GRIPEVINE, INC. (OTCMKTS:GRPV) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Share Exchange Agreement
Baixo Relocation Services, Inc., now known as Gripevine Inc., a
Nevada corporation (the Corporation), MBE Holdings Inc., a
private corporation organized under the laws of Delaware (MBE)
and the shareholders of MBE (the MBE Shareholders) entered into
that certain share exchange agreement dated February 28, 2017
(the Share Exchange Agreement). The Board of Directors of the
Corporation approved the execution and consummation of the
transaction under the Share Exchange Agreement on February 28,
2017. The Board of Directors and the shareholders holding a
majority of the total issued and outstanding shares of common
stock of MBE authorized and approved the Share Exchange
Agreement. In accordance with the Delaware Business Corporation
Act, a majority of the total issued and outstanding shares is
required to approve an arrangement, which is defined as “a
reconstruction under which a company transfer or sell or proposes
to transfer or to sell to another company the whole or a
substantial part of its undertaking for a consideration
consisting in whole or in part of shares of securities of the
other company …”
In accordance with the terms and provisions of the Share Exchange
Agreement, the Corporation issued an aggregate of 5,248,626
shares of its restricted common stock to the MBE Shareholders in
exchange for 157,458,778 of the total issued and outstanding
shares of MBE (constituting 100%), thus making MBE its
wholly-owned subsidiary. The Board of Directors of the
Corporation and MBE deemed it in the best interests of the
respective shareholders to enter into the Share Exchange
Agreement to which the Corporation would acquire all the
technology and assets and assume all liabilities of MBE. This
resulted in a change in control and overall business operations
of the Corporation thus bringing potential value to its
shareholders. See “SECTION 2. FINANCIAL INFORMATION.
ITEM 2.01 COMPLETION OF ACQUISITON OR DISPOSITION OF
ASSETS – Risk Factors.
In further accordance with the terms and provisions of the Share
Exchange Agreement, the Board of Directors of the Corporation
shall appoint James Liolios and Mark Vange as members of the
Board of Directors.
Lastly, the Corporation provided to MBE the reviewed balance
sheet and statements ofoperation, stockholders’ equity and cash
flows as of and for the quarter ended November 30, 2016 (the
Financial Statements). The Corporation has certain assets and
liabilities reflected on the balance sheet of the Financial
Statements as follows: (i) current assets comprised of $8 in
cash; and (ii) current liabilities comprised of $4,146 primarily
relating to edgar filing fees and professional fees.
MBE also has certain assets and liabilities reflected on the
balance sheet as follows: (i) current assets of $33,317
consisting of $28,301 in cash and $5,016 in prepaid and other
receivables; (ii) long term assets of $21,648 consisting of
equipment; (iii) current liabilities of $2,473,352 consisting of
$13,720 in accrued liabilities, $1,949,118 due to related parties
and $510,514 due to shareholder. In accordance with the terms and
provisions of the Share Exchange Agreement, the Corporation
agreed to assume such liabilities.
SECTION 2. FINANCIAL INFORMATION
ITEM 2.01 COMPLETION OF ACQUISITON OR DISPOSITION OF
ASSETS
The Corporation refers to Item 1.01 above, Entry into Material
Definitive Agreement and incorporates the contents of that
section herein, as if fully set forth under this Section 2.01.
BUSINESS DEVELOPMENT
Historical Business
The Corporation was incorporated on January 7, 2014 in the State
of Nevada. Previously, we were a development stage company and
planned to commence operations as a consulting business whereby
we would provide personalized relocation services to clients,
both individual and corporate, who were relocating to the states
of Maharashtra, Goa, or Karnataka, which are located in western
India. We intended to assist clients who desired to relocate to
the region for temporary, long-term, and permanent periods.
Changes in Control of Registrant
Dated May 31, 2016 and effective October 3, 2016, Rosy Rodrigues
(Rodrigues), our prior majority shareholder, sole executive
officer and member of the Board of Directors, entered into those
certain stock purchase agreements (collectively, the Stock
Purchase Agreements) with certain individuals and/or entities
(collectively, the Investors). In accordance with the terms and
provisions of the Stock Purchase Agreements, Rodrigues sold and
transferred at a per share price of $0.037 the control block of
the Corporation consisting of 5,000,000 shares of restricted
common stock and representing approximately 62.5% of the total
issued and outstanding shares of common stock. Therefore, there
was a change in control.
MBE Holdings Inc.
MBE is currently the wholly-owned subsidiary of the Corporation
to the terms and provisions of the Share Exchange Agreement.
DESCRIPTION OF BUSINESS OPERATIONS
General
The Corporation will be involved in the ongoing development and
marketing of Gripevine, which is a social customer experience
platform for social customer service and consumer reviews.
Gripevine includes a proprietary process to assist companies in
resolving customer service complaints (the Gripevine Proprietary
Process or Gripevine). The Gripevine Proprietary Process helps
consumers achieve resolutions while enabling businesses to
improve consumer loyalty. Our platform includes the handling of
ratings, reviews, complaint resolution statuses while offering
data collection features such as scoring, polling, comments,
voting, and credibility points all with the aim of creating a
home for connections, resolution, business improvement, and
loyalty enhancement. Consumers with legitimate customer service
complaints can post it (plant a gripe) and connect with companies
who in turn can interact with their customers on a level playing
field to find an amicable resolution.
Unlike other review sites that cater specifically to accumulating
and displaying consumer feedback, Gripevines business model
offers significant value to both consumers and businesses.
Management of the Corporation believes that the Gripevine
Proprietary Process brings fairness and balance by: (i) ensuring
users are real; (ii) allowing companies to reach out and verify
customer identity; (iii) flagging as fake those consumers who are
not identifiable; and (iv) providing companies free access to
their customers. Gripevines unique proposition in this social
customer experience space is to create consumer-company
connections in order to drive loyalty through efficient and
effective handling of online customer feedback and commentary.
Industry
Every day, hundreds of millions of consumers make decisions about
where to spend their money at local businesses. According to the
U.S. Census Bureau, in the United States alone, there are over
27million local business locations, which we believe represents a
multi-trillion dollar market for commerce. We believe several
secular trends will increasingly challenge the traditional ways
in which local businesses have connected with consumers and will
offer opportunities for solutions like ours.
Online Reviews are Gaining
Credibility.With the growth of the Internet,
online reviews have become a regularly relied-upon source of
information. Management believes that positive information
consumers read online reinforce their decision to purchase a
product or service and more and more consumers are utilizing the
Internet to search for customer or user reviews. The industry
witnesses high growth as it is understood that prospective
customers consistently use review sites, and trust them, to help
access quality businesses. At the same time, consumers require
transparency and quick responses, which has led to the growth of
social customer service management and the handling and effective
response to customer commentary online. Management believes that
the Gripevine Proprietary Process provides for three domains: (i)
collecting and displaying customer feedback; (ii) distributing
customer feedback; and (iii) providing a managed-process platform
for customer relations management.
Local Advertising is Moving from Offline to
Online.Over the past decade, the advertising
market for local businesses has undergone rapid and fundamental
changes. Consumers who at one time turned almost exclusively to
the yellow pages, newspapers, magazines and other forms of
offline media for information about local businesses are now
increasingly relying on online resources. As consumers move
online, local businesses are shifting their ad spending from
traditional media sources to online advertising.
Mobile Connected Devices and Apps are
Proliferating.Mobile devices provide an ideal
platform for people to search for local businesses due to their
ability to identify consumer location and provide all the
benefits of digital content to consumers on the go. There are
currently over 1 billion smartphone shipments worldwide.
Products
Gripevine has invested heavily in a robust back-end social CRM
system to assist in branding managed social customer experiences
within a safe and private environment. Management believes that
extensive market testing of the Gripevine Proprietary Process
platform has resulted in significant traffic and adoption with
both consumers and brands that consistently engage on both the
front-end and back-end of the social CRM solutions. During our
beta phase, over 100 brands (UPS, HP, Verizon, Sunwing,
Greyhound, and Rogers Communications, to name a few) chose to
engage with their customers on Gripevine, resulting in successful
resolutions as large as involving a $250,000 life policy to
simple refunds. Management believes that by having major
corporations and the important SME sector resolve issues through
Gripevine, including claiming their business listings and
engaging with their customers, is a significant milestone in
establishing the Gripevine brand.
Gripevine serves the social consumer feedback community with
features, such as ratings, reviews, complaint management and
polling. In the social customer service space, consumers with
legitimate customer service complaints can plant a gripe and
connect with companies who in turn are able to interact with
their customers on a level playing field through our proprietary
social CRM system in order to resolve those complaints (aka
gripes on Gripevine).
Management believes that what makes Gripevines platform so unique
is the ability to bring fairness and balance to the complaint
resolution world of social customer service. The business model
offers significant value not only to the consumer but to
businesses as well by giving companies the security of an arena
where they are dealing with real people with legitimate customer
service issues. It also allows the respective company to
communicate publically or privately depending on which approach
is most helpful at that stage of communication with the consumer.
Gripevines strategy in the online business ratings and reviews
industry provides a realistic solution to an industry flooded
with fake reviews, fake accounts and generally suspicious or
malicious feedback. Gripevines motto: Be Heard underpins and
addresses the solution which speaks to our differentiation
strategy whereby consumers can speak publicly about their
experiences and also gain trust with online commentary and
reviews from a particular businesss perspective.
Gripevines mobile application will target a greater demographic
given the ever-growing percentage of people who are integrating
mobile devices into their everyday life>
Gripevine allows businesses to grow their customer base through
their expression of responsiveness, transparency, and empathy on
our platform. Educated consumers can do research on businesses
allowing them to see what others experienced as well as see how
businesses address customer feedback and complaints, which is so
vital and important in todays economy.
Gripevine also helps consumers connect with one another on a
social level. One can see common interests and concerns, answer
polls, upvote and downvote and share guidance and advice among
the consumer community of social customer service. Consumers can
build influence and points within our gamification platform by
using the site to appropriately voice opinions that will build
credibility with other consumers and companies.
Process and Business Level Strategy
Accounts. Companies have the opportunity to
claim their Gripevine business profile page by registering for
their free account. Once they have claimed their free account
automated notifications of customer feedback will be initiated
when a review, gripe (aka customer service issue), or comment, is
planted. This occurs by following a simple verification process
which will enable companies to have access to their proprietary
response dashboard (the Dashboard) to communicate directly with
consumers, either publicly or privately, with the ability to
offer an immediate solution or initiate communications with the
customer and acquire further information.
All customer service issues are tracked with a status marker that
consumers can view online. Companies can achieve positive
positioning on Gripevine by purely being responsive. They will
also receive feedback on the satisfaction level of the customer
if a specific issue required resolution. In these ways, Gripevine
provides different opportunities for companies to display and
receive credit for their social customer service performance.
Management believes that the competitive edge and highlight of
the Gripevine Proprietary Process is twofold:
|
Gripevine offers companies a unique opportunity to increase the reach of their customer service capabilities (often a major challenge for SMEs) by engaging with real consumers in a safe and productive environment to reach amicable resolutions; and |
||
|
The free Gripevine business account offers companies the best opportunity to make immediate contact, through their pre-configured dashboard, with any customer and respond to their commentary. |
Once companies claim their free account, access is granted to
their proprietary dashboard where they can communicate publicly
or privately with consumers, keep accurate track of reviews and
gripes, see their current ratings, launch resolution offers, and
manage their overall online customer service channels across
other social platforms.
We will also offer paid company accounts, which will allow
companies to access a more robust social customer service
management system utilizing the Gripevine unique and proprietary
features allowing them to scale the use of the system to suit
their organizational needs. The paid accounts will also allow the
respective company to have more control over its presence on the
site and be provided access to tools for gaining market share
within their industries thus expanding the channels through which
they will receive and manage customer service feedback.
