems at our data centers could result in lengthy interruptions in our services. In addition, acts of terrorism and other geo-political unrest could cause disruptions in our business. All of the aforementioned risks may be further increased if our disaster recovery plans prove to be inadequate. We have a disaster recovery program, which allows us to move production to a back-up data center in the event of a catastrophe. Although this program is functional, we do not currently serve network traffic equally from each data center, so if our primary data center shuts down, there will be a period of time that our products or services, or certain of our products or services, will remain inaccessible to our users or our users may experience severe issues accessing our products and services. We do not carry business interruption insurance sufficient to compensate us for the potentially significant losses, including the potential harm to our business that may result from interruptions in our ability to provide our products and services.

 

Risks Related to Our Company

 

Messrs. Dean and Robert Rositano, Jr., as our directors and officers, own a significant percentage of the voting power of our stock and will be able to exercise significant influence and control over the matters subject to stockholder approval and our operations.

 

Messrs. Dean and Robert Rositano, Jr. may be deemed to own (directly and/or beneficially) 56.24% of our Series A preferred stock. As of September 30, 2020, the following entities and individuals own the following shares of our Series A preferred stock:

 

Messrs. Dean and Robert Rositano, Jr. each directly own 1,882 and 1,881 shares, respectively.

 

Copper Creek Holdings, LLC, a Nevada limited liability company owned and managed by Robert Rositano and his wife Stacy Rositano, owns 14,730 shares (74.45%), thus each may be deemed to beneficially own one half;

 

The holders of Series A preferred stock are entitled to cast votes equal to the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock held by such holder are convertible. The total aggregate issued shares of Series A Preferred Stock at any given time regardless of their number shall be convertible into the number of shares of common stock which equals nine (9) times the total number of shares of common stock which are issued and outstanding at the time of any conversion, at the option of the preferred holders or until the closing of a Qualified Financing (i.e. the sale and issuance of our equity securities that results in gross proceeds in excess of $2,500,000) at one time or in the same round. As a result of the Titan Iron Ore Corp. and iHookup merger transaction, the former iHookup stockholders received a controlling interest in the Company due to the voting rights of the Series A Preferred Stock being connected to their super-majority conversion rights. As a result of Messrs. Dean and Robert Rositano Jr.’s ownership interests and voting power described above, Messrs. Dean and Robert Rositano Jr. currently are in a position to influence and control, subject to our organizational documents and Nevada law, the composition of our Board of Directors and the outcome of corporate actions requiring stockholder approval, such as mergers, business combinations and dispositions of assets, among other corporate transactions. In addition, this concentration of voting power could discourage others from initiating a potential merger, takeover or other change of control transaction that may otherwise be beneficial to the Company, which could adversely affect the market price of our securities.

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If we are unable to pay the convertible promissory notes owed by the Company when obligations become due, the note holders may take adverse proceedings under terms of default.

 

In the event of default under terms in our convertible promissory notes, the note holder may enforce remedies including acceleration of payment in full plus interest and other charges, and an increase in interest rates of up to 24% when allowable by law.

 

Our disclosure controls and procedures and internal control over financial reporting are not effective, which may cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

 

Our management evaluated our disclosure controls and procedures as of December 31, 2019 and concluded that as of those dates, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses in our internal controls over financial reporting (i) inadequate segregation of duties and ineffective risk assessment; (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines and (iii) inadequate technical skills of accounting personnel.

 

As of the date of this Offering Circular, we believe that these material weaknesses continue to exist and our disclosure controls and procedures and internal control over financial reporting are not effective. If such material weakness and ineffective controls are not promptly corrected in the future, our ability to report quarterly and annual financial results or other information required to be disclosed on a timely and accurate basis may be adversely affected. Also, such material weakness and ineffective controls could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.

 

We have a limited operating history on which to base an evaluation of our business and prospects.

 

We have a short operating history, which limits our ability to forecast our future operating results and subjects us to a number of uncertainties, including our ability to plan for and model future growth. We have encountered and will continue to encounter risks and uncertainties frequently experienced by growing companies in developing industries. If our assumptions regarding these uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

 

As our Series D Preferred Stock, which is the subject of this Offering, is convertible into Common Stock of the Company that is quoted on the OTC Markets Group marketplace under the symbol “FDBL,” the following risk factors related to our common stock are relevant to this offering:

 

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

 

As of September 30, 2020, our articles of incorporation authorize the issuance of up to 1,000,000,000 shares of common stock with a par value of $0.0001 per share and 50,000,000 shares of preferred stock with a par value of $0.0001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating requirements and/or choose to increase the Company’s authorized capital. The increase and issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

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The price of our common stock may be negatively impacted by factors which are unrelated to our operations.

 

The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

 

We do not intend to pay cash dividends on any investment in the shares of stock of our company.

 

We have never paid any cash dividends and currently do not intend to pay any cash dividends for the foreseeable future. Because we do not intend to declare cash dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.

 

Trading of our stock is restricted by the Securities Exchange Commission’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our common stock.

 

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our common stock securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

 

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (known as “FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

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Our common stock price has been volatile and your investment could lose value.

 

The trading price of our common stock has been volatile and could be subject to wide fluctuations due to various factors. The timing of announcements in the public market regarding new products, product enhancements or technological advances by us or our competitors, and any announcements by us or our competitors of acquisitions, major transactions or management changes could also affect our stock price. Our stock price is subject to speculation in the press and the analyst community, changes in recommendations or earnings estimates by financial analysts, changes in investors’ or analysts’ valuation measures for our stock and market trends unrelated to our performance. A significant drop in our stock price could also expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management’s attention and resources, which could adversely affect our business. Moreover, if the per share trading price of our common stock declines significantly, you may be unable to resell your shares at or above the public offering price. We cannot assure you that the per share trading price of our common stock will not fluctuate or decline significantly in the future.

 

The trading price of our common stock has been low, and the sale of a substantial number of shares in the public market could depress the price of our common stock.

 

Our common stock is traded on the OTC Markets Group marketplace and historically has had a low average daily trading price relative to many other stocks. Thinly traded stocks can have more price volatility than stocks trading in an active public market, which can lead to significant price swings even when a relatively small number of shares are being traded, and can limit an investor’s ability to quickly sell blocks of stock. If there continues to be low average daily trading volume or price in our common stock investors may be unable to quickly liquidate their investments or at prices investors consider to be adequate.

 

Because our common stock is quoted and traded on the OTC Markets Group marketplace, short selling could increase the volatility of our stock price.

 

Short selling occurs when a person sells shares of stock which the person does not yet own and promises to buy stock in the future to cover the sale. The general objective of the person selling the shares short is to make a profit by buying the shares later, at a lower price, to cover the sale. Significant amounts of short selling, or the perception that a significant amount of short sales could occur, could depress the market price of our common stock. In contrast, purchases to cover a short position may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the OTC Markets Group marketplace or any other available markets or exchanges. Such short selling if it were to occur could impact the value of our stock in an extreme and volatile manner to the detriment of our shareholders.

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Risks Relating to the Early Stage of our Company and Ability to Raise Capital

 

We are at a very early stage and our success is subject to the substantial risks inherent in the establishment of a new business venture.

 

The implementation of our business strategy is in a very early stage and subject to all of the risks inherent in the establishment of a new business venture. Accordingly, our intended business and prospective operations may not prove to be successful in the near future, if at all. Any future success that we might enjoy will depend upon many factors, many of which are beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.

 

We expect to suffer continued operating losses and we may not be able to achieve profitability.

 

We expect to continue to incur significant development and marketing expenses in the foreseeable future related to the launch and commercialization of our products and services. As a result, we will be sustaining substantial operating and net losses, and it is possible that we will never be able to achieve profitability.

 

We may have difficulty raising additional capital, which could deprive us of necessary resources.

 

In order to support the initiatives envisioned in our business plan, we will need to raise additional funds through public or private debt or equity financing, collaborative relationships or other arrangements. Our ability to raise additional financing depends on many factors beyond our control, including the state of the capital markets, the market price of our common stock, and the development of competitive projects by others. Because our common stock is not listed on a major stock market, many investors may not be willing or allowed to purchase our common shares or may demand steep discounts. Sufficient additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock.

 

If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may have to modify our business plan and/or significantly curtail our planned activities. If we are successful raising additional capital through the issuance of additional equity, our investor’s interests will be diluted.

 

There are substantial doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares may have little or no value.

 

Our ability to become a profitable operating company is dependent upon our ability to generate revenues and/or obtain financing adequate to implement our business plan. Achieving a level of revenues adequate to support our cost structure, our continued operating losses and our net cash used in operations has raised substantial doubts about our ability to continue as a going concern. We plan to attempt to raise additional equity capital by issuing shares and, if necessary through one or more private placement or public offerings, and via the securities purchase agreement/equity line financing. However, the doubts raised relating to our ability to continue as a going concern may make our shares an unattractive investment for potential investors. These factors, among others, may make it difficult to raise any additional capital.

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Failure to effectively manage our growth could place additional strains on our managerial, operational and financial resources and could adversely affect our business and prospective operating results.

 

Our anticipated growth is expected to continue to place a strain on our managerial, operational and financial resources. Further, as we expand our user and advertiser base, we will be required to manage multiple relationships. Any further growth by us, or an increase in the number of our strategic relationships will increase this strain on our managerial, operational and financial resources. This strain may inhibit our ability to achieve the rapid execution necessary to implement our business plan, and could have a material adverse effect upon our financial condition, business prospects and prospective operations and the value of an investment in our company.

 

We may fail to raise sufficient capital.

 

To the extent that we fail to obtain sufficient operating capital, we may be unable to deal with presently unforeseen contingencies in the future or be able to fund our operations. In addition, we may have more difficulty or find it impossible, to raise third party financing from investors or financial institutions.

 

Our reserves may be insufficient.

 

We intend to establish a reserve fund, as determined in the Board’s discretion, for normal working capital contingencies. However, we have been unable to do so. If the reserves are not available to the Company, it may be necessary to attempt to raise additional capital or financing. In the event that such capital or financing is not available on favorable terms, we may be forced to raise additional capital on unfavorable terms. In fact, we have been forced to issue several convertible notes at substantial discounts and interest rates in order to raise the requisite capital for operations.

 

Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreements, which could result in less favorable outcomes to investors in any action under that agreement.

 

Investors in this offering will be bound by the subscription agreement that includes a provision under which investors waive the right to a jury trial of any claim they may have against the company arising out of or relating to the subscription agreement, including any claim under the federal securities laws.  If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by a federal court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of Nevada, which governs the subscription agreement, in a court of competent jurisdiction in the State of Florida. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party knowingly, intelligently, and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the subscription agreement. You should consult legal counsel regarding the jury waiver provision before entering into the subscription agreement. 

 

If you bring a claim against the Company in connection with matters arising under the subscription agreement, including claims under federal securities laws, you may not be entitled to a jury trial with respect to those claims, which may have the effect of limiting and discouraging lawsuits against the company. If a lawsuit is brought against the company under the subscription agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to investors in such an action. Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the subscription agreement with a jury trial. No condition, stipulation or provision of the subscription agreement serves as a waiver by any holder of common shares or by us of compliance with any provision of the federal securities laws and the rules and regulations promulgated under those laws.

 

The Company’s exclusive forum provision in the Subscription Agreement attached as Exhibit 4.1 does not apply to claims arising under the federal securities laws and the rules and regulations thereunder, including the Securities Act and the Exchange Act, and there are risks and other potential impacts of this exclusive forum provision to investors in this Offering.

 

The Subscription Agreement for this Offering provides that, unless we consent in writing to the selection of an alternative forum, the state and federal courts located in Broward County, Florida will be the sole and exclusive forum for substantially all disputes between us and subscribers to this Offering, which could limit your ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. This choice of forum provision does not preclude or contract the scope of exclusive federal or concurrent jurisdiction for any actions brought under the Securities Act or the Exchange Act and does not apply to claims arising under the federal securities laws. Accordingly, our exclusive forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and you cannot waive our compliance with these laws, rules, and regulations.

Any person or entity purchasing or otherwise acquiring any interest in any of our securities pursuant hereto shall be deemed to have notice of and consented to this provision. This exclusive-forum provision may limit your ability to bring a claim in a judicial forum of your choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find the choice of forum provision contained in the Subscription Agreement, to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees.

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Statements Regarding Forward-looking Statements

 

This Offering Circular contains various “forward-looking statements.” You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “would,” “could,” “should,” “seeks,” “approximately,” “intends,” “plans,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements may be impacted by a number of risks and uncertainties.

 

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our Securities. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.”

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USE OF PROCEEDS

 

We estimate that, at a per share price of $10.00, the net proceeds from the sale of the shares in this offering will be approximately $4,850,000, after deducting the estimated offering expenses of approximately $150,000.

 

The following table sets forth the uses of proceeds assuming the sale of 100%, 75%, 50% and 25% of the securities offered for sale by the Company at $10.00 per share. No assurance can be given that we will raise the full $5,000,000 as reflected in the following table:

 

Shares Offered
(% Sold)
  Shares
Sold (100%)
    Shares
Sold (75%)
    Shares
Sold (50%)
    Shares
Sold (25%)
 
Total Offering Amount   $ 5,000,000     $ 3,750,000     $ 2,500,000     $ 1,250,000  
Approximate Offering Expenses (1)                                
Misc. Expenses     105,000       105,000       105,000       105,000  
Legal, Accounting and Audit     45,000       45,000       45,000       45,000  
Total Offering Expenses     150,000       150,000       150,000       150,000  
Total Net Offering Proceeds     4,850,000       3,600,000       2,350,000       1,100,000  
Principal Uses of Net Proceeds (2)                                
Advertising and marketing   $ 1,000,000     $ 1,000,000     $ 750,000     $ 350,000  
Compensation to officer employees, developers consultants, support staff (3)   $ 1,200,000     $ 1,000,000     $ 650,000     $ 300,000  
Legal, investor relations, accounting, IT, servers, miscellaneous fees   $ 1,300,000     $ 1,000,000     $ 550,000     $ 250,000  
Working Capital   $ 1,350,000     $ 600,000     $ 400,000     $ 200,000  
                                 
Total Principal Uses of Net Proceeds   $ 4,850,000     $ 3,600,000     $ 2,350,000     $ 1,100,000  

 

(1) These amounts are estimates.

 

(2) These figures are estimates.

 

(3) The Company may use proceeds received and slates for this line item in order to pay all or a portion of any accrued and unpaid salaries of executives as discussed elsewhere in this Offering Circular.

 

The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including negotiations with the other parties in the merge and acquisitions process of the target companies, the amount of cash available from other sources and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

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DILUTION

 

If you purchase shares in this offering, your ownership interest in our Preferred Stock or as converted common stock will be diluted immediately, to the extent of the difference between the price to the public charged for each share in this offering and its converted value into common shares and the net tangible book value per share of our common stock after this offering.

 

Our historical net tangible book value as of September 30, 2020 was $(4,015,966) or $(0.1893) per then-outstanding shares of our common stock, which does not include common stock “issuable” of 106,558,432 at September 30, 2020. Historical net tangible book value per share equals the amount of our total tangible assets, less total liabilities, divided by the total number of shares of our common stock outstanding, all as of the date specified.

 

The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the Preferred Stock shares offered for sale at $10.00 per share in this offering, equating to its 80% common stock conversion value per Preferred Share (after deducting estimated offering expenses of $150,000):

 

Percentage of shares offered that are sold   100%     75%     50%     25%  
Price to the public charged for each common share conversion from this offering (1)   $ 0.0290     $ 0.0290     $ 0.0290     $ 0.0290  
                                 
Historical net tangible book value per common share as of September 30, 2020 (2)   $ (0.1893 )   $ (0.1893 )   $ (0.1893 )   $ (0.1893 )
                                 
Increase in net tangible book value per common share attributable to new investors in this offering (3)   $ 0.0250     $ 0.0239     $ 0.0219     $ 0.0171  
                                 
Net tangible book value per common share, after this offering   $ 0.0043     $ (0.0028 )   $ (0.0155 )   $ (0.0453 )
                                 
Dilution per common share to new investors   $ (0.0247 )   $ (0.0318 )   $ (0.0445 )   $ (0.0743 )
                                 
Increase to pre-offering shareholders   $ 0.1936     $ 0.1865     $ 0.1738     $ 0.1440  

 

(1) Based on a preferred to common conversion price of $0.0290 (being 80% of $0.036 closing price of FDBL common shares quoted on OTC Markets Group on December 23, 2020).

 

(2) Based on net tangible book value of $(4,015,966) and 21,218,432 outstanding common shares as of September 30, 2020.

 

(3) After deducting estimated offering expenses of $150,000.

  

The Company’s issued and outstanding common stock increased by 45,888,113 shares, from 21,218,432 shares to 67,106,545 shares, between October 1,2020 and January 20,2021, while the Company’s issuable common stock decreased by 7,586,353 shares from 106,558,432 shares at September 30,2020 to 98,972,079 shares at January 20, 2021. A summary of these changes follows:

 

Increase in common shares issued and outstanding:        
         
Common stock issued on the conversion of 124,800 Preferred C stock     28,205,115  
         
Common stock issued as requested drawdowns against the Company’s debt restructuring agreement     7,886,353  
         
Common stock issued on conversion of outstanding principal and interest under certain Convertible Notes     9,796,645  
         
Increase in issued and outstanding common shares     45,888,113  
         
Decrease in the number of common shares issuable:        
         
Common stock previously recorded as issuable, but now actually issued during the period (see above)     7,886,353  
         
Less: additional stock issuable obligation under artist’s performance contract     300,000  
         
Net reduction in issuable common shares     7,586,353  

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DISTRIBUTION

 

This Offering Circular is part of an Offering Statement that we filed with the SEC, using a continuous offering process. Periodically, as we have material developments, we will provide an Offering Circular supplement that may add, update or change information contained in this Offering Circular. Any statement that we make in this Offering Circular will be modified or superseded by any inconsistent statement made by us in a subsequent Offering Circular supplement. The Offering Statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular and the related exhibits filed with the SEC and any Offering Circular supplement, together with additional information contained in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the SEC. See the section entitled “Additional Information” below for more details.

 

We intend to sell the shares in the primary offering through the efforts of our officers and employees, who will not receive any compensation for offering or selling the shares in our primary offering. We believe that our officers and employees are exempt from registration as a broker-dealer under the provisions of Rule 3a4-1 promulgated under the Securities Exchange Act of 1934 (the Exchange Act). In particular, Mr. Rositano Jr.:

 

§ is not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Securities Act; and

 

§ is not to be compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;

 

§ is not an associated person of a broker or dealer; and

 

§ meets the conditions of the following:

 

§ primarily performs, and will perform at the end of this offering, substantial duties for us or on our behalf otherwise than in connection with transactions in securities; and

 

§ was not brokers or dealers, or an associated person of a broker or dealer, within the preceding 12 months; and

 

§ did not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on paragraphs (a)(4)(i) or (iii) of Rule 3a4-1 under the Exchange Act.

 

Pricing of the Offering

 

Prior to the Offering, there has been a limited public market for the Offered Shares. The public offering price was determined by the Company. The principal factors considered in determining the public offering price include:

 

§ the information set forth in this Offering Circular and otherwise available;

 

§ our history and prospects and the history of and prospects for the industry in which we compete;

 

§ our past and present financial performance;

 

§ our prospects for future earnings and the present state of our development;

 

§ the general condition of the securities markets at the time of this Offering;

 

§ the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

 

§ other factors deemed relevant by us.

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Offering Period and Expiration Date

 

This Offering will start on or after the Qualification Date and will terminate at the Company’s discretion or, on the Termination Date.

 

Procedures for Subscribing

 

When you decide to subscribe for Offered Shares in this Offering, you should:

 

Contact us via phone or email.

 

1. Electronically receive, review, execute and deliver to us a subscription agreement; and

 

2. Deliver funds directly by wire or electronic funds transfer via ACH to the specified account maintained by us.

 

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity to review this Offering Circular.

 

Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been deposited to the Company’s account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.

 

Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

 

No Escrow

 

The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best effort’s basis. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds at Management’s discretion.

 

Investment Limitations

 

Generally, no sale may be made to you in this Offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth (please see below on how to calculate your net worth). Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

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Because this is a Tier 2, Regulation A Offering, most investors must comply with the 10% limitation on investment in the Offering. The only investor in this Offering exempt from this limitation is an “accredited investor” as defined under Rule 501 of Regulation D under the Securities Act (an “Accredited Investor”). If you meet one of the following tests you should qualify as an Accredited Investor:

 

(i) You are a natural person who has had individual income in excess of $200,000 in each of the two most recent years, or joint income with your spouse in excess of $300,000 in each of these years, and have a reasonable expectation of reaching the same income level in the current year;

 

(ii) You are a natural person and your individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time you purchase Offered Shares (please see below on how to calculate your net worth);

 

(iii) You are an executive officer or general partner of the issuer or a manager or executive officer of the general partner of the issuer;

 

(iv) You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or the Code, a corporation, a Massachusetts or similar business trust or a partnership, not formed for the specific purpose of acquiring the Offered Shares, with total assets in excess of $5,000,000;

 

(v) You are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered pursuant to Section 15 of the Exchange Act, an insurance company as defined by the Securities Act, an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”), or a business development company as defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958 or a private business development company as defined in the Investment Advisers Act of 1940;

 

(vi) You are an entity (including an Individual Retirement Account trust) in which each equity owner is an accredited investor;

 

(vii) You are a trust with total assets in excess of $5,000,000, your purchase of Offered Shares is directed by a person who either alone or with his purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, and you were not formed for the specific purpose of investing in the Offered Shares; or

 

(viii) You are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of $5,000,000.

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

 

You should read the following discussion and analysis of our financial condition and results of our operations together with our consolidated financial statements and the notes thereto appearing elsewhere in this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors”, “Cautionary Statement regarding Forward-Looking Statements” and elsewhere in this Offering Circular. Please see the notes to our Financial Statements for information about our Critical Accounting Policies and Recently Issued Accounting Pronouncements.

 

Results of Operations

 

For the three and nine months ended September 30, 2020 compared to September 30, 2019

 

    For the Three Months Ended     For the Nine Months Ended  
    September 30,     September 30,  
    2020     2019     2020     2019  
REVENUES   $ 111,392     $ 118,801     $ 322,671     $ 120,662  
                                 
OPERATING EXPENSES:                                
App hosting     12,000       2,301       33,000       18,068  
Commissions     191       61       625       619  
General and administrative     224,401       187,352       605,458       577,605  
Product development and launch     105,790       100,500       460,102       156,088  
Artists’ performance fees     425,058       -       425,058       -  
Artists’ revenue share     402               402       -  
Investor relations     3,921       -       140,527       -  
Sales and Marketing     30,081       28,788       82,335       52,924  
                                 
Total operating expenses     801,844       319,002       1,747,507       805,304  
                                 
LOSS FROM OPERATIONS     (690,452 )     (200,201 )     (1,424,836 )     (684,642 )
                                 
OTHER INCOME (EXPENSE):                                
Accretion and interest expense     (38,423 )     (189,117 )     (266,710 )     (453,674 )
Provision for settlement of lawsuit     -       (780,000 )     -       (780,000 )
Gain on foreign exchange     -       -       2,580          
Initial derivative expense     -       -       (419,000 )     -  
Gain (loss) on settlement of derivative     257,317       -       (640,821 )     -  
Gain on change in fair value of derivative     263,000       -       259,000          
                                 
Total other expense, net     481,894       (969,117 )     (1,064,951 )     (1,233,674 )
                                 
NET LOSS   $ (208,558 )   $ (1,169,318 )   $ (2,489,787 )   $ (1,918,316 )

36

 

For the three months ended September 30, 2020 compared to September 30, 2019

 

Revenues

 

The Company had revenues of $111,392 and $118,801 for the three months ended September 30, 2020 and 2019 respectively. The decrease was due to the timing of sales under a contract to develop a third-party app.

 

Operating Expenses

 

The Company had operating expenses of $801,844 and $319,002 for the three months ended September 30, 2020 and 2019, respectively. The increase in operating expenses was due primarily to Artists’ performing fees of $ 425,058 together with other related expenses associated with the live event produced for the launch the Fan Pass app on July 24,2020. This resulted in a higher loss from operations of $690,466 for the three months ended September 30,2020 compared with a loss from operations of $200,201 for the three months ended September 30,2019.

 

Other Income and Expense

 

The Company had other income of $481,894 for the three months ended June 30, 2020 compared with other expense of $969,117 for the three months ended September 30, 2019. Other income of $481,894 included gain on settlement of derivative $ 257,317 and gain on change in fair value of derivative $263,000, offset with lower accretion and interest expense of $38,423. Other expense for the three months ended September 30,2019 included provision for settlement of lawsuit $780,000 and higher accretion and interest expense of $ 189,117.

 

Net Loss

 

The Company had net losses of $208,552 and $1,169,318 for the three months ended September 30, 2020 and 2019 respectively. The decrease in net loss was due primarily to the provision for settlement of lawsuit $780,000 for the three months ended September 30,2019, and gain on settlement of derivative and gain in fair value in derivative of $257,317 and $263,000 in the current period. The higher operating expenses for the three months ended September 30,2020 attributable to the July, 2020 launch of the Fan Pass app were offset by lower accretion and interest expense and by the gain on settlement and change in fair value of derivative.

 

For the nine months ended September 30, 2020 compared to September 30, 2019

 

Revenues

 

The Company had revenues of $322,671 and $120,662 for the nine months ended September 30, 2020 and 2019, respectively. The increase primarily was due to higher revenue derived from the Company’s contract to develop a third-party app.

 

Operating Expenses

 

The Company had operating expenses of $1,747,507 and $805,304 for the nine months ended September 30, 2020 and 2019, respectively. The increase in operating expenses was due primarily to additional product development, investor relations, artists’ performance and sales and marketing expenses relating to the Company’s live event to launch the Fan Pass app on July 24,2020.

 

Other Income and Expense

 

The Company had other expense of $1,064,951 and $1,233,674 for the nine months ended September 30, 2020 and 2019 respectively. The decrease in other expense was due primarily due to the provision for settlement of lawsuit $780,000 for the nine months ended September 30,2019, offset by initial derivative expense and loss on settlement of derivative, plus a gain for the change in fair value of derivative, for the nine months ended September 30,2020.

 

Net Loss

 

The Company had net losses of $2,489,787 and $1,918,316 for the nine months ended September 30, 2020 and 2019 respectively. The reduction in net loss was due primarily to the reduction of $780,000 in the provision for settlement of lawsuit, lower interest expense and higher revenues, offset by increased operating expenses and increased losses related to the derivatives.

37

 

Results of Operations

 

Years Ended December 31, 2019 and 2018

 

Our cash as of December 31, 2019 was $11,282. As a result of our minimal amount of revenues and ongoing expenditures in pursuit of our business, we have incurred net losses since our inception. Our accumulated deficit at December 31, 2019 was $32,443,883. For the year ended December 31, 2019, our net loss was $10,183,410.

 

Our operating revenues and expenses for our fiscal years ended December 31, 2019 and 2018 and the changes between those periods for the respective items are summarized as follows:

 

    For the Years Ended  
    December 31,  
    2019     2018  
REVENUES   $ 242,696     $ 6,190  
                 
OPERATING EXPENSES:                
App hosting     24,068       210,000  
Commissions     938       1,817  
General and administrative     814,053       719,960  
Product development     299,124       80,549  
Investor relations     98,264       6,077  
Sales and Marketing     48,375       22,575  
                 
Total operating expenses     1,284,822       1,040,978  
                 
LOSS FROM OPERATIONS     (1,042,126 )     (1,034,788 )
                 
OTHER INCOME (EXPENSE):                
Accretion and interest expense     (621,149 )     (2,052,216 )
Impairment loss     -       (35,000 )
Provision for settlement of lawsuit     (1,035,000 )     -  
Loss on debt extinguishments     (7,384,866 )     -  
Exchange gain or (loss)     24,731       -  
Loss on change in fair value of derivative     (125,000 )     -  
                 
Total other expense, net     (9,141,284 )     (2,087,216 )
                 
NET LOSS   $ (10,183,410 )   $ (3,122,004 )

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Revenues

 

Revenues for the year ended December 31, 2019 increased to $242,696 as compared to $6,190 for the year ended December 31, 2018. The increase in revenue was due to receiving a contract to develop an app for a third party.

 

Operating Expenses

 

Operating expenses for the year ended December 31, 2019 and the December 31, 2018 were $1,284,822 and $1,040,978 respectively, an increase of 23%. The increase in operating expenses was due primarily to higher sales and marketing, product development, and investor relations related to preparing to launch the Fan Pass app. App hosting expenses decreased with less support for the old Friendable app.

 

Net Loss

 

Our operating results have recognized net loss in the amount of $10,183,410 for the year ended December 31, 2019 as compared to a net loss of $3,122,004 for the year ended December 31, 2018. The increase was primarily related due to higher operating expenses, a loss on extinguishments of debt, and by a provision for settlement of a lawsuit, offset by lower interest expense.

 

Liquidity and Capital Resources

 

Working Capital

 

Our working capital deficit (being the excess of current liabilities over current assets) at September 30, 2020 totaled $(4,015,966) compared with a working capital deficit at December 31, 2019 of $(15,970,305) and December 31, 2018 of $(10,237,897). The higher deficit at December 31, 2019 related primarily to a derivative liability, which was largely extinguished in 2020. A summary follows:

 

    September 30, 2020     December 31, 2019     December 31, 2018  
Current assets   $ 115,165     $ 71,500     $ 25,646  
Current liabilities     (4,131,131 )     (16,041,805 )     (10,263,543 )
Working capital deficit   $ (4,015,966 )   $ (15,970,305 )   $ (10,237,897 )

39

 

We currently do not have sufficient capital to fund our needs for the next 12 months. We rely on financing from convertible debt, promissory notes, and sale of stock to fund our operations.

 

Cash Flows

 

Our cash flows for the 9 months ended September 30, 2020, 9 months ended September 30, 2019 and for the years ended December 31, 2019 and December 31, 2018 were as follows:

 

    September 30, 2020   September 30, 2019   December 31, 2019   December 31, 2018
Net cash used in Operating Activities   $ (260,931 )   $ (350,935 )   $ (488,864 )   $ (385,319 )
Net cash provided by Financing Activities     258,500       325,368       474,500       410,965  
Net increase (decrease) in Cash   $ (2,431 )     (25,567 )   $ (14,364 )   $ 25,646  
                                 
Cash at end of period   $ 8,851     $ 79     $ 11,282     $ 25,646  

 

Operating Activities

 

Cash used in operating activities

 

The Company used $260,931 and $350,935, respectively, in cash in operating activities for the 9 months ended September 30, 2020 and September 30, 2019 and $488,864 and $385,319 for the years ended December 31, 2019 and December 31, 2018. The increase use in 2019 is due to higher product development and general and administrative expense.

 

Cash provided by financing activities

 

Financing activities for the 9 months ended September 30, 2020 and September 30, 2019 generated net cash of $258,500 and $325,368, respectively, as compared to generating net cash of $474,500 and $410,965 for the years ended December 31, 2019 and December 31, 2018, respectively. The higher cash provided from financing activities in 2019 is attributable to higher proceeds from the sale of convertible preferred Series B, Series C stock. and common stock.

 

There was no significant impact on the Company’s operations as a result of inflation in either the 9 months ended September 30, 2020 and 9 months ended September 30, 2019, or for the years ended December 31, 2019 and December 31, 2018.

 

Series B and Series C Preferred Stock 

 

Series B Preferred Stock Purchase Agreements

 

On August 8, 2019 the Company filed a Designation of Series B convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series B Preferred Stock with a stated value of $1.00 per share. A holder of Series B Preferred Stock has the right to convert their Series B Preferred Stock into fully paid and non-assessable shares of Common Stock. Initially, the conversion price for the Series B Preferred Stock is $0.25 per share, subject to standard anti-dilution adjustments. Additionally, each share of Series B Preferred Stock shall be entitled to, as a dividend, a pro rata portion of an amount equal to 10% (Ten Percent) of the Net Revenues (“Net Revenues” being Gross Sales minus Cost of Goods Sold) derived from the subscriptions and other sales, but excluding and net of Vimeo fees, processing fees and up sells, generated by Fan Pass Inc., the wholly-owned subsidiary of the Corporation. The Series B Dividend shall be calculated and paid on a monthly basis in arrears starting on the day 30 days following the first day of the month following the initial issuance of the Series B Preferred and continuing for a period of 60 (Sixty) months. The holders of Series B Preferred stock shall have no voting rights. The holders of Series B Preferred stock shall not be entitled to receive any dividends. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or deemed liquidation event, the holders of shares of Series B Preferred Stock shall be entitled to be paid the liquidation amount, as defined out of the assets of the Company available for distribution to its shareholders, after distributions to holders of the Series A Preferred Stock and before distributions to holders of Common Stock.

40

 

During the year ended December 31, 2019, the Company entered into subscription agreements with various investors whereby we sold rights to 284,000 shares of Series B Preferred Stock for a total purchase price of $284,000 of which $205,000 was received in cash and $79,000 was settled against payables to a related party.

 

Series C Preferred Stock Purchase Agreements

 

On November 25, 2019 the Company filed a Designation of Series C convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series C Preferred Stock with a stated value of $1.00 per share. The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends with the Company’s common stock, par value 0.0001 per share (“Common Stock”)(the Series C Preferred Stock will convert into common stock immediately upon liquidation and be pari passu with the common stock in the event of litigation), and (b) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company. The Series C Preferred Stock does not have any voting rights. Each share of Series C Preferred Stock will carry an annual dividend in the amount of eight percent (8%) of the Stated Value of $1.00 (the “Divided Rate”), which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion and increase to 22% upon an event of default as defined. In the event of any default other than the Company’s failure to issue shares upon conversion, the stated price will be $1.50. In a default event where the Company fails to issue shares upon conversion, the stated price will $2.00. The holder shall have the right six months following the issuance date, to convert all or any part of the outstanding Series C Preferred Stock into shares of common stock of the Company. The conversion price shall equal the Variable Conversion Price. The “Variable Conversion Price” shall mean 71% multiplied by the market price, representing a discount rate of 29%. Market price means the average of the two lowest trading prices for the Company’s common stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or upon any deemed liquidation event, after payment or provision for payment of debts and other liabilities of the Company, and after payment or provision for any liquidation preference payable to the holders of any Preferred Stock ranking senior upon liquidation to the Series C Preferred Stock, if any, but prior to any distribution or payment made to the holders of Common Stock or the holders of any Preferred Stock ranking junior upon liquidation to the Series C Preferred Stock by reason of their ownership thereof, the Holders will be entitled to be paid out of the assets of the Company available for distribution to its stockholders. The Company will have the right, at the Company’s option, to redeem all or any portion of the shares of Series C Preferred Stock, exercisable on not more than three trading days prior written notice to the Holders, in full, in accordance with Section 6 of the designations at a premium of up to 35% for up to six months. Company’s mandatory redemption: On the earlier to occur of (i) the date which is twenty-four (24) months following the Issuance Date and (ii) the occurrence of an Event of Default (the “Mandatory Redemption Date”), the Company shall redeem all of the shares of Series C Preferred Stock of the Holders (which have not been previously redeemed or converted).

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During the year ended December 31, 2019, the Company entered into subscription agreements with Geneva Roth Remark Holdings, Inc. whereby we sold 149,300 shares of Series C Preferred Stock for a total purchase price of $136,000. At September 30, 2020, due to conversions exercised in 2020, the outstanding balance of Series C Preferred Stock was reduced to 124,800 shares, with a cumulative liquidation value of $208,867.

 

Debt Restructure Agreement

 

On March 26, 2019 three officers forgave debt totaling $400,000 and a company controlled by two officers of the Company forgave debt totaling $600,000. The debt forgiveness is considered a capital transaction and therefore $1,000,000 was recorded as an increase in additional paid-in capital in the 12 months ended December 31, 2019.

 

On March 26, 2019, the Company entered into a Debt Restructuring Agreement with related parties Robert A. Rositano Jr., Dean Rositano, Frank Garcia (former affiliate), and Checkmate Mobile, Inc. and Alpha Capital Anstalt, Coventry Enterprises, LLC, Palladium Capital Advisors, LLC, EMA Financial, LLC, Michael Finkelstein, and Barbara R. Mittman, each being a debt holder of the Company. Subsequent to March 26, 2019, Alpha sold all of its convertible debenture to Ellis International LP (“Ellis”).

 

The debt holders have agreed to convert their debt into certain amounts of common stock as set forth in the Agreement upon the Company meeting certain milestones including but not limited to: the Company effecting a reverse stock split and maintaining a stock price of $1.00 per share; being current with its periodic report filings pursuant to the Securities Exchange Act; Checkmate Mobile Inc and Company officers forgiving an aggregate of $1,000,000 in amounts owed to them; the Company raising not less than $400,000 in common stock at a post-split price of not less than $0.20 per share; and certain other things as further set forth in the Agreement. The debt holders were subject to certain lock up and leak out provisions as contained in the Agreement.

 

December 26, 2019, all parties signed an amendment to the Agreement which set forth, among other things, the following: Company Principals have given Holders notice that it has satisfied all conditions of closing.

 

The Agreement is considered Closed as of November 5, 2019 (“Settlement Date”) and any conditions of closing not satisfied are waived.

 

Reset Dates. The “Reset Dates” as set forth in Section 1(h) of the Agreement are as follows: March 4, 2020 and July 2, 2020. As of the reset dates the holders can convert all or part of the settled note amounts at the lower of (i) 75% of the closing bid price for the Common Stock on such respective Reset Date, or (ii) the VWAP for the Company’s Common Stock for the 7 trading days immediately preceding and including such respective Reset Dates. This reset provision provides for the issuance of additional shares above the initial 5,902,589 shares for no additional consideration as measured at each of the two reset dates.

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On March 4, 2020 the Company became obligated issue an additional 36,193,098 shares of common stock and on July 2, 2020 it became obligated to issue an additional 63,275,243 shares for a total amount of shares due of 105,370,930.

 

The Company determined that the reset provision represented a standalone derivative liability. Accordingly, this debt restructure transaction was accounted for in 2019 as an extinguishment of debt for consideration equal to the $2,384,646 fair value of the 5,902,589 common shares issuable, based on the $0.404 quoted trading price of the Company’s common stock price on the settlement date, and the initial fair value of the derivative liability of $12,653,000 resulting in a loss on debt extinguishment of $6,954,920.

 

The Company adjusted this derivative liability to fair value at each reporting and settlement date, with changes in fair value reported in the statement of operations. The Company estimated the fair value of the obligations to issue common stock pursuant to the Debt Restructuring Agreement, as amended, using Monte Carlo simulations and the following assumptions:

 

    November 5,     December     June  
    2019     31, 2019     30, 2020  
Volatility     617 %     738.1 %     293.6 %
Risk Free Rate     1.59 %     1.6 %     .13 %
Expected Term     0.66       0.5       0.01  
                         

Because the second (and final) reset date of July 2, 2020 determined that the total common shares issuable to fully settle this debt amounted to 105,370,930 a derivative liability no longer exists and the Company recognized a final gain on settlement on July 2, 2020 of $257,316.

 

On September 21, 2020, Ellis International LP (as successor to Alpha Capital Anstalt) submitted a request to drawdown and, on September 29, 2020, was issued 687,355 common shares against its entitlement above and reclassified from issuable shares in the accompanying balance sheet and statement of changes in stockholder equity.

