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EX-32 - EXHIBIT 32.1 - MOTIVATING THE MASSES INCex321.htm
EX-32 - EXHIBIT32.2 - MOTIVATING THE MASSES INCex322.htm
EX-31 - EXHIBIT 31.2 - MOTIVATING THE MASSES INCex312.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________

FORM 10-Q

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2014

 

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Commission File Number 333-187554

 

MOTIVATING THE MASSES, INC.

(Exact name of registrant as specified in its charter)

 

 

  Nevada   88-0410660  
  (State or Other Jurisdiction of   (I.R.S. Employer  
  Incorporation or Organization)   Identification No.)  
         
 

2121 Palomar Airport Road, Suite 300

Carlsbad, California

  92011  
  (Address of Principal Executive Offices)   (Zip Code)  
         

 

(760) 931-9400

(Registrant's telephone number, including area code)

 

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 requirement for the past 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 (§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 [ X ] 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 (Check One):

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes [ ] No [ X ]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. At November 7, 2014, the registrant had outstanding 15,314,300 shares of common stock.

1
 

 

Table of Contents

 

   

Page

Number

PART I. FINANCIAL INFORMATION  
     
Item 1   Financial Statements 3
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3 Quantitative and Qualitative Disclosures About Market Risk 17
Item 4 Controls and Procedures 17
Item 4(T) Controls and Procedures 17
     
PART II OTHER INFORMATION  
     
Item 1 Legal Proceedings 18
Item 1A Risk Factors 18
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3 Defaults upon Senior Securities 21
Item 4 Mine Safety Disclosures 21
Item 5 Other Information 21
Item 6 Exhibits 22

 

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

MOTIVATING THE MASSES, INC
BALANCE SHEETS
       
  (Unaudited)   (Audited)
  September 30,   December 31,
  2014   2013
ASSETS
       
Current Assets:      
  Cash and cash equivalents  $                 71,204    $               232,206
  Accounts receivable, net                1,287,722                     863,251
  Prepaids                               -                         1,925
  Other receivable                               -                            200
      Total Current Assets 1,358,926   1,097,582
       
Property and equipment, net 26,214   21,121
       
Other Assets:      
  Deposits 79,190   6,429
  Intellectual property                       1,836                         1,836
      Total Other Assets 81,026   8,265
       
Total Assets  $            1,466,166    $            1,126,968
       
LIABILITIES AND STOCKHOLDERS' EQUITY
       
Current Liabilities:      
  Accounts payable and accrued expenses  $                 38,066    $                 39,124
  Deferred revenue                   721,917                     769,730
  Line of credit                       5,886                         6,072
      Total Current Liabilities                   765,869                     814,926
       
          Total Liabilities                   765,869                     814,926
       
Stockholders' Equity:      
  Preferred Stock, $0.001 Par value, 1,000,000 shares authorized,      
  No shares issued and outstanding                               -                                 -
  Common Stock, $0.001 Par value, 75,000,000 shares authorized      
  15,314,300 and 14,829,000 shares issued and outstanding, respectively                     15,314                       14,829
  Stock subscription receivable                   (11,000)                     (11,000)
  Additional paid in capital                2,385,160                  2,142,995
  Accumulated deficit              (1,689,177)                (1,834,782)
      Total Stockholders' Equity                   700,297                     312,042
       
     Total Liabilities and Stockholders' Equity  $            1,466,166    $            1,126,968
       
The accompanying notes are an integral part of these unaudited financial statements.

 

 

3
 

 

MOTIVATING THE MASSES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
             
   For the Three Months Ended  For the Nine Months Ended
   September 30,  September 30,
   2014  2013  2014  2013
             
Revenues  $597,983   $404,785   $2,271,205   $1,060,258 
Costs of services   211,295    249,656    796,584    644,074 
                     
    Gross Margin   386,688    155,129    1,474,621    416,184 
                     
Operating Expenses:                    
  Bad debt   —      41,889    28,480    56,946 
  Consulting   69,059    47,253    269,209    219,964 
  General and administrative   141,139    76,860    422,520    215,771 
  Professional fees   13,062    12,700    55,962    17,089 
  Wages and other compensation   205,973    220,758    552,894    485,872 
Total Operating Expenses   429,233    399,460    1,329,065    995,642 
                     
      Income (Loss) from Operations   (42,545)   (244,331)   145,556    (579,458)
                     
Other Income (Expense):                    
  Interest expense   —      —      —      (136)
  Interest income   3    —      49    —   
  Gain on sale of assets   —      —      —      1,174 
         Total Other Income (Expense)   3    —      49    1,038 
                     
Net Income (Loss) Before Income Taxes   (42,542)   (244,331)   145,605    (578,420)
                     
Provision for Income Taxes   —      —      —      —   
                     
Net Income (Loss)  $(42,542)  $(244,331)  $145,605   $(578,420)
                     
Net Income (Loss) per Share - Basic and Diluted  $(0.00)  $(0.02)  $0.01   $(0.04)
                     
Weighted average number of shares                    
outstanding - Basic and Diluted   15,221,355    14,445,702    15,119,865    14,236,246 
                     
The accompanying notes are an integral part of these unaudited financial statements.

