Company Quick10K Filing
NestBuilder.com
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 2 $0
10-K 2020-01-28 Annual: 2019-11-30
10-Q 2019-10-15 Quarter: 2019-08-31
10-Q 2019-07-15 Quarter: 2019-05-31
10-Q 2019-04-12 Quarter: 2019-02-28
10-K 2019-02-28 Annual: 2018-11-30
10-Q 2018-10-15 Quarter: 2018-08-31
10-Q 2018-07-16 Quarter: 2018-05-31
10-Q 2018-04-23 Quarter: 2018-02-28
8-K 2019-08-20 Enter Agreement, Sale of Shares, Exhibits
8-K 2019-05-30 Enter Agreement, Sale of Shares, Shareholder Rights, Amend Bylaw, Exhibits
8-K 2018-08-17 Enter Agreement, Sale of Shares, Officers, Exhibits
NEST 2019-11-30
Part I
Item 1 - Business
Item 1A - Risk Factors.
Item 1B - Unresolved Staff Comments
Item 2 - Properties
Item 3 - Legal Proceedings
Item 4 - Mine Safety Disclosures
Part II
Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6 - Selected Financial Data
Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operation
Item 7A - Quantitative and Qualitative Disclosures About Market Risk
Item 8 - Financial Statements and Supplementary Data
Note 1: Organization and Nature of Business
Note 2: Summary of Significant Accounting Policies
Note 3: Going Concern
Note 4: Property and Equipment
Note 5: Due From/To Affiliates
Note 6: Related Party Transactions
Note 7: Stockholders' Equity
Note 8: Convertible Promissory Notes Payable
Note 9: Commitments and Contigencies
Note 10: Income Taxes
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A - Controls and Procedures
Item 9B - Other Information
Part III
Item 10 - Directors, Executive Officers and Corporate Governance
Item 11 - Executive Compensation
Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13 - Certain Relationships and Related Transactions, and Director Independence
Item 14 - Principal Accounting Fees and Services
Part IV
Item 15 - Exhibits, Financial Statement Schedules
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

NestBuilder.com Earnings 2019-11-30

NEST 10K Annual Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
GSX
PNAT 0 1 4 0 0 -6 -5 1 28% -0.2 -783%
MJHI
LBSR 0 0 2 0 -0 -0 -0 -0 0.7 -1,081%
STSA
LVLT 0 29,683 15,675 8,362 4,517 -3,236 -904 10,574 54% -11.7 -11%
MXSG 0 1 2 0 0 -3 -2 1 -0.3 -214%
ASTI 0 7 28 0 0 -9 -8 5 0% -0.6 -134%
VCSY 0 0 25 4 3 -3 -1 8 65% -7.6 -736%
DRUS 0 4 16 14 2 -6 -6 -0 11% 0.0 -143%

10-K 1 form10-k.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended November 30, 2019

 

OR

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from_____________ to _____________.

 

Commission file number 000-55875

 

Nestbuilder.com Corp.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of

incorporation or organization)

 

82-3254264

(I.R.S. Employer

Identification No.)

     

201 W. Passaic Street, Suite 301

Rochelle Park, NJ

(Address of principal executive offices)

 

 

07662

(Zip Code)

 

Registrant’s telephone number, including area code (201) 845-7001

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, par value $0.0001

(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ] Yes [X] No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. [  ] Yes [X] No

 

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. [X] Yes [  ] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). [X] Yes [  ] No

 

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

 

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

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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

 

As of May 31, 2019 the aggregate market value of the registrant’s common stock held by non-affiliates was $3,747,114, based on the last sale price for such stock on May 3, 2019.

 

As of January 24, 2020, there were 1,673,253 shares of common stock, par value $0.0001, issued and outstanding.

 

Documents Incorporated by Reference

 

None.

 

 

  

 
 

 

NESTBUILDER.COM CORP.

 

FORM 10-K ANNUAL REPORT

FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2019

 

TABLE OF CONTENTS

 

PART I  
     
ITEM 1 – BUSINESS 3
ITEM 1A – RISK FACTORS 9
ITEM 1B – UNRESOLVED STAFF COMMENTS 19
ITEM 2 – PROPERTIES 19
ITEM 3 – LEGAL PROCEEDINGS 19
ITEM 4 – MINE SAFETY DISCLOSURES 19
     
PART II  
     
ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 20
ITEM 6 – SELECTED FINANCIAL DATA 20
ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 21
ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 24
ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 25
ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 26
ITEM 9A – CONTROLS AND PROCEDURES 26
ITEM 9B – OTHER INFORMATION 28
     
PART III  
     
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 29
ITEM 11 – EXECUTIVE COMPENSATION 31
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 33
ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 34
ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES 36
     
PART IV  
     
ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES 37

 

 2 
 

 

PART I

 

Cautionary Statement Regarding Forward Looking Statements

 

This Annual Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning possible or assumed future results of operations of the Company set forth under the heading “Management’s Discussion and Analysis of Financial Condition or Plan of Operation.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

 

ITEM 1 – BUSINESS

 

History

 

We were incorporated in the State of Nevada on January 10, 2017 as a wholly owned subsidiary of RealBiz Media Group, Inc., a Delaware corporation (“RealBiz”). On October 27, 2017, we, RealBiz, Anshu Bhatnagar and Alex Aliksanyan entered into a Contribution and Spin-Off Agreement, as amended by a First Amendment to Contribution and Spin-Off Agreement dated as of January 29, 2018 (the “Spin-Off Agreement”). Under the Spin-Off Agreement, we and RealBiz agreed, among other things, to use commercially reasonable efforts to effectuate a pro rata distribution of our common stock to RealBiz stockholders. In addition, in furtherance of the separation and distribution described in the Spin-Off Agreement, RealBiz contributed to us certain of its assets and liabilities, including all tangible and intangible assets related to its digital media and marketing services for the real estate industry.

 

On July 31, 2018, RealBiz effectuated our spin-off from RealBiz. Upon completion of the spin-off, RealBiz stockholders owned 100% of the outstanding shares of our common stock. The spin-off was effectuated by way of a pro rata distribution of our common stock to the RealBiz stockholders of record as of July 2, 2018. Each RealBiz stockholder received one share of our common stock for every 900 shares of RealBiz common stock held by such stockholder on the record date. No fractional shares of our common stock were issued. Instead, RealBiz stockholders received a check that represented cash in lieu of fractional shares.

 

The Company

 

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees (video creation and production and website hosting (ReachFactor)) and product sales (Microvideo app). At the core of our programs is our proprietary video creation technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice and music. We provide video search, storage and marketing capabilities on multiple platform dynamics for web and mobile. Once a home, personal or community video is created using our proprietary technology, it can be published to social media, email or distributed to multiple real estate websites. In addition, we own and operate the web site LoseTheAgent.com, which is a site dedicated to peer-to-peer real estate transactions between home sellers and buyers - the so called For Sale By Owner segment. We currently have approximately 120,000 home listings across all 50 states. We monetize the website by charging fees for both listing a home for sale and picking up possible buyers’ messages of interest. We also plan on generating additional revenues by monetizing seller/buyer information with targeted, interested parties. The web site is fully functional and is being marketed via various on line platforms.

 

 3 
 

 

Products and Services

 

We currently offer the following products and services:

 

Enterprise Video Production: We service some of the largest and well-known franchisor accounts in the North America Real Estate Market in compiling listings into a Video format and distributing to those franchisor’s websites, brokers and agents and lead generation platforms 24/7. Some of these multiyear contracts produced over 10 million video listings from 2012-2014. These volumes, however, have declined in 2017 and 2018. We currently have the ability to produce over 15,000 videos per day and have exclusive agreements with key players such as NRT systems.

 

The Virtual Tour (VT) and Microvideo App (MVA): These programs were developed and implemented to allow agents to access specific video based product strategies that are designed specifically to increase the SEO rank and traffic credit to real estate franchise systems and/or their brokers. The MVA is a proprietary video widget marketing application designed to deliver video and integrate SEO strategies, traffic generation, e-mail, lead generation with mobile-friendly viewing. This solution gives those franchises and brokers a much-needed tool to lower their cost of prospect acquisition.

 

ReachFactor: Our social media and marketing platform under the “ReachFactor” brand name offers a variety of solutions to agents and brokers such as web design and web hosting.

 

LoseTheAgent.com: We own and operate the web site LoseTheAgent.com, which is a site dedicated to peer-to-peer real estate transactions between home sellers and buyers - the so called For Sale By Owner (FSBO) segment. We currently have approximately 120,000 home listings across all 50 states. We monetize the website by charging fees for both listing a home for sale and picking up possible buyers’ messages of interest. We also plan on generating additional revenues by monetizing seller/buyer information with targeted, interested parties. The web site is fully functional and is being marketed via various online platforms.

 

Growth Strategy

 

Key Elements of our growth strategy during fiscal 2020 include:

 

Focus on growing the number of home listings on LoseTheAgent.com. While we have experienced notable growth in the number of listings of FSBO homes, we plan to continue to seek interested home buyers via targeted Internet and social media platforms. In addition, we believe a public relations campaign could boost awareness of our brand and increase listings volume.

 

Leverage our proprietary video technology. While our proprietary video technology has been developed for the real estate industry, we believe this technology can be applied to other industries as well. In particular, we believe that the used car sale industry could benefit from our automated and seamless development engine. We will continue to explore these and other similar opportunities.

 

 4 
 

 

Design and develop technology for the real estate industry. We will continue working to develop technologies to increase sales and efficiencies for the real estate professional. We are in the preliminary stages of creating a new website to enter into the business-to-consumer segment of the real estate industry.

 

Background and Industry Trends

 

According to the National Association of Realtors (NAR) data, for sale by owner (FSBO) transactions represented over 8% of all home sales in the United States in 2019. While NAR considers private sales between people familiar to each other, such as family members, as FSBO home sales, we believe this percentage is still impressive. In the Year 2020, trends are expected to expand the FSBO segment as technology replaces the search/find capabilities of the MLS and property owners seeking to save on commissions take on additional roles typically carried out by real estate agents.

 

We believe that the real estate market is undergoing a dramatic change not dissimilar to that previously experienced by traditional stock brokerages. We believe that the most critical aspect driving this change is the advent of the Internet as a tool for searching for and researching real estate, eliminating the commitments of time and expense involved with visiting multiple properties in person. According to the National Association of Realtors’ 2014 “Member Profile,” 89% of home buyers use the internet to search for a home, up from 74% in 2010. This mirrors the 69% who use a realtor for their search. Note: many buyers use both the internet and a realtor in their search. In addition, home sellers can use the Internet to check home valuations, track the housing market and research comparable sales information. The majority of consumers used the Internet frequently to search for homes (81%), with consumers aged 33 or younger being higher than average (92%) and 59-67 year olds below (although still high at 69%). Searches are often conducted on mobile devices such as iPhones (47%), iPads (40%) or Androids (24%). One of the most significant trends for our business is that 70% of homebuyers search for and watch video home tours. Also, real estate searches on Google have grown 253% over the past four years.

 

The increased use of technology throughout the entire process of a typical residential real estate transaction is an important development in the real estate market. For instance, electronic communication and electronic data storage permits a real estate brokerage to quickly reproduce standard real estate transaction documents, store such documents and store other important information about customers and properties, and communicate quickly with other parties involved in real estate transactions (e.g., title companies, insurers, surveyors, inspectors and governmental agencies), all of which permits increased efficiencies in the process of buying and selling a home. The technological changes and developments generally make it possible to achieve a greater volume of transactions with less effort and expense.

 

We believe the technological developments in the real estate market and the increased amount of information available to and used by ordinary consumers appear to be circumstances that are similar to those developments that eventually gave rise to the non-traditional stock brokerages which have intruded upon the market dominance of traditional stock brokerages over the past two decades. For example, we note that the non-traditional stock brokerages developed their services and products to compete primarily on the bases of price, consumer effort and technology. Their websites, such as TD Ameritrade or e-Trade, provide not only trading capacity for the average consumer, but also a tremendous amount of information about companies. In this regard, we note that there has recently been a proliferation of various Internet-related real estate businesses that seek to provide either specific and limited services or information relating to residential real estate transactions (e.g., ForSaleByOwner.com, BuyOwner.com, Realtor.com, Trulia.com and Zillow.com). Like the non-traditional stock brokerages, these businesses typically rely on consumer effort, technology and price as the bases for competition.

 

 5 
 

 

However, the market models of Zillow/Trulia and Realtor are now in direct conflict with the enterprises that own the listings and that make the actual sales. The Zillow group’s main revenues are generated by advertising the listing as though another agent owned the listing, an agent that had paid Zillow for such display. Unaware, the consumer thus interacts with the displayed agent thinking they are the one that controls the listing. Then the display agent contacts the true agent and askes to 50/50 split the commission due on the sale. As the consumer power of the Zillow group has grown exponentially, they have substantially cut into the profits of the enterprises and agents that actually own the listings. Thus, the battle lines are now drawn between the Zillow group and groups such as Realogy member of companies and Keller Williams.

 

We foresee direct and continuous pushback in 2020 by the enterprises against the Zillow group, in trying to neutralize their marketing power and take ownership back of their listings. As publicly owned companies the Zillow group can only grow revenues by increasing advertising rates to the agent community which strikes deep into agent discontent with the enterprises and the resulting demand in action. This competitive model is unique to the real estate industry and clearly will not follow the path of the aforementioned financial portals.

