Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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[X]
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QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013
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OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 000-54635
PUB CRAWL HOLDINGS INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
27-2758155
(I.R.S. Employer Identification No.)
801 West Bay Drive, Suite 470
Largo, Florida 33770
(Address of principal executive offices, including zip code.)
727-330-2731
(Registrant’s telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. YES [X] 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 (SS 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 [X]
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,”“non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer
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Accelerated Filer
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Non-accelerated Filer
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[ ]
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Smaller Reporting Company
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[X]
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(Do not check if smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
135,500,000 as of August 12, 2013.
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Page
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Financial Statements.
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3
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Financial Statements:
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3
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4
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5
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6
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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11
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Quantitative and Qualitative Disclosures About Market Risk.
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13
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Controls and Procedures.
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14
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Risk Factors.
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14
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Unregistered Sale of Equity Securities.
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14
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Exhibits.
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14
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16
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17
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PART I – FINANCIAL INFORMATION
PUB CRAWL HOLDINGS INC.
(A Development Stage Company)
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June 30,
2013
$
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December 31,
2012
$
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(unaudited)
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ASSETS
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Cash
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21,442
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103,241
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Prepaid expenses
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25
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25
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Total Assets
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21,467
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103,266
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LIABILITIES
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Current Liabilities
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Accounts payable and accrued liabilities
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40,120
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20,341
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Derivative liabilities
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715,385
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395,285
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Total Current Liabilities
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755,505
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415,626
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Convertible debenture, net of unamortized discount of $139,016 and $144,856,
respectively
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10,984
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5,144
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Total liabilities
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766,489
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420,770
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STOCKHOLDERS’ DEFICIT
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Preferred Stock
Authorized: 500,000,000 preferred shares with a par value of $0.001 per share
Issued and outstanding: nil preferred shares
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–
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–
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Common Stock
Authorized: 750,000,000 common shares with a par value of $0.001 per share
Issued and outstanding: 135,500,000 and 125,500,000 common shares, respectively
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135,500
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125,500
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Additional Paid-In Capital
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(60,500)
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(125,500)
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Common Stock Issuable
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50,000
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–
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Accumulated Deficit during the Development Stage
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(870,022)
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(317,504)
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Total Stockholders’ Deficit
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(745,022)
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(317,504)
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Total Liabilities and Stockholders’ Deficit
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21,467
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103,266
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(The accompanying notes are an integral part of these financial statements)
F-1
PUB CRAWL HOLDINGS INC.
(A Development Stage Company)
(unaudited)
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Three months
ended
June 30,
2013
$
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Six months
ended
June 30,
2013
$
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Accumulated from
November 6, 2012
(Date of Inception)
to June 30,
2013
$
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Revenues
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–
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50,000
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50,000
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Operating Expenses
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Consulting
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2,956
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3,506
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28,506
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General and administrative
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69,652
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121,552
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128,368
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Payroll
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25,342
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91,137
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110,619
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Professional fees
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28,548
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52,705
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67,455
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Transfer agent fees
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20
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240
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240
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Total Operating Expenses
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126,518
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269,140
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335,188
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Loss Before Other Expense
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(126,518)
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(219,140)
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(285,188)
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Other Expense
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Loss on change in fair value of derivative liabilities
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(178,247)
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(320,100)
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(565,385)
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Interest expense
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(7,621)
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(13,278)
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(19,449)
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Total Other Expense
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(185,868)
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(333,378)
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(584,834)
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Net Loss
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(312,386)
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(552,518)
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(870,022)
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Net Earnings per Share – Basic and Diluted
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(0.00)
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(0.00)
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Weighted Average Shares Outstanding – Basic and Diluted
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127,983,425
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128,483,425
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(The accompanying notes are an integral part of these financial statements)
F-2
PUB CRAWL HOLDINGS INC.
(A Development Stage Company)
(unaudited)
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Six months
ended
June 30,
2013
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Accumulated from
November 6, 2012
(date of inception)
to June 30,
2013
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$
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$
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Operating Activities
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Net loss for the period
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(552,518)
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(870,022)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Amortization of discount on convertible debenture
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5,840
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10,984
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Loss on change in fair value of derivative liabilities
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320,100
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565,385
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Changes in operating assets and liabilities:
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Prepaid expenses and deposits
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–
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(25)
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Accounts payable and accrued liabilities
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19,779
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40,120
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Net cash used in operating activities
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(206,799)
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(253,558)
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Financing Activities
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Proceeds from issuance of common stock
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125,000
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125,000
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Proceeds from issuance of convertible debentures
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–
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150,000
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Net cash provided by financing activities
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125,000
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275,000
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Increase (decrease) in cash
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(81,799)
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21,442
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Cash, beginning of period
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103,241
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–
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Cash, end of period
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21,442
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21,442
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Non-cash transactions
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Discount on convertible note due to derivative liability
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–
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150,000
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Effect of reverse merger
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–
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125,500
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Supplemental Disclosures
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Interest paid
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–
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–
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Income tax paid
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–
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–
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(The accompanying notes are an integral part of these financial statements)
F-3
PUB CRAWL HOLDINGS, INC.
