Company Quick10K Filing
Xtribe
Price-0.00 EPS-0
Shares10 P/E0
MCap-0 P/FCF0
Net Debt-0 EBIT-1
TEV-0 TEV/EBIT0
TTM 2019-06-30, in MM, except price, ratios
10-Q 2019-06-30 Filed 2019-10-15
10-Q 2019-03-31 Filed 2019-05-20
10-K 2018-12-31 Filed 2019-04-16
10-Q 2018-09-30 Filed 2018-11-19
10-Q 2018-06-30 Filed 2018-08-20
10-Q 2018-03-31 Filed 2018-05-21
10-K 2017-12-31 Filed 2018-04-02
10-Q 2017-09-30 Filed 2017-11-20
10-Q 2017-06-30 Filed 2017-08-17
10-Q 2017-03-31 Filed 2017-06-28
8-K 2019-04-04 Other Events, Exhibits
8-K 2019-03-27 Officers
8-K 2017-11-29 Officers, Exhibits

XTRIB 10Q Quarterly Report

Part I
Item 1. Financial Statements
Note 1 - Summary of Significant Accounting Policies
Note 2 - Management Plans
Note 3 - Acquisition of X-Solution S.R.L.
Note 4 - Revenue Recognition
Note 5 - Other Receivables, Net
Note 6 - Accounts Payable and Accrued Expenses
Note 7 - Bank Overdraft
Note 8 - Loans Payable - Other
Note 9 - Loans Payable - Shareholders
Note 10 - Income Taxes
Note 11 - Shareholders' Equity
Note 12 - Related Party Transactions
Note 13 - Operating Leases
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Xtribe Earnings 2019-06-30

Balance SheetIncome StatementCash Flow
0.90.1-0.7-1.4-2.2-3.02017201820192020
Assets, Equity
0.1-0.1-0.2-0.4-0.5-0.72017201820192020
Rev, G Profit, Net Income
0.70.40.2-0.1-0.3-0.62017201820192020
Ops, Inv, Fin

10-Q 1 form10-q.htm

 

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the fiscal quarter ended June 30, 2019

 

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

 

For the transition period from                  to             

 

XTRIBE P.L.C.

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

 

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

 

37-38 Long acre

WC2E9JT London

United Kingdom

(Address of principal executive offices) (Zip code)

 

Issuer’s telephone number +44 020 32140420

 

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

Ordinary Shares

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

 

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

 

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

Smaller Reporting Company [X]

Emerging Growth Company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction 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 Exchange Act). [  ] Yes [X] No

 

There were 9,679,538 shares outstanding of registrant’s Ordinary Shares as of October 11, 2019.

 

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

 

 

 

   
 

 

TABLE OF CONTENTS

 

PART I  
Item 1. Financial Statements 3
  Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018 (audited) F-1
  Unaudited Condensed Consolidated Statements of Operations for the six and three months ended June 30, 2019 and June 30, 2018. F-2
  Unaudited Condensed Consolidated Statements of Comprehensive Loss for the six and three months ended June 30, 2019 and June 30, 2018. F-2
  Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Deficit F-3 to F-4
  Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and June 30, 2018. F-5
  Notes to Unaudited Condensed Consolidated Financial Statements F-6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation 4
Item 3. Quantitative and Qualitative Disclosures About Market Risk 8
Item 4. Controls and Procedures 8
PART II  
Item 1. Legal Proceedings 9
Item 1A. Risk Factors 9
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Mine Safety Disclosures 9
Item 5. Other Information 9
Item 6. Exhibits 9
     
SIGNATURES 10

 

 2 
 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

CONTENTS

 

  PAGE
Condensed Consolidated Balance Sheets F-1
   
Condensed Consolidated Statements of Operations F-2
   
Condensed Consolidated Statements of Comprehensive Loss F-2
   
Condensed Consolidated Statements of Changes in Shareholders’ Deficit F-3 to F-4
   
Condensed Consolidated Statements of Cash Flows F-5
   
Notes to Condensed Consolidated Financial Statements F-6 to F-13

 

 3 
 

 

XTRIBE P.L.C.

