THAT MARKETING SOLUTION, INC.

Notes to Financial Statements

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The unaudited interim financial statements included herein have been prepared by That Marketing Solution, Inc. (Formerly Vista Holding Group, Corp.) (the Company) in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the SEC).  These interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Form 10-K for the year ended August 31, 2015, as filed with the SEC. We believe that all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein and that the disclosures made are adequate to make the information not misleading.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year as reported in Form 10-K have been omitted.

NOTE 2 - RELATED PARTY TRANSACTIONS

During the three months ended November 30, 2015 and the year ended August 31, 2015, an officer and director of the Company loaned $21,900 and $247,269 to the Company for operating expenses, respectively.  As of November 30, 2015 and August 31, 2015, the officer and director is owed $141,824 and $167,137 for amounts advanced, respectively, and $390 and $265 in accrued interest, respectively.

At November 30, 2015 and August 31, 2015, the Company owed officers and directors of the Company $10,000 and $7,000 for accrued wages, respectively.

Between June and November 2015, the Company received a total of $49,000 in deposits for product sales to a related party entity. At November 30, 2015 and August 31, 2015, the Company has deferred $49,000 and $45,000 in related party revenue, respectively.

NOTE 3 – CONVERTIBLE NOTES PAYABLE

Senior Convertible Promissory Notes

During September 2015, holders of two Senior Convertible Promissory Notes in the amount of $137,500 each, agreed to extend the maturity dates in exchange for extension fees.  One Senior Convertible Promissory Note was extended one month, to October 20, 2015 in exchange for a 15%, or $25,753, extension fee due and payable on October 20, 2015. The other Senior Convertible Promissory Note was extended to September 28, 2015 in exchange for $6,000 extension fee due and payable on September 20, 2015.  With the exception of these matters, all other terms of the Senior Convertible Promissory Note and related loan documents remain in full force and effect.

Effective October 20, 2015, the Company defaulted on the two Senior Convertible Promissory Notes and the face amount of each note of $262,500, plus extension penalties and interest, became due and payable.  As a result, the Company recognized debt penalty principal additions of $282,575.  

During the three months ended November 30, 2015, the holders of two Senior Convertible Promissory Notes converted a total of $286,305 in principal into 177,576,102 shares of the Company’s common stock.

At November 30, 2015 and August 31, 2015, the Company owes the holders of the Senior Convertible Promissory Notes principal amounts of $271,270 and $275,000, respectively.

Convertible Promissory Note

On October 15, 2015, the Company issued a Convertible Promissory Note (“Convertible Note”) in the amount of $60,000.  The Convertible Note carries a 10% original issue discount, is due October 15, 2017, accrues interest at 12% per annum and is convertible into shares of the Company’s common stock at the lower of $0.10 per share, or a 60% discount from the lowest trade price within 25 trading days prior to the notice of conversion.

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Original Discount Convertible Promissory Note

On November 10, 2015, the Company issued an Original Discount Convertible Promissory Note (“Discount Note”) in the amount of $25,000.  The Discount Note carries a maturity amount of $32,500, is due May 10, 2016, accrues interest at 10% per annum and is convertible into shares of the Company’s common stock after the maturity date at a 42.5% discount from the lowest intra-day traded price within 15 trading days prior to the notice of conversion.

NOTE 4 – DERIVATIVE LIABILITIES

The Company analyzed the conversion options embedded in the Senior Convertible Promissory Notes and Common Stock Purchase Warrants for derivative accounting consideration under Accounting Standards Codification 815, Derivatives and Hedging, and determined that the instruments embedded in the above referenced Senior Convertible Promissory Notes and Common Stock Purchase Warrants should be classified as liabilities and recorded at fair value due to their being no explicit limit to the number of shares to be delivered upon settlement of the conversion options. Additionally, the above referenced Senior Convertible Promissory Notes and Common Stock Purchase Warrants contain dilutive issuance clauses.  Under these clauses, based on future issuances of the Company’s common stock or other convertible instruments, the conversion price of the above referenced Senior Convertible Promissory Notes and Common Stock Purchase Warrants can be adjusted downward. Because the number of shares to be issued upon settlement of the above referenced Senior Convertible Promissory Notes and Common Stock Purchase Warrants cannot be determined under this instrument, the Company cannot determine whether it will have sufficient authorized shares at a given date to settle any other future share instruments. 