(A Development Stage Company)
(unaudited)
1. Nature of Operations and Continuance of Business
Pub Crawl Holdings, Inc. (the “Company”) was incorporated in the state of Nevada on May 27, 2010. On June 14, 2010, the Company entered into an Assignment Agreement (the "Acquisition") with PB PubCrawl.com LLC (“PubCrawl”), a California limited liability company, whereby the Company acquired a 100% interest in the member shares of PubCrawl in exchange for 5,000,000 common shares of the Company. The Acquisition was accounted for in accordance with ASC 805-50, Related Issues, as the companies were under common control prior to acquisition. On September 3, 2012, the Company sold their rights to PubCrawl to the former President and Director of the Company. The Company is a development stage company as defined by FASB guidelines.
On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. (“Mobile Dynamic”), a company incorporated in the state of Florida on November 7, 2012, in exchange for the issuance of 10,000,000 common shares. As part of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director of the Company and the management and directors of Mobile Dynamic acquired 75,000,000 common shares of the Company in a private transaction with the former President and Director of the Company. Effectively, Mobile Dynamic held 73% of the issued and outstanding common shares of the Company and the transaction has been accounted for as a reverse merger, where Mobile Dynamic is deemed to be the acquirer for accounting purposes.
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the period ended June 30, 2013, the Company has a working capital deficit of $734,038 and an accumulated deficit of $870,022. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These 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.
2. Summary of Significant Accounting Policies
a) Basis of Presentation and Principles of Consolidation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is December 31.
b) Use of Estimates
The preparation of financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. 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.
c) Cash and cash equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at June 30, 2013 and December 31, 2012, the Company had no cash equivalents.
PUB CRAWL HOLDINGS, INC.
(A Development Stage Company)
Notes to the Financial Statements
(unaudited)
2. Summary of Significant Accounting Policies (continued)
d) Basic and Diluted Net 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 income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at June 30, 2013 and December 31, 2012, the Company had no potentially dilutive shares.
e) Revenue Recognition
The Company derives revenue from the sale of agricultural products. In accordance with ASC 605, Revenue Recognition, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the amount is fixed and determinable, risk of ownership has passed to the customer and collection is reasonably assured.
f) Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required 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.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability 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 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 Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and convertible debentures. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The following table represents assets and liabilities that are measured and recognized in fair value as of June 30, 2013, on a recurring basis:
PUB CRAWL HOLDINGS, INC.
(A Development Stage Company)
Notes to the Financial Statements
(unaudited)
2. Summary of Significant Accounting Policies (continued)
f) Financial Instruments (continued)
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Level 1
$
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Level 2
$
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Level 3
$
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Total gains and (losses)
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Derivative liabilities
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–
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–
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715,385
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(320,100)
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Total
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–
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–
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715,385
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(320,100)
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During the year ended December 31, 2012, the Company had a derivative liability amount of $395,285, which was classified as a Level 3 financial instrument, and a loss on change in fair value of derivative liabilities of $245,285.
g) Recent Accounting Pronouncements
In February 2013, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
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·
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Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income (but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period); and
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·
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Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
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The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.
In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.
PUB CRAWL HOLDINGS, INC.
(A Development Stage Company)
Notes to the Financial Statements
(unaudited)
2. Summary of Significant Accounting Policies (continued)
g) Recent Accounting Pronouncements (continued)
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.
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.
3. Reverse Merger
On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. (“Mobile Dynamic”), a company incorporated in the state of Florida on November 6, 2012, in exchange for the issuance of 10,000,000 common shares. As part of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director of the Company and the management and directors of Mobile Dynamic acquired 75,000,000 common shares of the Company in a private transaction with the former President and Director of the Company. Effectively, Mobile Dynamic held 73% of the issued and outstanding common shares of the Company and the transaction has been accounted for as a reverse merger, where Mobile Dynamic is deemed to be the acquirer for accounting purposes.
As part of the acquisition transaction, all assets and liabilities of Pub Crawl at the date of acquisition were assumed by the former management.