Management intends that paid accounts will offer companies access
to the customer commentary and sentiment on social media. Whether
a company is large or small, there is tremendous value in being
able to monitor social customer service conversations about its
brand across multi-platforms under one dashboard.
Pricing. Initially, our paid business accounts
will be established at rates below-market, and provide a feature
set that is relevant to each business category and size. Research
in the on-line review and complaints sector, together with
company Social CRM and social monitoring service provision,
reveals that the combination of value-pricing and volume
acquisition provides a strong business proposition.
Gripevines place in the online review and social customer
experience space is founded on the premise of creating true and
valuable connections between companies and consumers. This means
that appropriate postings, reviews and gripes from consumers will
be presented online and not manipulated and that they will be
brought to the attention of the respective companies. Consumers
can remain anonymous on the public site but it also means that
the companies can validate that postings are from real people
with real identities, and that good faith communication can be
conducted on the content presented in Gripevine. This addresses a
serious credibility problem for mainstream review sites: the
presence of fake reviews posted by competitors, or individuals
with malicious intent. Lastly, our proposition is based on
building trust through transparency. Companies can reliably
proceed with communications and resolutions of real commentaries.
We build connections between consumers and companies resulting in
potentially powerful revenue generating opportunities.
Target Markets
Gripevines platform targets a wide consumer demographic of all
ages, ethnicities, income levels, education levels, and genders.
Our current geographic spread indicates an early opportunity
across North America, Australia, Asia, and the United Kingdom
with expansion plans for multi-language capability and spreading
to a fully international positioning. For businesses, we offer a
tailored product appropriate to larger enterprises and an
accessible feature set attractive to SMEs. We offer multiple
services across a variety of platforms, whether its review and
complaint resolution or Social CRM and back-office productivity.
Our current industry sector positioning is not confined to the
restaurant or travel sector for customer commentary. We currently
have a wide band of industry sectors (such as communications,
appliance manufacturers, courier companies, airlines, hotels,
software companies, and retail, just to name a few) already
engaged within our platform.
Marketing Strategies
The primary purpose of our marketing campaigns is to increase
brand awareness, foster a sense of community among local
contributors, and increase the number of claimed local business
locations and active local business accounts. The strength of our
brand and the high quality of Gripevine reviews facilitate a
powerful network effect that has helped attract a large community
of users to our website with almost no traffic acquisition costs.
Gripevine will utilize a unique sales channel opportunity to
direct-sell to SMEs. Management believes that this sales
strategy, along with reasonably priced features tailored to the
SME market, is a powerful, low cost and wide reaching
relationship-based sales platform. While the sales strategy saves
the expense of creating a costly sales infrastructure, it also
works off the power of word of mouth from businesses that have
already successfully improved their online positioning, customer
service posture and branded a social voice through the feature
sets of Gripevine. We believe that this sales strategy will
provide us with the opportunity to ramp up sales quickly and
efficiently.
This strategy will allow Gripevine to: (i) ramp up sales and grow
rapidly; (ii) build a large and motivated sales force at a
relatively low cost; (iii) reach many businesses that would
otherwise be geographically out-of-reach; and (iv) allow for
better forecasting of expenses as a percentage of revenues.
PROPERTY
There are currently two leases regarding principal office space
regarding 1282A Cornwall Road and 1290 Cornwall Road, Unit B. The
lease term begins on the date of initial possession of the leased
property for purposes of recognizing lease expense. Lease renewal
periods are considered on a lease-by-lease basis.
The first lease dated March 8, 2016 is between Katalex Holdings
Inc., as landlord (Katalex) and MBE Holdings with a commencement
date of May 1, 2016 and a termination date of December 31, 2019
(the Katalex Lease). In accordance with the terms and provisions
of the Katalex Lease, we shall pay rent as follows: (i) May 1,
2016 through June 30, 2016 approximately $2,558; (ii) July 1,
2016 through August 31, 2016 approximately $3,058; (iii)
September 1, 2016 through October 31, 2016 approximately $3,358;
(iv) November 1, 2016 through December 31, 2016 approximately
$3,658; (v) all of 2017 approximately $3,300; (vi) all of 2018
approximately $3,392; and (vii) all of 2019 approximately $3,485.
The second lease dated December 6, 2016 between Katalex and MBE
Holdings with a commencement date of January 1, 2017 and a
termination date of December 31, 2019 (the Second Katalex Lease).
In accordance with the terms and provisions of the Second Katalex
Lease, we shall pay rent as follows: (i) January 1, 2017 through
June 30, 2017 approximately $2,500; (ii) July 1, 2017 through
December 31, 2017 approximately $3,505; (iii) all of 2018
approximately $3,626; and (iv) all of 2019 approximately $3,800.
EMPLOYEES
The Corporation employs 3 full time employees and MBE employs 18
employees. . The Corporation also has its President/Chief
Executive Officer, Richard Hue, its Chief Operating Officer,
James Liolios, its Chief Technical Officer, Mark Vange.. Messrs.
Hue, Liolios and Vange all serve the Corporation on a full-time
basis. These individuals are primarily responsible for all of the
Corporation’s day-to-day operations. Other services may be
provided by outsourcing and consultant and special purpose
contracts.
RESEARCH AND DEVELOPMENT ACTIVITIES
MBE Holdings has incurred approximately $700,526 during the nine
month period ended September 30, 2016, $898,798 during fiscal
year ended December 31, 2015 and $541,331 the fiscal year ended
December 31, 2014 on research and development relating to the
Gripevine Proprietary Process. None of these research or
development costs are borne by the customer.
INTELLECTUAL PROPERTY
Patent
On August 15, 2016, our President/Chief Executive Officer, filed
an application with the United States Patent and Trademark Office
for a provisional patent, No. 62/375,027, for the System and
Method for Determining Metrics.
Trademarks
We have trademarked certain of our logos and names. On October
16, 2012, the United States Patent and Trademark Office issued a
trademark for Gripevine, Registration No. 4,227,471, for classes
35 and 42, which primarily is for business data analysis and
electronic data collection and use of online non-downloadable
proprietary software for business purposes for third parties
featuring the use of such proprietary software to collect,
evaluate and analyze consumer complaints and assist third parties
in the resolution of such complaints.
We rely on federal, state, common law and international rights,
as well as contractual restrictions, to protect our intellectual
property. We control access to our proprietary technology and
algorithms by entering into confidentiality and agreements with
our employees and contractors and confidentiality agreements with
third parties.
In addition to these contractual arrangements, we also rely on a
combination of patent pending applications, trade secrets,
copyrights, trademarks, service marks and domain names to protect
our intellectual property. We will pursue the registration of our
patents, copyrights, trademarks, service marks and domain names
in North America and in certain locations outside the United
States. We believe that our registration efforts will focus on
gaining protection of our trademark Gripevine name and logos
among others. These marks are material to our business as they
enable others to easily identify us as the source of the services
offered under these marks and are essential to our brand
identity.
Circumstances outside our control could pose a threat to our
intellectual property rights. For example, effective intellectual
property protection may not be available in the North America or
other countries in which we operate. Also, the efforts we have
taken to protect our proprietary rights may not be sufficient or
effective. Any significant impairment of our intellectual
property rights could harm our business or our ability to
compete. Also, protecting our intellectual property rights is
costly and time-consuming. Any unauthorized disclosure or use of
our intellectual property could make it more expensive to do
business and harm our operating results.
Companies in the Internet, media and other industries may own
large numbers of patents, copyrights and trademarks and may
frequently request license agreements, threaten litigation or
file suit against us based on allegations of infringement or
other violations of intellectual property rights. We are
currently subject to, and expect to face in the future,
allegations that we have infringed the trademarks, copyrights,
patents and other intellectual property rights of third parties,
including our competitors and non-practicing entities. As we face
increasing competition and as our business grows, we may likely
face claims of infringement.
COMPETITION
Gripevine will compete for consumer traffic with traditional,
offline local business guides and directories, and with other
online providers of local and web search on the basis of a number
of factors, including the reliability of our content, breadth,
depth and timeliness of information and the strength and
recognition of our brand. Gripevine will also compete for a share
of local businesses overall advertising budgets with traditional,
offline media companies and other Internet marketing providers on
the basis of a number of factors, including consumer audience,
effectiveness of our advertising solutions, our pricing structure
and recognition of our brand. Our competitors include the
following types of businesses:
Offline. We primarily compete with offline media
companies and service providers who typically have existing
advertising relationships with local businesses. Services
provided by competitors range from yellow pages listings to
direct mail campaigns to advertising and listings services on
local newspapers, magazines, television and radio.
Online. We compete with Internet search engines,
such as, Google, Yahoo! and Bing. We also compete with various
other online service providers.
Gripevine operates on three levels: (i) local search, business
ratings and reviews industry; (ii) collection and distribution of
customer commentary, sentiment, and feedback to organizations;
and (iii) social customer service, which includes the provision
of company administration and management tools for the
back-office, aimed at customer response and loyalty enhancement.
The main competitors in the ratings and review market are Yelp!,
Angies List, Google Reviews, Trip Advisor (industry niched), and
Zomato (industry niche). The players in this sector concentrate
on publishing reviews to power a local search capability. Yelp,
is publicly-traded on the NYSE with a large and sophisticated
capital structure. Since going public they have expanded into
mobile and international markets. Yelp! as an early entrant to
the reviews industry has been buffeted by accusations of
manipulating reviews and strong-arming businesses for advertising
revenue. Gripevines response to these sentiments is to assist
enterprises, especially small medium sized (SMEs) businesses, to
connect quickly with their customers, absorb and make positive
use of the waves of online commentary, and exploit value-added
features within our proprietary platform to strengthen their
brands. Pricing, as well as service, will be attractive to
Gripevine business users as we disrupt the online review and
social customer service space with our freemium model, always
providing businesses access to their customers regardless if they
pay us or not.
Gripevines other competitors are primarily a compilation of
complaint sites with rudimentary functionalities. None offer
proprietary back-end platform ticket management, like Gripevine.
Their primary business model is to offer a bulletin board, or a
soapbox community, to accumulate complaint content versus
offering resolution or loyalty building capabilities for
businesses.
The business model of Gripevines competitors relies on traffic
arising from search engines such as Google, Bing, and Yahoo, many
of which have competing business-review features. To a certain
extent, competitors have placed their business model at the mercy
of search engine algorithms to favorably index their content.
Gripevines business model, to provide cloud services to
companies, leverages a stronger opportunity for growth and
sustainability beyond the simple attempt to post negative
traffic. This also opens the opportunity to potentially work with
other companies in the social CRM sector who could leverage the
value-added attributes of Gripevine.
Competitors have arisen from our established technology, but the
succesor platforms have not been able to establish their product
as a unique proposition in the market. Most use generic ratings
systems or allow users to find nearby points of interest such as
restaurants, hotels, theatres, hospitals and more; but without
comprehensive features that allow consumers and businesses to
connect and for companies to employ online strategies to build
loyalty.
RISK FACTORS
Risks Related to Our Business and Industry
If we fail to manage our growth effectively, our
brand, results of operations and business could be
harmed.
We anticipate experiencing rapid growth in our operations, which
places substantial demands on management and our operational
infrastructure. Most of our employees have been with us for fewer
than two years and to manage the expected growth of our
operations, we will need to continue to increase the productivity
of our current employees and hire, train and manage new
employees. In particular, we intend to continue to make
substantial investments in our developer, engineering, technical
support, sales and marketing and social community management
organizations. As a result, we must effectively integrate,
develop and motivate a large number of new employees, including
employees in international markets and from any acquired
businesses, while maintaining the beneficial aspects of our
company culture.
