Cuentas Inc. - Quarter Report: 2015 December (Form 10-Q)

On July 30, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to Service Trading Company, LLC, for the principal amount of $37,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note contains a 5% OID such that the purchase price shall be $35,000. The Note, together with accrued interest at the annual rate of 8%, is due on July 30, 2016. The Note is convertible into the Company's common stock commencing at any time from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $37,000. The Company recorded $1,249 of accrued interest pursuant to this convertible note

On August 19, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $82,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note contains a 7% OID such that the purchase price shall be $76,875. The Note, together with accrued interest at the annual rate of 8%, is due on August 19, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 55% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including

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accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $82,500. The Company recorded $2,423 of accrued interest pursuant to this convertible note.

On September 21, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $72,450 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note contains a17% OID such that the purchase price shall be $60,000. The Note, together with accrued interest at the annual rate of 8%, is due on September 21, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $72,450. The Company recorded $1,604 of accrued interest pursuant to this convertible note.

On October 19, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $82,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of 8%, is due on October 19, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $82,500. The Company recorded $1,320 of accrued interest pursuant to this convertible note.

On November 13, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to Quarum Holdings, LLC, for the principal amount of $75,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of 8%, is due on November 13, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $75,000. The Company recorded $789 of accrued interest pursuant to this convertible note.

On November 16, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to Mountain Ranch Partners, Inc., for the principal amount of $100,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of 8%, is due on November 16, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $100,000. The Company recorded $986 of accrued interest pursuant to this convertible note.

On November 17, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to Sam Esses, for the principal amount of $25,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of 8%, is due on November 17, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $25,000. The Company recorded $241 of accrued interest pursuant to this convertible note.

On November 20, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to Service Trading Company, LLC, for the principal amount of $37,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The note contains a 5% OID such that the purchase price shall be $35,000. The Note, together with accrued interest at the annual rate of 8%, is due on November 20, 2016. The Note is convertible into the Company's common stock commencing at any time from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $37,000. The Company recorded $332 of accrued interest pursuant to this convertible note.

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On November 25, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $82,500 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of 8%, is due on November 25, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $82,500. The Company recorded $651 of accrued interest pursuant to this convertible note.

On December 24, 2015, Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) sold and issued a Convertible Promissory Note to LG Capital Funding, LLC, for the principal amount of $27,000 pursuant to the terms of a Securities Purchase Agreement of even date therewith. The Note, together with accrued interest at the annual rate of 8%, is due on December 24, 2016. The Note is convertible into the Company's common stock commencing 180 days from the date of issuance at a conversion price equal to 50% of the lowest closing bid price of the Company's common stock for the twenty prior trading days including the date of conversion. The Company has the right to prepay the Note at any time from the date of issuance until the note is paid in full at an amount equal to 150% of the then outstanding principal amount of the Note, including accrued and unpaid interest due on the prepayment date. As of December 31, 2015, the balance on the note is $27,000. The Company recorded $41 of accrued interest pursuant to this convertible note.

As of December 31, 2015, the Company has five convertible notes outstanding with LG Capital Funding, LLC totaling $346,950, two convertible note with Service Trading Company, LLC for 74,000, a convertible note with Quarum Holdings, LLC for $75,000, a convertible note with Mountain Ranch Partners, Inc. for $100,000, and a convertible note with Sam Esses for $25,000, for total convertible notes due in the amount of $620,950.  As of September 30, 2015, the Company had convertible notes payable due in the amount of $320,400, and the notes net of discount is $209,739.

Accrued Interest

At December 31, 2015, the Company has recorded accrued interest of $7,288 pertaining to the outstanding convertible notes. As of September 30, 2015, the Company recorded $15,924 of accrued interest pertaining to the outstanding convertible notes.

Derivative Liability

The embedded conversion features of the above convertible notes payable contain discounted conversion price and should be recognized as a derivative instrument. Such embedded conversion features should be bifurcated and accounted for at fair value. At December 31, 2015 and September 30, 2015, the Company had $2,104,269 and $1,875,192 in derivative liability, respectively. In the three months ended December 31, 2015, the Company has a gain on changes in derivative liability of $422,913. In the three months ended December 31, 2014, the Company has a loss on changes in derivative liability of $321,886.