Condensed Consolidated Balance Sheets

 

   June 30, 2019   December 31, 2018 
   (Unaudited)   (Audited) 
ASSETS          
Current assets:          
Cash and Cash Equivalents  $15,558   $17,254 
Prepaid expenses   34,173    9,442 
Deposits   17,099    6,025 
Other receivable, net   126,840    68,461 
Total current assets   193,670    101,182 
           
Tangible Assets:          
Machinery and Equipment, net of accumulated depreciation   30,551    15,504 
           
Intangible Assets:          
Goodwill   20,397    20,397 
Software, net of accumulated amortization of $80,727 and $73,459   -    7,111 
Total assets  $244,618   $144,194 
           
LIABILITIES AND SHAREHOLDERS’ DEFICIT          
           
Current liabilities:          
Accounts payable and accrued expenses   760,244    440,537 
Bank overdraft   337,022    327,899 
Loan payable - other   361,018    311,723 
Loans payable - shareholders   1,708,442    1,240,823 
Total current liabilities   3,166,726    2,320,982 
           
Shareholders’ deficit:          
Ordinary shares, Series A, $0.034 par value; unlimited shares authorized; 9,679,538 shares issued and outstanding at June 30, 2019 and 9,100,000 shares issued and outstanding at December 31, 2018   329,104    309,400 
Ordinary shares, Series B, $0.034 par value; unlimited shares authorized; 0 shares issued and outstanding at June 30, 2019 and 579,538 shares issued and outstanding at December 31, 2018   -    19,704 
Additional paid-in capital   2,013,471    2,013,471 
Accumulated other comprehensive loss   (32,438)   (85,894)
Accumulated deficit   (5,232,245)   (4,433,469)
Total shareholders’ deficit   (2,922,108)   (2,176,788)
Total liabilities and shareholders’ deficit  $244,618   $144,194 

 

See the accompanying notes to the condensed consolidated financial statements.

 

F-1
 

 

XTRIBE P.L.C.

Condensed Consolidated Statements of Operations

(Unaudited)

 

   For the Three Months
Ended June 30,
   For the Six Months
Ended June 30,
 
   2019   2018   2019   2018 
                 
Sales  $35,363   $-   $60,824   $- 
                     
Operating expenses:                    
General and administrative   382,941    153,455    709,625    465,809 
Sales and Marketing   16,309    42,278    33,587    139,508 
Research and Development   23,504    87,484    116,388    181,836 
Total operating expenses   422,754    283,216    859,600    787,153 
                     
Net Loss  $(387,391)  $(283,216)  $(798,776)  $(787,153)
Net loss per share attributable to common shareholders:                    
Basic and diluted  $(0.04)  $(0.03)  $(0.08)  $(0.08)
                     
Weighted average common shares outstanding:                    
Basic and diluted   9,679,538    9,679,538    9,679,538    9,582,948 

 

See the accompanying notes to the condensed consolidated financial statements.

 

XTRIBE P.L.C.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

   For the Three Months
Ended June 30,
   For the Six Months
Ended June 30,
 
   2019   2018   2019   2018 
                 
Net loss as reported  $(387,391)   (283,216)  $(798,776)   (787,153)
Other comprehensive income (loss)                    
Foreign currency translation adjustments   (42,523)   69,716    53,456    25,552 
Comprehensive loss  $(429,914)   (213,500)   (745,320)   (761,601)

 

See the accompanying notes to the condensed consolidated financial statements.

 

F-2
 

 

XTRIBE P.L.C.

