Friendable, Inc. - Quarter Report: 2018 June (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: June 30, 2018

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from   to

 

Commission File Number: 000-52917

 

FRIENDABLE, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		98-0546715
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

 

1821 S Bascom Ave., Suite 353, Campbell, California 95008

(Address of principal executive offices) (zip code)

 

(855) 473-8473

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.		☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).		☒ Yes ☐ No

 

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

 

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☒
			Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

5,553,310,369 shares of common stock outstanding as of August 15, 2018

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

 

PART I - FINANCIAL INFORMATION	1
ITEM 1. FINANCIAL STATEMENTS	1
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	23
ITEM 4. CONTROLS AND PROCEDURES	23
PART II - OTHER INFORMATION	24
ITEM 1. LEGAL PROCEEDINGS	24
ITEM 1A. RISK FACTORS	24
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	24
ITEM 4. MINE SAFETY DISCLOSURES	24
ITEM 5. OTHER INFORMATION	24
ITEM 6. EXHIBITS	25
SIGNATURES	26

 

 

 

 

 

 

 

 

 

 

 

As used in this report, the term “the Company” means Friendable, Inc., formerly known as iHookup Social, Inc., and its subsidiary, unless the context clearly indicates otherwise.

 

Special Note Regarding Forward-Looking Information

 

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: the Company’s future financial performance, the Company’s business prospects and strategy, anticipated trends and prospects in the industries in which the Company’s businesses operate and other similar matters. These forward-looking statements are based on the Company’s management's expectations and assumptions about future events as of the date of this quarterly report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

 

Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others, the risk factors set forth below. Other unknown or unpredictable factors that could also adversely affect the Company’s business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this quarterly report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of the Company’s management as of the date of this quarterly report. The Company does not undertake to update these forward-looking statements

 

In this quarterly report on Form 10-Q, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in the Company’s capital stock.

 

An investment in the Company’s common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this quarterly report on Form 10-Q in evaluating the Company and its business before purchasing shares of the Company’s common stock. The Company’s business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks. You should invest in the Company’s common stock only if you can afford to lose your entire investment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

FRIENDABLE, INC.

CONSOLIDATED BALANCE SHEETS

(Expressed in US dollars)

  

ASSETS	June 30, 2018 (Unaudited)	December 31,  2017
Current assets
Cash	$5,353	$-
Accounts receivable	632	-
Prepaid expenses	6,863	6,863
Total current assets	12,848	6,863
Intangible assets (Note 3)	35,000	35,000
TOTAL ASSETS	$47,848	$41,863
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Current liabilities
Accounts payable	$3,393,152	$2,718,832
Convertible debentures short-term (Note 10)	5,915,438	4,807,189
Deferred revenue	-	-
Total current liabilities	9,308,590	7,526,021
Total liabilities	9,308,590	7,526,021
Going concern (Note 1)
Commitments (Note 7)
STOCKHOLDERS' DEFICIT
Preferred stock, 50,000,000 shares authorized at par value of $0.0001, 21,267 (December 31, 2017 – 21,267 ) shares issued and outstanding (Note 4)	2	2
Common stock, 15,000,000,000 shares authorized at par value of $0.0001, 5,553,310,369 (December 31, 2017 – 5,010,310,369) shares issued and outstanding (Note 4)	555,331	501,031
Additional paid-in capital	11,412,743	11,157,778
Common stock subscriptions receivable (Note 8)	(4,500)	(4,500)
Deficit	(21,224,318)	(19,138,469)
Total Stockholders' Deficit	(9,260,742)	(7,484,158)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$47,848	$41,863

 

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

 

 

 

 FRIENDABLE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in US dollars)

(Unaudited)

 

