All the stock shenanigans are internal to the inbreed insiders now and none of it will happen. This type of filing would be enough to get f-d-bl revoked if the SEC bothered to read it. Note a major lawsuit coming up in August this year of which they already lost.
On December 14, 2018, the Company issued a promissory note for proceeds of $100,000 at 12% interest per annum. The maturity date of the note is December 14, 2019. The note includes a conversion feature that entitles the holder to receive 1.63% equity ownership of Friendable, Inc. and 18.2% equity ownership of Fan Pass, Inc. upon conversion. During the three months ended March 31, 2019, the note was converted into 100,000 shares (post-split) of common stock of the Company, or a 1.63% ownership. Additionally, the holder will be entitled to 2,000,000 shares, or a 18.2% ownership of Fan Pass, Inc (a wholly owned subsidiary of the Company). As of March 31, 2019 none of the shares have been issued.
The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at March 31, 2019 the conversion features and non-standard anti-dilution provisions would not meet derivative classification.
11. DEBT RESTRUCTURE AGREEMENT
On March 26, 2019, the Company entered into a Debt Restructuring Agreement with related parties Robert A. Rositano Jr., Dean Rositano, Frank Garcia, and Checkmate Mobile, Inc. and Alpha Capital Anstalt, Coventry Enterprises, LLC, Palladium Capital Advisors, LLC, EMA Financial, LLC, Michael Finkelstein, and Barbara R. Mittman, each being a debt holder of the Company.
The debt holders have agreed to convert their debt into certain amounts of common stock as set forth in the Agreement upon the Company meeting certain milestones including but not limited to: the Company effecting a reverse stock split and maintaining a stock price of $1.00 per share; being current with its periodic report filings pursuant to the Securities Exchange Act; Checkmate Mobile, Inc. and Company officers forgiving an aggregate of $1,000,000 in amounts owed to them; the Company raising not less than $400,000 in common stock at a post-split price of not less than $0.20 per share; and certain other things as further set forth in the Agreement. The debt holders will be subject to certain lock up and leak out provisions as contained in the Agreement.
12. CONTINGENCY
Integrity Media, Inc. (“Integrity”) had previously filed a lawsuit against the Company and the CEO of the Company for $500,000 alleging breach of contract alleging the Company failed to deliver marketable securities in exchange for services. The Company answered the allegations in court and Integrity filed a motion attacking the Company’s answers. The court did not strike the answers but the clerk of the court entered a default judgment against the Company in the amount of $1,192,875 plus 10% interest. On May 8, 2019, the Company received a tentative ruling on the Company’s motion to vacate the default judgement whereby the previously entered default judgement has now been voided and a trial date of August 26, 2019 has been set. The Company fully intends to defend itself against these allegations and believes that the claim is without merit.
13. SUBSEQUENT EVENTS
Subsequent to March 31, 2019, the Company entered into subscriptions for the sale 420,000 post-split common shares for total consideration of $105,000. As the Company’s reverse split as set forth on the Company’s filing on Form 14C on May 7, 2019 has not yet become effective the Company has not yet issued the shares. As part of the subscription for the shares, each investor was granted a percentage interest in the net revenues received from Fan Pass subscriptions and subscribers. Each share is entitled to receive .00001% of the net revenue. The shareholders in this offering also were granted limited anti-dilution protection providing for an additional issuance of shares from those held by the Robert and Dean Rositano after the completion of an additional offering by the Company.
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