On October 15, 2015, the Company issued a Convertible Promissory Note in the amount of $60,000. Upon the date of issuance of the Convertible Promissory Note, $60,000 was recorded as debt discount and $88,033 was recorded as day one loss on derivative liability.  

Effective October 20, 2015, the Company defaulted on the two Senior Convertible Promissory Notes and the face amount of each note of $262,500, plus extension penalties and interest, became due and payable.  As a result, the Company recognized debt penalty principal additions of $282,575. Upon the default, $282,575 was recorded as debt discount and $139,790 was recorded as day one loss on derivative liability.  

During the three months ended November 30, 2015, the holders of two Senior Convertible Promissory Notes converted a total of $286,305 in principal into 177,576,102 shares of the Company’s common stock, resulting in a loss on conversion of $661,657 and a gain on extinguishment of convertible debt of $719,048, or a net gain of $58,283.

The fair value of the conversion options at November 30, 2015 was determined to be $2,102,428 using a Black-Scholes option-pricing model.  

The following table summarizes the derivative liabilities included in the balance sheet at November 30, 2015:

The Company valued its derivatives liabilities using the Black-Scholes option-pricing model.  Assumptions used during the period ended November 30, 2015 include (1) risk-free interest rates between 0.01% to 1.65%, (2) lives of between 0.08 and 4.31 years, (3) expected volatility of between 107% to 590%, (4) zero expected dividends, (5) conversion prices as set forth in the related instruments, and (6) the common stock price of the underlying share on the valuation dates.

NOTE 5 – FINANCIAL INSTRUMENTS

ASC 820, Fair Value Measurements (ASC 820) and ASC 825, Financial Instruments (ASC 825), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It

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The following table summarizes the outstanding warrants and associated activity for the three months ended November 30, 2015:

NOTE 8 - CAPITAL LEASE

During October 2015, the Company entered into a capital lease for equipment for use in its operating facilities valued at $43,636. The lease calls for a down payment of $10,483 and 24 monthly payments of $1,165. For financial statement purposes, the present values of the net minimum capital lease payments have been capitalized and are being amortized over the useful life of the asset.  The lease has been imputed with interest at an annual rate of 10.31 percent. In most circumstances, management expects that in the normal course of business, leases will be renewed or replaced by other leases.

Amortization expense on property and equipment under capital leases is included in depreciation expense. Depreciation expense was $1,435 for the three months ended November 30, 2015.

Interest expense associated with capital leases is included in the consolidated statements of operations.  Interest expense on the capital leases was $550 for the three months ended November 30, 2015.

NOTE 9 - GOING CONCERN

The Company's financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has recently accumulated losses of $2,833,910 as of November 30, 2015 and has negative working capital. All of these items raise substantial doubt about its ability to continue as a going concern. Management's plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the Company's ability to continue as a going concern are as follows:

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock.

There can be no assurance that the Company will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 10 – SUBSEQUENT EVENTS

During January 2016, holders of two Senior Convertible Promissory Notes converted a total of $26,050 in principal into 54,916,667 shares of the Company’s common stock at an average conversion price of $0.005 per share.

On January 7, 2016, the Company executed an Original Issue Discount Convertible Promissory Note payable to Beaufort Capital Partners LLC.  The Original Issue Discount Convertible Promissory Note was sold for a purchase price of $25,000, which amount shall become due and payable on June 7, 2016. Absent any Event of Default, the Company may prepay the Original Issue Discount Convertible Promissory Note prior to the maturity date by paying a sum of $31,000.  All overdue unpaid principal shall entail a late fee at the rate of 10% per annum.  At any time after the maturity date and ending on the date that the Original Issue Discount Convertible Promissory Note is no

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longer outstanding, the Original Issue Discount Convertible Promissory Note can be converted into shares of the Company’s common stock at a 42.5% discount from the lowest intra-day traded price of such common stock within the 15 days prior to the date of conversion.