	Three Months Ended June 30, 2018 $	Three Months Ended June 30, 2017 $	Six Months Ended June 30, 2018 $	Six Months Ended June 30, 2017 $
REVENUES	1,401	2,535	4,482	5,578
OPERATING EXPENSES
Accretion and interest expense (Note 10)	529,268	805,129	1,396,829	1,451,393
App hosting (Note 8)	139,970	142,826	279,425	277,826
Commissions	421	760	1,305	1,673
Financing costs	-	-	-	-
General and administrative (Note 8)	193,247	227,578	411,185	459,379
Product development (Note 8)	-	42,050	-	92,450
Sales and marketing	1,097	63,809	1,587	163,303
TOTAL OPERATING EXPENSES	864,003	1,282,152	2,090,331	2,446,024
LOSS FROM OPERATIONS	(862,602)	(1,279,617)	(2,085,849)	(2,440,446)
OTHER EXPENSES
Loss on investment (Note 11)	-	-	-	(175,000)
NET LOSS AND COMPREHENSIVE LOSS	(862,602)	(1,279,617)	(2,085,849)	(2,615,446)
BASIC LOSS PER SHARE	(0.00)	(0.00)	(0.00)	(0.00)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	5,553,310,369	1,682,777,754	5,435,934,678	1,491,502,113

 

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

 

 

 

 

 

 

 

 

 

 

FRIENDABLE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE PERIOD FROM DECEMBER 31, 2016 TO JUNE 30, 2018

(Expressed in US dollars)

  

Common # Stock

Common Stock Amount

Preferred #

Preferred Stock Amount

Additional Paid-in Capital

Common Stock Subscriptions

Deficit

Total

 

Balance December 31, 2016

1,068,031,823

$

106,803

21,655

$

2

$

9,609,198

$

(4,500

)

$

(13,500,287

)

$

(3,788,784

)

 

Shares issued for services	123,220,000	12,322	—	—	56,368	—	—	68,690
Conversion of convertible notes (Note 10)	3,521,332,373	352,133	—	—	410,819	—	—	762,952
Conversion of preferred shares (Note 4)	297,726,173	29,773	(388)	—	(29,773)	—	—	—
Issuance of convertible notes (net) (Note 10)	—	—	—	—	1,111,166	—	—	1,111,166
Net loss for the period	—	—	—	—	—	—	(5,638,182)	(5,638,182)
Balance December 31, 2017	5,010,310,369	$501,031	21,267	$2	$11,157,778	$(4,500)	$(19,138,469)	$(7,484,158)

Conversion of convertible notes (Note 10)	543,000,000	54,300	—	—	6,000	—	—	60,300
Issuance of convertible notes (net) (Note 10)	—	—	—	—	248,965	—	—	248,965
Net loss for the period	—	—	—	—	—	—	(2,085,849)	(2,085,849)
Balance June 30, 2018	5,553,310,369	$555,331	21,267	$2	$11,412,743	$(4,500)	$(21,224,318)	$(9,260,742)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 FRIENDABLE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Expressed in US dollars)

 

  

	Six months ended  June 30, 2018	Six months ended  June 30, 2017
Cash Flows Used in Operating Activities:
Net loss	$(2,085,849)	$(2,615,446)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Interest on convertible debentures	277,949	216,601
Accretion expense	1,118,879	1,234,790
Shares issued for services	-	9,440
Loss on investment	-	175,000
Changes in Operating Assets and Liabilities
Increase in accounts receivable	(632)	(63)
Increase in prepaid expenses	-	(3,900)
Increase (decrease) in accounts payable	444,041	312,714
Net Cash Used in Operating Activities	(245,612)	(670,864)
Cash Flows Used in Investing Activities:
Purchase of investment in Hang With	-	(175,000)
Net Cash Used in Investing Activities	-	(175,000)
Cash Flows Provided by Financing Activities:
Proceeds from convertible debentures (net)	250,965	726,060
Net Cash Provided by Financing Activities	250,965	726,060
Net Increase (Decrease) in Cash	5,353	(119,804)
Cash – Beginning	-	119,804
Cash – Ending	$5,353	$-
Supplemental Cash Flow Information:
Cash paid for interest	$—	$—
Cash paid for income taxes	$—	$—
Non-cash Investing and Financing Items:
Shares issued for conversion of debt (net)	$-	$-
Convertible debentures issued to extinguish promissory notes	$-	$-
Cash consists of:
Cash	$5,353	$-

 

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

 

FRIENDABLE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD ENDED JUNE 30, 2018

(Expressed in US dollars)

1.  NATURE OF BUSINESS AND GOING CONCERN

 

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

 

Effective June 15, 2011, the Company completed a merger with its subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in the Company’s name from “Digital Yearbook Inc.” to “Titan Iron Ore Corp.” The Company then began to pursue business in the area of mining exploration.