 

4
 

 

MOTIVATING THE MASSES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
       
   For the Nine Months Ended
   September 30,
   2014  2013
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Income (Loss) for the Period  $145,605   $(578,420)
Adjustments to reconcile net loss to net cash          
provided by operating activities:          
     Depreciation and amortization   12,582    9,053 
     Gain on sale of property and equipment   —      (1,174)
     Bad debt   28,480    56,946 
Changes in Operating Assets and Liabilities          
     Decrease (Increase) in accounts receivables   (451,252)   (64,488)
     Increase in other receivable   200    (3,000)
     Decrease (Increase) in prepaid expenses   1,675    (11,425)
     Increase in deferred revenue   (47,813)   84,615 
     Increase in deposits   (72,511)   —   
     Decrease in accounts payable & accrued expenses   (2,757)   (18,977)
Net Cash Used in Operating Activities   (385,791)   (526,870)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
     Purchase of property and equipment   (17,675)   (9,924)
     Proceeds from sale of property and equipment   —      8,589 
Net Cash Used In Investing Activities   (17,675)   (1,335)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
     Repayments on note payable   —      (8,871)
     Proceeds from line of credit   37,265    70,804 
     Repayments on line of credit   (37,451)   (66,706)
     Proceeds from issuance of common stock, net of stock subscription          
     receivable and net of stock offering costs   242,650    316,300 
Net Cash Provided by Financing Activities   242,464    311,527 
           
Net (Decrease) Increase in Cash   (161,002)   (216,678)
           
Cash at Beginning of Period   232,206    595,128 
           
Cash at End of Period  $71,204   $378,450 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid during period:          
 Interest  $—     $136 
 Franchise and Income Taxes  $—     $—   
           
           
The accompanying notes are an integral part of these unaudited financial statements.

 

5
 

MOTIVATING THE MASSES, INC

NOTES TO FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

  

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Motivating the Masses, Inc. (the “Company”) was incorporated under the laws of the state of Nevada on September 2, 1998. The Company was founded by Lisa S. Nichols for the purpose of providing high quality resources for business coaching, and professional and management development techniques both on the local and national scale.

The Company’s products and services revolve around the personal life coaching program written and developed by their CEO Lisa Nichols. The program sells as a package of books and DVD’s at their local and national training seminars, and on the Company’s website. The Company has contract rights to the sales of the product. The Company, through their CEO and a core team of coaches, also provide training and development programs through local and national seminars, on-site employee training, public and private speaking engagements, and customized life-coaching programs.

In February of 2013, the Company amended its Articles of Incorporation to provide for an increase in its’ authorized share capital. The authorized common stock increased to 75,000,000 shares at a par value of $0.001 per share.

 

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information.  Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

 

It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation.  The results for the interim period are not necessarily indicative of the results to be expected for the year.

  

The balance sheet information as of December 31, 2013 was derived from the audited financial statements included in the Company’s Form 10-K filed with Securities and Exchange Commission (“SEC”) for the fiscal year ended December 31, 2013. These interim unaudited condensed financial statements should be read in conjunction with the Company’s most recently audited financial statements and the notes thereto in such above referenced Annual Report on Form 10-K.

 

Use of estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles 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. Accordingly, actual results could differ from those estimates. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, and related depreciation and amortization methods applied.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. During the year ended December 31, 2012, the Company may have had cash deposits that exceeded Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company maintains its cash balances at high quality financial institutions to mitigate this risk. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company records an allowance for doubtful accounts in accordance with the procedures discussed below. Past-due amounts are written off against the allowance for doubtful accounts when collections are believed to be unlikely and all collection efforts have ceased.

 

6
 

 

The Company had approximately $-0- in excess of FDIC insurance limits as of September 30, 2014 and December 31, 2013, respectively.

 

Cash equivalents

 

The Company considers all highly liquid investments with an original maturity of six months or less when purchased to be cash equivalents. At September 30, 2014 and December 31, 2013, the Company had no cash equivalents.