 

Website and Mobile Applications

 

Our product, LoseTheAgent.com, is a complex web site produced completely by our internal technology group. We believe our technology team has utilized the latest technologies in order to make LoseTheAgent easy to use and functionally convenient. Visitors are able to search our thousands of listings, gain critical information about properties, and after making an informed choice, directly contact owners of target properties. After making contact with an owner, a dialog commences between the two parties that may result in a potentially advantageous sale for both parties. Our use of map data increases site usability where visitors can search using state, city or even neighborhood.

 

We are utilizing our proprietary technology along with our industry contracts to create two separate and very important critical paths for real estate professionals and their organizations to follow. By using our video processing capabilities combined with micro-site and website building techniques we have created an agent/broker micro-site product that leverages best practices in SEO (search engine optimization) on the agent/brokers behalf and delivers a web and mobile friendly rich media experience to consumers. This solution provides the broker a significant increase in organic ranking in local searches, increased site traffic and by doing so, reduces the agent/broker dependency on traditional listing aggregators. Secondly, by integrating marketing capabilities into a single powerful platform, we have taken the direct-to-agent sales model and offered to the property owner through SoloSeller, our proprietary marketing toolset. This strategy lowers risk threshold by giving home sellers a set of tools to market their homes on social media and the Internet as well as providing a pathway to developing accelerating revenue stream via a monthly subscription model. While the former video generator intensive model for us will continue to be our primary revenue generator, we believe that our SoloSeller will become the next generation of marketing for the FSBO home seller.

 

 6 
 

 

Market and Competition

 

The FSBO segment represents 8% of home sale transactions according to NAR; however, the segment remains nascent. We believe the advent of Internet based technology has made much of the practical functionality reserved to real estate professionals irrelevant. Even so, there doesn’t appear to be a market leader focusing solely on the FSBO segment, likely because of challenges related to monetization of FSBO market opportunities. While Zillow has expanded the category dramatically by introducing a listing process for interested FSBO sellers, this runs against the revenue interest of Zillow and may potentially adversely impact agents that are the mainstay of Zillow revenues. Other players such as forsalebyowner.com and fsbo.com have been around for decades but have not had the financing to fuel market expansion and growth. As a result, we believe the existing competition in the FSBO market does not preclude us from achieving success in this market. We believe the key is to develop a formula for monetization so that the few web sites in the FSBO segment can fuel the category expansion the market is demanding.

 

The National Association of Realtors has approximately 1.2 million members, of which we estimate roughly half are active and associated with at least one real estate brokerage firm.

 

Presently, Zillow is the largest independent real estate market site, as measured by homes in its database and unique visitors to its website. In 2015, Zillow completed its acquisition of Trulia making it the single most powerful name in the real estate web marketplace. A full 29% of web property searches were conducted on the joint platforms in 2015. As part of the industry consolidation, NewsCorp recently acquired the 3rd largest real estate portal, Realtor.com. Additionally, there are a variety of other websites which have meaningful market share and listing information. We believe a battle for the consumer mindset is now underway as the real estate enterprises enter into a competitive setting against Zillow/Trulia/Realtor/Homes. We also believe we can benefit from the acrimony as we have positioned ourselves as the friends of the enterprises and offer products and capabilities that will enhance the position of the enterprises by leveraging our technology.

 

Customers

 

We have experienced substantial customer losses in our legacy businesses due to our proprietary Virtual Tour technology being overtaken by open source coding and clients taking the service in house and offering as an added benefit to agents, free of charge. As a result, in 2019, our legacy business revenue was down 25%.

 

Industry Segments

 

We currently operate in one primary operating segment, real estate, mainly through web-assisted services.

 

Seasonality of Business

 

The residential real estate market has traditionally experienced seasonality, with a peak in the spring and summer seasons and a decrease in activity during the fall and winter seasons. Revenues in each quarter can be significantly affected by activity during the prior quarter, given the time lag between contract execution and closing. A typical real estate transaction has a 30-day lag between contract signing and closing of the transaction.

 

 7 
 

 

Environmental Regulation

 

We are not subject to environmental regulations that have a material effect upon our capital expenditures or otherwise.

 

Other Regulation

 

We are subject to governmental regulation by federal, state and local regulatory authorities with respect to our operations. We operate several Internet websites that we use to distribute information about and provide our services and content. Internet services are now subject to regulation in the United States relating to the privacy and security of personally identifiable user information and acquisition of personal information from children under the age of 13, including the federal Child Online Protection Act (COPA) and the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM). In addition, a majority of states have enacted laws that impose data security and security breach obligations. Additional federal and state laws and regulations may be adopted with respect to the Internet or other online services, covering such issues as user privacy, child safety, data security, advertising, pricing, content, copyrights and trademarks, access by persons with disabilities, distribution, taxation and characteristics and quality of products and services. In addition, to the extent we offer products and services to online consumers outside the United States, the laws and regulations of foreign jurisdictions, including, without limitation, consumer protection, privacy, advertising, data retention, intellectual property, and content limitations, may impose additional compliance obligations on us.

 

Intellectual Property

 

We have been granted perpetual licenses of patents which the Company uses for imaging and streaming tiled images as well as 3D image and warping technologies.

 

Employees

 

The Company currently has two full-time employees.

 

 8 
 

 

ITEM 1A – RISK FACTORS.

 

As a smaller reporting company, we are not required to provide a statement of risk factors. Nonetheless, we are voluntarily providing risk factors herein.

 

Any investment in our common stock involves a high degree of risk. You should consider carefully the following information, together with the other information contained in this annual report, before you decide to buy our common stock. If one or more of the following events actually occurs, our business will suffer, and as a result our financial condition or results of operations will be adversely affected. In this case, the market price, if any, of our common stock could decline, and you could lose all or part of your investment in our common stock.

 

We face risks in developing our products and services and eventually bringing them to market. We also face risks that we will lose some, or all, of our market share in existing businesses to competition, or we risk that our business model becomes obsolete. The following risks are material risks that we face. If any of these risks occur, our business, our ability to achieve revenues, our operating results and our financial condition could be seriously harmed.

 

Risks Relating to Our Business

 

We have no history of profitability.

 

Our business has never generated a yearly profit. As a young company, we are subject to all of the risks associated with a new business enterprise. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, especially in challenging and competitive industries such as residential real estate and particularly in light of current general economic, real estate and credit market conditions.

 

We do not yet have a significant operating history which would provide you with meaningful information about our past or future operations. The Company has not yet achieved positive cash flow on a monthly basis during any fiscal year including the current fiscal year ending November 30, 2019 and there is significant risk to the survival of the enterprise.

 

There is substantial doubt about our ability to continue as a going concern.

 

We have had net operating losses for the years ended November 30, 2019 and 2018. Since the financial statements were prepared assuming that we would continue as a going concern, these conditions coupled with our current liquidity position raise substantial doubt about our ability to continue as a going concern. Furthermore, since we are pursuing new products and services, this diminishes our ability to accurately forecast our revenues and expenses. We expect that our ability to continue as a going concern depends, in large part, on our ability to generate sufficient revenues, limit our expenses without sacrificing customer service, and obtain necessary financing. If we are unable to raise additional capital, we may be forced to discontinue our business.

 

 9 
 

 

We will require additional financing in the future, but such financing may not be available to us.

 

If adequate funds are not available on acceptable terms, we may be unable to fund the operation of our business. As a result, we would likely be forced to dramatically alter or cease operations. To date, our revenues from operations have not generated cash flow sufficient to finance our operations and growth. We will require as a result significant additional capital to continue our operations. There can be no assurance given that we will be able to secure additional financing in the future.

 

We critically rely on our executive management, and the loss of certain members of management would materially and negatively affect us.

 

Our success materially depends upon the efforts of our management and other key personnel, including but not limited to our Chief Executive Officer, Alex Aliksanyan. If we lose the services of any of these members of management, our business would be materially and adversely affected. We have entered into formal employment agreements with Mr. Aliksanyan and our Chief Financial Officer, Thomas M. Grbelja; however, their employment agreements are for a term of only one year. Furthermore, we do not have “key person” life insurance, and we do not presently intend to purchase such insurance.

 

Our future success also depends upon our ability to attract and retain highly qualified management personnel and other employees. Any difficulties in obtaining, retaining and training qualified employees could have a material adverse effect on our results of operation or financial condition. The process of identifying such personnel with the combination of skills and attributes required to carry out our strategy is often lengthy. Any difficulties in obtaining and retaining qualified managers and employees could have a material adverse effect on our results of operation or financial condition.

 

We may be unable to obtain sufficient market acceptance of our services.

 

The market for residential real estate sales is well-established. However, the market for non-traditional residential real estate sales is relatively new, developing and even more uncertain. As is typical in the case of a new and rapidly evolving industry, demand and market acceptance for products and services are subject to tremendous uncertainty. Our future growth and financial performance will almost entirely depend upon consumers’ acceptance of our products and services. In this regard, the failure of advertisers to accept our model or the inability of our services to satisfy consumer expectations, would have a material adverse effect on our business, and could cause us to cease operations.

 

We rely on third parties for key aspects of the process of providing services to our customers, and any failure or interruption in the services provided by these third parties could harm our ability to operate our business and damage our reputation.

 

We rely on third-party vendors, including website providers and information technology vendors. Any disruption in access to the websites developed and hosted by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business. Any financial or other difficulties our providers face may have negative effects on our business, the nature and extent of which we cannot predict. We exercise little or no control over all of these third-party vendors, which increases our vulnerability to problems with the services they provide.

 

In addition, we license technology and related databases from third parties to facilitate aspects of our website and connectivity operations. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services could materially and negatively impact our relationship with our customers and adversely affect our brand and our business. It is possible that such errors, failures, interruptions or delays could even expose us to liabilities to our customers or other third parties.

 

 10 
 

 

Interruption or failure of our information technology and communications systems would impair our ability to effectively provide our services, which could in turn damage our reputation and harm our business.

 

Our ability to provide our services critically depends on the continuing operation of our information technology and communications systems. Any damage to or failure of our systems would likely result in interruptions in our service to customers and the closings of real estate transactions from which we principally derive revenue. Accordingly, interruptions in our service would likely reduce our revenues and profits, and our brand could be damaged, perhaps irreparably, if people believe our system and services are unreliable.

 

To our knowledge, our systems are vulnerable to damage or interruption from terrorist or malicious attacks, floods, tornados, fires, power loss, telecommunications failures, computer viruses and other attempts to harm our systems, and similar types of events. Some of our systems are not fully redundant (i.e., backed up), and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, or a decision to close a facility we are using without adequate notice for financial reasons, could result in lengthy interruptions in our service. Any unscheduled interruption in our service would likely place a burden on our entire organization and result in an immediate loss of revenue. The steps we have taken to increase the reliability and redundancy of our systems are expensive, reduce our operating margin and even then may not be successful in reducing the frequency or duration of unscheduled downtime.

 

Any failure to maintain the security of the information relating to our company and customers, whether as a result of cybersecurity attacks on our information systems or otherwise, could damage our reputation, result in litigation or other legal actions against us, cause us to incur substantial additional costs, and materially adversely affect our business and operating results.

 

We receive and store in our digital information systems certain personal information about our customers. Some of that information is stored digitally in connection with our digital platforms. We also utilize third-party service providers for a variety of reasons, including, without limitation, for encryption and authentication technology, content delivery to customers, back-office support, and other functions. Such providers may have access to information we hold about our customers. In addition, our eCommerce operations depend upon the secure transmission of confidential information over public networks, including information permitting cashless payments.

 

Cyber threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other storage media are becoming increasingly sophisticated. Cyber threats and cyber-attackers can be sponsored by countries or sophisticated criminal organizations or be the work of single “hackers” or small groups of “hackers.” As cyber threats evolve, change and become more difficult to detect and successfully defend against, one or more cyber-attacks might defeat our or a third-party service provider’s security measures in the future and obtain the personal information of customers.

 

 11 
 

 

Employee error or malfeasance, faulty password management or other irregularities may also result in a defeat of our or our third-party service providers’ security measures and a breach of our or their information systems. Moreover, hardware, software or applications we use may have inherent defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. We or our third-party service providers may not discover any security breach and loss of information for a significant period of time after the security breach occurs.

 

Any breach of our security measures or any breach, error or malfeasance of those of our third-party service providers and loss of our confidential information, or any failure by us to comply with applicable privacy and information security laws and regulations, could cause us to incur significant costs to protect any customers whose personal data was compromised and to restore their confidence in us and to make changes to our information systems and administrative processes to address security issues and compliance with applicable laws and regulations.

 

In addition, such events could be widely publicized and could materially adversely affect our reputation with our customers and shareholders, could harm our competitive position, and could result in a material reduction in our net sales, thereby materially adversely affecting our operations, net sales, results of operations, financial condition, cash flows and liquidity. Such events could also result in the release to the public of confidential information about our operations and financial condition and performance and could result in litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security breach could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to upgrade further the security measures we employ to guard personal information against cyber-attacks and other attempts to access such information and could result in a disruption of our operations, particularly our digital retail operations.

 

We accept payments using credit and debit cards, and we may offer new payment options over time, which may have information security risk implications. As an online business accepting debit and credit cards for payment, we are subject to various industry data protection standards and protocols, such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We cannot be certain that the security measures we maintain to protect all of our information technology systems are able to prevent, contain or detect any cyber-attacks, cyber terrorism, or security breaches from known cyber-attacks or malware that may be developed in the future. To the extent that any cyber-attack or incursion in our or one of our third-party service provider’s information systems results in the loss, damage or misappropriation of information, we may be materially adversely affected by claims from customers, financial institutions, regulatory authorities, payment card networks and others. In certain circumstances, payment card association rules and obligations to which we are subject under our contracts with payment card processors make us liable to payment card issuers if information in connection with payment cards and payment card transactions that we hold is compromised, which liabilities could be substantial. In addition, the cost of complying with stricter and more complex data privacy, data collection and information security laws and standards could be significant to us.