 

CONVERTIBLE PROMISSORY NOTES

 

The following is a summary of Convertible Promissory Notes at September 30, 2020:

 

                    Principal  
                    and  
    Issuance:   Principal     Accrued     Accrued  
    Date   Outstanding     Interest     Interest  
J.P. Carey Inc.   March 30, 2017     -     $ 48,228     $ 48,228  
J.P. Carey Inc   May 20, 2020   $ 60,000       4,892       64,892  
J.P. Carey Inc   June 11, 2020     10,000       -       10,000  
Green Coast Capital                            
International   April 6, 2020     10,755       631       11,386  
Green Coast Capital                            
International   April 8, 2020     35,000       2,853       37,853  
Total       $ 115,755     $ 56,604     $ 172,359  
Less: Discount         (59,905 )                
Net carrying value September 30, 2020       $ 55,850                  

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The derivative fair value of the above at September 30, 2020 is $209,000.

 

Going Concern

 

At September 30, 2020, we had a working capital deficiency, an accumulated deficit, and a stockholder’s deficit of $4,015,966, $34,933,670 and $4,015,966 respectively and incurred a net loss and cash used in operations of $2,489,787 and $260,931 respectively for the 9 months ended September 30, 2020 and $10,183,410 and $488,864 respectively for the 12 months ended December 31, 2019. We have generated a modest level of revenues and have incurred losses since inception. Accordingly, we will be dependent on future additional financing in order to seek other business opportunities in the online entertainment industry or new business opportunities. We are considered a development stage company in the online entertainment/social media industry. As of September 30, 2020, there is no assurance that we will be able raise sufficient capital to sustain our operations. We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due.

 

Application of Critical Accounting Policies

 

Use of Estimates

 

The preparation of these statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to valuation of convertible debenture conversion options, derivative instruments, deferred income tax asset valuations, financial instrument valuations, share-based payments, other equity-based payments, and loss contingencies. 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.

 

Revenue Recognition

 

In accordance with ASC 606, revenue is recognized when the following criteria have been met; valid contracts are identified with specific customers, performance obligations have been identified, price is determinable, price is allocated to performance obligations, and the Company has satisfied the performance obligations. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. During both the 9 months ended September 30, 2020 and the year ended December 31, 2019, the Company derived revenues primarily from the development of apps for a third party, and such revenues were recognized upon completion of services.

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Impairment of Long-Lived Assets

 

We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

 

If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

 

Stock-based compensation

 

We record stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options. In 2019 the Company adapted ASU 2018-17 which expands the measurement requirements to non-employees.

 

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. We use the Black-Scholes option pricing model as its method in determining fair value. This model is affected by our stock price as well as assumptions regarding a number of subjective variables. These subjective variables include but are not limited to our expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

 

On January 11, 2021, the Board of Directors adopted a new NonQualified Stock Option Award Plan for the Company’s full time employees. Stock Options were granted totaling 15 million common shares, 10 million of which vest quarterly expiring January 11, 2024 and 5 million of which vest quarterly expiring January 11, 2023. Applying the Black-Scholes option pricing model, these options were valued at $194,700 which will be amortized as an operating expense over their respective vesting periods.

 

Financial Instruments

 

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value, as required by ASC 820, must maximize the use of observable inputs and minimize the use of unobservable inputs.

 

Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The carrying values of accounts payable, convertible debentures and promissory note approximate fair values because of the short-term maturity of these instruments. Unless otherwise noted, it is management’s opinion that we are not exposed to significant interest, currency or credit risks arising from these financial instruments.

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Basic and Diluted Net Loss Per Share

 

We compute 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 statement of operations. Basic EPS is computed by dividing net income (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.

 

Recent Accounting Pronouncements

 

We have implemented all other new accounting pronouncements that are in effect and that may impact its financial statements and 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.

 

Off-Balance Sheet Arrangements

 

We do not have any off -balance sheet arrangements.

 

DEFAULTS UPON SENIOR SECURITIES.

 

On May 29, 2020, the Company defaulted on the outstanding Series C preferred stock previously issued by being late with the Form 10-K filing on the extended date. Under the default provision of the Series C preferred stock the dividend rate increases from 8% to 22% and the stated price increases from $1.00 to $1.50. The Company also defaulted on four convertible notes, one dated March 30,2017 having no principal balance outstanding and accrued interest of $ 48,228, one dated April 8, 2020 in the amount of $35,000 one dated May 20, 2020 in the amount of $60,000, and another one dated June 11,2020 for $10,000 causing the interest rate to increase to 24%.

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BUSINESS

 

The following description of our business contains forward-looking statements relating to future events or our future financial or operating performance that involve risks and uncertainties, as set forth above under “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in the Annual Report, including those set forth above in the Special Cautionary Note Regarding Forward-Looking Statements or under the heading “Risk Factors” or elsewhere in this Offering Circular.

 

Business Overview

 

Friendable, Inc. is a mobile-focused technology and marketing company, connecting and engaging users through two distinctly branded applications.

 

The Friendable and Fan Pass Mobile Applications.

 

The Company initially released its flagship product Friendable, as a social application where users can create one-on-one or group-style meetups. In 2019 the Company has moved the Friendable app closer to a traditional dating application with its focus on building revenue, as well as reintroducing the brand as a non-threatening, all-inclusive place where “Everything starts with Friendship” meet, chat & date.

 

Fan Pass is the Company’s most recent or second app/brand and was launched on July 24, 2020. Fan Pass believes in connecting Fans of their favorite celebrity or artist, to an exclusive VIP or Backstage experience, right from their smartphone or other connected devices. Fan Pass allows an artist’s fanbase to experience something they would otherwise never have the opportunity to afford or geographically attend. The Company aims to establish both Friendable and Fan Pass as premier brands and mobile platforms that are dedicated to connecting and engaging users from anywhere around the World.

 

Friendable, Inc. was founded by Robert A. Rositano Jr. and Dean Rositano, two brothers with over 27 years of working together on technology-related ventures.

 

Highlights

 

The Fan Pass launch event, which was held on July 24, 2020. The event exceeded the Company’s expectations. The Fan Pass platform provided a virtual stage and hosted live stream performances that were headlined by some of the music industry’s most talented artists ranging from Grammy award winning producers to international DJs and even rising hip hop stars. The Fan Pass team successfully launched the showcasing of the platform’s high-quality streaming capabilities, along with other unique aspects of the Company’s business model, including the turn-key service of providing every artist an exclusive Fan Pass channel, custom merchandise, store front, Go Live Streaming and monetization tools, Instagram & social ad creatives, and adding additional revenue opportunities for both the artists and the Company.

 

For the launch event Fan Pass secured over 10 hours of exclusive content, on-boarded 16 prominent artists; produced 16+ live content channels, with custom merchandise and live merchandise stores; created social media ads and promotional materials for the artists; solidified relationships with artists and artist management; increased social media followers, content and activity and a radio interview with iHeart Radio. Live events were streamed from approximately 1:30 pm EST until roughly 11:00 pm EST on Friday July 24, 2020 from four separate locations that included: an Atlanta, GA Stage; a New York, NY Penthouse; a Los Angeles, CA Studio; and, a private venue located in Palm Beach, FL. The event attracted die-hard music fans and social followers from across the globe, representing more than 72 countries.

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On August 27, 2020 the Company announced that since the Fan Pass launch event on July 24, 2020, Fan Pass has received an additional 34 Artist Sign-ups, validating the Company’s business model. The Company works with each new artist to move them through the various onboarding stages required to build them their personalized Artist Channel on Fan Pass. Once completed, our agents hand over the controls to each Artist so they can begin scheduling events through the Company’s live event calendar, promoting their events with the custom marketing materials the Fan Pass team designs, and most importantly, so they can start streaming and earning a revenue share on the Fan Pass platform.

 

On September 3, 2020 the Company announced that its new artist sign-ups continued to increase, indicating a strong demand for the Fan Pass platform and services. Fan Pass had received an additional 26 artist sign-ups with demand continuing to grow. The Company’s next steps include focusing on the onboarding of each artist, bringing channels live, and delivering promotional materials designed to convert artist fans and followers to monthly subscribers/content views, event ticket sales, and general e-commerce that generates revenue through merchandise sales and special offerings.

 

On September 15, 2020 the Company announced its new Fan Pass feature, allowing artists to perform a live event or stream content right from their smart phone or mobile device, anywhere, any time.

 

History

 

Friendable, Inc., a Nevada corporation (the “Company”), was incorporated in the State of Nevada on June 5, 2007. On June 15, 2011, the Company changed its name to Titan Iron Ore Corp, through a merger with a wholly owned subsidiary. On February 3, 2014, the Company merged with IHookup, created a new subsidiary called iHookup Operations Corp, a Delaware corporation, and then merged the Company with and into IHookup, causing the subsidiary’s separate existence to cease and IHookup to become a wholly-owned subsidiary of the Company. On October 27, 2015, the Company’s trading symbol was changed from “HKUP” to “FDBL”. This change was made in conjunction with the Company’s filing of a Certificate of Amendment on September 28, 2015 to its Articles of Incorporation changing the name of the Company from “iHookup Social, Inc.” to “Friendable, Inc.” The Company had previously announced a re-branding our app from "iHookup Social" to "Friendable". As a result, the Company desired to change its name to match the rebranding so as to be more recognizable and create less confusion.

 

On June 28, 2017, the Company formed a wholly owned Nevada subsidiary called Fan Pass Inc. Fan Pass is the Company’s most recent or second app/brand, completed and released in July 2020. Fan Pass believes in connecting Fans of their favorite celebrity or artist, to an exclusive VIP or Backstage experience, right from their smartphone or other connected devices. Fan Pass allows an artist’s fanbase to experience something they would otherwise never have the opportunity to afford or geographically attend. The Company aims to establish both Friendable and Fan Pass as premier brands and mobile platforms that are dedicated to connecting and engaging users from anywhere around the World.

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On August 8, 2019, the Company filed a Designation of Series B convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series B Preferred Stock with a stated value of $1.00 per share. A holder of Series B Preferred Stock has the right to convert their Series B Preferred Stock into fully paid and non-assessable shares of Common Stock. Initially, the conversion price for the Series B Preferred Stock is $0.25 per share, subject to standard anti-dilution adjustments. Additionally, each share of Series B Preferred Stock shall be entitled to, as a dividend, a pro rata portion of an amount equal to 10% (Ten Percent) of the Net Revenues (“Net Revenues” being Gross Sales minus Cost of Goods Sold) derived from the subscriptions and other sales, but excluding and net of Vimeo fees, processing fees and up sells, generated by Fan Pass Inc., the wholly-owned subsidiary of the Corporation. The Series B Dividend shall be calculated and paid on a monthly basis in arrears starting on the day 30 days following the first day of the month following the initial issuance of the Series B Preferred and continuing for a period of 60 (Sixty) months. The holders of Series B Preferred stock shall have no voting rights. The holders of Series B Preferred stock shall not be entitled to receive any dividends. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or deemed liquidation event, the holders of shares of Series B Preferred Stock shall be entitled to be paid the liquidation amount, as defined out of the assets of the Company available for distribution to its shareholders, after distributions to holders of the Series A Preferred Stock and before distributions to holders of Common Stock.

 

On August 27, 2019, a 1 for 18,000 reverse stock split of our common stock became effective. All share and per share information in the accompanying consolidated financial statements and footnotes, and throughout this Form 1-A, has been retroactively adjusted for the effects of the reverse split.

 

On November 25, 2019 the Company filed a Designation of Series C convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series C Preferred Stock with a stated value of $1.00 per share. The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends with the Company’s common stock, par value 0.0001 per share (“Common Stock”)(the Series C Preferred Stock will convert into common stock immediately upon liquidation and be pari passu with the common stock in the event of litigation), and (b) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company. The Series C Preferred Stock does not have any voting rights. Each share of Series C Preferred Stock will carry an annual dividend in the amount of eight percent (8%) of the Stated Value of $1.00 (the “Divided Rate”), which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion and increase to 22% upon an event of default as defined. In the event of any default other than the Company’s failure to issue shares upon conversion, the stated price will be $1.50. In a default event where the Company fails to issue shares upon conversion, the stated price will $2.00. The holder shall have the right six months following the issuance date, to convert all or any part of the outstanding Series C Preferred Stock into shares of common stock of the Company. The conversion price shall equal the Variable Conversion Price. The “Variable Conversion Price” shall mean 71% multiplied by the market price, representing a discount rate of 29%. Market price means the average of the two lowest trading prices for the Company’s common stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or upon any deemed liquidation event, after payment or provision for payment of debts and other liabilities of the Company, and after payment or provision for any liquidation preference payable to the holders of any Preferred Stock ranking senior upon liquidation to the Series C Preferred Stock, if any, but prior to any distribution or payment made to the holders of Common Stock or the holders of any Preferred Stock ranking junior upon liquidation to the Series C Preferred Stock by reason of their ownership thereof, the Holders will be entitled to be paid out of the assets of the Company available for distribution to its stockholders. The Company will have the right, at the Company’s option, to redeem all or any portion of the shares of Series C Preferred Stock, exercisable on not more than three trading days prior written notice to the Holders, in full, in accordance with Section 6 of the designations at a premium of up to 35% for up to six months. Company’s mandatory redemption: On the earlier to occur of (i) the date which is twenty-four (24) months following the Issuance Date and (ii) the occurrence of an Event of Default (the “Mandatory Redemption Date”), the Company shall redeem all of the shares of Series C Preferred Stock of the Holders (which have not been previously redeemed or converted).

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Our principal office is located at 1821 S Bascom Ave., Suite 353, Campbell, California 95008, and our telephone number is (855) 473-7473.

 

Business Strategy

 

Fan Pass is the “Virtual Stage” connecting artists with fans and fans with their favorite artists and entertainers. Whether its fans seeking access to their favorite artist or an artist/entertainer, or ready to have their own Fan Pass Channel, Fan Pass has it covered. Fan Pass has put everything together all in one place, making our venue a one-of-a-kind experience for both fans and Artists/Entertainers.

 

At Fan Pass, fans can go live with their favorite entertainers by tuning in to a channel to see their favorite singer, rapper, band, or entertainers live stream, purchase tickets to a Live Virtual Event and shop exclusive artist merchandise available only on Fan Pass. Through Fan Pass, fans are able to chat and meet other fellow fans. Fans can customize fan profiles and connect with other fans, as well as share photos, videos, and other content of their favorite entertainer to their feed. Fan Pass also facilitates fans and artists being able to discover and sign-up new talent. Fans can find or discover up-and-coming artists, view what’s trending and sign up or recommend artists and entertainers who should have to their own channel

 

Fan Pass provides direct benefits to Artists and Entertainers in some of the following ways. Artists & Entertainers simply need to request a Fan Pass “Channel” Download and Register for Details. In doing so, they: (i) get paid on live or PPV overed on call “PAY PER VIEW” events; (ii) keep up to 100% of Ticket Sales (less any fees for agency, agent, manager or other, if applicable); (iii) share in monthly subscription revenue, based on “Content Views” generated by all Fan Pass fans, across the entire platform; (iv) are able to upload content and keep fans engaged; (v) sell tickets to artist events and perform live with the highest quality streams, right from their phone or computer, by simply notifying their fans on Go Live!; and (vi) benefit from Fan Pass producing promotions, exclusive merchandise and preparing other related things needed.

 

Market

 

The market in which Friendable, Inc. operates can be described as follows.

 

Market Opportunity

 

Artists rely heavily on revenue streams that are not often seen to those without intimate knowledge of a particular industry and with the focus currently on virtual performances, there will be a re-entry for these same artists, back to the traditional stage while maintaining the virtual streams. When it comes to traditional performances, the sale of a VIP/backstage or meet & greet pass to boost revenue can often become the majority of the artist’s annual tour revenue. With data provided from one of the Friendable’s original entertainment partners “The Kluger Agency” (“TKA”) suggesting that as much as 18%-23% of artists’ annual tour revenue has previously been derived from these VIP experiences. This is particularly true in the year 2020, with The World Economic Forum reporting that the six-month-plus disappearance of live music concerts “is estimated to cost the industry more than $10 billion in sponsorships,” and individual artists are feeling the loss the most.

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Fan Pass

 

Fan Pass, one of Friendable’s applications, bridges the gap, providing more affordable virtual VIP experiences that can be offered simultaneously to fans around the world. While Fan Pass is free for artists to join, Fan Pass leverages a monthly subscription model paid by fans to generate revenues. These revenues are shared with all channel artists. In exchange for its platform features, live streaming tools, bandwidth, processing and handling, Fan Pass earns platform fees on each separately ticketed event, as well as splits with each artist on subscriber fees and merchandise designed and sold on the platform.

 

The U.S. video streaming industry is expected to hit $7.08 billion in value in 2021, with an estimated 100 million internet users watching online video content every day, according to data from Livestream.com. The same report suggests that 45% of live video audiences would pay for exclusive, on-demand video from a favorite team, speaker or performer. Through Fan Pass, Friendable Inc. is uniquely positioned to capitalize on this opportunity.

 

The Friendable App

 

Our Company’s second application, Friendable, is an all-inclusive platform where users can meet, chat and date. The app has exceeded 1.5 million total downloads, with over 900,000 historical registered users and more than 580,000 historical user profiles.

 

Friendable Inc.’s Next Phase of Growth

 

To facilitate its next phase of growth, Friendable Inc. is seeking an additional equity investment of up to $5 million. The company intends to utilize its relationships to secure the lowest cost of capital available as these funds will drive technology advancements, increase head count, marketing initiatives and secure additional celebrity talent that will bring larger fan audiences to each released event. These initiatives will assist in building recurring monthly (fan) subscribers that generate recurring monthly revenue for each artist as well. The next phase of growth is expected to play a key role in accelerating the company’s download and conversion of data for subscription revenue and merchandise sales.

 

Our Company’s primary goal is to establish Fan Pass as a premier brand and mobile platform dedicated to connecting and engaging users around the world. In support of this goal, it has entered into a partnership with Brightcove targeting OTT platform expansion, including leaders such as iOS, Android, Apple TV, Android TV, Roku and WWW.

 

In the highly competitive video streaming market, Friendable Inc. has tapped into an unmet demand from today’s ever-present “omni-users” for constant contact with celebrities and influencers. Via Fan Pass, the company offers investors an opportunity to gain a stake in an organization catering to this new breed of omni-users and their influencers. We believe that this application’s potential is clearly illustrated by the interest it has generated. For example, from September 4 to October 12, 2020 the Fan Pass platform added 246 new artists, accounting for a 410 percent increase in just six weeks.

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Competition - Product Differentiation

 

Based on the Company’s internal analysis, market related and industry specific news/growth projections, management believes there are approximately 10 companies currently in this streaming marketplace with similar goals of live streaming concerts or events. The Company has identified what it believes is its closest competitors currently and listed them below with additional information of how the offerings compare with one another and how Fan Pass has differentiated its offering to artists at all stages of their careers. Nonetheless, we believe we have several competitive advantages along with discovering a service-related niche that is being highly regarded by our artists. Fan Pass has no direct or service by service offering competitors. There are companies that offer services similar to Fan Pass in different mediums and with different content, for example Only Fans, IG Live, Sessions, Stage It and Twitch. Nonetheless, the Company believes it is differentiated in its offerings from these other companies and has a competitive advantage. The Company believes it has a superior and differentiated offering to all Artists and Entertainers seeking a “Virtual Stage” for performance and revenue. In addition to the streaming services offered by others, Fan Pass has a focused approach to engage, support and grow each artists’ revenue and fan following. The table below describe more about the Fan Pass offering vs. that of others, along with reference to a quote from a third-party article that articulates the Company’s position vis a vis its competitors.

 

Fan Pass Similarities Only Fans (a Competitor)

●      Artist-support platform

●      Mobile app

●      Exclusive Merchandise

 

●      Pay per view content

●     Ability to subscribe to a creator

●     Mobile device streaming ability

●     ‘Sex worker’ content creator platform

●     Story posts (like IG stories, FB, etc)

 

 

Fan Pass Similarities IG Live (a Competitor)

●     Artist platform

●     OBS/Computer streaming

●     Archived streams

●     Mobile device streaming ability

●     Viewer chatting

●     Allows facetime-like video chat

●     Pinning comments

●     Streamer chatting

 

Fan Pass Similarities Sessions (a Competitor)

●     Mobile app

●     Archived events

●     Exclusive Merchandise

●     Music (artist) platform

●     Virtual ticked events

●     Chat features

●     In-chat gifting features

●     “meet and greet” feature

●     Only ticketed events, no subscription

●     Higher-tiered artists

 

Fan Pass Similarities Stage It (a Competitor)

●     Mobile app

●     Archived events

●     Free subscriber streams (not only ticketed events)

●     Exclusive Merchandise

●     Ticketed events

●     Chat features

●     Ticket gifting

●     Tipping feature

●     Shows can sell out

 

Fan Pass Similarities Twitch (a Competitor)

●     Artist platform

●     Photos, Article content in channel

●     Exclusive Merchandise

●     Artist-support platform (creation of channel graphics, ads, etc)

 

●     OBS Streaming Abilities

●     Archived Streams

●     Mobile app & webpage

●    Main streamer demographic is gamer (with recent addition of music)

●    Streamer sets up their own channel

●    Subscriptions to individual channels

●    Chat Moderators (Nightbot, mods, etc)

●    Custom emotes

●    Viewers ability to tip the creator

●    Viewers ability to gift other fans in the chat

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The World Economic Forum released this past May staggering figures relating to how Covid-19 (the “pandemic”) has affected the music industry. The report states with the disappearance of live music concerts and no end in-sight that the “six-month shutdown is estimated to cost the industry more than $10 bn in sponsorships,” and individual artists are feeling the loss the most. With the ban on large gatherings, small and large venues have shut their doors, and artists are finding themselves deprived of their primary source of revenues, live gigs. Live shows account for 75% of artists’ income and are directly tied to the release of new music. Rolling Stones magazine reported that a growing list of artists is delaying new releases to later in the year. Well-known artists from megastars Alicia Keys and Lady Gaga to upcoming groups Haim and Hind, R&B singers such Toni Braxton, Kehlani to veterans rockers The Pretenders, and country music legend Willie Nelson, have all decided to delay the release of their latest albums. Touring is the number one promotional tool for a new album launch and is also an excellent marketplace for merchandising and connecting with fans. Many artists are taking the position that without the ability to tour, it’s best to wait.

 

In response to the growing pressure on the music industry to mitigate the damages done by the global pandemic, technology is coming to the rescue and harnessing the power of live video streaming. Indeed our Company, Fan Pass, is a Live Streaming mobile app and desktop platform is offering solutions to artists with dwindling sources of revenue at this time and giving them control over their career. In particular response to the pandemic, we have released Fan Pass Live, a live video streaming platform with an “artist first” approach to developing an eco-system where artists now have their very own channel, in a particular genre or category and a central location where exclusive content lives. On this platform, Fan Pass continues to provide many services to artists and entertainers, their work, creates custom merchandise for each channel artist and gives them the controls to schedule a live event or event chat, at a moments’ notice, all providing new revenue opportunities for all Fan Pass artists. The platform aims to give artists back a voice, while providing a one-of-a-kind experience for their fans, along with opening up new ways of earning from the virtual stage. The brainchild of brothers and business partners Robert A. Rositano, Jr. and Dean Rositano, Fan Pass Live, officially launched its platform with a live concert on July 24, 2020.

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To demonstrate the strength of Fan Pass, for example, Fan Pass had live streaming events from approximately 1:30 pm EST until roughly 11:00 pm EST on Friday July 24, 2020 from four separate locations that included: an Atlanta, GA Stage; New York, NY Penthouse; Los Angeles, CA Studio; and, a private venue located in Palm Beach, FL. The event attracted die-hard music fans and social followers from across the globe in the following locations: the United States, Germany, Canada, India, United Republic of Tanzania, United Arab Emirates, Ghana, Netherlands, New Zealand, Finland, Tunisia, United Kingdom, Brazil, Kenya, Japan, Guatemala, Nigeria, Australia, South Africa, Dominican Republic, Ukraine, Turkey, Sweden, Italy, Poland, France, Rwanda, Haiti, Switzerland, Mexico, Portugal, Spain, Belgium, Uganda, Iraq, Indonesia, Jamaica, Senegal, Norway, Malaysia, Virgin Islands, Bulgaria, Dominica, Greece, Guadeloupe, Saudi Arabia, Honduras, Qatar, Ireland, Hong Kong, Denmark, Mongolia, Kuwait, Guyana, Lebanon, Chile, Jordan, Taiwan, Zimbabwe, Cameroon, Estonia, Colombia, Egypt, Iceland, China, Vietnam, Austria, Peru, Israel, Philippines, Bahamas, Fiji, Puerto Rico, and Costa Rica.

 

According to the expectations set by management, this event outperformed the goals set for Fan Pass, achieving much more than it could have anticipated. Fan Pass was able to secure over 10 hours of Exclusive Content, on-board 16 prominent artists; produce 16+ live content channels, custom merchandise and live merchandise stores; create social media ads and promotional materials for 16+ artists; solidify relationships with artists and artist management; increase social media followers, content and activity by 500%; gain recognition from other Industry Labels; increase press coverage landing a radio interview with iHeart Radio; and, create more sponsorship opportunities.

 

Robert A. Rositano, Jr, CEO of the Company said to BitRebel, “When we initially developed Fan Pass Live, we were aiming to Live Stream the “Backstage VIP Experience” or “meet and greet” of a concert event and make accessible this once in a lifetime experience to all fans worldwide. With the global pandemic disrupting the industry and changing the industry’s needs, we were determined to re-position our offering to also provide a solution to those who are used to earning a living on the physical stages across the country.”

 

What does precisely Fan Pass Live do? For starters, it breaks down the barrier between artists and fans, giving the artists control over setting a date, setting a price (or offering viewings and access to Fan Pass monthly subscribers for free) and broadcasting their events, concerts or chats, right from their phone or a complete computer, microphone and streaming set up. The Fan Pass team also creates Instagram ads and promotion for each channel artist, allowing them to focus on what they enjoy and announcing to fans with professionally designed ads to promote when ready. More importantly, it gives back to artists a way to remain relevant to their fan base and earn revenue.

 

Fan Pass Live Shares Revenues with Artists

 

Fan Pass Live offers Artists at all levels and genres, the opportunity to engage fans from one location, removing the need for multiple sharing platforms. It conveniently provides an Exclusive Artist “Channels” jam-packed with all their relevant content from videos, photos, interviews, and past and upcoming events. While Fan Pass charges the fans a small transaction fee for ticket sales, artists keep the money earned from ticket sales. The handling of the merchandise is also taken care of by the Company and once it’s approved by the Artist, all merchandise is released within the Artist’s channel.

 

While it is free for Artists to join, Fan Pass aims to monetize by offering fans an “ALL ACCESS VIP” offering priced at $3.99 as a monthly subscription model paid by fans through Fan Pass’ website or through a similar offering to fans at $4.99 per month if processed by the Apple App Store or Google Play Stores, with a three-day free trial. Revenues are shared with all Channel Artists. In exchange for its platform features, live streaming tools, bandwidth, processing, and handling, Fan Pass will also earn platform fees on each separately ticketed event, as well as splits with each Artist on subscriber fees and merchandise designed and sold on the platform.

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Marketing

 

The Company’s marketing efforts will consist of a combination of various public relations, social media and traditional media outlets. Digital media (Facebook, Google, Instagram, Twitch and others), executive team pod casts and speaking engagements will also round out online advertising designed to attract artists to the platform. In addition to the Company’s overarching promotion of its Fan Pass brand and offering each artist is required to perform additional promotion to attract their fans specifically. The Company believes it will convert a certain number of these fans to monthly subscribers, others will purchase tickets for PPV events (performed by artists) and/or exclusive merchandise being offered and sold will also attract fan purchases. The platform is not authorized to, and will not, make any commitments on behalf of an Artist for personal appearances or other promotional activities related to any Live Performance or event planned on the Fan Pass platform, until such Artist has committed to platform and Fan Pass has engaged in design and productions of fan-based offerings for such planned event. Notwithstanding the foregoing, any such Artist will be offered creative options for at least one Instagram story and shall actively promote their artist “Channel” on the Fan Pass platform, along with an upcoming or previous event. Artist deliverables include promotions to be delivered across the Artist’s existing social media platforms to solicit downloads of the Fan Pass mobile application and therefor allow fans to choose a subscription option or not. Artists will assist and use their best efforts to engage with fans, broadcast promotional messages and announce live events scheduled, pre-recorded and available and upcoming.

 

Friendable, Inc. is a publicly traded company on the OTC Marketplace with a set of product and service offerings that have, on occasion been complimentary offerings to one another but most often stand alone as product and service offerings of the Friendable brand and/or public company.

 

Friendable, Inc. has a meet up/dating application that is available for download in the Apple app store and Google play stores and had been the foundation of the Company’s first mobile app offering. Additionally, Friendable, Inc. has a “Technology Services” division whereby our services can be hired for app consulting and related design, development and deployment services. Finally, we have our Wholly owned subsidiary Fan Pass, Inc. which has been born out of various celebrity relationships achieved through the strategic marketing efforts of the Friendable dating app and has become the focus of the Company’s future growth path and ROI for investors. Currently, the Company has substantial client concentration, with one client accounting for a substantial portion of our revenues.

 

In the 9 months ended September 30, 2020 and in the 12 months ended December 31, 2019 we derived 99% of our revenue from one client. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of clients. It is not possible for us to predict the future level of demand for our services that will be generated by this client or the future demand for the products and services of other similar clients. A loss of this client or the failure to retain similar clients could negatively affect our revenues and results of operations and/or trading price of our common stock.

 

Material Agreements

 

As mentioned above, in the 12 months ended December 31, 2019 and 9 months ended September 30, 2020, the Company derived the majority of its revenue from its relationship with Answering Legal, a company with which Friendable is party to a "Technology Services Agreement" that provides for statements of work or SOWs through various stages of development of 2 mobile and 1 desktop application. These applications were to function on iOS and Android devices as well as website/browser, focused on providing an extension of the "Answering Legal" call center/answering services provided to their "Legal/Attorney" based clients. The fluid nature of app/tech development projects provided for various iterations of the interface, specifications and created various changes and/or additions or changes that added to the Friendable development timelines, fees and overall scope, which ultimately created an extended development cycle and supplemented the Company's ability to focus on the development of its Friendable mobile dating application and further its release of Fan Pass, it's live streaming artist platform and core business focus. A copy of the Technology Series Agreement is attached as an exhibit to this Offering Circular.

 

Regulatory Requirements

 

None that are extraordinary currently.

 

Patents and Trade Secrets

 

Trademarks and marks protected (Fan Pass, Inc., Fan Pass Live and Fan Pass) – Trade Secrets relate to the Company’s executive teams experience with technology, the Internet and their various industry or industry related partners that have had or are having success in the industries and markets the Company has embarked upon.

55

 

Seasonality of Business

 

Our results of operations have not been materially impacted by seasonality.

 

Property

 

Our executive offices are located at 1821 S. Bascom Ave, Ste 353, Campbell, California 95008. We believe that our office space and facilities are sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.

 

Employees

 

The Company has seven full time employees and a variety of partners that serve in various consulting capacities based on the Company’s specific needs.

 

Legal Proceedings

 

Integrity Media, Inc. (“Integrity”) had previously filed a lawsuit against the Company and the CEO of the Company for $500,000 alleging breach of contract alleging the Company failed to deliver marketable securities in exchange for services. The Company answered the allegations in court and Integrity filed a motion attacking the Company’s answers. The court did not strike the answers, but the clerk of the court entered a default judgment against the Company in the amount of $1,192,875 plus 10% interest. On May 8, 2019, the Company received a tentative ruling on the Company’s motion to vacate the default judgement whereby the previously entered default judgement was voided and a trial date of August 26, 2019 was set.

 

On September 19, 2019, the Company entered into a Settlement Agreement with Integrity Media settling the civil action known as Integrity Media, Inc. vs. Friendable, Inc. et al., Orange County Case No. 30-2016-00867956-CU-CO-CJC. Pursuant to the Settlement Agreement, the Company agreed to issue to Integrity 750,000 shares of its common stock in exchange for 275 of the Company’s preferred shares held by Integrity and the cash payment of $30,000 for costs. Robert Rositano Jr., the Company’s CEO, has also personally guaranteed the Company’s compliance with the terms of the Settlement Agreement. The cash payment is to be made within 6 months of the date of the Settlement Agreement. As of the date of filing of this report the cash amount has not been paid and the preferred shares have not been returned. Additionally, Integrity will be entitled to additional shares if (i) the price of the Company’s common stock is below $1.34 at either the 120 day or 240 day reset dates set forth in the Company’s Debt Restructure Agreement as amended entered into with various debt holders on March 26, 2019 effective November 5, 2019. The Company has determined that a total of 4,275,000 additional shares would be issuable on the first “reset” date of March 4, 2020 based on a share price of $0.20 on that date and a total of 7,537,500 additional shares would be issuable on the second “reset” date of July 2, 2020 based on a shares price of $0.08 on that date for a total of 12,562,500 shares. Integrity will also be entitled to a “true-up” by issuance of additional common shares on the issuance date should the share price of the Company’s common stock on the issuance date be below $1. It was determined by the Company that its liability was $1,005,000 ($750,000 plus a premium of $255,000) in accordance with ASC 480.

 

On August 28, 2020 Integrity requested and was issued 750,000 common shares, which Integrity advised the Company realized $16,625 when sold. Accordingly, at September 30, 2020 the Company reduced its liability payable in common stock from $1,005,000 to $988,375 and retained $30,000 as an accrued liability for costs.

 

On October 14, 2020, the Company filed a “Declaration” with the Santa Clara County Courts challenging Integrity’s future ability to convert additional shares based on “Stock Market Manipulation” designed to harm the Company’s share price, valuation and number of shares issuable to Integrity following its sales. Additionally, the Company contended that Integrity disregarded the volume limitation set forth in its settlement for the Company’s thinly traded securities and caused a potential third party capital investment of $150,000 to be rescinded. The court agreed with the Company’s declaration that Integrity should have filed a motion so the Company would have the opportunity to present all arguments and evidence in opposition to deny Integrity’s application to enter judgment.

56

 

MANAGEMENT

 

The following table sets forth the names, ages and positions of our current board members and executive officers:

 

Name   Age   Position with the Company   With the
Company Since
Robert A Rositano, Jr.   51   Chief Executive Officer, Chief Financial Officer, Secretary & Director   January 31, 2014
Dean Rositano   48   President, Chief Technology Officer & Director   January 31, 2014

 

The business address of our officers and directors is c/o Friendable, Inc., 1821 S Bascom Ave., Suite 353, Campbell, California 95008.

 

Board Composition and Committees and Director Independence

 

Robert Rositano, Jr. and Dean Rositano currently serve on our board of directors. We are not required to have any independent members of the Board of Directors. As we do not have any board committees, the board carries out the functions of nominating and compensation committees, and such “independent director” determination has been made pursuant to the committee independence standards.

 

Biographies

 

Robert A Rositano, Jr., Chief Executive Officer and Interim CFO

 

Prior to founding iHookup, Robert Rositano, Jr. was the third employee at Netcom Online Communications, Inc., an internet service provider which went public in 1993 and eventually merged into Earthlink and AT&T Canada. From 2006-2010, Robert Rositano, Jr. worked as Chief Executive Officer of Zippi Networks, Inc. Zippi Networks, Inc. created a home-based business system that allowed users to become certified eBay sellers and earn commission by selling items on eBay for others. Zippi Networks, Inc. supplied its users with everything one would need to begin a home-based business as an eBay seller, including but not limited to, certain training, materials, uniforms, processes and software. Robert Rositano, Jr. was responsible for its day-to-day operations and overseeing the development of eBay seller applications for the web, as well as mobile applications for windows and iPhone devices. He was also in charge of fundraising, and raised over $2 million for Zippi Networks, Inc. In 2010, Robert Rositano, Jr. became Chief Executive Officer of Checkmate Mobile, Inc. (“CMI”), which developed mobile applications on a work-for-hire basis as well as incubated creative concepts conceived among a core group of product managers, graphic designers and mobile developers. CMI has successfully developed applications for the education market (e.g. released Cloud9 Learning to Brigham Young University with a pilot of over 7,000 students), cause-related or donation style applications, and applications used by restaurants and bars. Robert Rositano, Jr. has continued in his role at CMI while serving as a director and officer of the Company.

 
Dean Rositano,
 President & Chief Technology Officer

 

Prior to Friendable, Inc., Dean Rositano co-founded CMI, Latitude Venture Partners, LLC, Zippi Networks, Inc., America’s Biggest, Inc., and most notably, was the co-founder and president and CTO of Silicon Valley-based Nettaxi.com, which went public in 1998. From 2006-2010, Dean Rositano worked as President and Chief Technology Officer of Zippi Networks, Inc. In 2010, Dean Rositano became President and Chief Technology Officer of CMI. Dean Rositano has continued in his role at CMI while serving as a director and officer of the Company.

57

 

Overall

 

The Company believes Messrs. Robert and Dean Rositano are well qualified to serve as director and officers of the Company due to each of them having twenty years of experience working with high technology companies, many of which have been in the social media or internet community space and directly relate to the Friendable apps. They have each had experience in successfully raising capital, managing and growing teams of people in the areas of product development, internet / mobile marketing, and IT, as well as architecting, building, scaling and launching high volume consumer products, from internet websites to mobile applications.

 

Term of Office

 

Our directors hold office until the next annual meeting or until their successors have been elected and qualified, or until they resign or are removed. Our board of directors appoints our officers, and our officers hold office for such term as may be prescribed by our board of directors and until their successors are chosen and qualify, or until their death or resignation, or until their removal.

  

Family Relationships

 

Robert Rositano, Jr., age 51, and Dean Rositano, age 48, are brothers.

  

Involvement in Certain Legal Proceedings

 

During the past ten years, our directors and executive officers above have not been involved in any of the following events:

 

 

a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

 

conviction in a criminal proceeding or being subject to a pending criminal proceeding, excluding traffic violations and other minor offenses;

 

 

being subject to any order, judgment or decree, not substantially reversed, suspended or vacated, of any court of competent jurisdiction, permanently enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking business;

 

 

being found by a court of competent jurisdiction, in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;

 

 

being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

 

being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

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Committees of the Board

 

Our board of directors has the authority to appoint committees to perform certain management and administration functions. Currently, we do not have an audit committee, compensation committee or nominating and corporate governance committee and do not have an audit committee financial expert. Our board of directors currently intends to appoint various committees in the future.

 

Nominating and Corporate Governance Committee

 

We do not have a nominating and corporate governance committee. Our board of directors performed the functions associated with a nominating committee. Generally, nominees for directors are identified and suggested by the members of our board of directors or management using their business networks. Our board of directors has not retained any executive search firms or other third parties to identify or evaluate director candidates in the past and does not intend to in the near future. We have elected not to have a nominating committee because we are an exploration stage company with limited operations and resources.

 

Our board of directors does not have a written policy or charter regarding how director candidates are evaluated or nominated for our board of directors. Additionally, our board of directors has not created particular qualifications or minimum standards that candidates for our board of directors must meet. Instead, our board of directors considers how a candidate could contribute to our business and meet our needs and those of our board of directors. As we are an exploration stage company, our board of directors will not consider candidates for director recommended by our stockholders, and we have received no such candidate recommendations from our stockholders.

 

Compensation Committee

 

We currently do not have a compensation committee. However, our board of directors may establish a compensation committee once we are no longer in the exploration stage, which would consist of inside directors and independent members. Until a formal committee is established, our board of directors will continue to review all forms of compensation provided to our executive officers, directors, consultants and employees including stock compensation.

 

Audit Committee

 

We currently do not have an audit committee. However, our board of directors may establish an audit committee once we are no longer in the exploration stage, which would consist of inside directors and independent members.