 

Fair value of financial instruments

 

The Company adopted the provisions of FASB ASC 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements.

 

The Fair Value Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into six broad levels.

 

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

 

A) Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

 

B) Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

 

C) Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with significant frequency and volume to provide pricing information on an ongoing basis.

 

Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs based on the Company’s assessment of the assumptions that are market participants would use in pricing the asset or liability.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable, accrued expenses, and deferred revenue approximate their fair value because of the short maturity of those instruments.

 

The Company had no assets and/or liabilities measured at fair value on a recurring basis at September 30, 2014 and December 31, 2013, respectively, using the market and income approaches.

7
 

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable related to the products and services sold are recorded at the time revenue is recognized, and are presented on the balance sheet net of allowance for doubtful accounts. The ultimate collection of the receivable may not be known for several months after services have been provided and billed.

 

The Company has established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, analyses of current and historical cash collections, and the aging of receivables. Delinquent accounts are written-off when the likelihood for collection is remote and/or when the Company believes collection efforts have been fully exhausted and the Company does not intend to devote any additional efforts in an attempt to collect the receivable. The Company adjusts their allowance for doubtful accounts balance on a quarterly basis.

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of six (3) years for equipment, (5) years for automobile, and (7) years for furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

  

Identifiable Intangible Assets

 

As of September 30, 2014 and December 31, 2013, $1,836, respectively of costs related to acquiring intellectual property have been capitalized. It has been determined that the intellectual property has an indefinite useful life and is not subject to amortization. However, the intellectual property will be reviewed for impairment annually or more frequently if impairment indicators arise.

 

Impairment of long-lived assets

 

The Company follows paragraph 360-10-05-4 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, such as intellectual property, are required to be reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

 

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

 

The Company determined that there were no impairments of long-lived assets as of September 30, 2014 and December 31, 2013.

 

Commitments and contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

 

Revenue recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. In addition, the Company records allowances for accounts receivable that are estimated to not be collected.

 

8
 

 

A portion of the Company’s revenues are from coaching and/or training services provided under contracts that are greater than one month in length. These contracts are billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the revenue is earned. We recognize revenue on these contracts in the period the coaching and/or training services are provided under the contract. Expenses associated with providing the coaching and/or training services are recognized in the period the services are provided which coincides with when the revenue is earned.

 

Income taxes

 

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. 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.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

 

Stock-Based Compensation

 

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation.  Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.  As such, compensation cost is measured on the date of grant at their fair value.  Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.  The Company applies this statement prospectively.

 

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718.  FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments.  In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

 

Net income (loss)per share

 

The Company computes basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.

 

9
 

 

There were no potentially dilutive shares outstanding as of September 30, 2014 and December 31, 2013, respectively.

 

Subsequent events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  

 

Recently issued accounting pronouncements

 

We have decided to take advantage of the exemptions provided to emerging growth companies under the JOBS Act and as a result our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, delay compliance with new or revised accounting standards that have different effective dates for public and private companies until they are made applicable to private companies.

 

Company management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

Reliance on Key Personnel and Consultants

 

The Company is heavily dependent on the continued active participation of their current executive officers, employees and key personnel. The loss of any of the senior management or key employees could significantly and negatively impact the business until adequate replacements can be identified and put in place.

 

NOTE 3 - GOING CONCERN

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company's ability to continue as a going concern is contingent upon its ability to achieve and maintain profitable operations, and the Company’s ability to raise additional capital as required.

  

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

NOTE 4 – ACCOUNTS RECEIVABLE

 

Accounts receivable at September 30, 2014 and December 31, 2013 consisted of the following:

 

   September 30, 2014  December 31, 2013
Accounts receivable  $1,351,578   $910,095 
Less: Allowance for doubtful accounts   (63,856)   (46,844)
   $1,287,722   $863,251 
           

 

In the nine months ended September 30, 2014, the Company recorded bad debt expense of $28,480 which was calculated from 5% of the ending accounts receivable balance.

 

In the year ended December 31, 2013, the Company wrote off $178,815 of uncollectible customer accounts using the allowance method of accounting. This resulted in a reduction of both accounts receivable and allowance for doubtful accounts in the amounts of $178,815. The Company recorded bad debt expense of $72,815 for the year ended December 31, 2013 and $109,745 for the year ended December 31, 2012, respectively. The Company records bad debt expense based on a percentage of the ending accounts receivable balance.