Condensed Consolidated Statement of Changes in Shareholders’ Deficit

For the Three and Six Months Ended June 30, 2019

(Unaudited)

 

   Common Stock - Series A   Common Stock - Series B   Additional Paid-In   Accumulated Other Comprehensive   Accumulated   Total Shareholders’ 
   Shares   Amount   Shares   Amount   Capital   Loss   Deficit   Deficit 
Balance at December 31, 2018 (Audited)   9,100,000   $309,400    579,538   $19,704   $2,013,471   $(85,894)  $(4,433,469)  $(2,176,788)
                                         
Conversion of Series B - Ordinary Shares to Series A - Ordinary Shares   579,538    19,704    (579,538)   (19,704)   -    -    -    - 
                                         
Net loss   -    -    -    -    -    -    (798,776)   (798,776)
                                         
Cumulative translation adjustment   -    -    -    -    -    53,456    -    53,456 
                                         
Balance at June 30, 2019 (Unaudited)   9,679,538   $329,104    -   $-   $2,013,471   $(32,438)  $(5,232,245)  $(2,922,108)
                                         
Balance at March 31, 2019 (Unaudited)   9,679,538   $329,104    -   $-   $2,013,471   $10,085   $(4,844,854)  $(2,492,194)
                                         
Net loss   -    -    -    -    -    -    (387,391)   (387,391)
                                         
Cumulative translation adjustment   -    -    -    -    -    (42,523)   -    (42,523)
                                         
Balance at June 30, 2019 (Unaudited)   9,679,538   $329,104    -   $-   $2,013,471   $(32,438)  $(5,232,245)  $(2,922,108)

 

F-3
 

 

XTRIBE P.L.C.

Condensed Consolidated Statement of Changes in Shareholders’ Deficit

For the Three and Six Months Ended June 30, 2018

(Unaudited)

 

   Common Stock -
Series A
   Common Stock -
Series B
   Ordinary Shares   Subscriptions   Additional Paid-In   Accumulated Other Comprehensive   Accumulated   Total Shareholders’ 
   Shares   Amount   Shares   Amount   Subscribed   Receivable   Capital   Loss   Deficit   Deficit 
Balance at December 31, 2017 (Audited)   9,100,000   $309,400    -   $-   $-   $-   $1,268,764   $(64,323)  $(2,941,411)  $(1,427,570)
                                                   
Issuance of ordinary shares Series B   -    -    351,500    11,951    35,340    (35,340)   416,338    -    -    428,289 
                                                   
Settlement of loans payable shareholder for ordinary shares Series B   -    -    228,038    7,753    -    -    293,029    -    -    300,782 
                                                   
Settlement of Subscription Receivable for reduction of shareholder loan   -    -    -    -    (35,340)   35,340    35,340    -    -    35,340 
                                                   
Net loss   -    -    -    -    -    -    -    -    (787,153)   (787,153)
                                                   
Cumulative translation adjustment   -    -    -    -    -    -    -    25,552    -    25,552 
                                                   
Balance at June 30, 2018 (Unaudited)   9,100,000   $309,400    579,538   $19,704   $-   $-   $2,013,471   $(38,771)  $(3,728,564)  $(1,424,760)
                                                   
Balance at March 31, 2018 (Unaudited)   9,100,000   $309,400    579,538   $19,704   $35,340   $(35,340)  $1,978,131   $(108,487)  $(3,445,347)  $(1,246,599)
                                                   
Settlement of subsscripton receivable for reduction of shareholder loan   -    -    -    -    (35,340)   35,340    35,340         -    35,340 
                                                   
Net loss   -    -    -    -    -    -    -    -    (283,216)   (283,216)
                                                   
Cumulative translation adjustment   -    -    -    -    -    -    -    69,716    -    69,716 
                                                   
Balance at June 30, 2018 (Unaudited)   9,100,000  $309,400    579,538   $19,704  $-   $-   $2,013,471  $(38,771)  $(3,728,564)  $(1,424,760)

 

See the accompanying notes to the condensed consolidated financial statements.