A summary of the changes in derivative liabilities balance as at December 31, 2015 is as follows:

We calculate the derivative liability using the Black Scholes Model which factors in the Company’s stock price volatility as well as the convertible terms applicable to the outstanding convertible notes. The following is the range of variables used in revaluing the derivative liabilities at December 31, 2015 and September 30, 2015:

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NOTE 7– ACCRUED SALARY

On October 1, 2013, the Company entered into Employment Contracts with Robert Rico, President/CEO and Calvin Lewis, Vice President. The contracts each have a term of 5 years with a base salary plus a bonus of 2% of sales annually. The annual base salaries are as follows:

On December 28, 2015 Robert Rico and Calvin Lewis resigned from the board of directors and as officers of the Company.  With the resignation and as part of the Share Exchange Agreement with Next Group Holdings, Inc., Robert Rico and Calvin Lewis also forgave all unpaid salaries.

The Company also has a consulting agreement with Kenneth C. Wiedrich. Mr. Wiedrich is to be paid $2,000 per month to provide accounting services, and part time CFO duties. This monthly fee was reduced to $0.00 based on the agreement that past salaries would be paid.

As of the quarter ended December 31, 2015 and as of the year ended September 30, 2015, the Company has unpaid salaries to the officers of the Company of $50,026 and $341,242, respectively, broken down as follows:

NOTE 8– SHAREHOLDER LOAN

There was no shareholder loan balance due as of December 31, 2015. The amount was owed the two former officers of the Company, Robert Rico is the CEO and Calvin Lewis the Vice President were forgiven as part of the Share Exchange Agreement.  As of September 30, 2015 the total amount of the shareholder loans was $19,265 net of debt discount and was part of the convertible note balance.

NOTE  9– STOCKHOLDERS’ EQUITY

Preferred Stock

At the time of incorporation, the Company was authorized to issue 50,000,000 shares of preferred stock with a par value of $.001.These Series A Preferred Shares shall for a period of 48 months from the date of issuance, be convertible in aggregate into that number of fully paid and non-assessable shares of the common stock of the Corporation, equal to seventy-five percent (75%) of the post conversion issued and outstanding common stock of the Corporation on the date of conversion.  Holders of Series A Preferred Stock shall be entitled to 25 votes per 1 vote of common stock, voting together with the holders of common stock. Holders of Series A Preferred Stock will also be entitled to convert 1 share of Series A Preferred Stock into 25 shares of common stock at any time.  

The Company has 10,000,000 shares of Preferred Stock are designated as Series B. The Series B Preferred Stock is not convertible into Common Stock at any time and is not entitled to dividends of any kind or liquidation, dissolution

rights of any kind. The holders of Series B Preferred Stock shall be entitled to 1,000 votes for each share of Series B Stock that is held when voting together with holders of the Common Stock.

On March 18, 2015, Robert Rico and Calvin Lewis each purchased 19,590,000 shares of Preferred Stock Series A for $48,975 each. The $48,975 amount was deducted from their respective accrued salaries. The Company also issued 2,500,000 shares of Preferred Stock Series A to a marketing representative for services rendered.

On March 20, 2015, Robert Rico and Calvin Lewis each purchased 5,000,000 shares of Series B Preferred for the sum of $10,000 each. The $10,000 was deducted from each of their respective shareholder loans.

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On November 4, 2015, Robert Rico converted 176,400 shares of Preferred Stock Series A into 4,410,000 shares of Common Stock and Calvin Lewis converted 136,400 shares of Preferred Stock Series A into 3,410,000 shares of Common Stock.

Common Stock

The Company has 9,500,000,000 shares of common stock authorized with a par value off $.001.

During the quarter ended December 31, 2015 ended, the Company has issued shares of commons stock for the conversion and reduction of $160,161 in convertible notes payable and $4,711 of accrued interest.   During the year ended September 30, 2015, the Company issued 10,698,740 post reverse shares of Common Stock for the conversion and reduction of $210,500 in convertible debt and $6,451 of accrued interest.