 

On February 3, 2014, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger”) with iHookup Operations Corp., a wholly-owned Delaware subsidiary of the Company (“Acquisition Sub”) and iHookup-DE, whereby iHookup-DE was the surviving entity and became the wholly-owned subsidiary of the Company. iHookup-DE’s former stockholders exchanged all of their 6,000 shares of outstanding common stock for 25,000 shares of the Company’s designated Series A Preferred Stock.

 

The Merger was regarded as a reverse recapitalization whereby iHookup-DE was considered to be the accounting acquirer as its stockholders retained control of the Company after the Merger. On February 3, 2014, the Merger was completed and as a result, iHookup-DE acquired the net liabilities of the Company.

 

As a result of the Merger, the Company ceased its prior operations and its business became the development and dissemination of a “proximity based” mobile-social media application that facilitates connections between people, utilizing the intelligence of global positioning system and localized recommendations.

On September 28, 2015, the Company filed a Certificate of Amendment to its Articles of Incorporation changing the name of the Company from “iHookup Social, Inc.” to “Friendable, Inc.”. On October 27, 2015, the Company’s trading symbol on the OTC Pink marketplace was changed from “HKUP” to “FDBL”. This change was made in conjunction with the re-branding of the Company’s app from "iHookup Social" to "Friendable".

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

 

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. The Company has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. As of June 30, 2018, the Company has a working capital deficiency of $9,295,742 and has an accumulated deficit of $21,224,318 since inception and its operations continue to be funded primarily from sales of its stock and issuance of convertible debentures. These factors raise substantial doubt about the Company’s ability to continue as a going concern. 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. 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

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year end is December 31.

 

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 the useful life and recoverability of long-lived assets, valuation of convertible debenture conversion options, 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. 

 

FRIENDABLE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD ENDED JUNE 30, 2018

(Expressed in US dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. The Company derives revenues from the sale of application software, unlimited messaging subscriptions for periods varying from one to twelve months, and arrangements for virtual gifts and access to special features referred to as coin packs. Revenue from the sale of application software is recognized upon download. Revenue from messaging subscriptions is recognized as revenue ratably over the subscription period beginning on the date the service is made available to customers. Revenue from coin packs is recognized on a consumption basis commensurate with the customer utilization of such resources.

 

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. During the six months ended June 30, 2018, the Company incurred $1,396 (June 30, 2017: $25,207) 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.

 

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.

 

Stock-based Compensation

The Company records 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.

 

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 comprehensive loss 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.

 

Allowance for Doubtful Accounts

The Company monitors its outstanding receivables for timely payments and potential collection issues. During the six months ended June 30, 2018 and 2017, the Company did not have any allowance for doubtful accounts.

  

 

FRIENDABLE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD ENDED JUNE 30, 2018

(Expressed in US dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 payable and convertible debentures. 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.

 

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 comprehensive loss. 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.

 

As of June 30, 2018, there were approximately 60,805,920,185 potentially dilutive shares outstanding.

 

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 May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition” and some cost guidance included in ASC Subtopic 605-35, Revenue Recognition -Construction-Type and Production-Type Contracts”.  ASU 2014-09 requires the disclosure of sufficient information to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company will also be required to disclose information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Early adoption is not allowed. ASU 2014-09 provides two methods of retrospective application. The first method would require the Company to apply ASU 2014-09 to each prior reporting period presented. The second method would require the Company to retrospectively apply with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company is currently evaluating the impact that the adoption of ASU 2014-09 may have on its consolidated financial statements.

 

3.  INTANGIBLE ASSETS

 

As at June 30, 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.