 

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Our operations are dependent upon our ability to protect our intellectual property, which could be costly.

 

Our technology is the cornerstone of our business and our success will depend in part upon protecting any technology we use or may develop from infringement, misappropriation, duplication and discovery, and avoiding infringement and misappropriation of third-party rights. Our intellectual property is essential to our business, and our ability to compete effectively with other companies depends on the proprietary nature of our technologies. We do not have patent protection for our proprietary video on demand technology. We rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop, maintain, and strengthen its competitive position. Although we intend to have confidentiality provisions in the agreements we enter into with our employees and independent contractors, there can be no assurance that such agreements can fully protect our intellectual property, be enforced in a timely manner or that any such employees or consultants will not violate their agreements with us.

 

Furthermore, we may have to take legal action in the future to protect our trade secrets or know-how, or to defend them against claimed infringement of the rights of others. Any legal action of that type could be costly and time-consuming to us, and there can be no assurance that such actions will be successful. The invalidation of key proprietary rights which we own or unsuccessful outcomes in lawsuits to protect our intellectual property may have a material adverse effect on our business, financial condition and results of operations.

 

If we cannot adequately protect our intellectual property rights, our competitors may be able to compete more directly with us, which could adversely affect our competitive position and, as a result, our business, financial condition and results of operations.

 

We are required to comply with governmental regulations, which will increase our costs and could prohibit us from conducting business in certain jurisdictions.

 

We are subject to governmental regulation by federal, state and local regulatory authorities with respect to our real estate business. Governmental bodies may change the regulatory framework within which we intend to operate, without providing any recourse for adverse effects that the change may have on our business.

 

We can give no assurance that we will be able to comply with existing laws and regulations, that additional regulations that harm our business will not be adopted, or that we will continue to maintain our licenses, approvals or authorizations. Our failure to comply with applicable laws and regulations, or the adoption of new laws and regulations restricting our intended operations, could have a material adverse effect on our business and could cause us to cease operations.

 

The efforts of the National Association of Realtors or other organizations could prevent us from operating our business and could lead to the imposition of significant restrictions on our operations.

 

The National Association of Realtors, which represents real estate brokerages, has issued rules that attempt to block access of web-assisted real estate companies to the Multiple Listing System (MLS) and may adopt additional rules intended to reduce or eliminate competition from web-assisted (online) discount real estate businesses such as ours. Our business is dependent upon the ability to access the MLS to be competitive. We can give no assurance that the National Association of Realtors will not be successful in preventing our access to the MLS, or that it or another organization will not be successful in adopting rules or imposing other restrictions on web-assisted real estate businesses such as ours. Such adoption or imposition of regulations or restrictions would have a material adverse effect on our business.

 

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Competition in the traditional and online residential real estate industry is intense.

 

The residential real estate industry is highly competitive. We believe that important competitive factors in this industry include (but are not limited to) price, service, and ease of use. We presently face competition from numerous companies engaged in traditional residential real estate marketing services and we expect online competition to increase in the future from existing and new competitors. Most of our current and potential competitors have substantially greater financial, marketing and technical resources than us, as well as significant operating histories. Accordingly, we may not be able to compete successfully against new or existing competitors. Furthermore, competition may reduce the prices we are able to charge for our services, thereby potentially lowering revenues and margins, which would likely have a material adverse effect on our results of operation and financial condition.

 

The online residential real estate industry is subject to significant and rapid technological change.

 

The online residential real estate industry is subject to rapid innovation and technological change, shifting customer preferences, new service introductions and competition from traditional real estate brokerage firms. Competitors in this market have frequently taken different strategic approaches and have launched substantially different products or services in order to exploit the same perceived market opportunity. Although we believe that we are offering a unique solution, there can be no assurance that our services will be competitive technologically or otherwise, or that any other services developed by us will be competitive.

 

Our ability to compete in this industry will depend upon, among other things, broad acceptance of our services and on our ability to continually improve current and future services we may develop to meet changing customer requirements. There can be no assurance that we will successfully identify new service or product opportunities and develop and bring to the market new and enhanced solutions in a timely manner, that such products or services will be commercially successful, that we will benefit from such development, or that products and services developed by others will not render our products and services noncompetitive or obsolete. If we are unable to penetrate markets in a timely manner in response to changing market conditions or customer requirements, or if new or enhanced products or services do not achieve a significant degree of market acceptance, our business would be materially and adversely affected.

 

We may be impacted by general economic conditions within the United States residential real estate market.

 

The residential real estate market has experienced vast fluctuations in recent times. In some years, real estate home sales are brisk, while in other years the residential real estate market has been stagnant. Our ability to attract home sellers and buyers to use our website will, in part, depend upon consumers’ willingness in general to buy or sell a home. When consumers sense that the overall economy is not doing well, they are less likely to make an expensive purchase such as a home.

 

 14 
 

 

We have identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the value of our common stock.

 

Our initial evaluation of our internal controls resulted in our conclusion that our disclosure controls and procedures and that our internal control over financial reporting were not effective. Effective internal controls are necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. In our case, our failure to achieve and maintain an effective internal control environment could cause us to be unable to produce reliable financial reports or prevent fraud. This may cause investors to lose confidence in our reported financial information, which could in turn have a material adverse effect on the value of our common stock.

 

Our lack of an independent audit committee and audit committee financial expert at this time may hinder our Board of Directors’ effectiveness in fulfilling the functions of the audit committee without undue influence from management and until we establish such committee will prevent us from obtaining a listing on a national securities exchange.

 

Although our common stock is not listed on any national securities exchange, for purposes of independence we use the definition of independence applied by NASDAQ. Currently, we have no independent audit committee. Our full Board of Directors functions as our audit committee and is currently comprised of three directors, none of whom are considered to be “independent” in accordance with the requirements set forth in NASDAQ Listing Rule 5605(a)(2). An independent audit committee plays a crucial role in the corporate governance process, assessing our Company’s processes relating to our risks and control environment, overseeing financial reporting, and evaluating internal and independent audit processes. The lack of an independent audit committee may prevent the Board of Directors from being independent from management in its judgments and decisions and its ability to pursue the responsibilities of an audit committee without undue influence. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified, independent directors, the management of our business could be compromised.

 

Our Board of Directors acts as our compensation committee, which presents the risk that compensation and benefits paid to those executive officers who are board members and other officers may not be commensurate with our financial performance.

 

A compensation committee consisting of independent directors is a safeguard against self-dealing by company executives. Our Board of Directors acts as the compensation committee and determines the compensation and benefits of our executive officers, administers our employee stock and benefit plans, and reviews policies relating to the compensation and benefits of our employees. Our lack of an independent compensation committee presents the risk that our executive officer on the board may have influence over his personal compensation and benefits levels that may not be commensurate with our financial performance.

 

We are obligated to indemnify RealBiz against certain damages, costs and expenses.

 

In connection with our separation from RealBiz, on October 27, 2017, we, RealBiz, Anshu Bhatnagar and Alex Aliksanyan entered into a Contribution and Spin-Off Agreement, as amended by a First Amendment to Contribution and Spin-Off Agreement dated as of January 29, 2018 (the “Spin-Off Agreement”). Under the Spin-Off Agreement, we are required to indemnify RealBiz against damages, costs and expenses resulting from events occurring at RealBiz prior to January 2, 2017. As a result, if an event occurring at RealBiz prior to January 2, 2017 results in liability for which RealBiz is obligated to pay, then we may be subject to liabilities from our indemnification obligations, which could materially adversely affect our financial condition and our ability to continue as a going concern.

 

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Risks Relating to Our Common Stock

 

Our common stock is not quoted or traded in any market, limiting liquidity opportunities for investors.

 

Our common stock is not quoted on any market or exchange, and it is possible that our common stock will never be quoted or listed on any market or exchange. Even if our common stock becomes listed or commences trading, the volume trading in our common stock may be insufficient for stockholders to liquidate common stock at a profit, or at all. As a result, an investor in our common stock may find it difficult to dispose of shares of our common stock or obtain a fair price for our common stock in the market if one develops. Investors in our common stock should expect to hold our common stock indefinitely.

 

We may be unable to make, on a timely basis, the changes necessary to operate effectively as an independent, publicly owned company.

 

We have historically operated our business as part of a larger public company. Following consummation of the spin-off, we have been required to file with the SEC annual, quarterly and current reports that are specified in Section 13 of the Exchange Act. We have also been required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. In addition, we have become subject to other reporting and corporate governance requirements, including certain provisions of the Sarbanes-Oxley Act and the regulations promulgated thereunder, which impose significant compliance obligations upon us.

 

We expect to devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act, including costs associated with auditing and legal fees and accounting and administrative staff. In addition, Section 404(a) under the Sarbanes-Oxley Act requires that we assess the effectiveness of our controls over financial reporting. Our future compliance with the annual internal control report requirement will depend on the effectiveness of our financial reporting and data systems and controls. We cannot be certain that these measures will ensure that we design, implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation or operation, could harm our operating results, cause us to fail to meet our financial reporting obligations, or cause us to suffer adverse regulatory consequences or violate applicable stock exchange listing rules. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the value of our stock and our access to capital.

 

 16 
 

 

If we are unable to pay the costs associated with being a public, reporting company, we may be forced to discontinue operations.

 

We expect to have significant costs associated with being a public, reporting company, which may raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern will depend on positive cash flow, if any, from future operations and on our ability to raise additional funds through equity or debt financing. If we are unable to achieve the necessary product sales or raise or obtain needed funding to cover the costs of operating as a public, reporting company, we may be forced to discontinue operations.

 

Our directors and executive officers have the ability to exert significant control in matters requiring shareholder approval and could delay, deter, or prevent a change in control of our company.

 

Alex Aliksanyan, our Chief Executive Officer and a director, Thomas M. Grbelja, our Chief Financial Officer, Secretary and a director, and William McLeod, our President and a director, collectively own 7,853 shares of our outstanding common stock, and through the exercise of convertible promissory notes and warrants could, upon 61 days prior written notice to us, acquire approximately 1,112,501 additional shares of our common stock. In addition, Mr. McLeod could, through the conversion of Series A Convertible Preferred Stock, acquire an additional 280,000 shares of our common stock, giving these three individuals approximately 46% of our current voting securities. As a result, they have the ability to influence matters affecting our shareholders, including the election of our directors, the acquisition or disposition of our assets, and the future issuance of our shares. Because they control such shares, investors may find it difficult to replace our management if they disagree with the way our business is being operated. Because the influence by these shareholders could result in management making decisions that are in the best interest of those shareholders and not in the best interest of the investors, you may lose some or all of the value of your investment in our common stock. Investors who purchase our common stock should be willing to entrust all aspects of operational control to our current management team.

 

We have never paid cash dividends and have no plans to pay cash dividends in the future.

 

Holders of shares of our common stock are entitled to receive such dividends as may be declared by our Board of Directors. To date, we have paid no cash dividends on our shares of our preferred or common stock and we do not expect to pay cash dividends in the foreseeable future.

 

Our certificate of incorporation grants our Board of Directors, without any action or approval by our stockholders, the power to designate and issue preferred stock with rights, preferences and privileges that may be adverse to the rights of the holders of our common stock.

 

The total number of shares of all classes of stock that the Company shall have the authority to issue is 275,000,000 shares consisting of: (i) 250,000,000 shares of common stock, par value $0.0001, of which 1,673,253 shares are issued and outstanding as of the date of this report and (ii) 25,000,000 shares of preferred stock, par value $0.0001 per share, none of which are issued and outstanding.

 

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Pursuant to authority granted by our certificate of incorporation and applicable state law, our Board of Directors, without any action or approval by our stockholders, may designate and issue shares in such classes or series (including other classes or series of preferred stock) as it deems appropriate and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of other classes or series of capital stock, including preferred stock that may be issued could be superior to the rights of the shares of common stock offered hereby. The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to the shares of our common stock. Finally, any issuances of additional capital stock (common or preferred) will dilute the percentage of ownership interest of our stockholders and may dilute the per-share book value of the Company.

 

Certain provisions of the Nevada Revised Statutes of the State of Nevada, our Articles of Incorporation, and our bylaws may have anti-takeover effects which may make an acquisition of our company by another company more difficult.

 

Our Articles of Incorporation and bylaws contain provisions that permit us to issue, without any further vote or action by the stockholders, up to 25,000,000 shares of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting the series and the designation of the series, the voting powers, if any, of the shares of the series, and the preferences and relative, participating, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such series.

 

Our bylaws provide that special meetings of stockholders may be called only by the Board of Directors, any two directors, or the President. Stockholders are not permitted to call a special meeting of stockholders, to require that the board call such a special meeting, or to require that our board request the calling of a special meeting of stockholders.

 

These provisions in our Articles of Incorporation and Bylaws may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest.

 

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

We have made forward-looking statements in this annual report, including the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation, and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are only predictions and involve known and unknown risks and uncertainties, including the risks outlined under “Risk Factors” and elsewhere in this annual report.

 

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Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievement. We are not under any duty to update any of the forward-looking statements after the date of this annual report to conform these statements to actual results, unless required by law.

 

ITEM 1B – UNRESOLVED STAFF COMMENTS

 

This Item is not applicable to us as we are not an accelerated filer, a large accelerated filer, or a well-seasoned issuer; however, we are voluntarily disclosing that all written comments from the Commission staff regarding our periodic or current reports under the Securities Exchange Act of 1934 received within the last 180 days before the end of our last fiscal year have been resolved.

