U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

 

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal quarter ended September 30, 2018

 

[  ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from                      to                    

 

XTRIBE P.L.C.

(Exact name of small business issuer as specified in its charter)

 

England and Wales		333-214799		Not Applicable
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

37-38 Long acre

WC2E9JT London

United Kingdom

(Address of principal executive offices) (Zip code)

 

Issuer’s telephone number +44020 32140420

 

Securities registered under Section 12(g) of the Exchange Act:

Ordinary Shares

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [  ]

 

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

 

Large Accelerated Filer [  ]	Accelerated Filer [  ]
Non-accelerated Filer [  ] (Do not check if a smaller reporting company)	Smaller Reporting Company [X]

 

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

 

There were 9,100,000 shares outstanding of registrant’s Ordinary Shares as of August 17, 2018.

 

Transitional Small Business Disclosure Format (check one): Yes [  ] No [X]

 

 

 

TABLE OF CONTENTS

 

PART I
Item 1.	Financial Statements	3
	Condensed Balance Sheets as of September 30, 2018 (unaudited) and December 31, 2017 (audited)	F-1
	Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2018 and September 30, 2017.	F-2
	Unaudited Condensed Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018 and September 30, 2017.	F-3
	Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Deficit	F-4
	Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2018 and September 30, 2017.	F-5
	Notes to Unaudited Condensed Consolidated Financial Statements	F-6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4.	Controls and Procedures	8
PART II
Item 1.	Legal Proceedings	9
Item 1A.	Risk Factors	9
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3.	Defaults Upon Senior Securities	9
Item 4.	Mine Safety Disclosures	9
Item 5.	Other Information	9
Item 6.	Exhibits	9
SIGNATURES		10

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

CONTENTS

 

	PAGE
Condensed Consolidated Balance Sheets	F-1
Condensed Consolidated Statements of Operations	F-2
Condensed Consolidated Statements of Comprehensive Income (Loss)	F-3
Condensed Consolidated Statement of Changes in Shareholders’ Deficit	F-4
Condensed Consolidated Statements of Cash Flows	F-5
Notes to Condensed Consolidated Financial Statements	F-6 to F-14

 

 

XTRIBE P.L.C.

Condensed Consolidated Balance Sheets

 

		September 30, 2018				December 31, 2017
		(Unaudited)				(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	41,220			$	41,870
Prepaid expenses			15,516				431
Other receivable			49,683				-
TOTAL CURRENT ASSETS			106,419				42,301
TANGINBLE ASSETS
Machinery and Equipment net of accumulated depreciation			8,197				-
INTANGIBLE ASSETS
Software, net of accumulated amortization			12,356				26,924
Goodwill			20,397				-
OTHER ASSETS
Deposits			6,058				2,550
TOTAL ASSETS		$	153,427			$	71,775
LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	604,690			$	236,040
Accounts payable - related party			-				20,346
Loan payable - other			318,699				101,818
Loans payable - shareholders			1,079,339				1,141,141
TOTAL CURRENT LIABILITIES			2,002,728				1,499,345
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ DEFICIT
Ordinary shares, Series A, $0.034 par value; unlimited shares authorized; 9,100,000 shares issued and outstanding at September 30, 2018 and December 31, 2017			309,400				309,400
Ordinary shares, Series B, $0.034 par value; unlimited shares authorized; 579,538 shares issued and outstanding at September 30, 2018 and 0 shares issued and outstanding at December 31, 2017			19,704				-
Additional paid in capital			2,013,471				1,268,764
Accumulated deficit			(4,151,283	)			(2,941,411	)
Accumulated other comprehensive loss			(40,593	)			(64,323	)
SHAREHOLDERS’ DEFICIT			(1,849,301	)			(1,427,570	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT		$	153,427			$	71,775

 

See the accompanying notes to the condensed consolidated financial statements.

 

 

XTRIBE P.L.C.

Condensed Consolidated Statements of Operations

(Unaudited)

 

		For the Three Months Ended								For the Nine Months Ended
		September 30, 2018				September 30, 2017				September 30, 2018				September 30, 2017
SALES		$	17,580			$	-			$	17,580			$	-
OPERATING EXPENSES
General and administrative			359,760				156,895				825,569				457,034
Provision for bad debts			-				272,186				-				272,186
Sales and marketing			(1,589	)			95,895				137,919				217,310
Research and development			82,128				151,670				263,964				383,413
Total operating expenses			440,299				676,646				1,227,452				1,329,943
NET LOSS		$	(422,719	)		$	(676,646	)		$	(1,209,872	)		$	(1,329,943	)
BASIC AND DILUTED NET LOSS PER ORDINARY SHARE		$	(0.04	)		$	(0.07	)		$	(0.13	)		$	(0.15	)
BASIC AND DILUTED WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING			9,679,538				9,100,000				9,615,145				9,038,889

 

See the accompanying notes to the condensed consolidated financial statements.