 

 

FRIENDABLE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD ENDED JUNE 30, 2018

(Expressed in US dollars) 

4.  COMMON AND PREFERRED STOCK

 

Common Stock:

 

Issued during 2018

 

During the six months ended June 30, 2018, the Company issued 543,000,000 shares of common stock to various convertible note holders for full and partial conversion of the notes (Note 10).

 

Preferred Stock:

 

The Series A Preferred Stock is convertible into nine (9) times the number of common stock outstanding 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 preferred stock is based on the ratio of the number of shares of 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.

 

5.  SHARE PURCHASE WARRANTS

 

Balance of share purchase warrants as of June 30, 2018 and year ended December 31, 2017 are: 

 

		Weighted Average
		Exercise
	Number of Warrants	Price $
Balance, December 31, 2017	1,096,335,757	0.004
Balance, June 30, 2018	1,096,335,757	0.004

 

6.  STOCK-BASED COMPENSATION

 

On November 22, 2011, the Board of Directors of the Company (see Note 1) 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 following table summarizes the options outstanding and exercisable under the 2011 Stock Option Plan as of June 30, 2018:

 

	Option Price
Expiry Date	Per Share($)	Number
December 21, 2021	1,680	1,725
June 21, 2022	400	500
June 25, 2023	134	850
	$1,044	3,075

  

FRIENDABLE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE PERIOD ENDED JUNE 30, 2018

(Expressed in US dollars)

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 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 120,679 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 June 30, 2018, no options have been awarded under the 2014 Plan.

 

The following table summarizes the Company’s stock options outstanding and exercisable:

 

	Number of Options	Weighted Average Exercise Price	Weighted- Average Remaining Contractual Term (years) $	Aggregate Intrinsic Value $
Outstanding and exercisable, December 31, 2016	3,075	1,044	6.57	-
Outstanding and exercisable, December 31, 2017	3,075	1,044	5.57	-
Outstanding and exercisable, June 30, 2018	3,075	1,044	5.07	-

 

7.  COMMITMENTS

 

The following table summarizes the Company’s significant contractual obligations as of June 30, 2018:

	$
Employment Agreements (1)	150,000

 

 (1) Employment agreements with related parties.

 

8.  RELATED PARTY TRANSACTIONS AND BALANCES

 

During the six months ended June 30, 2018, the Company incurred $229,600 (2017: $244,067) in salaries to officers and directors with such costs being recorded as general and administrative expenses.

 

During the six months ended June 30, 2018, the Company incurred $309,425 (2017: $399,826) 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 June 30, 2018, the Company had a stock subscription receivable totaling $4,500 (December 31, 2017: $4,500) from an officer and director and from a company with an officer and director in common.

 

 

 

 

As of June 30, 2018, accounts payable includes $720,624 (December 31, 2017: $481,078) payable to a company with two officers and directors in common, and $628,291 (December 31, 2017: $474,583) payable in salaries to directors and officers of the Company. The amounts are unsecured, non-interest bearing and are due on demand.

 

The above transactions were recorded at their exchange amounts, being the amounts agreed by the related parties.

 

9.  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 approximates their carrying values as the underlying imputed interest rates approximates the estimated current market rate for similar instruments.

 

As of June 30, 2018, there were no assets or liabilities measured at fair value on a recurring basis presented on the Company’s balance sheet, other than cash. 

 

 

 
10.  CONVERTIBLE DEBENTURES

 

Current Convertible Debentures:

 