The Company also issued 7,000,002 shares for consulting fees for services to be rendered during the quarter ended December 31, 2015. The shares were valued at market value of $771,500 on the issuance dates. The Company recorded $469,000 as consulting expense and $302,500 as prepaid consulting fees as of December 31, 2015.

NOTE 10 – SUBSEQUENT EVENT

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than listed below no material subsequent events exist through the date of this filing.

1.

On January 12, 2016, the agreement signed on December 28, 2015, became effective wherein the Company issued 177,539,180 shares of restricted common stock, and 8,600,000 shares of the Company’s Series B preferred stock for 100% of Next Group Holdings, Inc. As a result of the agreement, Next Group Holdings, Inc. will become a wholly owned subsidiary of the Company.

2.

On January 12, 2016, the 177,539,180 shares of restricted common issued according to the agreement was based on the conversion of 7,101,567 of Preferred Series A stock.  In February 2016, an additional 3,400,000 shares of restricted common was issued based on the conversion of 136,000 shares of Preferred Series A stock.  The 42,449,633 remaining shares of Preferred Series A was then retired.

3.

On March 17, 2016, the Company issued 803,262 shares of common stock for reduction of $72, 450 of principal and $7,876.21 of interest on a note with LG Capital Funding, LLC dated September 21, 2015.  

4.

On March 17, 2016, the Company issued 201,649 shares of common stock for reduction of $14,490 of principal / penalty and $1,642 of interest on a note with LG Capital Funding, LLC dated September 21, 2015.  

5.

On March 9, 2016 the Company signed a term sheet with LG Capital Funding, LLC wherein the Company will receive $500,000 of funding over a one-year period.  The Company received the first funding of $50,000 upon the signing of the agreement on March 9, 2016.

6.

On March 9, 2016 the Company signed a term sheet with Quarum Holdings, LLC wherein the Company will receive $500,000 of funding over a one-year period.  The Company received the first funding of $50,000 upon the signing of the agreement on March 9, 2016.

7.

On March 9, 2016 the Company signed a term sheet with Cerberus Financial Group, Ltd wherein the Company will receive $500,000 of funding over a one-year period.  The Company received the first funding of $50,000 upon the signing of the agreement on March 9, 2016.

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ITEM 2. Management’s Discussion and Analysis and Results of Operations

The following discussion and analysis provides information which management of the Company believes to be relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read together with the Company’s financial statements and the notes to the financial statements, which are included in this report.

Forward-Looking Statements

This Report contains forward-looking statements that relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Report. Forward-looking statements are often identified by words like “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project” and similar words or expressions that, by their nature, refer to future events.

In some cases, you can also identify forward-looking statements by terminology such as “may,” “will,” “should,” “plans,” “predicts,” “potential,” or “continue,” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements in an effort to conform these statements to actual results.

Business History

Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) was incorporated in September 2005 in Florida. Then on September 21, 2005, the Company entered into an Asset Purchase Agreement with Anthony Warner pursuant to which the Company acquired the domain name, www.leaguenow.com, its design, associated copyrights and trademarks and all business related to the website including the customer database. The Company originally intended to operate as an application service provider offering web-based services for the online video gaming industry.

The Company commenced offering services in October 2005 through a subscription basis. During 2007 the Company changed directions by using an advertising model. The Company was unable to generate additional revenue streams by charging registered users for the use of enhanced functionality to be incorporated into the site, access to specialized content, and e-commerce of merchandise related to the video console industry. The inability to generate revenue led to the decision that the Company would have to explore other options regarding the development of a new business plan and direction.

On May 29, 2009, the Company's stockholders approved a 1 for 6 reverse stock split for its common stock. As a result, stockholders of record at the close of business on July 1, 2009, received one share of common stock for every six shares held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.

On January 19, 2010, the Company's stockholders approved a 2 for 1 forward stock split for its common stock. As a result, stockholders of record at the close of business on January 19, 2010, received two shares of common stock for every one share held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.

