NewBridge Global Ventures, Inc. - Quarter Report: 2018 March (Form 10-Q)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — THE COMPANY AND BASIS OF PRESENTATION

Financial Statement Presentation – The accompanying condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include the operations and balances of NewBridge Global Ventures, Inc. (“NewBridge”) and its wholly-owned subsidiaries NABUFIT Global ApS (“NABUFIT Denmark”), NABUFIT China Limited (“NABUFIT China”), NABUFIT IP ApS (“NABUFIT IP”), and Elevated Education, Inc. (“Elevated”) (collectively “NewBridge,” “we”, or “the Company”).  NewBridge was incorporated in May 1983 in the State of Colorado and re-incorporated in the State of Delaware in April 2008.  

Organization – Effective August 30, 2017, the Company entered into an Agreement on Transfer of Shares (“Transfer Agreement”) whereby it sold all of the interest held in its operating subsidiaries NABUFIT Denmark, NABUFIT China, and NABUFIT IP (“Operating Subsidiaries”) and consequently ceased its prior operations (“Operations Sale”).  Prior to the Operations Sale, the Company, through its Operating Subsidiaries designed, manufactured and marketed the NABUFIT virtual training and fitness products and services (“NABUFIT Products”).  After completion of the Operations Sale, all of the Company’s equity in the Operating Subsidiaries were transferred and all of its interests in the NABUFIT Product and the associated technology and intellectual property ceased.

NewBridge is currently engaged in providing education and business consulting services to several companies in the medical marijuana and cannabis related industries.  Through Elevated we provide education to healthcare professionals on medical cannabis and the endocannabinoid system.

In connection with such consulting agreements, the Company provides the following services:

·Strategic advisory and services; 

·Business services; 

·Marketing services; 

·Acquisition and development services; and 

·Strategic partnership and consolidation services. 

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NOTE 2 – GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared with the recognition that there is considerable doubt about whether the Company can continue as a going concern.  As shown in the accompanying condensed consolidated financial statements, the Company incurred a net loss of $491,475 for the three months ended March 31, 2018 and has an accumulated deficit of $9,103,587 at March 31, 2018.  The Company also used cash in operating activities of $153,934 during the three months ended March 31, 2018.   These factors raise substantial doubt about the Company’s ability to continue as a going concern.

In order for us to continue as a going concern, we will need to obtain additional debt or equity financing. We are regularly and continually seeking additional funding from investors and from time to time we are in various stages of negotiations.  Nonetheless, to date we have not accomplished a financing of the size needed to put the Company on a stable operating basis. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to attain positive cash flow operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet our future obligations. All of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to cease operations.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Information – The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).  Accordingly, they are condensed and do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature.  The results of operations for the three months ended March 31, 2018, may not be indicative of the results that may be expected for the year ending December 31, 2018.

These financial statements should be read in conjunction with the financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation.

Principles of Consolidation — The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include operations and balances of NewBridge Global Ventures, Inc. and its wholly-owned subsidiaries NABUFIT Denmark, NABUFIT China, NABUFIT IP, and Elevated.  Intercompany balances and transactions have been eliminated in consolidation. NABUFIT China and NABUFIT IP had no activity.  All three NABUFIT subsidiaries were sold to an employee of NABUFIT Denmark effective August 30, 2017.  As a result of this action, the disclosures reflect these operations as discontinued and prior year financial information has been restated to reflect this accounting treatment.  The subsidiaries were consolidated up through August 30, 2017, the date they were sold.  Elevated was formed February 14, 2018.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.  

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Fair Value – The fair values of the Company’s financial assets and liabilities approximate their carrying amounts at the reporting date.

Foreign Currency Transactions and Translations – The functional currency of NABUFIT Denmark was the Danish Krone (DKK), the functional currency of NABUFIT China was the China Yuan Renminbi (CNY), and the functional currency of NewBridge, Elevated and the reporting currency is U.S. dollars (USD).  The Company translated the assets and liabilities of NABUFIT Denmark and NABUFIT China from the functional currency to U.S. dollars at the appropriate spot rates as of the balance sheet date. Equity balances were translated using historical exchange rates. Changes in the carrying value of these assets and liabilities attributable to fluctuations in spot rates were recognized in foreign currency translation adjustment, a component of accumulated other comprehensive income. Income statement accounts were translated using the average exchange rate during the period.

Monetary assets and liabilities denominated in a currency that is different from the functional currency must first be remeasured from the applicable currency to the functional currency. The effect of this remeasurement process was recognized translation adjustments in our statement of comprehensive loss.

The Company had no foreign currency transaction gains or losses during the three months ended March 31, 2018.