 

ITEM 2 – PROPERTIES

 

Our principal executive offices are currently located at 201 W. Passaic St #301, Rochelle Park, NJ 07662. We currently share office space with Thomas M. Grbelja, our Chief Financial Officer, Secretary and a director. We do not currently pay rent for our principal executive offices. The office space is approximately 1,000 square feet of office space. The space is utilized for general office purposes and it is our belief that the space we currently occupy is adequate for our immediate needs. Additional space may be required as we expand our operations. We do not foresee any significant difficulties in obtaining any required additional space. We currently do not own any real property.

 

ITEM 3 – LEGAL PROCEEDINGS

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

 

ITEM 4 – MINE SAFETY DISCLOSURES

 

Not applicable.

 

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PART II

 

ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Our common stock is not listed or traded on any exchange or other market.

 

Holders

 

As of January 24, 2020, there are 1,673,253 shares of our common stock issued and outstanding and held by 220 holders of record.

 

Dividend Policy

 

We have not paid any dividends on our common stock and do not expect to do so in the foreseeable future. We intend to apply our earnings, if any, in expanding our operations and related activities. The payment of cash dividends in the future will be at the discretion of the Board of Directors and will depend upon such factors as earnings levels, capital requirements, our financial condition and other factors deemed relevant by the Board of Directors.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We do not have any equity compensation plans.

 

Recent Sales of Unregistered Securities

 

On May 31, 2019, we issued 640,000 shares of Series A Convertible Preferred Stock to three investors in exchange for a total of $160,000. The issuances of Series A Convertible Preferred Stock were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the holders were all either accredited or sophisticated investors familiar with our operations.

 

On August 20, 2019, we issued Common Stock Purchase Warrants to six individuals for the purchase of up to an aggregate of 1,192,500 shares of Common Stock. The issuances of warrants were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the holders were all either accredited or sophisticated investors familiar with our operations.

 

ITEM 6 – SELECTED FINANCIAL DATA

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

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ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

 

Although the forward-looking statements in this Annual Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

Overview

 

We were incorporated in the State of Nevada on January 10, 2017 as a wholly-owned subsidiary of RealBiz Media Group, Inc., a Delaware corporation (“RealBiz”). On October 27, 2017, we, RealBiz, Anshu Bhatnagar and Alex Aliksanyan entered into a Contribution and Spin-Off Agreement, as amended by a First Amendment to Contribution and Spin-Off Agreement dated as of January 29, 2018 (the “Spin-Off Agreement”). Under the Spin-Off Agreement, we and RealBiz agreed, among other things, to use commercially reasonable efforts to effectuate a pro rata distribution of our common stock to RealBiz stockholders. In addition, in furtherance of the separation and distribution described in the Spin-Off Agreement, RealBiz contributed to us certain of its assets and liabilities, including all tangible and intangible assets related to its digital media and marketing services for the real estate industry.

 

On July 31, 2018, RealBiz effectuated our spin-off from RealBiz. Upon completion of the spin-off, RealBiz stockholders owned 100% of the outstanding shares of our common stock. The spin-off was effectuated by way of a pro rata distribution of our common stock to the RealBiz stockholders of record as of July 2, 2018. Each RealBiz stockholder received one share of our common stock for every 900 shares of RealBiz common stock held by such stockholder on the record date.

 

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees (video creation and production and website hosting (ReachFactor)) and product sales (Microvideo app). At the core of our programs is our proprietary video creation technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice and music. We provide video search, storage and marketing capabilities on multiple platform dynamics for web and mobile. Once a home, personal or community video is created using our proprietary technology, it can be published to social media, email or distributed to multiple real estate websites. In addition, we own and operate the web site LoseTheAgent.com, which is a site dedicated to peer-to-peer real estate transactions between home sellers and buyers - the so called For Sale By Owner segment. We currently have approximately 120,000 home listings across all 50 states. We monetize the website by charging fees for both listing a home for sale and picking up possible buyers’ messages of interest. We also plan on generating additional revenues by monetizing seller/buyer information with targeted, interested parties. The web site is fully functional and is being marketed via various on line platforms.

 

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Going Concern

 

As a result of our financial condition, our auditors have indicated in a footnote to our financial statements as of November 30, 2019 their uncertainty as to our ability to continue as a going concern. In order to continue as a going concern, we must effectively balance many factors and begin to generate sufficient revenue to fund our operations. If we are not able to do this, we may not be able to continue as an operating company. At our current revenue and burn rate, our cash on hand will not cover our operating expenses for the next nine months. There is no assurance that our existing cash flow will ever be adequate to satisfy our existing operating expenses and capital requirements.

 

Results of Operations for the Year Ended November 30, 2019 compared to Year Ended November 30, 2018

 

Revenue

 

Total revenue for the year ended November 30, 2019 was $136,863 compared to $275,463 for the year ended November 30, 2018, a decrease of 50%. The decrease is primarily a result of declining legacy virtual tour business.

 

Cost of Revenue

 

Cost of revenues totaled $104,355 for year ended November 30, 2019, compared to $128,363 for the year ended November 30, 2018, representing a decrease of $24,008, or 18.70%. Cost of revenues consists primarily of engineering and server costs incurred in connection with maintenance of our online networks. The decline in costs is primarily due to a reduction in server costs.

 

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Operating Expenses

 

Our operating expenses, which include salaries and benefits, selling and promotion, amortization and depreciation and general and administrative expenses, increased 181% to $426,068, for the year ended November 30, 2019, compared to $234,530 for the year ended November 30, 2018, an increase of $191,538. The increase was substantially due to an increase in salary and benefit expense of $150,082, increases in selling and promotional expense of $76,518 and decrease of general and administrative expenses of $35,062. A breakdown of general and administrative expenses is as follows:

 

   Fiscal Year Ended     
   November 30,     
Expense  2019   2018   Increase/(Decrease) 
Professional fees  $62,916   $95,912   $(32,996)
Insurance   2,908    4,720    (1,812)
Dues & subscriptions   3,208    4,176         (968)
Miscellaneous   6,474    5,760    714 
Total  $75,506   $110,568   $(35,062)

 

Other Income (Expenses)

 

Our other income stayed the same for the year ended November 30, 2019 A summary of other income (expense) is as follows:

 

   Fiscal Year Ended     
   November 30,     
Expense  2019   2018   Increase/(Decrease) 
Gain on legal settlements  $-   $179,023   $(179,023)
Gain on settlement of accounts payable   -    159,641    (159,641)
Realized loss on marketable securities   -    (21,602)   21,602 
Legal fees in connection with settlements   -    (35,299)   

35,299

 
Total  $-   $281,763   $(281,763)

 

Net Income/Loss

 

We had net loss of $393,560 for the year ended November 30, 2019, compared to a net income of $194,333 for the year ended November 30, 2018, a decrease of $587,893.

 

Liquidity and Capital Resources

 

Introduction

 

Our principal needs for liquidity have been to fund operating losses and working capital requirements. Our principal source of liquidity as of November 30, 2019 consisted of cash of $263,115. We expect that working capital requirements will continue to be our principal need for liquidity over the near term. Working capital requirements are expected to increase as a result of our anticipated growth.

 

We have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations. Management’s plan to meet our operating expenses in the short term is through equity and/or debt financing.

 

 23 
 

 

Cash Requirements

 

At November 30, 2019, we had $263,115 cash on-hand, an increase of $22,190 from the prior year balance of $240,925. Based on our current revenues, cash on hand, and our current net monthly burn rate of approximately $22,000, we will need to continue to raise money from the issuance of equity to fund short term operations.

 

Sources and Uses of Cash

 

Operations

 

Net cash used by operating activities was $207,835 for the year ended November 30, 2019, a decrease of $215,844 from $8,009 provided by operations in the year ended November 30, 2018. This decrease was primarily due to the net loss from the year.

 

Investments

 

Net cash provided by investing activities was $0 and $27,421 for the years ended November 30, 2019 and 2018, respectively.

 

Financing

 

Net cash provided by financing activities was $230,025 for the year ended November 30, 2019, as compared to net cash provided by financing activities of $183,830 for the year ended November 30, 2018.

 

Off-balance sheet arrangements

 

As of November 30, 2019, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital resources that are material to investors.

 

Critical accounting policies and estimates

 

Our critical accounting policies are set forth in Note 3 – Summary of Significant Accounting Policies, to our financial statement footnotes.

 

Recent accounting pronouncements

 

We have evaluated recent pronouncements and do not expect their adoption to have a material impact on our financial position or statements.

 

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

 24 
 

 

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

 25 
 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

Stockholders of Nestbuilder.com Corp

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Nestbuilder.com Corp (the Company) as of November 30, 2019 and 2018, and the related statements of income, stockholders’ equity, and cash flows for each of the years in the two-year period ended November 30, 2019 and 2018, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended November 30, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph – Going Concern

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has accumulated deficit of $519,375 as of November 30, 2019. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Assurance Dimensions  
Assurance Dimensions  
   
We have served as the Company’s auditor since 2018.  
Margate, Florida  
January 28, 2020  

 

ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES

TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053

JACKSONVILLE: 4720 Salisbury Road, Suite 223 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053

ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053

SOUTH FLORIDA: 2000 Banks Road, Suite 218 | Margate, FL 33063 | Office: 888.410.2323 | Fax: 813.443.5053

www.assurancedimensions.com

 

  F-1 
 

 

NESTBUILDER.COM CORP.

Balance Sheets

 

   November 30,
2019
   November 30,
2018
 
         
Assets          
Current Assets          
Cash  $263,115   $240,925 
Prepaid expenses   -    3,300 
Total current assets   263,115    244,225 
           
Total assets  $263,115   $244,225 
           
Liabilities and Stockholders’ Equity          
Current Liabilities          
Accounts payable and accrued expenses  $117,000   $113,043 
Convertible promissory notes payable   77,454    75,550 
Total current liabilities   194,454    188,593 
           
Total liabilities   194,454    188,593 
           
Commitments and Contingencies (Note 9)          
           
Stockholders’ Equity          
Convertible Series A Preferred stock, $0.0001 par value 25,000,000 shares authorized; 640,000 shares issued and outstanding at November 30, 2019 and zero at November 30, 2018, respectively   64    - 
Common stock, $0.0001 par value; 250,000,000 shares authorized; 1,673,253 shares issued and outstanding at November 30, 2019 and 1,433,196 shares issued and outstanding at November 30, 2018.   167    143 
Additional paid-in-capital   587,805    181,304 
Accumulated (deficit)   (519,375)   (125,815)
Total stockholders’ equity   68,661    55,632 
           
Total liabilities and stockholders’ equity  $263,115   $244,225 

 

The accompanying notes are an integral part of these financial statements

 

  F-2 
 

 

NESTBUILDER.COM CORP.

Statements of Operations

 

   For the years ended 
   November 30, 
   2019   2018 
         
Revenues          
Real estate media revenue  $136,863   $275,463 
           
Cost of revenues   104,355    128,363 
           
Gross profit   32,508    147,100 
           
Operating expenses          
Salaries and benefits   245,750    95,668 
Selling and promotions expense   104,812    28,294 
General and administrative   75,506    110,568 
Total operating expenses   426,068    234,530 
           
Operating income (loss)   (393,560)   (87,430)
           
Other income (expense)          
Realized (loss) on marketable securities   -    (21,602)
Gain on legal settlements   -    179,023 
Legal fees in connection with legal settlements   -    (35,299)
Gain on cancellation of accounts payable   -    159,641 
Total other income (expense)   -    281,763 
           
Income (loss) before income taxes   (393,560)   194,333 
           
Provision for income taxes   -    - 
           
Net income (loss)  $(393,560)  $194,333 
           
Weighted average number of shares outstanding – basic   1,571,341    419,359 
Weighted average number of shares outstanding - diluted   1,571,341    629,795 
           
Basic net income (loss) per common share  $(0.25)  $0.46 
Diluted net income (loss) per share  $(0.25)  $0.31 

 

The accompanying notes are an integral part of these financial statements.

 

  F-3 
 

 

NESTBUILDER.COM CORP.

Statements of Cash Flows

 

   For the years ended 
   November 30, 
   2019   2018 
Cash flows from operating activities:          
Net income (loss)  $(393,560)  $194,333 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Non- cash gain on settlement of lawsuits   -    (49,023)
Realized loss on investment   -    21,602 
Stock-based compensation   176,564    - 
Gain on cancellation of accounts payable   -    (159,641)
Changes in operating assets and liabilities:          
(Increase) decrease in accounts receivable   -    8,603 
(Increase) decrease in prepaid assets   3,300    - 
Increase in accrued interest on notes payable   1,904    - 
Increase (decrease) in accounts payable and accrued expenses   3,957    (7,865)
Net cash provided by (used in) operating activities   (207,835)   8,009 
           
Cash flows from investing activities:          
Proceeds from sale of investments   -    27,421 
Net cash provided by investing activities   -    27,421 
           
Cash flows from financing activities:          
Proceeds from issuance of common stock   70,025    - 
Proceeds from convertible promissory notes issuance   -    75,550 
Proceeds from issuance of preferred stock   160,000    108,280 
Net cash provided by financing activities   230,025    183,830 
           
Net increase in cash   22,190    219,260 
           
Cash at beginning of period   240,925    21,665 
           
Cash at end of period  $263,115   $240,925 
           
Supplemental disclosure of cash flow information:          
Cash paid for:          
Interest  $1,904   $2,145 
Income taxes  $-   $- 
Noncash financing activity:          
Intercompany accounts payable adjusted through paid in capital  $-   $108,000 

 

The accompanying notes are an integral part of these financial statements.