On April 26, 2010, the Company's stockholders approved a 1 for 3 reverse stock split for its common stock. As a result, stockholders of record at the close of business on June 1, 2010, received one shares of common stock for every three share held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.

On October 4, 2010, the Company's stockholders approved a 16 for 1 forward stock split for its common stock. As a result, stockholders of record at the close of business on October 21, 2010, received sixteen shares of common stock for every one share held. Common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.

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On October 6, 2010, the Company entered into a Share Exchange Agreement, dated October 6, 2010 (the “Share Exchange Agreement”) by and among League Now, James Pregiato, Pure Motion, Inc., a Texas corporation (“Pure Motion”) and the shareholders of Pure Motion (the “Pure Motion Shareholders”). Pursuant to the Share Exchange Agreement, the Company acquired 100% of the outstanding shares of common stock of Pure Motion (the “Pure Motion Stock”), in exchange for the Pure Motion Stock, the Pure Motion Shareholders acquired 24,009,008 shares of the Company’s common stock (the “Exchange Shares”).

Additionally, pursuant to the terms of the Share Exchange Agreement, as consideration for the cancellation of 38,048,000 of the 39,111,136 shares of League Now common shares owned by James Pregiato (“Pregiato”), Pure Motion agreed to pay a total cash payment of $250,000 to Pregiato (the “Cash Payment”) of which $100,000 (the “Initial Cash Payment”) was paid on the closing date and $150,000 (the “Final Cash Payment”) was to be paid within twelve weeks of the closing date. The 38,048,000 shares were being held in escrow until receipt of the Final Cash Payment. Mr. Pregiato agreed to extinguish all outstanding debt and liabilities of League Now outstanding as of the closing date upon receipt of the Cash Payment. Upon closing, Pure Motion became a wholly-owned subsidiary of the Company. The transaction was accounted for as a purchase by the Company of Pure Motion, Inc. Upon closing of the transaction, Mr. Pregiato resigned as an officer and director of the Company.

In May, 2011, the transaction with Pure Motion, Inc. was rescinded and the TOMI golf product and the patents and technology of the Company were returned to the Shareholders of Pure Motion, in exchange for the cancellation of shares that were to have been issued to them. The shares outstanding, at the present time, reflect the absence of any shares ever being issued to the Pure Motion, Inc. Shareholders, by the Company, either upon or subsequent to the closing of the transaction on October 6, 2010, since no such shares were ever issued by the Board following the acquisition of control by Pure Motion’s shareholders of the Company and its affairs. Simultaneously with the withdrawal and rescission of the acquisitive transaction of October 6, 2010, the Company entered into a license agreement (“the License Agreement”) with Pure Motion for the exclusive right to use and exploit its motion capture technology with respect to all medical applications (the Licensed Technology”). In addition to the License Agreement, the Company entered into a consulting agreement (“the Consulting Agreement”) with the former Chief Executive Officer, Mario Barton (who is also the CEO of Pure Motion, Inc.) to stay with the Company as a consultant with regard to the deployment of the medical applications licensed by Pure Motion to the Company, as well as an employment agreement (“the Employment Agreement”) which secure the continuation of his services as President and Chief Executive Officer of the Company for a period of twelve (12) months from the date thereof. The Consulting Agreement and the Employment Agreement provide for no payment of any compensation to Mr. Barton, other than payments which may be due him based upon the successful marketing and deployment of the Licensed Technology.

On January 20, 2012, the Company entered into a Stock Purchase Agreement and Share Exchange (the “Agreement”) with Infiniti Systems Group, Inc. (“Infiniti”). Pursuant to the Agreement, the Company agreed to issue 30 million common shares of the Company’s stock to the shareholders of Infiniti in exchange for 100% of the issued and outstanding capital stock of Infiniti. The shares issued to the shareholders of Infiniti represent 60% of our issued and outstanding capital stock on a fully diluted basis (the “Stock Consideration”). In addition, the Company’s Chief Executive Officer and Chief Financial Officer, Mario Barton, resigned. John Bianco, the Chief Executive Officer of Infiniti, agreed to serve as the Company’s new President and Chief Executive Officer. The Company’s new Treasurer and Chief Financial Officer is Lisa Bischof, and the new Secretary and Chief Operating Officer is D. Bruce Veness. The transactions contemplated by the Agreement were closed on January 31, 2012, with the Company issuing 30 million shares to Bianco, Veness and Bischof. Contemporaneously with the closing, Pregiato agreed to cancel 25,803,288 shares of the Company’s common stock which were held by him.