 

F-4
 

 

XTRIBE P.L.C.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   For the Six Months Ended 
   June 30, 2019   June 30, 2018 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(798,776)  $(787,153)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   7,111    8,688 
Change in operating assets and liabilities, net of acquisition          
Prepaid expenses   (24,731)   (13,049)
Other receivable   (58,379)   - 
Deposits   (11,074)   - 
Accounts Payable and Accrued Expenses   319,707    38,641 
Accounts payable - related party   -    (20,346)
Net cash used in operating activities   (566,142)   (773,219)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of equipment   (15,047)   (2,716)
Net cash used in investing activities   (15,047)   (2,716)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from loans payable - other   49,295    55,870 
Proceeds from loans payable - shareholders   467,619    341,161 
Proceeds from bank overdraft   9,123    - 
Sale of ordinary shares, Series B   -    428,289 
Net cash provided by financing activities   526,037    825,320 
           
Effect of Exchange Rate on Cash   53,456    (41,811)
           
Net change in cash and cash equivalents   (1,696)   7,574 
           
Cash and cash equivalents, beginning of period   17,254    41,870 
           
Cash and cash equivalents, end of period  $15,558   $49,444 
           
Supplemental Disclosure of Non-Cash Financing Activities:          
           
Settlement of loans payable shareholder for ordinary shares Series B  $-   $300,782 
           
Settlement of Subscription Receivable for reduction of shareholder loan   -    35,340 
   $-   $336,122 

 

See the accompanying notes to the condensed consolidated financial statements.

 

F-5
 

 

XTRIBE P.L.C.

Notes to the Condensed Consolidated Financial Statements

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of the Business

 

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

 

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

 

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

 

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

 

XTRIBE P.L.C. and its wholly owned subsidiaries are collectively referred to as the “Company.” The Company’s principal office is located in London, United Kingdom.

 

The Company has developed a free smartphone application which allows the user to sell, buy, swap and rent objects and services utilizing an active geolocation tool which locates all potential customers within any specified geographic target. Transactions can be completed without any intermediary, directly between the party and counter-party, without any commissions or third-party payments. Users have the option of customizing the app to best promote commerce. The Company derives revenues by its B2B division, XTRIBE Store. The XTRIBE application is available for Apple and Android devices and can be easily downloaded for free to a user’s mobile device. Once installed, the user establishes a free account and can immediately transact and communicate with other users. The Company’s principal office is in London, England. The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

 

F-6
 

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. As such, the information included in these financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission (“SEC”). In the opinion of the management, these consolidated financial statements include all adjustments, consisting of only normal recurring nature, necessary for a fair statement of the financial position of the Company as of June 30, 2019 and its results of operations and cash flows for the three and six months ended June 30, 2019 and 2018. The results of operations for the six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2019.

 

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

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Revenue Recognition

 

Under FASB Topic 606, Revenue from Contacts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation. Subject to these criteria, the Company recognizes revenue from product sales, upon application initialization on the XTRIBE Store by the customer.

 

Comprehensive Income

 

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

 

F-7
 

 

Foreign Currency Transactions and Translation

 

The functional currency of the operations of the Company is the Euro. The capitalization of the Company is provided in British pounds (“GBP”), while the Company transacts most of its other transactions including loans from shareholders in Euros, which makes the Euro the functional currency. Gains and losses resulting from transactions in currencies other than the functional currency of the Company are recorded in the statement of operations for the reporting periods as part of general and administrative expense. Included in general and administrative expense were foreign currency transaction losses of $12,852 and $24,782 for the three and six months ended June 30, 2019 and foreign transactions losses of $10,025 and $42,483 for the three and six months ended June 30, 2018

 

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

 

Advertising Costs

 

Advertising costs are expensed as incurred. Advertising costs were $16,309 for and $33,587 for the three and six months ended June 30, 2019 and $11,379 and $20,542 for the three and six months ended June 30, 2018 and are included in sales and marketing expenses.

 

Research and Development Costs

 

In accordance with FASB ASC 730, research and development costs are expensed when incurred. Research and development costs were $23,504 for and $116,388 for the three and six months ended June 30, 2019 and $87,484 and $181,836 for the three and six months ended June 30, 2018.