 

 

XTRIBE P.L.C.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

		For the Three Months Ended								For the Nine Months Ended
		September 30, 2018				September 30, 2017				September 30, 2018				September 30, 2017
NET LOSS		$	(422,719	)		$	(676,646	)		$	(1,209,872	)		$	(1,329,943	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign Currency Translation Adjustments, net of tax			1,823				(33,016	)			23,730				(85,750	)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), net of tax			1,823				(33,016	)			23,730				(85,750	)
COMPREHENSIVE LOSS		$	(420,896	)		$	(709,662	)		$	(1,186,142	)		$	(1,415,693	)

 

See the accompanying notes to the condensed consolidated financial statements.

 

 

XTRIBE P.L.C.

Condensed Consolidated Statement of Changes in Shareholders’ Deficit

For the Nine Months Ended September 30, 2018

 

		Ordinary Shares Series A				Ordinary Shares Series B																												Accumulated
		Number of Shares				Amount				Number of Shares				Amount				Ordinary Shares Subscribed				Subscription Receivable				Additional Paid-In Capital				Accumulated Deficit				Other Comprehensive Income				Total
Balance December 31, 2017 (Audited)			9,100,000			$	309,400				-			$	-			$	-			$	-			$	1,268,764			$	(2,941,411	)		$	(64,323	)		$	(1,427,570	)
Sale of ordinary shares - Series B			-				-				351,500				11,951				35,340				(35,340	)			416,338				-				-				428,289
Settlement of loans payable -shareholder
for ordinary shares - Series B			-				-				228,038				7,753												293,029				-				-				300,782
Settlement of subscriptions receivable
for reduction of loans payable - shareholder			-				-				-				-				(35,340	)			35,340				35,340				-				-				35,340
Net loss			-				-				-				-				-				-				-				(1,209,872	)			-				(1,209,872	)
Cumulative translation adjustment			-				-				-				-				-				-				-				-				23,730				23,730
Balance September 30, 2018 (Unaudited)			9,100,000			$	309,400				579,538			$	19,704			$	-			$	-			$	2,013,471			$	(4,151,283	)		$	(40,593	)		$	(1,849,301	)

 

See the accompanying notes to the condensed consolidated financial statements.

 

 

XTRIBE P.L.C.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		For the Nine Months Ended
		September 30, 2018				September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(1,209,872	)		$	(1,329,943	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation & Amortization			12,912				11,951
Provision for bad debts			-				272,186
(Increase) decrease in assets, net of acquisition:
Prepaid expenses			(6,297	)			(616	)
Other receivable			(20,065	)			69,764
Deposits			24				-
Increase (decrease) in liabilities, net of acquisition:
Accounts payable and accrued expenses			299,825				(75,550	)
Accounts payable - related party			(20,346	)			-
Net cash used in operating activities			(943,819	)			(1,052,208	)
CASH FLOWS FROM INVESTING ACTIVIITES
Investment in subsidiary			(17,521	)			-
Cash acquired in acquisition			1,687				-
Purchase of software & equipment			(2,243	)			(1,523	)
Net cash used in investing activities			(18,077	)			(1,523	)
CASH FLOWS FROM FINANCING ACTIVIITES
Proceeds from loans payable			216,881				-
Proceeds from loans payable - Shareholder			343,942				100,300
Sale of common stock			-				600,000
Sale of ordinary shares, Series B			428,289				-
Net cash provided by financing activities			989,112				700,300
EFFECT OF EXCHANGE RATE ON CASH			(27,866	)			10,125
NET DECREASE IN CASH AND CASH EQUIVALENTS			(650	)			(343,306	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR			41,870				427,777
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	41,220			$	84,471
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Settlement of loans payable -shareholder for ordinary shares - Series B		$	336,122			$	-
Goodwill		$	20,397			$	-

 

 

XTRIBE P.L.C.

Notes to the Condensed Consolidated Financial Statements

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of the Business

 

XTRIBE P.L.C. was originally registered as a private limited company in the United Kingdom as MEC FOOD (UK) LTD on December 12, 2011. On May 12, 2014, MEC FOOD (UK) changed its name to XTRIBE Limited. On April 30, 2016, the XTRIBE Limited was registered as a public limited company and changed its name to XTRIBE P.L.C.

 

On March 17, 2017, XTRIBE, P.L.C. formed a wholly owned subsidiary, XTRIBE USA Corp. in the State of Delaware. This corporation will be responsible for operations in the United States.

 

On March 9, 2018, XTRIBE, P.L.C. formed a wholly owned subsidiary, XTRIBE SUISSE SA in Switzerland. This corporation will be responsible for operations in Switzerland.