  

  F-4 
 

 

NESTBUILDER.COM CORP.

Statement of Changes in Stockholders’ Equity

 

   Common Stock   Preferred Stock   Additional       Total Stockholders 
   Shares   Par Value   Shares   Par
Value
   Paid-In Capital   Accumulated Deficit   Equity
(Deficit)
 
Balance, November 30, 2017   100    -    -    -    (34,833)  $(320,148)  $(354,981)
                                    
Write off of Intercompany Accounts Payable   -    -    -    -    108,000    -    108,000 
Issuance of common shares   71,500    7    -    -    108,273    -    108,280 
                                    
Issuance of common shares settlement agreement   1,361,596    136    -    -    (136)        - 
                                    
Net income   -    -    -    -    -    194,333    194,333 
Balance November 30, 2018   1,433,196   $143    -    -   $181,304   $(125,815)  $55,632 

 

   Common Stock   Preferred Stock   Additional        Total 
   Shares   Par Value   Shares   Par Value   Paid-In Capital   Accumulated Deficit   Stockholders’ Equity 
Balance, November 30, 2018   1,433,196   $143    -   $   $181,304   $(125,815)  $55,632 
                                    
Issuance of common shares   38,900    4    -    -    70,021    -    70,025 
                                    
Issuance of common shares settlement agreement   201,157    20    -    -    (20)   -    - 
                                    
Issuance of Series A convertible preferred shares   -    -    640,000    64    159,936    -    160,000 
                                    
Share-based compensation   -    -    -    -    176,564    -    176,564 
Net loss   -    -    -    -         (393,560)   (393,560)
Balance, November 30, 2019   1,673,253  

$

167

    

640,000

   $64  

$

587,805

  

$

(519,375

) 

$

68,661

 

 

The accompanying notes are an integral part of these financial statements.

 

  F-5 
 

 

NESTBUILDER.COM CORP.

NOTES TO THE FINANCIAL STATEMENTS

 

NOTE 1: ORGANIZATION AND NATURE OF BUSINESS

 

Organization

 

We were incorporated in the State of Nevada on January 10, 2017 as a wholly owned subsidiary of RealBiz Media Group, Inc., a Delaware corporation (“RealBiz”). On July 31, 2018, RealBiz effectuated our spin-off from RealBiz. Upon completion of the spin-off, RealBiz stockholders owned 100% of the outstanding shares of our common stock. The spin-off was effectuated by way of a pro rata distribution of our common stock to the RealBiz stockholders of record as of July 2, 2018. Each RealBiz stockholder received one share of our common stock for every 900 shares of RealBiz common stock held by such stockholder on the record date. The spinoff resulted in the issuance of 1,361,596 Nestbuilder.com common shares.

 

We are engaged in the business of providing digital media and marketing services for the real estate industry. We currently generate revenue from service fees (video creation and production and website hosting (ReachFactor)) and product sales (Microvideo app). At the core of our programs is our proprietary video creation technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice and music. We provide video search, storage and marketing capabilities on multiple platform dynamics for web and mobile. Once a home, personal or community video is created using our proprietary technology, it can be published to social media, email or distributed to multiple real estate websites. In addition, we own and operate the web site LoseTheAgent.com, which is a site dedicated to peer-to-peer real estate transactions between home sellers and buyers - the so called For Sale By Owner segment. We currently have approximately 120,000 home listings across all 50 states. We monetize the website by charging fees for both listing a home for sale and picking up possible buyers’ messages of interest. We also plan on generating additional revenues by monetizing seller/buyer information with targeted, interested parties. The web site is fully functional and is being marketed via various online platforms.

 

Cost Allocations

 

Prior to July 31, 2018, RealBiz Media Group, Inc. charged its operating subsidiaries for various corporate costs incurred in the operation of the business based on the specific identification of the expense. Accordingly, no significant additional cost allocations were necessary for the preparation of these financial statements. Actual costs that would have been incurred if Nestbuilder.com Corp. had been a standalone company would depend on multiple factors, including organizational structure, capital structure, and strategic decisions made in various areas, including information technology and infrastructure. Transactions between Realbiz Media Group, Inc. and Nestbuilder.com Corp. have been included as related party transactions in these financial Statements and are considered to be effectively settled for cash at the time the transaction is recorded.

 

  F-6 
 

 

Products and Services

 

We currently offer the following products and services:

 

Enterprise Video Production: We service some of the largest and well-known franchisor accounts in the North America Real Estate Market in compiling listings into a Video format and distributing to those franchisor’s websites, brokers and agents and lead generation platforms 24/7.

 

 

The Virtual Tour (VT) and Microvideo App (MVA): These programs were developed and implemented to allow agents to access specific video-based product strategies that are designed specifically to increase the SEO rank and traffic credit to real estate franchise systems and/or their brokers. The MVA is a proprietary video widget marketing application designed to deliver video and integrate SEO strategies, traffic generation, e-mail, lead generation with mobile-friendly viewing. This solution gives those franchises and brokers a much-needed tool to lower their cost of prospect acquisition.

 

ReachFactor: Our social media and marketing platform under the “ReachFactor” brand name offers a variety of solutions to agents and brokers such as web design and web hosting.

 

We launched a new real estate platform in the direct to consumer space in October 2018. The new product is designed to enable buyers and sellers of residential real estate to market and sell properties to each other without an agent. This platform is the result of two years of engineering and development work by our engineering team. All work was performed by in house staff and all licenses are owned by us. The new product represents our first foray into the business to consumer space that will attract the great majority of US homeowners.

 

LoseTheAgent.com: We own and operate the web site LoseTheAgent.com, which is a site dedicated to peer-to-peer real estate transactions between home sellers and buyers - the so called For Sale By Owner segment. We currently have approximately 120,000 home listings across all 50 states. We monetize the website by charging fees for both listing a home for sale and picking up possible buyers’ messages of interest. We also plan on generating additional revenues by monetizing seller/buyer information with targeted, interested parties. The web site is fully functional and is being marketed via various online platforms.

 

  F-7 
 

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of abbreviated financial statements in conformity with accounting principles generally accepted in the United States of America 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 abbreviated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted.

 

Cash and Cash Equivalents

 

The Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. There were no cash equivalents as of November 30, 2019 and November 30, 2018. The Company’ cash account is held at a financial institution and is insured by the Federal Deposit Insurance Corporation, or FDIC, up to $250,000. During the year ended November 30, 2019, the Company had reached a bank balance exceeding the FDIC insurance limit.

 

Property and Equipment

 

All expenditures on the acquisition for property and equipment are recorded at cost and capitalized as incurred, provided the asset benefits the Company for a period of more than one year. Expenditures on routine repairs and maintenance of property and equipment are charged directly to operating expense. The property and equipment are depreciated based upon its estimated useful life after being placed in service. The estimated useful life of computer equipment is 3 years. When equipment is retired, sold or impaired, the resulting gain or loss is reflected in earnings. The Company incurred depreciation expense of $0 for the year ended November 30, 2019 and 2018.

 

Impairment of Long-Lived Assets

 

In accordance with Accounting Standards Codification (“ASC”) 360-10, “Property, Plant, and Equipment”, the Company periodically reviews its long- lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not impair any long-lived assets as of November 30, 2019 and November 30, 2018.

 

Website Development Costs

 

The Company accounts for website development costs in accordance with Accounting Standards Codification 350-50 “Website Development Costs”. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage that meet specific criteria are capitalized and costs incurred in the day to day operation of the website are expensed as incurred.

 

  F-8 
 

 

Fair Value of Financial Instruments

 

ASC topic 820, “Fair Value Measurements and Disclosures” (ASC 820) defines “fair value” as the 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.

 

ASC 820 also describes three levels of inputs that may be used to measure fair value:

 

Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

 

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

Financial instruments consist principally of cash, accounts payable, accrued liabilities and other current liabilities. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short- term nature. The fair value of long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities. The carrying amounts approximate fair value. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

 

Revenue Recognition

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Nestbuilder adopted the standard effective December 1, 2018, with no cumulative adjustment needed as of this date. All of our revenue is generated from the United States of America.

 

Revenue is recognized when all of the following criteria are met:

 

Identification of the contract, or contracts, with a customer - A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and the parties are committed to perform, and (iii) we determine that collection of substantially all consideration to which it will be entitled in exchange for goods or services that will be transferred is probable based on the customer’s intent and ability to pay the promised consideration.

 

  F-9 
 

 

Identification of the performance obligations in the contract - Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation.

 

Determination of the transaction price - The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer adjusted for estimated variable consideration, if any. We typically estimate the transaction price impact of discounts offered to the customers for early payments on receivables or rebates based on channel partner sales achievements. Constraints are applied when estimating variable considerations based on historical experience where applicable.

 

Allocation of the transaction price to the performance obligations in the contract - All current contracts are of a single performance obligation thus the entire transaction price is allocated to the single performance obligation. We determine standalone selling price taking into account available information such as historical selling prices of the performance obligation, geographic location, overall strategic objective, market conditions and internally approved pricing guidelines related to the performance obligation.

 

Recognition of revenue when, or as, we satisfy performance obligation - We satisfy performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at or over the time the related performance obligation is satisfied by transferring a promised good or service to a customer.

 

Cost of Revenues

 

Cost of revenues includes costs attributable to services sold and delivered. These costs include engineering costs incurred to maintain our networks.

 

Advertising Expense

 

Advertising costs are charged to expense as incurred and are included in selling and promotions expense in the accompanying financial statements. Advertising expense for the year ended November 30, 2019 and 2018 were $104,812 and $28,294, respectively.

 

Share-Based Compensation

 

The Company computes share based payments in accordance with Accounting Standards Codification 718-10 “Compensation” (ASC 718-10). ASC 718-10 establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services at fair value, focusing primarily on accounting for transactions in which an entity obtains employees services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of an entity’s equity instruments or that may be settled by the issuance of those equity instruments. In March 2005, the SEC issued SAB No. 107, Share-Based Payment (“SAB 107”) which provides guidance regarding the interaction of ASC 718-10 and certain SEC rules and regulations. The Company has applied the provisions of SAB 107 in its adoption of ASC 718-10. The Company estimates the fair value of stock options by using the Black-Scholes option pricing model. Additionally, the Company has early adopted ASU 2018-07 during fiscal year 2019. In June 2018, the FASB issued ASU 2018-07 Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07), which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions.

 

  F-10 
 

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities and net operating loss and tax credit carryforwards given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.

 

ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company has applied for an extension of time to file with the Internal Revenue Service for its most recent tax filing.

 

The Company recognizes expenses for tax penalties and interest assessed by the Internal Revenue Service and other taxing authorities upon receiving valid notice of assessments. The Company has received no such notices as of November 30, 2019.

 

Marketable securities

 

As part of a legal settlement, the Company received $32,370 of their common shares from the Monaker Group in January 2018. In March 2018 the Company received $16,653 of the common shares from Realbiz Media Group, Inc. as part of a legal settlement. All marketable investments were sold prior to November 30, 2018 which resulted in a loss of $21,602.

 

Earnings Per Share

 

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

 

Diluted earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Diluted loss per common share is considered to be equal to basic because the common stock equivalents are anti-dilutive. The Company’s anti-dilutive common stock equivalents include the following:

 

   November 30,
2019
   November 30,
2018
 
Series A Preferred Stock issued and outstanding   640,000                - 
Shares on issuance of warrants as share-based compensation   1,192,500    - 
Shares on convertible promissory notes   645,450    - 
    2,477,950    - 

 

For the year-ended November 30, 2018, the Company had approximately 210,000 potentially dilutive shares due to convertible promissory notes.

 

  F-11 
 

 

Concentrations, Risks and Uncertainties

 

The Company’s operations and revenue are related to the real estate industry and its prospects for success are tied indirectly to interest rates and the general housing and business climates in the United States.

 

Recently Issued Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of fiscal 2020. Early adoption of ASU 2016-02 is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company does not have any leasing arrangements.

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued and not implemented that might have a material impact on its financial position or results of operations.

 

  F-12 
 

 

NOTE 3: GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

 

At November 30, 2019, the Company had working capital of $68,661, an accumulated deficit of $519,375 and a net loss of $393,560 for the year then ended. It is management’s opinion that these facts raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing, without additional debt or equity financing. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

In order to meet its working capital needs through the next twelve months and to fund the growth of our business, the Company may consider plans to raise additional funds through the issuance of additional shares of common or preferred stock and or through the issuance of debt instruments. Although the Company intends to obtain additional financing to meet our cash needs, the Company may be unable to secure any additional financing on terms that are favorable or acceptable to it, if at all.

 

NOTE 4: PROPERTY AND EQUIPMENT

 

At November 30, 2019 and November 30, 2018 Company’s property and equipment are as follows:

 

   Estimated
Life
(in years)
   November 30, 2019   November 30, 2018 
             
Office equipment  3   $82,719   $82,719 
Less: accumulated depreciation       (82,719)   (82,719)
       $-   $- 

 

The Company has recorded no depreciation expense for the years ended November 30, 2019 and 2018.