As our business matures, we may make periodic changes and
adjustments to our organization in response to various internal
and external considerations, including market opportunities, the
competitive landscape, new and enhanced products, acquisitions,
sales performance, increases in headcount and cost levels. In
some instances, these changes have resulted in a temporary lack
of focus and reduced productivity, which may occur again in
connection with any future changes to our organization and may
negatively affect our results of operations. Similarly, any
significant changes to the way we structure compensation of our
sales organization may be disruptive and may affect our ability
to generate revenue.
To manage our growth, we may need to improve our operational,
financial and management systems and processes, which may require
significant capital expenditures and allocation of valuable
management and employee resources, as well as subject us to the
risk of over-expanding our operating infrastructure. However, if
we fail to scale our operations successfully and increase
productivity, the quality of our platform and efficiency of our
operations could suffer, which could harm our brand, results of
operations and business.
If the demand for information regarding local businesses does not
develop as we expect, or if we fail to address the needs of this
demand, our business will be harmed. We may not be able to
address successfully these risks and difficulties or others,
including those described elsewhere in these risk factors.
Failure to address these risks and difficulties adequately could
harm our business and cause our operating results to suffer.
We may incur significant operating losses and may not
be able to generate sufficient revenue to gain profitability. A
failure to maintain an adequate growth rate will adversely affect
our business and results of operations.
Since the inception of MBE Holdings Inc. (hereinafter referred to
as MBE), MBE has incurred significant operating losses and, as of
December 31, 2016, it had an accumulated deficit of approximately
$2,418,387. Our potential revenue growth rate could decline in
future periods as a result of a variety of factors, including the
maturation of our business sector and the gradual decline in the
number of major geographic markets, especially within North
America, to which we have not fully expanded yet. As a result,
you should not rely on the potential revenue growth or net income
as an indication of our future performance. Our costs may
increase each year and we anticipate our costs to increase in
future periods as we continue to expend substantial financial
resources on: (i) sales and marketing; (ii) our technology
infrastructure; (iii) product and feature development; (iv)
domestic and international expansion efforts; (iv) strategic
opportunities, including commercial relationships and
acquisitions; and (v) general administration, including legal and
accounting expenses related to being a public company.
Proposed investments may not result in increased revenue or
growth in our business. Our costs may also increase as we hire
additional employees, particularly as a result of the significant
competition that we face to attract and retain technical talent.
Our expenses may grow faster than our revenue and may be greater
than we anticipate in a particular period or over time. If we are
unable to maintain adequate revenue growth and to manage our
expenses, we may continue to incur significant losses in the
future and may not be able to regain profitability.
We have a limited operating history in an evolving
industry, which makes it difficult to evaluate our future
prospects and may increase the risk that we will not be
successful.
We have a limited operating history in an evolving industry that
may not develop as expected, if at all. As a result, our
historical operating results may not be indicative of our future
operating results, making it difficult to assess our future
prospects. You should consider our business and prospects in
light of the risks and difficulties we may encounter in this
rapidly evolving industry, which we may not be able to address
successfully. These risks and difficulties include our ability
to, among other things: (i) increase the number of users of our
website and mobile app and the number of reviews and other
content on our platform; (ii) attract and retain new business
clients, many of which may have limited or no online review
experience; (iii) forecast revenue, which may be more difficult
as we engage more company paid accounts, as well as appropriately
estimate and plan our expenses; (iv) continue to earn and
preserve a reputation for providing meaningful and reliable
complaint-resolutions and/or reviews of local businesses; (v)
effectively monetize our mobile products as usage continues to
migrate toward mobile devices; (vi) successfully compete with
existing and future providers of other forms of offline and
online advertising; (vii) successfully compete with other
companies that are currently in, or may in the future enter, the
business of providing information and/or complaint-resolutions
regarding local businesses; (viii) successfully manage our
growth, including in international markets; (ix) successfully
develop and deploy new features and products; (viii) manage and
integrate successfully any acquisitions of businesses, solutions
or technologies; (ix) avoid interruptions or disruptions in our
service or slower than expected load times (x) develop a
scalable, high-performance technology infrastructure that can
efficiently and reliably handle increased usage globally, as well
as the deployment of new features and products; (xi) hire,
integrate and retain talented sales and other personnel; (xii)
effectively manage rapid growth in our sales force, other
personnel and operations; and (xiii) effectively identify, engage
and manage third-party partners and service providers.
We expect a number of factors to cause our operating
results to fluctuate on a quarterly and annual basis, which may
make it difficult to predict our future
performance.
Our operating results could vary significantly from period to
period as a result of a variety of factors, many of which may be
outside of our control. This volatility increases the difficulty
in predicting our future performance and means comparing our
operating results on a period-to-period basis may not be
meaningful. In addition to the other risk factors discussed in
this section, factors that may contribute to the volatility of
our operating results include: (i) changes in our pricing
policies and terms of contracts, whether initiated by us or as a
result of competition; (ii) cyclicality and seasonality, which
may become more pronounced as our growth rate slows; (iii) the
effects of changes in search engine placement and prominence;
(iv) the adoption of any laws or regulations that adversely
affect the growth, popularity or use of the Internet, such as
laws impacting Internet neutrality; (v) the success of our sales
and marketing efforts; (vi) costs associated with defending
intellectual property infringement and other claims and related
judgments or settlements; (vii) interruptions in service and any
related impact on our reputation; (viii) the impact of
fluctuations in currency exchange rates; (ix) changes in consumer
behavior with respect to local businesses; (ix) changes in our
tax rates or exposure to additional tax liabilities; (x) the
impact of worldwide economic conditions, including the resulting
effect on consumer spending at local businesses and the level of
advertising spending by local businesses; and; (xi) the effects
of natural or man-made catastrophic events.
We may require additional capital to support business
growth, and such capital might not be available on acceptable
terms, if at all.
We intend to continue to invest in our business and may require
or otherwise seek additional funds to respond to business
challenges, including the need to develop new features and
products, enhance our existing services, improve our operating
infrastructure and acquire complementary businesses and
technologies. As a result, we may need to engage in equity or
debt financings to secure additional funds. If we raise
additional funds through future issuances of equity or
convertible debt securities, our existing stockholders could
suffer significant dilution, and any new equity securities we
issue could have rights, preferences and privileges superior to
those of our common stock. Any future debt financing we secure
could involve restrictive covenants relating to our capital
raising activities and other financial and operational matters,
which may make it more difficult for us to obtain additional
capital and to pursue business opportunities, including potential
acquisitions. We may not be able to obtain additional financing
on terms favorable to us, if at all. If we are unable to obtain
adequate financing or financing on terms satisfactory to us when
we require it, our ability to continue to support our business
growth and respond to business challenges could be significantly
impaired, and our business may be harmed.
If we are unable to increase traffic to our mobile
app and website, or user engagement on our platform declines, our
revenue, business and operating results may be
harmed.
We will derive substantially all of our revenue from the paid
company accounts of businesses, offering business access to a
robust social customer service management system. Because traffic
to our platform will have an influence on its popularity and the
number of businesses we are able to show, we believe this will
affect the value of our services provided to businesses and
influence the content creation that drives further traffic.
Slower traffic growth rates may harm our business and financial
results. As a result, our ability to grow our business depends on
our ability to increase traffic to and user engagement on our
platform. Our traffic could be adversely affected by factors
including:
|
Reliance on Internet Search Engines. As discussed |
||
|
|
Increasing Competition. The market for online |
|
|
|
Our Automated Artificial Intelligence (AI) Suggestion |
|
|
|
Content Scraping. Other companies may attempt to |
|
|
|
Macroeconomic Conditions. Consumer purchases of |
|
|
|
Internet Access. The adoption of any laws or |
We also anticipate that our traffic growth rate may slow over
time, and potentially decrease in certain periods, as our
business matures and we achieve higher penetration rates. In
particular, the number of major geographic markets, especially
within North America, that we have not yet entered completely and
may decline and further expansion in smaller markets may not
yield similar results or sustain our growth. That our traffic
growth may slow even as we expand our operations. As our traffic
growth rate slows, our success may become increasingly dependent
on our ability to increase levels of user engagement on our
platform. This dependence may increase as the portion of our
revenue derived from company accounts increases. A number of
factors may negatively affect our user engagement, including if:
(i) users engage with other services or activities as an
alternative to our platform; (ii) there is a decrease in the
perceived quality of the content contributed by our users; (iii)
we fail to introduce new and improved features or we introduce
new features that do not effectively address consumer concerns or
needs or otherwise alienate consumers; (iv) technical or other
problems negatively impact the availability and reliability of
our platform or otherwise affect the user experience; (v) users
have difficulty installing, updating or otherwise accessing our
platform as a result of actions by us or third parties; (vi)
users believe that their experience is diminished as a result of
the decisions we make with respect to the frequency, relevance
and prominence of the business and content we display; and (vii)
we do not maintain our brand image or our reputation is damaged.
Consumers are increasingly using mobile devices to
access online services. If our mobile platform and mobile
services are not compelling, or if we are unable to operate
effectively on mobile devices, our business could be adversely
affected.
The number of people who access information about local
businesses through mobile devices, including smartphones, tablets
and handheld computers, has increased dramatically over the past
few years and is expected to continue to increase. Although many
consumers will access our platform both on their mobile devices
and through personal computers, we have seen substantial that the
majority of our traffic growth is in mobile usage. We anticipate
that growth in use of our mobile platform will be the driver of
our growth for the foreseeable future and that usage through
personal computers may continue to decline worldwide. As a
result, we must continue to drive adoption of and user engagement
on our mobile platform, and our mobile app in particular. If we
are unable to drive continued adoption of and engagement on our
mobile app, our business may be harmed and we may be unable to
decrease our reliance on traffic from Google and other search
engines.
In order to attract and retain engaged users of our mobile
platform, the mobile services we introduce must be compelling.
However, the ways in which users engage with our platform and
consume content has and will changed over time, and we expect it
will continue to do so as users increasingly engage via mobile.
This may make it more difficult to provide consumers with the
information they seek, and may also negatively affect our content
if users do not continue to contribute high quality content on
their mobile devices. In addition, building an engaged base of
mobile users may also be complicated by the frequency with which
users change or upgrade their mobile services. In the event users
choose mobile devices that do not already include or support our
mobile app or do not install our mobile app when they change or
upgrade their devices, our traffic and user engagement may be
harmed.
Our success is also dependent on the interoperability of our
mobile products with a range of mobile technologies, systems,
networks and standards that we do not control, such as mobile
operating systems like Android and iOS. We may not be successful
in developing products that operate effectively with these
technologies, systems, networks and standards or in creating,
maintaining and developing relationships with key participants in
the mobile industry, some of which may be our competitors. Any
changes that degrade the functionality of our mobile products,
give preferential treatment to competitive products or prevent us
from delivering advertising could adversely affect mobile usage
and monetization. As new mobile devices and platforms are
released, it is difficult to predict the problems we may
encounter in developing products for these alternative devices
and platforms, and we may need to devote significant resources to
the creation, support and maintenance of such products. If we
experience difficulties in the future integrating our mobile app
into mobile devices, or we face increased costs to distribute our
mobile app, our user growth and operating results could be
harmed. In addition, the mobile market remains a rapidly evolving
market with which we have limited experience. As new devices and
platforms are released, users may begin consuming content in a
manner that is more difficult to monetize.
We will rely on internet search engines and
application marketplaces to drive traffic to our platform,
certain providers of which offer services that compete directly
with our services, such as Yelp. If links to our applications and
website are not displayed prominently, traffic to our platform
could decline and our business would be adversely
affected.