 

Until a formal committee is established, our board of directors will continue to perform the functions of an audit committee.

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Audit Committee Financial Expert

 

Our board of directors has determined that it does not have a member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K issued by the United States Securities and Exchange Commission.

 

We believe that our entire board of directors is capable of analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues reasonably expected to be raised by our company. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date.

 

Code of Ethics

 

We have not yet adopted a Code of Ethics. 

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EXECUTIVE COMPENSATION

 

Summary Compensation Table 

 

The following table summarizes information regarding the compensation awarded to, earned by or paid to, our Chief Executive Officer, and our other most highly compensated executive officers who earned in excess of $100,000 during the year ended December 31, 2020, 2019 and 2018:

 

 

 

 

Name and

 

 

Salary
Incurred
(1)(2)

 

 

 

Bonus

 

 

Stock
Awards

 

 

Option
Awards

 

Non-Equity
Incentive Plan
Compensation

Nonqualified
Deferred
Compensation
Earnings

 

 

All other
Compensation

 

 

 

Total

Principal Position Year ($) ($) ($) (1) ($) ($) ($) ($) ($)
Robert Rositano, Jr.

2020

2019

150,000

150,000

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

150,000

150,000

CEO, CFO, Secretary, &

Director

2018 150,000 Nil Nil Nil Nil Nil Nil 150,000
                   
Dean Rositano

2020

2019

150,000

150,000

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

150,000

150,000

President and CTO 2018 150,000 Nil Nil Nil Nil Nil Nil 150,000
                   
Frank Garcia

2020

2019

73,333

100,000

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

73,333

100,000

CFO* 2018 100,000 Nil Nil Nil Nil Nil Nil 100,000

(*resigned August 31, 2020)

  

Notes:

 

  (1) The above listed officers had accrued salaries of $783,416 at December 31, 2019 and $798,580 at December 31, 2018. During the year ended December 31, 2019, three officers forgave $400,000 in accrued salaries as part of the debt restructuring agreement. At December 31,2020 and at September 30,2020 the aggregate accrued compensation to such officers totaled $1,156,749 and $1,081,749, respectively.
     
  (2) The officers’ salary incurred (and total compensation) for the year ended December 31,2020 totaled $150,000 for Robert Rositano Jr., $150,000 for Dean Rositano and $73,333 for Frank Garcia.

  

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Compensation for Executive Officers and Directors

 

Compensation arrangements for our named executive officers and directors are described below.

 

Employment Agreement – Robert Rositano, Jr.

 

Effective January 19, 2014, the Company, entered into an employment agreement with Robert Rositano, Jr. to serve as Chief Executive Officer, acting Chief Financial Officer and Secretary of Friendable, Inc. for a term of two years with automatic renewals for similar two-year periods pursuant to the terms of the agreement. Robert Rositano Jr.’s duties shall include the duties and responsibilities for the Company’s corporate and administration offices and positions as set forth by the Company and such other duties and responsibilities as the board of directors may from time to time reasonably assign to Robert Rositano, Jr. The employment agreement provides, among other things, that Robert Rositano, Jr. will be eligible for participation in any employee benefit plan, retirement plan, and option plan maintained by Friendable, Inc.; receive a base salary of $150,000 per year; and receive reimbursement for ordinary and necessary business expenses incurred by Robert Rositano, Jr. in connection with the performance of his duties as Chief Executive Officer and Secretary. During the year, only a portion of the salary was paid and the balance was accrued. Upon a successful launch of Friendable, Inc.’s products and services and reaching the first 1,000,000 registered users, Robert Rositano, Jr. will receive a bonus of $50,000 and his base salary will be increased to $200,000 annually. When Friendable, Inc. reaches a cumulative 5,000,000 registered users or more, Robert Rositano, Jr. will receive a bonus of $75,000 and his base salary will be increased to $250,000 annually. After the above goals are achieved, his base salary will begin being increased semi- annually at a minimum rate of 10% or higher, as determined by the board of directors or a committee established by the board of directors for compensation purposes. If Friendable, Inc. is unable to pay executive salary or bonuses, the amounts owed will be accrued as a convertible note. The note can be converted into common stock, at Robert Rositano Jr.’s sole discretion. The Company may terminate Robert Rositano, Jr.’s employment prior to the end of his employment period by a majority vote of the board of directors, excluding Robert Rositano Jr.’s vote. If we terminate Robert Rositano Jr.’s employment prior to the end of his employment period without cause, which shall also include termination in the event of a change in control, Robert Rositano, Jr. shall be entitled to his base salary in effect on the date of his termination for a period of twenty-four (24) months following the date of such termination, in one lump sum payment within fourteen (14) days of termination or as otherwise agreed to in writing. Furthermore, any unvested options granted to Robert Rositano, Jr. will immediately vest. If we terminate his employment with cause, he will be entitled to his base salary and commission schedule in effect on the date of termination for a period of twelve (12) months. If Robert Rositano, Jr. however, terminates his employment prior to the end of the employment period without cause, Robert Rositano, Jr. shall not be entitled to any severance and the Company shall have no further liability to Robert Rositano, Jr. He is also permitted to pursue other business interests not in conflict with the Company, including serving as officers and directors of other public companies.

 

On April 3, 2019, the Company entered into a new employment agreement with Robert Rositano, Jr. Pursuant to that agreement, the Company shall pay Rositano an aggregate annual salary at the rate of $150,000 (One Hundred Fifty Thousand Dollars) (the “Base Salary”). Upon a successful launch of the company’s Fan Pass mobile app or website, and reaching its first 50,000 subscribers, Rositano will receive a bonus of $50,000 and the Base Salary will be increased to $200,000 annually. In addition, when the Company reaches a cumulative 100,000 subscribers or more, Rositano, Jr. will receive a bonus of $75,000 and the Base Salary shall be increased to $250,000 annually. After the above goals are achieved, the Base Salary shall increase annually at a minimum rate of ten percent (10%) as determined by the Board of Directors or a Committee established by the Board of Directors for compensation purposes (the “Compensation Committee”), based on Rositano Jr.’s performance. Rositano, Jr. shall be entitled to participate in the Company’s stock option plan if and when it is put in place. Details will be determined by the board of directors or compensation committee at such time.

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Employment Agreement – Dean Rositano

 

Effective January 19, 2014, the Company, entered into an employment agreement with Dean Rositano to serve as President and Chief Technology Officer of Friendable, Inc. for a term of two years with automatic renewals for similar two-year periods pursuant to the terms of the agreement. Dean Rositano’s duties shall include the duties and responsibilities for the Company’s corporate and administration offices and positions as set forth by the Company and such other duties and responsibilities as the board of directors may from time to time reasonably assign to Dean Rositano. The employment agreement provides, among other things, that Dean Rositano will be eligible for participation in any employee benefit plan, retirement plan, and option plan maintained by Friendable, Inc.; receive a base salary of $150,000 per year; and receive reimbursement for ordinary and necessary business expenses incurred by Dean Rositano in connection with the performance of his duties as President and Chief Technology Officer. During the year, only a portion of the salary was paid and the balance was accrued. Upon a successful launch of Friendable, Inc.’s products and services and reaching the first 1,000,000 registered users, Dean Rositano will receive a bonus of $50,000 and his base salary will be increased to $200,000 annually. When Friendable, Inc. reaches a cumulative 5,000,000 registered users or more, Detocan Rositano will receive a bonus of $75,000 and his base salary will be increased to $250,000 annually. After the above goals are achieved, his base salary will begin being increased semi-annually at a minimum rate of 10% or higher, as determined by the board of directors or a committee established by the board of directors for compensation purposes. If Friendable, Inc. is unable to pay executive salary or bonuses, the amounts owed will be accrued as a convertible note. The note can be converted into common stock, at Dean Rositano’s sole discretion. The Company may terminate Dean Rositano’s employment prior to the end of his employment period by a majority vote of the board of directors, excluding Dean Rositano’s vote. If we terminate Dean Rositano’s employment prior to the end of his employment period without cause, which shall also include termination in the event of a change in control, Dean Rositano shall be entitled to his base salary in effect on the date of his termination for a period of twenty-four (24) months following the date of such termination, in one lump sum payment within fourteen (14) days of termination or as otherwise agreed to in writing. Furthermore, any unvested options granted to Dean Rositano will immediately vest. If we terminate his employment with cause, he will be entitled to his base salary and commission schedule in effect on the date of termination for a period of twelve (12) months. If Dean Rositano, however, terminates his employment prior to the end of the employment period without cause, Dean Rositano shall not be entitled to any severance and the Company shall have no further liability to Dean Rositano. He is also permitted to pursue other business interests not in conflict with the Company, including serving as officers and directors of other public companies.

 

On April 3, 2019, the Company entered into a new employment agreement with Dean Rositano. Pursuant to that agreement, the Company shall pay Rositano an aggregate annual salary at the rate of $150,000 (One Hundred Fifty Thousand Dollars) (the “Base Salary”). Upon a successful launch of the company’s Fan Pass mobile app or website, and reaching its first 50,000 subscribers, Rositano will receive a bonus of $50,000 and the Base Salary will be increased to $200,000 annually. In addition, when the Company reaches a cumulative 100,000 subscribers or more, Rositano will receive a bonus of $75,000 and the Base Salary shall be increased to $250,000 annually. After the above goals are achieved, the Base Salary shall increase annually at a minimum rate of ten percent (10%) as determined by the Board of Directors or a Committee established by the Board of Directors for compensation purposes (the “Compensation Committee”), based on Rositano’s performance. Rositano shall be entitled to participate in the Company’s stock option plan if and when it is put in place. Details will be determined by the board of directors or compensation committee at such time.

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Outstanding Equity Awards

 

On January 11, 2021, the following non-qualified stock option was awarded to each of Haley R. Rositano; Nikolas T. Rositano; Ryan Madani: Taylor N. Rositano and Vincent J. Rositano pursuant to a new nonqualified stock option plan (see below) – all full-time employees of the Company, as follows. Number of shares in each award: (a) 2 million common shares (total 10 million shares). Exercise price: $0.014 per common share. Vesting: 11.1% on January 11, 2021 and thereafter 11.1% at the end of each quarter through January 11, 2024, and (b) 1 million common shares (total 5 million shares). Exercise price: $0.014 per common share vesting 12.5% on January 11, 2021 and thereafter 12.5% at the end of each quarter through January 11, 2023. The total fair value of all of the options granted is approximately $194,700, to be recognized as compensation expense over the respective vesting periods.

  

Long-Term Incentive Plans

 

On November 22, 2011, the Board of Directors of the Company approved a stock option plan (“2011 Stock Option Plan”), the purpose of which is to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees, consultants and its affiliates and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership. Under the 2011 Stock Option Plan, officers, directors, employees and consultants who provide services to the Company may be granted options to acquire common shares of the Company. The aggregate number of options authorized by the plan shall not exceed 4,974 shares of common stock of the Company.

 

The Board of Directors and the stockholders holding a majority of the voting power approved a 2014 Equity Incentive Plan (the “2014 Plan”) on February 28, 2014, with a to be determined effective date. The date never became effective. The purpose of the 2014 Plan is to assist the Company and its affiliates in attracting, retaining and providing incentives to employees, directors, consultants and independent contractors who serve the Company and its affiliates by offering them the opportunity to acquire or increase their proprietary interest in the Company and to promote the identification of their interests with those of the stockholders of the Company. The 2014 Plan will also be used to make grants to further reward and incentivize current employees and others.

 

There are 7 shares of common stock reserved for issuance under the 2014 Plan. The Board has the power and authority to make grants of stock options to employees, directors, consultants and independent contractors who serve the Company and its affiliates. Any stock options granted under the 2014 Plan generally have an exercise price equal to or greater than the fair market value of the Company’s shares of common stock. Unless otherwise determined by the Board of Directors, stock options shall vest over a four-year period with 25% being vested after the end of one (1) year of service and the remainder vesting equally over a 36-month period. The Board may award options that may vest based upon the achievement of certain performance milestones. As of December 31, 2019, no options have been awarded under the 2014 Plan. Effective August 27, 2019, the Company effected a reverse split of the common stock of 1 for 18,000 which eliminated all the options which were previously outstanding.

 

Under the terms of the newly adopted nonqualified stock option of January 11,2021 the Company’s directors have the authority to grant, from time to time, certain nonqualified stock options to its full-time employees, evidence by Notices of Grant denoting the grant date and exercise price, the vesting entitlements and the grant expiration date. In the event that the employee grantee becomes no longer employed by the Company, any portion of the award not exercisable immediately prior to employment termination is also automatically terminated. In addition, any portion of the award that remains unexercised at the expiration of the applicable exercisable period is likewise terminated. Any exercise of any portion of the aware requires the grantee to provide written notice of such exercise accompanied by payment of the applicable exercise price.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

There are several related party transactions reported within this report. All such transactions have been duly approved by the required board and/or shareholder approvals. Please see below for further disclosure:

 

Dean Rositano and Robert Rositano, Jr. are both directors and 7.5% and 7.5% stockholders respectively of Checkmate Mobile, Inc. (“CMI”). At CMI, Dean Rositano also serves as President and Chief Technology Officer, while Robert Rositano, Jr. serves as Chief Executive Officer and Chief Financial Officer. They will both continue their respective roles at CMI while serving as directors and officers of Friendable, Inc.

 

During the year ended December 31, 2019, the Company incurred $24,068, $294,124, and $58,883 (2018: $210,000, $80,000, and $60,000) in app hosting, app development and rent to a CMI. As of December 31, 2019, Due from related party includes $30,083 (December 31, 2018: payable of $721,099) due from CMI.

 

During the year ended December 31, 2019, two directors converted 588 shares of Series A preferred stock at the contractual conversion rate into 1,002,970 shares of common stock and donated them to the Diocese of Monterey and other parties related to the directors converted 890 Series A preferred shares into 2,018,746 common shares that are issuable at December 31, 2019.

 

Dean Rositano and Robert Rositano, Jr. are both directors and stockholders of Friendable, Inc. At Friendable, Inc., Dean Rositano also serves as President and Chief Technology Officer, while Robert Rositano, Jr. serves as Chief Executive Officer and Secretary. The majority stockholder of Friendable, Inc. is Copper Creek Holdings, LLC, a Nevada limited liability company owned and managed by Robert Rositano, Jr. and his wife, Stacy Rositano.

 

As described above, Dean Rositano and Robert Rositano, Jr. are both directors and officers of the Company.

 

Transactions with related persons

 

Other than as disclosed below, there has been no transaction, or currently proposed transaction, in which our company was or is to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest:

 

(i) Any director or executive officer of our Company;

 

(ii) Any beneficial owner of shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;

 

(iii) Any person who acquired control of our company when it was a shell company or any person that is part of a group, consisting of two or more persons that agreed to act together for the purpose of acquiring, holding, voting or disposing of our common stock, that acquired control of Titan Iron Ore Corp. when it was a shell company; and

 

(iv) Any immediate family member (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons.

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During the 9 months ended September 30, 2020 and during the years ended December 31, 2019 and December 31, 2018, the Company incurred $369,558, $459,200 and $417,066 respectively in salaries and payroll taxes to officers and directors with such costs being recorded as general and administrative expenses.

 

During the 9 months ended September 30, 2020 the Company incurred $33,000, $332,834 and $45,000 (year ended December 31, 2019 $24,068, $299,124, and $58,883 and years ended December 31, 2018 $210,000, $80,000 and $60,000) in app hosting, app development and rent to a company with two officers and directors in common with such costs being recorded as app hosting, product development and general and administrative expenses.

 

During the year ended December 31, 2019, the Company issue a Securities Purchase agreement to a vendor company with two officers and directors in common for the purchase of 79,000 Series B preferred stock with the purchase price of $79,000 being applied to accounts payable due to the vendor. The price was based on recent sales of Series B shares for $1.00 per share.

 

As of September 30, 2020, December 31, 2019 and December 31, 2018, the Company had a stock subscription receivable totaling $4,500 from an officer and director and from a company with an officer and director in common.

 

As of September 30, 2020, due to related party includes $141,803 due to a company with two officers and directors in common, and $1,081,749 payable in salaries to directors and officers of the Company. As of December 31, 2019, due from related party includes $30,083 due from a company with two officers and directors in common, and $783,416 payable in salaries to directors and officers. As of December 31, 2018, due to related party includes $721,099 due to a Company with two officers and directors in common, and $798,500 payable in salaries to directors and officers of the Company. The amounts are unsecured, non-interest bearing and are due on demand.

 

During the year ended December 31, 2019, two directors converted 588 shares of Series A preferred stock at the contractual conversion rate into 1,002,970 shares of common stock and donated them to the Diocese of Monterey and other parties related to the directors converted 890 Series A preferred shares into 2,018,746 common shares that were issuable at December 31, 2019.

 

During the year ended December 31, 2019, three officers forgave debt totaling $400,000 and a company controlled by two officers of the Company forgave debt totaling $600,000. The total amount is reflected as contributed capital.

 

Dean Rositano and Robert Rositano, Jr. are also both directors and 7.5% and 7.5% stockholders respectively of CMI. At CMI, Dean Rositano also serves as President and Chief Technology Officer, while Robert Rositano, Jr. serves as Chief Executive Officer and Chief Financial Officer. They will both continue their respective roles at CMI while serving as directors and officers of Friendable, Inc.

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Dean Rositano and Robert Rositano, Jr. are both directors and stockholders of Friendable, Inc. At Friendable, Inc., Dean Rositano also serves as President and Chief Technology Officer, while Robert Rositano, Jr. serves as Chief Executive Officer and Secretary. The majority stockholder of Friendable, Inc. is Copper Creek Holdings, LLC, a Nevada limited liability company owned and managed by Robert Rositano, Jr. and his wife, Stacy Rositano.

 

The holders of preferred stock are entitled to cast votes equal to the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock held by such holder are convertible. The total aggregate issued shares of Series A Preferred Stock at any given time regardless of their number shall be convertible into the number of shares of common stock which equals nine (9) times the total number of shares of common stock which are issued and outstanding at the time of any conversion, at the option of the preferred holders or until the closing of a Qualified Financing (i.e. the sale and issuance of our equity securities that results in gross proceeds in excess of $2,500,000) at one time or in the same round. As a result of the transaction, the former iHookup stockholders received a controlling interest in the Company due to the voting rights of the Series A Preferred Stock being connected to their super- majority conversion rights.

 

As described above, Dean Rositano and Robert Rositano, Jr. have both been appointed directors and officers of Friendable, Inc. Dean Rositano also serves as President and Chief Technology Officer, while Robert Rositano, Jr. serves as Chief Executive Officer, Secretary, and since September 1,2020 as Chief Financial Officer.

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PRINCIPAL STOCKHOLDERS

 

The number of shares beneficially owned is determined under the rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which a person or entity has sole or shared voting power or investment power plus any shares which such person or entity has the right to acquire within sixty (60) days through the exercise or conversion of any stock option, convertible security, warrant or other right. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares such power with that person’s spouse) with respect to all shares of capital stock listed as owned by that person or entity.

 

Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders. The holders of Series A preferred stock are entitled to cast votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock held by such holder are convertible. The total aggregate issued shares of Series A Preferred Stock at any given time regardless of their number shall be convertible into the number of shares of common stock which equals nine (9) times the total number of shares of common stock which are issued and outstanding at the time of any conversion, at the option of the preferred holders or until the closing of a Qualified Financing (i.e. the sale and issuance of our equity securities that results in gross proceeds in excess of $2,500,000) at one time or in the same round. As a result of the Titan Iron Ore Corp. and iHookup merger transaction, the former iHookup stockholders received a controlling interest in the Company due to the voting rights of the Series A Preferred Stock being connected to their super-majority conversion rights.

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A. Director and Executive Officer Shareholders

 

The following tabulation shows, as of September 30, 2020, the number of shares of capital stock owned beneficially by: (a) all persons known to be the holders of more than five percent (5%) of voting securities, (b) Directors, (c) Executive Officers and (d) all other Officers and Directors as a group.

 

Title of Class Name and Address of Beneficial Owner Amount and Nature of Beneficial
Ownership
Percent of
Class (3)
Voting Percentage of Company, as a whole and Amount of Common Shares held on an as converted basis (4)
             
  (a) Holders Over 5%        
             
Series A preferred    Robert A Rositano Jr. 9,246 (1) Direct 46.73%

42.06%

537,391,285

  3846 Moanna Way,        
  Santa Cruz, CA 95062        
             
Series A preferred Dean Rositano
126 Sea Terrace Way,
Aptos, CA 95003
1,882 Direct 9.51%

8.56%

109,384,642

           
Series A preferred Copper Creek Holdings, LLC (2)
7960 B Soquel Dr., Suite #146
Aptos, CA 95003
14,730 Direct 74.45%

67.00%

856,129,529

  -Robert Rositano, Jr. 7,365   37.22%

33.50%

428,064,764

  -Stacy Rositano 7,365   37.22%

33.50%

428,064,765

           
  (b) Directors        
             
Series A preferred Robert A Rositano Jr. 9,246 (1) Direct and 46.73%

42.06%

537,391,285

  3846 Moanna Way,   Indirect    
  Santa Cruz, CA 95062        
             
Series A preferred Dean Rositano 1,882 Direct 9.51%

8.56%

109,384,642

  126 Sea Terrace Way,        
  Aptos, CA 95003        
             
  (c) Executive Officers        
             
Series A preferred Robert Rositano, Jr. and Dean Rositano as named above
             
Series A preferred (d) Officers and Directors as a Group for preferred stock 11,128 (1) Direct and Indirect 56%

50.62%

646,795,927

  

(1) Includes 7,365 shares beneficially owned by Robert Rositano, Jr. through Copper Creek Holdings, LLC. Does not include the shares beneficially owned by Stacy Rositano through Copper Creek Holdings, LLC.

 

(2) Copper Creek Holdings, LLC is owned and managed by Robert Rositano, Jr. and his wife Stacy Rositano, thus each may be deemed to beneficially own half of the interest of Copper Creek Holdings, LLC.

 

(3)

Based on 19,786 shares of Series A preferred stock issued and outstanding as of September 30, 2020.

(Note: Issuable common shares totaling 106,558,432 as of September 30, 2020 have not been included in this percentage computation).

 

(4)

These percentages represent voting power of common shares and Series A Preferred Shares of the Company on an as converted basis. Potential dilutive ownership of common shares assumes that the stated proportionate holding of Series A Preferred Stock is converted to 9 times the combined total issued and issuable common shares at September 30, 2020 of 127,776,864. These metrics are being provided to show voting power in the Company as a whole. These numbers are based on 19,786 shares of Series A preferred stock issued and outstanding as of September 30, 2020. As of the date of this Offering Circular, the current holders of Series A Preferred Shares have agreed to waive any reserve requirements attached to their shares and to refrain from converting their shares unless and until the Company increases its authorized shares to accommodate for their conversion amounts.

(Note: Issuable common shares totaling 106,558,432 as of September 30, 2020 have not been included in this percentage computation).

 

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Title of Class Name and Address of Beneficial Owner Amount and Nature of Beneficial
Ownership
Percent of
Class (3)
           
  (a) Directors      
           
Common stock Copper Creek Holdings, LLC (2)
7960 B Soquel Dr., Suite #146
Aptos, CA 95003
15,596 Direct *
  -Robert Rositano, Jr. 7,798 Indirect *
  -Stacy Rositano 7,798 Indirect  *
           
Common stock Robert A Rositano Jr.  17,026 (1) Direct and *
  3846 Moanna Way,   Indirect  
  Santa Cruz, CA 95062      
         
Common stock Dean Rositano 9,245 Direct *
  126 Sea Terrace Way,      
  Aptos, CA 95003      
         
  (b) Executive Officers      
         
Common stock Robert Rositano, Jr. and Dean Rositano as named above    
           
Common stock (c) Officers and Directors as a Group for common stock  26,271 (1) Direct and Indirect 0.124%

 

* Less than 1%.

 

(1) Includes 7,798 shares beneficially owned by Robert Rositano, Jr. through Copper Creek Holdings, LLC. Does not include the shares beneficially owned by Stacy Rositano through Copper Creek Holdings, LLC.

 

(2) Copper Creek Holdings, LLC is owned and managed by Robert Rositano, Jr. and his wife Stacy Rositano, thus each may be deemed to beneficially own half of the interest of Copper Creek Holdings, LLC.

 

(3) Based on 21,218,432 of common stock issued and outstanding as of September 30, 2020 (and does not include 106,558,432 issuable common shares as of September 30, 2020).

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B. Other Major Shareholders

 

The following table lists the beneficial ownership of our securities as of September 30, 2020 by each person known by us to be the beneficial owner of 5% or more of the outstanding shares of any class of our securities.

 

Series C convertible preferred stock Geneva Roth Remark Holdings, Inc 124,800 100.0%
  111 Great Neck Road, Suite 216    
  Great Neck, NY 11021    
       
Common Shares Robert Bishop 2,190,000 10.32%
  2744 W. Casas Dr.    
  Tucson, AZ 95742    
       
  Juaquin Malphur 1,800,000 8.48%
  1894 Vermack Court    
  Dunwoody, GA 30338    

 

Based on 21,218,432 of common stock issued and outstanding as of September 30, 2020 (and does not include 106,558,432 issuable common shares as of September 30, 2020).

 

Change of Control

 

We are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.

 

Control by Others

 

To the best of the Company’s knowledge, the Company is not directly or indirectly owned or controlled by another corporation, any foreign government, or any other natural or legal person, severally or jointly.

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DESCRIPTION OF SECURITIES

 

General

 

The Preferred Shares subject to this offering are convertible into common shares of our Company. Our common shares are quoted on the Pink Open Market under the symbol “FDBL.” Our common shares trade and have traded on a limited or sporadic basis and should not be deemed to constitute an established public trading market. Broker-dealers often decline to trade in over-the-counter stocks that are quoted on the Pink Open Market given the market for such securities are often limited, the stocks are more volatile, and the risk to investors is greater. These factors may reduce the potential market for our common shares by reducing the number of potential investors. This may make it more difficult for investors in our common shares to sell shares to third parties or to otherwise dispose of their shares. This could cause our share price to decline, and there is no assurance that there will be liquidity in our common shares.

 

In addition, The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.

 

Articles of Incorporation

 

We are governed by our amended articles of incorporation (the “Articles”) under Nevada law (the “Act”) and by our by-laws (the “By-laws”).

 

A description of the rights attached to Series D Preferred Shares are explained below in the section titled “Securities Offered.” The discussion that immediately follows provides an overview of the rights attached to shares of all classes of equity securities other than Series D Preferred Shares. Series D Preferred Shares are convertible in common stock of the Company.

  

Shares

 

As of the date of this Offering, the Company’s authorized capital stock consisted of 1,000,000,000 shares of common stock, $0.0001 per share par value, 50,000,000 shares of Series A Preferred Stock, $0.0001 per share par value, 1,000,000 shares of Series B Preferred Stock with a stated value of $1.00 per share and 1,000,000 shares of Series C Preferred Stock with a stated value of $1.00 per share. As of September 30, 2020, there were 86 registered holders of record of our common stock. As of such date, 21,218,432 shares of our common stock were issued and outstanding, and 106,558,432 were issuable.

 

As of September 30, 2020, there were 28 registered holders of record of our Series B Preferred Stock and as of such date, 284,000 shares of our Series B Preferred Stock were issued and outstanding. As of September 30, 2020, there was 1 registered holder of record of our Series C Preferred Stock and as of such date,124,800 shares of our Series C Preferred Stock were issued and outstanding.

 

Directors

 

The number of authorized directors of the Company are between two (2) to five (5), and the term of directors is two (2) years. The presence of a majority of the Board of Directors, at a meeting duly assembled, shall be necessary to constitute a quorum for the transaction of business and the act of a majority of the directors present and voting at any meeting, at which a quorum is then present, shall be the act of the Board of Directors, except as may be otherwise specifically provided by the statutes of Nevada or by the Articles of Incorporation. Unless otherwise restricted by the Articles of Incorporation or by these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a written consent thereto is signed by all members of the Board. 

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The Company’s Articles of Incorporation provide that a director or officer is protected from being personally liable for monetary damages for breach of fiduciary duties to the fullest extent permitted by law and provide that the Company may purchase directors and officers insurance. The Company’s Bylaws provide that the directors shall receive such compensation for their services as directors, and such additional compensation for their services as members of any committees of the Board of Directors, as may be authorized by the Board of Directors.

 

Voting

 

Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders.

 

The holders of Series A Preferred Stock are entitled to cast votes equal to the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock held by such holder are convertible (which is 9 shares of Common Stock per 1 Series A Preferred Stock).

 

The affirmative vote of a majority of Series A preferred stock have sufficient voting power to bind that class of shares and vote together with common stockholders as one class. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by the statutes of Nevada or by the Articles of Incorporation. When a quorum is present or represented at any meeting, the holders of a majority of the stock present in person or represented by proxy and voting shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes of Nevada, the Articles of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question.

 

The holders of Series B Preferred Stock and of Series C Preferred Stock generally have no right to vote on any matters requiring shareholder approval or any matters on which the shareholders are permitted to vote except as required by law and for the limited matters set forth in their certificates of designation. With respect to any voting rights of the Series B Preferred Stock or Series C Preferred Stock may vote, Series B Preferred Stock or Series C Preferred Stock, as the case may be, shall vote each vote separately as a class, each share of Series B Preferred Stock and Series C Preferred Stock shall have one vote on any such matter, and any such approval may be given by holders holding a majority of the issued and outstanding shares of each of Series B Preferred Stock and Series C Preferred Stock at such time shall be sufficient to bind that series of shares.

73

 

Conversion

 

The total aggregate issued shares of Series A Preferred Stock at any given time regardless of their number shall be convertible, at the option of the holder, into the number of shares of common stock which equals nine (9) times the total number of shares of common stock which are issued and outstanding at the time of any conversion, at the option of the preferred holders or until the closing of a “qualified financing” (meaning the sale and issuance of our equity securities that results in gross proceeds in excess of $2,500,000) at one time or in the same round. The “Series A Original Issue Price” means $0.002 per share for the Series A Preferred Stock subject to adjustment from time to time for any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or similar event.

 

No adjustment in the Series A Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least fifty percent (50%) of the then outstanding shares of Series A Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

 

In addition, Series A Preferred Stock is subject to mandatory conversion upon either (a) the closing of the sale of shares of  Common Stock to the public, in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, at a minimum price of $5.00 per share resulting in at least $30 million of gross proceeds to the Corporation or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the  holders of at least a majority of the then outstanding shares of Series A Preferred Stock (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to as the “Mandatory Conversion Time”), at which point, (i) all outstanding shares of Series A Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate and (ii) such shares may not be reissued by the Company.

 

A holder of Series B Preferred Stock also has the right to convert their Series B Preferred Stock into fully paid and non-assessable shares of Common Stock, at their option. Initially, the conversion price for the Series B Preferred Stock is $0.25 per share (equivalent to 4 shares of Common Stock), subject to standard anti-dilution adjustments.

 

The holders of Series C Preferred Stock shall also have the right from time to time, and at any time during the period beginning on the date which is six (6) months following their date of issuance to convert all or any part of the outstanding Series C Preferred Stock into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the date of their issuance, or any shares of capital stock or other securities of the Company into which such Common Stock shall hereafter be changed or reclassified at a variable conversion price of 71% multiplied by the market price based on the average of the two lowest trading prices for the Company’s common stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date.

 

Dividends

 

The holders of the shares of Series A Preferred Stock shall be entitled to receive non-cumulative dividends, when, and if declared, at a rate of 6% per year on the Series A Original Issue Price. For the avoidance of doubt, the “Series A Original Issue Price” means $0.002 per share for the Series A Preferred Stock subject to adjustment from time to time for any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or similar event.

 

Each share of Series B Preferred Stock shall be entitled to, as a dividend, a pro rata portion of an amount equal to 10% (Ten Percent) of the Net Revenues (“Net Revenues” being Gross Sales minus Cost of Goods Sold) derived from the subscriptions and other sales, but excluding and net of Vimeo fees, processing fees and up sells, generated by Fan Pass Inc., the wholly-owned subsidiary of the Company.

74

 

Share of Series C Preferred Stock carry an annual dividend in the amount of eight percent (8%) of their stated value of $1.00 (the “Dividend Rate”) which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion. Upon the occurrence of an Event of Default (as defined in the articles of incorporation of the company), the Dividend Rate for Series C Preferred Stock shall automatically increase to twenty two percent (22%).

 

Otherwise, the payment of dividends, if any, to common stockholders generally and in the future, rests within the sole discretion of our board of directors. Holders of common shares may receive dividends in the sole discretion of the Company’s board of directors. The payment of dividends will depend upon our earnings, our capital requirements and our financial condition, as well as other relevant factors. We have not declared any cash dividends since our inception and have no present intention of paying any cash dividends on our common stock in the foreseeable future. 

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

 

1. We would not be able to pay our debts as they become due in the usual course of business; or

 

2. Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

Liquidation Preference

 

In the event of any Deemed Liquidation Event (as defined in the Articles of Incorporation of the Company), the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders prior to and in preference to payment to the holders of the shares of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Series A Original Issue Price or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into  Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence is hereinafter referred to as the “Series A Liquidation Amount”). 

 

If upon any such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under the Series A Liquidation Amount, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

Series B Preferred Stock and Series C Preferred Stock shall be paid ahead of Common Stock of the Company in the event of a Deemed Liquidation Event, but shall not be paid ahead of Series A Preferred Stock, which, for the avoidance of doubt, has not been converted into Common Stock of the Company. For completeness, Series B Preferred Stock shall be entitled to be paid the liquidation amount, as defined out of the assets of the Company available for distribution to its shareholders, after distributions to holders of the Series A Preferred Stock and before distributions to holders of Common Stock and Series C Preferred Stock.

75

 

Redemption

 

The Series C Preferred Stock may be redeemed at the Company’s option for up to 6 months at a 35% premium and also subject to mandatory redemption by the Company on the earlier of (i) the date which is 24 months following the Issuance Date and (ii) the occurrence of an Event of Default.

 

Action Necessary to Change the Rights of Shareholders

 

Bylaws may be adopted, amended or repealed by the affirmative vote of not less than seventy-five percent (75%) of the outstanding voting shares of the Company.

 

Annual and Special Meetings of Shareholders

 

An annual meetings of the stockholders shall be held at such time and date as the Board of Directors shall determine. Special meetings of the stockholders may only be called by stockholders of record of not less than five (5) percent of the Company’s outstanding capital stock. In addition, action by written consent of stockholders in lieu of meeting may only be taken by holders of at least 75% of the voting power.

 

Disclosure of Director Share Ownership

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than 10% of our common stock, to file initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during year ended December 31, 2019 and during the 9 months ended September 30, 2020 all filing requirements applicable to our executive officers and directors, and persons who own more than 10% of our common stock were complied with, with the exception of the following:

 

Name

Number of Late
Reports

Number of Transactions Not Reported on a
Timely Basis

Failure to File
Requested Forms

Robert Rositano, Jr. Nil Nil N/A
Dean Rositano Nil Nil N/A

76

 

SECURITIES OFFERED

  

Current Offering

 

The Company is offering up to $5,000,000 total of Securities, consisting of Series D Preferred Stock, par value $0.0001 (the “Preferred Stock” or collectively the “Securities”).

 

Series D Preferred Stock (the “Preferred Stock”)

 

General

 

The Company has designated 500,000 (five hundred thousand) shares of its authorized and unissued Preferred Stock as “Series D Preferred Stock”. As of the date of this Offering Circular, zero shares of Series D Preferred Stock are issued and outstanding.

 

Voting

 

Holders of Series D Preferred Stock of the Company vote together as a single class, such that the affirmative vote of 50% of the then outstanding shares of Series D Preferred stock is sufficient to bind all holders of Series D Preferred Stock.

 

Except as required by applicable law, the holders of Series D Preferred Stock are only entitled to vote on any proposed amendment to the Company’s Articles of Incorporation if such amendment would (1) Effect an exchange or reclassification of all or part of the Series D Preferred Stock into shares of another class; (2) Effect an exchange or reclassification, or create the right of exchange, of all or part of the shares of another class of the Company into shares of Series D Preferred Stock; (3) Adversely change the rights, preferences, or limitations of all or part of the shares of Series D Preferred Stock; (4) Change the shares of all or part of the Series D Preferred Stock into a different number of shares of Series D Preferred Stock; (5) Create a new class of shares having rights or preferences with respect to dissolution that are prior or superior to the shares of Series D Preferred Stock; (6) Increase the rights, preferences, or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to dissolution that are prior or superior to the shares of Series D Preferred Stock; (7) Limit or deny any existing preemptive right of all or part of the shares of the Series D Preferred Stock; or (8) Cancel or otherwise affect rights to distributions that have accumulated but not yet been authorized on all or part of the shares of the Series D Preferred Stock.

 

Dividends

 

Holders of Series D Preferred Stock are currently not entitled to receive dividends on Series D Preferred Stock.

 

Liquidation Preference

 

Upon the liquidation, dissolution and winding up of our company, whether voluntary or involuntary, Series D Preferred Stock is senior to all common stockholders and are entitled to receive an amount per share of Series D Preferred Stock equal to $10.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series D Preferred Stock. If upon any such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event (as defined in the Certificate of Designation of Series D Preferred Stock of the Company), the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series D Preferred Stock the full amount to which they shall be entitled in accordance with the foregoing and shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

77

 

Conversion

 

Each share of Series D Preferred Stock is convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder, into that number of fully paid and nonassessable shares of common stock of the Company (whether whole or fractional) that have a Fair Market Value, in the aggregate, equal to the Series D Conversion Price. The “Series D Conversion Price” is initially equal to $10.00. Such initial Series D Conversion Price, and the rate at which shares of Series D Preferred Stock may be converted into shares of Common Stock is subject to adjustment for Reclassification, Exchange, Substitution, Sales, Reorganizations, Mergers or Consolidations, as set forth in section 4.4 of the Series D Preferred Stock Certificate of Designation, which is an Exhibit hereto. “Fair Market Value” shall mean as of any date of determination, 80% of the average closing price of a share of Common Stock on the principal exchange or market on which such shares are then trading for the 20 trading days immediately preceding such date.

 

Notwithstanding the foregoing, Series D Preferred Stock is subject to adjustment for reclassification, exchange and substitutions as follows: If the Common Stock issuable on the conversion of Series D Preferred Stock is changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (except in the event of a sale, reorganization or merger which results in a change in voting power of the Company that exceeds 50% of the combined voting power of the Company) then and in each such event, the holder of each share of Series D Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable on such reorganization, reclassification or other change, by holders of the number of shares of Common Stock into which such shares of Series D Preferred Stock might have been converted immediately before such reorganization, reclassification, or change.

 

Redemption

 

Series D Preferred Stock of the Company do not have redemption rights.

 

Listing of Stock

 

The Preferred Stock offered hereby is convertible into common stock of the Company and our common shares are quoted on the Pink Open Market under the symbol “FDBL”.

 

Transfer Agent and Registrar

 

Our transfer agent is Nevada Agency and Transfer Company, 50 West Liberty Street Suite 880, Reno, Nevada 89501, phone (775) 322- 0626.

 

78

 

Dividend Policy

 

The payment of dividends, if any, in the future, rests within the sole discretion of our board of directors. The payment of dividends will depend upon our earnings, our capital requirements and our financial condition, as well as other relevant factors. We have not declared any cash dividends since our inception and have no present intention of paying any cash dividends on our common stock in the foreseeable future.

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

 

1. We would not be able to pay our debts as they become due in the usual course of business; or

 

2. Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

LEGAL MATTERS

 

Certain legal matters with respect to the shares of common stock offered hereby will be passed upon by Jonathan D. Leinwand, Esq.