 

On June 5, 2018 (for accounting purposes the effective date is July 1,2018), XTRIBE P.L.C. acquired 100% of interest in X-SOLUTION S.R.L. This corporation will be responsible for operations in Italy.

 

XTRIBE P.L.C. and its wholly owned subsidiaries are collectively referred to as the “Company.”

 

The Company has developed a free smartphone application which allows the user to sell, buy, swap and rent objects and services utilizing an active geolocation tool which locates all potential customers within any specified geographic target. Transactions can be completed without any intermediary, directly between the party and counter-party, without any commissions or third-party payments. Users have the option of customizing the app to best promote commerce. The Company derives revenues by its B2B division, XTRIBE Store. The XTRIBE application is available for Apple and Android devices and can be easily downloaded for free to a user’s mobile device. Once installed, the user establishes a free account and can immediately transact and communicate with other users.

 

The Company’s principal office is located in London, England.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. As such, the information included in these financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed with the Securities and Exchange Commission (“SEC”). In the opinion of the management, these consolidated financial statements include all adjustments, consisting of only normal recurring nature, necessary for a fair statement of the financial position of the Company as of September 30, 2018 and its results of operations and cash flows for the three and nine months ended September 30, 2018 and 2017. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2018.

 

 

The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act enacted on April 5, 2012 and has elected to comply with certain reduced public company reporting requirements

 

Revenue Recognition

 

In accordance with FASB ASC 605, “Revenue Recognition,” the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of revenue is reasonably assured.

 

Comprehensive Loss

 

The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220, “Comprehensive Income,” in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. The Company has one item of other comprehensive income (loss), consisting of a foreign translation adjustment.

 

Use of Estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The management makes the estimates based on its knowledge about current events and expectations about actions that it may undertake in the future. Actual results could differ materially from these estimates.

 

Foreign Currency Transactions and Translation

 

The functional currency of the operations of the Company is the Euro. The capitalization of the Company is provided in British pounds (“GBP”) and US dollars, while the Company transacts a majority of its other transactions including loans from shareholders in Euros, which makes the Euro the functional currency. Gains and losses resulting from transactions in currencies other than the functional currency of the Company are recorded in the statement of operations for the reporting periods as part of general and administrative expense. Included in general and administrative expense were foreign currency transaction gain of $12,850 and loss of $48,553 for the three and nine months ended September 30, 2018 and foreign currency transaction gains of $13,527 and $1,790 for the three and nine months ended September 30, 2017.

 

 

The reporting currency of the Company is the United States (U.S.) dollar. The financial statements in functional currency are translated to U.S. dollars using the closing rate of exchange for assets and liabilities and average rate of exchange for the statement of operations. The capital accounts are translated at historical rate. Translation gains and losses are recorded in accumulated other comprehensive income as a component of shareholders’ equity.

 

Advertising Costs

 

Advertising costs are expensed as incurred. Advertising costs were $5,776 and $26,559 for the three and nine months ended September 30, 2018 and $16,585 and $64,115 for the three and nine months ended September 30, 2017 and are included in sales and marketing expenses.

 

Basic and Diluted Net Income per Share of Ordinary Shares

 

The Company follows FASB ASC 260, “Earnings Per Share,” when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss for all periods presented and because the Company has no ordinary share equivalents, the amounts reported for basic and diluted loss per share were the same.

 

Research and Development Costs

 

In accordance with FASB ASC 730, research and development costs are expensed when incurred. Research and development costs for the three and nine months ended September 30, 2018 were $82,128 and $263,964 and were $151,670 and $383,413 for the three and nine months ended September 30, 2017.

 

Software development costs that were incurred during the three and nine months ended September 30, 2018 and 2017 have been expensed as incurred and recorded in research and development costs in the statement of operations.

 

Recently Adopted Accounting Pronouncements

 

As of September 30, 2018, and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

As of September 30, 2018, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements through 2018.

 

NOTE 2 – MANAGEMENT PLANS

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations since inception. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

Since inception, the Company has focused on developing and implementing its business plan. The Company believes that its existing cash resources will not be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would likely be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations.

 

Based upon the current cash position and the Company’s planned expense run rate, management believes the Company has funds currently to finance its operations through December 31, 2018.

 

NOTE 3 – Acquisition of X-SOLUTION S.R.L.

 

On June 5, 2018 XTRIBE P.L.C. (the “Company”) acquired 100% of interest in X-SOLUTION S.R.L. for $17,521 (EURO 15,000). For accounting purposes, the effective date of the acquisition is July 1, 2018. The purchase price of the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over the fair value of identifiable net assets is recorded as goodwill.