Our success depends in part on our ability to attract users
through unpaid internet search results on search engines like
Google and Bing. The number of users we attract from search
engines to our website (including our mobile website) is due in
large part to how and where information from and links to our
website are displayed on search engine result pages. The display,
including rankings, of unpaid search results can be affected by a
number of factors, many of which are not in our direct control,
and may change frequently. For example, a search engine may
change its ranking algorithms, methodologies or design layouts.
As a result, links to our platform may not be prominent enough to
drive traffic to our platform, and we may not know how or
otherwise be in a position to influence the results. Search
engines such as Google continues to change its methodology in the
ranking of sites and on its mobile search results pages, as such,
the parameters of search engine policies may change from time to
time, be poorly defined and inconsistently interpreted. As a
result, these search engines may unexpectedly penalize our app
install interstitials, which may cause links to our mobile
website to be featured less prominently in search engines such as
Googles mobile search results page, and traffic to both our
mobile website and mobile app may be harmed as a result. We
cannot predict the long-term impact of such changes.
Although traffic to our mobile app may be less reliant on search
results than traffic to our website, growth in mobile device
usage may not decrease our overall reliance on search results if
mobile users use our mobile website rather than our mobile app.
In fact, consumers increasing use of mobile devices may
exacerbate the risks associated with how and where our website is
displayed in search results because mobile device screens are
smaller than personal computer screens and therefore display
fewer search results.
We may also rely on application marketplaces, such as Apples App
Store and Googles Play, to drive downloads of our applications.
In the future, Apple, Google or other marketplace operators may
make changes to their marketplaces that make access to our
services more difficult. For example, our applications may
receive less favorable treatment compared to the promotion and
placement of competing applications, such as the order in which
they appear within marketplaces. Similarly, if problems arise in
our relationships with providers of application marketplaces, our
user growth could be jeopardized.
In some instances, search engines and application marketplaces
may change their displays or rankings in order to promote their
own competing products or services or the products or services of
one or more of our competitors. For example, Google has
integrated its local product offering, Google Local, with certain
of its products, including search. The resulting promotion of
Googles own competing products in its web search results could
potentially negatively impact the search ranking of any website.
Because Google in particular may be the most significant source
of traffic to our website, our success will depend on our ability
to maintain a prominent presence in search results for queries
regarding local businesses on Google. As a result, Googles
promotion of its own competing products, or similar actions by
Google in the future that have the effect of reducing our
prominence or ranking on its search results, could have a
substantial negative effect on our business and results of
operations.
If our users fail to contribute high quality content
or their contributions are not valuable to other users, our
traffic and revenue could be negatively affected.
Our success in attracting users depends on our ability to provide
consumers with the information they seek, which in turn depends
on the quantity and quality of the content contributed by our
users. We believe that as the depth and breadth of the content on
our platform will become more widely known and relevant to
broader audiences, thereby attracting new consumers to our
service. However, if we are unable to provide consumers with the
information they seek, they may stop or reduce their use of our
platform, and traffic to our website and on our mobile app will
decline. If our user traffic declines, our company accounts may
stop or reduce their appearance on our platform and our business
could be harmed. Our ability to provide consumers with valuable
content may be harmed: (i) if our users do not contribute content
that is helpful or reliable; (ii) if our users remove content
they previously submitted; (iii) as a result of user concerns
that they may be harassed or sued by the business they review,
instances of which have occurred in the past on other similar
sector sites and may occur in the future on our platform; and
(iv) as users increasingly contribute content through our mobile
platform because content contributed through mobile devices tends
to be shorter than desktop contribution.
Similarly, if robots, shills or other spam accounts are able to
contribute a significant amount of recommended content, or
consumers perceive a significant amount of our recommended
content to be from such accounts, our traffic and revenue could
be negatively affected. Although we do not believe content from
these sources has had a material impact to date, if our automated
AI software recommends a substantial amount of such content in
the future, our ability to provide high quality content would be
harmed and the consumer trust essential to our success could be
undermined.
In addition, if our platform does not provide current information
about local businesses or users do not perceive reviews on our
platform as relevant, our brand and business could be harmed. For
example, we do not phase out or remove dated reviews, and
consumers may view older reviews as less relevant, helpful or
reliable than more recent reviews.
If we fail to maintain and expand our base of company
accounts, our revenue and our business will be
harmed.
Our ability to grow our business depends on our ability to
maintain and expand our base of company accounts. To do so, we
must convince prospective companies that our services offer a
material benefit and can generate a competitive return relative
to other alternatives. Our ability to do so depends on certain
factors.
|
|
Traffic Quality. The success of our online |
|
|
|
Perception of Our Platform. Our ability to compete |
|
|
|
Macroeconomic Conditions. Adverse macroeconomic |
As is typical in our industry, businesses generally do not have
long-term obligations to purchase our services. Their decisions
to renew depend on the degree of satisfaction with our services
as well as a number of factors that are outside of our control,
including their ability to continue their operations and spending
levels. Small and medium-sized local businesses in particular
have historically experienced high failure rates. As a result, we
may experience attrition in our advertisers in the ordinary
course of business resulting from several factors, including
losses to competitors, declining budgets, closures and
bankruptcies. To grow our business, we must continually add new
company accounts to replace company accounts who choose not to
renew their listing or who go out of business or otherwise fail
to fulfill any contracts with us, which we may not be able to do.
If we fail to further develop our markets
effectively, including international markets where we may have
limited operating experience and may be subject to increased
risks, our revenue and business will be harmed.
We intend to further develop our operations both domestically and
abroad. Our current and future plans will require significant
resources and management attention, and the returns on such
investments may not be achieved for several years, or at all. Our
communities in many of the largest markets in North America are
in a relatively late stage of development, and further
development of smaller markets may not yield similar results. As
a result, our continued growth depends on our ability to
successfully develop potential international communities and
operations. We have no operating history in international
markets, which makes it difficult to evaluate our future
prospects and may increase the risk that we will not be
successful. If we are not able to develop our international
markets as we expect, or if we fail to address the needs of those
markets, our business will be negatively impacted.
Expanding our international operations may also subject us to
risks that we have not faced before or that increase our exposure
to risks that we currently face, including risks associated with:
(i) operating a rapidly growing business in an environment of
multiple languages, cultures, customs, legal systems, regulatory
systems and commercial infrastructures; (ii) recruiting and
retaining qualified, multi-lingual employees, including sales
personnel; (iii) increased competition from local websites and
guides, and potential preferences by local populations for local
providers; (iv) potentially lower levels of demand and user
engagement; (v) our ability to achieve prominent display of our
content in unpaid search results, which may be more difficult in
newer markets where we may have less content and more competitors
than in more established markets; (vi) providing solutions in
different languages for different cultures, which may require
that we modify our solutions and features to ensure that they are
culturally relevant in different countries; (vii) compliance with
applicable foreign laws and regulations, including different
privacy, censorship and liability standards; (viii) the
enforceability of our intellectual property rights; (ix) credit
risk and higher levels of payment fraud; (x) currency exchange
rate fluctuations; (xi) compliance with anti-bribery laws,
including but not limited to the Foreign Corrupt Practices Act
and the U.K. Bribery Act; (xii) foreign exchange controls that
might prevent us from repatriating cash earned outside the United
States; (xiii) political and economic instability in some
countries; (xiv) double taxation of our international earnings
and potential adverse tax consequences due to changes in the tax
laws of the United States or foreign jurisdictions in which we
operate; and (xv) higher costs of doing business internationally.
We may rely on third-party service providers and
strategic partners for many aspects of our business, and any
failure to maintain these relationships could harm our
business.
We may rely on relationships with various third parties to grow
our business, including strategic partners and technology and
content providers. For example, we may rely on third parties for
data about local businesses, mapping functionality, payment
processing and administrative software solutions. Identifying,
negotiating and maintaining relationships with third parties
require significant time and resources, as does integrating their
data, services and technologies onto our platform. It is possible
that these third parties may not be able to devote the resources
we expect to the relationships. We may also have competing
interests and obligations with respect to our partners in
particular, which may make it difficult to maintain, grow or
maximize the benefit for each partnership.
If our relationships with our partners and providers deteriorate,
we could suffer increased costs and delays in our ability to
provide consumers with content or similar services. We may have
disagreements or disputes with our partners about our respective
contractual obligations, which could result in legal proceedings
or negatively affect our brand and reputation. In addition, we
will exercise limited control over our third-party partners and
vendors, which makes us vulnerable to any errors, interruptions
or delays in their operations. If these third parties experience
any service disruptions, financial distress or other business
disruption, or difficulties meeting our requirements or
standards, it could make it difficult for us to operate some
aspects of our business. Any disruption or problems with a
supplier or its services could have an adverse effect on our
reputation, results of operations and financial results.
Similarly, upon expiration or termination of any of our
agreements with third-party providers, we may not be able to
replace the services provided to us in a timely manner or on
terms that are favorable to us, if at all, and a transition from
one partner or provider to another could subject us to
operational delays and inefficiencies.
We face competition for local business directory
traffic and expect competition to increase in the
future.
The market for information regarding local businesses is
intensely competitive and rapidly changing. With the emergence of
new technologies and market entrants, competition is likely to
intensify in the future. We compete for consumer traffic with
traditional, offline local business guides and directories,
internet search engines, such as Google and Bing, review and
social media websites and various other online service providers.
These competitors may include regional review websites that may
have strong positions in particular countries. We also compete
with these companies for the content of contributors, and may
experience decreases in both traffic and user engagement if our
competitors offer more compelling environments.
Certain competitors could use strong or dominant positions in one
or more markets to gain competitive advantage against us in areas
in which we operate, including by: integrating social customer
service, review platforms or features into products they control,
such as search engines, web browsers or mobile device operating
systems; making acquisitions; changing their unpaid search result
rankings to promote their own products; refusing to enter into or
renew licenses on which we depend; limiting or denying our access
to delivery systems; limiting our ability to target or measure
the effectiveness of ads; or making access to our platform more
difficult. This risk may be exacerbated by the trend in recent
years toward consolidation among online media companies,
potentially allowing our larger competitors to offer bundled or
integrated products that feature alternatives to our platform.
Our competitors may also enjoy competitive advantages, such as
greater name recognition, longer operating histories,
substantially greater market share, large existing user bases and
substantially greater financial, technical and other resources.
Traditional television and print media companies, for example,
have large established audiences and more traditional and widely
accepted advertising products. These companies may use these
advantages to offer products similar to ours at a lower price,
develop different products to compete with our current solutions
and respond more quickly and effectively than we do to new or
changing opportunities, technologies, standards or client
requirements. In particular, major internet companies, such as
Google, Facebook, Twitter and Microsoft, may be more successful
than us in developing and marketing online directly to local
businesses, and may leverage their relationships based on other
products or services to gain additional share of advertising
budgets.
To compete effectively, we must continue to invest significant
resources in product development to enhance user experience and
engagement, as well as sales and marketing to expand our base of
advertisers. However, there can be no assurance that we will be
able to compete successfully for users and advertisers against
existing or new competitors, and failure to do so could result in
loss of existing users, reduced revenue, increased marketing
expenses or diminished brand strength, any of which could harm
our business.
Our business depends on strong branding, and any
failure to maintain, protect and/or enhance our brand would hurt
our ability to retain and expand our base of users and
advertisers, as well as our ability to increase the frequency
with which they use our platform.
We are in the early process of developing a strong brand that we
believe will contribute significantly to the success of our
business. Maintaining, protecting and enhancing the Gripevine
brand are critical to expanding our base of users and increasing
the frequency with which they will use our solutions. Our ability
to do so will depend largely on our ability to maintain consumer
trust in our platform and in the quality and integrity of the
user content and other information found on our site, which we
may not do successfully and which may also affect our ability to
create advertising revenues. We plan on dedicating significant
resources to these goals, primarily through our artificial
intelligence (AI) suggestion software, sting operations targeting
the buying and selling of reviews, our consumer alerts program,
coordination with consumer protection agencies and law
enforcement, and, in certain egregious cases, taking legal action
against business we believe to be engaged in deceptive practices.