 

10
 

 

NOTE 5 – PROPERTY AND EQUIPMENT

 

Fixed assets, stated at cost, less accumulated depreciation at September 30, 2014 and December 31, 2013, consisted of the following:

 

   September 30, 2014  December 31, 2013
Equipment  $54,475   $37,796 
Furniture & Fixtures   16,904    15,907 
Less: Accumulated Depreciation   (45,165)   (32,582)
Net Fixed Assets  $26,214   $21,121 

 

Depreciation expense

 

Depreciation expense for the nine months ended September 30, 2014 and 2013 was $12,582 and $9,053, respectively.

  

NOTE 6 – LINE OF CREDIT

 

In October of 2012, the Company entered into a revolving line of credit with a financial institution in the amount of $10,000. The line of credit carries an interest rate of 6.00%, and is collateralized by certain assets of the Company. As of September 30, 2014 and December 31, 2013, the balance owed was $5,886 and $6,072, respectively.

 

NOTE 7 – DEFERRED REVENUES

 

A portion of the Company’s revenues are from coaching and/or training services provided under contracts that are greater than one month in length. These contracts are billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the revenue is earned. We recognize revenue on these contracts in the period the coaching and/or training services are provided under the contract. Expenses associated with providing the coaching and/or training services are recognized in the period the services are provided which coincides with when the revenue is earned.

 

As of September 30, 2014 and December 31, 2013, the Company has a deferred revenues balance of $721,917 and $769,730.

 

NOTE 8 – COMMITMENTS & CONTINGENCIES

 

Employment Agreement

 

On January 1, 2014, the Company’s signed employment agreements with its three officers who also make up the Board of Directors. Each employment agreement is for one year starting January 1, 2014. The employment agreement with the Company’s Chief Executive Officer Lisa Nichols calls for an annual salary of $125,000. The employment agreement with the Company’s President and Chief Operating Officer Susie Carder calls for an annual salary of $100,000. The employment agreement with the Company’s Chief Financial Officer Alex Henderson calls for an annual salary of $80,000. The employment agreements to the three officers stipulate a potential bonus at the discretion of the Board of Directors.

 

Service Agreement

 

On April 25, 2014, the Company entered into a Contracted Services Agreement (“CSA”) with The Steve Harvey Companies (“TSHC”) which was effective March 8, 2014. Pursuant to the CSA, the Company will participate in six conferences with TSHC in various U.S. locations through August 2014 and are participating in the development of additional programs to leverage books and other produces marketed by TSHC. The CSA requires TSHC to pay us $250,000 on a payment plan as follows; 3/8/14 $50,000, 5/1/14 $50,000, 7/1/14 $50,000, 8/1/14 $50,000, 9/30/14 $50,000. The Company has received the $50,000 March payment. The Company will receive 30% allocation of revenue from developed products with TSHC. In May of 2014, the company elected to change the payment option election to Option No. 2 in the contract. This Option No. 2 allowed for the balance due of $200,000 to be paid in full on August 30, 2014. As of September 30, 2014, the Company is owed $200,000 by TSHC. See Note 11, subsequent event footnote, disclosure regarding payment of $75,000 in October.

 

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Lease

 

The Company currently occupies office space at 2121 Palomar Airport Road, Carlsbad, California. The Company signed an eleven month sublease agreement starting September 1, 2011 to July 31, 2012 for $3,159 per month. In July of 2012, the Company signed a new six year lease for the same office space starting August 1, 2012, for $3,127 a month for the first year, $5,686 a month for the second year, and $5,844 a month for the third year.

 

Minimum future rental payments under the agreement are as follows: 

 

 2014   $17,269 
 2015   $40,908 
        

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

Employment Agreement

 

On January 1, 2014, the Company’s signed employment agreements with its three officers who also make up the Board of Directors. Each employment agreement is for one year starting January 1, 2014. The employment agreement with the Company’s Chief Executive Officer Lisa Nichols calls for an annual salary of $125,000. The employment agreement with the Company’s President and Chief Operating Officer Susie Carder calls for an annual salary of $100,000. The employment agreement with the Company’s Chief Financial Officer Alex Henderson calls for an annual salary of $80,000. The employment agreements to the three officers stipulate a potential bonus at the discretion of the Board of Directors.

 

NOTE 10 – STOCKHOLDERS’ EQUITY

 

Common and Preferred Shares authorized

 

The Company was incorporated on September 2, 1998, at which time the Company authorized 3,000,000 shares of Common Stock with .001 par value and 1,000,000 shares of Preferred Stock with .001 par value.

 

Amendment to Articles of Incorporation

In February of 2013, the Company amended its Articles of Incorporation to provide for an increase in its’ authorized share capital. The authorized common stock increased to 75,000,000 shares at a par value of $0.001 per share.