On February 27, 2013, the Company, then known as League Now Holdings, Inc. consummated a share exchange with NYBD Holdings, Inc. (NYBD) pursuant to which 100% of the equity in NYBD was exchange for 28,500,000 shares of the Company’s common stock, which was previously held by the Company’s former CEO, John Bianco. As a result of the transaction, the shareholders of NYBD became the majority owners of the Company and NYBD became a wholly owned subsidiary. The Company concurrently agreed to sell the operations of League Now to Mr. Bianco in exchange for the assumption by Mr. Bianco of all associated liabilities with the exception the notes payable due Asher Enterprises, Inc. For accounting and reporting purposes, this transaction will be treated as a reverse merger with NYBD being the surviving entity. All balances as of and for the period ended December 31, 2012 are those of League Now exclusive of NYBD. The financial statements for March 31, 2013 and thereafter will reflect the historical balances and results of operations for NYBD, exclusive of League Now. The details of this transaction were previously reported on Form 8-K, filed March 6, 2013, and an 8K/A filed on May 2, 2013.

NYBD Holding, Inc. was incorporated in March 16, 2012 with a Fiscal Year ending of December 31. NYBD Holding, Inc. operates two deli restaurants that specialize in providing a wide variety of Bagels and cream cheese spread toppings along with a full service juice bar and large salad bar. The restaurants are located in downtown Miami located at 350 NE 24^th St. and at 155 E. Flagler St.

On September 20, 2013, NYBD Holding, Inc. entered into a share exchange agreement with Pleasant Kids, Inc. and all of its stockholders, and as a result of the closing of this agreement, Pleasant Kids, Inc. became the surviving Company. NYBD Holding, Inc. will close both of its deli restaurants at the closing of this agreement and adopt the operation of Pleasant Kid’s. Based on the terms of

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the share exchange agreement, the controlling stockholder of Pleasant Kids sold all 1,000 issued and outstanding shares of common stock and 10,000,000 million shares of Class A Preferred stock of Pleasant Kids, Inc. to NYBD Holding, Inc. in consideration for the issuance of 1,000 shares of the common shares and 10,000,000 of the Preferred A shares of NYBD Holding, Inc.

Following the closing of the share exchange agreement on September 20, 2013, control and management of the Company is that as Pleasant Kids, Inc. For accounting and reporting purposes, this transaction will be treated as a reverse recapitalization, with Pleasant Kids as the acquirer. As such, the financial information, including the operating and financial results, included in this 10K are that of Pleasant Kids rather than that of NYBD Holding, Inc. prior to the completion of the transactions described herein.

On June 18, 2004, the board of directors of Pleasant Kids, Inc., officially changed its name from NYBD Holding, Inc. to Pleasant Kids, Inc. The name change became effective August 9, 2014 with FINRA but did not become effective until October 7, 2014 in the state of Florida. The Company also changed the symbol from NYBD to PLKD effective August 18, 2014.

On April 26, 2015, the Company approved a reverse stock split. The outstanding common shares of the Company shall be decreased on the basis of 500 shares of Common Stock becoming 1 share of Common Stock (1:500 reverse split) without changing the par value of the shares of the Corporation and without changing the amount of the authorized shares of the Corporation. FINRA approved the reverse split on July 6, 2015, so as of June 30, 2015, common stock, additional paid-in capital, share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented

Overview

Pleasant Kids, Inc. (Formerly NYBD Holding, Inc.) was incorporated in July 17^th, 2013 with a Fiscal Year Ending of September 30^th. Pleasant Kids is a Florida Corporation engaged in the business of producing, marketing and distributing naturally balanced alkalized water for children, including and not limited to organic natural juices.