 

EXPERTS

 

The Company has engaged a new audit firm, Salberg & Company, P.A. (“Salberg”) to perform the audit for the year ended December 31, 2019. Manning Elliott LLP (“Manning Elliott”) performed the reviews for the first 3 quarters of 2019 and for the year ended December 31, 2018. These parties have audited our financial statements included in this offering statement to the extent and for the periods set forth in their audit reports. Their reports are included in reliance upon their authority as experts in accounting and auditing.

79

 

WHERE YOU CAN FIND MORE INFORMATION

 

This Offering Circular does not purport to restate all of the relevant provisions of the documents referred to or pertinent to the matters discussed herein, all of which must be read for a complete description of the terms relating to an investment in us. Such documents are available for inspection during regular business hours at our office by appointment, and upon written request, copies of documents not annexed to this Offering Circular will be provided to prospective investors. Each prospective investor is invited to ask questions of, and receive answers from, our representatives. Each prospective investor is invited to obtain such information concerning us and this offering, to the extent we possess the same or can acquire it without unreasonable effort or expense, as such prospective investor deems necessary to verify the accuracy of the information referred to into their Offering Circular. Arrangements to ask such questions or obtain such information should be made by contacting Robert A. Rositano, Jr. - at our executive offices. The telephone number is (855) 473-7473. We reserve the right, however, in our sole discretion, to condition access to information that management deems proprietary in nature, on the execution by each prospective investor of appropriate confidentiality agreements prior to having access to such information.

 

The offering of the common stock is made solely by this Offering Circular and the exhibits hereto. The prospective investors have a right to inquire about and request and receive any additional information they may deem appropriate or necessary to further evaluate this offering and to make an investment decision. Our representatives may prepare written responses to such inquiries or requests if the information requested is available. The use of any documents other than those prepared and expressly authorized by us in connection with this offering is not permitted and should not be relied upon by any prospective investor.

 

ONLY INFORMATION OR REPRESENTATIONS CONTAINED HEREIN MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR IN CONNECTION WITH THE OFFER BEING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT EXPRESSLY SET FORTH IN THIS OFFERING CIRCULAR. THE INFORMATION PRESENTED IS AS OF THE DATE ON THE COVER HEREOF UNLESS ANOTHER DATE IS SPECIFIED, AND NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY SALE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION PRESENTED SUBSEQUENT TO SUCH DATES(S).

80

 

Financial Statements - Table of Contents

 

 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

FRIENDABLE, INC.

 

SEPTEMBER 30, 2020 

 

    Page
Unaudited Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019   F-2
Unaudited Consolidated Statements of Operations for the Nine Months Ended September 30, 2020 and 2019   F-3
Unaudited Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2020 and 2019   F-4
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019   F-6
Notes to Unaudited Consolidated Financial Statements   F-7

F-1

 

FRIENDABLE INC.
CONSOLIDATED BALANCE SHEETS

 

    September 30,     December 31,  
    2020     2019  
    (Unaudited)        
ASSETS
CURRENT ASSETS:                
Cash   $ 8,851     $ 11,282  
Accounts receivable     147       135  
Prepaid expense     106,167       30,000  
Due from a related party     -       30,083  
                 
Total Current Assets     115,165       71,500  
                 
Total Assets   $ 115,165     $ 71,500  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:                
Accounts payable and accrued expenses   $ 2,389,774     $ 1,997,326  
Accounts payable - related party     141,803       -  
Short term loans     61,000       -  
Convertible debentures and convertible promissory notes, net of discounts     55,850       69,930  
Mandatorily redeemable Series C convertible Preferred stock, 1,000,000 shares designated, 124,800 and 149,300 shares issued and outstanding at September 30, 2020 and December 31, 2019, including premium of $76,462 and $55,549 respectively (Liquidation value $208,867)     285,329       191,549  
Derivative liabilities     209,000       12,778,000  
Liability to be settled in common stock     988,375       1,005,000  
                 
Total Current Liabilities     4,131,131       16,041,805  
                 
Total Liabilities     4,131,131       16,041,805  
                 
Commitments and contingencies (Note 7)                
                 
STOCKHOLDERS’ DEFICIT:                
Preferred stock, 50,000,000 authorized at par value $0.0001                
Series A convertible Preferred stock, 25,000 shares designated at par value of $0.0001, 19,786 and 19,789 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively.     2       2  
Series B convertible preferred stock, $0.0001 par value, 1,000,000 shares designated; 284,000 and 284,000 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. (Liquidation value $284,000)     28       28  
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 21,218,432 and 4,398,114 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively     2,122       438  
Common stock issuable, $0.0001 par value, 106,558,432 and 8,518,335 shares at September 30, 2020 and December 31, 2019, respectively     10,655       852  
Additional paid-in capital     30,909,397       16,476,758  
Common stock subscription receivable     (4,500 )     (4,500 )
Accumulated deficit     (34,933,670 )     (32,443,883 )
                 
Total Stockholders’ Deficit     (4,015,966 )     (15,970,305 )
                 
Total Liabilities and Stockholders’ Deficit   $ 115,165     $ 71,500  

 

See accompanying notes to consolidated financial statements

F-2

 

FRIENDABLE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
                         
REVENUES   $ 111,392     $ 118,801     $ 322,671     $ 120,662  
                                 
OPERATING EXPENSES:                                
App hosting     12,000       2,301       33,000       18,068  
Commissions     191       61       625       619  
General and administrative     224,401       187,352       605,458       577,605  
Product development and launch     105,790       100,500       460,102       156,088  
Artists’ performance fees     425,058       -       425,058       -  
Artists’ revenue share     402               402       -  
Investor relations     3,921       -       140,527       -  
Sales and Marketing     30,081       28,788       82,335       52,924  
                                 
Total operating expenses     801,844       319,002       1,747,507       805,304  
                                 
LOSS FROM OPERATIONS     (690,452 )     (200,201 )     (1,424,836 )     (684,642 )
                                 
OTHER INCOME (EXPENSE):                                
Accretion and interest expense     (38,423 )     (189,117 )     (266,710 )     (453,674 )
Provision for settlement of lawsuit     -       (780,000 )     -       (780,000 )
Gain on foreign exchange     -       -       2,580          
Initial derivative expense     -       -       (419,000 )     -  
Gain (loss) on settlement of derivative     257,317       -       (640,821 )     -  
Gain on change in fair value of derivative     263,000       -       259,000          
Total other expense, net     481,894       (969,117 )     (1,064,951 )     (1,233,674 )
                                 
NET LOSS   $ (208,558 )   $ (1,169,318 )   $ (2,489,787 )   $ (1,918,316 )
                                 
NET LOSS PER COMMON SHARE:                                
Basic and diluted   $ (0.002 )   $ (3.72 )   $ (0.04 )   $ (6.10 )
                                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
                                 
Basic and diluted     121,819,362       314,726       66,468,267       314,726  

 

See accompanying notes to consolidated financial statements

F-3

 

FRIENDABLE INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
For the three and nine months ended September 30, 2020
(Unaudited)

 

                                                                      Common              
    Series A Preferred Stock     Series B Preferred     Common Stock     Additional     Stock           Total  
    Shares           Shares           Shares           Shares           Shares           Paid In     Subscription     Accumulated     Shareholders’  
    Issued     Amount     Issuable     Amount     Issued     Amount     Issued     Amount     Issuable     Amount     Capital     Receivable     Deficit     Equity Deficit  
Balance, December 31, 2019     19,789     $ 2       -     $ -       284,000     $ 28       4,398,114     $ 438       8,518,335     $ 852     $ 16,476,758     $ (4,500 )   $ (32,443,883 )   $ (15,970,305 )
                                                                                                                 
Common shares cancelled     -       -       -       -       -       -       (2,000 )     -       -       -       (500 )     -       -       (500 )
                                                                                                                 
Conversion of Convertible notes     -       -       -       -       -       -       362,595       36       -       -       19,914       -       -       19,950  
                                                                                                                 
Common shares issued for services     -       -       -       -       -       -       600,000       60       -       -       89,940       -       -       90,000  
                                                                                                                 
Common stock issuable under debt restructuring agreement     -       -       -       -       -       -       -       -       36,193,098       3,620       8,415,518       -       -       8,419,138  
                                                                                                                 
Issuance of common stock previously issuable     -       -       -       -       -       -       2,575,746       258       (2,575,746 )     (258 )     -       -       -       -  
                                                                                                                 
Conversion of Series A preferred into common stock     (3 )     -       -       -       -       -       54,076       5       -       -       (5 )     -       -       -  
                                                                                                                 
Net loss             -       -       -       -       -       -       -       -       -       -       -       (1,547,616 )     (1,547,616 )
Balance, March 31, 2020     19,786     $ 2       -     $ -       284,000     $ 28       7,988,531     $ 797       42,135,687     $ 4,214     $ 25,001,625     $ (4,500 )   $ (33,991,499 )   $ (8,989,333 )
                                                                                                                 
Conversion of convertible notes     -       -       -       -       -       -       2,211,445       221       -       -       56,299       -       -       56,520  
                                                                                                                 
Common shares issued for services     -       -       -       -       -       -       78,000       8       206,667       21       27,579       -       -       27,608  
                                                                                                                 
Series A preferred shares issuable to talent agents in exchange for services     -       -       118       -       -       -       -       -       -       -       135,617       -       -       135,617  
                                                                                                                 
Return of Series A preferred shares to treasury     (118 )     -       -       -       -       -       -       -       -       -       -       -       -          
                                                                                                                 
Common stock sold for cash     -       -       -       -       -       -       -       -       1,750,000       175       34,825       -       -       35,000  
                                                                                                                 
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       (733,613 )     (733,613 )
Balance, June 30, 2020     19,668     $ 2       118     $ -       284,000     $ 28       10,277,976     $ 1,026       44,092,354     $ 4,410     $ 25,255,945     $ (4,500 )   $ (34,725,112 )   $ (9,468,201 )
                                                                                                                 
Common stock issuable under debt restructuring agreement     -       -       -       -       -       -       -       -       63,275,243       6,328       5,049,356       -       -       5,055,684  
                                                                                                                 
Common shares issuable for stock issued for cash     -       -       -       -       -       -       -       -       500,000       50       24,950       -       -       25,000  
                                                                                                                 
Common shares issued for services     -       -       -       -       -       -       5,058,333       506       -       -       427,936       -       -       428,442  
                                                                                                                 
Common shares issued towards settlement of lawsuit     -       -       -       -       -       -       750,000       75       -       -       16,550       -       -       16,625  
                                                                                                                 
Common shares issued on conversion of Series C preferred     -       -       -       -       -       -       3,822,958       383       -       -       134,660       -       -       135,043  
                                                                                                                 
Reclassification of common stock previously issuable     -       -       -       -       -       -       1,309,165       132       (1,309,165 )     (132 )     -       -       -       -  
                                                                                                                 
Reclassification of Series A Preferred previously issuable     118       -       (118 )     -       -       -       -       -       -       -       -       -       -       -  
                                                                                                                 
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       (208,558 )     (208,558 )
Balance, September 30, 2020     19,786     $ 2       0     $ -       284,000     $ 28       21,218,432     $ 2,122       106,558,432     $ 10,656     $ 30,909,397     $ (4,500 )   $ (34,933,670 )   $ (4,015,965 )

 

See accompanying notes to consolidated financial statements

F-4

 

FRIENDABLE INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
For the three and nine months ended September 30, 2019
(Unaudited)

 

                                                                      Common              
    Series A Preferred Stock     Series B Preferred     Common Stock     Additional     Stock           Total  
    Shares           Shares           Shares           Shares           Shares           Paid In     Subscription     Accumulated     Shareholders’  
    Issued     Amount     Issuable     Amount     Issuable2     Amount     Issued     Amount     Issuable     Amount     Capital     Receivable     Deficit     Equity Deficit  
Balance, December 31, 2018     21,267     $ 2       -     $ -       21,267     $ 2       314,726     $ 31       -     $ -     $ 12,027,043     $ (4,500 )   $ (22,260,473 )   $ (10,237,897 )
                                                                                                                 
Debt forgiveness - related parties     -       -       -       -       -       -       -       -       -       -       1,000,000       -       -       1,000,000  
                                                                                                                 
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       (380,289 )     (380,289 )
Balance, March 31, 2019     21,267     $ 2       -       -       21,267       2       314,726     $ 31       -     $ 53     $ 13,027,043     $ (4,500 )   $ (22,640,762 )   $ (9,618,186 )
                                                                                                                 
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       (368,709 )     (368,709 )
Balance, June 30, 2019     21,267     $ 2       -     $ -       21,267     $ 2       314,726     $ 31       0     $ 53     $ 13,027,043     $ (4,500 )   $ (23,009,471 )   $ (9,986,895 )
                                                                                                                 
Common stock subscriptions received     -       -       -       -       -       -       -       -       -       -       -       325,368       -       325,368  
                                                                                                                 
Net loss     -       -       -       -       -       -       -       -       -       -       -       -       (1,169,318 )     (1,169,318 )
Balance, September 30, 2019     21,267     $ 2                   21,267       -       314,726     $ 31       0     $ 53     $ 13,027,043     $ 320,868     $ (24,178,789 )   $ (10,830,845 )

 

See accompanying notes to consolidated financial statements

F-5

 

FRIENDABLE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

    For the Nine Months Ended  
    September 30,  
    2020     2019  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net Loss   $ (2,489,787 )   $ (1,918,316 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:                
Common stock issued for services     575,500       -  
Amortization of debt discount     45,095       -  
Loss on settlement of derivative     640,822       -  
Initial derivative expense     419,000       -  
Gain on change in fair value of derivative     (259,000 )     -  
Accrual of dividend on Preferred C Stock     24,666       -  
Premium and penalties on stock settled debt     171,156       -  
Interest on convertible debentures and promissory note     -       453,674  
Provision for settlement of lawsuit     -       780,000  
Change in operating assets and liabilities:                
Accounts receivable     (12 )     -  
Due from related party     30,083       -  
Prepaid expenses     30,000       -  
Accounts payable - related party     141,803       -  
Accounts payable and accrued expenses     409,743       333,707  
NET CASH USED IN OPERATING ACTIVITIES     (260,931 )     (350,935 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from sale of convertible preferred Series C stock     33,000       -  
Refund on canceled common stock subscription     (500 )     -  
Proceeds from issuance of convertible notes     105,000       -  
Proceeds from short-term loans     61,000       -  
Proceeds from sale of common stock     60,000       325,368  
NET CASH PROVIDED BY FINANCING ACTIVITIES     258,500       325,368  
                 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (2,431 )     (25,567 )
                 
CASH AND CASH EQUIVALENTS - beginning of period     11,282       25,646  
                 
CASH AND CASH EQUIVALENTS - end of period   $ 8,851     $ 79  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                
Cash paid during the period for:                
Interest   $ -     $ -  
Income taxes   $ -     $ -  
                 
Non-cash investing and financing activities:                
Conversion of accrued interest to common stock   $ 17,295     $ -  
Conversion of convertible notes to common stock   $ 59,175     $ -  
Premiums on Series C redeemable preferred shares   $ 135,042     $ -  
Series A shares granted for fees and recorded as prepaid asset   $ 135,617     $ -  
Reduction of liability to be settled with common stock   $ 16,625     $ -  
Recording of debt discount from derivatives on convertible debt   $ 105,000     $ -  
Reduction of derivative liability based on reset common shares issuable   $ 13,474,521     $ -  
                 
Cash consists of:                
Cash   $ 8,851     $ 79  

 

See accompanying notes to consolidated financial statements

F-6

 


FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

1. NATURE OF BUSINESS AND GOING CONCERN

 

Nature of Business

 

Friendable, Inc., a Nevada corporation (the “Company”), was incorporated in the State of Nevada.

 

Friendable, Inc. is a mobile-focused technology and marketing company, connecting and engaging users through two distinctly branded applications. The Company initially released its flagship product Friendable, as a social application where users can create one-on-one or group-style meetups. In 2019 the Company moved the Friendable app closer to a traditional dating application with its focus on building revenue, as well as reintroducing the brand as a non-threatening, all-inclusive place where “Everything starts with Friendship”…meet, chat & date.

 

On June 28, 2017, the Company formed a wholly owned Nevada subsidiary called Fan Pass Inc.

 

Fan Pass is the Company’s most recent or second app/brand, released in July, 2020. Fan Pass believes in connecting Fans of their favorite celebrity or artist, to an exclusive VIP or Backstage experience, right from their smartphone or other connected devices. Fan Pass allows an artist’s fanbase to experience something they would otherwise never have the opportunity to afford or geographically attend. The Company aims to establish both Friendable and Fan Pass as premier brands and mobile platforms that are dedicated to connecting and engaging users from anywhere around the World.

 

Presently, until our apps gain greater adoption from paying subscribers through increased awareness, coupled with additional compelling and exclusive digital content to produce higher revenue levels, the Company has largely supported its operations through the sale of its software services, and specifically its app development services, under a contractual relationship since inception with a third party. The Company’s plan, in due course, is to replace revenue from third party app development services with revenue from its own Friendable and Fan Pass apps, which have various revenue streams currently being tested for long term and/or recurring monthly viability.

 

On August 27, 2019, a 1 for 18,000 reverse stock split of our common stock became effective. All share and per share information in the accompanying unaudited consolidated financial statements and footnotes has been retroactively adjusted for the effects of the reverse split for all periods presented.

 

Going Concern

 

The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern, which implies that the Company would continue to realize its assets and discharge its liabilities in the normal course of business. As of September 30, 2020, the Company has a working capital deficiency of $4,015,966, an accumulated deficit of $34,933,670 and has a stockholder’s deficit of $4,015,966 and its operations continue to be funded primarily from sales of its stock, the issuance of convertible debentures and short-term loans. During the nine months ended September 30, 2020 the Company had a net loss and net cash used in operations of $2,489,787 and $260,931. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance of this report. The ability of the Company to continue as a going concern is dependent on the Company’s ability to obtain the necessary financing through the issuance of convertible notes and equity instruments. The unaudited consolidated 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.

 

Management plans to raise financing through the issuance of convertible notes and equity sales. No assurance can be given that any such additional financing will be available, or that it can be obtained on terms acceptable to the Company and its stockholders.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Principles of Consolidation

 

The unaudited consolidated financial statements include all the accounts of the Company and all of its wholly owned subsidiaries as of September 30, 2020 and 2019. All material intercompany accounts and transactions have been eliminated in consolidation. The Company’s fiscal year end is December 31.

 

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”) for interim financial information. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. These unaudited consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to the consolidated financial statements for the year ended December 31, 2019 of the Company which were included in the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission June 29, 2020.

F-7

 

FRIENDABLE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Reclassifications

 

Certain balances in 2019 have been reclassified to conform with the 2020 presentation. Specifically, accrued interest on convertible notes has been reclassified into accounts payable and accrued expenses and accretion and interest expense has been reclassified to other expenses.

 

Use of Estimates

 

The preparation of these statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to valuation of convertible debenture conversion options, derivative instruments, deferred income tax asset valuations, financial instrument valuations, share-based payments, other equity-based payments, and loss contingencies. 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.

 

Revenue Recognition

 

In accordance with ASC 606, revenue is recognized when the following criteria have been met; valid contracts are identified with specific customers, performance obligations have been identified, price is determinable, price is allocated to performance obligations, and the Company has satisfied the performance obligations. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. During the nine months ended September 30, 2020, the Company derived revenues primarily from the development of apps for a third party of $319,331, and such revenues were recognized upon completion of services, and secondarily revenue from the Friendable and Fan Pass apps totaling $3,340.

 

Sales and Marketing Costs

 

The Company’s policy regarding sales and marketing costs is to expense such costs when incurred. During the nine months ended September 30, 2020, the Company incurred $82,335 (September 30, 2019: $52,924) in sales and marketing costs.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

 

Impairment of Long-Lived Assets

 

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

 

If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

 

Derivative liabilities

 

The Company has a financial instrument associated with a debt restructuring agreement and conversion options embedded in convertible debt. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 – Derivative and Hedging – Contract in Entity’s Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.

F-8

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The guidance was adopted as of January 1, 2019 and the adoption did not have any impact on its consolidated financial statement and there was no cumulative effect adjustment.

 

Stock-based Compensation

 

During 2018 the Company recorded stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options. In 2019 the Company adopted ASU 2018-07 which expands the measurement requirements to non-employees.

 

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include but are not limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

 

All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company monitors its outstanding receivables for timely payments and potential collection issues. At September 30, 2020 and December 31, 2019, the Company did not have any allowance for doubtful accounts.

 

Financial Instruments

 

Financial assets and financial liabilities are recognized in the balance sheet when the Company has become party to the contractual provisions of the instruments.

 

The Company’s financial instruments consist of accounts receivable, accounts payable, convertible debentures, stock settled debt, derivatives, mandatorily redeemable Series C Preferred stock and promissory notes. The fair values of these financial instruments approximate their carrying value, due to their short-term nature, and current market rates for similar financial instruments. Fair value of a financial instrument is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company’s financial instruments recorded at fair value in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

 

Concentrations

 

We have substantial client concentration, with one client accounting for a substantial portion of our revenues.

 

In the nine months ended September 30, 2020 and 2019 we derived 99% of our revenue from one client. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of clients. It is not possible for us to predict the future level of demand for our services that will be generated by this client or the future demand for the products and services of other similar clients. A loss of this client or the failure to retain similar clients could negatively affect our revenues and results of operations and/or trading price of our common stock.

 

Basic and Diluted 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 statement of operations. Basic EPS is computed by dividing net income (loss) available to common stockholders (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.

F-9

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

As of September 30, 2020, there were approximately 1,180,528,592 potentially dilutive shares outstanding, as follows.

 

Potential dilutive shares

 

  60,908     Warrants outstanding
  14,313,505     Common shares issuable upon conversion of convertible debt
  1,149,991,726     Total shares issuable upon conversion of Preferred Series A shares
  1,136,000     Total shares issuable upon conversion of Preferred Series B shares
  15,026,403     Total shares issuable upon conversion of Preferred Series C shares
  1,180,528,592      

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC Topic 842) (“ASU 2016-02”), which requires lessees to recognize at the commencement date for all leases, with the exception of short-term leases, (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The ASU requires adoption using a modified retrospective transition approach with either (a) periods prior to the adoption date being recast or (b) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. As of September 30, 2020 the Company has no lease obligations.

 

3. RELATED PARTY TRANSACTIONS AND BALANCES

 

During the nine months ended September 30, 2020, the Company incurred $369,558 (2019: $344.434) in salaries and payroll taxes to officers, directors, and other related employees with such costs being recorded as general and administrative expenses.

 

During the nine months ended September 30, 2020, the Company incurred $33,000, $332,834, and $45,000 (2019: $18,068, $156,088, and $43,883) in app hosting, app development and rent to a company with two officers and directors in common with such costs being recorded as app hosting, product development and general and administrative expenses.

 

As of September 30, 2020, the Company had a stock subscription receivable totaling $4,500 (December 31, 2019: $4,500) from an officer and director and from a company with an officer and director in common.

 

As of September 30, 2020, accounts payable, related party includes $141,803 (December 31, 2019: due from related party of $30,083) due to a company with two officers and directors in common, and $1,081,749 (December 31, 2019: $783,416) payable in salaries to directors and officers of the Company, which is included in accounts payable and accrued expenses. The amounts are unsecured, non-interest bearing and are due on demand.

 

4. CONVERTIBLE DEBENTURES

 

On March 26, 2019 the Company entered into a Debt Restructuring Agreement (the “Agreement”) with Robert A. Rositano Jr. (“Robert Rositano”), Dean Rositano (“Dean Rositano”), Frank Garcia (“Garcia”), Checkmate Mobile, Inc. (“Checkmate”), Alpha Capital Anstalt (“Alpha”), Coventry Enterprises, LLC (“Coventry”), Palladium Capital Advisors, LLC (“Palladium”), EMA Financial, LLC (“EMA”), Michael Finkelstein (“Finkelstein”), and Barbara R. Mittman (“Mittman”), each being a debt holder of the Company at that date. Subsequent to March 26, 2019 Alpha sold all of its convertible debenture to Ellis International LP (“Ellis”).

F-10

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

4. CONVERTIBLE DEBENTURES (CONTINUED)

 

The debt holders agreed to convert their debt of approximately $6.3 million and accrued interest of approximately $1.8 million into an initial 5,902,589 shares of common stock as set forth in the Agreement upon the Company meeting certain milestones including but not limited to: the Company effecting a reverse stock split and maintaining a stock price of $1.00 per share; being current with its periodic report filings pursuant to the Securities Exchange Act; certain vendors and Company employees forgiving an aggregate of $1,000,000 in amounts owed to them; the Company raising not less than $400,000 in common stock at a post-split price of not less than $.20 per share; and certain other things as further set forth in the Agreement. The debt holders will be subject to certain lock up and leak out provisions as contained in the Agreement. As part of the Agreement the parties signed a Rights to Shares Agreement. Whereas the Agreement called for all the shares to be delivered at closing, the holders are generally restricted to beneficial ownership of up to 4.99% of the company’s common shares outstanding. The Rights to Shares Agreement allows for the Company to issue shares to each holder up the 4.99% limitation while preserving the holders’ rights to the total shares in schedule A of the Agreement. Accordingly, the 5,902,589 common shares due were recorded as issuable in equity.

 

On December 26, 2019, all parties signed an amendment to the Agreement which set forth, among other things, the following:

 

Company Principals have given Holders notice that it has satisfied all conditions of closing.

 

The Agreement is considered Closed as of November 5, 2019 (“Settlement Date”) and any conditions of closing not satisfied are waived.

 

Reset Dates. The “Reset Dates” as set forth in Section 1(h) of the Agreement shall be as follows: March 4, 2020 and July 2, 2020. As of the reset dates the holders can convert all or part of the settled note amounts at the lower of (i) 75% of the closing bid price for the Common Stock on such respective Reset Date, or (ii) the VWAP for the Company’s Common Stock for the 7 trading days immediately preceding and including such respective Reset Dates. This reset provision provides for the issuance of additional shares above the initial 5,902,589 shares for no additional consideration as measured at each of the two reset dates.

 

On March 4, 2020 the Company became obligated issue an additional 36,193,098 shares of common stock and on July 2, 2020 it became obligated to issue an additional 63,275,243 shares for a total amount of shares due of 105,370,930.

 

The Company determined that the reset provision represented a standalone derivative liability. Accordingly, this debt restructure transaction was accounted for in 2019 as an extinguishment of debt for consideration equal to the $2,384,646 fair value of the 5,902,589 common shares issuable, based on the $0.404 quoted trading price of the Company’s common stock price on the settlement date, and the initial fair value of the derivative liability of $12,653,000 resulting in a loss on debt extinguishment of $6,954,920.

 

The Company adjusted this derivative liability to fair value at each reporting and settlement date, with changes in fair value reported in the statement of operations. The Company estimated the fair value of the obligations to issue common stock pursuant to the Debt Restructuring Agreement, as amended, using Monte Carlo simulations and the following assumptions:

 

    November 5,     December     June  
    2019     31, 2019     30, 2020  
Volatility     617 %     738.1 %     293.6 %
Risk Free Rate     1.59 %     1.6 %     .13 %
Expected Term     0.66       0.5       0.01  

 

Because the second (and final) reset date of July 2, 2020 determined that the total common shares issuable to fully settle this debt amounted to 105,370,930 a derivative liability no longer exists and the Company recognized a final gain on settlement on July 2, 2020 of $257,316.

 

On September 21, 2020, Ellis International LP (as successor to Alpha Capital Anstalt) submitted a request to drawdown and, on September 29, 2020, was issued 687,355 common shares against its entitlement above and reclassified from issuable shares in the accompanying balance sheet and statement of changes in stockholder equity.

 

Subsequent to September 30, 2020, on November 9, 2020, Coventry Enterprises requested and was issued 915,000 common shares and on November 23, 2020 Barbara Mittman requested and was issued 1,262,783 against their respective entitlement under the debt settlement agreement, which was reclassified from issuable shares.

F-11

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

4. CONVERTIBLE DEBENTURES (CONTINUED)

 

Derivative Liabilities

 

The Company accounts for its obligation to issue common stock (“Reset Provision”) as derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” which are reflected as liabilities at fair value on the consolidated balance sheet, with changes in fair value reported in the consolidated statement of operations. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. The number of shares of common stock the Company could be obligated to issue, is based on future trading prices of the Company’s common stock. To reflect this uncertainty in estimating the fair value of the potential obligation to issue common stock, the Company uses a Monte Carlo model that considers the reporting date trading price, historical volatility of the Company’s common stock, and risk free rate in estimating the fair value of the potential obligation to issue common stock. The results of the Monte Carlo simulation model are most sensitive to inputs for expected volatility. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The estimated fair values may not represent future fair values and may not be realizable. We categorize our fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above.

 

The following is a summary of activity related to the reset provision derivative liability for the nine months ended September 30, 2020:

 

Balance, Derivative Liability at December 31, 2019   $ 12,778,000  
Record obligation to issue additional shares     (13,474,821 )
Loss on settlement of derivative     640,821  
Loss on change in fair value of derivative     56,000  
Balance, Reset provision derivative liability at September 30, 2020   $ -  

 

5. CONVERTIBLE PROMISSORY NOTES

 

The following is a summary of Convertible Promissory Notes at September 30, 2020:

 

    Issuance:   Principal     Accrued     Principal and  
    Date   Outstanding     Interest     Accrued Interest  
J.P. Carey Inc.   March 30, 2017     -     $ 48,228     $ 48,228  
J.P. Carey Inc   May 20, 2020   $ 60,000       4,892       64,892  
J.P. Carey Inc   June 11, 2020     10,000       -       10,000  
Green Coast Capital International   April 6, 2020     10,755       631       11,386  
Green Coast Capital International   April 8, 2020     35,000       2,853       37,853  
Total       $ 115,755     $ 56,604     $ 172,359  
Less: Discount         (59,905 )                
Net carrying value September 30, 2020       $ 55,850                  

 

The derivative fair value of the above at September 30, 2020 is $209,000.

 

Further information concerning the above Notes is as follows:

 

JP Carey Convertible Note dated March 30, 2017 and assignments

 

On April 7, 2017, the Company entered into a Settlement Agreement with Joseph Canouse (the “Agreement”). The Company and Mr. Canouse had been in a dispute regarding what amount, if any, was owed pursuant to a consulting agreement between the parties signed in April 2014. In December 2016, Mr. Canouse obtained a judgment in state court in Georgia and the right to garnish the Company’s bank accounts. Pursuant to the Settlement Agreement, the Company agreed to issue an 8% Convertible Note in the principal amount of $82,931 (the “Note”). The Note was issued to J.P. Carey LLC an entity controlled by Mr. Canouse. Although the Note is dated March 30, 2017, it was issued on April 7, 2017. The note maturity date was September 30, 2017. In return for the issuance of the Note, Mr. Canouse filed a Consent Motion to Withdraw Judgment, dismiss all garnishments, and cease all collection activities.

F-12

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

5. PROMISSORY NOTE AND CONVERTIBLE PROMISSORY NOTE (CONTINUED)

 

The Note is convertible into common stock, subject to Rule 144, at any time after the issue date at the lower of (i) the closing sale price of the common stock on the trading day immediately preceding the closing date, which was $20.00 per share, and (ii) 50% of the lowest sale price for the common stock during the twenty-five (25) consecutive trading days immediately preceding the conversion date or the closing bid price, whichever is lower. Mr. Canouse does not have the right to convert the Note, to the extent that he would beneficially own in excess of 4.99% of our outstanding common stock. The note defines several events that constitute default including failure to pay principal and interest by the maturity date of September 30, 2017 and failure to comply with the exchange act. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the Note becomes immediately due and payable. The Company defaulted by not paying the principal and interest on September 30, 2017 and has been recording interest at the 24% default rate. The Company also defaulted by being late with filing the Form 10-K on May 29, 2020.

 

During the year ended December 31, 2019, J.P. Carey converted $1,002 of principal into 120,000 shares of the Company’s common stock at a price of $0.0084 and J.P. Carey assigned $10,000 of the note to World Market Ventures, LLC and assigned $6,000 of the note to Anvil Financial Management Ltd LLC. The assignments carry the same conversion rights as the original note. World Market Ventures converted $6,000 of principal into 120,000 shares of the Company’s common stock at a price of $0.05. Anvil converted $6,000 of principal into 120,000 shares of the Company’s common stock at a price of $0.05.

 

At December 31, 2019, the J.P. Carey note balance including accrued interest of $51,980 was $121,910, including the portion assigned to World Market Ventures of $4,000.

 

During the nine months ended September 30, 2020:

 

J.P. Carey converted $30,929 of principal and $18,021 of interest into 1,642,162 shares of the Company’s common stock at a price of $0.029.

 

World Market Ventures converted the remaining balance of $4,000 of principal into 72,595 shares of the Company’s common stock at a price of $0.0551.

 

On April 6, 2020 JP Carey assigned $35,000 of the note to Green Coast Capital International. The assignment carries the same conversion rights as the original note. During the nine months ended September 30, 2020 Green Coast converted $24,245 of principal into 859,283 shares of common stock of the Company at an average price of $0.029 and the Company incurred $414 of interest on the assigned note. As of September 30, 2020 the assigned note had a principal balance of $10,755 and an interest balance of $631.

 

At September 30, 2020, the J.P. Carey note principal balance was $0 and accrued interest was $48,228.

 

The accrued interest has been accounted for as a derivative liability due to the variable conversion price.

 

Green Coast Capital International Securities Purchase Agreement and Convertible Note dated April 8, 2020

 

On April 8, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) whereby the Company agreed to sell to the holder convertible notes in amounts up to $150,000. The note holder shall be entitled to a pro rata share of 20% of the net revenues (excluding Brightcove) derived from subscriptions and other sales of Fan Pass, Inc., a wholly owned subsidiary of the Company. The 20% pays out two times the initial investment and continues at 5% for a period of five years.

 

On April 8, 2020 the Company issued a 0% note to Green Coast under this SPA with a maturity date of October 8, 2020 and received $35,000 in cash. The Note is convertible into common stock, subject to Rule 144, at any time after the issue date at $0.02 per share. The holder does not have the right to convert the note, to the extent that the holder would beneficially own in excess of 4.9% of our outstanding common stock. The note defines several events that constitute default including failure to pay principal and interest by the maturity date and failure to comply with the exchange act. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the note becomes immediately due and payable. Under certain default events the Company may incur a penalty of 20% to 50% of the note principal. Further, if the Company fails to comply with the exchange act the conversion price is the lowest price quoted on the trade exchange during the delinquency period.

F-13

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

5. PROMISSORY NOTE AND CONVERTIBLE PROMISSORY NOTE (CONTINUED)

 

Upon certain default events the conversion price may change. Therefore, the embedded conversion option is bifurcated and treated as a derivative liability. On the date of issuance, the Company recorded a derivative liability of $228,000, resulting in derivative expense of $193,000 and a discount against the note of $35,000 to be amortized into interest expense through the maturity date of October 8, 2020.

 

The Company defaulted by being late with filing the Form 10-K on May 29, 2020. The Company accrued interest at the default rate of 24% for the period from May 29, 2020 to September 30, 2020. At September 30, 2020, the Green Coast note principal balance was $35,000 and accrued interest was $2,853.

 

JP Carey Securities Purchase Agreement and Convertible Note dated May 20, 2020

 

On May 20, 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) whereby the Company agreed to sell to the holder convertible notes in amounts up to $60,000. The note holder shall be entitled to a pro rata share of 20% of the net revenues (excluding Brightcove) derived from subscriptions and other sales of Fan Pass, Inc., a wholly owned subsidiary of the Company. The 20% pays out two times the initial investment and continues at 5% for a period of five years. At September 30, 2020 no accrual for the net revenue share was material.

 

On May 20, 2020 the Company issued a 0% interest rate note to JP Carey under this SPA with a maturity date of January 1, 2021 and received $60,000 in cash in three closings; $30,000 on April 9, 2020, $15,000 on May 13, 2020, and $15,000 on May 20, 2020. The Note is convertible into common stock, subject to Rule 144, at any time after the issue date at $0.02 per share. The holder does not have the right to convert the note, to the extent that the holder would beneficially own in excess of 4.9% of our outstanding common stock. The note defines several events that constitute default including failure to pay principal and interest by the maturity date and failure to comply with the exchange act. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the note becomes immediately due and payable. Under certain default events the Company may incur a penalty of 20% to 50% of the note principal. Further, if the Company fails to comply with the exchange act the conversion price is the lowest price quoted on the trade exchange during the delinquency period.

 

Upon certain default events the conversion price may change. Therefore, the embedded conversion option is bifurcated and treated as a derivative liability. On the date of issuance, the Company recorded a derivative liability of $233,000, resulting in derivative expense of $173,000 and a discount against the note of $60,000 to be amortized into interest expense through the maturity date.

 

The Company defaulted by being late with filing the Form 10-K on May 29, 2020. The Company accrued $4,892 of interest at the default rate of 24% for the period from May 29, 2020 to September 30, 2020.

 

JP Carey Convertible Note dated June 11, 2020

 

On June 11, 2020, the issued a 0% note to JP Carey with a maturity date of January 15, 2021 and received $10,000 in cash. The Note is convertible into common stock, subject to Rule 144, at any time after the issue date at $0.01 per share. The holder does not have the right to convert the note, to the extent that the holder would beneficially own in excess of 9.9% of our outstanding common stock. The note defines several events that constitute default including failure to pay principal and interest by the maturity date and failure to comply with the exchange act. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the note becomes immediately due and payable. Under certain default events the Company may incur a penalty of 20% to 50% of the note principal. Further, if the Company fails to comply with the exchange act the conversion price is the lowest price quoted on the trade exchange during the delinquency period.

 

Upon certain default events the conversion price may change. Therefore, the embedded conversion option is bifurcated and treated as a derivative liability. On the date of issuance, the Company recorded a derivative liability of $63,000, resulting in derivative expense of $53,000 and a discount against the note of $10,000 to be amortized into interest expense through the maturity date.

 

At September 30, 2020, the JP Carey note principal balance was $10,000 and accrued interest was $0.

 

As discussed above, the Company determined that the conversion options embedded in certain convertible debt meet the definition of a derivative liability. The Company estimated the fair value of the conversion options at the date of issuance, and at September 30, 2020, using Monte Carlo simulations and the following range of assumptions:

 

Volatility   246.09% – 259.77%
Risk Free Rate   0.10%
Expected Term   0.25 – 0.31

F-14

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

5. PROMISSORY NOTE AND CONVERTIBLE PROMISSORY NOTE (CONTINUED)

 

The following is a summary of activity related to the embedded conversion options derivative liabilities for the nine months ended September 30, 2020.

 

Balance, December 31, 2019   $ -  
Initial derivative liabilities charged to operations     419,000  
Initial derivative liabilities recorded as debt discount     105,000  
Change in fair value loss (gain)     (315,000 )
Balance, September 30, 2020   $ 209,000  

 

6. SHORT TERM LOANS

 

During the 3 months ended September 30, 2020 the Company received short term, interest free, loans of $10,000, $16,000, $15,000 and $20,000 (total $61,000) on July 9, 2020, August 13, 2020, September 2, 2020 and September 28, 2020 respectively, from Joseph Canouse, the provider of the J.P. Carey Inc. convertible promissory notes.

 

7. COMMITMENTS AND CONTINGENCIES

 

The following table summarizes the Company’s significant contractual obligations as of September 30, 2020:

 

Employment Agreements (1)   $ 300,000  
Lawsuit Contingency (2)   $ 988,375  

 

(i) Employment agreements with related parties.