 

The purchase price allocation was estimated based on X-SOLUTION S.R.L. historical financial information reflecting International Financial Reporting Standards (“IFRS”) adjusted to U.S. Generally Accepted Accounting Principles (“GAAP”). Using the total consideration for the acquisition, the Company has estimated the allocations to such assets and liabilities. The following table summarizes the allocation of the preliminary purchase price as of the July 1, 2018, effective date of the transaction’s closing:

 

Recognized amounts of identifiable assets acquired, and liabilities assumed at fair value of X-SOLUTION S.R.L.:

 

Cash and cash equivalents		$	1,687
Accounts receivable, net			50,641
Prepaid expenses and other current assets			8,787
Preliminary costs, net			-
Development costs			-
Equipment, net			472
Furniture, net			1,450
Office equipment, net			2,882
Deposits			3,532
Accounts payable and accrued expenses			(72,329	)
Total identifiable net assets - Fair value			(2,877	)
Acquisition date Fair value of X-SOLUTION S.R.L.			17,521
Goodwill		$	20,397

 

The following unaudited pro forma consolidated financial data of XTRIBE P.L.C. has been prepared by applying pro forma adjustments to XTRIBE P.L.C. and X-SOLUTION S.R.L.’s historical financial statements to reflect the acquisition of X-SOLUTION S.R.L., an Italian company. The unaudited pro forma consolidated financial data does not purport to represent what the financial condition would have been on July 1, 2018 (the effective acquisition date), nor do they purport to project the results of operations or financial condition for any future period or as of any future date.

 

 

The unaudited pro forma consolidated balance sheet presented below assumes that the acquisition occurred on June 30, 2018.

 

Unaudited Pro Forma Consolidated Balance Sheet

as of June 30, 2018

 

		Xtribe PLC historical				X-Solution SRL (IFRS) converted to USD				X-Solution SRL US GAAP adjustments				Pro forma adjustments				Notes				Pro forma combined
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	49,444			$	1,686			$	-			$	-							$	51,130
Accounts receivable, net			-				120,727				(70,084	)							3				29,618
															(21,025	)			4-c
Prepaid expenses and other current assets			13,481				8,787				-				-								22,268
TOTAL CURRENT ASSETS			62,925				131,200				(70,084	)			(21,025	)							103,016
Equipment, net			-				472				-				-								472
Furniture, net			-				1,450				-				-								1,450
Office equipment, net			-				2,882				-				-								2,882
Goodwill			-				-				-				20,397				4-a				20,397
Software, net			20,422				-				-				-								20,422
Preliminary costs, net			-				185,353				(185,353	)			-				2-a				-
Development costs			-				131,892				(131,892	)			-				2-b				-
OTHER ASSETS
Deposits			2,550				3,532				-				-								6,082
Investment - X-Solution SRL			-				-				-				17,521				4-b				-
															(17,521	)			4-f
TOTAL ASSETS		$	85,897			$	456,781			$	(387,329	)		$	(628	)						$	154,721
LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	274,681			$	443,010			$	(370,681	)							2-a			$	343,505
														$	17,521				4-b
															(21,025	)			4-c
Loans payable other			157,688				-				-				-								157,688
Loans payable shareholders			1,078,288				-				-				-								1,078,288
TOTAL CURRENT LIABILITIES			1,510,657				443,010				(370,681	)			(3,504	)							1,579,481
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ DEFICIT
Ordinary shares, Series A, $0.034 par value; unlimited shares authorized; 9,100,000 shares issued and outstanding at June 30, 2018			309,400				11,680				-				(11,680	)			4-f				309,400
Ordinary shares, Series B, $0.034 par value; unlimited shares authorized; 579,538 shares issued and outstanding at June 30, 2018			19,704				-				-				-								19,704
Additional paid in capital			2,013,471				-				-				-								2,013,471
Accumulated deficit			(3,728,564	)			3,011				(16,648	)			13,636								(3,728,564	)
																			2-a
																			2-b
																			2-c
																			3
																			4-f
Accumulated other comprehensive loss			(38,771	)			(920	)			-				920				4f				(38,771	)
SHAREHOLDERS’ DEFICIT			(1,424,760	)			13,771				(16,648	)			2,876								(1,424,760	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT		$	85,897			$	456,781			$	(387,329	)		$	(628	)						$	154,721

 

 

The unaudited pro forma consolidated statements of operations presented below assumes that the acquisition occurred on January 1, 2017.