 

Software development costs that were incurred during the three and six months ended June 30, 2019 and 2018 have been expensed as incurred and recorded in research and development costs in the statement of operations.

 

Basic and Diluted Net Income per Share of Ordinary Shares

 

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

 

Reclassifications

 

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported.

 

F-8
 

 

Recently Issued Accounting Pronouncements Adopted

 

Management has evaluated recently issued accounting pronouncements adopted as of June 30, 2019 and for the period then ended, and does not believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements and related disclosures.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350); Simplifying the Test for Goodwill Impairment. The amendments in this update simplify the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for emerging growth companies for the reporting periods beginning after December 15, 2021. The Company is evaluating the effect that this update will have on its financial statements and related disclosures.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this Update specify the accounting for leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. The amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is evaluating the effect that this update will have on its financial statements and related disclosures.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. The amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within fiscal years beginning after December 15, 2021. The Company is evaluating the effect that this update will have on its financial statements and related disclosures.

 

NOTE 2 – MANAGEMENT PLANS

 

The Company believes that there is substantial doubt about the Company’s ability to continue as a going concern. The Company believes that its available cash balance as of the date of this filing will not be sufficient to fund its anticipated level of operations for at least the next 12 months. At June 30, 2019, the Company had a working capital deficit of approximately $2,973,056 as compared to working capital deficit of approximately $2,219,800 at December 31, 2018. The increase of $753,256 in the Company’s working deficit from December 31, 2018 to June 30, 2019 was primarily the result of the increase in loans taken on during the six months ended June 30,2019 from a shareholder of XTRIBE, and accounts payable which are used to fund the company’s operations during the period.

 

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

 

Based upon the current cash position and the Company’s planned expense run rate, management has determined the Company has insufficient funds for current operations and will need additional financing for future operations.

 

F-9
 

 

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

 

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

 

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

 

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

 

Description  Fair Value 
Assets acquired:     
Cash and cash equivalents  $1,687 
Accounts receivable, net   50,641 
Prepaid expenses and other current assets   8,789 
Equipment, net   472 
Furniture, net   1,450 
Office Equipment, net   2,882 
Deposits   3,532 
Total assets acquired  $69,453 
Liabilities assumed:     
Accounts payable and accrued expenses  $72,329 
Total liabilities assumed   72,329 
Estimated fair value of net assets acquired  $(2,876)
      
Acquisition date fair value of X-Solution S.R.L.  $17,521 
Goodwill  $20,397 

 

NOTE 4 – REVENUE RECOGNITION

 

The Company adopted the new revenue standard, ASC 606, using the modified retrospective method as of January 1, 2018. This method required retrospective application of the new accounting standard to all unfulfilled contracts that were outstanding as of January 1, 2018. Revenues and contract assets and liabilities for contracts completed prior to January 1, 2018 are presented in accordance with ASC 605. The Company has determined that there were no adjustments required with respect to the adoption of ASC 606 with respect to any prior periods. The Company generates revenue from product sales, upon application initialization on the XTRIBE Store by the customer.

 

F-10
 

 

NOTE 5 – OTHER RECEIVABLES, NET

 

At June 30, 2019 and December 31, 2018, other receivable, net was $126,840 and $68,461. The June 30, 2019 and December 31, 2018 other receivable, net balance is derived from revenues generated relating to the XTRIBE application.

 

NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

As of June 30, 2019, and December 31, 2018, accounts payable and accrued expenses consisted of the following:

 

   June 30, 2019   December 31, 2018 
Accounts payable  $495,679   $289,191 
Accrued expenses   114,782    55,418 
Accrued payroll liabilities   149,783    95,928 
Total  $760,244   $440,537 

 

NOTE 7 – BANK OVERDRAFT

 

During the year ended 2018, the Company entered into a bank overdraft facility and is utilized by the Company for short-term liquidity needs. The unsecured bank overdraft facility includes an annual interest rate of 3.75%, a maximum spending limit of 300,000 EURO and is due and payable on January 2, 2020. At June 30, 2019 and December 31, 2018, the bank overdraft outstanding was $337,022 and $327,899. Interest expense for the three- and six- month period ended June 30, 2019 was $3,133 and $6,203 respectively. There was no interest expense incurred in the three- and six - month period ended June 30, 2018.