 

NOTE 5: DUE FROM/TO AFFILIATES

 

During the normal course of business, our parent, RealBiz, received and/or made advances for operating expenses and various debt obligation conversions to/from its former parent company, Monaker Group, Inc. (“Monaker”). As a result of these transactions, RealBiz has recorded a receivable of $1,287,517 as of November 30, 2017. On May 11, 2016, RealBiz filed a lawsuit against Monaker seeking collection of this balance. All recoveries and liabilities associated with Monaker lawsuits were transferred to Nestbuilder pursuant to the Contribution and Spin-Off Agreement. Due to uncertainty surrounding our ability to collect this amount, management has elected to record an allowance against the full amount of this receivable. On January 2, 2018 this matter was settled for $63,000 in cash (net of legal fees of $37,000) and $32,370 marketable securities of Monaker. The amount is recorded in gain on legal settlements in the accompanying statement of operations. (See note 6).

 

  F-13 
 

 

NOTE 6: RELATED PARTY TRANSACTIONS

 

Contribution and Spin-Off Agreement

 

On October 27, 2017, a Contribution and Spin-Off Agreement (the “Spin-Off Agreement”) was entered into between Nestbuilder, RealBiz, Mr. Alex Aliksanyan, and Mr. Anshu Bhatnagar. Below is a brief summary of certain terms and conditions of the Spin-Off Agreement:

 

Transfer of Assets and Assumption of Liabilities. Pursuant to the Spin-Off Agreement, RealBiz contributed to the Company certain of its assets, including (i) all tangible and intangible assets related to its digital media and marketing services for the real estate industry, and (ii) all right, title and interest in the following lawsuits (collectively, the the “Monaker Lawsuits”): (a) the lawsuit filed by RealBiz against Monaker Group, Inc. (“Monaker”) on May 11, 2016 in the United States District Court for the Southern District of Florida (Case No. 0:16-cv-61017-FAM); (b) the lawsuit filed by Monaker against RealBiz in October 2016 in the 17th Judicial Circuit for Broward County, Florida (Case No. CACE-16-019818); and, (c) the lawsuit filed by Monaker against RealBiz in November 2016 in the United States District Court for the Southern District of Florida (Case No. 1:16-cv-24978-DLG). In exchange for the contribution of such assets, we issued 100 shares of our common stock, constituting 100% of our issued and outstanding common stock, to RealBiz.

 

We assumed from RealBiz all liabilities of RealBiz accruing before January 2, 2017, and all liabilities arising out of or relating to the assets contributed to us in accordance with the Spin-off Agreement. We expressly did not assume RealBiz liabilities accruing on or after January 2, 2017, and arising from acts, omissions, or agreements occurring on or after January 2, 2017 and which are not related to the assets or the business contributed to us by RealBiz in accordance with the Spin-off Agreement.

 

Conditions. The Spin-Off Agreement states that the obligation to consummate the distribution of our common stock to RealBiz stockholders is subject only to our Registration Statement on Form 10, of which this information statement is a part, becoming effective under the Exchange Act.

 

The Distribution. We and RealBiz agreed to use commercially reasonable efforts to effectuate a pro rata distribution of our common stock to RealBiz stockholders. We further agreed that the record date for determining stockholders entitled to receive shares in connection with the distribution of our common stock will be determined by the Board of Directors of RealBiz as soon as practicable following the effectiveness of our Registration Statement on Form 10. We further agreed that within ten (10) days of receipt by Mr. Bhatnagar or his affiliates of shares of our common stock pursuant to the distribution, Mr. Bhatnagar will sell to us the shares of our common stock he and his affiliates receive, in exchange for a nominal purchase price. We and RealBiz also agreed to cooperate in structuring the Spin-Off to be completed in as tax efficient manner as possible, provided, however, that a tax liability to either party as a result of the Spin-Off will not prevent the completion of the spin-off.

 

Expenses. We are responsible for all expenses related to the distribution, and are entitled to engage our own legal, accounting and other advisors and service providers to prepare all documentation related to the distribution. Each of Nestbuilder and RealBiz agreed to be responsible for all costs and expenses related to its respective operations incurred or accruing after the date of the Spin-Off Agreement.

 

  F-14 
 

 

Monaker Lawsuits. Under the Spin-Off Agreement, our president, Alex Aliksanyan, received exclusive control and direction of the Monaker Lawsuits in his capacity as our president. However, we are required to indemnify RealBiz against all damages, costs and expenses resulting from the Monaker Lawsuits.

 

On January 2, 2018 this matter was settled for $63,000 in cash (net of legal fees of $37,000) and $32,370 of marketable securities of Monaker. The amount is recorded in gain on legal settlements in the accompanying statement of operations.

 

Indemnification. We are required to indemnify RealBiz against all damages, costs and expenses resulting from events occurring at RealBiz prior to January 2, 2017. In addition, the Spin-Off Agreement expressly states that we are required to indemnify RealBiz against all damages, costs and expenses resulting from the Monaker Lawsuits. The Company received a settlement from a pending matter with Realbiz Media Group, Inc., the parent, in the amount of $30,000 in January 2018 and also received 4,163,315 shares or Realbiz Media Group common stock in March 2018 valued at $16,653. The amount is recorded in gain on legal settlements in the accompanying statement of operations.

 

Representations and Warranties. Pursuant to the Spin-Off Agreement, we and RealBiz make customary representations and warranties such as with respect to our capacity to enter into and the validity and enforceability of the Spin-Off Agreement.

 

Convertible Promissory Notes

 

Mr. Aliksanyan and Mr. Grbelja are both officers and board members of the Company were issued convertible promissory notes in the amount of $12,500 each. Mr. McLeod is our President and also a board member was issued a convertible promissory note for $12,500. All notes were issued during August 2018. (See note 8).

 

Series A Convertible Preferred Stock

 

Included in the year ended November 30, 2019, Mr. McLeod, director and President purchased 280,000 Series A preferred shares in exchange for $70,000.

 

Common Stock Purchase Warrants

 

On August 20, 2019, Common Stock Purchase Warrants were issued to the following officers and directors: Alex Aliksanyan, the Chief Executive Officer and a Director, was issued warrants to purchase up to 420,000 shares of Common Stock. Thomas Grbelja, the Treasurer, Secretary and a Director, was issued warrants to purchase up to 230,000 shares of our Common Stock. William McLeod, the President and a Director, was issued warrants to purchase up to 150,000 shares of our Common Stock. In connection with these issuances, the Company recognized compensation expense in the amount of $176,564.

 

  F-15 
 

 

NOTE 7: STOCKHOLDERS’ EQUITY

 

The total number of shares of all classes of stock that the Company shall have the authority to issue is 275,000,000 shares consisting of: 250,000,000 shares of common stock with a $0.0001 par value per shares; and 25,000,000 shares of preferred stock, par value $0.0001 per share. On May 31, 2019, we filed a certificate of designation with the Secretary of State of the State of Nevada to create a new class of preferred stock designated as the Series A Convertible Preferred Stock. The holders of Series A Convertible Preferred Stock are entitled to receive dividends in an amount equal to any dividends or other Distribution on the Common Stock. The holders of Series A Convertible Preferred Stock are entitled to be paid out of the Available Funds and Assets, in preference to any payment or distribution of any Available Funds and Assets on any shares of Common Stock or subsequent preferred stock, an amount per share equal to the Original Issue Price of the Series A Convertible Preferred Stock plus all declared but unpaid dividends on the Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the issuance of such share, into one (1) share of Common Stock. As of November 30, 2019, there were 1,673,253 shares of common stock issued and outstanding and 640,000 shares of Series A Convertible Preferred Stock issued and outstanding.

 

The original issued and outstanding shares of common stock were owned by the shareholders of our former parent company, RealBiz, as a result of the spin-off of the Company effectuated by RealBiz on July 31, 2018. The existing Realbiz shareholders at the time of the spin-off were issued 1,109,069 shares of Nestbuilder (conversion of 900 to 1). Furthermore, on September 18, 2018 and October 11, 2018, we entered into settlement agreements with two holders (the “RealBiz Noteholders”) of three convertible promissory notes issued to the RealBiz Noteholder by RealBiz, our former parent company (collectively, the “RealBiz Notes”). The RealBiz Noteholders claimed that under the RealBiz Notes it was contractually entitled to receive shares of our common stock in connection with our spin-off from RealBiz on July 31, 2018. Pursuant to the settlement agreement, we issued to the RealBiz Noteholders a total of 252,527 unrestricted shares of our common stock in connection with our spin-off from RealBiz in exchange for a release of any additional claims arising out of the RealBiz Notes and our spin-off from RealBiz. Additionally, during 2018, two private placements were completed with the sale of 71,500 common shares that and raised $108,280, as further detailed below. During 2018, $108,000 were identified as intercompany related and therefore the Company adjusted its accounts payable related to those balances as an adjustment to additional paid in capital (as further discussed in note 6).

 

On September 18, 2018, we entered into an Entity Subscription Agreement with Geneva Roth Remark Holdings, Inc. (“Geneva”), pursuant to which we sold to Geneva a total of 31,500 shares of our common stock, restricted in accordance with Rule 144, for an aggregate purchase price of $37,280, as follows: (i) 14,000 shares upon execution of the Entity Subscription Agreement on September 18, 2018, at a per-share purchase price of $0.52 per share, for a purchase price of $7,280; (ii) 10,000 shares upon completion of the launch of our new website product on September 27, 2018, at a per-share purchase price of $1.50 per share, for a purchase price of $15,000; and (iii) 7,500 shares upon us achieving a minimum of 100 listings on our newly-launched website product on November 9, 2018, at a per-share purchase price of $2.00 per share, for a purchase price of $15,000. The issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the investor was accredited and familiar with our operations and there was no solicitation in connection with the issuances.

 

On October 12, 2018, we entered into an Entity Subscription Agreement with one individual, pursuant to which we sold a total of 40,000 shares of our common stock, restricted in accordance with Rule 144, for an aggregate purchase price of $71,000, as follows: (i) 30,000 shares within 5 days of the execution of the Entity Subscription Agreement on October 17, 2018, at a per-share purchase price of $1.70 per share, for a purchase price of $51,000; and (ii) 10,000 shares upon us achieving a minimum of 100 listings on our newly-launched website product on November 9, 2018, at a per-share purchase price of $2.00 per share, for a purchase price of $20,000. The issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the investor was accredited and familiar with our operations and there was no solicitation in connection with the issuances.

 

  F-16 
 

 

On January 10, 2019, we issued a total of 10,000 shares of our common stock to one investor in exchange for $5,000. The issuance was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the investor was accredited and familiar with our operations and there was no solicitation in connection with the issuance.

 

On April 30, 2019, we entered into a settlement agreement with Auctus Fund, LLC (“Auctus Fund”), the holder of a convertible promissory note (the “Auctus Fund Note”) issued to Auctus Fund by RealBiz Media Group, Inc. (“RealBiz”), our former parent company. Pursuant to the settlement agreement, we issued to Auctus Fund a total of 201,157 unrestricted shares of our common stock in connection with our spin-off from RealBiz and received a release of any additional claims arising out of the Auctus Fund Note and our spin-off from RealBiz

 

On May 3, 2019, we issued a total of 28,900 shares of our common stock to one investor in exchange for $65,025. The issuance was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the investor was accredited and familiar with our operations and there was no solicitation in connection with the issuance.

 

On May 31, 2019, we issued 280,000 shares of Series A Convertible Preferred Stock to an investor in exchange for a total of $70,000. The issuance of Series A Convertible Preferred Stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the holder was either accredited or sophisticated investors familiar with our operations.

 

In June of 2019, we issued 360,000 shares of Series A Convertible Preferred Stock in exchange for $90,000. In connection with the foregoing, Mr. McLeod, our President and one of our directors, purchased 280,000 of those shares in exchange for $70,000. The issuances of Series A Convertible Preferred Stock were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, and the holders were all either accredited or sophisticated investors familiar with our operations.

 

  F-17 
 

 

Common stock warrants

 

On August 20, 2019, the Company issued 1,192,500 common stock warrants to its officers, contracted employees and professionals that vested immediately. We currently anticipate that the three contracted employees will be granted additional warrants on a quarterly basis. Each warrant is convertible into 1 share of common stock and vests immediately upon issuance with an exercise price of $0.20. The warrants also have a cashless exercise option. The Company has recorded stock-based compensation expense of $176,564 for the year ending November 30, 2019 and is included part of salaries and benefits. The warrants expire on August 20, 2024. A summary of the Company’s outstanding common stock warrants as of November 30, 2019 is as follows:

 

       Weighted     
       Average     
       Exercise   Intrinsic 
   Warrants   Price   Value 
Outstanding, November 30, 2018   -   $-   $- 
Warrants granted and issued   1,192,500   $0.20   $0.00 
Warrants exercised      $   $
Warrants exchanged      $    $0.00
Outstanding, November 30, 2019   1,192,500   $020   $0.00 
                
Common stock issuable upon issuance of warrants   1,192,500   $0.20   $0.00 

 

The Company estimates the fair value of each award on the date of grant using a Black-Scholes option valuation model that uses the following assumptions for warrants earned during the year ended November 30, 2019:

 

Expected volatility   100%
Expected dividends   0%
Expected term (in years)   5.0 
Risk-free rate   1.42%

 

  F-18 
 

 

NOTE 8: CONVERTIBLE PROMISSORY NOTES PAYABLE

 

On November 30, 2018, the Company issued the six promissory notes, in the principal amount totaling $75,000, which includes notes payables to certain officers and board members of the Company, namely Mr. Aliksanyan, Mr. McLeod and Mr. Grbelja, in the amount of $12,500 each (See note 6). The Notes accrue interest at a rate of 2.5% per annum and mature on January 31, 2020. Pursuant to the terms of the Notes, the Company may prepay the principal amount of the note together with accrued interest at any time prior to the date of maturity without a prepayment penalty. Pursuant to the terms of the Notes, the holders of the Notes have the right, at their option, at any time, to convert the principal amount of the Notes, and any accrued interest, into our common stock at a conversion price of $0.12 per share. However, each holder of a Note will not have the right to convert any portion of his Note if the holder (together with his affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to the conversion, as such percentage ownership is determined in accordance with the terms of the Note. Each Holder has the right to waive the foregoing conversion limitation, in whole or in part, upon and effective after 61 days prior written notice to us. The company has accrued $1,904 in interest on those notes during the current fiscal year. If all of the Notes were converted, the Company would be required to issue 645,450 shares of common stock to the noteholders. At November 30, 2019, the total outstanding balance of the Notes amounted to $77,454.