 

		Unaudited Pro Forma Consolidated Statement of Operations as of June 30, 2018																								Unaudited Pro Forma Consolidated Statement of Operations as of December 31, 2017
		Xtribe PLC				X-Solution SRL (IFRS) converted to				X-Solution SRL US GAAP				Pro forma								Pro forma				Xtribe PLC				X-Solution SRL (IFRS) converted to				X-Solution SRL US GAAP				Pro forma								Pro forma
		historical				USD				adjustments				adjustments				Notes				combined				historical				USD				adjustments				adjustments				Notes				combined
SALES		$	-			$	191,512			$	-			$	(164,251	)			4-d			$	27,261			$	-			$	388,681			$	-			$	(261,568	)			4-e			$	127,113
OPERATING EXPENSES
General and administrative			465,809				193,725				(37,978	)			-				2-c				621,556				695,916				384,535				(71,892	)			-				2-d				1,008,558
Sales and marketing			139,508				-				-				-								139,508				325,551				1,689				-				-								327,240
Research and development			181,836				-				-				(164,251	)			4-d				17,585				468,657				-				127,111								2-e				334,200
																																							(261,568	)			4-e
Provision for bad debts			-				-				-				-								-				273,270				-				-												273,270
Total operating expenses			787,153				193,725				(37,978	)			(164,251	)							778,649				1,763,394				386,224				55,219				(261,568	)							1,943,268
LOSS BEFORE OTHER INCOME			(787,153	)			(2,213	)			37,978				-								(751,388	)			(1,763,394	)			2,457				(55,219	)			-								(1,816,155	)
OTHER INCOME
Interest income			-				-				-				-								-				-				1				-				-								1
			-				-				-				-								-				-				1				-				-								1
OTHER EXPENSES
Interest Expense			-				-				-				-								-				-				8				-				-								8
			-				-				-				-								-				-				8				-				-								8
NET LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS		$	(787,153	)		$	(2,213	)		$	37,978			$	-							$	(751,388	)		$	(1,763,394	)		$	2,450			$	(55,219	)		$	-							$	(1,816,162	)
BASIC AND DILUTED NET LOSS PER ORDINARY SHARE ATTRIBUTABLE TO ORDINARY SHAREHOLDERS		$	(0.08	)		$	(22.13	)														$	(0.08	)		$	(0.19	)		$	24.50															$	(0.20	)
BASIC AND DILUTED WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING			9,582,948				100																9,582,948				9,100,000				100																9,100,000

 

 

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

Pro Forma adjustments:

 

1 - IFRS to U.S. GAAP and accounting policy adjustments

 

X-SOLUTION S.R.L. historical financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”), which differs in certain respects from U.S. GAAP, and are reported in Euros. X-Solution S.R.L.’s historical figures in the pro forma have been translated from Euros to U.S. Dollars and the pro forma statements include adjustments to a U.S. GAAP basis.

 

X-SOLUTION S.R.L. historical financial information has been translated as follows:

 

	●	the unaudited pro forma balance sheet has been translated at the closing rate of 1.16806 U.S. Dollars to one Euro, as of June 30, 2018.
	●	the unaudited pro forma statement of operations for the six months ended June 30, 2018 has been translated using the average exchange rate for the period of 1.19891 U.S. Dollars to one Euro.
	●	the unaudited pro forma statement of operations for the year ended December 31, 2017 has been translated using the average exchange rate for the period of 1.12571 U.S. Dollars to one Euro.

 

The following adjustments have been made to X-SOLUTION S.R.L. historical financial information to present it on a U.S. GAAP basis and conform to XTRIBE P.L.C. accounting policies for the purposes of the pro forma financial information:

 

2 - Adjustments to intangible assets

 

Balance Sheet adjustments as of June 30, 2018:

 

	(a)	Preliminary costs, net, as of June 30, 2018 in the amount of $185,353 are written off as expenses under U.S. GAAP. In order to be consistent with XTRIBE P.L.C.’s books, $370,681 of accounts payable were written off against accumulated deficit since XTRIBE P.L.C. wrote off in its books the balance of the accounts receivable in 2017.
	(b)	Development costs as of June 30, 2018 in the amount of $131,892 are written off as expenses under U.S. GAAP.

 

Profit and Loss adjustment for the period January 1, 2018 to June 30, 2018:

 

(c)

Depreciation expense of $37,978 is reversed since the intangible assets are expensed as incurred under U.S. GAAP.

 

Profit and Loss adjustments for the period January 1, 2017 to December 31, 2017:

 

	(d)	Depreciation expense in the amount of $71,892 is reversed since the intangible assets are expensed as incurred under US GAAP.
	(e)	In 2017 the intangible costs were recorded as capitalized cost in the amount of $127,111 which is expensed in the proforma, since the intangible assets are expensed as incurred under U.S. GAAP.

 

 

3 - Adjustment of Accounts Receivable

 

X-SOLUTION S.R.L. accounts receivable related to XTRIBE P.L.C. as of December 31, 2017 is $70,084. XTRIBE P.L.C. wrote off in its books as accounts payable to X-SOLUTION S.R.L. the balance of $70,084 on December 31, 2017. To reflect the adjustment that XTRIBE P.L.C. did in its books, X-SOLUTION S.R.L. adjusted the accounts receivable balance of $70,084 on June 30, 2018.