Cash and Cash Equivalents – The balance in cash and cash equivalents consists of cash reserves held in bank accounts. The Company maintains cash balances in bank accounts that, at times, exceed federally insured limits.  The Company has not experienced any losses in these accounts and believes it is not exposed to any significant risk with respect to cash.

Revenue Recognition – The Company adopted Topic 606 Revenue from Contracts with Customers with a date of initial application of January 1, 2018.  Since the Company had no revenue prior to 2018, the adoption of this standard had no effect on prior periods.  The Company generates revenue through consulting arrangements.  The revenue will be recognized at the point in time that the service is performed and delivered to the customer.  This policy will be modified if necessary as the Company grows and develops multiple revenue sources.

Software Development Costs – The Company expenses software development costs until the Company has a working business model for the software.

Income Taxes – The Company accounts for income taxes pursuant to Accounting Standards Codification (ASC) 740, Income Taxes, which requires the use of the asset and liability method of accounting for deferred income taxes.  We recognize deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years.

All allowances against deferred income tax assets are recorded in whole or in part, when it is more likely than not those deferred income tax assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is required to the extent it is more-likely-than-not that a deferred tax asset will not be realized. ASC 740 also requires reporting of taxes based on tax positions that meet a more-likely-than-not standard and are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits.

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Basic and Diluted Loss Per Share – Basic loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period giving effect to potentially dilutive common stock equivalents.  As of March 31, 2018, the Company had 1,017,086 common stock equivalents outstanding.    

New Accounting Pronouncements – The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.

NOTE 4 – ASSET PURCHASE AGREEMENT

Elevated acquired intangible assets from Elevated Portfolio and assumed $38,500 of liabilities.  The liabilities consisted of $19,000 payable to NewBridge, which was eliminated in consolidation.  The remaining assumed liabilities of $19,500 are payable Mustang Capital, LLC, a related party.  Elevated Portfolio and Mustang Capital, LLC are both related parties since Mark Mersman, the chief executive officer of NewBridge is the principal executive in these entities as well.  

The purchase of the intangible assets of Elevated Portfolio was valued at predecessor cost.  As a result, the Company has recorded payables to related parties of $19,500, and the shares at par value.  

NOTE 5 – STOCK OPTIONS

Incentive Plan

An Incentive Plan was approved by the NewBridge Board on October 18, 2017 and by a majority of the stockholders on October 19, 2017. The Incentive Plan permits NewBridge to grant “Awards,” that may consist of stock options, the grant or sale of restricted stock (“Restricted Stock”), stock appreciation rights (“SARs”), or hypothetical units issued with reference to NewBridge common stock (“Restricted Stock Units”), for up to 4,000,000 shares of common stock. Awards may be granted under the Incentive Plan to employees, directors, and consultants of NewBridge and its subsidiaries, including also subsidiaries that NewBridge may form or acquire in the future. The Incentive Plan will be administered by the NewBridge Board or by a committee authorized by the NewBridge Board (the “Committee”), which will make all determinations with regard to the grant and terms of Awards, subject to the terms of the Incentive Plan.

On October 12, 2017, the Company granted options to Mark Merman, CEO and Scott Cox, President and COO, to purchase 1,508,543 shares of common stock each (3,017,086 total).  The options have an exercise price of $0.01 per share and expire December 31, 2018.  The options are exercisable upon achievement of various milestones.  As of December 31, 2017, none of the options were exercisable.  The combined stock options were valued at $1,518,884 using Black-Scholes.  The Company recognized share-based compensation on these stock options of $272,572 during 2017 and had $1,246,312 of unrecognized share-based compensation.  For the three months ended March 31, 2018 and 2017, the Company recognized $311,578 and $40,670, respectively, of share-based compensation and had $934,734 of unrecognized share-based compensation as of March 31, 2018 that will be recognized ratable over the remaining nine months of 2018.  On February 6, 2018, options of 2,817,085 vested upon Board approval.  The remaining 200,000

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options have not yet vested but are still expected to vest. During the quarter ended March 31, 2018, 2,000,000 of the vested shares were exercised leaving 817,085 options that have vested but have not been exercised.

NOTE 6 – SHAREHOLDERS’ EQUITY

We have authorized capital stock consisting of 100,000,000 shares of $0.0001 par value common stock and 400,000 shares of $0.0001 par value preferred stock. At March 31, 2018 and December 31, 2017, we had 8,034,354 and 3,695,604 shares of common stock issued and outstanding, respectively, and no shares of preferred stock issued and outstanding.

During March 2017, the Company recorded a credit to additional paid-in capital of $87,020 for the beneficial conversion feature described in Note 5.

During the quarter ended March 31, 2018, the Company issued 338,750 shares of common stock to investors at $0.40 per share for cash totaling $135,500.