Subsequent to the quarter ended December 31, 2015, on January 12, 2016, and effective as of August 15, 2015, the Company issued 177,539,180 shares of its restricted common stock and 8,600,000 shares of its Series B preferred stock for 100% of the issued and outstanding shares of Next Group Holdings, Inc. (NEXT).  Based on the completion of the agreement NEXT will become a wholly-owned subsidiary of the Company.    The completion of the agreement is contingent on the successful financial audit of Next Group Holdings, Inc.

On December 31, 2015, we signed our merger with Next Group Holdings, Inc. a Florida Corporation but the transaction was not completed until January 12, 2016, when the document was filed with the State of Florida.  Our name change and requested symbol change is currently pending with the Financial Industry Regulatory Authority.  

As a result of this merger, we adopted Next Group’s corporate structure and began a transition into its business model.  Through our newly acquired subsidiaries we began to engage in use of certain licensed technology to provide innovative telecommunications, mobility, and remittance solutions to unserved, unbanked, and emerging markets.

Our new subsidiaries are Next Mobile 360 LLC (100%), a limited liability company formed under the laws of Florida (“Next Mobile”), Meimoun & Mammon, LLC (100%), a limited liability company formed under the laws of Florida (“M&M”), NxtGn, Inc. (65%), a corporation formed under the laws of Florida (“NxtGn”), and Next CALA, Inc. (94%), a corporation formed under the laws of Florida (“Next CALA”).

This new corporate structure is illustrated below.

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Item 2. Business Description

I tem 2.01.  Business Description

Next Group Holdings through its operating subsidiaries, engages in the business of using proprietary technology and certain licensed technology to provide innovative telecommunications and telecommunications mobility and remittance solutions in emerging markets.

PRINCIPAL PRODUCTS

Until the merger we offered retail consumers naturally balanced alkalized spring bottled water for children in an 8oz. bottle through our brand “Pleasant Kids”.

The Company sources our naturally balanced alkalized spring water, throughout the United States. The product requirements are to bottle naturally balanced alkalized spring water with a minimum of 8.0 of pH, without the use of any chemicals, or ionize machinery.

The main reason parents and consumers drink the Company’s product is for the perceived benefit that a proper pH balance helps fight disease and boosts the immune system and the perception that alkaline water helps to maintain a proper body pH and keeps cells young and hydrated.

OPERATIONS

In connection with our transition into a new business model the Company is phasing out our prior operations.  In the future, the Company plans to engage in the business of using proprietary technology and certain licensed technology to provide innovative telecommunications and telecommunications mobility and remittance solutions in emerging markets.

Transitioning of operations

Prior to the merger, we operated primarily as a manufacturing, marketing and distribution company.  These operations will be phased out over the coming months.

Sample production, market research and consumer product acceptance of our product began in mid-2012. The Company has focused on pre-launch market evaluation of our product in California and Orlando/South Florida for year 2014. The product is currently at the introduction phase of its lifecycle. In April of 2013 Pleasant Kids did market research on the demand for naturally balance alkalized bottle water in Los Angeles, California. In June of 2013 the Company repeated the processes in Orlando, Florida. Pleasant Kids launched its online store in August of 2014 on Amazon.com.  When this model failed to produce profits we decided to seek a suitable merger candidate.

OUR MARKET

The Company plans to target emerging markets worldwide.

Results of operations for the three months ended December 31, 2015 and 2014.

Revenue

Sales for the three months ended December 31, 2015, were $0, compared to sales of $0 for the three months ended December 31, 2014.

Cost of Goods Sold

The Company is reporting Cost of Goods Sold of $0 for the three months ended December 31, 2015, compared to $0 for the three months ended December 31, 2014.

Operating Expenses

Operating expenses for the three months ended December 31, 2015, were $537,762 compared to $107,189 for the three months ended December 31, 2014. Operating expenses were greater in the three months ended December 31, 2014 due mainly to a consulting fee charge of $479,000.   The expense was incurred through the issuance of 7,000,002 shares of common stock for services.

Professional Fees. For the three months ended December 31, 2015, professional fees were $16,650 compared to $8,446 for the three months ended December 31, 2014.