 

4 - Pro forma adjustments

 

The following pro forma adjustments have been reflected in the company’s unaudited pro forma consolidated financial information:

 

	(a)	To record goodwill. The preliminary purchase price has been allocated to the net fair value of tangible identifiable assets. The excess of the purchase price over the fair value of the tangible assets acquired, and liabilities assumed, resulted in goodwill of $20,397.
	(b)	To record the acquisition payable and the investment by XTRIBE P.L.C. to acquire X-SOLUTION S.R.L. on July 1, 2018.
	(c)	To reflect the elimination of X-SOLUTION S.R.L. accounts receivable related to XTRIBE P.L.C. as of June 30, 2018 in the amount of $21,025 against the XTRIBE P.L.C. accounts payable.
	(d)	To reflect the elimination of intercompany income and expense on the unaudited proforma consolidated statement of operations for the six months ended June 30, 2018 in the amount of $164,251.
	(e)	To reflect the elimination of intercompany income and expense on the unaudited proforma consolidated statement of operations for the year ended December 31, 2017 in the amount of $261,568.
	(f)	To reflect the elimination of X-SOLUTION S.R.L. equity accounts against the investment in X-SOLUTION S.R.L. by XTRIBE P.L.C.

 

NOTE 4 – OTHER RECEIVABLES

 

On September 30, 2016, the Company entered into an agency agreement whereby the agent would receive five percent of all sales that the agent introduced to the Company. In addition, the agent would reimburse the Company 55 percent of the software development costs that the Company had expended, which were $638,720 as of September 30, 2016. Therefore, the amount of $351,296 was billed to the agent in British pounds (£262,288) and was to be paid by December 31, 2016 and has been recorded as other receivable. In 2017, the Company established 100% reserve for this receivable and wrote-off the receivable against this reserve as of June 30, 2018.

 

NOTE 5-A – LOANS PAYABLE – OTHER

 

During the nine months ended September 30, 2018, the Company borrowed an additional $216,881 in loans payable.

 

The loans are interest-free and unsecured with no formal repayment terms, except for a loan in the amount of $171,740 which is due to be repaid on December 31, 2018 and bears interest at 4% per annum.

 

 

NOTE 5-B – LOANS PAYABLE – SHAREHOLDERS

 

During the first quarter ended March 31, 2018, a shareholder and officer of the Company exchanged $300,782 of a loan for 228,038 ordinary shares Series B of the Company.

 

In June 2018, above shareholder exchanged $35,340 from his loan balance for settlement of an outstanding subscription receivable.

 

During the nine months ended September 30, 2018 certain shareholders and officer of the Company loaned the Company $ 343,942. The loans are interest-free and unsecured with no formal repayment terms.

 

NOTE 6 – SHAREHOLDERS’ EQUITY

 

During the nine months ended September 30, 2018, the Company sold 351,500 ordinary shares Series B for $428,289, exchanged 228,038 ordinary shares Series B for $336,122 in loans payable-shareholder and settled an outstanding subscription receivable of $35,340 for a reduction in loans payable – shareholder

 

The ordinary shares Series B have no voting rights and are not negotiable in the United States but are included in earnings per share calculation.

 

NOTE 7 – OPERATING LEASES

 

As of September 30, 2018, the Company was not obligated under any non-cancelable operating lease arrangements.

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

The Company has a consulting arrangement with Phronesis Consulting Sagl in which the Chief Financial Officer has a material interest. As of September 30, 2018, and December 31, 2017, this company was owed $0 and $20,364. During the three and nine months ended September 30, 2018 the Company paid $18,565 and $56,391 to this company. During the three and nine months ended September 30, 2017, the Company paid $33,655 and $101,072 to this company.

 

The Company received shareholder loans from a company in which the Chief Financial Officer has a material interest. As of September 30, 2018, and December 31, 2017, the balance of the loans was $313,409 and $333,784, the change in the balance resulting from the foreign currency translation.

 

As of September 30, 2018, and December 31, 2017, the Company owed $98,980 and $299,465 to one of the shareholders who is also the Chief Financial Officer of the Company.

 

At September 30, 2018 and December 31, 2017, the Company owed shareholders other than those described above $318,699 and $507,892.

 

NOTE 9 – INCOME TAXES

 

Income tax expense was $0 for the three and nine months ended September 30, 2018 and 2017.

 

As of January 1, 2018, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2018 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three and nine months ended September 30, 2018, and there was no accrual for uncertain tax positions as of September 30, 2018. Tax years from 2014 through 2017 remain subject to examination by major tax jurisdictions.

 

There is no income tax benefit for the losses for the three and nine months ended September 30, 2018 and 2017, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits.