 

On April 3, 2019, the Company entered into employment agreements with three officers. Pursuant to the agreements, the Company shall pay officers an aggregate annual salary amount of $400,000. Upon a successful launch of the Company’s Fan Pass mobile app or website, and the Company achieving various levels of subscribers, the officers are eligible to receive additional bonuses and salary increases. With mutual agreement with the Company, effective August 31, 2020 one of the officers chose early termination of his employment, which reduced the annual commitment for the remaining officers to $300,000.

 

(ii) Lawsuit Contingency.

 

Integrity Media, Inc. (“Integrity”) had previously filed a lawsuit against the Company and the CEO of the Company for $500,000 alleging breach of contract alleging the Company failed to deliver marketable securities in exchange for services. The Company answered the allegations in court and Integrity filed a motion attacking the Company’s answers. While the court did not strike those responses, the clerk of the court entered a default judgment against the Company in the amount of $1,192,875 plus 10% interest. On May 8, 2019, the Company received a tentative ruling on the Company’s motion to vacate the default judgement whereby the previously entered default judgement was voided and a trial date of August 26, 2019 was set.

 

On September 19, 2019, the Company entered into a Settlement Agreement, as Amended, with Integrity Media settling the civil action known as Integrity Media, Inc. vs. Friendable, Inc. et al., Orange County Case No. 30-2016-00867956-CU-CO-CJC. Pursuant to the Settlement Agreement, the Company agreed to issue to Integrity 750,000 shares of its common stock to be issued in tranches every 30 days or according to the instructions of Integrity, in exchange for 275 of the Company’s preferred shares held by Integrity and the cash payment of $30,000 for costs. Robert Rositano, the Company’s CEO, has also personally guaranteed the Company’s compliance with the terms of the Settlement Agreement. The cash payment is to be made within 6 months of the date of the Settlement Agreement. As of the date of filing of this report the cash amount has not been paid and the preferred shares have not been returned. Additionally, Integrity will be entitled to additional shares if (i) the price of the Company’s common stock is below $1.34 at either the 120 day or 240 day reset dates set forth in the Company’s Debt Restructure Agreement as amended entered into with various debt holders on March 26, 2019 effective November 5, 2019. The Company determined that a total of 4,275,000 additional shares would be issuable on the first “reset” date of March 4, 2020 based on a share price of $0.20 on that date and a total of 7,537,500 additional shares would be issuable on the second “reset” date of July 2, 2020 based on a share price of $0.08 on that date, for a total of 12,562,500 shares. Integrity will also be entitled to a “true-up” by the issuance of additional common shares on the issuance date should the share price of the Company’s common stock on the issuance date be below $1.00. It was determined by the Company that its liability was $1,005,000 ($750,000 plus a premium of $255,000), in accordance with ASC 480.

F-15

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

7. COMMITMENTS AND CONTINGENCIES (CONTINUED)

 

On August 28, 2020 Integrity requested and was issued 750,000 common shares, which Integrity advised the Company realized $16,625 when sold. Accordingly, at September 30, 2020 the Company reduced its liability payable in common stock from $1,005,000 to $988,375 and retained $30,000 as an accrued liability for costs.

 

On October 14, 2020 the Company filed a “Declaration” with the Santa Clara County Courts challenging Integrity’s future ability to convert additional shares based on “Stock Market Manipulation” designed to harm the Company’s share price, valuation and number of shares issuable to Integrity following its sales. Additionally, the Company contended that Integrity disregarded the volume limitation set forth in its settlement for the Company’s thinly traded securities and caused a potential third party capital investment of $150,000 to be rescinded. The court agreed with the Company’s declaration that Integrity should have filed a motion so the Company would have the opportunity to present all arguments and evidence in opposition to deny Integrity’s application to enter judgment.

 

COVID-19 Disclosure

 

The coronavirus pandemic has at times adversely affected the Company’s business and is expected to continue to adversely affect certain aspects of our merchandise offerings and custom artist collections of merchandise specifically. This impact on our operations, supply chains and distribution systems may also impair our ability to raise capital. There is uncertainty around the duration and breadth of the COVID-19 pandemic and, as a result, uncertainty on the ultimate impact on our business. Such impact on the Company’s financial condition and operating results cannot be reasonably estimated at this time, since the extent of such impact is dependent on future developments, which are highly uncertain and cannot be predicted.

 

8. COMMON AND PREFERRED STOCK

 

Common Stock:

 

During the year ended December 31, 2019, the Company:

 

Issued 393,418 shares of common stock to two convertible note holders for partial conversion of an aggregate of $21,356 of the notes at the contractual conversion rates. 120,000 of the shares remained issuable as of December 31, 2019.

 

Issued 534,000 shares of common stock to various subscribers of common stock under security purchase agreements at $0.25 per share for a total of $133,500. Certain of these agreements contained a provision whereby the founders of the Company were to issue to the subscribers (a) an aggregate of 47,000 shares of common stock from their personal holdings and (b) another amount of common shares (43,811) by converting their held Series A preferred shares as measured on the date one year from the closing of the offering. There is no accounting effect for these transfers. In addition, other agreements contained a provision whereby the Company would set aside 10% of future net revenue from a specific product and share ratably with the investors. The Company has reviewed ASC 470-10-25, “Sales of Future Revenues or Various other Measures of Income.” and determined that no debt provision is needed. The investors who received this benefit did not pay additional consideration compared to those who did not receive it. Therefore, the additional feature is a detachable unit with $0 value. 477,000 shares remained issuable as of December 31, 2019. In March 2020, the Founder converted 3 Series A Preferred Shares to meet their personal commitment to transfer their common shares to the investors.

 

Issued 600,000 shares of common stock to a consultant in exchange for future services valued at $90,000 of which $30,000 remained in prepaid expense at December 31, 2019.

 

Issued 2,150,000 shares of common stock to settle a promissory note and accrued interest of $102,500 and recognized a loss on debt extinguishment of $435,000 based on the $537,500 value based on recent sales.

 

Issued 1,002,970 and had 2,018,746 issuable shares of common stock to related parties on conversion of 1,478 shares of Series A preferred stock.

 

Agreed to issue 5,902,589 shares as a preliminary settlement of approximately $6.3 million of convertible debt (See note 4).

 

During the six months ended June 30, 2020, the Company:

 

Issued 2,574,040 shares of common stock to two convertible note holders for partial conversion of an aggregate of $76,470 of the notes and accrued interest at an average price of $0.03.

 

Cancelled 2,000 shares of common stock valued at $500 previously issued to an investor under a securities purchase agreement and returned the $500 to the investor.

F-16

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)

 

8. COMMON AND PREFERRED STOCK (CONTINUED)

 

Granted 884,667 shares of common stock to consultants in exchange for services valued at $117,608 based on the quoted trading price of the Company’s common stock on the grant dates.

 

Recorded the obligation to issue 36,193,098 additional shares of common stock based on the first reset date of March 4, 2020 in accordance with the debt restructuring agreement (See note 4).

 

The two directors converted 3 shares of Series A Preferred Stock into 54,076 shares of common stock to transfer 43,811 of these shares to investors who were owed shares of common stock under a “founders match” provision in security purchase agreements (See above).

 

Sold 1,750,000 shares of common stock in exchange for $35,000.

 

During the three months ended September 30, 2020, the Company:

 

Recorded the obligation to issue 63,275,243 additional shares of common stock based on the second reset date of July 2, 2020 in accordance with the debt restructuring agreement (See note 4).

 

Recorded the obligation to issue 500,000 common shares under a third party SPA at the sale price of $0.05 per share in exchange for cash of $25,000.

 

Issued a total of 4,983,333 common shares for services from music artists and mangers at a value of $425,058 at date of agreements, based on the quoted trading prices on those dates, to secure live performances for the July 24, 2020 Fan Pass app launch.

 

Issued 750,000 common shares to Integrity Media pursuant to the Company’s settlement agreement, which Integrity Media advised had a realized value of $16,625.

 

Granted a total of 75,000 common shares for services valued at $3,384 at date of the agreement.

 

Issued a total of 3,822,958 common shares on conversion of 62,500 Preferred Series C shares having a redemption value of $96,750 including accrued dividend, plus a premium of $38,293.

 

Issued a total of 1,309,165 common shares against commitments for previously issuable common shares.

 

Preferred Stock:

 

Series A:

 

The Series A Preferred Stock was authorized in 2014 and is convertible into nine (9) times the number of common stock outstanding at time of conversion until the closing of a Qualified Financing (i.e. the sale and issuance of the Company’s equity securities that results in gross proceeds in excess of $2,500,000). The number of shares of common stock issued on conversion of Series A preferred stock is based on the ratio of the number of shares of Series A preferred stock converted to the total number of shares of preferred stock outstanding at the date of conversion multiplied by nine (9) times the number of common stock outstanding at the date of conversion. After the qualified financing the conversion shares issuable shall be the original issue price of the Series A preferred stock divided by $0.002. The holders of Series A Preferred stock are entitled to receive non-cumulative dividends when and if declared at a rate of 6% per year. On all matters presented to the stockholders for action the holders of Series A Preferred stock shall be entitled to cast votes equal to the number of shares the holder would be entitled to if the Series A Preferred stock were converted at the date of record.

 

During the year ended December 31, 2019, 588 shares of Series A preferred stock were converted to common stock by two related parties who donated them to the Diocese of Monterey. In addition, 890 Series A shares were converted into 2,018,746 common shares by parties related to the two directors. The 2,018,746 common shares were issuable as of December 31, 2019 and were subsequently issued during the six months ended June 30, 2020.

 

During the six months ended June 30, 2020 two directors converted 3 shares of Series A Preferred Stock into 54,076 shares of common stock.

F-17

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2020 and 2019
(Unaudited)
 

8. COMMON AND PREFERRED STOCK (CONTINUED)

 

On June 3, 2020 the Company and Eclectic Artists LLC (“E Artists”) entered into a Partner Agreement and Stock Subscription Agreement, pursuant to which E Artists will engage musical artists and other talent to engage on the Company’s FanPass platform, providing live streaming events available through the FanPass mobile application for a term of 18 months. As compensation for bringing the artists to the FanPass platform, E Artists will receive 5% of net revenue attributable to the Fan Pass platform, initially for a period of 18 months. In addition, E Artists will receive Series A preferred stock such that when converted would be equal to 5% of the outstanding common stock. The number of Series A preferred shares was calculated at 118 shares valued at $135,617 based on the quoted trading price of the Company’s common stock of $0.0605 on the agreement date and 2,241,596 equivalent common shares. The Company recorded a prepaid expense of $135,617 and amortized $29,450 as sales and marketing expense as of September 30, 2020. Concurrent with the issuance of the Series A Shares to E Artists, Robert Rositano, Jr., the Company’s CEO and Dean Rositano, the Company’s president, will return an aggregate of 118 Series A Preferred shares to the Company’s treasury.

 

Series B:

 

On August 8, 2019 the Company filed a Designation of Series B convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series B Preferred Stock with a stated value of $1.00 per share. A holder of Series B Preferred Stock has the right to convert their Series B Preferred Stock into fully paid and non-assessable shares of Common Stock. Initially, the conversion price for the Series B Preferred Stock is $.25 per share, subject to standard anti-dilution adjustments. Additionally, each share of Series B Preferred Stock shall be entitled to, as a dividend, a pro rata portion of an amount equal to 10% (Ten Percent) of the Net Revenues (“Net Revenues” being Gross Sales minus Cost of Goods Sold) derived from the subscriptions and other sales, but excluding and net of Vimeo fees, processing fees and up sells, generated by Fan Pass Inc., the wholly-owned subsidiary of the Corporation. The Series B Dividend shall be calculated and paid on a monthly basis in arrears starting on the day 30 days following the first day of the month following the initial issuance of the Series B Preferred and continuing for a period of 60 (Sixty) months. The holders of Series B Preferred stock shall have no voting rights. The holders of Series B Preferred stock shall not be entitled to receive any dividends other than noted above. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or deemed liquidation event, the holders of shares of Series B Preferred Stock shall be entitled to be paid the liquidation amount, as defined out of the assets of the Company available for distribution to its shareholders, after distributions to holders of the Series A Preferred Stock and before distributions to holders of Common Stock.

 

During the year ended December 31, 2019, the Company entered into Security Purchase Agreements with various investors for the purchase of 205,000 shares Series B convertible Preferred stock and received $205,000 in cash. Each Series B Preferred share is convertible into 4 shares of common stock valued at $0.25.

 

During the year ended December 31, 2019, The Company entered into a Security Purchase Agreements with a related party for the purchase of 79,000 shares Series B Preferred stock. The $79,000 was settled against accounts payable owed to the related party. Each Series B Preferred share is convertible into 4 shares of common stock valued at $0.25.

 

Series C:

 

On November 25, 2019 the Company filed a Designation of Series C convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series C Preferred Stock with a stated value of $1.00 per share. The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends with the Company’s common stock, par value 0.0001 per share (“Common Stock”) (the Series C Preferred Stock will convert into common stock immediately upon liquidation and be pari passu with the common stock in the event of litigation), and (b) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company. The Series C Preferred Stock does not have any voting rights. Each share of Series C Preferred Stock will carry an annual dividend in the amount of eight percent (8%) of the Stated Value of $1.00 (the “Divided Rate”), which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion and increase to 22% upon an event of default as defined. In the event of any default other than the Company’s failure to issue shares upon conversion, the stated price will be $1.50. In a default event where the Company fails to issue shares upon conversion, the stated price will $2.00. The holder shall have the right six months following the issuance date, to convert all or any part of the outstanding Series C Preferred Stock into shares of common stock of the Company. The conversion price shall equal the Variable Conversion Price. The “Variable Conversion Price” shall mean 71% multiplied by the market price, representing a discount rate of 29%. Market price means the average of the two lowest trading prices for the Company’s common stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or upon any deemed liquidation event, after payment or provision for payment of debts and other liabilities of the Company, and after payment or provision for any liquidation preference payable to the holders of any Preferred Stock ranking senior upon liquidation to the Series C Preferred Stock, if any, but prior to any distribution or payment made to the holders of Common Stock or the holders of any Preferred Stock ranking junior upon liquidation to the Series C Preferred Stock by reason of their ownership thereof, the Holders will be entitled to be paid out of the assets of the Company available for distribution to its stockholders. The Company will have the right, at the Company’s option, to redeem all or any portion of the shares of Series C Preferred Stock, exercisable on not more than three trading days prior written notice to the Holders, in full, in accordance with Section 6 of the designations at a premium of up to 35% for up to six months. Company’s mandatory redemption: On the earlier to occur of (i) the date which is twenty-four (24) months following the Issuance Date and (ii) the occurrence of an Event of Default (the “Mandatory Redemption Date”), the Company shall redeem all of the shares of Series C Preferred Stock of the Holders (which have not been previously redeemed or converted).

F-18

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2020 and 2019
(Unaudited)
 

8. COMMON AND PREFERRED STOCK (CONTINUED)

 

During the year ended December 31, 2019, 149,300 shares of Series C convertible preferred stock were issued to an investor under preferred stock purchase agreements at a price of approximately $0.91 per share for a total of $136,000. Due to the mandatory redemption feature, these shares are reflected as a current liability at December 31, 2019. Furthermore, because these shares are convertible at 71% of the common shares market price around the time of the conversion date, they are treated as a stock settled debt under ASC 480 with a premium of $55,549 recorded and charged to interest expense. The total amount is reflected at $191,549 at December 31, 2019.

 

As of June 30, 2020, the Company has revalued the shares and premiums at the stated value of $1.50 per share in accordance with the events discussed below. On May 29, 2020 the Company defaulted on the shares by being late with the filing of the Form 10-K, thereby increasing the dividend rate to 22% and the stated value to $1.50 per share. During the three months ended March 31, 2020, 38,000 shares of Series C convertible preferred stock were issued to an investor under preferred stock purchase agreements at a price of approximately $0.87 per share for a total of $33,000. Due to the mandatory redemption feature, these shares were reflected as a current liability at June 30, 2020 and September 30, 2020.

 

Because Series C preferred shares are convertible at 71% of the common shares market price around the time of the conversion date, they are treated as a stock settled debt under ASC 480 with a total premium of $114,755 recorded as of June 30, 2020. In addition, the Company recorded a cumulative dividend payable of $11,885 as of June 30, 2020 to the mandatorily redeemable Series C convertible preferred stock liability with this amount being recorded as interest expense since the Series C liability must be reflected at redemption value. Together with the 2019 issuances and adjustments, the total amount was reflected at $407,590 at June 30, 2020.

 

During the three months ended September 30, 2020 the holder of the Series C converted 62,500 Series C shares to 3,822,958 common shares for a redemption value of $96,750 including accrued dividends plus premium of $38,292, which totaled $135,042 recorded into equity. At September 30, 2020 the remaining liability totals $285,329, represented by a remaining balance of $187,200 in redeemable Series C stock, together with the related premium of $76,463 and accrued dividends of $21,667.

 

9. SHARE PURCHASE WARRANTS

 

Activity in 2020 and 2019 is as follows:

 

    Number of
Warrants
    Weighted Average
Exercise Price $
    Weighted Average
Remaining Life (Years)
 
Balance, December 31, 2018     60,908       72.00          
Balance, December 31, 2019     60,908       72.00          
Balance, September 30, 2020     60,908       72.00       1.0  

 

10. STOCK-BASED COMPENSATION

 

On November 22, 2011, the Board of Directors of the Company approved a stock option plan (“2011 Stock Option Plan”), the purpose of which is to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees, consultants and its affiliates and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership. Under the 2011 Stock Option Plan, officers, directors, employees and consultants who provide services to the Company may be granted options to acquire common shares of the Company. The aggregate number of options authorized by the plan shall not exceed 4,974 shares of common stock of the Company.

 

The Board of Directors and the stockholders holding a majority of the voting power approved a 2014 Equity Incentive Plan (the “2014 Plan”) on February 28, 2014, with a to be determined effective date. The date never became effective. The purpose of the 2014 Plan is to assist the Company and its affiliates in attracting, retaining and providing incentives to employees, directors, consultants and independent contractors who serve the Company and its affiliates by offering them the opportunity to acquire or increase their proprietary interest in the Company and to promote the identification of their interests with those of the stockholders of the Company. The 2014 Plan will also be used to make grants to further reward and incentivize current employees and others.

F-19

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2020 and 2019
(Unaudited)
 

10. STOCK-BASED COMPENSATION (CONTINUED)

 

There are 7 shares of common stock reserved for issuance under the 2014 Plan. The Board shall have the power and authority to make grants of stock options to employees, directors, consultants and independent contractors who serve the Company and its affiliates. Any stock options granted under the 2014 Plan shall have an exercise price equal to or greater than the fair market value of the Company’s shares of common stock. Unless otherwise determined by the Board of Directors, stock options shall vest over a four-year period with 25% being vested after the end of one (1) year of service and the remainder vesting equally over a 36-month period. The Board may award options that may vest based upon the achievement of certain performance milestones. As of September 30, 2020, no options have been awarded under the 2014 Plan. Effective August 27, 2019, the Company effected a reverse split of the common stock of 1 for 18,000 (Note 1) which eliminated all the options which were previously outstanding.

 

11. FAIR VALUE MEASUREMENTS

 

ASC 820, Fair Value Measurements and Disclosures, require an entity 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. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment.

 

Level 2

 

Level 2 applies to assets or liabilities for which there are other than Level 1 observable inputs 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 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered active requires management judgment.

 

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 determination of fair value for Level 3 instruments requires the most management judgment and subjectivity.

 

Pursuant to ASC 825, cash is based on Level 1 inputs. The Company believes that the recorded values of accounts receivable and accounts payable approximate their current fair values because of their nature or respective relatively short durations. The fair value of the Company’s convertible debentures and promissory note approximates their carrying values as the underlying imputed interest rates approximates the estimated current market rate for similar instruments.

 

As of September 30, 2020, there was a derivative measured at fair value on a recurring basis (see note 4) presented on the Company’s balance sheet, as follows:

 

    Liabilities at Fair Value  
    September 30, 2020  
    Level 1     Level 2     Level 3     Total  
Embedded conversion of options derivative liabilities     -       -     $ 209,000     $ 209,000  

F-20

 

FRIENDABLE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020 and 2019
(Unaudited)
 

12. SUBSEQUENT EVENTS

 

Between October 23 and November 13, 2020, the Company issued a total of 4,412,118 shares of common stock to the holder of the Preferred C stock on conversion of 25,900 shares of Preferred C stock at a price per common share of between $0.0083 and $0.0095. The conversion price was determined based on the default stated value of $1.50 plus accrued dividends and a discount to market price of 29%.

 

The Company recorded the obligation to issue 915,000 common shares to Coventry Enterprises and 1,262,783 common shares to Barbara Mittman in November 2020 as requested drawdowns against the Company’s debt restructuring agreement (see Note 4).

 

On October 9, 2020 the Company recorded the obligation to issue 300,000 common shares to music artist Remy Boy Monty in consideration for the artist’s agreement to post his exclusive music content on the Company’s Fan Pass platform on a revenue share basis. The shares will be valued at the quoted trade price on the October 9, 2020 grant date.

 

On November 19, 2020 the Company issued 175,000 common shares to Green Coast Capital International at $0.02 per share in settlement of its $35,000 convertible note maturing October 8, 2020.

F-21

 

FRIENDABLE, INC.

 

CONSOLIDATED FINANCIAL STATEMENTS

 

December 31, 2019

 

Reports of Independent Registered Public Accounting Firms   F-23
     
Consolidated Balance Sheets as of December 31, 2019 and 2018   F-26
     
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2019 and 2018   F-27
     
Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2019 and 2018   F-28
     
Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018   F-29
     
Notes to the Consolidated Financial Statements   F-30 - F-40

F-22

 

(SALBERG & COMPANY LOGO)

 

Report of Independent Registered Public Accounting Firm

 

To the Stockholders and the Board of Directors of:

Friendable, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheet of Friendable, Inc. and Subsidiary (the “Company”) as of December 31, 2019, the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows, for the year then ended and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2019, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

We also audited the adjustments described in Note 1 to retrospectively apply the effects of the 1 for 18,000 reverse stock-split to all periods presented including the 2018 period. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review or apply any procedures to the 2018 consolidated financial statements other than with respect to the reverse stock-split adjustments and accordingly, we do not express an opinion or any other form of assurance on the 2018 consolidated financial statements taken as a whole.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a net loss and cash used in operations of $10,183,410 and $488,864, respectively, in 2019 and has a working capital deficit, stockholders’ deficit and accumulated deficit of $15,970,305, $32,443,883 and $15,970,305, respectively, at December 31, 2019. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s Plan in regards to these matters is also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

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 audit. 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.

 

2295 NW Corporate Blvd., Suite 240 ● Boca Raton, FL 33431-7328

Phone: (561) 995-8270 ● Toll Free: (866) CPA-8500 ● Fax: (561) 995-1920

www.salbergco.com ● info@salbergco.com

Member National Association of Certified Valuation Analysts ● Registered with the PCAOB

Member CPAConnect with Affiliated Offices Worldwide ● Member AICPA Center for Audit Quality

F-23

 

We conducted our audit 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 internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting 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 audit included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

/s/ Salberg & Company, P.A.

 

SALBERG & COMPANY, P.A.

We have served as the Company’s auditor since 2020.

Boca Raton, Florida

June 29, 2020

F-24

 

(MANNING ELLIOTT LOGO) 17th floor, 1030 West Georgia St., Vancouver, BC, Canada V6E 2Y3

Tel:
604. 714. 3600 Fax: 604. 714. 3669 Web: manningelliott.com

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Stockholders and the Board of Directors of Friendable, Inc.

 

Opinion on the Consolidated Financial Statements

 

We have audited, before the effects of the adjustment to retrospectively apply the adjustments described in Note 1 to apply the effects of the 1 for 18,000 reverse stock-split to all periods presented including the 2018 period the accompanying consolidated financial statements of Friendable, Inc. and its subsidiaries (the “Company”), which comprised the consolidated statements of financial position as at December 31, 2018 and 2017, and the consolidated statements of comprehensive loss, consolidated statement of stockholders’ deficit and consolidated statements of cash flows for the years ended December 31, 2018 and 2017, and the related notes, including a summary of significant accounting policies and other explanatory information (collectively referred to as the “consolidated financial statements”).

 

In our opinion, the consolidated financial statements, before the effects of the adjustments to retrospectively apply the effects of the 1 for 18,000 reverse stock-split as described in Note 1, present fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States as issued by the Financial Accounting Standards Board.

 

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the effects of the 1 for 18,000 reverse stock-split as described in Note 1 and, accordingly, we do not express an option or any other form of assurance about whether such adjustments are appropriate and have been properly applied. These adjustments were audited by Salberg & Company, P.A.

 

Explanatory Paragraph – Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a working capital deficit and has accumulated losses since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (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 audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement, whether due to fraud or error. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

 

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a reasonable basis for our audit opinion.

 

/s/ MANNING ELLIOTT LLP

 

CHARTERED PROFESSIONAL ACCOUNTANTS

 

Vancouver, British Columbia

 

June 29, 2020

 

We have served as the Company’s auditor since 2010.

F-25

 

FRIENDABLE INC.
CONSOLIDATED BALANCE SHEETS

 

    December 31,     December 31,  
    2019     2018  
             
ASSETS                
CURRENT ASSETS:                
Cash   $ 11,282     $ 25,646  
Accounts receivable     135       -  
Prepaid expenses     30,000       -  
Due from a related party     30,083       -  
                 
Total Current Assets     71,500       25,646  
                 
Total Assets   $ 71,500     $ 25,646  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
CURRENT LIABILITIES:                
Accounts payable and accrued expenses   $ 1,945,346     $ 3,777,301  
Convertible debentures and convertible promissory notes     121,910       6,385,683  
Mandatorily redeemable Series C convertible Preferred stock, 1,000,000 shares designated, 149,300 and 0 issued and outstanding at December 31, 2019 and 2018, including premium of $55,549 (Liquidation value $136,000)     191,549       -  
Derivative liability     12,778,000       -  
Promissory note     -       100,559  
Liability to be settled in common stock     1,005,000       -  
                 
Total Current Liabilities     16,041,805       10,263,543  
                 
Total Liabilities     16,041,805       10,263,543  
                 
Commitments and contingencies (Note 7)                
                 
STOCKHOLDERS’ DEFICIT:                
 Preferred stock, 50,000,000 authorized at par value $0.0001                
Series A convertible Preferred stock, 50,000,000 shares designated at par value of $0.0001, 19,789 and 21,267 shares issued and outstanding at December 31, 2019 and 2018 (Liquidation value $68,366)     2       2  
Series B convertible preferred stock, $0.0001 par value, 1,000,000 shares designated; 284,000 and 0 shares issued and outstanding at outstanding December 31, 2019 and 2018, respectively. (Liquidation value $284,000)     28       -  
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 4,398,114 and 308,518 shares issued and outstanding at outstanding December 31, 2019 and 2018, respectively     438       31  
Common stock issuable, $0.0001 par value, 8,518,335 and 0 shares at December 31, 2019 and 2018, respectively     852       -  
Additional paid-in capital     16,476,758       12,027,043  
Common stock subscription receivable     (4,500 )     (4,500 )
Accumulated deficit     (32,443,883 )     (22,260,473 )
                 
Total Stockholders’ Deficit     (15,970,305 )     (10,237,897 )
                 
Total Liabilities and Stockholders’ Deficit   $ 71,500     $ 25,646  

 

See accompanying notes to consolidated financial statements.

F-26

 

FRIENDABLE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

 

    For the Years Ended  
    December 31,  
    2019     2018  
             
REVENUES   $ 242,696     $ 6,190  
                 
OPERATING EXPENSES:                
App hosting     24,068       210,000  
Commissions     938       1,817  
General and administrative     814,053       719,960  
Product development     299,124       80,549  
Investor relations     98,264       6,077  
Sales and Marketing     48,375       22,575  
                 
Total operating expenses     1,284,822       1,040,978  
                 
LOSS FROM OPERATIONS     (1,042,126 )     (1,034,788 )
                 
OTHER INCOME (EXPENSE):                
Accretion and interest expense     (621,149 )     (2,052,216 )
Impairment loss     -       (35,000 )
Provision for settlement of lawsuit     (1,035,000 )     -  
Loss on debt extinguishments     (7,384,866 )     -  
Exchange gain or (loss)     24,731       -  
Loss on change in fair value of derivative     (125,000 )     -  
                 
Total other expense, net     (9,141,284 )     (2,087,216 )
                 
NET LOSS   $ (10,183,410 )   $ (3,122,004 )
                 
NET LOSS PER COMMON SHARE:                
Basic and diluted   $ (2.56 )   $ (10.23 )
                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                
Basic and diluted     3,981,702       305,283  

 

See accompanying notes to consolidated financial statements.

F-27

 

FRIENDABLE INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the Years Ended December 31, 2019 and 2018

 

                                                    Additional     Common Stock           Total  
    Series A Preferred Stock     Series B Preferred Stock     Common Stock     Paid In     Subscription     Accumulated     Stockholders’  
    Shares Issued     Amount     Shares Issuable     Amount     Shares Issued     Amount     Shares Issuable     Amount     Capital     Receivable     Deficit     Equity (Deficit)  
                                                                         
Balance, December 31, 2017     21,267     $ 2       -     $ -       278,351     $ 28             $ -     $ 11,658,781     $ (4,500 )   $ (19,138,469 )   $ (7,484,158 )
                                                                                                 
Conversion of convertible notes     -       -       -       -       30,167       3               -       60,297                       60,300  
                              -                                                                  
Issuance of convertible notes     -       -       -       -       -       -               -       307,965                       307,965  
                                                                                                 
Net loss     -       -       -       -       -       -       -       -       -       -       (3,122,004 )     (3,122,004 )
                                                                                                 
Balance, December 31, 2018     21,267       2       -       -       308,518       31               -       12,027,043     $ (4,500 )   $ (22,260,473 )     (10,237,897 )
                                                                                                 
Debt forgiveness - related parties     -       -       -       -       -       -               -       1,000,000                       1,000,000  
                                                                                                 
Common stock sold for cash     -       -       -       -       57,000       5       477,000       48       133,447                       133,500  
                                                                                                 
Common stock issuable under debt restructuring agreement     -       -       -       -       -       -       5,902,589       590       2,384,056                       2,384,646  
                                                                                                 
Preferred stock Series B Sold for cash     -       -       205,000       20       -       -               -       204,980                       205,000  
                                                                                                 
Preferred stock Series B issued to settle AP - Related Party     -       -       79,000       8       -       -               -       78,992                       79,000  
                                                                                                 
Conversion of Convertible notes     -       -       -       -       273,418       27       120,000       12       21,317                       21,356  
                                                                                                 
Common shares issued for services     -       -       -       -       600,000       60       -       -       89,940                       90,000  
                                                                                                 
Common shares issued for settlement of promissory note     -       -       -       -       2,150,000       215       -       -       537,285                       537,500  
                                                                                                 
Conversion of Series A preferred shares     (1,478 )     -       -       -       1,002,970       100       2,018,746       202       (302 )                     -  
                                                                                                 
Fractional share issuance     -       -       -       -       6,208       -       -       -       -                       -  
                                                                                                 
Net loss     -       -       -       -       -       -       -       -       -       -     $ (10,183,410 )     (10,183,410 )
                                                                                                 
Balance, December 31, 2019     19,789     $ 2       284,000     $ 28       4,398,114     $ 438       8,518,335     $ 852     $ 16,476,758     $ (4,500 )   $ (32,443,883 )   $ (15,970,305 )

 

See accompanying notes to consolidated financial statements.

F-28

 

FRIENDABLE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

 

    For the Years Ended  
    December 31,  
    2019     2018  
             
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (10,183,410 )   $ (3,122,004 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities                
Loss on debt extinguishment, net     7,384,867       -  
Notes issued for services     20,000       -  
Amortization of prepaid stock fees     60,000       -  
Loss on change in fair value of derivative     125,000       -  
Premium on stock settled debt     55,549          
Interest on convertible debentures and promissory note     -       48,229  
Accretion expense     -       1,501,848  
Impairment loss     -       35,000  
Change in operating assets and liabilities:                
Accounts receivable     (135 )     -  
Due from related party     (30,083 )        
Prepaid expenses     -       6,863  
Accounts payable and accrued expenses     1,074,348       1,144,745  
Liability to be settled in common stock     1,005,000       -  
                 
NET CASH USED IN OPERATING ACTIVITIES     (488,864 )     (385,319 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from convertible debentures     -       310,965  
Proceeds from promissory note     -       100,000  
Proceeds from sale of convertible preferred Series B stock     205,000       -  
Proceeds from sale of convertible preferred Series C stock     136,000       -  
Proceeds from sale of common stock     133,500       -  
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES     474,500       410,965  
                 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS:     (14,364 )     25,646  
                 
CASH AND CASH EQUIVALENTS - beginning of year     25,646       -  
                 
CASH AND CASH EQUIVALENTS - end of year   $ 11,282     $ 25,646  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                
Cash paid during the period for:                
Interest   $ -     $ -  
Income taxes   $ -     $ -  
                 
Non-cash investing and financing activities:                
 Common shares issued for prepaid expenses   $ 90,000     $ -  
 Series B convertible preferred stock issued in exchange for accounts payable, related party   $ 79,000     $ -  
 Payables forgiven by related parties treated as contributed capital   $ 1,000,000     $ -  
 Debt and accrued interest settled with common stock   $ 8,178,634     $ -  
 Convertible notes converted to common stock   $ 13,002     $ 54,300  
 Derivative liability   $ 5,698,080     $ -  
                 
Cash Consists of:                
Cash   $ 11,282     $ 25,646  

 

See accompanying notes to consolidated financial statements.

F-29

 

FRIENDABLE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018

 

1. NATURE OF BUSINESS AND GOING CONCERN

 

Nature of Business

 

Friendable, Inc., a Nevada corporation (the “Company”), was incorporated in the State of Nevada.

 

Friendable, Inc. is a mobile-focused technology and marketing company, connecting and engaging users through two distinctly branded applications. The Company initially released its flagship product Friendable, as a social application where users can create one-on-one or group-style meetups. In 2019 the Company has moved the Friendable app closer to a traditional dating application with its focus on building revenue, as well as reintroducing the brand as a non-threatening, all-inclusive place where “Everything starts with Friendship”…meet, chat & date.

 

On June 28, 2017, the Company formed a wholly owned Nevada subsidiary called Fan Pass Inc.

 

Fan Pass is the Company’s most recent or second app/brand, scheduled for release in 2020. Fan Pass believes in connecting Fans of their favorite celebrity or artist, to an exclusive VIP or Backstage experience, right from their smartphone or other connected devices. Fan Pass allows an artist’s fanbase to experience something they would otherwise never have the opportunity to afford or geographically attend. The Company aims to establish both Friendable and Fan Pass as premier brands and mobile platforms that are dedicated to connecting and engaging users from anywhere around the World.

 

On August 8, 2019 the Company filed a Designation of Series B convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series B Preferred Stock with a stated value of $1.00 per share. A holder of Series B Preferred Stock has the right to convert their Series B Preferred Stock into fully paid and non-assessable shares of Common Stock. Initially, the conversion price for the Series B Preferred Stock is $.25 per share, subject to standard anti-dilution adjustments. Additionally, each share of Series B Preferred Stock shall be entitled to, as a dividend, a pro rata portion of an amount equal to 10% (Ten Percent) of the Net Revenues (“Net Revenues” being Gross Sales minus Cost of Goods Sold) derived from the subscriptions and other sales, but excluding and net of Vimeo fees, processing fees and up sells, generated by Fan Pass Inc., the wholly-owned subsidiary of the Corporation. The Series B Dividend shall be calculated and paid on a monthly basis in arrears starting on the day 30 days following the first day of the month following the initial issuance of the Series B Preferred and continuing for a period of 60 (Sixty) months. The holders of Series B Preferred stock shall have no voting rights. The holders of Series B Preferred stock shall not be entitled to receive any dividends. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or deemed liquidation event, the holders of shares of Series B Preferred Stock shall be entitled to be paid the liquidation amount, as defined out of the assets of the Company available for distribution to its shareholders, after distributions to holders of the Series A Preferred Stock and before distributions to holders of Common Stock.

 

On August 27, 2019, a 1 for 18,000 reverse stock split of our common stock became effective. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively adjusted for the effects of the reverse split for all periods presented.

 

On November 25, 2019 the Company filed a Designation of Series C convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series C Preferred Stock with a stated value of $1.00 per share. The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends with the Company’s common stock, par value 0.0001 per share (“Common Stock”)(the Series C Preferred Stock will convert into common stock immediately upon liquidation and be pari passu with the common stock in the event of litigation), and (b) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company. The Series C Preferred Stock does not have any voting rights. Each share of Series C Preferred Stock will carry an annual dividend in the amount of eight percent (8%) of the Stated Value of $1.00 (the “Divided Rate”), which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion and increase to 22% upon an event of default as defined. In the event of any default other than the Company’s failure to issue shares upon conversion, the stated price will be $1.50. In a default event where the Company fails to issue shares upon conversion, the stated price will $2.00. The holder shall have the right six months following the issuance date, to convert all or any part of the outstanding Series C Preferred Stock into shares of common stock of the Company. The conversion price shall equal the Variable Conversion Price. The “Variable Conversion Price” shall mean 71% multiplied by the market price, representing a discount rate of 29%. Market price means the average of the two lowest trading prices for the Company’s common stock during the twenty trading day period ending on the latest complete trading day prior to the conversion date. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or upon any deemed liquidation event, after payment or provision for payment of debts and other liabilities of the Company, and after payment or provision for any liquidation preference payable to the holders of any Preferred Stock ranking senior upon liquidation to the Series C Preferred Stock, if any, but prior to any distribution or payment made to the holders of Common Stock or the holders of any Preferred Stock ranking junior upon liquidation to the Series C Preferred Stock by reason of their ownership thereof, the Holders will be entitled to be paid out of the assets of the Company available for distribution to its stockholders. The Company will have the right, at the Company’s option, to redeem all or any portion of the shares of Series C Preferred Stock, exercisable on not more than three trading days prior written notice to the Holders, in full, in accordance with Section 6 of the designations at a premium of up to 35% for up to six months. Company’s mandatory redemption: On the earlier to occur of (i) the date which is twenty-four (24) months following the Issuance Date and (ii) the occurrence of an Event of Default (the “Mandatory Redemption Date”), the Company shall redeem all of the shares of Series C Preferred Stock of the Holders (which have not been previously redeemed or converted).

F-30

 

1. NATURE OF BUSINESS AND GOING CONCERN (CONTINUED)

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which implies that the Company would continue to realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2019, the Company has a working capital deficiency of $15,970,305 and has an accumulated deficit of $32,443,883 and a stockholder’s deficit of $15,970,305 since inception and its operations continue to be funded primarily from sales of its stock and issuance of convertible debentures. During 2019 the Company had a net loss and net cash used in operations of $10,183,410 and $488,864. As of December 31, 2019 the Company had $1,360 of cumulative dividends related to the Series C convertible preferred stock. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance of this report. The ability of the Company to continue as a going concern is dependent on the Company’s ability to obtain the necessary financing through the issuance of convertible notes and equity instruments. The consolidated 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.

 

Management plans to raise financing through the issuance of convertible notes and equity sales. No assurance can be given that any such additional financing will be available, or that it can be obtained on terms acceptable to the Company and its stockholders.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The consolidated financial statements include all the accounts of the Company and all of its wholly owned subsidiaries as of December 31, 2019 and 2018. All material intercompany accounts and transactions have been eliminated in the accompanying consolidated financial statements. The Company’s fiscal year end is December 31.