On March 2, 2018, the Company issued 2,000,000 shares of common stock for $0.01 per share for a total of $20,000.  These shares were issued to Mark Mersman and Scott Cox upon exercise of stock options.

On March 5, 2018, the Company issued 2,000,000 shares of common stock as part of the asset purchase agreement described in Note 4.  Due to Elevated Portfolio Holdings being a related party, the net assets acquired were recorded at predecessor cost.

NOTE 7 – RELATED PARTY TRANSACTIONS

As of March 31, 2018 and December 31, 2017, the Company had related party payables of $19,500 and $1,988, respectively.  The 2018 payable was to Mustang Capital, a company owned by Mark Mersman, and was assumed as part of the asset purchase agreement described in Note 4.  The 2017 payable was to a former CEO for expenses related to the operation of the business.  These payables are due on demand with no interest.

As described in Note 4, the asset purchase agreement between the Company, Elevated Portfolio and Elevated Education is considered a related party transaction since Mark Mersman was the chief executive officer in all companies involved.

Elevated Portfolio and Mustang Capital, LLC are both related parties since Mark Mersman, the chief executive officer of NewBridge is the principal executive in these entities as well.  

NOTE 8 – SUBSEQUENT EVENTS

Effective May 4, 2018, the Company entered into a Securities Purchase Agreement (“Auctus Purchase Agreement”) dated April 30, 2018 with Auctus Fund, LLC (“Auctus”).  In conjunction with the Auctus Purchase Agreement, the Company signed a Convertible Promissory Note for $250,000 (“Auctus Note”). The Auctus Note is convertible into shares of the Company’s common stock and has an initial maturity date of nine months from the issue date of each funding tranche.   The first $125,000 was received May 3, 2018.  In connection with the Purchase Agreement and the Note, the Company also entered into a Registration Rights Agreement pursuant to which the Company agreed to register the conversion shares for resell by Auctus.  The conversion price is equal to (1) the lessor of the lowest trading price during the previous 25 day trading period ending on April 27, 2018, the last full trading day prior to the date of the note, which was $0.41 or (2) a variable conversion price equal to 50% of the lowest trading price during the 25 trading days leading up to the date of the conversion.  

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Results of Operations

The following discussion is intended to assist you in understanding our results of operations and our present financial condition.  Our condensed financial statements and the accompanying notes included in this quarterly report on Form 10-Q contain additional information that should be referred to when reviewing this material.

Forward-Looking Information and Cautionary Statements

This quarterly report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.  Such statements are based on currently available financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.  Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s 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.  Such factors include, but are not limited to, market factors, market prices and marketing activity, future revenues and costs, unsettled political conditions, civil unrest and governmental actions, foreign currency fluctuations, and environmental and labor laws and other factors detailed herein and in our other filings with the U.S. Securities and Exchange Commission (the “Commission”) filings.    Additional factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

·our ability to raise capital when needed and on acceptable terms and conditions; 

·our ability to identify and acquire a viable operating business; 

·our ability to attract and retain management, and to integrate and maintain technical information and management information systems; 

·the intensity of competition; and 

·general economic conditions. 

Forward-looking statements are predictions and not guarantees of future performance or events.  Forward-looking statements are based on current industry, financial and economic information, which we have assessed but which by its nature, is dynamic and subject to rapid and possibly abrupt changes.  Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business.  We hereby qualify all our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of their dates and should not be unduly relied upon.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise (other than pursuant to reporting obligations imposed on registrants pursuant to the Securities Exchange Act of 1934)  to reflect subsequent events or circumstances. All written and oral forward-looking statements made in connection with this Quarterly Report on Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Executive Summary

The Company has completed the transition from NABUFIT to NewBridge and is now focused on growth.  The Company began generating revenue, but to date, the only revenue is with a related party customer.

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Critical Accounting Policies and Estimates

Certain accounting policies are considered by management to be critical to an understanding of our condensed consolidated financial statements.  Their application requires significant management judgment, with financial reporting results relying on estimates about the effect of matters that are inherently uncertain.  A summary of critical accounting policies can be found in our Form 10-K for the year ended December 31, 2017.  For all of these policies, management cautions that future results rarely develop exactly as forecasted, and the best estimates routinely require modification.  

Results of Operations

During the three months ended March 31, 2018, the Company had a net loss of $491,475 compared to a net loss of $1,166,181 for the three months ended March 31, 2017.  The decrease was mainly due to selling the NABUFIT subsidiaries and the associated expense burden as the net loss from discontinued operations for the three months ended March 31, 2017 was $823,112.  The loss from operations increased from $322,990 to $491,475 for the three months ended March 31, 2017 and 2018, respectively.  This increase is mainly due to increased share-based compensation to the executives.