We also endeavor to remove content from our platform that
violates our terms of service.
Despite these efforts, we cannot guarantee that each of the
proposed numerous reviews on our platform have been recommended
and are useful or reliable or that consumers will trust the
integrity of our content. For example, if our AI suggestion
software does not recommend helpful content or recommends
unhelpful content, consumers and businesses alike may stop or
reduce their use of our platform and products. Some consumers and
businesses may express concern that our technology either
recommends too many reviews, thereby recommending some reviews
that may not be legitimate, or too few reviews, thereby not
recommending some reviews that may be legitimate. If consumers do
not believe our recommended reviews to be useful and reliable,
they may seek other services to obtain the information for which
they are looking, and may not return to our platform as often in
the future, or at all. This would negatively impact our ability
to retain and attract users and advertisers and the frequency
with which they use our platform.
Consumers may also believe that the reviews, photos and other
user content contributed by our company clients or other
employees are influenced by any contractual relationships or are
otherwise biased. Although we will take steps to prevent this
from occurring, we may not be successful in our efforts to
maintain consumer trust. Similarly, the actions of any future
partners may affect our brand if users do not have a positive
experience on the Gripevine Platform. If others misuse our brand
or pass themselves off as being endorsed or affiliated with us,
it could harm our reputation and our business could suffer. Our
website and mobile app also serve as a platform for expression by
our users, and third parties or the public at large may also
attribute the political or other sentiments expressed by users on
our platform to us, which could harm our reputation.
Maintaining and enhancing our brand may also require us to make
substantial investments, and these investments may not be
successful. For example, our trademarks are an important element
of our brand. We may face in the future oppositions from third
parties to our applications to register key trademarks in foreign
jurisdictions in which we expect to expand our presence. If we
are unsuccessful in defending against these oppositions, our
trademark applications may be denied. Whether or not our
trademark applications are denied, third parties may claim that
our trademarks infringe their rights. As a result, we could be
forced to pay significant settlement costs or cease the use of
these trademarks and associated elements of our brand in certain
jurisdictions. Doing so could harm our brand recognition and
adversely affect our business. If we fail to maintain and enhance
our brand successfully, or if we incur excessive expenses in this
effort, our business and financial results may be adversely
affected.
The consumer experience is our highest priority. Our
dedication to making decisions based primarily on the best
interests of consumers may cause us to forgo short-term gains and
advertising revenue.
We base many of our decisions on the best interests of the
consumers who use our platform. We may in the future forgo,
certain expansion or revenue opportunities that we do not believe
are in the best interests of consumers, even if such decisions
negatively impact our results of operations in the short term.
Our approach of putting consumers first may negatively impact our
relationship with prospective advertisers. For example, unless we
believe that a review violates our terms of service, such as
reviews that contain hate speech or bigotry, we will allow the
review to remain on our platform, even if the business disputes
its accuracy. However, consumers must respond to any business
thats proactive in engaging in order to come to an amicable
resolution with any negative review the consumer has posted and
if there is no response by the consumer then the business has an
option to flag as fake any review it deems as inaccurate or fake.
This initiative is only activated if the consumer refuses to
connect with the company in order to try and resolve a negative
review. Even with our flag as fake option, certain advertisers
may still perceive us as an impediment to their success as a
result of negative reviews and ratings. This practice could
result in a loss of advertisers, which in turn could harm our
results of operations. However, we believe that this approach has
been essential to our success in attracting users and increasing
the frequency with which they use our platform. As a result, we
believe this balanced approach will served the long-term
interests of our company and our stakeholders and will continue
to do so in the future.
We rely on the performance of highly skilled
personnel, and if we are unable to attract, retain and motivate
well-qualified team members, our business could be
harmed.
We believe our success will depend on the efforts and talents of
our team members, including our senior management team, software
engineers, marketing professionals and advertising sales team. At
present, all our officers and team members are at-will
contractors, which means they may terminate their business
relationship with us at any time, and their knowledge of our
business and industry could be extremely difficult to replace.
Any changes in our senior management team in particular may be
disruptive to our business. If our senior management team,
including any new hires that we may make, fails to work together
effectively or execute our plans and strategies on a timely
basis, our business could be harmed.
Our future also depends on our continuing ability to attract,
develop, motivate and retain highly qualified and skilled team
members. Identifying, recruiting, training and integrating new
hires will require significant time, expense and attention, and
qualified individuals are in high demand; as a result, we may
incur significant costs to attract them before we can validate
their productivity. Volatility in the price of our Class A common
stock may make it more difficult or costly in the future to use
equity compensation to motivate, incentivize and retain our team
members or future employees. If we fail to manage our hiring
needs effectively, our efficiency and ability to meet our
forecasts, as well as team member morale, productivity and
retention, could suffer, and our business and operating results
could be adversely affected.
Risks Related to Our Technology
Our business is dependent on the uninterrupted and
proper operation of our technology and network infrastructure.
Any significant disruption in our service could damage our
reputation, result in a potential loss of users and engagement
and adversely affect our results of operations.
It is important to our success that users in all geographies be
able to access our platform at all times. We may experience in
the future service disruptions, outages and other performance
problems. Such performance problems may be due to a variety of
factors, including infrastructure changes, human or software
errors and capacity constraints due to an overwhelming number of
users accessing our platform simultaneously. Our platform and
services are highly technical and complex, and may contain errors
or vulnerabilities that could result in unanticipated downtime
for our platform and harm to our reputation and business. Users
may also use our products in unanticipated ways that may cause a
disruption in service for other users attempting to access our
platform. We may encounter such difficulties more frequently as
we acquire companies and incorporate their technologies into our
service. It may also become increasingly difficult to maintain
and improve the availability of our platform, especially during
peak usage times, as our products become more complex and our
user traffic increases.
In some instances, we may not be able to identify the cause or
causes of these performance problems within an acceptable period
of time. If our platform is unavailable when users attempt to
access it or it does not load as quickly as they expect, users
may seek other services to obtain the information for which they
are looking, and may not return to our platform as often in the
future, or at all. This would negatively impact our ability to
attract users and advertisers and increase the frequency with
which they use our platform. We expect to continue to make
significant investments to maintain and improve the availability
of our platform and to enable rapid releases of new features and
products. To the extent that we do not effectively address
capacity constraints, upgrade our systems as needed and
continually develop our technology and network architecture to
accommodate actual and anticipated changes in technology, our
business and operating results may be harmed.
Although the majority of our infrastructures and platform are
cloud based hosted, our systems are still vulnerable to damage or
interruption from catastrophic occurrences such as earthquakes,
fires, floods, power losses, telecommunications failures, cyber
or terrorist attacks and similar events. Acts of terrorism, which
may be targeted at metropolitan areas that have higher population
densities than rural areas where our infrastructures are hosted,
could cause disruptions within our infrastructures or our
advertisers businesses or the economy as a whole. We may not have
sufficient protection or recovery plans in certain circumstances,
such as natural disasters affecting the New York City, New York
and/or Oakville, Ontario area, and our business interruption
insurance may be insufficient to compensate us for losses that
may occur. Our disaster recovery program both internal and cloud
based will contemplate transitioning our platform and data to a
backup center in the event of a catastrophe. Although this
program is not yet functional, if our primary data center shuts
down, there will be a period of time that our services will
remain shut down while the transition to the back-up data center
takes place. During this time, our platform may be unavailable in
whole or in part to our users.
If our security measures are compromised, or if our
platform is subject to cyber security attacks that degrade or
deny the ability of users to access our content, users may
curtail or stop use of our platform.
Our platform involves the storage and transmission of user and
business information, some of which may be private, and security
breaches could expose us to a risk of loss of this information,
which could result in potential liability and litigation.
Security breaches such as cyber-attacks, computer viruses,
break-ins, malware, phishing attacks, attempts to overload
servers with denial-of-service or other attacks and similar
disruptions from unauthorized use of computer systems have become
more prevalent in our industry, have occurred on our systems in
the past and are expected to occur periodically on our systems in
the future. We may be a particularly compelling target for such
attacks as a result of our brand recognition. User and business
owner accounts and listing pages could be hacked, hijacked,
altered or otherwise claimed or controlled by unauthorized
persons. For example, we enable businesses to create online
accounts and each of their business locations. Although we take
steps to confirm that the person setting up the account is
affiliated with the business, our verification systems could fail
to confirm that such person is an authorized representative of
the business, or mistakenly allow an unauthorized person to claim
the businesss listing page. In addition, we face risks associated
with security breaches affecting our third-party partners and
service providers. A security breach at any such third party
could be perceived by consumers as a security breach of our
systems and result in negative publicity, damage to our
reputation and expose us to other losses.
Future disruptions could lead to interruptions, delays or website
shutdowns, causing loss of critical data or the unauthorized
disclosure or use of personally identifiable or other
confidential information. Even if we experience no significant
shutdown or no critical data is lost, obtained or misused in
connection with an attack, the occurrence of such attack or the
perception that we are vulnerable to such attacks may harm our
reputation, our ability to retain existing users and our ability
to attract new users. Although we will develop systems and
processes that are designed to protect our data and prevent data
loss and other security breaches, the techniques used to obtain
unauthorized access, disable or degrade service or sabotage
systems change frequently, often are not recognized until
launched against a target or long after, and may originate from
less regulated and more remote areas around the world. As a
result, these preventative measures may not be adequate and we
cannot provide assurances that they will provide absolute
security.
Any or all of these issues could negatively impact our ability to
attract new users, deter current users from returning to our
platform, cause potential advertisers to cancel their contracts
or subject us to third-party lawsuits or other liabilities. For
example, we will work with a third-party vendor to process credit
card payments and are subject to payment card association
operating rules. Compliance with applicable operating rules will
not necessarily prevent illegal or improper use of our payment
systems, or the theft, loss or misuse of payment information,
however. If our security measures fail to prevent fraudulent
credit card transactions and protect payment information
adequately as a result of employee error, malfeasance or
otherwise, or we fail to comply with the applicable operating
rules, we could be liable to the users and businesses for their
losses, as well as the vendor under our agreement with it, and be
subject to fines and higher transaction fees. In addition,
government authorities could also initiate legal or regulatory
actions against us in connection with such incidents, which could
cause us to incur significant expense and liability or result in
orders or consent decrees forcing us to modify our business
practices.
Some of our features may contain open source
software, which may pose particular risks to our proprietary
software and solutions.
We may use open source software in our services, presently and in
the future. From time to time, we may face claims from third
parties claiming ownership of, or demanding release of, the open
source software or derivative works that we developed using such
software (which could include our proprietary source code), or
otherwise seeking to enforce the terms of the applicable open
source license. These claims could result in litigation and could
require us to purchase a costly license or cease offering the
implicated solutions unless and until we can re-engineer them to
avoid infringement. This re-engineering process could require
significant additional research and development resources. In
addition to risks related to license requirements, use of certain
open source software can lead to greater risks than use of
third-party commercial software because open source licensors
generally do not provide warranties or controls on the origin of
the software. Any of these risks could be difficult to eliminate
or manage, and, if not addressed, could have a negative effect on
our business and operating results.
Failure to protect or enforce our intellectual
property rights could harm our business and results of
operations.