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Officer Compensation. For the three months ended December 31, 2015, officer compensation was $0 compared to $87,249 for the three months ended December 31, 2014. On October 1, 2013, the Company entered into employment agreements with Robert Rico, CEO and Calvin Lewis, VP. The contracts each have a term of 5 years with a base salary plus a bonus of 2% of sales annually. The annual base salaries are as follows:

On December 28, 2015 Robert Rico and Calvin Lewis resigned from the board of directors and as officers of the Company.  With the resignation and as part of the Share Exchange Agreement with Next Group Holdings, Inc., Robert Rico and Calvin Lewis also forgave all unpaid salaries and did not accrue any salary for the three month period ended December 31, 2015.

Selling, General and Administrative Expense. For the three months ended December 31, 2015, selling, general and administrative expense was $42,112 compared to $10,593 for the three months ended December 31, 2014.

Loss from Operations:

Loss from operations was $537,762 for the three months ended December 31, 2015, compared to Loss from Operations of $107,189 for the three months ended December 31, 2014.

Interest Expense:

Interest expense for the three months ended December 31, 2015, was $187,258, and is derived from the convertible debenture debt carried by the Company. For the three months ended December 31, 2014, the interest expense was $54,412. The interest expense for the three months ended December 31, 2015, is higher due to the fact that the convertible notes outstanding have increased as of December 31, 2015.

Net Loss:

Net Loss from operations for the three months ended December 31, 2015, was $530,481 compared to a loss of $483,487 for the three months ended December 31, 2014. The greater loss for the three months ended December 31, 2015 is due mainly to a gain on the change in fair value of embedded derivative liability of $422,913 and Derivative expense of $430,834 offset by a gain on extinguishment of debt of $202,460, compared to a loss on the change in fair value of embedded derivative liability of $321,886 for the three months ended December 31, 2014.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2015, the Company had net current liabilities of $1,421,004 compared to $2,468,767 as of September 30, 2015. The decrease in net current liability is due mainly to increase in derivative liability of $651,043. The Company has a bank balance of $1,184 for the period ended December 31, 2015, compared to a bank overdraft of $3,080 as of September 30, 2014.

Operational Activities

The Company had cash used in operating activities of $434,027 in the three months ended December 31, 2015, and $57,756 for the three months ended December 31, 2014.The Company’s primary uses of cash have been for professional support, marketing expenses and working capital. All cash received has been expended in the furtherance of growing future operations.

Investing Activities

The Company had zero cash used in investing activities during the three months ended December 31, 2015, and $4,100 in the three months ended December 31, 2014, which was for the purchase of furniture, equipment and a vehicle.

Financing Activities

The Company had cash provide from mostly proceeds from convertible debentures in financing activities of $427,250 for the three months ended December 31, 2015, and $50,000 for the three months ended December 31, 2014.

The Company may not have sufficient resources to fully develop any new products or expand our inventory levels unless it is able to raise additional financing. The Company can make no assurances these required funds will be available on favorable terms, if at all. If additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in

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dilution to our existing stockholders. Additionally, these conditions may increase costs to raise capital and/or result in further dilution. The failure to raise capital when needed, will adversely affect our business, financial condition and results of operations, and could force the Company to reduce or cease operations.

The Company believes that it will be able to meet the costs of growth and public reporting with funds generated from operations and additional amounts generated through debt and equity financing, Although management believes that the required financing to fund product development and increasing inventory levels can be secured at terms satisfactory to the Company, there is no guarantee these funds will be made available, and if funds are available, that the terms will be satisfactory to the Company.

Impact of Inflation

The Company does not expect inflation to be a significant factor in operation of the business.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements between the Company and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Going Concern

The Company has a working capital deficiency of $2,770,547 and accumulated deficit of $6,588,362 as of December 31, 2015. These factors raise substantial doubt about its ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the company is unable to continue as a going concern.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon The Company’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. Some of the critical accounting estimates are detailed below.