 

Common shares issued

 

In the year ended December 31, 2013, the Company issued 836,100common shares for $408,050 cash and 15,000 shares for services rendered in the year. Of the shares for cash, the Company has yet to receive $10,000 cash for 20,000 shares. Therefore, the Company recorded the amount as a stock subscription receivable. The shares for services were to the Company’s CFO and an outside consultant for services completed by December 31, 2013.

 

In the nine months ended September 30, 2014, the Company issued 485,300 common shares for $242,650 cash.

 

NOTE 11 – SUBSEQUENT EVENTS

 

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

 

    1. In October, The Steve Harvey Companies paid $75,000 pursuant to the Contracted Services Agreement.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This report on Form 10-Q contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Form 10-K filed on March 28, 2014, and other filings we make with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.

 

The following discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with our audited financial statements and related notes thereto included elsewhere in this report, and in our Form 10-K filed on March 28, 2014.

 

BUSINESS OVERVIEW

 

Motivating the Masses (the "Company") was formed in the State of Nevada on September 2, 1998 to engage in providing top-quality professional development and coaching services. The Company will provide it’s professional development services in the most effective manner and with an ongoing effort to provide 100% client satisfaction (collectively, the "Motivating the Masses Programs"). Management believes that the Motivating the Masses Programs and initiation of the following key procedures will enable it to reach its goals: (i) creation of a unique, upscale, innovative environment that will differentiate Motivating The Masses Programs from other coaching or professional development businesses; (ii) educating the business community on what business and strategic coaching has to offer; (iii) formation of a learning environment that will bring people with diverse interests and backgrounds together in a common forum to overcome challenges both professionally and personally; (iv) affordable access to the resources of business coaching and other consulting services; (v) training and developing key individuals to leverage the Company's trainings, coaching programs and platforms; and (vi) hiring the executive team.

 

The Company plans to use its existing contacts and customer base to generate both short and long-term coaching contracts. Its long-term profitability will rely on professional contracts obtained through strategic alliances, a comprehensive marketing program and a successful referral program. The Company has focused on professional development, strategic workshops, one-on-one coaching and special project relationships. The Company's expansion will provide a separate and comprehensive coaching, mastermind session, and online membership services.

 

Management believes that it is in the Company's best interests to become a fully reporting company under the Securities Exchange Act of 1934, as amended. The Company plans to raise further capital necessary to fund its business through subsequent private placement offerings and public offering of its common stock and believes that the transparency and accountability associated with being a reporting company is an advantage to attracting investors.

 

Summary and Outlook of the Business

 

The Company was formed in September of 1998. The company is currently working on a backend system that will utilize previously created evergreen material that will be sold online in the form of instructional videos and webinars that will incrementally increase revenues without increasing costs.  The costs are being incurred now through the creation of the technology but the revenues will be realized in the years to come with very minimal costs in the form of website hosting and video hosting.  With more product mixes that increase revenues while minimally increasing expenses, the company plans to utilize creative material it has already produced to capture this revenue.  

 

The company has also employed new coaches that will broaden the capacity and depth for coaching clients.  With a broader, deeper product mix, the company anticipates it will be able to attain and maintain profitability by the summer of 2014.

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Going Concern

 

The Company has an accumulated deficit of $1,689,177 at September 30, 2014. To date management has been able to finance the initial phase of implementation of the Company’s business plan via private placements of its common stock. Management plans to initiate and grow the Company’s business of providing top-quality professional development and coaching products and services.

 

Revenues  

 

Revenues for the nine months ended September 30, 2014 were $2,271,205 compared to $1,060,258 for the nine months ended September 30, 2013 which was an increase of $1,210,947. The increase in revenues was mainly due to an increase in sales from training workshop seminars and events. Moreover, toward the end of 2013, the Company developed a product series named World Class Speakers Alliance which we have begun selling with much success in our events throughout the nine months ended September 30, 2014.

 

The Company generates a significant amount of their revenue from holding event seminars and/or multi-day conferences which are usually held during the last nine months of each calendar year. Due to the seasonal timing when these event seminars and/or multi day conferences are held, the Company will recognize a significant amount of their revenue in the later part of each year. As a result of these seminars and/or multi day conferences, the Company is able to generate multi-month (anywhere from two to twelve months in term) consulting contracts. Therefore, the revenues reported for the three quarters ended September 30, when annualized, may be substantially lower than the revenues reported for the full fiscal year.