 

Reclassifications

 

Certain balances in 2018 have been reclassified to conform with the 2019 presentation.

 

Use of Estimates

 

The preparation of these statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to valuation of convertible debenture conversion options, derivative instruments, deferred income tax asset valuations, financial instrument valuations, share-based payments, other equity-based payments, and loss contingencies. 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. 

 

Revenue Recognition

 

In accordance with ASC 606, revenue is recognized when the following criteria have been met; valid contracts are identified with specific customers, performance obligations have been identified, price is determinable, price is allocated to performance obligations, and the Company has satisfied the performance obligations. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. During the year ended December 31, 2019, the Company derived revenues primarily from the development of apps for a third party, and such revenues were recognized upon completion of services.

 

Advertising Costs

 

The Company’s policy regarding advertising is to expense advertising when incurred. During the twelve months ended December 31, 2019, the Company incurred $48,375 (December 31, 2018: $1,783) in advertising costs.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

 

Intangible Assets

 

The Company accounts for intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other. The Company assesses potential impairments to intangible assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered.

F-31

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Intangible assets with finite lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of intangible assets with finite lives is measured by comparing the carrying amount of the asset to its fair value. If the future value of the asset is lower than its carrying value, the Company recognizes an impairment loss for the amount by which the carrying value of the asset exceeds the related estimated fair value.

 

Intangible assets with indefinite lives are tested for impairment annually or more frequently are tested for impairment annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the intangible asset is impaired.

 

Impairment of Long-Lived Assets

 

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

 

If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

 

Derivative liabilities

 

The Company has a financial instrument associated with a debt restructuring agreement. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 – Derivative and Hedging – Contract in Entity’s Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.

 

In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The guidance was adopted as of January 1, 2019. The Company adopted ASU No. 2017-11 in the first quarter of 2019, and the adoption did not have any impact on its consolidated financial statement and there was no cumulative effect adjustment.

 

Stock-based Compensation

 

During 2018 the Company recorded stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options. In 2019 the Company adopted ASU 2018-07 which expands the measurement requirements to non employees.

 

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

 

All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company monitors its outstanding receivables for timely payments and potential collection issues. At December 31, 2019 and 2018, the Company did not have any allowance for doubtful accounts.

 

Financial Instruments

 

Financial assets and financial liabilities are recognized in the balance sheet when the Company has become party to the contractual provisions of the instruments.

 

The Company’s financial instruments consist of accounts receivable, accounts payable, convertible debentures, stock settled debt, derivatives, mandatorily redeemable Series C Preferred stock and promissory notes. The fair values of these financial instruments approximate their carrying value, due to their short term nature, and current market rates for similar financial instruments. Fair value of a financial instrument is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company’s financial instruments recorded at fair value in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

 

Concentrations

 

We Have Substantial Client Concentration, with one Client Accounting for a Substantial Portion of our Revenues.

 

In the year ended December 31, 2019 we derived 99% (2018: 0%) of our revenue from one client. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of clients. It is not possible for us to predict the future level of demand for our services that will be generated by this client or the future demand for the products and services of other similar clients. A loss of this client or the failure to retain similar clients could negatively affect our revenues and results of operations and/or trading price of our common stock.

 

Basic and Diluted 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 statement of operations. Basic EPS is computed by dividing net income (loss) available to common stockholders (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.

F-32

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

As of December 31, 2019, there were approximately 122,051,838 potentially dilutive shares outstanding. Potential dilutive shares:

 

  60,908     Warrants outstanding
  2,212,523     Common shares issuable upon conversion of convertible debt
  116,248,041     Total shares issuable upon conversion of Preferred Series A shares
  1,136,000     Total shares issuable upon conversion of Preferred Series B shares
  2,394,366     Total shares issuable upon conversion of Preferred Series C shares
  122,051,838      

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC Topic 842) (“ASU 2016-02”), which requires lessees to recognize at the commencement date for all leases, with the exception of short-term leases, (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The ASU requires adoption using a modified retrospective transition approach with either (a) periods prior to the adoption date being recast or (b) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. As at December 31, 2019 the Company has no lease obligations.

 

Reclassifications

 

Certain amounts in the 2018 financial statements have been reclassified to conform to the 2019 presentation.

 

3. INTANGIBLE ASSETS

 

As at December 31, 2019 and 2018, the Company owns the Friendable Properties which includes domain names, logos, icons, and registered trademarks for which it paid cash consideration of $35,000. During 2018 an impairment provision for $35,000 was recorded through the statement of operations to impair the intangible assets to $nil.

 

4. RELATED PARTY TRANSACTIONS AND BALANCES

 

During the year ended December 31, 2019, the Company incurred $459,200 (2018: $417,066) in salaries and payroll taxes to officers and directors with such costs being recorded as general and administrative expenses.

 

During the year ended December 31, 2019, the Company incurred $24,068, $299,124, and $58,883 (2018: $210,000, $80,000, and $60,000) in app hosting, app development and rent to a company with two officers and directors in common with such costs being recorded as app hosting, product development and general and administrative expenses.

 

During the year ended December 31, 2019, the Company issue a Securities Purchase agreement to a vendor company with two officers and directors in common for the purchase of 79,000 Series B preferred stock with the purchase price of $79,000 being applied to accounts payable due to the vendor. The price was based on recent sales of Series B shares for $1.00 per share.

 

As of December 31, 2019, the Company had a stock subscription receivable totaling $4,500 (December 31, 2018: $4,500) from an officer and director and from a company with an officer and director in common.

 

As of December 31, 2019, Due from related party includes $30,083 (December 31, 2018: payable of $721,099) due from a company with two officers and directors in common, and $783,416 (December 31, 2018: $798,580) payable in salaries to directors and officers of the Company. The amounts are unsecured, non-interest bearing and are due on demand.

F-33

 

4. RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

 

During the year ended December 31, 2019, two directors converted 588 shares of Series A preferred stock at the contractual conversion rate into 1,002,970 shares of common stock and donated them to the Diocese of Monterey and other parties related to the directors converted 890 Series A preferred shares into 2,018,746 common shares that are issuable at December 31, 2019.

 

During the year ended December 31, 2019, three officers forgave debt totaling $400,000 and a company controlled by two officers of the Company forgave debt totaling $600,000. The total amount is reflected as contributed capital.

 

5. CONVERTIBLE DEBENTURES

 

During the year ended December 31, 2019, $8,355 (2018: $60,300) of convertible debentures were converted at the contractual rate by issuing 33,418 (2018: 30,167) shares of common stock of the Company.

 

On March 26, 2019 the Company entered into a Debt Restructuring Agreement (the “Agreement”) with Robert A. Rositano Jr. (“Robert Rositano”), Dean Rositano (“Dean Rositano”), Frank Garcia (“Garcia”), Checkmate Mobile, Inc. (“Checkmate”), Alpha Capital Anstalt (“Alpha”), Coventry Enterprises, LLC (“Coventry”), Palladium Capital Advisors, LLC (“Palladium”), EMA Financial, LLC (“EMA”), Michael Finkelstein (“Finkelstein”), and Barbara R. Mittman (“Mittman”), each being a debt holder of the Company.

 

The debt holders agreed to convert their debt of approximately $6.3 million into an initial 5,902,589 shares of common stock as set forth in the Agreement upon the Company meeting certain milestones including but not limited to: the Company effecting a reverse stock split and maintaining a stock price of $1.00 per share; being current with its periodic report filings pursuant to the Securities Exchange Act; certain vendors and Company employees forgiving an aggregate of $1,000,000 in amounts owed to them; the Company raising not less than $400,000 in common stock at a post-split price of not less than $.20 per share; and certain other things as further set forth in the Agreement. The debt holders will be subject to certain lock up and leak out provisions as contained in the Agreement. As part of the Agreement the parties signed a Rights to Shares Agreement. Whereas the Agreement called for all the shares to be delivered at closing, the holders are generally restricted to beneficial ownership of up to 4.99% of the company’s common shares outstanding. The Rights to Shares Agreement allows for the Company to issue shares to each holder up the 4.99% limitation while preserving the holders’ rights to the total shares in schedule A of the Agreement.

 

During the year ended December 31, 2019, the Company incurred $558,792 (2018: $2,052,216) in accretion and interest expense in connection with the convertible debentures.

 

December 26, 2019, all parties signed an amendment to the Agreement which set forth, among other things, the following:

 

Company Principals have given Holders notice that it has satisfied all conditions of closing.

 

The Agreement is considered Closed as of November 5, 2019 (“Settlement Date”) and any conditions of closing not satisfied are waived.

 

Reset Dates. The “Reset Dates” as set forth in Section 1(h) of the Agreement shall be as follows: March 4, 2020 and July 2, 2020. As of the reset dates the holders can convert all or part of the settled note amounts at the lower of (i) 75% of the closing bid price for the Common Stock on such respective Reset Date, or (ii) the VWAP for the Company’s Common Stock for the 7 trading days immediately preceding and including such respective Reset Dates. This reset provision provides for the issuance of additional shares above the initial 5,902,589 shares for no additional consideration as measured at each of the two reset dates.

 

The Company determined that the reset provision represents a standalone derivative liability. Accordingly, this debt restructure transaction was accounted for as an extinguishment of debt for consideration equal to the $2,384,646 fair value of the 5,902,589 common shares issuable, based on the $0.404 quoted trading price of the Company’s common stock price on the settlement date, and the initial fair value of the derivative liability of $12,653,000.

F-34

 

5. CONVERTIBLE DEBENTURES (CONTINUED)

 

The Company adjusts its derivative liability to fair value at each reporting and settlement date, with changes in fair value reported in the statement of operations. The Company estimated the fair value of the obligations to issue common stock pursuant to the Debt Restructuring Agreement, as amended, using Monte Carlo simulations and the following assumptions:

 

    November 5,     December  
    2019     31, 2019  
Volatility     617.0 %     738.1 %
Risk Free Rate     1.59 %     1.60 %
Expected Term     0.66       0.50  

 

Derivative Liabilities

 

The Company accounts for its obligation to issue common stock (“Reset Provision”) as derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” which are reflected as liabilities at fair value on the balance sheet, with changes in fair value reported in the statement of operations. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. The number of shares of common stock the Company could be obligated to issue, is based on future trading prices of the Company’s common stock. To reflect this uncertainty in estimating the fair value of the potential obligation to issue common stock, the Company uses a Monte Carlo model that considers the reporting date trading price, historical volatility of the Company’s common stock, and risk free rate in estimating the fair value of the potential obligation to issue common stock. The results of the Monte Carlo simulation model are most sensitive to inputs for expected volatility. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The estimated fair values may not represent future fair values and may not be realizable. We categorize our fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As of December 31, 2019, the fair value of the Company’s potential obligation to issue common stock was $12,778,000.

 

The following is a summary of activity related to the derivative liability for the year ended December 31, 2019:

 

Balance, December 31, 2018   $ -  
Reset provision     12,653,000  
Change in fair value     125,000  
Balance, December 31, 2019   $ 12,778,000  

 

6. PROMISSORY NOTE AND CONVERTIBLE PROMISSORY NOTE

 

On December 14, 2018, the Company issued a promissory note for proceeds of $100,000 at 12% interest per annum. The maturity date of the note is December 14, 2019. The note includes a conversion feature that entitles the Holder to receive 1.63% equity ownership of Friendable, Inc. and 18.2% equity ownership of Fan Pass, Inc. upon conversion. During the year ended December 31, 2019, the Company incurred $1,901 (2018: $599) in interest expense in connection with the promissory note.

 

On December 20, 2019 the note above settled by the issuance of 2,150,000 shares of common stock. The shares were valued at $537,500 based on contemporaneous sales $0.25 of per share resulting in a loss on debt extinguishment of $435,000.

 

On April 7, 2017, the Company entered into a Settlement Agreement with Joseph Canouse (the “Agreement”). The Company and Mr. Canouse had been in a dispute regarding what amount, if any, was owed pursuant to a consulting agreement between the parties signed in April 2014. In December 2016, Mr. Canouse obtained a judgment in state court in Georgia and the right to garnish the Company’s bank accounts. Pursuant to the Settlement Agreement, the Company agreed to issue an 8% Convertible Note in the principal amount of $82,931 (the “Note”). The Note was issued to J.P. Carey Inc., an entity controlled by Mr. Canouse. Although the Note is dated March 30, 2017, it was issued on April 7, 2017. In return for the issuance of the Note, Mr. Canouse filed a Consent Motion to Withdraw Judgment, dismiss all garnishments, and cease all collection activities.

 

The Note is convertible into common stock, subject to Rule 144, at any time after the issue date at the lower of (i) the closing sale price of the common stock on the on the trading day immediately preceding the closing date, and (ii) 50% of the lowest sale price for the common stock during the twenty-five (25) consecutive trading days immediately preceding the conversion date or the closing bid price, whichever is lower. Mr. Canouse does not have the right to convert the Note, to the extent that he would beneficially own in excess of 4.9% of our outstanding common stock. In the event of default, the amount of principal and interest not paid when due bear default interest at the rate of 24% per annum and the Note becomes immediately due and payable.

 

During the year ended December 31, 2019:

 

The Company incurred $51,980 in interest related to the note through December 31, 2019.

 

J.P. Carey converted $1,002 of principal into 120,000 shares of the Company’s common stock at a price of $0.0084.

 

J.P. Carey assigned $10,000 of the note to World Market Ventures, LLC and assigned $6,000 of the note to Anvil Financial Management LTD LLC. The assignments carry the same conversion rights as the original note. World Market Ventures converted $6,000 of principal into 120,000 shares of the Company’s common stock at a price of $0.05. Anvil converted $6,000 of principal into 120,000 shares of the Company’s common stock at a price of $0.05.

F-35

 

7. COMMITMENTS AND CONTINGENCIES

 

The following table summarizes the Company’s significant contractual obligations as of December 31, 2019:

 

    $  
Employment Agreements (1)     400,000  
Lawsuit Contingency (2)     1,005,000  

 

(1) Employment agreements with related parties.

 

On April 3, 2019, the Company entered into employment agreements with three officers. Pursuant to the agreements, the Company shall pay officers an aggregate annual salary amount of $400,000. Upon a successful launch of the company’s Fan Pass mobile app or website, and the Company achieving various levels if subscribers, the officers will receive additional bonuses and salary increases.

 

(2) Lawsuit Contingency.

 

Integrity Media, Inc. (“Integrity”) had previously filed a lawsuit against the Company and the CEO of the Company for $500,000 alleging breach of contract alleging the Company failed to deliver marketable securities in exchange for services. The Company answered the allegations in court and Integrity filed a motion attacking the Company’s answers. The court did not strike the answers but the clerk of the court entered a default judgment against the Company in the amount of $1,192,875 plus 10% interest. On May 8, 2019, the Company received a tentative ruling on the Company’s motion to vacate the default judgement whereby the previously entered default judgement was voided and a trial date of August 26, 2019 was set.

 

On September 19, 2019, the Company entered into a Settlement Agreement with Integrity Media settling the civil action known as Integrity Media, Inc. vs. Friendable, Inc. et al., Orange County Case No. 30-2016-00867956-CU-CO-CJC. Pursuant to the Settlement Agreement, the Company agreed to issue to Integrity 750,000 shares of its common stock in exchange for 275 of the Company’s preferred shares held by Integrity and the cash payment of $30,000 for costs. The cash payment is to be made within 6 months of the date of the Settlement Agreement. As of June 24, 2019 the cash amount has not been paid and the preferred shares have not been returned. Additionally, Integrity will be entitled to additional shares if (i) the price of the Company’s common stock is below $1.34 at either the 120 day or 240 day reset dates set forth in the Company’s Debt Restructure Agreement as amended entered into with various debt holders on March 26, 2019 effective November 5, 2019. Integrity will also be entitled to a “true-up” by issuance of additional common shares on the issuance date should the share price of the Company’s common stock on the issuance date be below $1. The true-up shares will adjust the value of the aggregate shares issued to be $750,000 on the date of issuance. As of December 31, 2019, no shares have been issued nor cash paid. As of December 31, 2019, the Company has recorded a provision for settlement of lawsuit of $1,035,000 with $1,005,000 ($750,000 plus a premium of $255,000) recorded as a liability payable in common stock in accordance with ASC 480 and $30,000 as an accrued liability.

 

Robert Rositano, the Company’s CEO, has also personally guaranteed the Company’s compliance with the terms of the Settlement Agreement.

 

COVID-19 Disclosure

 

The coronavirus pandemic could adversely impact our operations, supply chains and distribution systems and demand for our products and services. The coronavirus pandemic could adversely impact our ability to raise capital.

 

8. COMMON AND PREFERRED STOCK

 

Common Stock:

 

During the year ended December 31, 2018, the Company issued 30,167 shares of common stock to various convertible note holders for full and partial conversion of the notes During the year ended December 31, 2019, the Company:

 

Issued 393,418 shares of common stock to two convertible note holders for partial conversion of an aggregate of $21,356 of the notes at the contractual conversion rates. 120,000 of the shares remain issuable as of December 31, 2019.

 

Issued 534,000 shares of common stock to various subscribers of common stock at $0.25 per share for a total of $133,500. 477,000 shares remain issuable as of December 31, 2019.

F-36

 

8. COMMON AND PREFERRED STOCK (CONTINUED)

 

Issued 600,000 shares of common stock to a consultant in exchange for future services valued at $90,000 of which $30,000 remains in prepaid expenses as of December 31, 2019.

 

Issued 2,150,000 shares of common stock to settle a promissory note and accrued interest of $102,500 and recognized a loss on settlement of $435,000 based on the $537,500 value based on recent sales.

 

Issued 1,002,970 and has 2,018,746 issuable shares of common stock to related parties on conversion of 1,478 shares of Series A preferred stock.

 

Agreed to issue 5,902,589 shares as a preliminary settlement of approximately $6.3 million of convertible debt (See note 5)

 

Preferred Stock:

 

Series A:

 

The Series A Preferred Stock was authorized in 2014 and is convertible into nine (9) times the number of common stock outstanding at time of conversion until the closing of a Qualified Financing (i.e. the sale and issuance of the Company’s equity securities that results in gross proceeds in excess of $2,500,000). The number of shares of common stock issued on conversion of Series A preferred stock is based on the ratio of the number of shares of Series A preferred stock converted to the total number of shares of preferred stock outstanding at the date of conversion multiplied by nine (9) times the number of common stock outstanding at the date of conversion. After the qualified financing the conversion shares issuable shall be the original issue price of the Series A preferred stock divided by $0.002. The holders of Series A Preferred stock are entitled to receive non-cumulative dividends when and if declared at a rate of 6% per year. On all matters presented to the stockholders for action the holders of Series A Preferred stock shall be entitled to cast votes equal to the number of shares the holder would be entitled to if the Series A Preferred stock were converted at the date of record.

 

During the year ended December 31, 2019, 588 shares of Series A preferred stock were converted to common stock by 2 related parties and donated them to the Diocese of Monterey. In addition, 890 Series A shares were converted into 2,018,746 common shares by parties related to the 2 directors. The 2,018,746 common shares remain issuable as of December 31, 2019.

 

Series B:

 

During the year ended December 31, 2019, the Company entered into Security Purchase Agreements with various investors for the purchase of 205,000 shares Series B convertible Preferred stock and received $205,000 in cash. Each Series B Preferred share is convertible into 4 shares of common stock valued at $0.25.

 

During the year ended December 31, 2019, The Company entered into a Security Purchase Agreements with a related party for the purchase of 79,000 shares Series B Preferred stock. The $79,000 was settled against accounts payable owed to the related party. Each Series B Preferred share is convertible into 4 shares of common stock valued at $0.25.

 

Series C:

 

In November and December 2019, 149,300 shares of Series C convertible preferred stock were issued to an investor under preferred stock purchase agreements at a price of approximately $0.91 per share for a total of $136,000. Due to the mandatory redemption feature, these shares are reflected as a current liability at December 31, 2019. Furthermore, because these shares are convertible at 71% of the common shares market price around the time of the conversion date, they are treated as a stock settled debt under ASC 480 with a premium of $55,549 recorded and charged to interest expense. The total amount is reflected at $191,549 at December 31, 2019.

F-37

 

9. SHARE PURCHASE WARRANTS

 

Activity in 2019 and 2018 is as follows:

 

    Number of
Warrants
    Weighted Average
Exercise
Price
$
    Weighted Average
Remaining
Life
 
Balance, December 31, 2017     60,908       72.00          
                         
Balance, December 31, 2018     60,908       72.00          
                         
Balance, December 30, 2019     60,908       72.00       1.6  

 

10. STOCK-BASED COMPENSATION

 

On November 22, 2011, the Board of Directors of the Company approved a stock option plan (“2011 Stock Option Plan”), the purpose of which is to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees, consultants and its affiliates and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership. Under the 2011 Stock Option Plan, officers, directors, employees and consultants who provide services to the Company may be granted options to acquire common shares of the Company. The aggregate number of options authorized by the plan shall not exceed 4,974 shares of common stock of the Company. 

 

The Board of Directors and the stockholders holding a majority of the voting power approved a 2014 Equity Incentive Plan (the “2014 Plan”) on February 28, 2014, with a to be determined effective date. The date never became effective. The purpose of the 2014 Plan is to assist the Company and its affiliates in attracting, retaining and providing incentives to employees, directors, consultants and independent contractors who serve the Company and its affiliates by offering them the opportunity to acquire or increase their proprietary interest in the Company and to promote the identification of their interests with those of the stockholders of the Company. The 2014 Plan will also be used to make grants to further reward and incentivize current employees and others.

 

There are 7 shares of common stock reserved for issuance under the 2014 Plan. The Board shall have the power and authority to make grants of stock options to employees, directors, consultants and independent contractors who serve the Company and its affiliates. Any stock options granted under the 2014 Plan shall have an exercise price equal to or greater than the fair market value of the Company’s shares of common stock. Unless otherwise determined by the Board of Directors, stock options shall vest over a four-year period with 25% being vested after the end of one (1) year of service and the remainder vesting equally over a 36-month period. The Board may award options that may vest based upon the achievement of certain performance milestones. As of December 31, 2019, no options have been awarded under the 2014 Plan. Effective August 27, 2019, the Company effected a reverse split of the common stock of 1 for 18,000 (Note 1) which eliminated all the options which were previously outstanding.

 

11. FAIR VALUE MEASUREMENTS

 

ASC 820, Fair Value Measurements and Disclosures, require an entity 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. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment.

F-38

 

11. FAIR VALUE MEASUREMENTS (CONTINUED)

 

Level 2

 

Level 2 applies to assets or liabilities for which there are other than Level 1 observable inputs 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 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered active requires management judgment.

 

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 determination of fair value for Level 3 instruments requires the most management judgment and subjectivity.

 

Pursuant to ASC 825, cash is based on Level 1 inputs. The Company believes that the recorded values of accounts receivable and accounts payable approximate their current fair values because of their nature or respective relatively short durations. The fair value of the Company’s convertible debentures and promissory note approximates their carrying values as the underlying imputed interest rates approximates the estimated current market rate for similar instruments.

 

As of December 31, 2019 there was a derivative measured at fair value on a recurring basis (see note 5) presented on the Company’s balance sheet, as follows:

 

Liabilities at Fair Value
December 31, 2019
 
                         
    Level 1     Level 2     Level 3     Total  
Derivative Liability                     12,778,000       12,778,000  

F-39

 

12. INCOME TAXES

 

Due to the net losses incurred there was no income tax provision in 2019 or 2018.

 

A reconciliation of the difference between the income tax benefit computed at the federal statutory rate of 21% and 35% respectively, and the provision for income taxes for the years ended December 31, 2019 and 2018 are as follows:

 

    2019     2018  
Computed tax benefit   $ (2,138,516 )   $ (1,092,701 )
State taxes     (394,200 )     -  
Permanent differences     1,887,855       662,304  
Change in tax rate and other     1,143,792       -  
Change in valuation allowance     (498,931 )     430,497  
    $ -     $ -  

 

The Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows:

 

    2019     2018  
Deferred Tax Assets:                
Net operating losses   $ 3,187,626     $ 4,214,782  
Accrued payroll     194,843       -  
Reserve contingency     257,415       -  
      3,639,884       4,214,782  
Deferred Tax Liability:                
Other     (186,533 )     (262,500 )
Valuation Allowance     (3,453,351 )     (3,952,282 )
    $ -     $ -  

 

The Company has net operating losses of approximately $12,817,000, of which $10,457,080 expires through 2037 and $2,359,560 may be carried forward indefinitely subject to annual usage limitations. The Company has established a 100% valuation allowance against its net deferred tax assets as it is more likely than not they will not be able to utilize such deferred assets in the future. The change in the valuation allowance for the year ended December 31, 2019 was a decrease of $498,931.

 

13. SUBSEQUENT EVENTS

 

Subsequent to December 31, 2019, the Company issued 78,000 shares of common stock to a consultant at $0.13 per share for services valued at $10,000.

 

Subsequent to December 31, 2019, the Company issued 1,178,650 shares of common stock on conversion of principal of $39,280 on convertible notes at an average contractual price of $0.03.

 

Subsequent to December 31, 2019, the Company raised $95,000 in financing by issuing new convertible notes. Interest accrues at 12% per annum and the notes are convertible, subject to rule 144, at a 50% discount to the lowest trading price in the preceding 25 days prior to conversion.

 

Subsequent to December 31, 2019, the Company raised $33,000 by issuing 38,000 shares of Series C preferred stock.

 

Subsequent to December 31, 2019, the Company issued 600,000 shares of common stock for past and future services valued at $0.15 per share or $90,000 to be recognized through the service term ending March 31, 2020.

F-40

 

 

EXHIBITS

 

Index to Exhibits

 

Exhibit 
Number
Exhibit Description
2.5 Certificate of Designation of Series D Preferred Stock (1)
4.1 Subscription Agreement*
6.1 Material Agreements between Friendable, Inc. and Answering Legal
11.1 Consent of Salberg & Company P.A., Auditors

11.2

Consent of Manning Elliott LLP, Auditors

12.1 Legal Opinion of Jonathan D. Leinwand, P.A.

 

 

 

 

 

81

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, on March 19, 2021.

 

    FRIENDABLE INC.
       
Date: March 19, 2021   By:  /s/ Robert Rositano, Jr.
      Robert Rositano, Jr.
      Chief Executive Officer, Chief Financial
      Officer, Secretary, and Director
      (Principal Executive Officer)
       

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date: March 19, 2021   By:  /s/ Robert Rositano, Jr.
      Robert Rositano, Jr.
      Chief Executive Officer, Chief Financial
      Officer, Secretary, and Director
      (Principal Executive Officer)
       
Date: March 19, 2021   By: /s/ Dean Rositano
      Dean Rositano
      President and Chief Technology
      Officer and Director

 

82

 

 

 

Exhibit 2.5

 

CERTIFICATE OF DESIGNATION

 

OF

 

SERIES D PREFERRED STOCK OF

 

FRIENDABLE, INC.

 

Pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation of FRIENDABLE, INC., a Nevada Corporation (the “Company”), and by the Nevada Business Corporation Act, the Board of Directors of the Company (the “Board”) on January 22, 2021 adopted by resolution the following terms, conditions and designations of the Series D Preferred Stock. Such preferred stock shall contain the following terms, powers, preferences, and rights:

 

500,000 (five hundred thousand) shares of the authorized and unissued Preferred Stock of the Corporation are hereby designated “Series D Preferred Stock” with the following rights, preferences, powers, privileges and restrictions, qualifications, and limitations.

 

1.            Dividends.

 

The Corporation shall not declare, pay or set aside any dividends on the Series D Preferred Stock.

 

2.            Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

 

2.1           Liquidation Payment Amount for Holders of Series D Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the holders of shares of Series D Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before any payment shall be made to the holders of preferred stock junior to the Series D Preferred Stock or Common Stock by reason of their ownership thereof, an amount per share equal to the Series D Original Issue Price (the amount payable pursuant to this sentence is hereinafter referred to as the “Series D Liquidation Amount”). The “Series D Original Issue Price” shall mean $10.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series D Preferred Stock. If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series D Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Series D Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

 

2.2          Deemed Liquidation Events.

 

2.2.1       Definition. Each of the following events shall be considered a “Deemed Liquidation Event”:

 

(a)       a merger, consolidation or share exchange in which:

 

(i)     the Corporation is a constituent party or

 

(ii)    a subsidiary of the Corporation is a constituent party

 

And, in either case, the Corporation issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or

 

(b)       the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.

 

2.2.2       Effecting a Deemed Liquidation Event.

 

(a)       The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.2.1(a)(i) unless the agreement or plan of merger, consolidation or share exchange for such transaction (the “Merger Agreement”) provides that the consideration payable to the shareholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsection 2.1.

 

(b)       In the event of a Deemed Liquidation Event referred to in Subsection 2.2.1(a)(ii) or 2.2.1(b), if the Corporation does not effect a dissolution of the Corporation under the Business Corporation Act within 90 days after such Deemed Liquidation Event, then the Corporation shall send a written notice to each holder of Series D Preferred Stock no later than the 90th day after the Deemed Liquidation Event advising such holders of the redemption of such shares of Series D Preferred Stock, and, if the Board so determines, the Corporation may use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its shareholders, all to the extent permitted by Nevada law governing distributions to shareholders (the “Available Proceeds”), on the 150th day after such Deemed Liquidation Event (the “Redemption Date”), to redeem all outstanding shares of Series D Preferred Stock at a price per share equal to the Series D Liquidation Amount (the “Redemption Price”). Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series D Preferred Stock, the Corporation shall ratably redeem each holder’s shares of Series D Preferred Stock to the fullest extent of such Available Proceeds and shall redeem the remaining shares as soon as it may lawfully do so under Nevada law governing distributions to shareholders. Prior to the distribution or redemption provided for in this Subsection 2.2.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event.

 

 

Each holder of Series D Preferred Stock shall surrender the certificate or certificates representing such shares to the Corporation at the principal office of the Corporation, or at such other place as may be designated by the Corporation, on or before the Redemption Date, and thereupon, on the Redemption Date, the Corporation shall pay the Redemption Price for such shares in immediately available funds, by wire transfer to an account designated by such holder or by certified or bank check payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. Each stock certificate surrendered for redemption shall be canceled and retired. From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of the Series D Preferred Stock of the Corporation (except the right to receive the Redemption Price on surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. Shares of Series D Preferred Stock that are subject to redemption but that have not been redeemed and the Redemption Price paid due to insufficient legally available funds shall continue to be entitled to the conversion and other rights, preferences, privileges and restrictions of such Series D Preferred Stock until such shares have been redeemed and the Redemption Price has been paid.

 

2.2.3       Notice of Liquidating Event. Written notice of any Deemed Liquidating Event stating, as applicable, a payment date or Redemption Date, the place where such payment or redemption shall be made, the amount of each payment in liquidation or the Redemption Price and calling on such holder to surrender to the Corporation, in the manner and at the place designated, its certificate or certificates representing its shares of Series D Preferred Stock, shall be given not less than 10 days before the payment date or Redemption Date stated therein, to each holder of record of Series D Preferred Stock at such holder’s address as shown in the records of the Corporation; provided, that, to the extent permitted hereunder, any holder of Series D Preferred Stock may convert its shares of Series D Preferred Stock to Common Stock during such period at any time before the close of business on the last full day preceding the payment date or Redemption Date stated in such notice.

 

2.2.4       Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the fair market value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity. The fair market value of such property, rights or securities shall be determined in good faith by the Board.

 

 

3.            Voting.

 

3.1          General. Notwithstanding anything to the contrary herein or in the Articles of Incorporation of the Company, except as provided below or otherwise expressly required by applicable law, the holders of Series D Preferred Stock shall not be entitled to vote. At any time when shares of Series D Preferred Stock are required to vote, the written consent or affirmative vote of the holders of at least 50% of the then outstanding shares of Series D Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, shall be binding on all Series D Preferred Stock holders. The holders of Series D Preferred Stock shall be entitled to vote on any proposed amendment to the Company’s Articles of Incorporation if such amendment would:

 

3.1.1       Effect an exchange or reclassification of all or part of the Series D Preferred Stock into shares of another class;

 

3.1.2       Effect an exchange or reclassification, or create the right of exchange, of all or part of the shares of another class of the Company into shares of Series D Preferred Stock;

 

3.1.3       Adversely change the rights, preferences, or limitations of all or part of the shares of Series D Preferred Stock;

 

3.1.4       Change the shares of all or part of the Series D Preferred Stock into a different number of shares of Series D Preferred Stock;

 

3.1.5       Create a new class of shares having rights or preferences with respect to dissolution that are prior or superior to the shares of Series D Preferred Stock;

 

3.1.6       Increase the rights, preferences, or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to dissolution that are prior or superior to the shares of Series D Preferred Stock;

 

3.1.7       Limit or deny any existing preemptive right of all or part of the shares of the Series D Preferred Stock; or

 

3.1.8       Cancel or otherwise affect rights to distributions that have accumulated but not yet been authorized on all or part of the shares of the Series D Preferred Stock.

 

 

4.            Conversion.

 

The holders of the Series D Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

4.1          Right to Convert.

 

4.1.1       Conversion Ratio. Each share of Series D Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into that number of fully paid and nonassessable shares of Common Stock (whether whole or fractional) that have a Fair Market Value, in the aggregate, equal to the Series D Conversion Price. The “Series D Conversion Price” shall initially be equal to $10.00. Such initial Series D Conversion Price, and the rate at which shares of Series D Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in Section 4.4 below. “Fair Market Value” shall mean as of any date of determination, 80% of the average closing price of a share of Common Stock on the principal exchange or market on which such shares are then trading for the 20 trading days immediately preceding such date.

 

4.1.2       Termination of Conversion Rights. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series D Preferred Stock.

 

4.1.3       Limitation on Conversion. Notwithstanding anything to the contrary contained herein, a holder’s right to exercise that holder’s Conversion Rights shall be limited to the extent necessary to ensure that, following such exercise, the total number of shares of Common Stock then beneficially owned by such holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with such holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the “1934 Act”), does not exceed 4.9% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder.

 

4.2          Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series D Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall round the number of shares issued to the nearest whole number. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series D Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

 

 

4.3           Mechanics of Conversion.

 

4.3.1       Notice of Conversion. In order for a holder of Series D Preferred Stock to voluntarily convert shares of Series D Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series D Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series D Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series D Preferred Stock represented by such certificate or certificates and, if applicable, any event on which such conversion is contingent. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such certificates (or lost certificate affidavit and agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of Series D Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Series D Preferred Stock represented by the surrendered certificate that were not converted into Common Stock and (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion.

 

4.3.2       Reservation of Shares. The Corporation shall at all times when the Series D Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series D Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series D Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series D Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval of any necessary amendment to the Articles of Incorporation. Before taking any action that would cause an adjustment reducing the Series D Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series D Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Series D Conversion Price.

 

 

4.3.3       Effect of Conversion. All shares of Series D Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor. Any shares of Series D Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of shares of Series D Preferred Stock accordingly.

 

4.3.4       No Further Adjustment. Upon any such conversion, no adjustment to the Series D Conversion Price shall be made for any declared but unpaid dividends on the Series D Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

 

4.3.5       Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock on behalf of the Corporation upon conversion of shares of Series D Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series D Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

 

4.4          Adjustments to Series D Preferred.

 

4.4.1       Adjustment for Reclassification, Exchange and Substitution. If the Common Stock issuable on the conversion of Series D Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than as provided for in Subsection 4.4.3), then and in each such event the holder of each share of Series D Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable on such reorganization, reclassification or other change, by holders of the number of shares of Common Stock into which such shares of Series D Preferred Stock might have been converted immediately before such reorganization, reclassification, or change.

 

4.4.2       Sales, Reorganizations, Mergers or Consolidations. In case of any consolidation or merger of the Corporation with or into another entity, the sale, transfer or other disposition of all or substantially all of the assets of the Corporation to another person or the sale, transfer or other disposition of securities of the Corporation representing 50% or more of the combined voting power of the then outstanding securities of the Corporation (other than a consolidation, merger or sale treated as a Deemed Liquidating Event pursuant to Section 2 above), each share of Series D Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property that a holder of the number of shares of Common Stock of the Corporation deliverable on conversion of Series D Preferred Stock would have been entitled on such consolidation, merger or sale; and in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions of Section 4 herein with respect to the rights and interest thereafter of the holders of Series D Preferred Stock, to the end that the provisions set forth in Section 4 herein shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of Series D Preferred Stock.

 

 

4.4.3       Certificate of Adjustment. On the occurrence of each adjustment or readjustment of the Series D Conversion Price pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms thereof and prepare and furnish to each holder of Series D Preferred Stock affected thereby a certificate setting forth such adjustment or readjustment and showing in detail the facts on which such adjustment or readjustment is based. The Corporation shall, on the written notice at any time of any holder of Series D Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (a) such adjustment or readjustment, (b) the Series D Conversion Price at the time in effect, and (c) the number of shares of Common Stock and the amount, if any, of other property that at the time would be received on the conversion of such holder’s shares.

 

5.            Preemptive Rights. Holders of Series D Preferred Stock shall not have preemptive rights to acquire shares of stock or securities convertible into shares of stock issued by the Corporation.

 

6.            Waiver. Any of the rights, powers, preferences and other terms of the Series D Preferred Stock set forth herein may be waived on behalf of all holders of Series D Preferred Stock by the affirmative written consent or vote of the holders of more than 50% of the shares of Series D Preferred Stock then outstanding.

 

7.            Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Series D Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation or given by electronic communication in compliance with the provisions of the Business Corporation Act and shall be deemed sent upon such mailing or electronic transmission.

 

IN WITNESS WHEREOF, the Company has caused this Certificate to be duly executed on its behalf by its undersigned Chairman, Chief Executive Officer and Chief Financial Officer as of the date below.

 

Date: January [__], 2021.

 

FRIENDABLE, INC.:  
     
By:     
  Robert Rosatino, Jr.  
  CEO, CFO and Director  

 

 

 

Exhibit 4.1

 

FRIENDABLE, INC.

SUBSCRIPTION AGREEMENT

 

NOTICE TO INVESTORS

 

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO PROSPECTIVE INVESTOR IN CONNECTION WITH THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

THE SECURITIES CANNOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT. IN ADDITION, THE SECURITIES CANNOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS. INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4(g). THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH INVESTOR IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY INVESTOR IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

PROSPECTIVE INVESTORS MAY NOT TREAT THE CONTENTS OF THE SUBSCRIPTION AGREEMENT, THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS PROVIDED BY THE COMPANY (COLLECTIVELY, THE “OFFERING MATERIALS”), OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING “TESTING THE WATERS” MATERIALS) AS INVESTMENT, LEGAL OR TAX ADVICE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED. EACH PROSPECTIVE INVESTOR SHOULD CONSULT THE INVESTOR’S OWN COUNSEL, ACCOUNTANTS AND OTHER PROFESSIONAL ADVISORS AS TO INVESTMENT, LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THE INVESTOR’S PROPOSED INVESTMENT.

 

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

 

SUBSCRIPTION AGREEMENT

 

This subscription agreement (this “Subscription Agreement” or the “Agreement”) is entered into by and between FRIENDABLE INC., a Nevada corporation (hereinafter the “Company”) and the undersigned (hereinafter the “Investor”) as of the date set forth on the signature page hereto. Any term used but not defined herein shall have the meaning set forth in the Offering Circular (as defined below).