We regard the protection of our patent pending applications,
trade secrets, copyrights, trademarks and domain names as
critical to our success. In particular, we must maintain, protect
and enhance the Gripevine brand. We may pursue the registration
of our domain names, trademarks and service marks through-out the
United States and in certain jurisdictions, within North America
including Canada. We will strive to protect our intellectual
property rights by relying on federal, state and common law
rights, as well as contractual restrictions. We will typically
enter into confidentiality and invention assignment agreements
with our team members, future employees and contractors, as well
as confidentiality agreements with parties with whom we conduct
business in order to limit access to, and disclosure and use of,
our proprietary information. However, these contractual
arrangements and the other steps we will take to protect our
intellectual property may not prevent the misappropriation or
disclosure of our proprietary information or deter independent
development of similar technologies by others.
Effective trade secret, copyright, trademark and domain name
protection is expensive to develop and maintain, both in terms of
initial and ongoing registration requirements and expenses and
the costs of defending our rights. Seeking protection for our
intellectual property, including trademarks and domain names, is
an expensive process and may not be successful, and we may not do
so in every location in which we operate. Litigation may become
necessary to enforce our intellectual property rights, protect
our trade secrets or determine the validity and scope of
proprietary rights claimed by others. For example, we may incur
significant costs in enforcing our trademarks against those who
attempt to imitate our Gripevine brand. Any litigation of this
nature, regardless of outcome or merit, could result in
substantial costs and diversion of management and technical
resources, any of which could adversely affect our business and
operating results.
We may be unable to continue to use the domain names
that we use in our business, or prevent third parties from
acquiring and using domain names that infringe on, are similar
to, or otherwise decrease the value of our brand or our
trademarks or service marks.
We have registered domain names for the websites that we use in
our business, such as Gripevine.com. If we lose the ability to
use a domain name, whether due to trademark claims, failure to
renew the applicable registration or any other cause, we may be
forced to market our products under a new domain name, which
could cause us substantial harm or cause us to incur significant
expense in order to purchase rights to the domain name in
question. In addition, our competitors and others could attempt
to capitalize on our brand recognition by using domain names
similar to ours. Domain names similar to ours have been
registered by others in the United States and elsewhere. We may
be unable to prevent third parties from acquiring and using
domain names that infringe on, are similar to or otherwise
decrease the value of our brand or our trademarks or service
marks. Protecting and enforcing our rights in our domain names
may require litigation, which could result in substantial costs
and diversion of managements attention.
If our goodwill or intangible assets become impaired,
we may be required to record a significant charge to
earnings.
Under accounting principles generally accepted in the United
States, or GAAP, we will review our intangible assets for
impairment when events or changes in circumstances indicate the
carrying value of our goodwill and other intangible assets may
not be recoverable. Goodwill is required to be tested for
impairment at least annually. Factors that may be considered
include declines in our stock price, market capitalization and
future cash flow projections. If future acquisitions do not yield
expected returns, our stock price declines or any other adverse
change in market conditions occurs, a change to the estimation of
fair value could result. Any such change could result in an
impairment charge to our goodwill and intangible assets,
particularly if such change impacts any of our critical
assumptions or estimates, and may have a negative impact on our
financial position and operating results.
Changes in tax laws or tax rulings, or the
examination of our tax positions, could materially affect our
financial position and results of operations.
Tax laws are dynamic and subject to change as new laws are passed
and new interpretations of the law are issued or applied. Our
existing corporate structure and wholly-owned subsidiary have
been implemented in a manner we believe is in compliance with
current prevailing tax laws. However, the tax benefits that we
intend to eventually derive could be undermined due to changing
tax laws. In particular, the current U.S. administration and key
members of Congress have made public statements indicating that
tax reform is a priority, resulting in uncertainty not only with
respect to the future corporate tax rate, but also the U.S. tax
consequences of income derived from income related to
intellectual property earned overseas in low tax jurisdictions.
Certain changes to U.S. tax laws, including limitations on the
ability to defer U.S. taxation on earnings outside of the United
States until those earnings are repatriated to the United States,
as well as changes to U.S. tax laws that may be enacted in the
future, could affect the tax treatment of our foreign earnings.
In addition, many countries in the European Union, as well as a
number of other countries and organizations such as the
Organization for Economic Cooperation and Development, are
actively considering changes to existing tax laws that, if
enacted, could increase our tax obligations in many countries
where we do business. Due to the expanding scale of our
international business activities, any changes in the taxation of
such activities may increase our worldwide effective tax rate and
harm our financial position and results of operations.
In addition, the taxing authorities in the United States and
other jurisdictions where we do business regularly examine our
income and other tax returns. The ultimate outcome of these
examinations cannot be predicted with certainty. Should the IRS
or other taxing authorities assess additional taxes as a result
of examinations, we may be required to record charges to our
operations, which could harm our business, operating results and
financial condition.
We may rely on data from both internal tools and
third parties to calculate certain performance metrics. Real or
perceived inaccuracies in such metrics may harm our reputation
and negatively affect our business.
We intend to implement and track certain performance metrics
including the number of unique devices accessing our mobile app
in a given period, page views and calls and clicks for directions
and map views with internal tools, which are not independently
verified by any third party. Our internal tools may have a number
of limitations and our methodologies for tracking these metrics
may change over time, which could result in unexpected changes to
our metrics, including key metrics that we report. For example,
our metrics may be affected by mobile applications that
automatically contact our servers for regular updates with no
discernable user action involved; this activity can cause our
system to count the device associated with the app as a unique
app device in a given period. If the internal tools we use to
track these metrics over- or under-count performance or contain
algorithm or other technical errors, the data we report may not
be accurate. In addition, limitations or errors with respect to
how we measure data may affect our understanding of certain
details of our business, which could affect our longer-term
strategies.
In addition, certain of our key metrics the number of our desktop
unique visitors and mobile website unique visitors maybe
calculated relying on data from third parties. While these
numbers might be based on what we believe to be reasonable
calculations for the applicable periods of measurement, our
third-party providers may periodically encounter difficulties in
providing accurate data for such metrics as a result of a variety
of factors, including human and software errors. We expect these
challenges to continue to occur, and potentially to increase as
our traffic grows.
There may also be inherent challenges in measuring usage across
our future user base around the world. For example, because these
metrics are based on users with unique cookies, an individual who
accesses our website from multiple devices with different cookies
may be counted as multiple unique visitors, and multiple
individuals who access our website from a shared device with a
single cookie may be counted as a single unique visitor. In
addition, although we will be implementing technology designed to
block low-quality traffic, such as robots, spiders and other
software, we may not be able to prevent all such traffic. For
these and other reasons, the present and/or future calculations
of our desktop unique visitors and mobile website unique visitors
may not accurately reflect the number of people actually using
our platform.
Our measures of traffic and other key metrics may differ from
estimates published by third parties (other than those whose data
we use to calculate our key metrics) or from similar metrics of
our competitors. We will be continually seeking ways to improve
our ability to measure these key metrics, and regularly review
our processes to assess potential improvements to their accuracy.
However, if our users, advertisers, partners and stockholders do
not perceive our metrics to be accurate representations, or if we
discover material inaccuracies in our metrics, our reputation may
be harmed.
Risks Related to Regulatory Compliance and Legal
Matters
We are, and may be in the future, subject to disputes
and assertions by third parties that we violate their rights.
These disputes may be costly to defend and could harm our
business and operating results.
We may face from time to time in the future, allegations that we
have violated the rights of third parties, including patent,
trademark, copyright and other intellectual property rights, and
the rights of current and former team members and/or future
employees, users and business owners. The nature of our business
also exposes us to claims relating to the information posted on
our platform, including claims for defamation, libel, negligence
and copyright or trademark infringement, among others. Businesses
may in the future claim that we are responsible for the
defamatory reviews posted by our users. We expect claims like
these to potentially increase in proportion to the amount of
content on our platform. In some instances, we may elect or be
compelled to remove the content that is the subject of such
claims, or may be forced to pay substantial damages if we are
unsuccessful in our efforts to defend against these claims. If we
elect or are compelled to remove content from our platform, our
products and services may become less useful to consumers and our
traffic may decline, which would have a negative impact on our
business.
We are also regularly exposed to claims based on allegations of
infringement or other violations of intellectual property rights.
Companies in the Internet, technology and media industries own
large numbers of patent and other intellectual property rights,
and frequently enter into litigation. Various non-practicing
entities that own patents and other intellectual property rights
also often aggressively attempt to assert their rights in order
to extract value from technology companies. From time to time, we
may receive notice letters from patent holders alleging that
certain of our products and services infringe their patent
rights. While we intend to pursue patent applications, we do not
currently have any issued patents, and the contractual
restrictions and trade secrets that protect our proprietary
technology provide only limited safeguards against infringement.
This may make it more difficult to defend certain of our
intellectual property rights, particularly related to our core
business.
We expect other claims to be made against us in the future, and
as we face increasing competition and gain an increasingly high
profile, we expect the number of claims against us to accelerate.
The results of litigation and claims to which we may be subject
cannot be predicted with any certainty. Even if the claims are
without merit, the costs associated with defending against them
may be substantial in terms of time, money and management
distraction. In particular, patent and other intellectual
property litigation may be protracted and expensive, and the
results may require us to stop offering certain features,
purchase licenses or modify our products and features while we
develop non-infringing substitutes, or otherwise involve
significant settlement costs. The development of alternative
non-infringing technology or practices could require significant
effort and expense or may not be feasible. Even if claims do not
result in litigation or are resolved in our favor without
significant cash settlements, such matters, and the time and
resources necessary to resolve them, could harm our business,
results of operations and reputation.
Our business is subject to complex and evolving U.S.,
Canadian and potentially other foreign regulations and other
legal obligations related to privacy, data protection and other
matters. Our actual or perceived failure to comply with such
regulations and obligations could harm our
business.
We are subject to a variety of laws in the United States and
Canada that involve matters central to our business, including
laws regarding privacy, data retention, distribution of
user-generated content and consumer protection, among others. For
example, because we will receive, store and process personal
information and other user data, including credit card
information, we will be subject to numerous federal, state and
local laws around the world regarding privacy and the storing,
sharing, use, processing, disclosure and protection of personal
information and other user data. We are also subject to a variety
of laws, regulations and guidelines that regulate the way we
distinguish paid search results and other types of advertising
from unpaid search results.
The application and interpretation of these laws and regulations
are often uncertain, particularly in the new and rapidly evolving
industry in which we operate. For example, we rely on laws
limiting the liability of providers of online services for
activities of their users and other third parties. In the future,
these laws could be tested by any number of claims, including
actions based on invasion of privacy and other torts, unfair
competition, copyright and trademark infringement and other
theories based on the nature and content of the materials
searched, any present and/or future ads posted or any present
and/or future content provided by users. It is difficult to
predict how existing laws will be applied to our business, and if
our business grows and evolves and our solutions are used in a
greater number of countries, we will also become subject to laws
and regulations in additional jurisdictions, which may be
inconsistent with the laws of the jurisdictions to which we are
currently subject. For example, the risk related to liability for
third-party actions may be greater in certain jurisdictions
outside the United States where our protection from such
liability may be unclear.
It is also possible that the interpretation and application of
various laws and regulations may conflict with other rules or our
practices, such as industry standards to which we adhere, our
privacy policies and our privacy-related obligations to third
parties (including, in certain instances, voluntary third-party
certification bodies). Similarly, our business could be adversely
affected if new legislation or regulations are adopted that
require us to change our current practices or the design of our
platform, products or features. For example, regulatory
frameworks for privacy issues are currently in flux worldwide,
and are likely to remain so for the foreseeable future due to
increased public scrutiny of the practices of companies offering
online services with respect to personal information of their
users. The U.S. government, including the White House, the
Federal Trade Commission, the Department of Commerce and many
state governments are reviewing the need for greater regulation
of the collection, processing, storage and use of information
about consumer behavior on the Internet, including regulation
aimed at restricting certain targeted advertising practices. The
European Commission recently approved a new safe harbor program,
the E.U.-U.S. Privacy Shield, covering the transfer of personal
data from the European Union to the United States, and a new
general data protection regulation is expected to take effect in
the European Union by 2018, each of which may be subject to
varying interpretations and evolving practices, which would
create uncertainty for us and possibly result in significantly
greater compliance burdens for companies such as us with users
and operations in Europe. Changes like these could increase our
administrative costs and make it more difficult for consumers to
use our platform, resulting in less traffic and revenue. Such
changes could also make it more difficult for us to provide
effective advertising tools to businesses on our platform,
resulting in fewer advertisers and less revenue.