On January 7, 2016, the Company filed with the Nevada Secretary of State a Certificate of Designation designating a series of preferred stock as “Series A Preferred Stock.”  The Series A Preferred Stock consists of one million (1,000,000) shares and the holders of such shares shall be entitled to notice of any stockholders’ meeting and to vote as a single class upon any matter submitted to the stockholders for a vote as follows: each Series A Holder shall have such number of votes as is determined by multiplying (a) the number of shares of Series A Preferred Stock held by such Holder, and (b) 1,000.  The Series A Preferred Stock shall not have any dividend, conversion or redemption rights or any liquidation preference.  The designation of the Series A Preferred Stock and its rights and preferences was done by the Company’s Board of Directors pursuant to the authority granted to the Board under Article IV of the Company’s Amended and Restated Articles of Incorporation, as amended.

On January 7, 2016, the Company issued one million (1,000,000) shares of its Series A Preferred Stock to its CEO, Darren Lopez, in consideration of the retirement of Company debt owed to Mr. Lopez in the amount of $10,000.

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Item 2.  Management’s Discussions and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

Accordingly, results actually achieved may differ materially from expected results in these statements.  Forward-looking statements speak only as of the date they are made.  We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Results of Operation

For The Three Months Ended November 30, 2015 Compared to The Three Months Ended November 30, 2014.

We had $19,986 and $0 in revenue in the quarterly periods ended November 30, 2015 and 2014, respectively.  Our cost of sales and operating expenses increased to $17,807 and $69,849 during the quarterly period ended November 30, 2015, respectively, from $0 and $47,583 in the year-ago period, respectively.  

In the quarter ended November 30, 2015 we incurred interest expense of $341,440 compared to $460 in the quarter ended November 30, 2014. The increase in interest expense in the period ended November 30, 2015 is mainly related to $316,244 in interest from the amortization of debt discounts on convertible notes payable.   

In the quarter ended November 30, 2015 we incurred default penalties totaling $282,575 on two Senior Convertible Promissory Notes,  losses on related convertible debt derivatives of $2,200,508 and gains on extinguishment of convertible debt of $58,283, we had no such losses during the period ended November 30, 2014.   

For the three months ended November 30, 2015, our net loss was $2,833,910, or $0.01 per share, as compared to a net loss of $48,043, or $0.00 per share, during the year-ago period.

Liquidity

The Company had cash on hand of $2,774 as of November 30, 2015.  We believe that this cash on hand will not be sufficient to meet our expenses through the end of our 2016 fiscal year.  We will have to seek additional financing through either a private placement of our stock or through debt financing.  While management expects to be able to raise the required funds, there is no guarantee that we can obtain adequate financing.  Our ability to achieve a level of profitable operations and/or additional financing may affect our ability to continue as a going concern.

We are currently beginning to implement and scale our operations, including the launch of our Low T, That Vitamin and Lion’s Fuel Leg and lung products, and have received an order using our micellization manufacturing process. There can be no assurance that these operations will be successful and if they do not provide positive cash flow, the Company may need to raise additional capital through further debt and/or equity offerings.  In this regard, on January 7, 2016, which is subsequent to the end of the period covered by this Report, the Company issued to Beaufort Capital Partners LLC (the “Holder”) an Original Issue Discount Promissory Note for a purchase price of $25,000 (the “Note”), which Note will become due and payable on June 7, 2016, or such later date as the Holder may agree in writing.  For a discussion of the principal terms of the Note, see the Company’s Current Report on Form 8-K dated January 7, 2016, filed with the Securities and Exchange Commission on January 13, 2016.

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SIGNATURES

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

THAT MARKETING SOLUTION, INC.

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