 

RECITALS

 

WHEREAS, the Company desires to offer shares of its Series D Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”) on a “best efforts” basis pursuant to Regulation A of Section 3(6) of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a Tier 2 offering (the “Offering”), at a purchase price of $10.00 per share (the “Per Share Purchase Price”), for total gross proceeds of up to $5,000,000 (the “Maximum Offering”); and

 

WHEREAS, the Investor desires to acquire that number of shares of Series D Preferred Stock (the “Shares”) as set forth on the signature page hereto at the purchase price set forth herein; and

 

WHEREAS, the Offering will terminate on the first to occur of: (i) one year from the date of the Offering Circular as filed with the US Securities and Exchange Commission; or (ii) the date on which the Maximum Offering is sold (in either case, the “Termination Date”).

 

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

1. Subscription.

 

(a)       The Investor hereby irrevocably subscribes for and agrees to purchase the number of Shares set forth on the signature page hereto at the Per Share Purchase Price, upon the terms and conditions set forth herein. The aggregate purchase price for the Shares with respect to each Investor (the “Purchase Price”) is payable in the manner provided in Section 2(a) below.

 

(b)       Investor understands that the Shares are being offered pursuant to the Form 1-A Regulation A Offering Circular dated ____________, 2021 and its exhibits as filed with and qualified by the Securities and Exchange Commission (the “SEC”) on ________________, 2021 (collectively, the “Offering Circular”). The Company will accept tenders of funds to purchase the Shares. The Company will close on investments on a “rolling basis,” pursuant to the terms of the Offering Circular. As a result, not all investors will receive their Shares on the same date.

  

(c)  This subscription may be accepted or rejected in whole or in part, for any reason or for no reason, at any time prior to the Termination Date, by the Company at its sole and absolute discretion. In addition, the Company, at its sole and absolute discretion, may allocate to Investor only a portion of the number of the Shares that Investor has subscribed for hereunder. The Company will notify Investor whether this subscription is accepted (whether in whole or in part) or rejected. If Investor’s subscription is rejected, Investor’s payment (or portion thereof if partially rejected) will be returned to Investor without interest and all of Investor’s obligations hereunder shall terminate. In the event of rejection of this subscription in its entirety, or in the event the sale of the Shares (or any portion thereof) to an Investor is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in full force and effect. 

 

(d)  The terms of this Subscription Agreement shall be binding upon Investor and its permitted transferees, heirs, successors and assigns (collectively, the “Transferees”); provided, however, that for any such transfer to be deemed effective, the Transferee shall have executed and delivered to the Company in advance an instrument in form acceptable to the Company in its sole discretion, pursuant to which the proposed Transferee shall acknowledge and agree to be bound by the representations and warranties of Investor and the terms of this Subscription Agreement. No transfer of this Agreement may be made without the consent of the Company, which may be withheld in its sole and absolute discretion.

 

 

2.  Payment and Purchase Procedure. The Purchase Price shall be paid simultaneously with Investor’s subscription. Investor shall deliver payment for the aggregate purchase price of the Shares by check, credit card, ACH deposit or by wire transfer to an account designated by the Company in Section 8 below. The Investor acknowledges that, in order to subscribe for Shares, he must fully comply with the purchase procedure requirements set forth in Section 8 below.

 

3.  Representations and Warranties of the Company. The Company represents and warrants to Investor that the following representations and warranties are true and complete in all material respects as of the date of each Closing: (a) the Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Nevada. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement, the Shares and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business; (b) the issuance, sale and delivery of the Shares in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Shares, when issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable; (c) the acceptance by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon the Company’s acceptance of this Subscription Agreement, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by the Company’s certificate of incorporation, bylaws and the Nevada Business Corporation Act in general.

 

4.  Representations and Warranties of Investor. By subscribing to the Offering, Investor (and, if Investor is purchasing the Shares subscribed for hereby in a fiduciary capacity, the person or persons for whom Investor is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects, as of the date of each Closing:

 

(a)  Requisite Power and Authority. Investor has all necessary power and authority under all applicable provisions of law to subscribe to the Offering, to execute and deliver this Subscription Agreement and to carry out the provisions thereof. All actions on Investor’s part required for the lawful subscription to the offering have been or will be effectively taken prior to the Closing. Upon subscribing to the Offering, this Subscription Agreement will be a valid and binding obligation of Investor, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (ii) as limited by general principles of equity that restrict the availability of equitable remedies.

   

(b)  Company Offering Circular. Investor acknowledges the public availability of the Company’s Offering Circular which can be viewed on the SEC Edgar Database, under the CIK number [                   ]. This Offering Circular is made available in the Company’s qualified offering statement on SEC Form 1-A, as amended, and was qualified by the SEC on ________ _____, 2021. In the Company’s Offering Circular, it makes clear the terms and conditions of the offering of Shares and the risks associated therewith are described. Investor has had an opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Investor has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Investor acknowledges that except as set forth herein, no representations or warranties have been made to Investor, or to Investor’s advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.

 

 

(c)   Investment Experience; Investor Determination of Suitability. Investor has sufficient experience in financial and business matters to be capable of utilizing such information to evaluate the merits and risks of Investor’s investment in the Shares, and to make an informed decision relating thereto. Alternatively, the Investor has utilized the services of a purchaser representative and together they have sufficient experience in financial and business matters that they are capable of utilizing such information to evaluate the merits and risks of Investor’s investment in the Shares, and to make an informed decision relating thereto. Investor has evaluated the risks of an investment in the Shares, including those described in the section of the Offering Circular entitled “Risk Factors,” and has determined that the investment is suitable for Investor. Investor has adequate financial resources for an investment of this character. Investor could bear a complete loss of Investor’s investment in the Company. 

 

(d)   No Registration. Investor understands that the Shares are not being registered under the Securities Act on the ground that the issuance is exempt under Regulation A of Section 3(b) of the Securities Act, and that reliance on such exemption is predicated in part on the truth and accuracy of Investor’s representations and warranties, and those of the other purchasers of the Shares, in the offering. Investor further understands that, at present, the Company is offering the Shares solely by members of its management. However, the Company reserves the right to engage the services of a broker/dealer who is registered with the Financial Industry Regulatory Authority (“FINRA”). Accordingly, until such FINRA registered broker/dealer has been engaged as a placement or selling agent, the Shares may not be “covered securities” under the National Securities Market Improvement Act of 1996, and the Company may be required to register or qualify the Shares under the securities laws of those states in which the Company intends to offer the Shares. In the event that Shares are so registered or qualified, the Company will notify the Investor and all prospective purchasers of the Shares as to those states in which the Company is permitted to offer and sell the Shares. In the event that the Company engages a FINRA registered broker/dealer as placement or selling agent, and FINRA approves the compensation of such broker/dealer, then the Shares will no longer be required to be registered under state securities laws on the basis that the issuance thereof is exempt as an offer and sale not involving a registrable public offering in such state, as the Shares will be “covered securities” under the National Securities Market Improvement Act of 1996. The Investor covenants not to sell, transfer or otherwise dispose of any Shares unless such Shares have been registered under the applicable state securities laws in which the Shares are sold, or unless exemptions from such registration requirements are otherwise available.

 

(e)  Illiquidity and Continued Economic Risk. Investor acknowledges and agrees that there is no ready public market for the Shares and that there is no guarantee that a market for their resale will ever exist. The Company has no obligation to list any of the Shares on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Shares. Investor must bear the economic risk of this investment indefinitely and Investor acknowledges that Investor is able to bear the economic risk of losing Investor’s entire investment in the Shares.

  

(f)  Accredited Investor Status or Investment Limits. Investor represents that either:

 

  (i) that Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the United States Securities Act of 1933; or
     
  (ii) that the Purchase Price, together with any other amounts previously used to purchase Shares in this offering, does not exceed Ten Percent (10%) of the greater of Investor’s annual income or net worth (or in the case where Investor is a non-natural person, their revenue or net assets for such Investor’s most recently completed fiscal year end).

 

Investor represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.

 

(g)  Stockholder Information. Within five (5) days after receipt of a request from the Company, Investor hereby agrees to provide such information with respect to its status as a stockholder (or potential stockholder) and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject, including, without limitation, the need to determine the accredited investor status of the Company’s stockholders. Investor further agrees that in the event it transfers any Shares, it will require the transferee of such Shares to agree to provide such information to the Company as a condition of such transfer.

 

(h)  Valuation; Arbitrary Determination of Per Share Purchase Price by the Company. Investor acknowledges that the Per Share Purchase Price of the Shares to be sold in this offering was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. Investor further acknowledges that future offerings of securities of the Company may be made at lower valuations, with the result that Investor’s investment will bear a lower valuation.

 

 

(i)  Domicile. Investor maintains Investor’s domicile (and is not a transient or temporary resident) at the address provided with Investors subscription.

 

(j)  Foreign Investors. If Investor is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Investor hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. Investor’s subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of Investor’s jurisdiction.

  

(k)  Fiduciary Capacity. If Investor is purchasing the Shares in a fiduciary capacity for another person or entity, including without limitation a corporation, partnership, trust or any other entity, the Investor has been duly authorized and empowered to execute this Agreement and all other subscription documents. Upon request of the Company, Investor will provide true, complete and current copies of all relevant documents creating the Investor, authorizing its investment in the Company and/or evidencing the satisfaction of the foregoing.

 

5.  Indemnity. The representations, warranties and covenants made by Investor herein shall survive the closing of this Subscription Agreement. Investor agrees to indemnify and hold harmless the Company and its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by Investor to comply with any covenant or agreement made by Investor herein or in any other document furnished by Investor to any of the foregoing in connection with this transaction.

  

6.  Governing Law; Jurisdiction; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of the Offering Circular, including, without limitation, this Subscription Agreement, shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Subscription Agreement and any documents included within the Offering Circular (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in Broward County, Florida. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Broward County, Florida for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the documents included within the Offering Circular), and hereby irrevocably waives, and agrees not to assert in any action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Subscription Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party hereto shall commence an action or proceeding to enforce any provisions of the documents included within the Offering Circular, then the prevailing party in such action or proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

This choice of forum provision does not preclude or contract the scope of exclusive federal or concurrent jurisdiction for any actions brought under the Securities Act or the Exchange Act and does not apply to claims arising under the federal securities laws. Accordingly, our exclusive forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and you cannot waive our compliance with these laws, rules, and regulations.

 

 

IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

This Waiver of Jury Trial does not waive compliance with federal securities laws and the rules and regulations promulgated thereunder. Accordingly, this Jury Trial Waiver provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and you cannot waive our compliance with these laws, rules, and regulations.

 

7.  Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed on the date of such delivery to the address of the respective parties as follows, if to the Company, to Friendable, Inc., 1821 S Bascom Ave., Campbell, CA 95008, Attention: Robert Rositano, Chief Executive Officer. If to Investor, at Investor’s address supplied in connection with this subscription, or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by email shall be confirmed by letter given in accordance with (a) or (b) above. 

 

8.  Purchase Procedure. The Investor acknowledges that, in order to subscribe for Shares, he must, and he does hereby, deliver to the Company: (a) a fully completed and executed counterpart of the Signature Page attached to this Subscription Agreement; and (b) payment for the aggregate Purchase Price in the amount set forth on the Signature Page attached to this Agreement. Payment may be made by either check, wire, credit card or ACH deposits.

 

Please send checks to the Company.

 

Friendable, Inc.

1821 S Bascom Ave.

Campbell, CA 95008

 

Wire instructions:

 

Name and Address of Bank:

ABA # 
Account#
 

For the benefit of: Friendable, Inc.

 

 

9.  Miscellaneous. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require. Other than as set forth herein, this Subscription Agreement is not transferable or assignable by Investor. The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Investor and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns. None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Investor. In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement. The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. This Subscription Agreement supersedes all prior discussions and agreements between the parties, if any, with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof. The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person. The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. In the event that either party hereto shall commence any suit, action or other proceeding to interpret this Subscription Agreement, or determine to enforce any right or obligation created hereby, then such party, if it prevails in such action, shall recover its reasonable costs and expenses incurred in connection therewith, including, but not limited to, reasonable attorney’s fees and expenses and costs of appeal, if any. All notices and communications to be given or otherwise made to Investor shall be deemed to be sufficient if sent by e-mail to such address provided by Investor on the signature page of this Subscription Agreement. Unless otherwise specified in this Subscription Agreement, Investor shall send all notices or other communications required to be given hereunder to the Company by email to __________________ followed by a copy via FedEx or other national overnight courier service. Any such notice or communication shall be deemed to have been delivered and received on the first business day following that on which the e-mail has been sent (assuming that there is no error in delivery). As used in this Section 9, the term “business day” shall mean any day other than a day on which banking institutions in the State of California are legally closed for business. This Subscription Agreement may be executed in one or more counterparts. No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

10.  Consent to Electronic Delivery of Notices, Disclosures and Forms. Investor understands that, to the fullest extent permitted by law, any notices, disclosures, forms, privacy statements, reports or other communications (collectively, “Communications”) regarding the Company, the Investor’s investment in the Company and the shares of Series D Preferred Stock (including annual and other updates and tax documents) may be delivered by electronic means, such as by e-mail. Investor hereby consents to electronic delivery as described in the preceding sentence. In so consenting, Investor acknowledges that e-mail messages are not secure and may contain computer viruses or other defects, may not be accurately replicated on other systems or may be intercepted, deleted or interfered with, with or without the knowledge of the sender or the intended recipient. The Investor also acknowledges that an e-mail from the Company may be accessed by recipients other than the Investor and may be interfered with, may contain computer viruses or other defects and may not be successfully replicated on other systems. Neither the Company, nor any of its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (collectively, the “Company Parties”), gives any warranties in relation to these matters. Investor further understands and agrees to each of the following: (a) other than with respect to tax documents in the case of an election to receive paper versions, none of the Company Parties will be under any obligation to provide Investor with paper versions of any Communications; (b) electronic Communications may be provided to Investor via e-mail or a website of a Company Party upon written notice of such website’s internet address to such Investor. In order to view and retain the Communications, the Investor’s computer hardware and software must, at a minimum, be capable of accessing the Internet, with connectivity to an internet service provider or any other capable communications medium, and with software capable of viewing and printing a portable document format (“PDF”) file created by Adobe Acrobat. Further, the Investor must have a personal e-mail address capable of sending and receiving e-mail messages to and from the Company Parties. To print the documents, the Investor will need access to a printer compatible with his or her hardware and the required software; (c) if these software or hardware requirements change in the future, a Company Party will notify the Investor through written notification. To facilitate these services, the Investor must provide the Company with his or her current e-mail address and update that information as necessary. Unless otherwise required by law, the Investor will be deemed to have received any electronic Communications that are sent to the most current e-mail address that the Investor has provided to the Company in writing; (d) none of the Company Parties will assume liability for non-receipt of notification of the availability of electronic Communications in the event the Investor’s e-mail address on file is invalid; the Investor’s e-mail or Internet service provider filters the notification as “spam” or “junk mail”; there is a malfunction in the Investor’s computer, browser, internet service or software; or for other reasons beyond the control of the Company Parties; and (e) solely with respect to the provision of tax documents by a Company Party, the Investor agrees to each of the following: (i) if the Investor does not consent to receive tax documents electronically, a paper copy will be provided, and (ii) the Investor’s consent to receive tax documents electronically continues for every tax year of the Company until the Investor withdraws its consent by notifying the Company in writing.

  

[THIS SPACE IS INTENTIONALLY LEFT BLANK]

 

[SIGNATURE PAGE TO FOLLOW] 

 

 

INVESTOR CERTIFIES THAT HE HAS READ THIS ENTIRE SUBSCRIPTION AGREEMENT AND THAT EVERY STATEMENT MADE BY THE INVESTOR HEREIN IS TRUE AND COMPLETE.

 

THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED. THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THIS OFFERING. NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN ANY OFFERING MATERIALS, AND NOTHING CONTAINED IN THE OFFERING MATERIALS IS OR SHOULD BE RELIED UPON AS A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THE COMPANY.

 

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT, IN WHOLE OR IN PART, FOR ANY REASON OR FOR NO REASON, ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE DOLLAR AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

 

IN WITNESS WHEREOF, this Subscription Agreement is executed as of the ______ day of _________, 2021.

 

Number of Shares Subscribed For:  
   
Total Purchase Price:   $
   
Signature of Investor:  
   
Name of Investor:  
   
Address of Investor:  
   
Electronic Mail Address:  
   
Investor’s SS# or Tax ID#:  

 

ACCEPTED BY: FRIENDABLE, INC.

  

Signature of Authorized Signatory: __________________________________

 

Name of Authorized Signatory: ___________________________, CEO

 

Date of Acceptance: _________________, 2021.

 

[Signature Page to Subscription Agreement]

 

 

 

EXHIBIT 6.1

 

MATERIAL AGREEMENTS BETWEEN FRIENDABLE, INC. AND ANSWERING LEGAL

 

(FRIENDABLE LOGO)

 

Technology Services Division™

 

 

 

 

 

 

 

MOBILE APPLICATION DEVELOPMENT SERVICES

 

 

 

 

For

 

 

 

(ANSWERING LEGAL)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepared for:
Robert Shatles |
rob@answeringlegal.com
Submitted by: Dean
Rositano | CTO
Friendable, Inc.
dean@friendable.com

1

 

(FRIENDABLE LOGO)

 

ANSWERING LEGAL

 

SOW1: MOBILE APPLICATION DEVELOPMENT SERVICES

 

Presented to:

 

ROB SHATLES | PRESIDENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Important Notice:

The enclosed material is proprietary to Friendable. This material is presented for the purpose of evaluating services and may not be disclosed in any manner to anyone other than the addressee and employees or authorized representatives of client named here within.

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

2

 

(FRIENDABLE LOGO)

 

TABLE OF CONTENTS

 

ANSWERING LEGAL

 

SOW1: MOBILE APPLICATION DEVELOPMENT SERVICES 2
   
TABLE OF CONTENTS 3
   
EXECUTIVE SUMMARY 4
   
MOBILE APPLICATION PROJECT GOALS 4
   
SERVICES AND TIMELINES 7
   
PROJECT COSTS & EXPENSES 8
   
CONTRACT TERMS 8
   
ANSWERING LEGAL SOW1 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

3

 

(FRIENDABLE LOGO)

 

EXECUTIVE SUMMARY

 

Friendable has been asked to submit a proposal to develop a mobile application for Answering Legal utilizing existing backend services and API’s. Application is to be designed for IOS and Android, and will be utilized as a customer facing application, allowing them to manage their calls, messages, availability, and account information. It is understood by and between Friendable, Inc. and the Answering Legal team, that features identified in the general scope of work may be added in series or phases, based on the goal of delivering a version of the “Answering Legal App” by year end. It is possible all features and functions make it into the apps final deliverable, yet it is not possible to determine until we move through the initial phases of development together.

 

PROJECT GOALS

 

MOBILE APPLICATION(S)

 

High Level Goals:

 

Þ Develop a New Mobile application for deployment on IOS and Android Phone and Tablet Devices.
Þ UI / UX Design – Pixel Perfect Designs, plus cut and prep elements for multiple screen sizes / resolutions / and OS’s.
Þ Auto Layout – Multiple Screen Sizes and Resolutions
Þ Develop User Account Login Interface
Þ Develop User Account Management - to add, view, sort, and manage their calls and messages.
Þ Development of Reminder System
Þ Development of Tutorial on “How To Use” the application
Þ Utilization of Answering Legal API’s
Þ Testing, Bug Fixing, and Deployment to app stores

 

Features / Tasks:

 

Complete Wireframe (Every Screen & Action), API Mapping, and Developer Documentation
Setup of code version control (GitHub)
Setup automatic build processes and quality control
Setup Bug Tracking software and process

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

4

 

(FRIENDABLE LOGO)

 

UI / UX design – All Screens, buttons, elements, etc.
Develop User On-Boarding Process
- Tutorial
- Login (User ID & Pass) and Face ID / Thumb option (On Supported Devices)
- Forgot Password Function
Develop Navigation – Bottom Touch bar
Development of Home Screen and Services - Quick Action Buttons
- Hold Calls
Double Verification Prompt
- Hold Calls Expiration Countdown Timer
- Double Verification Prompt
- Set New Status
- Support / Submit Ticket
- Set Current Status
Scroll Selector
Set Expiration Countdown Timer
Double Verification Prompt
Edit Status
- Details
Activity Feed
- Messages
- Reminders
Messages
- Search
Criteria
Phrase Match
Tag
- Filter
Date / Time
Tags
Save Filter
Tabs
- All Messages
- Unread
Message Contact Detail
- Quick Action Buttons
Email
Save
Reminder
More
Tag
Mark Unread
Archive
Tag

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

5

 

(FRIENDABLE LOGO)  

 

Mark Unread
Archive
- Message Body
- Reminders
Add Reminder
- Tags
Add / Remove Tag
- Message Details
Group Text
- Launch group text from pre-determined group
Status
- Quick Action Buttons
New Status
Set Start and End Times
Scheduled – Details
Activity Feed
Create New
More Options
o Copy / Duplicate
o Edit
My Statuses
o Saved Statuses
o Crate New
o Edit
Current Status
o Scroll Menu
o Expiration Time Ticker
o Double Verification Prompt
Status Details
Contact Info
Support Ticket
o Submit-able Form – email
o Success Message
Company Info
o Request Info Change
App Settings
o Notification Settings – Email / Push
Contact Us
FAQ’s
Logout
Tutorials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

6

 

(FRIENDABLE LOGO)  

 

Analytics / Behavior Tracking and Reporting – inclusion of analytics and tracking SDK and behavior tagging – (Google Analytics, Flurry, MixPanel, AppSee, etc.)
Push Notifications?
User Experience testing and tweaking
Bug testing, tracking, and fixing
App Store Deployment
 

 

SERVICES OVERVIEW

 

With our Agreement in place, Friendable will provide a knowledgeable team that is trained to address any issues that might arise. The Project Manager will be available during standard business via email, phone or skype. In addition, Friendable will utilize a web based issue tracker. When builds are released, client can log any and all issues, changes, and feature requests, which will be assigned and managed until closed by the project manager.

 

Client Responsibilities:

Provide access to a complete set of API’s
Provide project manager and technical contact

 

PROCESS

Task Assignments
- Direct to the Project Manager
- If the work is unsatisfactory, the client agrees to raise the concern within 1 business week of asking the Project Manager to address the issue

 

TIMELINE

Kick Off July 22nd, 2019
Beta Release – November 15th 2019
Production Release - December 15th 2019
Optimization Release – January 2020
Roll out January 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

7

 

(FRIENDABLE LOGO)  

 

PROJECT COSTS

 

SERVICES AND TIMELINES

 

Initial Product Build

 

Title Dates Amount
Start Up On Approval / Signing $30,000
Progress Payment #1 August 15th $30,000
Progress Payment #2 September 15th $30,000
Progress Payment #3 October 15th $30,000
V1 Release Payment November 15th $30,000
  Total  $150,000

 

Payment is due in U.S. Dollars on or before the dates identified in the table above.

 

Ongoing Fees:

 

Þ App Updates: As Needed

 

EXPENSES

 

These costs exclude direct expenses incurred on the project. These include desktop publishing of print and/or presentation materials, copying and shipping charges. This does not include travel-related expenses. If traveling, meal expenses will be limited to $50 per diem. All travel and other direct expenses greater than $500 will be submitted to the Answering Legal for approval prior to incurring them.

 

CONTRACT TERMS

 

PAYMENT TERMS: Client shall pay Company the fees in the amount and on the timing as specified in each applicable SOW, or invoice, including, but not limited to, compensation for the Services and all reasonable out-of-pocket expenses incurred in the performance of the Services, and for any non-standard expenses [including support] incurred at the written request of Client. Payments made later than the due date set forth in the applicable SOW or invoice will accrue interest from the date due to the date paid at the lesser rate of eighteen percent (18%) per annum or the maximum allowed by applicable law. In the event Client fails to make a payment within ten (10) days from the date such payment is due, Company shall be entitled to suspend performance of the Services and, at its option, terminate the relevant SOW by written notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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DELIVERABLES: All Deliverables provided by Company to Client shall be deemed to be accepted within 5 days of receipt by Client unless Company receives written notice of non-acceptance within 5 days after delivery. Any notice of non-acceptance must state in reasonable detail how the Deliverables did not conform to the Statement of Work and Company shall use its reasonable business efforts to correct any deficiencies in the Deliverables so that they conform to the Statement of Work within 30 days of non- acceptance notice by Client. Client shall not withhold any payment for Services except for material and substantial non-conformity with the Statement of Work.

 

TERMINATION: Either party may, in its sole discretion, terminate this Agreement after the Services have been completed and paid in full for any existing SOW by providing prior written notice to the other party hereto. The provisions of this Agreement shall continue to apply to all ongoing Statements of Work. Either party may terminate this Agreement upon written notice to the other party if the other party: (a) materially breaches this Agreement, and such breach remains uncured more than thirty (30) days after receipt of written notice of such breach; (b) makes an assignment of substantially all of its assets for the benefit of its creditors; or (c) either (i) files a voluntary petition for relief under 11 U.S.C. 101 et. seq. (the “Bankruptcy Code”) which is not dismissed or withdrawn within sixty (60) days or (ii) has an involuntary petition for relief under the Bankruptcy Code filed against it. In the event Client fails to meet any obligations to Company as described in this Agreement or in an SOW, including timely performance of Client tasks and deliverables per project schedules, then Company shall be entitled to suspend performance of the Services and, at its option, immediately terminate the relevant SOW by written notice. In any of the events of termination described herein, Client will continue to be obligated to pay any and all amounts due to Company for products or services provided to Client prior to the effective date of the termination, and any deposits or advance payments made by Client to Company shall be retained by Company. Upon expiration or termination of this Agreement, all Contract Terms described herein shall survive any expiration or termination of this Agreement.

 

WARRANTY: Client warrants that Company’s use of any materials furnished by Client in connection with a Statement of Work does not infringe any patent, copyright, trademark, trade secret or other right of any third party. Company warrants that the Deliverables, in the form provided to Client, do not infringe any patent, copyright, trademark, trade secret or other right of any third party. Company shall provide its services and meet its obligations under this Contract in a timely and workmanlike manner. If a Company License Agreement is used, then additional warranty terms contained therein will apply as to Company’s intellectual property which is licensed to Client.

 

LIMITATION OF LIABILITY: Neither party shall be liable for any consequential, indirect, special or incidental damages, such as damages for lost profits, business failure or loss arising out of use of the Deliverables or the Services, whether or not advised of the possibility of such damages. Company’s total liability arising out of this Agreement and the provision of the Services shall be limited to the fees received by Company within the twelve (12) month period immediately prior to the event giving rise to such liability paid under the applicable Statement of Work under which such liability arises. No action or proceeding arising out of this Agreement may be brought more than two years after the events giving rise thereto. Client shall indemnify and hold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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harmless Company, its parent, and subsidiary, and affiliate corporations, and their respective officers, directors and employees for any damages or losses incurred or sustained by any such parties relating to or that arise from: (i) the negligent or willful acts or omissions of Client, its employees or agents; or (ii) the performance of Services hereunder.

 

PUBLICITY: Neither party shall publish or use any advertising, sales promotions, press releases or other publicity relating to this Agreement or which use the other party’s name, logo, trademarks or service marks without the approval of the other party, which approval shall not be unreasonably withheld. The foregoing notwithstanding, the parties agree that Company may publicly refer to Client by name and use Client’s trademark and logo as part of Company’s Client lists.

 

INTELLECTUAL PROPERTY: ANSWERING LEGAL will own the entire product developed as part of this agreement.

 

PROTECTION OF PERSONNEL: Company makes every effort to hire and retain the best and brightest personnel. If Client hires any personnel of Company during a contract or within 24 months of the end of a contract, then the Client agrees to pay 50% of the employee’s previous annual compensation, or 50% of the employee’s future annual compensation, whichever is greater, to Company. The client also hereby grants access to Company for any and all financial or payroll information necessary to ascertain the employee’s future annual compensation within the first year of employment with Client.

 

ASSIGNMENT: Neither party may assign this Agreement without the other party’s prior written consent. Notwithstanding the foregoing, however, Company may assign this Agreement without the Client’s prior written consent to (i) its subsidiary or affiliate, (ii) a purchaser of all or substantially all of its stock, membership interests or assets, or (iii) a third party participating in a merger or other corporate reorganization. This Agreement shall be binding on the successors, legal representatives, and assigns of the parties hereto. Any purported attempt to assign or transfer this Agreement in violation of this provision will be deemed void.

 

AGREEMENT: This Agreement, including the SOWs and/or License Agreement, contains the entire agreement between Company and Client with regard to the subject matter hereof and supersedes all prior agreements between the parties. Company and Client acknowledge that no representations, inducements, promises, or agreements, orally or otherwise, have been made by Company or Client regarding the subject matter hereof which are not contained in this Agreement, and that no other agreement, statement, or promise not contained herein shall be valid or binding. This agreement will continue in effect from the effective date hereof, until terminated in writing by either party. Any changes to this agreement must be in writing and signed by both parties. This Agreement shall be governed in all respects by and construed in accordance with the laws of the state of California.

 

ARBITRATION: Any controversy, claim, or dispute between the parties relating to this Agreement shall be resolved by binding arbitration in California by an arbitrator(s) chosen under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). The arbitration shall be administered by the AAA and conducted according to California Code of Civil

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Procedure section 1282 et seq. Each party shall have the right to reasonable discovery prior to the arbitration. The arbitrator(s) shall base the award on applicable California law and judicial precedent and shall include in the award a statement of the reasons upon which the award is based. The fees of the arbitrator(s) shall be shared equally between the parties. Each party shall bear its own attorneys’ fees and costs incurred in the arbitration. Notwithstanding the foregoing, either party may seek judicial relief, including but not limited to, injunctive relief, for claims arising under the Intellectual Property section of this Agreement.

 

FORCE MAJEURE: Neither party shall be in default of any obligation under this Agreement to the extent performance of such obligation is prevented or delayed by a Force Majeure Event. For purposes of this section, Force Majeure Events include fire, flood, explosion, strike, war, insurrection, embargo, government requirement, act of civil or military authority, act of God, or any similar event, occurrence or condition which is not caused, in whole or in part, by that party, and which is beyond the reasonable control of that party. The parties shall take all reasonable action to minimize the effects of a Force Majeure Event. If a Force Majeure Event prevents or delays the performance of a party for 30 days, the other party shall have the right to terminate the affected Statement of Work upon written notice at any time before performance resumes.

 

RELATIONSHIP: The relationship of the parties is that of independent contractors. Each party, its employees and agents, shall not be deemed to be employees, agents, joint ventures or partners of the other and shall not have the authority to bind the other.

 

GOVERNING LAW:. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to conflict of law principles.

 

NO WAIVER: Neither party shall be deemed to have waived any rights under this Agreement, by course of dealing or otherwise, unless such waiver is given in writing and signed by the waiving party.

 

SEVERABILITY: If any provision of this Agreement or a Statement of Work is found to be unenforceable in any jurisdiction, the balance of this Agreement and the Statement of Work shall not be affected by the unenforceable provision, and such provision, shall, if feasible, be modified in scope so that it becomes enforceable.

 

COUNTERPARTS: This Agreement may be executed in one or more counterparts, including by facsimile, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ACCEPTANCE

 

ANSWERING LEGAL SOWl : MOBILE APPLICATION DEVELOPMENT SERVICES

 

Signature:   Signature:  
(-S-ROBERT A ROSITANO)   (-S-ROBERT SHATLES)    
Robert A Rositano JRI CEO   Robert Shatles I President  
       
FRIENDABLE, INC.   ANSWERING LEGAL  
Dated: 7/18/2019   Dated: 7/18/2019  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Technology Services Division™

 

 

 

 

For

 

 

 

 

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ADDITION #1 TO ORIGINAL PROJECT SCOPE

 

 

 

MOBILE AND WEB APPLICATION

High Performance Network Services Infrastructure, API Development, and Secure Admin Portal

 

 

 

 

 

Prepared for: Submitted by:
Robert Shatles | Dean Rositano | CTO
rob@answeringlegal.com Friendable, Inc.
  dean@friendable.com

 

 

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ANSWERING LEGAL

 

SOW2: Network Services Infrastructure, API Development, and Secure Admin Portal

 

Presented to:

 

ROB SHATLES | PRESIDENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Important Notice:

The enclosed material is proprietary to Friendable. This material is presented for the purpose of evaluating services and may not be disclosed in any manner to anyone other than the addressee and employees or authorized representatives of client named here within.

 

 

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Network Services Infrastructure

 

Friendable will architect, design and develop a backend infrastructure on the AWS platform to handle requests from the Answering Legal Mobile and Web Applications. Infrastructure will auto scale based on load, be backed up multiple times a day, and will be mirrored in 2 separate zones for failover. Platform will include creating and setting up the following services:

 

- Creation of Production Network Environment
- Creation of Development Network Environment – mini version of production
- Database Creation, structure, and development
- EC2 Linux based Server setup and recipe creation (server template) for provisioning new servers
- DNS Setup – domains and sub-domains
- Purchase and install of SSL
- AWS network and account Security design and setup (Create Security groups & VPN’s)
- AWS Beanstalk for auto provisioning auto scale servers
- S3 Buckets - creation and Setup for storing files
- Dual VPN to CTI for secure communications
- SNS setup and config - Push Notifications
- Creation of push notification groups and segmentation of users (i.e. subscribed, unsubscribed, past due, time zones, main account holders, team members, etc.)
- Creation of Cloud Front Auto Scale Groups for production API’s and web app
- Elastic Load Balancer setup and config
- Automated backup routines and data management
- Write routines to get the latest code from the Git repository and deploy to all production or development server groups - (Jenkins)
- Setup Code version control
- Setup bot server for automated tasks
- Amazon SES setup for admin email notifications
- Monitoring and Alerting setup

 

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CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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API Development

 

Friendable will develop a set of network service API’s to communicate with the applications (IOS, Android, and Web) as well as CTI. API’s will be a central location for all platforms to communicate and to ensure that everything is always in sync.

 

These include:

 

- Architect and Design of Database table structure
- Creation of approx. 30 – 40 new endpoints required (as per the API spec doc)
- Device and notification management – SNS subscribe / Unsubscribe
- Creation of routines to communicate changes to CTI
- Create a full set of Developer Documentation
- Create automated routines for task reminders, schedule changes, etc.
- Bot creation or Lambda function for Log management and reporting, server cleanup, stats, admin feeds, timed events, turning off account access for past due payments, etc.

 

Answering Legal Admin and server health portal

 

Friendable will create a secure admin area where answering Legal employees can login and perform the following tasks:

 

- View total # of App Users
- View # of app users – daily, hourly, date range
- View a user’s activity log
- Send a user’s activity log via email to customer
- View and edit a user’s profile
- Change Password
- Search Users
- Lock a user’s account
- Unlock a user’s account
- View app usage – link to app analytics
- Send broadcast push notifications to all users or by groups
- User Notes
- Server and DB health monitoring NewRelic, Nagios, etc –
o # of active servers
o # of requests
o Speed
o Error reporting
o Network and App Debugging information

 

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App Changes and Additions

 

- Add Sub User Process
o UI / UX updates
o CTI Sync updates
- User admin levels
o Web Admin Updates
o APP UI / UX updates
- User change log and management
o APP UI / UX updates
o Change Log DB and code updates
o Will include where change was made (IOS, Android, Web App, Phone - CTI)
- Email Folders functionality for filing messages into folders
o APP UI / UX updates
o DB and code updates
- Assigning & Attaching Tasks to email and contacts
o APP UI / UX updates
- Contact merge if duplicate function
- Setup Email SMTP server or AWS SES and connect to automated task reminder system and forgot password flows

 

Additions November 7th & 8th

 

- Book Appointment Feature – allow account owner to send back to CTI to schedule an appointment.
o UI / UX Updates
o API Update
o Database Schema Update
o Automated file import and export sync with CTI creation
o CTI will schedule appointments outside of the app.

 

- Re-Skin for Ring Savvy
o New and separate source code
o New Domain creation and setup in production auto scale zones – separated domain URL’s for Answering Legal and Ring Savvy for easy splitting later, but will run on the same network services infrastructure for V1
o New version control repos – Github
o New separate automated code compile and deploy routines setup (Jenkins) dev and production for debugging and deploy on app stores
o Same DB, but users will be tagged and separated for Answering Legal and Ring Savvy for V1
o Combined web admin – users will be designated as Answering Legal or Ring Savvy

 

- Courts List
o GPA lookup of nearby courts
o Select Court and launch text message app with address pasted in

 

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Additional Clarifications:

1. Domain Transfer – Friendable will transfer ownership of the domain answeringmobile.com.
2. DNS management for answeringmobile.com will be forwarded to Amazon Route 53.

 

 

 

SERVICES OVERVIEW

 

With our Agreement in place, Friendable will provide a knowledgeable team that is trained to address any issues that might arise. The Project Manager will be available during standard business via email, phone or skype. In addition, Friendable will utilize a network and DB analyzer with a web-based interface. Client can log into the admin portal to see the health of the network and/or individual servers and DB’s.

 

Client Responsibilities:

Provide cooperation with CTI to complete the required database sync items in a timely manor.
Provide project manager and technical contact

 

PROCESS

 

Task Assignments
- Direct to the Project Manager
- If the work is unsatisfactory, the client agrees to raise the concern within 1 business week of asking the Project Manager to address the issue

 

PROJECTED TIMELINE

Network Services Infrastructure dev - Kick Off November 11th, 2019
Network Services backend development environment complete – November 22nd 2019
API development complete - January 24th, 2020
Production Environment Live – February 13th, 2020
Answering legal Web app & admin V1 alpha - February 28th, 2020
Answering legal Mobile App IOS and Android Alpha – March 20th, 2020
Answering legal Web app & Admin beta – April 3rd, 2020
Answering legal Mobile App IOS and Android Beta – April 17th, 2020
Answering legal Web App, IOS, and Android Release 1 – May 4th, 2020
Ring Savvy Web App, IOS, and Android Beta – May 15th
Ring Savvy Web App, IOS, and Android Production Live – May 22nd
Web admin production – May 22nd, 2020

 

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PROJECT COSTS

 

SERVICES AND COSTS

 

Initial High-Performance Network and Backend Services Build

 

Title Dates Amount
Network Services architecture design, development and administration (through March 2020)      $73,500
  API Development      $77,000
Admin and Server Health Portal       $44,900
App Additions      $57,000
   Total:          $252,400

 

Payment is due in U.S. Dollars on or before the dates identified in the table above.

 

  PAYMENT PLAN  
  Initial Kick Off Network Services        November 15th   $41,485.71
Progress Payment #1 December 15th $41,485.71
Progress Payment #2 January 15th $41,485.71
Progress Payment #3 February 15th $41,485.71
Progress Payment #4 March 15th $41,485.71
Progress Payment #5 April 15th $41,485.71
Last Payment SOW1 & SOW#2 May 15th $41,485.71

 

Payments include SOW #1, SOW #2, and re-skin for Ring Savvy

 

Ongoing Fees:

 

Þ Hosting, Monitoring, Upgrades, and Maintenance TBD

 

EXPENSES

 

These costs exclude direct expenses incurred on the project. These include desktop publishing of print and/or presentation materials, copying and shipping charges. This does not include travel-related expenses. If traveling, meal expenses will be limited to $50 per diem. All travel and other direct expenses greater than $500 will be submitted to the Answering Legal for approval prior to incurring them.

 

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CONTRACT TERMS

 

PAYMENT TERMS: Client shall pay Company the fees in the amount and on the timing as specified in each applicable SOW, or invoice, including, but not limited to, compensation for the Services and all reasonable out-of-pocket expenses incurred in the performance of the Services, and for any non-standard expenses [including support] incurred at the written request of Client. Payments made later than the due date set forth in the applicable SOW or invoice will accrue interest from the date due to the date paid at the lesser rate of eighteen percent (18%) per annum or the maximum allowed by applicable law. In the event Client fails to make a payment within ten (10) days from the date such payment is due, Company shall be entitled to suspend performance of the Services and, at its option, terminate the relevant SOW by written notice.