4. Convertible Debentures
On December 6, 2012, the Company entered into a convertible promissory note agreement for $150,000. Pursuant to the agreement, the loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible into common shares at a conversion price equal to 25% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on December 6, 2012.
In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $150,000. During the period ended June 30, 2013, the Company recorded accretion expense of $5,840.
PUB CRAWL HOLDINGS, INC.
(A Development Stage Company)
Notes to the Financial Statements
(unaudited)
5. Derivative Liabilities
As at June 30, 2013 and December 31, 2012, the following are the fair value of the derivative to account for the convertibility feature of the convertible debenture as well as the fact that there is no lower limit on the number of issuable common shares upon conversion:
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June 30,
2013
$
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December 31,
2012
$
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Convertible promissory note, due December 5, 2014
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715,385
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395,285
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During the period ended June 30, 2013, the Company recorded a loss on the fair value of the derivative liability of $320,100 (December 31, 2012 - $245,285). The fair value of the derivative financial liabilities was determined using the multinomial lattice models and the following assumptions:
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Expected
Volatility
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Risk-free
Interest Rate
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Expected
Dividend Yield
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Expected Life
(in years)
|
|
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||||
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At December 6, 2012 (issuance date)
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318%
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0.25%
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0%
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2.00
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At June 30, 2013
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356%
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0.26%
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0%
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1.43
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6. Related Party Transactions
During the period ended June 30, 2013, the Company incurred payroll expense of $68,254 (December 31, 2012 - $16,000) to management and officers of the Company.
7. Common Shares
|
|
a)
|
On November 6, 2012, the Company issued 1,000,000 founders share with a fair value of $1,000 to management and directors of the Company. The amounts have been recorded as contributed capital. Upon the reverse merger as described in Note 7b), these amounts have been recorded to additional paid-in capital.
|
|
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b)
|
On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. in exchange for the issuance of 10,000,000 common shares. As part of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director of the Company and 1,000,000 founders’ shares held by the management and directors of Mobile Dynamic.
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|
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c)
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On May 7, 2013, the Company issued 10,000,000 common shares at $0.0075 per share for proceeds of $75,000.
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d)
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As of June 30, 2013, the Company received subscription proceeds of $50,000. Refer to Note 8.
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8. Subsequent Events
|
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a)
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As of June 30, 2013, the Company received proceeds of $50,000 for issuance of common shares, which have not been issued as of the date of filing.
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b)
|
On July 13, 2013, the Company acquired 100% of the members shares of Career Start, Inc., a company incorporated in the state of Florida, in exchange for the issuance of 47,142,858 restricted common shares.
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This section of this quarterly report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. 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.
OVERVIEW
We were to engage in the business of an Internet-based company specializing in providing information on Happy Hours, drink specials, nightly specials and “pub crawls” for bars and restaurants in San Diego, California. Our operations were not profitable. Based upon our losses we decided it was in our best interests to change our direction and accordingly we acquired Mobile Dynamic Marketing, Inc. (“MDM”) a Florida Corporation and changed our business to designing and selling mobile apps for smart phones and other mobile platforms such as table.
RESULTS OF OPERATIONS AT JUNE 30, 2013
Working Capital
|
June 30,
2013
|
December 31,
2012
|
|
|
Current Assets
|
21,467
|
103,266
|
|
Current Liabilities
|
755,505
|
415,626
|
|
Working Capital (Deficit)
|
(734,038)
|
(312,360)
|
Cash Flows
|
June 30,
2013
|
|
|
Cash Flows from Operating Activities
|
(206,799)
|
|
Cash Flows from Financing Activities
|
125,000
|
|
Net Increase in Cash During Period
|
(81,799)
|
Operating Revenues
During the six months ended June 30, 2013, we earned revenues from consulting services of $50,000 compared with $nil for the period from November 6, 2012 (date of inception) to December 31, 2012.
Operating Expenses and Net Loss
During the three months ended June 30, 2013, we recorded operating expenses of $126,518 comprised of $25,342 of payroll costs to employees and management, $28,548 of professional fees for legal, accounting, and audit services relating to the Company’s required SEC filing documentation, and $69,652 of general and administrative costs relating to overhead costs relating to maintaining our office including travel expenses.
During the six months ended June 30, 2013, we recorded operating expenses of $269,140 comprised of $91,137 of payroll costs to employees and management, $52,705 of professional fees for legal, accounting, and audit services relating to the Company’s required SEC filing documentation, and $121,552 of general and administrative costs relating to overhead costs relating to maintaining our office including travel expenses.