 

NOTE 9: COMMITMENTS AND CONTIGENCIES

 

On August 17, 2018, we entered into employment agreements with Alex Aliksanyan, our Chief Executive Officer and a director, and Thomas M. Grbelja, our Chief Financial Officer, Secretary and a director.

 

Pursuant to the employment agreement with Alex Aliksanyan (the “Aliksanyan Employment Agreement”), Mr. Aliksanyan agreed to serve as our Chief Executive Officer, and we agreed to pay Mr. Aliksanyan an annual base salary of $120,000 per year. The initial term of the Aliksanyan Employment Agreement is 12 months and may be extended by mutual agreement between us and Mr. Aliksanyan. On or about August 28, 2018, we entered into an oral agreement with Mr. Aliksanyan, as memorialized by a First Amendment to Employment Agreement dated September 25, 2018, pursuant to which Mr. Aliksanyan agreed to continue receiving his 2017 annual salary of $36,000 per year in exchange for continued employment and our agreement to adopt an employee stock option plan or similar plan for compensating, incentivizing, retaining and attracting employees prior to June 30, 2019, from which Mr. Aliksanyan would be eligible to receive equity securities from time to time in the discretion of our board of directors.

 

Pursuant to the employment agreement with Thomas M. Grbelja (the “Grbelja Employment Agreement”), Mr. Grbelja agreed to serve as our Chief Financial Officer, devoting a minimum of 50% of his time and attention to his duties as Chief Financial Officer. We agreed to pay Mr. Grbelja an annual base salary of $70,000 per year. The initial term of the Grbelja Employment Agreement is 12 months and may be extended by mutual agreement between us and Mr. Grbelja. On or about August 28, 2018, we entered into an oral agreement with Mr. Grbelja, as memorialized by a First Amendment to Employment Agreement dated September 25, 2018, pursuant to which Mr. Grbelja agreed to continue receiving his 2017 annual salary of $24,000 per year in exchange for continued employment and our agreement to adopt an employee stock option plan or similar plan for compensating, incentivizing, retaining and attracting employees prior to June 30, 2019, from which Mr. Grbelja would be eligible to receive equity securities from time to time in the discretion of our board of directors.

 

  F-19 
 

 

NOTE 10: INCOME TAXES

 

The Company accounts for income taxes taking into account deferred tax assets and liabilities which represent the future tax consequences of the differences between financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year the change is enacted.

 

The Company filed its initial tax return for the short period from August 1, 2018 (effective date of the spinoff) through November 30, 2018. The Company reported a tax loss for that short period of $64,638 for the year ended November 30, 2018.

 

The provision for income taxes varies from the statutory rate applied to the net loss for the years ended November 30, 2019 and 2018:

 

The difference between the effective income tax rate and the applicable statutory federal income tax rate is summarized as follows:

 

   2019   2018 
Statutory federal rate   (21.0)%   (21.0)%
           
Permanent differences, stock-based compensation   (44.8)%   (0.0)%
Change in valuation allowance   65.8%   21.0%
Effective tax rate   0.0%   0.0%

 

At November 30, 2019 and 2018 the Company’s deferred tax assets were as follows:

 

   2019   2018 
Tax benefit of net operating loss carry forward  $45,569   $13,574 
Change in valuation allowance   (45,569)   (13,574)
Provision for income tax   -    - 

 

Deferred tax assets (liabilities)          
Net deferred tax assets- net operating losses   59,143    13,574 
Less: Valuation allowance   (59,143)   (13,574)
Net deferred tax asset  $-    - 

 

  F-20 
 

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has recorded a full valuation allowance against its net deferred tax assets because it is not currently able to conclude that it is more likely than not that these assets will be realized. The amount of deferred tax assets considered to be realizable could be increased in the near term if estimates of future taxable income during the carryforward period are increased.

 

As of November 30, 2019, the Company had unused net operating loss carry forwards of $281,634 available to reduce future federal taxable income. The Company’s ability to offset future taxable income, if any, with tax net operating loss carryforwards may be limited due to the non-filing of tax returns and the impact of the statute of limitations on the Company’s ability to claim such benefits. Furthermore, changes in ownership may result in limitations under Internal Revenue Code Section 382.

 

  F-21 
 

 

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There are no events required to be disclosed under this Item.

 

ITEM 9A - CONTROLS AND PROCEDURES

 

(a) Disclosure Controls and Procedures

 

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of November 30, 2019, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of November 30, 2019, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in Item 9A(b).

 

Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the 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 the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

(b) Management Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by our 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 in the United States and includes those policies and procedures that:

 

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

 

 26 
 

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. 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.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of November 30, 2019. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, Management identified the following three material weaknesses that have caused management to conclude that, as of November 30, 2019, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:

 

1. We do not have a formal policy or written procedures for the approval, identification and reporting of related-party transactions. Our controls are not adequate to ensure that all material transactions and developments with related parties will be properly identified, approved and reported. In our assessment of our disclosure controls and procedures, management evaluated the impact of our failure to have policies and procedures for the identification, approval and reporting of related-party transactions and has concluded that the control deficiency that resulted represented a material weakness.

 

2. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. In our assessment of our disclosure controls and procedures, management evaluated the impact of our failure to have written documentation of our internal controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

3. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. In our assessment of our disclosure controls and procedures, management evaluated the impact of our failure to have segregation of duties and has concluded that the control deficiency that resulted represented a material weakness.

 

 27 
 

 

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

 

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only our management’s report in this Annual Report.

 

(c) Remediation of Material Weaknesses

 

To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once resources become available.

 

We also intend to remedy our material weakness with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective internal controls once resources become available.

 

(d) Changes in Internal Control over Financial Reporting

 

No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended November 30, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B – OTHER INFORMATION

 

There are no events required to be disclosed by the Item.

 

 28 
 

 

PART III

 

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors and Executive Officers

 

The following table sets forth the names, ages, and biographical information of each of our current directors and executive officers, and the positions with us held by each person, and the date such person became a director or executive officer. Our executive officers are elected annually by the Board of Directors. The directors serve one-year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. Family relationships among any of the directors and officers are described below.

 

Name   Age   Position(s)
         
Alex Aliksanyan   70   Chief Executive Officer and Director
         
Thomas M. Grbelja   61   Chief Financial Officer, Secretary, and Director
         
William McLeod   68   President and Director

 

Alex Aliksanyan, age 70, has served as a director since our inception, and served as our President from October 28, 2017 to August 17, 2018. He has served as our Chief Executive Officer since August 17, 2018. Mr. Aliksanyan comes to the Company with more than 25 years of Strategic Technology Planning, Implementation and Marketing experience. Mr. Aliksanyan also previously served as CEO and President of iCruise.com which he founded in 2000. Prior thereto, Mr. Aliksanyan had served as a marketing consultant for several brands such as Citibank, Disney and Hillshire Farms. He is also considered in the travel industry as a pioneer in the area of e-commerce. Mr. Aliksanyan received his Bachelors’ Degree in Physics from New York University and an advanced degree in marketing from the Stern School of Business in New York.

 

Thomas M. Grbelja¸ age 61, has served as our Treasurer and Secretary since October 28, 2017, and has served as our Chief Financial Officer, Treasurer, Secretary and one of our directors since August 17, 2018. Mr. Grbelja has spent over 30 years as a Certified Public Accountant providing a wide variety of professional accounting, tax and financial consulting services to professional service, manufacturing, and construction industry participants. Since 1990, he has served as the President and a Founding Member of Burke Grbelja & Symeonides, LLC, Certified Public Accountants, an accounting firm based in Rochelle Park, New Jersey. In addition, between 1983 and 1990, Mr. Grbelja worked as an accountant at Coopers & Lybrand, where he was responsible for the overall audit engagement, including filings with the SEC, for certain large, publicly traded companies. He received his undergraduate degree in accounting at Fairleigh Dickinson University and is a Certified Public Accountant.

 

William (Bill) McLeod, age 68, has served as our President and as one of our directors since August 17, 2018. Mr. McLeod has been a real estate business investor since 1978. He has been active in real estate development for over thirty-five years. He is currently the managing partner for McLeod Investment, LLC. Bill has also been active in medical surgical equipment sales until 2006. He remains a partner in Skype Comfort and Shoes Etc., both closely-held medical equipment companies. Mr. McLeod brings to the Board his extensive senior leadership experience, his significant real estate industry experience, and significant professional relationships in the real estate and investment industries.

 

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Family Relationships

 

There are no family relationships among any of our officers, directors, or greater-than-10% shareholders.

 

Other Directorships; Director Independence

 

Other than as set forth above, none of our officers and directors is a director of any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

 

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The NASDAQ definition of “Independent Officer” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

According to the NASDAQ definition, we do not have any independent directors because all of our directors are also executive officers.

 

Committees

 

We do not currently have an audit committee or an audit committee financial expert, nor do we have any other committees of the Board of Directors.

 

Involvement in Certain Legal Proceedings

 

None of our officers or directors has, in the past ten years, filed bankruptcy, been convicted in a criminal proceeding or is named in a pending criminal proceeding, been the subject of any order, judgment, or decree of any court permanently or temporarily enjoining him from any securities activities, or any other disclosable event required by Item 401(f) of Regulation S-K.

 

Compliance with Section 16(a) of the Securities Exchange Act of 1934

 

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and persons who own more than ten percent of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

 

To our knowledge, based solely on a review of the copies of such reports furnished to us, none of the current required parties are delinquent in their 16(a) filings.

 

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Board Meetings

 

During the fiscal year ended November 30, 2019, the Board of Directors met on one occasion.

 

Code of Ethics

 

We have not adopted a written code of ethics, primarily because we believe and understand that our officers and directors adhere to and follow ethical standards without the necessity of a written policy.

 

ITEM 11 - EXECUTIVE COMPENSATION

 

Narrative Disclosure of Executive Compensation

 

On August 17, 2018, we entered into employment agreements with Alex Aliksanyan, our Chief Executive Officer and a director, and Thomas M. Grbelja, our Chief Financial Officer, Secretary and a director.

 

Pursuant to the employment agreement with Alex Aliksanyan (the “Aliksanyan Employment Agreement”), Mr. Aliksanyan agreed to serve as our Chief Executive Officer, and we agreed to pay Mr. Aliksanyan an annual base salary of $120,000 per year. The initial term of the Aliksanyan Employment Agreement is 12 months and may be extended by mutual agreement between us and Mr. Aliksanyan. On or about August 28, 2018, we entered into an oral agreement with Mr. Aliksanyan, as memorialized by a First Amendment to Employment Agreement dated September 25, 2018, pursuant to which Mr. Aliksanyan agreed to continue receiving his 2017 annual salary of $36,000 per year in exchange for continued employment and our agreement to adopt an employee stock option plan or similar plan for compensating, incentivizing, retaining and attracting employees prior to June 30, 2019, from which Mr. Aliksanyan would be eligible to receive equity securities from time to time in the discretion of our board of directors.

 

Pursuant to the employment agreement with Thomas M. Grbelja (the “Grbelja Employment Agreement”), Mr. Grbelja agreed to serve as our Chief Financial Officer, devoting a minimum of 50% of his time and attention to his duties as Chief Financial Officer. We agreed to pay Mr. Grbelja an annual base salary of $70,000 per year. The initial term of the Grbelja Employment Agreement is 12 months and may be extended by mutual agreement between us and Mr. Grbelja. On or about August 28, 2018, we entered into an oral agreement with Mr. Grbelja, as memorialized by a First Amendment to Employment Agreement dated September 25, 2018, pursuant to which Mr. Grbelja agreed to continue receiving his 2017 annual salary of $24,000 per year in exchange for continued employment and our agreement to adopt an employee stock option plan or similar plan for compensating, incentivizing, retaining and attracting employees prior to June 30, 2019, from which Mr. Grbelja would be eligible to receive equity securities from time to time in the discretion of our board of directors.

 

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Summary Compensation Table

 

The following table sets forth information with respect to compensation earned by our Chief Executive Officer, President, and Chief Financial Officer for the fiscal years ended November 30, 2019 and 2018.

 

Name and

Principal Position

  Year  

Salary

($)

  

Bonus

($)

  

Stock

Awards

($)

  

Option Awards

($)

   Non-Equity Incentive Plan Compensation ($)   Nonqualified Deferred Compensation ($)  

All Other

Compensation

($)

  

Total

($)

 
                                     
Alex Aliksanyan (1)   2019    36,000    -0-    -0-    62,580(4)   -0-    -0-    -0-    98,580 
CEO   2018    36,000    -0-    -0-    -0-    -0-    -0-    -0-    36,000 
                                              
Thomas M. Grbelja (2)   2019    24,000    -0-    -0-    34,270(5)   -0-    -0-    -0-    58,270 
CFO and Secretary   2018    24,000    -0-    -0-    -0-    -0-    -0-    -0-    24,000 
                                              
William McLeod (3)   2019    -0-    -0-    -0-    22,350(6)   -0-    -0-    -0-    22,350 
President   2018    -0-    -0-    -0-    -0-    -0-    -0-    -0-    -0- 

 

(1) On October 28, 2017, Mr. Aliksanyan was appointed as our President. As compensation for such services, Mr. Aliksanyan received a salary of $36,000 per year. On August 17, 2018, we entered into an employment agreement with Mr. Aliksanyan, as amended by a First Amendment to Employment Agreement, pursuant to which we pay him a salary of $36,000 per year in exchange for his agreement to serve as our Chief Executive Officer.
   