Conversion Feature	Issuance	Net Principal ($)	Discount ($)	Carrying Value ($)	Interest Rate	Maturity Date
a )	2-Apr-13	5,054	-	5,054	0%	2-Jan-14
d )	5-Aug-15	474,900	-	474,900	7%	5-Feb-17
d )	5-Aug-15	18,750	-	18,750	7%	5-Feb-17
c )	17-Feb-15	102,135	-	102,135	8%	17-Feb-16
b )	17-Feb-15	5,000	-	5,000	8%	17-Feb-16
b )	27-Feb-15	37,500	-	37,500	8%	27-Feb-16
b )	19-Mar-15	53,551	-	53,551	8%	19-Mar-16
b )	19-Mar-15	8,000	-	8,000	8%	19-Mar-16
b )	11-May-15	50,000	-	50,000	8%	11-May-16
b )	2-Jun-15	29,500	-	29,500	8%	2-Jun-16
b )	2-Jun-15	45,966	-	45,966	8%	2-Jun-16
b )	2-Jun-15	10,000	-	10,000	8%	2-Jun-16
b )	2-Jun-15	58,540	-	58,540	8%	2-Jun-16
b )	2-Jun-15	35,408	-	35,408	8%	2-Jun-16
b )	2-Jun-15	20,758	-	20,758	8%	2-Jun-16
c )	11-Jun-15	50,000	-	50,000	8%	27-Mar-16
b )	19-Jun-15	30,464	-	30,464	8%	19-Jun-16
b )	19-Jun-15	30,000	-	30,000	8%	19-Jun-16
b )	19-Jun-15	35,408	-	35,408	8%	19-Jun-16
b )	24-Jun-15	37,500	-	37,500	8%	27-Feb-16
b )	24-Jun-15	35,000	-	35,000	8%	12-Feb-16
b )	24-Jun-15	37,500	-	37,500	8%	12-Mar-16
b )	7-Jul-15	75,000	-	75,000	8%	7-Oct-15
b )	1-Aug-15	17,408	-	17,408	8%	4-Aug-16
b )	1-Aug-15	30,000	-	30,000	8%	1-Aug-16
b )	1-Aug-15	35,408	-	35,408	8%	1-Aug-16
b )	21-Sep-15	64,744	-	64,744	8%	21-Sep-16
b )	3-May-16	50,000	-	50,000	8%	3-May-17
b )	3-May-16	50,000	-	50,000	8%	11-May-16
b )	3-May-16	29,500	-	29,500	8%	2-Jun-16
b )	3-May-16	45,965	-	45,965	8%	2-Jun-16
b )	24-May-16	61,571	-	61,571	8%	24-May-17
b )	24-May-16	30,464	-	30,464	8%	19-Jun-16
b )	26-May-16	157,500	-	157,500	8%	26-May-17
b )	15-Jun-16	5,000	-	5,000	8%	15-Jun-17
d )	3-Jun-16	160,000	-	160,000	7%	8-Sep-17
d )	3-Jun-16	4,000	-	4,000	7%	8-Sep-17
d )	15-Jun-16	50,000	-	50,000	7%	8-Sep-17
d )	15-Jun-16	1,250	-	1,250	7%	8-Sep-17
d )	17-May-16	100,000	-	100,000	7%	8-Sep-17
d )	17-May-16	2,500	-	2,500	7%	8-Sep-17
d )	20-May-16	110,000	-	110,000	7%	8-Sep-17
d )	20-May-16	2,750	-	2,750	7%	8-Sep-17
d )	27-Jan-16	250,000	-	250,000	7%	27-Jul-17