 

NOTE 10 - Subsequent Events

 

On November 15, 2018 the Company converted all of the series B shares into 579,538 “A” ordinary shares.

 

 

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

 

Forward Looking Statements

 

This Interim Report on Form 10-Q contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PLSRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding XTribe P.L.C. (the “Company” or “XTribe”, also referred to as “us”, “we” or “our”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Business,” as well as in this Form 10-Q generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

 

Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” detailed in the Company’s Form S-1 registration statement and matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise. We intend that all forward-looking statements be subject to the safe harbor provisions of the PSLRA.

 

Overview

 

The Company was originally registered as a private limited company in the United Kingdom as MEC FOOD (UK) LTD on December 12, 2011. On May 12, 2014, the Company changed its name to XTRIBE Limited. On April 30, 2016, the Company was registered as a public limited company and changed its name to XTRIBE P.L.C. The Company has developed a free smartphone application which allows the user to sell, buy, swap and rent objects and services utilizing an active geolocation tool which locates all potential customers within any specified geographic target. Transactions can be completed without any intermediary, directly between party and counter-party, without any commissions or third-party payments. Users have the option of customizing the app to best promote commerce. The Company derives revenues by its B2B division, XTRIBE Store. The XTRIBE application is available for Apple and Android devices and can be easily downloaded for free to a user’s mobile device. Once installed, the user establishes a free account and can immediately transact and communicate with other users.

 

 

To date we have not generated material revenues. Commencing in 2017, we expect to generate revenue streams through the use of our fully developed and operational application by its registered users. The Company is currently only operating in Italy, but plans to expand its operations to the United States and other selected markets in the next 12-24 months.

 

As of September 30, 2018, the Company had $41,220 cash on hand which management believes is sufficient to fund expenses of operation through December 31, 2018. Management further believes that it needs to raise a minimum of an additional approximately $1,000,000 in the Offering to complete its product roll-out and marketing and support in Italy. Additional proceeds will enable the Company to expand to the United States and other international markets.

 

Strategic Outlook

 

We believe that the connectivity between by buyers and sellers, the geolocation attributes, and the multilingual capabilities of our application will provide the source for our success in a currently underutilized market.

 

As our registered user base grows, we intend to hire additional information technology staff to maintain our product offerings and develop new products to increase our market share.

 

We believe that our near-term success will depend particularly on our ability to develop customer awareness and confidence in our application. Since we have limited capital resources, we will need to closely manage our expenses and conserve our cash by continually monitoring any increase in expenses and reducing or eliminating unnecessary expenditures. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies at an early stage of development, particularly given that we operate in new and rapidly evolving markets, that we have limited financial resources, and face an uncertain economic environment. We may not be successful in addressing such risks and difficulties.

 

Results of Operations

 

Comparison of the Three Months Ended September 30, 2018 and 2017

 

The following discussion analyzes our results of operations for the three months ended September 30, 2018 and 2017. The following information should be considered together with our condensed consolidated financial statements for such periods and the accompanying notes thereto.

 

Net Revenue/Net Loss

 

We have not generated significant revenue since our inception. For the three months ended September 30, 2018, we have generated limited sales and in 2017, we have not generated any sales. For the three months ended September 30, 2018 and 2017, we had a net loss of $422,719 and $676,646.

 

General and Administrative Expenses

 

General and administrative expenses increased by $202,865 to $359,760 for the three months ended September 30, 2018 from $156,895 for the three months ended September 30, 2017. The increase resulted primarily from combined net increases in management, consulting, and professional fees during the three months ended September 30, 2018.

 

 

Provision for bad debts

 

The provision for bad debts decreased by $272,186 to $0 for the three months ended September 30, 2018, from $272,186 for the three months ended September 30, 2017. This was a result of the write-off of the provision for bad debts.

 

Sales and Marketing

 

Sales and marketing expenses for the three months ended September 30, 2018 were ($1,589) as compared to $95,895 for the three months ended September 30, 2017, a decrease of $97,484. The decrease resulted primarily from combined net decreases in sales and marketing expenses during the three months ended September 30, 2018.

 

Research and Development

 

Research and development expenses were $82,128 and $151,670 for the three months ended September 30, 2018 and 2017, a decrease of $69,542. The decrease is related to a reduction in research and development activity required during the three months ended September 30, 2018.

 

Comparison of the Nine Months Ended September 30, 2018 and 2017

 

The following discussion analyzes our results of operations for the six months ended September 30, 2018 and 2017. The following information should be considered together with our condensed consolidated financial statements for such periods and the accompanying notes thereto.