Operating expenses consist mainly of employee salaries and share-based compensation.  We expect operating expenses to be at similar levels the rest of the year.

Liquidity and Capital Resources

During the three months ended March 31, 2018, we had a net loss of $491,475. At March 31, 2018, we had an accumulated deficit of $9,103,587.

We could potentially use our available financial resources sooner than we currently expect, and we may incur additional indebtedness to meet future financing needs. Adequate additional funding may not be available to us on acceptable terms or at all. In addition, although we anticipate being able to obtain additional financing through non-dilutive means, we may be unable to do so. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of operations. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors” noted in the previously filed 10-K.

The following table summarizes our cash flows for the three months ended March 31, 2018:

Number of Employees

As of March 31, 2018, the Company had 2 full-time and 2 part-time employees.

Disclosure of Contractual Obligations

None

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Off-Balance Sheet Financing Arrangements

The Company had no off-balance sheet financing arrangements at March 31, 2018 and December 31, 2017.

General

The Company’s Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue, if any, and expenses, and the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions 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 that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Financial Statements.

New Accounting Pronouncements

The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.

As a Smaller Reporting Company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our President, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act.”))  and based upon this evaluation, and the engagement of a qualified outside third party to monitor our disclosure controls and procedures, concluded that as of March 31, 2018, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

None.

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PART II - OTHER INFORMATION

The Company had no legal proceedings as of March 31, 2018.

On February 6, 2018, the Company entered into an Equity Financing Agreement (“Financing Agreement”) with GHS Investments LLC, a Nevada limited liability company (“GHS”).  Under the Financing Agreement, we may from time to time, in our discretion, sell shares of our common stock to GHS for aggregate gross proceeds of up to $1,000,000 (but in no event more than 1,850,000 shares or such other amount which is less than one-third of the Company’s public float, not including shares beneficially owned by affiliates). Unless terminated earlier, GHS’s purchase commitment will automatically terminate on the earlier of the date on which GHS shall have purchased our shares pursuant to the Financing Agreement for an aggregate purchase price of $1,000,000, the date which is 24 months from the effective date or the date the Registration Statement is no longer effective. We have no obligation to sell any shares under the Financing Agreement.

As provided in the Financing Agreement, we may require GHS to purchase shares of common stock from time to time by delivering a put notice (“Put Notice”) to GHS specifying the total number of shares to be purchased (such number of shares multiplied by the Purchase Price described below, equals the “Investment Amount”). Our ability to issue Put Notices to GHS and require GHS to purchase our common stock is not contingent on the trading volume of our common stock. GHS will have no obligation to purchase shares under the applicable Financing Agreement to the extent that such purchase would cause GHS to own more than 9.99% of our then-issued and outstanding common stock (the “Beneficial Ownership Limitation”).

For each share of our common stock purchased under the Financing Agreement, GHS will pay a Purchase Price equal to 75% of the “Market Price” subject to a floor price of $0.50. The “Market Price” is defined as the volume weighted average price (the “VWAP”) on the principal trading platform for the Common Stock, as reported by OTC Markets Group, Inc. (“OTC Markets”), for the five consecutive trading days immediately preceding the closing date (each, a “Closing Date”) associated with the applicable Put Notice (the “Valuation Period”). GHS’s obligation to purchase shares is subject to customary closing conditions, including without limitation a requirement that this registration statement registering the resale by GHS of the shares to be issued under the Financing Agreement remain effective. The Financing Agreement also contains covenants, representations and warranties by us and GHS that are typical for transactions of this type, including customary mutual indemnification rights. The Financing Agreement is not transferable and any benefits attached thereto may not be assigned.

In connection with the Financing Agreement, we also entered into a Registration Rights Agreement with GHS requiring us to prepare and file this Registration Statement registering the resale by GHS of shares to be issued under the Financing Agreement, to use commercially reasonable efforts to cause the Registration Statement to be declared effective, and to keep the Registration Statement effective until (i) the date on which GHS may sell all the shares under Rule 144 without volume limitations, or (ii) the date on which GHS no longer owns any of the shares.

The foregoing description of the terms of the Financing Agreement and the Registration Rights Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to the agreements/instructions themselves, copies of which were filed as exhibits to our Current Report on Form 8-K, filed February 13, 2018, the terms of which are incorporated herein by reference.

No shares have been purchased by GHS under the Financing Agreement.

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Item 3. Defaults Upon Senior Securities

None.

Not applicable.

None.

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Exhibits.  The following exhibits are included as part of this report:

EXHIBIT NO    DESCRIPTION AND METHOD OF FILING

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NABUFIT GLOBAL, INC.

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