 

NOTE 8 – LOANS PAYABLE – OTHER

 

During the three months ended June 30, 2019, the balance of loans payable – other increased by approximately $50,000 from December 31,2018. The new loan is a $50,000 secured convertible loan dated in May 2019 with an annual interest rate of 10% and due on June 1, 2021. The note is convertible at the holder’s option into common shares of the Company equal to the greater of 75% of the fair market value and in no case shall the conversion price be less than $4.50. This convertible loan is secured by a security interest in any and all of the XTRIBE P.L.C’s tangible or intangible assets (except patents, patents applications and trademarks) and a security agreement executed by XTRIBE P.L.C. granting a seniority interest in these assets.

 

The balance of the loan’s payable are unsecured, interest free without formal repayment terms.

 

NOTE 9 – LOANS PAYABLE – SHAREHOLDERS

 

As of June 30, 2019, and December 31, 2018, loans payable - shareholders consisted of the following:

 

   June 30, 2019   December 31, 2018 
Loan payable one, loan is interest-free and unsecured with no payment terms  $316,823   $306,548 
Loan payable two, loan is interest-free and unsecured with no payment terms   56,850    59,655 
Loan payable three, loan is interest-free and unsecured with no payment terms   748,088    281,926 
Loan payable four, loan is interest-free and unsecured with no payment terms   112,562    112,468 
Loan payable five, loan is interest-free and unsecured with no payment terms   56,850    58,046 
Loan payable six, loan is interest-free and unsecured with no payment terms   394,531    399,834 
Loan payable seven, loan is interest-free and unsecured with no payment terms   22,738    22,346 
   $1,708,442   $1,240,823 

 

The loans as of June 30, 2019 and December 31, 2018 are interest-free and unsecured with no formal repayment terms.

 

F-11
 

 

NOTE 10 – INCOME TAXES

 

Income tax expense was $0 for the three and six months ended June 30, 2019 and 2018.

 

As of January 1, 2019, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2019 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the six months ended June 30, 2019, and there was no accrual for uncertain tax positions as of June 30, 2019. Tax years from 2015 through 2018 remain subject to examination by major tax jurisdictions.

 

There is no income tax benefit for the losses for the three and six months ended June 30, 2019 and 2018, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits.

 

NOTE 11 – SHAREHOLDERS’ EQUITY

 

In January 2019, the Company converted all of the series B shares into 579,538 “A” ordinary shares. As part of this transaction, the following proceedings were noted:

 

  1. Re-designate/re-name all class B shares to Ordinary Shares
  2. Variate the rights of the newly re-designated shares to align them to Ordinary Shares’ rights. Each class B shareholder will be asked to consent to the variation of rights in writing.
  3. All Class B shareholders are to retain their shares entitlement as calculated for the conversion (9:10 ratio) and for the Bonus Issue (issuance of discounted number of shares) and to surrender, by means of a transfer for no consideration made to a nominee shareholder, the balance of the newly converted shares. Each class B shareholder will be asked to sign a Stock Transfer Form for this balance.
  4. The Nominee Shareholder in turn will transfer to all the other Ordinary Shareholders their share entitlement under the Bonus Issue.

 

As part of this conversion, the Bonus Issue allows shareholders to receive a discounted number of shares of Common Stock, so that the total issued share capital of the Company would remain unaltered.

 

NOTE 12 – RELATED PARTY TRANSACTIONS

 

The Company received shareholder loans from a company in which the Chief Executive Officer has a material interest. As of June 30, 2019, and December 31, 2018, the balance of the loans was $316,823 and $306,548 (see Note 9).

 

As of June 30, 2019, and December 31, 2018, the Company owed $770,826 and $304,272 to two shareholders. One of the shareholders is also the Chief Executive Officer of the Company, and the other is a relative to the Chief Executive Officer of the Company (see Note 9).