10.  CONVERTIBLE DEBENTURES (CONTINUED)

d )	8-Mar-16	110,000	-	110,000	7%	8-Sep-17
d )	27-Jan-16	18,750	-	18,750	7%	27-Jul-17
d )	8-Mar-16	5,000	-	5,000	7%	8-Sep-17
d )	8-Mar-16	90,000	-	90,000	8%	8-Sep-17
b )	8-Jul-16	50,000	-	50,000	7%	8-Sep-17
b )	4-Aug-16	110,000	-	110,000	7%	8-Sep-17
d )	15-Aug-16	157,000	-	157,000	7%	8-Sep-17
d )	12-Sep-16	83,000	-	83,000	7%	8-Sep-17
d )	8-Jul-16	1,250	-	1,250	7%	8-Sep-17
d )	4-Aug-16	2,750	-	2,750	7%	8-Sep-17
d )	15-Aug-16	3,925	-	3,925	7%	8-Sep-17
d )	12-Sep-16	2,075	-	2,075	7%	8-Sep-17
d )	4-Aug-16	110,000	-	110,000	8%	4-Aug-17
b )	15-Aug-16	157,500	-	157,500	8%	15-Aug-17
b )	8-Sep-16	80,000	-	80,000	8%	8-Sep-17
b )	11-Nov-16	80,000	-	80,000	8%	11-Nov-17
b )	5-Dec-16	88,000	-	88,000	8%	5-Dec-17
b )	9-Jan-17	84,000	-	84,000	8%	6-Jan-18
b )	13-Mar-17	32,000	-	32,000	8%	13-Mar-18
c )	2-Feb-17	90,198	-	90,198	8%	2-Feb-18
c )	15-Mar-17	96,000	-	96,000	8%	15-Mar-18
d )	7-Oct-16	465,000	-	465,000	7%	7-Apr-18
d )	7-Nov-16	295,000	-	295,000	7%	7-May-18
d )	12-Dec-16	295,000	-	295,000	7%	12-Jun-18
d )	18-Jan-17	295,000	-	295,000	7%	7-Apr-18
b )	7-Apr-17	25,000	-	25,000	8%	7-Apr-18
b )	3-May-17	27,000	-	27,000	8%	3-May-18
c )	5-May-17	30,000	-	30,000	8%	5-May-18
b )	2-Jun-17	27,000	-	27,000	8%	2-Jun-18
s) d )	21-Jul-17	760,965	322,363	438,602	10%	21-Jul-18
s) d )	21-Jul-17	24,000	1,606	22,394	10%	21-Jul-18
		6,239,407	323,969	5,915,438

 

 

 

 

 

 

 

During the six months ended June 30, 2018, the Company received net proceeds from convertible debentures of $250,965 (2017: $726,060).

 

During the six months ended June 30, 2018, $60,300 (2017: $289,484) of convertible debentures were settled by issuing 543,000,000 (2017: 599,157,030) shares of common stock of the Company.

 

During the six months ended June 30, 2018, the Company incurred $255 (2017: $40,250) in transaction costs in connection with the issuance of the convertible debentures that have been offset against the carrying values of the related debentures on the issuance date.

 

During the six months ended June 30, 2018, the Company incurred $1,396,829 (2017: $1,451,393) in accretion and interest expense in connection with the convertible debentures.

 

At June 30, 2018, convertible debentures with the principal amount of $6,239,407 are subject to a General Security Agreement covering substantially all of the Company’s assets.

 

The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at June 30, 2018 the conversion features and non-standard anti-dilution provisions would not meet derivative classification.

 

Convertible debentures with maturity dates prior to June 30, 2018 are now due on demand.

 

11.  LOSS ON INVESTMENT AND INTANGIBLE ASSET

 

On October 7, 2016, the Company entered into a Securities Purchase Agreement (the “Alpha SPA”) with Alpha Capital Anstalt (“Alpha Capital”), to issue and sell up to, in principal amount, $1,615,000 of convertible notes, payable in four tranches (the “Alpha Notes”). The first tranche of $465,000 was funded on October 7, 2016 (the “Initial Closing Date”) and the second, third, and fourth tranches of $375,000 were funded, respectively, during the first week of each of November 2016, December 2016, and January 2017 (the subsequent closing dates and, with the Initial Closing Date, each a “Closing”).

 

The Company used a portion of the proceeds of each Closing to purchase Series A Convertible Participating Preferred Stock of a private entity named Hang With, Inc. (“Hang With”). Alpha Capital is currently Hang With’s majority shareholder. On October 7, 2016, the Company entered into a Securities Purchase Agreement with Hang With (the “Hang With SPA”) to buy up to 330,397 shares of Hang With’s Series A Convertible Participating Preferred Stock (the “Preferred Stock”) for $750,000. On the Initial Closing Date, the Company paid $225,000 and was to receive 99,118 shares of Preferred Stock. The Company paid Hang With $175,000 on each of the subsequent three Closings. In connection with entering into the Hang With SPA, the Company and Hang With entered into a Software License Agreement (the “License Agreement”) in which Hang With is licensing the intellectual property of the Hang With apps to the Company. As part of the Hang With SPA and as compensation for the Company entering into the License Agreement and the future development agreement, Hang With was to issue 154,185 shares of Preferred Stock on the Initial Closing Date, and was to issue 100,000 shares of its common stock to the Company.