Critical Accounting Estimates and New Accounting Pronouncements

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:

The Company base estimates and judgments on experience, current knowledge, and beliefs of what could occur in the future, observation of trends in the industry, information provided by customers and information available from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company has identified the following accounting policies and estimates as those that are believed to be the most critical to the financial condition and results of operations and that require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties: share-based compensation expense, income taxes, and derivative financial instruments.

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Share-Based Compensation Expense. We calculate share-based compensation expense for option awards and warrant issuances (“Share-based Awards”) based on the estimated grant/issue-date fair value using the Black-Scholes-Merton option pricing model (“Black-Scholes Model”), and recognize the expense on a straight-line basis over the vesting period, net of estimated forfeitures. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting period of the Share-based Award in determining the fair value of Share-based Awards. Although we believe our assumptions used to calculate share-based compensation expense are reasonable, these assumptions can involve complex judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to our assumptions could significantly impact the amount of expense recorded in a given period.

New Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, and as discussed in greater detail below, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, disclosure controls and procedures were no longer effective:

●  to give reasonable assurance that the information required to be disclosed in reports that are file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and

●  to ensure that information required to be disclosed in the reports that are file or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our CEO and our Treasurer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. There are no changes in internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the fiscal year ended September 30, 2014, Pleasant Kids, Inc, (formerly NYBD Holdings, Inc.) failed to answer a lawsuit from Franjose Yglesias-Bertheau for unpaid salary. The lawsuit was based on the 5 year contract that Mr. Yglesias-Bertheau had with the Company and based on the Company not answering the suit Mr. Ylgesias-Bertheau was awarded a $622,968 judgment. Due to the frivolous nature of the claim the $622,968 judgment was reversed. The Company is in the process of settling the final amount owed Mr. Yglesias-Bertheau but does not think that the claim will be in excess of the accrued salary amount of $35,029 that the Company has accrued on its books.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Based on the share exchange agreement, and on the closing date of September 20, 2013, the controlling stockholder of Pleasant Kids, sold all 1,000 issued and outstanding shares of common stock of Pleasant Kids, Inc. to NYBD Holding, Inc. in consideration for the issuance of 1,000 shares of the common shares of NYBD Holding, Inc. Such securities were not registered under the Securities Act.  These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance of securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the transaction, size of the offering, manner of the offering and number of securities offered. The Company has not undertaken an offering in which it sold a high number of securities to a high number of investors. In addition, these shareholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

During the fiscal year ended September 30, 2014, the Company increased the authorized number of Common shares four times: On January 14, 2014 the Company increased the authorized from 750,000,000 to 1,500,000,000 shares of common stock; on March 31, 2014, the Company increased the authorized from 1,500,000,000 common stock to 2,500,000,000 shares of common; on May 16, 2014, the Company increased the authorized from 2,500,000,000 common stock to 4,,000,000 shares of common stock; and on September 9, 2014, the Company increased the authorized from 4,000,000 shares of common to 10,000,000,000 shares of common. During the quarter ended December 31, 2014, the Company reduced the authorized from 10,000,000,000 shares of common to 5,000,000,000 shares of common. On February 25, 2015, the Company increased the authorized shares of Common Stock from 5,000,000,000 shares of Common Stock to 9,500,000,000 Shares of Common Stock.

During the three months ended December 31, 2015, the company issued 9,350,719 shares of Common Stock in settlement of $155,450 of debt and $4,711 of interest, 7,820,000 shares of commons stock for the conversion of 312,800 shares of preferred stock, and 7,000,000 shares of common stock for services. The total number of shares issued and outstanding for the company is 41,834,795 as of December 31, 2015.

ITEM 3. DEFAULTS UPON SENIOR DEBT

None

ITEM 4. [Removed and Reserved]

None

ITEM 5. OTHER INFORMATION

None

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ITEM 6. EXHIBITS

(1) Incorporated by reference from Pleasant Kid’s Annual Report on Form 10-KSB for the Fiscal Year Ended September 30, 2013 filed on January 14, 2014. 

(2) Incorporated by reference from Pleasant Kid’s Annual Report on Form 10-KSB for the Fiscal Year Ended September 30, 2014 filed on January 14, 2015. 

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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