 

As of June 30, 2019, and December 31, 2018, the Company owed $620,793 and $630,003 to four additional shareholders of the Company (see Note 9).

 

F-12
 

 

The Company owed a consulting company in which the Chief Executive Officer has a material interest, an amount of $53,458 as of June 30, 2019 and an amount of $41,386 as of December 31, 2018. This related Company provided research and development services to the Company amounting to $0 and $34,064 during the three and six months ended June 30, 2019 and $31,940 and $31,940 during the three and six months ended June 30,2018. This was recorded in the research and development costs on the condensed statement of operations.

 

NOTE 13 – Operating Leases

 

As of June 30, 2019, the Company is obligated under two operating lease arrangements. The office lease in Milan expires on February 28, 2025 and is renewable for an additional six years. The Company has the right to cancel without penalty with a six -month notice.

 

The office space in Milan expires on February 1, 2025. The Company has a purchase option and if exercised a portion of the rental payments will be applied to the purchase price. The Company will incur a penalty of 10,000 Euro if the lease is terminated before the expiration date.

 

F-13
 

 

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

 

Forward Looking Statements

 

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

 

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

 

 4 
 

 

Overview

 

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

 

To date we have not generated material revenues. Commencing in 2020, we expect to generate revenue streams using our fully developed and operational application by its registered users. The Company is currently only operating in Italy, but plans to expand its operations to the United States and other selected markets in the next 12-24 months.

 

As of June 30, 2019, the Company had $15,558 cash on hand which management has determined is insufficient to fund future operations. Management further believes that it needs to raise a minimum of an additional approximately $1,000,000 in the Offering to complete its product roll-out and marketing and support in Italy. Additional proceeds will enable the Company to expand to the United States and other international markets.

 

Strategic Outlook

 

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

 

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

 

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

 

 5 
 

 

Results of Operations

 

Comparison of the Three Months Ended June 30, 2019 and 2018

 

The following discussion analyzes our results of operations for the three months ended June 30, 2019 and 2018. The following information should be considered together with our condensed consolidated financial statements for such periods and the accompanying notes thereto.

 

Revenue/Net Loss

 

We have generated limited revenue since our inception. For the three months ended June 30, 2019, we have generated $35,363 of sales. and for the three months ended June 30, 2018, we did not generate any sales. For the three months ended June 30, 2019 we had a net loss of $387,391 and for the three months ended June 30, 2018 we had a net loss of $283,216.

 

General and Administrative Expenses

 

General and administrative expenses for the three months ended June 30, 2019 were $382,941 compared to $153,455 for the three months ended June 30, 2018, an increase of $229,486. The increase resulted primarily from expenses related to X-Solution that did not occur during the three months ending June 30, 2018, as it was not acquired yet.

 

Sales and Marketing

 

Sales and marketing expenses for the three months ended June 30, 2019 were $16,309 as compared to $42,278 for the three months ended June 30, 2018, a decrease of $25,969. This is a result of the Company’s decrease in marketing efforts in 2019 due to lack of operational funds when compared to 2018.

 

Research and Development

 

Research and development expenses were $23,504 for the three months ended June 30, 2019 as compared to $87,484 for the three months ended June 30,2018, a decrease of $63,980. This decrease is related to less software development enhancements required during the three months ended June 30, 2019.

 

Comparison of the Six Months Ended June 30, 2019 and 2018

 

The following discussion analyzes our results of operations for the six months ended June 30, 2019 and 2018. The following information should be considered together with our condensed consolidated financial statements for such periods and the accompanying notes thereto.

 

Revenue/Net Loss

 

We have generated limited revenue since our inception. For the six months ended June 30, 2019, we have generated $60,824 of sales and for the six months ended June 30, 2018, we did not generate any sales. For the six months ended June 30, 2019 and 2018, we had a net loss of $798,776 and $787,153.