 

The Company attributed much of the value of Hang With to Hang With management’s representation that, in the history of its own apps, it had a certain amount of total users and a range of monthly active users. Hang With believed, prior to the Hang With SPA being signed, that, with the Company’s investment, the monthly active users would be at the higher end of the range within a short period of time. Based on these representations by management the Company believed that it could specifically market its own apps to the minimum monthly active users of the Hang With app that Hang With management’s represented existed.

 

 

 

The Company believes that, after the November 2016 Closing, the Hang With app was removed for a period of time from the app stores on which it appeared and that the app was shut down for a period of time. At this point, Hang With effectively had zero monthly active users. In addition, the Company was not able to utilize Hang With’s technology in the Friendable app as was contemplated by the License Agreement due to Hang With’s technology being, in the Company’s view, out of date. The Company is currently seeking to negotiate a settlement with Hang With regarding the Company’s claims against Hang With.

 

As of December 31, 2016 Hang With had not delivered any of the preferred or common shares to the Company. During the year ended December 31, 2016, the Company had paid Hang With $575,000 which has been written off as a loss on investment. During the year ended December 31, 2017, the Company had paid Hang With $175,000 in connection to the fourth Closing which has been written off as a loss on investment.

 

12.  SUBSEQUENT EVENTS

 

Issuance of Convertible Debenture:

 

Subsequent to the period ended June 30, 2018, the Company issued $30,000 in convertible debentures.

 

Share Exchange Agreement:

 

On June 27, 2018, Friendable, Inc., a corporation organized under the laws of Nevada (the “Acquiror” or “Company”), shareholders of the Acquiror (the “Acquiror Principal Shareholders”), and Sharps Technology, Inc., a corporation organized under the laws of Wyoming (the “Acquiree”) entered into a Share Exchange Agreement (the “Agreement”) pursuant to which each person who is a shareholder of the Acquiree (the “Acquiree Shareholders”) (who are the holders of all of the issued and outstanding shares of common stock of the Acquiree (the “Acquiree Interests”)) have agreed to transfer to the Acquiror, and the Acquiror has agreed to acquire from the Acquiree Shareholders, all of the Acquiree Interests, in exchange for the issuance of 17,000,000 shares of Acquiror’s common stock to the Acquiree Shareholders (the “Acquiror Shares”), which Acquiror Shares shall constitute approximately 85.00% on a fully diluted basis of the issued and outstanding shares of Acquiror Common Stock immediately after the closing of the transactions contemplated herein, in each case, on the terms and conditions as set forth in the Agreement. The 17,000,000 share number is subject to adjustment for any shares of Acquiree issued subsequent to June 27, 2018 for financing purposes. The transaction shall be consummated upon the satisfaction of certain closing conditions set forth in the Share Exchange Agreement which include but are not limited to: a reverse split of the Acquiror’s outstanding common stock so that no more than 3,000,000 shares will be outstanding in total prior to issuance of the Acquiror Common Stock, exchange of $1.5 million principal amount of notes for $1.5 million principal amount of post-closing notes and disposition of its Fan Pass, Inc. business and filing of an S-1 Registration Statement with respect thereto.

 

Disposition of Fan Pass, Inc.:

 

On June 27, 2018, Acquiror, Acquiree as noted above and Fan Pass, Inc. entered into a Spin Off Agreement pursuant to which the Acquiror shall distribute 100% of the issued and outstanding stock of Fan Pass, Inc. to the Acquiror’s shareholders existing immediately prior to the Closing. The Spin Off Agreement also requires that Fan Pass, Inc. file a registration statement on Form S-1 for the registration of all of its shares distributed to Acquiror’s shareholders.

 

 

 

 

 

 

 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 1 “Financial Statements” in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. The Company’s actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.

 

Overview

 

We were incorporated in the State of Nevada on June 5, 2007. Effective June 15, 2011, we completed a merger with our subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in our name to “Titan Iron Ore Corp.”