(2) On October 28, 2017, Mr. Grbelja was appointed as our Treasurer and Secretary. As compensation for such services, Mr. Grbelja received a salary of $24,000 per year. On August 17, 2018, we entered into an employment agreement with Mr. Grbelja, as amended by a First Amendment to Employment Agreement, pursuant to which we pay him a salary of $24,000 per year in exchange for his agreement to serve as our Chief Financial Officer and Secretary, devoting a minimum of 50% of his time and attention to such duties.
   
(3) Mr. McLeod was appointed as our President on August 17, 2018. Mr. McLeod does not have a written employment agreement and receives no salary for his services.
   
(4) Option awards consist of warrants to purchase 420,000 shares of our common stock at an exercise price of $0.20 per share over five (5) years from the grant date on August 20, 2019.
   
(5) Option awards consist of warrants to purchase 230,000 shares of our common stock at an exercise price of $0.20 per share over five (5) years from the grant date on August 20, 2019.
   
(6) Option awards consist of warrants to purchase 150,000 shares of our common stock at an exercise price of $0.20 per share over five (5) years from the grant date on August 20, 2019.

 

Officer and Director Compensation

 

On August 20, 2019, we issued Common Stock Purchase Warrants to the following officers and directors: Alex Aliksanyan, our Chief Executive Officer and a Director, was issued warrants to purchase up to 420,000 shares of our Common Stock. Thomas Grbelja, our Treasurer, Secretary and a Director, was issued warrants to purchase up to 230,000 shares of our Common Stock. William McLeod, our President and a Director, was issued warrants to purchase up to 150,000 shares of our Common Stock.

 

Each Common Stock Purchase Warrant is exercisable, by its holder, in whole or in part, at any time between August 20, 2019 and August 20, 2024, into shares of our Common Stock as follows: (i) by a cash payment to us at a cash exercise price equal to $0.20 per share, or (ii) by notice of election to exercise the warrant in a cashless exercise to obtain a number of shares of our Common Stock computed using the following formula: X = Y(A-B)/A; where X = the number of shares of Common Stock to be issued to the holder, Y = the number of shares of Common Stock purchasable under the warrant, A = the fair market value of one share of Common Stock on the date of determination, and B = the per share exercise price of $0.20.

 

The Common Stock Purchase Warrants were issued with respect to services provided in 2019 and vested immediately upon issuance. The issuance of the warrants was fully approved by our Board of Directors on July 25, 2019, the date a fully executed resolution authorizing the issuance was delivered to us.

 

For the years ended November 30, 2019 and 2018, none of the members of our Board of Directors received compensation for his or her service as a director. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity.

 

Outstanding Equity Awards at Fiscal Year-End

 

We do not currently have a stock option or grant plan.

 

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ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of January 24, 2020, certain information with respect to our equity securities owned of record or beneficially by (i) each Officer and Director; (ii) each person who owns beneficially more than 5% of each class of our outstanding equity securities; and (iii) all Directors and Executive Officers as a group.

 

Name and Address

 

Common Stock Ownership(1)

   Percentage of Common Stock Ownership(2) 
         
Alex Aliksanyan (3)(4)   -    - 
           
Thomas M. Grbelja (3)(4)   7,010    0.42%
           
William McLeod (3)(4)   280,843(5)   14.34%
           
Cardar Investments Limited   281,666(6)   14.41%
           
All Officers and Directors
as a Group (3 Persons)
   287,853(5)   14.68%

 

  (1) The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.
     
  (2) Based on 1,673,253 shares of common stock issued and outstanding as of January 24, 2020.
     
  (3) Indicates one of our officers or directors.
     
  (4) Unless otherwise noted, the address is c/o Nestbuilder.com Corp., 201 W. Passaic Street, Suite 301, Rochelle Park, NJ 07662.
     
  (5) Includes 280,000 shares of common stock that may be acquired upon the conversion of 280,000 shares of Series A Convertible Preferred Stock.
     
  (6) Includes 280,000 shares of common stock that may be acquired upon the conversion of 280,000 shares of Series A Convertible Preferred Stock.

 

We are not aware of any person who owns of record, or is known to own beneficially, five percent or more of our outstanding securities of any class, other than as set forth above. There are no classes of stock other than as set forth above.

 

There are no current arrangements which will result in a change in control.

 

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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Series A Convertible Preferred Stock

 

On May 31, 2019, we entered into a Stock Purchase Agreement with William McLeod, our President and a Director, pursuant to which we issued to Mr. McLeod a total of 280,000 shares of Series A Convertible Preferred Stock, at a per-share purchase price of $0.25 per share, for a total of $70,000.

 

The holders of shares of Series A Convertible Preferred Stock are entitled to receive dividends equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of Common Stock when, as, and if such dividends are paid on shares of Common Stock. Each share of Series A Convertible Preferred Stock is convertible, at the option of the holder thereof, at any time after the issuance of such share, into one share of our Common Stock. In addition, each share of Series A Convertible Preferred Stock will automatically convert into one share of our Common Stock upon completion of certain corporation transactions, including a reorganization, merger, sale of substantially all of our assets, or the disposition of more than 50% of our voting power. Each share of Series A Convertible Preferred Stock is entitled to the number of votes to which the holders thereof would be entitled if they converted their shares of Series A Convertible Preferred Stock at the time of voting. As long as shares of Series A Convertible Preferred Stock are outstanding, we cannot (i) directly or indirectly, enter into, create, incur or assume any new indebtedness for borrowed money, or (ii) incur any liens on our assets, without the vote or written consent of the holders of at least a majority of the then outstanding shares of the Series A Convertible Preferred Stock. With respect to the distribution of assets upon the liquidation, dissolution or winding up of the Company, the Series A Convertible Preferred Stock ranks senior to the Common Stock and subsequent series of preferred stock that may be issued by us in the future.

 

Warrants

 

On August 20, 2019, we issued Common Stock Purchase Warrants to the following officers and directors: Alex Aliksanyan, our Chief Executive Officer and a Director, was issued warrants to purchase up to 420,000 shares of our Common Stock. Thomas Grbelja, our Treasurer, Secretary and a Director, was issued warrants to purchase up to 230,000 shares of our Common Stock. William McLeod, our President and a Director, was issued warrants to purchase up to 150,000 shares of our Common Stock.

 

Each Common Stock Purchase Warrant is exercisable, by its holder, in whole or in part, at any time between August 20, 2019 and August 20, 2024, into shares of our Common Stock as follows: (i) by a cash payment to us at a cash exercise price equal to $0.20 per share, or (ii) by notice of election to exercise the warrant in a cashless exercise to obtain a number of shares of our Common Stock computed using the following formula: X = Y(A-B)/A; where X = the number of shares of Common Stock to be issued to the holder, Y = the number of shares of Common Stock purchasable under the warrant, A = the fair market value of one share of Common Stock on the date of determination, and B = the per share exercise price of $0.20.

 

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Convertible Notes

 

On August 17, 2018, we issued an aggregate of $75,000 in Convertible Promissory Notes (the “Notes”) to six investors, including Alex Aliksanyan, our Chief Executive Officer and a director, Thomas M. Grbelja, our Chief Financial Officer, Secretary and a director, and William McLeod, President and a director. The Notes bear interest at the rate of 2.5% per annum and mature on February 28, 2019. Pursuant to the terms of the Notes, the holders of the Notes have the right, at their option, at any time, to convert the principal amount of the Notes, and any accrued interest, into our common stock at a conversion price of $0.12 per share. However, each holder of a Note will not have the right to convert any portion of his Note if the holder (together with his affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to the conversion, as such percentage ownership is determined in accordance with the terms of the Note. Each Holder has the right to waive the foregoing conversion limitation, in whole or in part, upon and effective after 61 days prior written notice to us.

 

Employment Agreements

 

On August 17, 2018, we entered into employment agreements with Alex Aliksanyan, our Chief Executive Officer and a director, and Thomas M. Grbelja, our Chief Financial Officer, Secretary and a director .

 

Pursuant to the employment agreement with Alex Aliksanyan (the “Aliksanyan Employment Agreement”), Mr. Aliksanyan agreed to serve as our Chief Executive Officer, and we agreed to pay Mr. Aliksanyan an annual base salary of $120,000 per year. The initial term of the Aliksanyan Employment Agreement is 12 months and may be extended by mutual agreement between us and Mr. Aliksanyan. On or about August 28, 2018, we entered into an oral agreement with Mr. Aliksanyan, as memorialized by a First Amendment to Employment Agreement dated September 25, 2018, pursuant to which Mr. Aliksanyan agreed to continue receiving his 2017 annual salary of $36,000 per year in exchange for continued employment and our agreement to adopt an employee stock option plan or similar plan for compensating, incentivizing, retaining and attracting employees prior to June 30, 2019, from which Mr. Aliksanyan would be eligible to receive equity securities from time to time in the discretion of our board of directors.

 

Pursuant to the employment agreement with Thomas M. Grbelja (the “Grbelja Employment Agreement”), Mr. Grbelja agreed to serve as our Chief Financial Officer, devoting a minimum of 50% of his time and attention to his duties as Chief Financial Officer. We agreed to pay Mr. Grbelja an annual base salary of $70,000 per year. The initial term of the Grbelja Employment Agreement is 12 months and may be extended by mutual agreement between us and Mr. Grbelja. On or about August 28, 2018, we entered into an oral agreement with Mr. Grbelja, as memorialized by a First Amendment to Employment Agreement dated September 25, 2018, pursuant to which Mr. Grbelja agreed to continue receiving his 2017 annual salary of $24,000 per year in exchange for continued employment and our agreement to adopt an employee stock option plan or similar plan for compensating, incentivizing, retaining and attracting employees prior to June 30, 2019, from which Mr. Grbelja would be eligible to receive equity securities from time to time in the discretion of our board of directors.

 

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Principal Executive Offices

 

Thomas M. Grbelja, our Chief Financial Officer, Secretary and a director, currently provides us with office space located at 201 W. Passaic St #301, Rochelle Park, NJ 07662. We do not currently pay Mr. Grbelja rent for our principal executive offices.

 

ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Audit Fees

 

The aggregate fees billed for the years ended November 30, 2019 and 2018 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $18,500.

 

Audit - Related Fees

 

The aggregate fees billed in the fiscal years ended November 30, 2019 and 2018 for professional services rendered by the principal accountant for the review of the financial statements for the quarterly periods ended February 28, May 31, and August 31, of each year, and for the issuance of consents, were $12,000 for each year.

 

Tax Fees

 

For the fiscal years ended November 30, 2019 and 2018, our principal accountants did not render any services for tax compliance, tax advice, and tax planning work.

 

All Other Fees

 

None.

 

Of the fees described above for the years ended November 30, 2019 and 2018, all were approved by the entire Board of Directors.

 

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PART IV

 

ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

  (a)(1) Financial Statements

 

The following consolidated financial statements are filed as part of this report:

 

 

  (a)(2) Financial Statement Schedules

 

We do not have any financial statement schedules required to be supplied under this Item.

 

  (a)(3) Exhibits

 

Refer to (b) below.

 

  (b) Exhibits

 

 

 37 
 

 

  2.4 (2) First Amendment to Contribution and Spin-Off Agreement dated as of January 29, 2018, by and between RealBiz Media Group, Inc., Anshu Bhatnagar, NestBuilder.com Corp., and Alex Aliksanyan
     
  3.1 (1) Articles of Incorporation of NestBuilder.com Corp.
     
  3.2 (1) Bylaws of NestBuilder.com Corp.
     
  3.3 (4) Certificate of Designation of the Series A Convertible Preferred Stock
     
  10.1 (4) Form of Stock Purchase Agreement of Series A Convertible Preferred Stock
     
  10.2 (5) Settlement Agreement, dated April 30, 2019, between Auctus Fund, LLC and NestBuilder.com Corp.
     
  10.3 (6) Form of Common Stock Purchase Warrant
     
  99.1 (3) Information Statement of NestBuilder.com Corp. dated July 23, 2018
     
  31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
  31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
  32.1* Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
  32.2* Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

  (1) Incorporated by reference from our registration statement on Form 10, filed with the Commission on December 22, 2017.
     
  (2) Incorporated by reference from Amendment No. 1 to our registration statement on Form 10/A, filed with the Commission on February 20, 2018.
     
  (3) Incorporated by reference from Amendment No. 5 to our registration statement on Form 10/A, filed with the Commission on July 23, 2018.
     
  (4) Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on June 3, 2019.
     
  (5) Incorporated by reference from our Quarterly Report on Form 10-Q, filed with the Commission on July 15, 2019.
     
  (6) Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on August 26, 2019.

 

* Furnished herewith

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

  Nestbuilder.com Corp.
     
Dated: January 28, 2020   /s/ Alex Aliksanyan
  By: Alex Aliksanyan
  Its: Chief Executive Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Dated: January 28, 2020   /s/ Alex Aliksanyan
  By: Alex Aliksanyan
  Its:

Chief Executive Officer

and Director

     
Dated: January 28, 2020   /s/ Thomas M. Grbelja
  By: Thomas M. Grbelja
  Its: Chief Financial Officer, Secretary and Director

 

 39