 

DELIVERABLES: All Deliverables provided by Company to Client shall be deemed to be accepted within 5 days of receipt by Client unless Company receives written notice of non-acceptance within 5 days after delivery. Any notice of non-acceptance must state in reasonable detail how the Deliverables did not conform to the Statement of Work and Company shall use its reasonable business efforts to correct any deficiencies in the Deliverables so that they conform to the Statement of Work within 30 days of non- acceptance notice by Client. Client shall not withhold any payment for Services except for material and substantial non-conformity with the Statement of Work.

 

TERMINATION: Either party may, in its sole discretion, terminate this Agreement after the Services have been completed and paid in full for any existing SOW by providing prior written notice to the other party hereto. The provisions of this Agreement shall continue to apply to all ongoing Statements of Work. Either party may terminate this Agreement upon written notice to the other party if the other party: (a) materially breaches this Agreement, and such breach remains uncured more than thirty (30) days after receipt of written notice of such breach; (b) makes an assignment of substantially all of its assets for the benefit of its creditors; or (c) either (i) files a voluntary petition for relief under 11 U.S.C. 101 et. seq. (the “Bankruptcy Code”) which is not dismissed or withdrawn within sixty (60) days or (ii) has an involuntary petition for relief under the Bankruptcy Code filed against it. In the event Client fails to meet any obligations to Company as described in this Agreement or in an SOW, including timely performance of Client tasks and deliverables per project schedules, then Company shall be entitled to suspend performance of the Services and, at its option, immediately terminate the relevant SOW by written notice. In any of the events of termination described herein, Client will continue to be obligated to pay any and all amounts due to Company for products or services provided to Client prior to the effective date of the termination, and any deposits or advance payments made by Client to Company shall be retained by Company. Upon expiration or termination of this Agreement, all Contract Terms described herein shall survive any expiration or termination of this Agreement.

 

WARRANTY: Client warrants that Company’s use of any materials furnished by Client in connection with a Statement of Work does not infringe any patent, copyright, trademark, trade secret or other right of any third party. Company warrants that the Deliverables, in the form provided to Client, do not infringe any patent, copyright, trademark, trade secret or other right

 

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of any third party. Company shall provide its services and meet its obligations under this Contract in a timely and workmanlike manner. If a Company License Agreement is used, then additional warranty terms contained therein will apply as to Company’s intellectual property which is licensed to Client.

 

LIMITATION OF LIABILITY: Neither party shall be liable for any consequential, indirect, special or incidental damages, such as damages for lost profits, business failure or loss arising out of use of the Deliverables or the Services, whether or not advised of the possibility of such damages. Company’s total liability arising out of this Agreement and the provision of the Services shall be limited to the fees received by Company within the twelve (12) month period immediately prior to the event giving rise to such liability paid under the applicable Statement of Work under which such liability arises. No action or proceeding arising out of this Agreement may be brought more than two years after the events giving rise thereto. Client shall indemnify and hold harmless Company, its parent, and subsidiary, and affiliate corporations, and their respective officers, directors and employees for any damages or losses incurred or sustained by any such parties relating to or that arise from: (i) the negligent or willful acts or omissions of Client, its employees or agents; or (ii) the performance of Services hereunder.

 

PUBLICITY: Neither party shall publish or use any advertising, sales promotions, press releases or other publicity relating to this Agreement or which use the other party’s name, logo, trademarks or service marks without the approval of the other party, which approval shall not be unreasonably withheld. The foregoing notwithstanding, the parties agree that Company may publicly refer to Client by name and use Client’s trademark and logo as part of Company’s Client lists.

 

INTELLECTUAL PROPERTY: ANSWERING LEGAL will own the entire product developed as part of this agreement.

 

PROTECTION OF PERSONNEL: Company makes every effort to hire and retain the best and brightest personnel. If Client hires any personnel of Company during a contract or within 24 months of the end of a contract, then the Client agrees to pay 50% of the employee’s previous annual compensation, or 50% of the employee’s future annual compensation, whichever is greater, to Company. The client also hereby grants access to Company for any and all financial or payroll information necessary to ascertain the employee’s future annual compensation within the first year of employment with Client.

 

ASSIGNMENT: Neither party may assign this Agreement without the other party’s prior written consent. Notwithstanding the foregoing, however, Company may assign this Agreement without the Client’s prior written consent to (i) its subsidiary or affiliate, (ii) a purchaser of all or substantially all of its stock, membership interests or assets, or (iii) a third party participating in a merger or other corporate reorganization. This Agreement shall be binding on the successors, legal representatives, and assigns of the parties hereto. Any purported attempt to assign or transfer this Agreement in violation of this provision will be deemed void.

 

AGREEMENT: This Agreement, including the SOWs and/or License Agreement, contains the entire agreement between Company and Client with regard to the subject matter hereof and

 

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supersedes all prior agreements between the parties. Company and Client acknowledge that no representations, inducements, promises, or agreements, orally or otherwise, have been made by Company or Client regarding the subject matter hereof which are not contained in this Agreement, and that no other agreement, statement, or promise not contained herein shall be valid or binding. This agreement will continue in effect from the effective date hereof, until terminated in writing by either party. Any changes to this agreement must be in writing and signed by both parties. This Agreement shall be governed in all respects by and construed in accordance with the laws of the state of California.

 

ARBITRATION: Any controversy, claim, or dispute between the parties relating to this Agreement shall be resolved by binding arbitration in California by an arbitrator(s) chosen under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). The arbitration shall be administered by the AAA and conducted according to California Code of Civil Procedure section 1282 et seq. Each party shall have the right to reasonable discovery prior to the arbitration. The arbitrator(s) shall base the award on applicable California law and judicial precedent and shall include in the award a statement of the reasons upon which the award is based. The fees of the arbitrator(s) shall be shared equally between the parties. Each party shall bear its own attorneys’ fees and costs incurred in the arbitration. Notwithstanding the foregoing, either party may seek judicial relief, including but not limited to, injunctive relief, for claims arising under the Intellectual Property section of this Agreement.

 

FORCE MAJEURE: Neither party shall be in default of any obligation under this Agreement to the extent performance of such obligation is prevented or delayed by a Force Majeure Event. For purposes of this section, Force Majeure Events include fire, flood, explosion, strike, war, insurrection, embargo, government requirement, act of civil or military authority, act of God, or any similar event, occurrence or condition which is not caused, in whole or in part, by that party, and which is beyond the reasonable control of that party. The parties shall take all reasonable action to minimize the effects of a Force Majeure Event. If a Force Majeure Event prevents or delays the performance of a party for 30 days, the other party shall have the right to terminate the affected Statement of Work upon written notice at any time before performance resumes.

 

RELATIONSHIP: The relationship of the parties is that of independent contractors. Each party, its employees and agents, shall not be deemed to be employees, agents, joint ventures or partners of the other and shall not have the authority to bind the other.

 

GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to conflict of law principles.

 

NO WAIVER: Neither party shall be deemed to have waived any rights under this Agreement, by course of dealing or otherwise, unless such waiver is given in writing and signed by the waiving party.

 

SEVERABILITY: If any provision of this Agreement or a Statement of Work is found to be unenforceable in any jurisdiction, the balance of this Agreement and the Statement of Work shall not be affected by the unenforceable provision, and such provision, shall, if feasible, be modified in scope so that it becomes enforceable.

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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COUNTERPARTS: This Agreement may be executed in one or more counterparts, including by facsimile, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

 

 

 

ACCEPTANCE

 

ANSWERING LEGAL SOW2: Network Services, API Development, and Secure Admin Portal

 

Signature:   Signature:  
       
  (-S- ROBERT A ROSITANO JR)   (-S- ROBERT SHATLES)    
Robert A Rositano JR | CEO   Robert Shatles | President  
       
FRIENDABLE, INC.   ANSWERING LEGAL  
Dated : 11/12/2019   Dated : 11/12/2019  

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473

 

CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

 

 

 

(FRIENDABLE LOGO)

 

Technology Services Division™

 

 

 

 

For

 

 

 

(GRAPHICS)

 

 

 

 

 

 

 

 

ADDITION #2 TO ORIGINAL PROJECT SCOPE

 

 

 

 

 

MOBILE AND WEB APPLICATION
Zapier Development and Integration

 

 

 

 

 

 

 

 

Prepared for:
Robert Shatles |
rob@answeringlegal.com
Submitted by: Dean
Rositano | CTO
Friendable, Inc.
dean@friendable.com

 

 

((FRIENDABLE LOGO))

 

ANSWERING LEGAL
 
SOW2: Zapier Development and Integration
 

Presented to:

 

ROB SHATLES | PRESIDENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Important Notice:

The enclosed material is proprietary to Friendable. This material is presented for the purpose of evaluating services and may not be disclosed in any manner to anyone other than the addressee and employees or authorized representatives of client named here within.

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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Overview / Background

 

Zapier is an app automation platform where over 2 million people connect apps into customized workflows—what they call Zaps. A Zapier integration can connect Answering Legal API’s to the Zapier platform and let it integrate with 1,300+ other popular apps to watch for new or updated data, find existing data, or create and update data.

 

Zaps are built of steps—or functions that take input, communicate with an API, and return output. Users build Zaps from two or more steps from integrations. The first step is always the trigger, that watches for new or updated data every few minutes (with polling or subscription triggers), and starts the Zap. Subsequent steps—or actions—then use that data to find or add items to Answering Legal, with search actions to find data or even the ability to create actions to add new items into the Answering Legal database / app.

 

Tasks / Outline

 

Zapier integrations define authentication, triggers, searches, and actions so users can connect any part of your app’s API to other applications. When building and integrating, we will:

 

1. Design the exact data and endpoints from your API and data schemas that make the most sense to use as Zap steps, including triggers and actions.

 

2. To enable this for Answering Legal, we need to connect and configure your app’s authentication security system, create new API calls and convert into triggers and searches, then release your new integration to let users connect to it with Zapier. Initial high-level thoughts are:

 

Get All Schedule

 

Get Current status

 

Get All Available Status’s

 

Customize Schedule results (search), by date range, status type, taking calls, status name

 

Get All Contacts

 

Customize Contact results (search), by name, phone #, Client Type, address, city, state, zip

 

Get All Tasks

 

Customize Task results (search), by name and/or due date

 

Get My Team

 

Customize Team results (search), by name, phone, access level?

 

3. Create a single development server and new webhook application with subscription capabilities to communicate with Zapier.

 

4. Create a new elastic beanstalk production server cluster with 1 load balancer and 2 webhook servers (for failover) to communicate with Zapier’s servers.

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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5. Create and utilize github repos (source control) and create automated deployment to elastic Beanstalk via github and code pipeline.

 

6. Create backup routines

 

7. Add monitoring software

 

8. Create alarms and alerts for automatically and immediately detecting issues and notifying us to investigate

 

Following integration, we require extensive Q/A and testing with live data, prior to releasing your new integration to Zapier and/or advising any users to connect their applications to it.

 

 
SERVICES OVERVIEW
 

With a signed agreement in place, Friendable will add additional and knowledgeable resources to our dev team, ensuring they have been trained to address any issues that might arise. Our Project Manager will be available during standard business hours via email, phone, skype, or slack. (but as always we will be available 24/7)

 

CLIENT RESPONSIBILITES:

 

Provide cooperation with CTI to complete the required database sync items in a timely manor.

 

Provide project manager and technical contact

 

PROCESS

 

Task Assignments

 

- Direct to the Project Manager

 

- If the work is unsatisfactory, the client agrees to raise the concern within 1 business week of asking the Project Manager to address the issue

 

PROJECTED TIMELINE

 

Zapier Design – 1 Week

 

Zapier Development – 2.5 Weeks

 

Production server setup, load balancer and auto scaling, automated deployment from source control repo(Github) – 1.5 weeks

 

Q / A, testing, monitoring and alerting setup – 1.5 weeks

 

Production roll out / Release monitoring and minor bug fixing – 4 Weeks

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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PROJECT COSTS

 

SERVICES AND COSTS
 

Initial High-Performance Network and Backend Services Build

 

Title Dates Amount
Zapier Design & Development    $38,500
 Production Server Environment    $7,800
Q/A, testing, monitoring and alerting setup    $5,675
Production monitoring and minor bug fixing    $3,500
   Total:  $55,475
  With Discount: $35,000

 

  DISCOUNTED PAYMENT PLAN
 Initial Kick Off  10,000  
Balance pay    
over 4 months  6,250  

 

 

Ongoing Fees:

 

Þ Hosting, Monitoring, Upgrades, and Maintenance TBD

 

EXPENSES
 

These costs exclude direct expenses incurred on the project. These include desktop publishing of print and/or presentation materials, copying and shipping charges. This does not include travel-related expenses. If traveling, meal expenses will be limited to $50 per diem. All travel and other direct expenses greater than $500 will be submitted to the Answering Legal for approval prior to incurring them.

 

CONTRACT TERMS
 

PAYMENT TERMS: Client shall pay Company the fees in the amount and on the timing as specified in each applicable SOW, or invoice, including, but not limited to, compensation for the Services and all reasonable out-of-pocket expenses incurred in the performance of the Services, and for any non-standard expenses [including support] incurred at the written request of Client. Payments made later than the due date set forth in the applicable SOW or invoice will accrue interest from the date due to the date paid at the lesser rate of eighteen percent (18%) per

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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annum or the maximum allowed by applicable law. In the event Client fails to make a payment within ten (10) days from the date such payment is due, Company shall be entitled to suspend performance of the Services and, at its option, terminate the relevant SOW by written notice.

 

DELIVERABLES: All Deliverables provided by Company to Client shall be deemed to be accepted within 5 days of receipt by Client unless Company receives written notice of non-acceptance within 5 days after delivery. Any notice of non-acceptance must state in reasonable detail how the Deliverables did not conform to the Statement of Work and Company shall use its reasonable business efforts to correct any deficiencies in the Deliverables so that they conform to the Statement of Work within 30 days of non- acceptance notice by Client. Client shall not withhold any payment for Services except for material and substantial non-conformity with the Statement of Work.

 

TERMINATION: Either party may, in its sole discretion, terminate this Agreement after the Services have been completed and paid in full for any existing SOW by providing prior written notice to the other party hereto. The provisions of this Agreement shall continue to apply to all ongoing Statements of Work. Either party may terminate this Agreement upon written notice to the other party if the other party: (a) materially breaches this Agreement, and such breach remains uncured more than thirty (30) days after receipt of written notice of such breach; (b) makes an assignment of substantially all of its assets for the benefit of its creditors; or (c) either (i) files a voluntary petition for relief under 11 U.S.C. 101 et. seq. (the “Bankruptcy Code”) which is not dismissed or withdrawn within sixty (60) days or (ii) has an involuntary petition for relief under the Bankruptcy Code filed against it. In the event Client fails to meet any obligations to Company as described in this Agreement or in an SOW, including timely performance of Client tasks and deliverables per project schedules, then Company shall be entitled to suspend performance of the Services and, at its option, immediately terminate the relevant SOW by written notice. In any of the events of termination described herein, Client will continue to be obligated to pay any and all amounts due to Company for products or services provided to Client prior to the effective date of the termination, and any deposits or advance payments made by Client to Company shall be retained by Company. Upon expiration or termination of this Agreement, all Contract Terms described herein shall survive any expiration or termination of this Agreement.

 

WARRANTY: Client warrants that Company’s use of any materials furnished by Client in connection with a Statement of Work does not infringe any patent, copyright, trademark, trade secret or other right of any third party. Company warrants that the Deliverables, in the form provided to Client, do not infringe any patent, copyright, trademark, trade secret or other right of any third party. Company shall provide its services and meet its obligations under this Contract in a timely and workmanlike manner. If a Company License Agreement is used, then additional warranty terms contained therein will apply as to Company’s intellectual property which is licensed to Client.

 

LIMITATION OF LIABILITY: Neither party shall be liable for any consequential, indirect, special or incidental damages, such as damages for lost profits, business failure or loss arising out of use of the Deliverables or the Services, whether or not advised of the possibility of such damages. Company’s total liability arising out of this Agreement and the provision of the Services shall be

 

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limited to the fees received by Company within the twelve (12) month period immediately prior to the event giving rise to such liability paid under the applicable Statement of Work under which such liability arises. No action or proceeding arising out of this Agreement may be brought more than two years after the events giving rise thereto. Client shall indemnify and hold harmless Company, its parent, and subsidiary, and affiliate corporations, and their respective officers, directors and employees for any damages or losses incurred or sustained by any such parties relating to or that arise from: (i) the negligent or willful acts or omissions of Client, its employees or agents; or (ii) the performance of Services hereunder.

 

PUBLICITY: Neither party shall publish or use any advertising, sales promotions, press releases or other publicity relating to this Agreement or which use the other party’s name, logo, trademarks or service marks without the approval of the other party, which approval shall not be unreasonably withheld. The foregoing notwithstanding, the parties agree that Company may publicly refer to Client by name and use Client’s trademark and logo as part of Company’s Client lists.

 

INTELLECTUAL PROPERTY: ANSWERING LEGAL will own the entire product developed as part of this agreement.

 

PROTECTION OF PERSONNEL: Company makes every effort to hire and retain the best and brightest personnel. If Client hires any personnel of Company during a contract or within 24 months of the end of a contract, then the Client agrees to pay 50% of the employee’s previous annual compensation, or 50% of the employee’s future annual compensation, whichever is greater, to Company. The client also hereby grants access to Company for any and all financial or payroll information necessary to ascertain the employee’s future annual compensation within the first year of employment with Client.

 

ASSIGNMENT: Neither party may assign this Agreement without the other party’s prior written consent. Notwithstanding the foregoing, however, Company may assign this Agreement without the Client’s prior written consent to (i) its subsidiary or affiliate, (ii) a purchaser of all or substantially all of its stock, membership interests or assets, or (iii) a third party participating in a merger or other corporate reorganization. This Agreement shall be binding on the successors, legal representatives, and assigns of the parties hereto. Any purported attempt to assign or transfer this Agreement in violation of this provision will be deemed void.

 

AGREEMENT: This Agreement, including the SOWs and/or License Agreement, contains the entire agreement between Company and Client with regard to the subject matter hereof and supersedes all prior agreements between the parties. Company and Client acknowledge that no representations, inducements, promises, or agreements, orally or otherwise, have been made by Company or Client regarding the subject matter hereof which are not contained in this Agreement, and that no other agreement, statement, or promise not contained herein shall be valid or binding. This agreement will continue in effect from the effective date hereof, until terminated in writing by either party. Any changes to this agreement must be in writing and signed by both parties. This Agreement shall be governed in all respects by and construed in accordance with the laws of the state of California.

 

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ARBITRATION: Any controversy, claim, or dispute between the parties relating to this Agreement shall be resolved by binding arbitration in California by an arbitrator(s) chosen under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). The arbitration shall be administered by the AAA and conducted according to California Code of Civil Procedure section 1282 et seq. Each party shall have the right to reasonable discovery prior to the arbitration. The arbitrator(s) shall base the award on applicable California law and judicial precedent and shall include in the award a statement of the reasons upon which the award is based. The fees of the arbitrator(s) shall be shared equally between the parties. Each party shall bear its own attorneys’ fees and costs incurred in the arbitration. Notwithstanding the foregoing, either party may seek judicial relief, including but not limited to, injunctive relief, for claims arising under the Intellectual Property section of this Agreement.

 

FORCE MAJEURE: Neither party shall be in default of any obligation under this Agreement to the extent performance of such obligation is prevented or delayed by a Force Majeure Event. For purposes of this section, Force Majeure Events include fire, flood, explosion, strike, war, insurrection, embargo, government requirement, act of civil or military authority, act of God, or any similar event, occurrence or condition which is not caused, in whole or in part, by that party, and which is beyond the reasonable control of that party. The parties shall take all reasonable action to minimize the effects of a Force Majeure Event. If a Force Majeure Event prevents or delays the performance of a party for 30 days, the other party shall have the right to terminate the affected Statement of Work upon written notice at any time before performance resumes.

 

RELATIONSHIP: The relationship of the parties is that of independent contractors. Each party, its employees and agents, shall not be deemed to be employees, agents, joint ventures or partners of the other and shall not have the authority to bind the other.

 

GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to conflict of law principles.

 

NO WAIVER: Neither party shall be deemed to have waived any rights under this Agreement, by course of dealing or otherwise, unless such waiver is given in writing and signed by the waiving party.

 

SEVERABILITY: If any provision of this Agreement or a Statement of Work is found to be unenforceable in any jurisdiction, the balance of this Agreement and the Statement of Work shall not be affected by the unenforceable provision, and such provision, shall, if feasible, be modified in scope so that it becomes enforceable.

 

COUNTERPARTS: This Agreement may be executed in one or more counterparts, including by facsimile, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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ACCEPTANCE
 
ANSWERING LEGAL SOW3: ZAPIER DEVELOPMENT AND INTEGRATION

 

Signature:   Signature:  
       
(-S- ROBERT A ROSITANO JR)   (-S- ROBERT SHATLES)  
Robert A Rositano JR | CEO   Robert Shatles | President  
       
FRIENDABLE, INC.   ANSWERING LEGAL  
DATED: 3/6/2020   DATED: 3/6/2020  

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

 

 

 

(FRIENDABLE LOGO)

 

Technology Services Division™

 

 

 

 

For

 

 

 

(GRAPHICS)

 

 

 

 

 

 

 

 

ADDITION #3 TO ORIGINAL PROJECT SCOPE

 

 

 

 

 

MOBILE AND WEB APPLICATION
FormStack, Airship, & App Additions Development and Integration

 

 

 

 

 

 

 

 

Prepared for:
Robert Shatles |
rob@answeringlegal.com
Submitted by: Dean
Rositano | CTO
Friendable, Inc.
dean@friendable.com

 

 

((FRIENDABLE LOGO))

 

ANSWERING LEGAL
 
SOW4: Formstack, Airship, Upgrades - Development and Integration

 

Presented to:

 

ROB SHATLES | PRESIDENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Important Notice:

 

The enclosed material is proprietary to Friendable. This material is presented for the purpose of evaluating services and may not be disclosed in any manner to anyone other than the addressee and employees or authorized representatives of client named here within.

 

 

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

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Tasks / Outline

 

Form Stack:

 

Overview: Connect to the Formstack API and create a system that allows Answering Legal reps to create lead forms and embed them into other websites and then Integrate the new form submissions (any length or values) into the existing Answering legal and Ring Savvy applications and network infrustructure.

 

Features:

 

1. Submissions would show up in the user’s “message inbox”

 

2. User would have the ability to choose from a selectable list of options for having the call center contact the lead. (Set Appointment, pre-qualify, send contract, etc.)

 

3. Process the response based on the selected option from #2

 

a. Send response request and lead contact info to CTI (through existing VPN file import/export system)

 

b. Update the apps UI’s with the response i.e. “Set Appointment Requested”

 

c. Update the apps UI’s with option status on each change i.e. “No Answer – 1st Attempt,” or “incorrect number,” or “Appointment Set,” etc.

 

d. Create Change Log Message that will show up in the user’s master change log from within the app and from within the Messages area change log as well with info on what was requested, who requested it, device used, and date.

 

e. Send a new message to the user on each status change indicating what happened.

 

i. Convert and Process status change file from CTI and import into mobile app DB so that it appears in the app as a new message

 

ii. Create tags and push notification groups within airship and send Push notification (If opted in)

 

iii. Create Change Log Message that will show up in the user’s master change log from within the app and from within the Messages area change log as well.

 

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Airship:

 

Overview: Create 30 automated push notifications scenario’s for actions that happen within the app, and customize for each platform (IOS, Android, Web) and 2 branded apps, resulting in approximately 180 different notification scenarios. Each platform and notification will need to be separately coded so that change logs, messages, stats, and the notification dashboard can properly operate (i.e. message received, appointment set, task assigned to you, assigned task accepted, etc.).

 

1. Creation of Airship scope document and work with them to create notification plan with tagging and groups, etc.

 

2. Creation of notification dashboard in the app with all 180 options available to turn off and on (30 per platform, 3 platforms, 2 brands = 180 configurable options).

 

3. Create approx. 180 notifications and notification groups

 

4. Make available subscribe / unsubscribe states for each one

 

5. Create change log entry for each notification in users account

 

------------------------------------------------------------- New Additions ---------------------------------------------------------------- 

 

TASKS

 

1. Create new API’s, database updates, and front-end UI features to:

 

a. Add a folder and filter system to tasks, similar to messages

 

b. Drag and drop folders

 

c. Create New Change Log Entries

 

Create read receipts on assigned tasks:

 

1. Send a new message to the user on each Task read and Task accepted/Denied that shows up as a new Message for the user that requested.

 

a. Create 2 “Change Log” entries (customized per platform and brand) that will show up in each of the user’s master change log from within the app and also from within the Tasks area change log as well

 

b. Send push notification notifying that a task was read or assigned task was accepted/denied.

 

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Change from Default Status to Default Schedule:

 

1. Change code and architecture to accommodate a default schedule instead of a default status, as previously coded.

 

2. Write logic to process repeated default events and compare against newly created events with repeat options. Result is 2 repeating events, one as default and one as newly created, priority given to the newly created.

 

API’s Affected:

 

a. CTI files and file processing

 

i. Write conversion from CTI’s repeat system to ours.

 

b. Get Current Status

 

c. Time to Next Status timer

 

d. Get 90 Schedule (calendar)

 

e. Get Days Schedule (Days schedule list)

 

f. Return to default status

 

g. Hold calls

 

Other items affected:

 

h. Database structure and table config

 

i. UI Updates (Web app calendar)

 

 
SERVICES OVERVIEW
 

With a signed agreement in place, Friendable will engage additional knowledgeable dev team resources, ensuring they have been trained to address any issues that might arise. Our Project Manager will be available during standard business hours via email, phone, skype, or slack. (but as always, we will be available 24/7)

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
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CLIENT RESPONSIBILITES:

 

Provide knowledgeable staff to accomplish the above tasks within the timeline and delivery dates agreed to.

 

Provide cooperation with CTI to complete the syncing of data between the two systems.

 

Provide project manager and technical contact

 

PROCESS

 

Task Assignments

 

- Direct to the Project Manager

 

- If the work is unsatisfactory, the client agrees to raise the concern within 1 business week of asking the Project Manager to address the issue

 

PROJECTED TIMELINE

 

Formstack

 

Airship

 

Tasks

 

Upgrades

 

PROJECT COSTS
 
SERVICES AND COSTS
 

Initial High-Performance Network and Backend Services Build

 

Title Dates Amount
+ Airship, 170 additional notifications, groups, etc. + 1 additional platform (Desktop)   $38,750
 Formstack: separate load balanced servers, DB, notifications, integration into existing system   $47,175
App Upgrades   $25,350
     
   Total: $111,275
  With Discount: $70,103

 

  DISCOUNTED PAYMENT PLAN
 August  $35,052  
September  $35,051  

 

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Ongoing Fees:

 

Þ Hosting, Monitoring, Upgrades, and Maintenance TBD

 

EXPENSES
 

These costs exclude direct expenses incurred on the project. These include desktop publishing of print and/or presentation materials, copying and shipping charges. This does not include travel-related expenses. If traveling, meal expenses will be limited to $50 per diem. All travel and other direct expenses greater than $500 will be submitted to the Answering Legal for approval prior to incurring them.

 

CONTRACT TERMS
 

PAYMENT TERMS: Client shall pay Company the fees in the amount and on the timing as specified in each applicable SOW, or invoice, including, but not limited to, compensation for the Services and all reasonable out-of-pocket expenses incurred in the performance of the Services, and for any non-standard expenses [including support] incurred at the written request of Client. Payments made later than the due date set forth in the applicable SOW or invoice will accrue interest from the date due to the date paid at the lesser rate of eighteen percent (18%) per annum or the maximum allowed by applicable law. In the event Client fails to make a payment within ten (10) days from the date such payment is due, Company shall be entitled to suspend

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
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performance of the Services and, at its option, terminate the relevant SOW by written notice.

 

DELIVERABLES: All Deliverables provided by Company to Client shall be deemed to be accepted within 5 days of receipt by Client unless Company receives written notice of non-acceptance within 5 days after delivery. Any notice of non-acceptance must state in reasonable detail how the Deliverables did not conform to the Statement of Work and Company shall use its reasonable business efforts to correct any deficiencies in the Deliverables so that they conform to the Statement of Work within 30 days of non- acceptance notice by Client. Client shall not withhold any payment for Services except for material and substantial non-conformity with the Statement of Work.

 

TERMINATION: Either party may, in its sole discretion, terminate this Agreement after the Services have been completed and paid in full for any existing SOW by providing prior written notice to the other party hereto. The provisions of this Agreement shall continue to apply to all ongoing Statements of Work. Either party may terminate this Agreement upon written notice to the other party if the other party: (a) materially breaches this Agreement, and such breach remains uncured more than thirty (30) days after receipt of written notice of such breach; (b) makes an assignment of substantially all of its assets for the benefit of its creditors; or (c) either (i) files a voluntary petition for relief under 11 U.S.C. 101 et. seq. (the “Bankruptcy Code”) which is not dismissed or withdrawn within sixty (60) days or (ii) has an involuntary petition for relief under the Bankruptcy Code filed against it. In the event Client fails to meet any obligations to Company as described in this Agreement or in an SOW, including timely performance of Client tasks and deliverables per project schedules, then Company shall be entitled to suspend performance of the Services and, at its option, immediately terminate the relevant SOW by written notice. In any of the events of termination described herein, Client will continue to be obligated to pay any and all amounts due to Company for products or services provided to Client prior to the effective date of the termination, and any deposits or advance payments made by Client to Company shall be retained by Company. Upon expiration or termination of this Agreement, all Contract Terms described herein shall survive any expiration or termination of this Agreement.

 

WARRANTY: Client warrants that Company’s use of any materials furnished by Client in connection with a Statement of Work does not infringe any patent, copyright, trademark, trade secret or other right of any third party. Company warrants that the Deliverables, in the form provided to Client, do not infringe any patent, copyright, trademark, trade secret or other right of any third party. Company shall provide its services and meet its obligations under this Contract in a timely and workmanlike manner. If a Company License Agreement is used, then additional warranty terms contained therein will apply as to Company’s intellectual property which is licensed to Client.

 

LIMITATION OF LIABILITY: Neither party shall be liable for any consequential, indirect, special or incidental damages, such as damages for lost profits, business failure or loss arising out of use of the Deliverables or the Services, whether or not advised of the possibility of such damages. Company’s total liability arising out of this Agreement and the provision of the Services shall be limited to the fees received by Company within the twelve (12) month period immediately prior to the event giving rise to such liability paid under the applicable Statement of Work under which such liability arises. No action or proceeding arising out of this Agreement may be brought more than two years after the events giving rise thereto. Client shall indemnify and hold harmless Company, its parent, and subsidiary, and affiliate corporations, and their respective officers, directors and employees for any damages or losses incurred or sustained by any such parties relating to or that arise from: (i) the negligent or willful acts or omissions of Client, its employees or agents; or (ii) the performance of Services hereunder.

 

PUBLICITY: Neither party shall publish or use any advertising, sales promotions, press releases or other publicity relating to this Agreement or which use the other party’s name, logo, trademarks or service marks without the approval of the other party, which approval shall not be unreasonably withheld. The foregoing notwithstanding, the parties agree that Company may publicly refer to Client by name and use Client’s trademark and logo as part of Company’s Client lists.

 

INTELLECTUAL PROPERTY: ANSWERING LEGAL will own the entire product developed as part of this agreement.

 

PROTECTION OF PERSONNEL: Company makes every effort to hire and retain the best and brightest personnel. If Client hires any personnel of Company during a contract or within 24 months of the end of a contract, then the Client agrees to pay 50% of the employee’s previous annual compensation, or 50% of the employee’s future annual compensation, whichever is greater, to Company. The client also hereby grants access to Company for any and all financial

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

((FRIENDABLE LOGO))

 

or payroll information necessary to ascertain the employee’s future annual compensation within the first year of employment with Client.

 

ASSIGNMENT: Neither party may assign this Agreement without the other party’s prior written consent. Notwithstanding the foregoing, however, Company may assign this Agreement without the Client’s prior written consent to (i) its subsidiary or affiliate, (ii) a purchaser of all or substantially all of its stock, membership interests or assets, or (iii) a third party participating in a merger or other corporate reorganization. This Agreement shall be binding on the successors, legal representatives, and assigns of the parties hereto. Any purported attempt to assign or transfer this Agreement in violation of this provision will be deemed void.

 

AGREEMENT: This Agreement, including the SOWs and/or License Agreement, contains the entire agreement between Company and Client with regard to the subject matter hereof and supersedes all prior agreements between the parties. Company and Client acknowledge that no representations, inducements, promises, or agreements, orally or otherwise, have been made by Company or Client regarding the subject matter hereof which are not contained in this Agreement, and that no other agreement, statement, or promise not contained herein shall be valid or binding. This agreement will continue in effect from the effective date hereof, until terminated in writing by either party. Any changes to this agreement must be in writing and signed by both parties. This Agreement shall be governed in all respects by and construed in accordance with the laws of the state of California.

 

ARBITRATION: Any controversy, claim, or dispute between the parties relating to this Agreement shall be resolved by binding arbitration in California by an arbitrator(s) chosen under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”). The arbitration shall be administered by the AAA and conducted according to California Code of Civil Procedure section 1282 et seq. Each party shall have the right to reasonable discovery prior to the arbitration. The arbitrator(s) shall base the award on applicable California law and judicial precedent and shall include in the award a statement of the reasons upon which the award is based. The fees of the arbitrator(s) shall be shared equally between the parties. Each party shall bear its own attorneys’ fees and costs incurred in the arbitration. Notwithstanding the foregoing, either party may seek judicial relief, including but not limited to, injunctive relief, for claims arising under the Intellectual Property section of this Agreement.

 

FORCE MAJEURE: Neither party shall be in default of any obligation under this Agreement to the extent performance of such obligation is prevented or delayed by a Force Majeure Event. For purposes of this section, Force Majeure Events include fire, flood, explosion, strike, war, insurrection, embargo, government requirement, act of civil or military authority, act of God, or any similar event, occurrence or condition which is not caused, in whole or in part, by that party, and which is beyond the reasonable control of that party. The parties shall take all reasonable action to minimize the effects of a Force Majeure Event. If a Force Majeure Event prevents or delays the performance of a party for 30 days, the other party shall have the right to terminate the affected Statement of Work upon written notice at any time before performance resumes.

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

((FRIENDABLE LOGO))

 

RELATIONSHIP: The relationship of the parties is that of independent contractors. Each party, its employees and agents, shall not be deemed to be employees, agents, joint ventures or partners of the other and shall not have the authority to bind the other.

 

GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to conflict of law principles.

 

NO WAIVER: Neither party shall be deemed to have waived any rights under this Agreement, by course of dealing or otherwise, unless such waiver is given in writing and signed by the waiving party.

 

SEVERABILITY: If any provision of this Agreement or a Statement of Work is found to be unenforceable in any jurisdiction, the balance of this Agreement and the Statement of Work shall not be affected by the unenforceable provision, and such provision, shall, if feasible, be modified in scope so that it becomes enforceable.

 

COUNTERPARTS: This Agreement may be executed in one or more counterparts, including by facsimile, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

 

ACCEPTANCE
 
ANSWERING LEGAL SOW3: ZAPIER DEVELOPMENT AND INTEGRATION
 

  

Signature:   Signature:  
       
(-S- ROBERT A ROSITANO JR)   (-S- ROBERT SHATLES)  
Robert A Rositano JR | CEO   Robert Shatles | President  
       
FRIENDABLE, INC.   ANSWERING LEGAL  
DATED: 6/9/2020   DATED: 6/9/2020  

 

FRIENDABLE, INC. | 1821 S BASCOM AVE #353, CAMPBELL, CA 95008 | O: 855-473-7473
 
CLOUD SYSTEMS INTEGRATION AND APPLICATION DEVELOPMENT

 

 

 

Exhibit 11.1

 

EXHIBIT

AUDITOR’S’ CONSENT

 

Consent of Independent Registered Public Accounting Firm

 

We hereby consent to the use of our report dated June 29, 2020 on the consolidated financial statements of Friendable, Inc. as of December 31, 2019 and for the year then ended included in the Regulation A Offering Circular of Friendable, Inc. on Form 1-A/A, and to the reference to our firm under the heading “Experts”.

 

/s/ Salberg & Company, P.A.

 

SALBERG & COMPANY, P.A.

Boca Raton, Florida

March 4, 2021

 

 

 

 

 

Exhibit 11.2

 

 

March 4, 2021

 

 

Friendable, Inc.

Campbell, California

 

 

Re: Consent of Independent Registered Public Accounting Firm

 

 

We hereby consent to the use in this Offering Circular on Form 1-A of Friendable, Inc. of our report dated June 29, 2020, related to the consolidated financial statements of Friendable, Inc. as of December 31, 2018 and 2017 and for the years then ended. Our report on the consolidated financial statements included an explanatory paragraph expressing substantial doubt regarding Friendable, Inc.’s ability to continue as a going concern.

 

Yours truly,

 

MANNING ELLIOTT LLP

 

/s/ Manning Elliott LLP

 

Chartered Professional Accountants

Vancouver, Canada

 

 

 

  

Exhibit 12.1

 

 

 

Jonathan D. Leinwand, P.A.

18305 Biscayne Blvd.

Suite 200

Aventura, FL 33160

Tel: (954) 903-7856

Fax: (954) 252-4265

   
  E-mail: jonathan@jdlpa.com 

 

March 4, 2021

 

Board of Directors

Friendable, Inc.

1821 S Bascom Ave, Suite 353

Campbell, CA 95008

 

Ladies and Gentlemen:

 

We are acting as counsel to Friendable, Inc., a Nevada corporation (“FDBL”), for the purpose of rendering an opinion as to the legality of the shares of FDBL’s Series D Preferred Stock (the “Shares”), to be offered and distributed by FDBL pursuant to an offering statement to be filed under Regulation A of the Securities Act of 1933, as amended, by FDBL, with the U.S. Securities and Exchange Commission (the “SEC”) on Form 1-A, for the purpose of registering the offer and sale of the Shares (“Offering Statement”).

 

The offering statement, and pre-qualification amendments, cover the contemplated sale of up to $5,000,000 in Shares of its Series D Preferred Stock at a price of $10.00 per share.

 

In connection with the opinion contained herein, we have examined the offering statement, as well as pre-qualification amendments, the certificate of incorporation (as amended) and bylaws, the resolutions of the FDBL’s board of directors and stockholders, as well as all other documents necessary to render an opinion. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies.

 

Based upon the foregoing, we are of the opinion that the entirety of the Shares being sold pursuant to the offering statement are duly authorized and will be, when issued in the manner described in the offering statement, legally and validly issued, fully paid, and non-assessable with in connection with the shares of common stock offered by the Company.

 

No opinion is being rendered hereby with respect to the truth and accuracy, or completeness of the offering statement or any portion thereof.

 

We further consent to the use of this opinion as an exhibit to the offering statement and to the reference to our firm under the caption “Legal Matters” in the offering circular. We assume no obligation to update or supplement any of the opinion set forth herein to reflect any changes of law or fact that may occur following the date hereof.

 

  Very Truly Yours,
  JONATHAN D. LEINWAND, P.A.
     
  By: /s/ Jonathan Leinwand
    Jonathan Leinwand, Esq.