 

As of December 31, 2013, Titan Iron Ore Corp. was a mineral exploration company. Due to our inability to raise capital to further develop mining claims and pursue mineral exploration, we decided to exit the mining business and look for other opportunities.

 

On February 3, 2014, we completed a merger with iHookup Social, Inc., a Delaware corporation (“iHookup”) pursuant to an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) dated January 31, 2014. Pursuant to the Merger Agreement, we incorporated a new subsidiary called iHookup Operations Corp, a Delaware corporation, which merged with and into iHookup, causing the subsidiary’s separate existence to cease and iHookup to become a wholly-owned subsidiary of the Company. iHookup’s stockholders exchanged all of their twelve million (12,000,000) shares of outstanding common stock for fifty million (50,000,000) shares of the Company’s newly designated Series A Preferred Stock. Each share of common stock entitles its holder to one vote on each matter submitted to the stockholders. 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 Friendable 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.

 

On May 31, 2017, the Company filed an Amendment to its Articles of Incorporation increasing the authorized common stock from 10,000,000,000 to 15,000,000,000 shares. On June 28, 2017, the Company incorporated a subsidiary, Fan Pass Inc., a Nevada corporation, which was incorporated to hold all of the assets of the mobile application or The “Fan Pass” App.

 

Who We Are

 

The Company is a mobile-social technology company focused on connecting and engaging users through its existing social networking app “Friendable” and a new application scheduled to roll out in 2018, Fan Pass.

 

The Company’s first product was launched under the same name as the Company, the Friendable app. The app provides a mobile social network for both iOS and Android mobile devices/operating systems and allows users to create one-on-one or group-style meet-ups for food, drinks, live music venues, or any other occasion, based on location. Since its inception in 2013, Friendable has generated more than 1 million downloads, 800,000 registered users, and approximately 600,000 user profiles, and has been featured in popular music videos such as the 2016 hit “Ain’t Your Mama” by singer Jennifer Lopez. The Company seeks to explore new opportunities for growth, partnerships, mergers or acquisitions in 2018.

 

In 2018, the Company intends to release a beta version of its Fan Pass mobile application for user testing as well as complete a version of Fan Pass ready for commercial release. Additionally, Fan Pass is its own Corporation that is currently wholly owned by Friendable, Inc., and on a path to be spun off as a separate entity. The spin-off of Fan Pass, Inc. is intended to result in a share issuance to all Friendable shareholders as the Company files an S1 registration statement to become a stand-alone public company.

 

The Fan Pass app has been designed to capture and monetize content via live streaming video. Video content will be the focus in which the Company will build content related assets and allow brands/social media influencers to unite. The app has the opportunity to provide fans to capture and/or view exclusive back-stage and uncensored video content from their favorite performing artists and celebrities (social media influencers). Fan Pass is currently working on its application, as well as establishing partnerships with some of the very same and prominent artists utilized by Friendable in the past. These artists include Jennifer Lopez, Austin Mahone, Meghan Trainor, Fetty Wap, and more. Through these previous celebrity partnerships, Fan Pass believes it can drive downloads and convert downloads to users, this approach allows Fan Pass to leverage built-in fan bases into the application’s initial viewership base, making quick and large scalability a real possibility.

 

 

 

 

Mobile Applications

 

Introduction

 

The Friendable Mobile Application:   Friendable is a "friends-first" approach to making new connections. Unlike platforms like Facebook and Instagram where users post what they did in the past, Friendable’s features are designed and focused on living in the present and looking forward to the future:

  

 

As of April 2018, Friendable has been downloaded over 1 million times across iOS and Android.

 

“Everything Starts with Friendship.”

 

Management believes that its Friendable app and brand, along with its existing feature set is in need of upgrades, expansion and more intelligent technology integration to stay competitive in the Social Networking category. With such upgrades being extremely costly and the existing user base growing only through search and organic word of mouth, Friendable intends to seek strategic partners that may provide new opportunities to create value for the Company’s shareholders by pivoting the app or its business focus in a new direction.