 

Net Revenue/Net Loss

 

We have not generated significant revenue since our inception. For the nine months ended September 30, 2018, we have generated limited sales and in 2017, we have not generated any sales. For the nine months ended September 30, 2018 and 2017, we had a net loss of $1,209,872 and $1,329,943

 

General and Administrative Expenses

 

General and administrative expenses increased by $368,535 to $825,569 for the nine months ended September 30, 2018 from $457,034 for the nine months ended September 30, 2017. The increase resulted primarily from increases in professional fees and increase in employee head count and corresponding increase in payroll costs.

 

Provision for bad debts

 

The provision for bad debts decreased by $272,186 to $0 for the nine months ended September 30, 2018, from $272,186 for the nine months ended September 30, 2017. This was a result of the write-off of the provision for bad debts.

 

Sales and Marketing

 

Sales and marketing expenses for the nine months ended September 30, 2018 were $137,919 as compared to $217,310 for the nine months ended September 30, 2017, a decrease of $79,391. This is a result of the Company’s decrease in marketing and advertising expenses during the nine months ended September 30, 2018.

 

 

Research and Development

 

Research and development expenses were $263,964 and $383,413 for the nine months ended September 30, 2018 and 2017, a decrease of $119,449. The decrease is related to a reduction in research and development required during the nine months ended September 30, 2018.

 

Liquidity and Capital Resources

 

As of November 16, 2018, we had cash on hand of approximately $32,707.

 

Net cash used in operating activities decreased by $108,389 to $943,819 for the nine months ended September 30, 2018 as compared to $1,052,208 for the nine months ended September 30, 2017. The decrease resulted primarily from a decrease in the net loss and an increase in accounts payable and accrued expenses.

 

Net cash used in investing activities increased by $16,554 to $18,077 for the nine months ended September 30, 2018 as compared to $1,523 for the nine months ended September 30, 2017. The increase resulted primarily from a increase in the investment in subsidiary.

 

Net cash provided by financing activities increased by $288,812 to $989,112 for the nine months ended September 30, 2018 as compared to $700,300 for the nine months ended September 30, 2017. The increase resulted from proceeds from loans payable, proceeds from shareholder loans and sales of Series B ordinary shares.

 

As we have not realized any significant revenues since our inception, we have financed our operations through private offerings of debt and equity securities. We do not currently maintain a line of credit or term loan with any commercial bank or other financial institution.

 

Since our inception, we have focused on developing and implementing our business plan. We believe that our existing cash resources will not be sufficient to sustain our operations during the next twelve months. We currently need to generate sufficient revenues to support our cost structure to enable us to pay ongoing costs and expenses as they are incurred, finance the development of our platform, and execute the business plan. If we cannot generate sufficient revenue to fund our business plan, we intend to seek to raise such financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to us, we will be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on our business, financial condition and results of operations.

 

Even if we are successful in generating sufficient revenue or in raising sufficient capital in order to complete the platform, our ability to continue in business as a viable going concern can only be achieved when our revenues reach a level that sustains our business operations. There can be no assurance that we will raise sufficient proceeds, or any proceeds, for us to implement fully our proposed business plan. Moreover there can be no assurance we will generate revenues sufficient to fund our operations. In either such situation, we may not be able to continue our operations and our business might fail.

 

The foregoing forward-looking information was prepared by us in good faith based upon assumptions that we believe to be reasonable. No assurance can be given, however, regarding the attainability of the projections or the reliability of the assumptions on which they are based. The projections are subject to the uncertainties inherent in any attempt to predict the results of our operations, especially where new products and services are involved. Certain of the assumptions used will inevitably not materialize and unanticipated events will occur. Actual results of operations are, therefore, likely to vary from the projections and such variations may be material and adverse to us. Accordingly, no assurance can be given that such results will be achieved. Moreover due to changes in technology, new product announcements, competitive pressures, system design and/or other specifications we may be required to change the current plans.

 

 

Off-Balance Sheet Arrangements

 

As of September 30, 2018, we do not have any off-balance sheet arrangements.

 

Subsequent Events

 

On November 15, 2018 the Company converted all of the series B shares into 579,538 “A” ordinary shares.

 

Critical Accounting Policies

 

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 1 of the Notes to Financial Statements included elsewhere herein.

 

Recently Issued Accounting Pronouncements

 

Recently issued accounting pronouncements are discussed in Note 1 of the Notes to Financial Statements contained elsewhere in this prospectus.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls and Procedures

 

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e)) as of the end of the quarterly period covered by this report, have concluded that our disclosure controls and procedures are not effective to reasonably ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s Rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The principal basis for this conclusion is the lack of segregation of duties within our financial function and the lack of an operating Audit Committee.

 

(b) Changes in Internal Control over Financial Reporting

 

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibit No.		Description
31.1/31.2		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1/32.2		Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

 

 

SIGNATURES

 

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

 

	XTRIBE P.L.C.
November 19, 2018	By:	/s/ Enrico dal Monte
		Enrico dal Monte,
		Chief Executive Officer