We believe that our policies and practices will comply with
applicable laws and regulations. However, if our belief proves
incorrect, if these guidelines, laws or regulations or their
interpretations change or new legislation or regulations are
enacted, or if the third parties with whom we share user
information fail to comply with such guidelines, laws,
regulations or their contractual obligations to us, we may be
forced to implement new measures to reduce our legal exposure.
This may require us to expend substantial resources, delay
development of new products or discontinue certain products or
features, which would negatively impact our business. For
example, if we fail to comply with our privacy-related
obligations to users or third parties, or any compromise of
security that results in the unauthorized release or transfer of
personally identifiable information or other user data, we may be
compelled to provide additional disclosures to our users, obtain
additional consents from our users before collecting or using
their information or implement new safeguards to help our users
manage our use of their information, among other changes. We may
also face litigation, governmental enforcement actions or
negative publicity, which could cause our users and advertisers
to lose trust in us and have an adverse effect on our business.
Internal resources expended and expenses incurred in connection
with inquiries and their resolutions could result in negative
publicity and adversely affect our reputation and brand.
Responding to and resolving any future litigation,
investigations, settlements or other regulatory actions may
require significant time and resources, and could diminish
confidence in and the use of our products.
The requirements of being a public company may strain
our resources, divert managements attention and affect our
ability to attract and retain qualified board
members.
As a public company, we are subject to the reporting requirements
of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act,
the listing requirements of the exchange in which we will be
listed and other applicable securities rules and regulations.
Compliance with these rules and regulations has increased, and
will likely continue to increase, our legal and financial
compliance costs, make some activities more difficult,
time-consuming or costly, and place significant strain on our
personnel, systems and resources. In addition, changing laws,
regulations and standards relating to corporate governance and
public disclosure are creating uncertainty for public companies,
increasing legal and financial compliance costs and making some
activities more time consuming. These laws, regulations and
standards are subject to varying interpretations, in many cases
due to their lack of specificity, and, as a result, their
application in practice may evolve over time. This could result
in continuing uncertainty regarding compliance matters, higher
administrative expenses and a diversion of managements time and
attention. Further, if our compliance efforts differ from the
activities intended by regulatory or governing bodies due to
ambiguities related to practice, regulatory authorities may
initiate legal proceedings against us and our business may be
harmed. Being a public company that is subject to these rules and
regulations also makes it more expensive for us to obtain and
retain director and officer liability insurance, and we may in
the future be required to accept reduced coverage or incur
substantially higher costs to obtain or retain adequate coverage.
These factors could also make it more difficult for us to attract
and retain qualified members of our board of directors and
qualified executive officers.
Risks Related to Ownership of Our Common Stock
Our directors and officers are able to exercise
significant influence over matters requiring stockholder
approval.
As of the date of this Current Report, we have 125,248,626 shares
of common stock issued and outstanding. Currently, our directors
and executive officers collectively hold approximately 48.20% of
the voting power of our common stock entitled to vote on any
matter brought to a vote of the stockholders. Moreover, our
Articles of Incorporation authorize 20,000,000 shares of blank
check preferred stock thus providing the Board of Directors to
create rights and preferences for designated shares, possibly
including super voting rights. to Nevada law and our bylaws, the
holders of a majority of our voting stock may authorize or take
corporate action with only a notice provided to our stockholders.
A stockholder vote may not be made available to our minority
stockholders, and in any event, a stockholder vote would be
controlled by the majority stockholders.
Nevada law and our Articles of Incorporation may
protect our directors from certain types of
lawsuits.
Nevada law provides that our officers and directors will not be
liable to us or our stockholders for monetary damages for all but
certain types of conduct as officers and directors. Our Bylaws
permit us broad indemnification powers to all persons against all
damages incurred in connection with our business to the fullest
extent provided or allowed by law. The exculpation provisions may
have the effect of preventing stockholders from recovering
damages against our officers and directors caused by their
negligence, poor judgment or other circumstances. The
indemnification provisions may require us to use our limited
assets to defend our officers and directors against claims,
including claims arising out of their negligence, poor judgment,
or other circumstances.
Our share price may highly likely be volatile, which
substantially increases the risk that you may not be able to sell
your shares at or above the price that you may pay for the
shares.
The trading price of our common stock may highly likely be
volatile and could be subject to wide fluctuations in response to
various factors, some of which are beyond our control. In
addition to the factors discussed in this Risk Factors section
and elsewhere in this Current Report, factors that may cause
volatility in our share price include: (i) actual or anticipated
fluctuations in our financial condition and operating results;
(ii) changes in projected operating and financial results; (iii)
announcements of technological innovations or new offerings by us
or our competitors; (iv) actual or anticipated changes in our
growth rate relative to our competitors; (v) announcements by us
or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital-raising activities or
commitments; (vi) additions or departures of key personnel; (vii)
actions securities analysts who may cover our company, such as
publishing research or forecasts about our business (and our
performance against such forecasts), changing the rating of our
common stock or ceasing coverage of our company; (viii) investor
sentiment with respect to our competitors, business partners and
industry in general; (ix) reporting on our business by the
financial media, including television, radio and press reports
and blogs; (x) fluctuations in the value of companies perceived
by investors to be comparable to us; (xi) changes in the way we
measure our key metrics; (xii) sales of our common stock; (xii)
changes in laws or regulations applicable to our solutions;
(xiii) share price and volume fluctuations attributable to
inconsistent trading volume levels of our shares; and (xiv)
general economic and market conditions such as recessions,
interest rate changes or international currency fluctuations.
Furthermore, the stock markets have recently experienced extreme
price and volume fluctuations that have affected and continue to
affect the market prices of equity securities of many companies.
These fluctuations often have been unrelated or disproportionate
to the operating performance of those companies. In the past,
companies that have experienced volatility in the market price of
their stock have been subject to securities class action
litigation. We could be the target of additional litigation of
this type in the future. Securities litigation against us could
result in substantial costs and divert our managements time and
attention from other business concerns, which could harm our
business.
We do not intend to pay dividends for the foreseeable
future, and as a result, our stockholders ability to achieve a
return on their investment will depend on appreciation in the
price of our common stock.
We have never declared or paid any cash dividends on our common
stock and do not intend to pay any cash dividends in the
foreseeable future. We anticipate that we will retain all of our
future earnings for use in the development of our business and
for general corporate purposes. Any determination to pay
dividends in the future will be at the discretion of our board of
directors. Accordingly, investors must rely on sales of their
common stock after price appreciation, which may never occur, as
the only way to realize future gains on their investments.
Future sales of our common stock in the public market
could cause our share price to decline.
Sales of a substantial number of shares of our common stock in
the public market, particularly sales by our directors, officers,
employees and significant stockholders, or the perception that
these sales might occur, could depress the market price of our
common stock and could impair our ability to raise capital
through the sale of additional equity securities. As of the date
of this Current Report, we have 125,248,626 shares of common
stock issued and outstanding of which 80,248,626 shares are
restricted and 45,000,000 shares are free-trading.
There is no significant active trading market for our
shares of common stock and if an active trading market does not
develop, purchasers of our shares may be unable to sell them
publicly.
There is no significant active trading market for our shares, and
we do not know if an active trading market will develop. An
active market will not develop unless broker-dealers develop
interest in trading our shares, and we may be unable to generate
interest in our shares among broker-dealers until we generate
meaningful revenues and profits from operations. Until that time
occurs, if it does at all, purchasers of our shares may be unable
to sell them publicly. In the absence of an active trading
market: (i) investors may have difficulty buying and selling our
shares or obtaining market quotations; (ii) market visibility for
our common stock may be limited; and (iii) a lack of visibility
for our common stock may depress the market price for our shares.
Moreover, the market price for our shares is likely to be highly
volatile and subject to wide fluctuations in response to various
factors, including the following: (i) actual or anticipated
fluctuations in our quarterly operating results and revisions to
our expected results; (ii) changes in financial estimates by
securities research analysts; (iii) conditions in the market for
our products; (iv) changes in the economic performance or market
valuations of companies specialized in our sector; (v)
announcements by us or our competitors of new services, strategic
relationships, joint ventures or capital commitments; (vi)
addition or departure of key personnel; (vii) litigation related
to any intellectual property; and (viii) sales or perceived
potential sales of our shares.
In addition, the securities market has from time to time, and to
an even greater degree since 2008, experienced significant price
and volume fluctuations that are not related to the operating
performance of particular companies. These market fluctuations
may also have a material adverse effect on the market price of
our ordinary shares. Furthermore, in the past, following periods
of volatility in the market price of a public companys
securities, shareholders have frequently instituted securities
class action litigation against that company. Litigation of this
kind could result in substantial costs and a diversion of our
managements attention and resources.
Our common stock is considered to be Penny
Stock.
Our common stock is considered to be a “penny stock” because it
meets one or more of the definitions in Rules 15g-2 through 15g-6
promulgated under Section 15(g) of the Securities Exchange Act of
1934, as amended. These include but are not limited to, the
following: (i) the stock trades at a price less than $5.00 per
share; (ii) it is not traded on a “recognized” national
exchange; (iii) it is not quoted on The NASDAQ Stock Market, or
even if quoted, has a price less than $5.00 per share; or (iv) is
issued by a company with net tangible assets less than $2.0
million, if in business more than a continuous three years, or
with average revenues of less than $6.0 million for the past
three years. The principal result or effect of being designated a
“penny stock” is that securities broker-dealers cannot
recommend the stock but must trade it on an unsolicited basis.
The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in “penny stocks.” Penny stocks
generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current
price and volume information with respect to transactions in such
securities is provided by the exchange or system). Penny stock
rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the SEC, which
specifies information about penny stocks and the nature and
significance of risks of the penny stock market. A broker-dealer
must also provide the customer with bid and offer quotations for
the penny stock, the compensation of the broker-dealer, and sales
person in the transaction, and monthly account statements
indicating the market value of each penny stock held in the
customer’s account. In addition, the penny stock rules require
that, prior to a transaction in a penny stock not otherwise
exempt from those rules, the broker-dealer must make a special
written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These disclosure requirements may
have the effect of reducing the trading activity in the secondary
market for stock that becomes subject to those penny stock rules.
If a trading market for our common stock develops, our common
stock will probably become subject to the penny stock rules, and
shareholders may have difficulty in selling their shares.
Broker-Dealer requirements may affect trading and
liquidity.
Section 15(g) of the Securities Exchange Act of 1934, as amended,
and Rule 15g-2 promulgated thereunder by the SEC require
broker-dealers dealing in penny stocks to provide potential
investors with a document disclosing the risks of penny stocks
and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for
the investor’s account. Potential investors in our common stock
are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be “penny stocks.”
Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such
stocks before selling any penny stock to that investor. This
procedure requires the broker-dealer to (i) obtain from the
investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably
determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has
sufficient knowledge and experience as to be reasonably capable
of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the
basis on which the broker-dealer made the determination in (ii)
above; and (iv) receive a signed and dated copy of such statement
from the investor, confirming that it accurately reflects the
investor’s financial situation, investment experience and
investment objectives. Compliance with these requirements may
make it more difficult for holders of our common stock to resell
their shares to third parties or to otherwise dispose of them in
the market or otherwise.