Our net loss for the six months ended June 30, 2013 was $552,518. In addition to operating expenses, we incurred a loss on the change in fair value of our derivative liability of $320,100 to reflect the change in the fair value of the floating rate convertible debentures during the current period, and interest expense of $13,278 relating to interest and accretion costs relating to our $150,000 convertible debenture, which is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The debenture is also convertible into common shares of our company, at the option of the debenture holder, at a conversion price of 25% of the average of the three lowest closing prices of our common shares in the ten trading days prior to conversion.
Liquidity and Capital Resources
At June 30, 2013, we had a cash of $21,442 and total assets of $21,467. At June 30, 2013, our total liabilities were $766,489, comprised of accounts payable and accrued liabilities of $40,120, convertible debenture of $10,984 net of unamortized discount of $139,016, and derivative liabilities of $715,385. Our working capital deficit was $734,038.
Cashflow from Operating Activities
During the six months ended June 30 2013, we used $206,799 of cash for operating expenses which primarily consisted of payroll and professional fees incurred by our company.
Cashflow from Investing Activities
During the six months ended June 30, 2013, we did not have any investing activities.
Cashflow from Financing Activities
During the six months ended June 30, 2013, we received $125,000 from the issuance of common stock.
Convertible Promissory Note
On December 6, 2012, we entered into a convertible promissory note agreement for $150,000. Pursuant to the agreement, the loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible into common shares at a conversion price equal to 25% of the average of the three lowest closing prices for our common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on December 6, 2012. In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the intrinsic value of the derivative of $150,000 and recorded an additional initial derivative liability of $347,557, which was recorded as a loss on change in fair value of the derivative liability. At June 30, 2013, the fair value of the derivative liability was $715,385, resulting in a loss on change in fair value of the derivative liability of $320,100. During the six months ended June 30, 2013, the Company recorded interest and accretion expense of $13,278.
Critical Accounting Policies and Estimates
We prepared our financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes. We identified certain accounting policies as critical based on, among other things, their impact on the portrayal of our financial condition, results of operations, or liquidity and the degree of difficulty, subjectivity, and complexity in their deployment. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. Management routinely discusses the development, selection, and disclosure of each of the critical accounting policies. The following is a discussion of our most critical accounting policies:
Use of Estimates
The preparation of financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. 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.
Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required 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.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability 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 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 Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective.
Management’s assessment identified several material weaknesses in our internal control over financial reporting. These material weaknesses include the following:
|
-
|
Insufficient number of qualified accounting personnel governing the financial close and reporting process
|
|
-
|
Lack of proper segregation of duties
|
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
On May 7, 2013, we sold a total of 18,000,000 restricted shares of common stock to two individuals in consideration of $102,000.00. The shares of common stock were sold pursuant to the exemption from registration contained in Reg. 506 of the Securities Act of 1933, as amended (the “Act”). A Form D was filed with the SEC and State of New York. The investors represented they were accredited investors as that term is defined in Rule 501 of the Act.
On July 12, 2013, we acquired all of the issued and outstanding shares of common stock of Career Start, Inc., a Florida corporation in consideration of issuing 47,142,857 restricted shares of common stock to the sole four shareholders of Career Start, Inc. A Form D was filed with the SEC. Each shareholder represented he was an accredited investor.
ITEM 6. EXHIBITS.
|
Exhibit
|
Incorporated by reference
|
Filed
|
|||
|
Number
|
Document Description
|
Form
|
Date
|
Number
|
Herewith
|
|
|
|||||
|
2.1
|
Exchange Agreement between Pub Crawl Holdings,
Inc. and Mobile Dynamic Marketing, Inc.
|
8-K
|
1/30/13
|
2.1
|
|
|
|
|||||
|
3.1
|
Articles of Incorporation - Pub Crawl
|
S-1
|
10/07/10
|
3.1
|
|
|
|
|||||
|
3.2
|
Articles of Incorporation - Mobile Dynamic Marketing, Inc.
|
10-K/A
|
4/16/13
|
3.2
|
|
|
|
|||||
|
3.3
|
Bylaws - Pub Crawl Holdings, Inc.
|
S-1
|
10/07/10
|
3.2
|
|
|
|
|||||
|
3.4
|
Bylaws - Mobile Dynamic Marketing, Inc.