 

Cost of Revenues

 

The gross margin for the nine months ended September 30, 2014 was 65% of sales compared to 39% for the nine months ended September 30, 2013. The sharp increase in gross margin was due to a few factors. One being that the event locations in the first three quarters of 2013 required higher costs of travel to get to. Another factor was increased website sales which have a low cost associated. Since September 30, 2013, the Company has revised its compensation plan to coaches whereby they became employees and will receive less coaching commissions which increased the gross margin. The Company believes that restructuring coaching costs and continuing to invest in website production will lead to increased revenues and lower costs of services in the future.

 

Operating Activities

 

For the three months ended September 30, 2014 and 2013

 

Total operating loss for the three months ended September 30, 2014 was $42,545 as compared to $244,331 for the three months ended September 30, 2013, which was a decrease of $201,786.

 

Operating expenses were $429,233 for the three months ended September 30, 2014 compared to $399,460 for the three months ended September 30, 2013, which was an increase of $29,773.

 

Bad debt expense was $-0- for the three months ended September 30, 2014 as compared to $41,889 for the three months ended September 30, 2013. The increase is due to more accounts receivable.

 

Consulting expense was $69,059 for the three months ended September 30, 2014 as compared to $47,253 for the three months ended September 30, 2014, resulting in an increase of $21,806. The increase was minimal as the Company has regular consulting fees.

 

Professional fees were $13,062 for the three months ended September 30, 2014 as compared to $12,700 for the three months ended September 30, 2013, resulting in an increase of $362. The increase was minimal as our professional services such as accounting, auditing and legal are fairly constant.

 

Wages and other compensation were $205,973 for the three months ended September 30, 2014 as compared to $220,758 for the three months ended September 30, 2013, resulting in a decrease of $14,785. The decrease was minimal as our staff has been consistent the past year as we’ve expanded operations.

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For the nine months ended September 30, 2014 and 2013

 

Total operating income for the nine months ended September 30, 2014 was $145,556 as compared to a loss for the nine months ended September 30, 2013, of $579,458 which was an increase of $433,902.

 

Operating expenses were $1,329,065 for the nine months ended September 30, 2014 compared to $995,642 for the nine months ended September 30, 2013. The major increase was general and administrative costs which increased with our expanded operations.

 

Bad debt expense was $28,480 for the nine months ended September 30, 2014 as compared to $56,946 for the nine months ended September 30, 2013. The decrease is due to less accounts receivable.

 

Consulting expense was $269,209 for the nine months ended September 30, 2014 as compared to $219,964 for the nine months ended September 30, 2014, resulting in an increase of $49,245. The increase was from the Company hiring additional consultants.

 

Professional fees were $55,962 for the nine months ended September 30, 2014 as compared to $17,089 for the nine months ended September 30, 2013, resulting in an increase of $38,873. The increase was due to more professional services needed as we became a reporting company.

 

Wages and other compensation were $552,894 for the nine months ended September 30, 2014 as compared to $485,872 for the nine months ended September 30, 2013, resulting in an increase of $67,022. The increase was due to additional employees hired as operations expanded.

 

Liquidity and Capital Resources

 

For the nine months ended September 30, 2014 and 2013

 

Our cash balance is $71,204 as of September 30, 2014 as compared to $232,206 as of December 31, 2013.

 

As of September 30, 2014, total current assets were $1,358,926 compared to $1,097,582 at December 31 2013. The increase of $261,344 in current assets is mainly a result of an increase in accounts receivable.

 

As of September 30, 2014, total current liabilities were $765,869 as compared to $814,926 on December 31, 2013. The decrease in our current liabilities is mainly due to the decrease in deferred revenues which represents income to be recognized in the future as services are provided.

 

During the nine months ended September 30, 2014, net cash used by operating activities was $385,791 consisting of $12,582 in depreciation, $451,252 increase in accounts receivable, $28,480 in bad debt, $200 in increase of other receivabless, $1,675 in prepaids, $47,813 in deferred revenues, $72,511 in deposits and $2,575 in accounts payable. During the nine months ended September 30, 2013, net cash used by operating activities were $526,870 consisting of $9,053 in depreciation, $1,174 in gain on sale of property and equipment, $64,488 of accounts receivable, $3,000 increase in other receivables, $11,425 in prepaids, $84,615 in deferred revenues being recognized and $18,977 in accounts payable and accrued expenses.

 

Net cash used in investing activities for the nine months ended September 30, 2014 were $17,675 from the purchase of equipment and furniture. Net cash provided in investing activities for the nine months ended September 30, 2013 were $1,335 consisting of $9,924 in purchase of equipment and furniture and $8,589 in proceeds from the sale of equipment.