 

General and Administrative Expenses

 

General and administrative expenses for the six months ended June 30, 2019 were $709,625 as compared to $465,809 for the six months ended June 30, 2018, an increase of $243,816. The increase resulted primarily from increases in professional fees and increase in employee head count and corresponding increase in payroll costs.

 

Sales and Marketing

 

Sales and marketing expenses for the six months ended June 30, 2019 were $33,587 as compared to $139,508

for the six months ended June 30, 2018, a decrease of $105,921. This is a result of the Company’s decrease in marketing efforts in 2019 due to lack of operational funds when compared to 2018.

 

Research and Development

 

Research and development expenses were $116,388 for the six months ended June 30, 2019 as compared to $181,836 for the six months ended June 30,2018, a decrease of $65,448.

 

This decrease is related to less software development enhancements required during the six months ended June 30, 2019.

 

 6 
 

 

Liquidity and Capital Resources

 

Summary of Cash Flows

 

Net cash used in Operating Activities Net cash used in operating activities for the six months ended June 30, 2019 was $566,142. This included a net loss of $798,776, reduced by a non-cash charge related to depreciation and amortization of $7,111 and a net aggregate change in prepaid expenses, other receivable, deposits and accounts payable of $225,523.

 

Net cash used in operating activities for the six months ended June 30,2018 were $773,219. This included a net loss of $787,153, reduced by non-cash charge related to depreciation and amortization of $8,688 and changes in prepaid expenses and accounts payable of $5,246.

 

Net cash used in Investing Activities Net cash used in investing activities for the six months ended June 30, 2019 was $15,047 which consisted of capital expenditures. Net cash used in investing activities for the six months ended June 30, 2018 was $2,716 which consisted of capital expenditures.

 

Net cash provided by Financing Activities Net cash provided by financing activities for the six months ended June 30, 2019 was $526,037, which resulted from proceeds from loans payable – shareholders of $467,619, and proceeds from bank overdraft of $9,123 and loans payable – other of $49,295. Net cash provided by Financing Activities for the six months ended June 30, 2018 was $825,320, which resulted from proceeds from loans payable – shareholders of $341,161, proceeds from loans payable – other of $55,870 and proceeds from sale of ordinary shares, Series B of $428,289.

 

As we have not realized any significant revenues since our inception, we have financed our operations through private offerings of debt and equity securities. We do not currently maintain a line of credit or term loan with any commercial bank or other financial institution except for that disclosed in Note 7 to the condensed consolidated financial statements.

 

Going Concern

 

The Company believes that there is substantial doubt about the Company’s ability to continue as a going concern. The Company believes that its available cash balance as of the date of this filing will not be sufficient to fund its anticipated level of operations for at least the next 12 months. At June 30, 2019, the Company had a working capital deficit of approximately $2,973,056 as compared to working capital deficit of approximately $2,219,800 at December 31, 2018. The increase of $753,256 in the Company’s working deficit from December 31, 2018 to June 30, 2019 was primarily the result of additional accounts payable and accrued expenses, additional loans received from a shareholder of the Company and an external party in order to fund operations of the Company.

 

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

 

 7 
 

 

The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2019, we do not have any off-balance sheet arrangements.

 

Critical Accounting Policies

 

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

 

Recently Issued Accounting Pronouncements

 

Recently issued accounting pronouncements are discussed in Note 1 of the Notes to Consolidated Financial Statements included elsewhere herein.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

ITEM 4. CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls and Procedures

 

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

 

(b) Changes in Internal Control over Financial Reporting

 

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

 

 8 
 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are subject from time to time to litigation, claims and suits arising in the ordinary course of business. As of the date of this Quarterly Report, we were not a party to any material litigation, claim or suit whose outcome could have a material effect on our financial statements.

 

ITEM 1A. RISK FACTORS

 

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

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

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

 

 9 
 

 

SIGNATURES

 

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

 

  XTRIBE P.L.C.
     
October 15, 2019 By: /s/ Enrico dal Monte
    Enrico dal Monte,
    Chief Executive Officer

 

 10