|
S-1
|
6/14/13
|
3.4
|
|
|
10.1
|
Assignment Agreement between the Company, Peter
Kremer, and PBPubCrawl.com, LLC dated June 14, 2010
|
S-1
|
10/07/10
|
10.1
|
|
|
|
|||||
|
10.2
|
Form of Management Agreement between the
Company and Peter Kremer dated June 22, 2010
|
S-1
|
10/07/10
|
10.2
|
|
|
|
|||||
|
10.3
|
Promissory Note between the Company and Sun
Valley Investments dated August 5, 2010
|
S-1
|
10/07/10
|
10.3
|
|
|
|
|||||
|
10.4
|
Consulting Agreement between the Company and
Voltaire Gomez dated September 23, 2010
|
S-1
|
10/07/10
|
10.4
|
|
|
|
|||||
|
10.5
|
Settlement Agreement between the Company and Sun
Valley Investments dated May 25, 2012
|
8-K
|
08/11/11
|
10.1
|
|
|
|
|||||
|
10.6
|
Promissory Note between the Company and Deville
Enterprises, Inc. dated June 1, 2012
|
8-K
|
08/11/11
|
10.2
|
|
|
|
|||||
|
14.1
|
Code of Ethics
|
S-1
|
10/07/10
|
14.1
|
|
|
|
|||||
|
21.1
|
List of Subsidiaries
|
S-1
|
6/14/13
|
21.1
|
|
|
|
|||||
|
31.1
|
Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
31.2
|
Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
32.1
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
32.2
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
|
|
|||||
|
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
|
|
|||||
|
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
|
|
|||||
|
101.DEF
|
XBRL Taxonomy Extension – Definitions.
|
X
|
|||
|
|
|||||
|
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
|
|
|||||
|
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 13th day of August, 2013.
|
PUB CRAWL HOLDINGS INC.
|
||
|
BY:
|
BRIAN MCFADDEN
|
|
|
Brian McFadden
|
||
|
Principal Executive Officer and Director
|
||
|
|
||
|
BY:
|
MICHELLE PANNONI
|
|
|
Michelle Pannoni
|
||
|
Principal Financial Officer, Principal Accounting
Officer and Treasurer
|
||
|
Exhibit
|
Incorporated by reference
|
Filed
|
|||
|
Number
|
Document Description
|
Form
|
Date
|
Number
|
Herewith
|
|
|
|||||
|
2.1
|
Exchange Agreement between Pub Crawl Holdings,
Inc. and Mobile Dynamic Marketing, Inc.
|
8-K
|
1/30/13
|
2.1
|
|
|
|
|||||
|
3.1
|
Articles of Incorporation - Pub Crawl
|
S-1
|
10/07/10
|
3.1
|
|
|
|
|||||
|
3.2
|
Articles of Incorporation - Mobile Dynamic Marketing, Inc.
|
10-K/A
|
4/16/13
|
3.2
|
|
|
|
|||||
|
3.3
|
Bylaws - Pub Crawl Holdings, Inc.
|
S-1
|
10/07/10
|
3.2
|
|
|
|
|||||
|
3.4
|
Bylaws - Mobile Dynamic Marketing, Inc.
|
S-1
|
6/14/13
|
3.4
|
|
|
|
|||||
|
10.1
|
Assignment Agreement between the Company, Peter
Kremer, and PBPubCrawl.com, LLC dated June 14, 2010
|
S-1
|
10/07/10
|
10.1
|
|
|
|
|||||
|
10.2
|
Form of Management Agreement between the
Company and Peter Kremer dated June 22, 2010
|
S-1
|
10/07/10
|
10.2
|
|
|
|
|||||
|
10.3
|
Promissory Note between the Company and Sun
Valley Investments dated August 5, 2010
|
S-1
|
10/07/10
|
10.3
|
|
|
|
|||||
|
10.4
|
Consulting Agreement between the Company and
Voltaire Gomez dated September 23, 2010
|
S-1
|
10/07/10
|
10.4
|
|
|
|
|||||
|
10.5
|
Settlement Agreement between the Company and Sun
Valley Investments dated May 25, 2012
|
8-K
|
08/11/11
|
10.1
|
|
|
|
|||||
|
10.6
|
Promissory Note between the Company and Deville
Enterprises, Inc. dated June 1, 2012
|
8-K
|
08/11/11
|
10.2
|
|
|
|
|||||
|
14.1
|
Code of Ethics
|
S-1
|
10/07/10
|
14.1
|
|
|
|
|||||
|
21.1
|
List of Subsidiaries
|
S-1
|
6/14/13
|
21.1
|
|
|
|
|||||
|
31.1
|
Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
31.2
|
Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
32.1
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
32.2
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
|
|
|||||
|
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
|
|
|||||
|
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
|
|
|||||
|
101.DEF
|
XBRL Taxonomy Extension – Definitions.
|
X
|
|||
|
|
|||||
|
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
|
|
|||||
|
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
-18-