 

Net cash provided from financing activities for the nine months ended September 30, 2014, were $242,464 consisting of $242,650 in net proceeds from the private sale of common shares, $37,265 in proceeds from line of credit and $37,451 in payments on line of credit. Net cash provided from financing activities for the nine months ended September 30, 2013, were $311,527 consisting of $316,300 in net proceeds from the private sale of common shares, $8,871 in repayment of notes payable and $4,095 in net proceeds from line of credit.

 

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The Company’s management is reviewing new ways to cut costs and increase revenues so they can increase operational efficiency in the future. The Company is in the process of restructuring its compensation plan to its officers in a way to reduce cash expense while incentivizing increased sales. At the moment, they are reviewing a number of stock option and equity plans. As of the date of this filing, there have been no new material compensation agreements entered into by the Company. The Company plans to increase the utilization of their website with users and have increased material that will be sold online in the form of instructional videos and webinars that will incrementally increase revenues without increasing costs.  The costs are being incurred now through the creation of the technology but the revenues will be realized in the years to come with very minimal costs in the form of website hosting and video hosting.  

 

OFF-BALANCE SHEET TRANSACTIONS

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Seasonality

 

We anticipate our business will be affected by seasonal factors. The Company generates a significant amount of their revenue from holding event seminars and/or multi-day conferences in the last six to six months of each calendar year. Due to the seasonal timing when these event seminars and/or multi day conferences are held, the Company will recognize a significant amount of their revenue in the later part of each year.

 

Impact of Inflation

 

General inflation in the economy has driven the operating expenses of many businesses higher. We will continuously seek methods of reducing costs and streamlining operations while maximizing efficiency through improved internal operating procedures and controls. While we are subject to inflation as described above, our management believes that inflation currently does not have a material effect on our operating results. However, inflation may become a factor in the future.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies include revenue recognition and impairment of long-lived assets.

 

We recognize revenue in accordance with Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements.” Sales are recorded when products are shipped to customers and/or when services are provided. Provisions for discounts and rebates to customers, estimated returns and allowances and other adjustments are provided for in the same period the related sales are recorded.

 

We evaluate our long-lived assets for financial impairment on a regular basis in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” which evaluates the recoverability of long-lived assets not held for sale by measuring the carrying amount of the assets against the estimated discounted future cash flows associated with them. At the time such evaluations indicate that the future discounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values.

 

Quantitative and Qualitative Disclosures About Market Risk

 

We conduct all of our transactions, including those with foreign suppliers and customers, in U.S. dollars. We are therefore not directly subject to the risks of foreign currency fluctuations and do not hedge or otherwise deal in currency instruments in an attempt to minimize such risks. Demand from foreign customers and the ability or willingness of foreign suppliers to perform their obligations to us may be affected by the relative change in value of such customer or supplier’s domestic currency to the value of the U.S. dollar. Furthermore, changes in the relative value of the U.S. dollar may change the price of our products relative to the prices of our foreign competitors.

 

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Stock-Based Compensation

 

We recognize compensation cost for stock-based awards based on the estimated fair value of the award on date of grant. We measure compensation cost at the grant date based on the fair value of the award and recognize compensation cost upon the probable attainment of a specified performance condition or over a service period.

 

Recently Issued Accounting Pronouncements

 

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 were 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 July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

There has been no material change in our market risks since the end of the fiscal year 2013.

 

Item 4. Controls and Procedures.

 

See Item 4(T) below.

 

Item 4(T). Controls and Procedures.

 

The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a, et seq. ) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

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The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;
·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and
·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the registrant have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Evaluation of Disclosure and Controls and Procedures. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. The evaluation was undertaken in consultation with our accounting personnel. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective at September 30, 2014 due to the lack of accounting personnel. We intend to hire additional employees when we obtain sufficient capital.

Changes in Internal Controls over Financial Reporting. There were no changes in the internal controls over our financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

Motivating the Masses, Inc. is not engaged in any litigation at the present time, and management is unaware of any claims or complaints that could result in future litigation. Management will seek to minimize disputes with its customers but recognizes the inevitability of legal action in today’s business environment as an unfortunate price of conducting business.

Item 1A. Risk Factors.

Not applicable.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On January 15, 2014, the Company issued 5,700 unregistered common shares to David Patterson for $2,850 cash. The shares issued to Mr. Patterson were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On February 10, 2014, the Company issued 8,000 unregistered common shares to Lee Richter for $4,000 cash. The shares issued to Mr. Lee were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On February 13, 2014, the Company issued 24,000 unregistered common shares to Leslie Stein for $12,000 cash. The shares issued to Mr. Stein were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On February 25, 2014, the Company issued 20,000 unregistered common shares to Reimann Family Trust for $10,000 cash. The shares issued to Reimann Family Trust were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On May 4, 2014, the Company issued 100,000 unregistered common shares to Nicholas Katovsky for $50,000 cash. The shares issued to Katovsky were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On May 20, 2014, the Company issued 20,000 unregistered common shares to Shemika Merphy for $10,000 cash. The shares issued to Shemika Merphy were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On May 21, 2014, the Company issued 20,000 unregistered common shares to Catherine Bonin for $10,000 cash. The shares issued to Catherine Bonin were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On May 21, 2014, the Company issued 20,000 unregistered common shares to Peter Beshara and Sylvia Toepfer for $10,000 cash. The shares issued to Beshara Toepfer were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

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On May 25, 2014, the Company issued 30,000 unregistered common shares to Felicia Newsome and Patricia Dowe for $15,000 cash. The shares issued to Newsome Dowe were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On May 25, 2014, the Company issued 20,000 unregistered common shares to Frederica Browne for $10,000 cash. The shares issued to Frederica Browne were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On June 2, 2014, the Company issued 20,000 unregistered common shares to Lynne Cessante for $10,000 cash. The shares issued to Cessante were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On June 12, 2014, the Company issued 20,000 unregistered common shares to Theresa Hoermann for $10,000 cash. The shares issued to Hoermann were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On June 20, 2014, the Company issued 20,000 unregistered common shares to Dr. Anthony Charles for $10,000 cash. The shares issued to Dr. Anthony Charles were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On June 30, 2014, the Company issued 20,000 unregistered common shares to Kim Warren Martin for $10,000 cash. The shares issued to Kim Warren Martin were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

On July 15, 2014, the Company issued 37,600 unregistered common shares to Daniel Drew for $18,800 cash. The shares issued to Daniel Drew were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation.

 

On September 5, 2014, the Company issued 100,000 unregistered common shares to Phillip Scott for $50,000 cash. The shares issued to Phillip Scott were restricted in their transfer as required by the Securities Act. The foregoing transactions were conducted pursuant to Regulation D under the Securities Act of 1933, as amended (the “Act”). Accordingly they were exempt under section 4(1) of the Act. Each investor indicated the investor’s investment intent and an appropriate legend was placed on the certificates for the investor’s shares. There was no general solicitation

 

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Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

 

 

 

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Item 6. Exhibits.

      Incorporated by reference
Exhibit Exhibit Description Filed herewith Form Period ending Exhibit Filing date
3.1 Articles of Incorporation   S-1   3.1 3/27/2013
3.2 Corporate By-Laws   S-1   3.2 3/27/2013
3.3 Amendment to Articles of Incorporation dated February 28, 2013   S-1/A   3.3 6/6/2013
10.1 Employment Agreement between Motivating the Masses and Susie Carder dated January 3, 2013   10-K   10.1 6/6/2013
10.2 Employment Agreement between Motivating the Masses and Lisa Nichols dated January 3, 2013   10-K   10.2 9/16/13
10.3 Employment Agreement between Motivating the Masses and Lisa Nichols dated January 3, 2014   10-K   10.3 3/28/14
10.4 Employment Agreement between Motivating the Masses and Susie Carder dated January 3, 2014   10-K   10.4 3/28/14
10.5 Employment Agreement between Motivating the Masses and Alex Henderson dated January 3, 2014   10-K   10.5 3/28/14
10.6 Sublease agreement dated July 1, 2012   10-K   10.6 3/28/14
10.7 Service agreement between Motivating the Masses and The Steve Harvey Companies (TSHC)   8-K   10.1 5/1/14
101.INS* XBRL Instance Document X        
101.SCH* XBRL Taxonomy Extension Schema Document X        
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document X        
101.LAB* XBRL Taxonomy Extension Label Linkbase Document X        
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document X        
101.DEF* XBRL Taxonomy Extension Definition Linkbase Definition X        
31.1 Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer X        
31.2 Rule 13a-14(a)/15d-14(a) certification of principal financial and accounting officer X        
32.1 Section 1350 certification of Chief Executive Officer X        
32.2 Section 1350 certification of principal financial and accounting officer X        

 

* In accordance with Regulation S-T, the XBRL-related information on Exhibit No. 101 to this Quarterly Report on Form 10-Q shall be deemed “furnished” herewith and not “filed.”

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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

   
  MOTIVATING THE MASSES
   
November 14, 2014

By: /s/ Lisa Nichols

Lisa Nichols, Chief Executive Officer (Principal Executive Officer)

   
November 14, 2014

By: /s/ Alex Henderson

Alex Henderson, Chief Financial Officer (Principal Financial Officer)

 

 

 

 

 

 

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