We were previously deemed a shell company under SEC
regulations, which will affect sales of our common stock in
reliance on Rule 144 of the Securities Act and subject to the
requirements of Rule 144(i). Moreover, sales of our common stock
relying upon Rule 144 may depress prices in the market for our
common stock by a material amount.
Rule 144 under the Securities Act, which generally permits the
resale, subject to various terms and conditions, of restricted
securities after they have been held for six months will not
immediately apply to our common stock because we have been
designated as a shell company under SEC regulations. to Rule
144(i), securities issued by a current or former shell company
that otherwise meet the holding period and other requirements of
Rule 144 nevertheless cannot be sold in reliance on Rule 144
until one year after the date on which the issuer filed current
Form 10 information (as defined in Rule 144(i)) with the SEC
reflecting that it ceased being a shell company, and provided
that at the time of a proposed sale to Rule 144, the issuer has
satisfied certain reporting requirements under the Exchange Act.
As of the date of this Current Report, management is deeming that
we are no longer a shell company. Thus, the reporting
requirements of Rule 144(i) will apply and restrictive legends on
certificates for shares of our common stock cannot be removed
until one year from the date of this Current Report or except in
connection with an actual sale that is subject to an effective
registration statement under or an applicable exemption from the
registration requirements of, the Securities Act.
Securities saleable to the Rule 144 exemption from registration
may only be resold if all of the requirements of Rule 144 have
been met, including, but not limited to, the requirement that the
issuer of the securities have made available all required public
information. However, there is no limit on the amount of
restricted securities that may be sold by a non-affiliate (i.e. a
stockholder who has not been an officer, director or control
person for at least 90 consecutive days) after the restricted
securities have been held by the owner for a period of at least
six months and the other requirements of Rule 144 have been
satisfied. Presently shares of restricted common stock held by
non-affiliates of the Company may be sold, subject to compliance
with Rule 144, six months after issuance, provided that our
Exchange Act registration remains in effect and we are current in
our disclosure reporting obligations.
Moreover, when our shareholders are able to use Rule 144 to
remove the restrictive legend, having met the applicable holding
periods imposed by Rule 144 under the Securities Act, there is a
significant risk that sales under Rule 144 or under any other
exemption from the Securities Act or to registration of shares of
common stock of present stockholders, may have a depressive
effect upon the price of our common stock in the over-the-counter
market, especially in situations where a large volume of shares
is offered for sale at the same time.
MANAGEMENT DISCUSSION AND ANALYSISAND PLAN OF
OPERATIONS
MBE HOLDINGS INC.
Results of Operations
These charts and discussions summarize MBEs financial statements
for the nine months ended September 30, 2016 and year ended
December 31, 2015 and should be read in conjunction with the
financial statements and notes thereto, included as an exhibit to
this Current Report on Form 8-K.
Balance sheet as at September 30, 2016 and December 31,
2015
At September 30, 2016, MBEs current assets were $33,317 and our
current liabilities were $2,473,352. Current assets were
comprised of $28,301 in cash and $5,016 in prepaid and other
receivables. Current liabilities were comprised of: (i) $13,720
in accrued liabilities; (ii) $1,949,118 in amounts due to related
parties; and (iii) $510,514 in amounts due to a shareholder.
As of September 30, 2016, MBEs total assets were $54,965
comprised of $33,317 in current assets and equipment valued at
$21,648. The increase in total assets during the nine month
period ended September 30, 2016 from fiscal year ended December
31, 2015 was primarily due to the increase in cash of $2,667 and
in prepaid and other receivables of $2,338.
As of September 30, 2016, MBEs total liabilities were $2,473,352
comprised of $2,473,352 in current liabilities. The increase in
liabilities of $1,035,431 during the nine month period ended
September 30, 2016 from fiscal year ended December 31, 2015 was
primarily due to the amounts due to related parties of $944,382.
Stockholders deficit increased from ($1,398,509) for fiscal year
ended December 31, 2015 to stockholder deficit of ($2,418,387)
for the nine month period ended September 30, 2016.
Statement of Operations
|
Summary Comparison of Operating Results |
||||||||
|
Nine Month Period ended September 30 |
||||||||
|
|
|
|||||||
|
Total Operating Expenses |
$ | 934,578 | $ | 470,313 | ||||
|
Comprehensive Loss |
(1,019,878 | ) | (345,037 | ) | ||||
|
Net Loss Per Share |
(0.006 | ) | (0.003 | ) |
For the Nine Month Period Ended September 30, 2016
Compared to Nine Month Period Ended September 30, 2015
MBEs comprehensive loss for the nine month period ended September
30, 2016 was $1,019,878 compared to a comprehensive loss of
$345,037 during the nine month period ended September 30, 2015
(an increase in comprehensive loss of $674,841. MBE did not
generate any revenue during the nine month periods ended November
30, 2016 and November 30, 2015, respectively.
During the nine month period ended September 30, 2016, MBE
incurred operating expenses of $934,578 compared to $470,313
incurred during the nine month period ended September 30, 2015
(an increase of $464,265). These operating expenses incurred
during the nine month period ended September 30, 2016 consisted
of: (i) general and administrative of $234,052 (2015: $94,114);
and (ii) research and development expenses of $700,526 (2015:
$376,199).
Operating expenses incurred during the nine month period ended
September 30, 2016 increased compared to the nine month period
ended Septemberr 30, 2015 primarily due to an increase in general
and administrative expenses of $139,938 and research and
development of $324,327. During the nine month period ended
September 30, 2016, MBE also incurred an exchange gain of $215
(2015: $188).
Thus, MBEs net loss during the nine month period ended September
30, 2016 was $934,793 compared to a loss from operations of
$470,501 during the nine month period ended September 30, 2015.
During the nine month period ended September 30, 2016, MBE
incurred a translation adjustment of ($85,085) as compared to a
translation adjustment of $125,464 incurred during the nine month
period ended September 30, 2015.
Therefore, MBE realized a comprehensive loss of $1,019,878 or
$0.006 per share for the nine month period ended September 30,
2016 compared to a comprehensive loss of $345,037 or $0.003 per
share for the nine month period ended September 30, 2015. The
weighted average number of shares outstanding was 157,208,778 for
the nine month periods ended September 30, 2016 and September 30,
2015, respectively.
For the Three Month Period Ended September 30, 2015
Compared to Three Month Period Ended September 30, 2015.
MBEs comprehensive loss for the three month period ended
September 30, 2016 was $439,023 compared to a comprehensive loss
of $116,811 during the three month period ended September 30,
2015 (an increase in net loss of $322,212). We did not generate
any revenue during the three month periods ended September 30,
2016 and September 30, 2015, respectively.
During the three month period ended September 30, 2016, we
incurred operating expenses of $410,420 compared to $158,668
incurred during the three month period ended September 30, 2015
(an increase of $251,752). These operating expenses incurred
during the three month period ended September 30, 2016 consisted
of: (i) general and administrative of $137,428 (2015: $33,028);
and (ii) research and development expenses of $272,992 (2015:
$125,640). Operating expenses incurred during the three month
period ended September 30, 2016 increased compared to the three
month period ended September 30, 2015 primarily due to an
increase in professional fees of $104,400 and research and
development of $147,352. During the three month period ended
September 30, 2016, MBE also incurred an exchange gain of $241
(2015: ($36)).
Thus, MBEs net loss during the three month period ended September
30, 2016 was $410,661 compared to a net loss of $158,632 during
the three month period ended September 30, 2015.
During the three month period ended September 30, 2016, MBE
incurred a translation adjustment of ($28,362) compared to a
translation adjustment of $41,821.
Therefore, MBE realized a comprehensive loss of $439,023 or
$0.003 per share for the three month period ended September 30,
2016 compared to a net loss of $116,811 or $0.001 per share for
the three month period ended September 30, 2015. The weighted
average number of shares outstanding was 157,208,778 for the
three month periods ended September 30, 2016 and September 30,
2015, respectively.
Liquidity and Capital Resource
Cash Flows from Operating Activities
MBE has not generated positive cash flows from operating
activities. For the nine month period ended September 30, 2016,
net cash flows used in operating activities was $934,007 compared
to net cash flows used in operating activities of $458,960 for
the nine month period ended September 30, 2015. Net cash flows
used in operating activities consisted primarily of a net loss of
$934,793 (2015: $470,501), which was partially adjusted by $4,469
(2015: ($1,856)) in depreciation. Net cash flows used in
operating activities was also changed by: (i) decrease in prepaid
expenses and other receivables of $2,171 (2015: $2,222) and
accrued liabilities of $1,512 (2015: $11,907).
Cash Flows from Investing Activities
For the nine month period ended September 30, 2016, net cash
flows used in investing activities was $14,322 in purchase of
equipment compared to $11,102 for the nine month period ended
September 30, 2015.
Cash Flows from Financing Activities
For the nine month period ended September 30, 2016, net cash
flows provided by financing activities was $949,564 (2015:
$553,615) consisting of: (i) $881,582 (2015: $267,600) due to
related parties; and (ii) $67,982 (2015: $286,015) due to
shareholder.
GRIPEVINE INC.
Results of Operation
The following discussions are based on our consolidated financial
statements, including our subsidiaries. These charts and
discussions summarize our financial statements for the nine
months ended November 30, 2016 and November 30, 2015 and should
be read in conjunction with the financial statements and notes
thereto, included with our most recent Form 10-K for fiscal year
ended February 29, 2016.
Balance sheet as at November 30, 2016 and February 29,
2016
At November 30, 2016, our current assets were $8 and our current
liabilities were $4,146. Current assets comprised $8 in cash and
current liabilities comprised of $4,146 in accrued liabilities.
As of November 30, 2016, our total assets were $8 comprised of $8
in current assets. The decrease in total assets during the nine
month period ended November 30, 2016 from fiscal year ended
February 29, 2016 was primarily due to the decrease in cash of
$15,465.
As of November 30, 2016, our total liabilities were $4,146
comprised of $4,146 in current liabilities. The increase in
liabilities of $3,805 during the nine month period ended November
30, 2016 from fiscal year ended February 29, 2016 was primarily
due to the filing and professional fess.
Stockholders equity decreased from $15,132 for fiscal year ended
February 29, 2016 to stockholder deficit of $4,138 for the nine
month period ended November 30, 2016.
Statement of Operations
|
SUMMARY COMPARISON OF OPERATING RESULTS |
||||||||
|
Nine Month Period ended November 30 |
||||||||
|
|
|
|||||||
|
Total Operating Expenses |
$ | 19,270 | $ | 24,733 | ||||
|
Net Loss |
(19,270 | ) | (24,733 | ) | ||||
|
Net Loss Per Share |
(0.00 | ) | (0.00 | ) |
For the nine months ended November 30, 2016 and
2015.
Our net loss for the nine month period ended November 30, 2016
was $19,270 compared to a net loss of $24,733 during the nine
month period ended November 30, 2015 (a decrease in net loss of
$5,463. We did not generate any revenue during the nine month
periods ended November 30, 2016 and November 30, 2015,
respectively.
During the nine month period ended November 30, 2016, we incurred
operating expenses of $19,270 compared to $24,733 incurred during
the nine month period ended November 30, 2015 (a decrease of
$5,463. These operating expenses incurred during the nine month
period ended November 30, 2016 consisted of: (i) general and
administrative of $7,483 (2015: $4,502); and (ii) professional
fees of $11,787 (2015: $20,231).
Operating expenses incurred during the nine month period ended
November 30, 2016 decreased compared to the nine month period
ended November 30, 2015 primarily due to a decrease in
professional fees of $8,444, partially offset by an increase in
General expenses amounting to $2,981.
Our loss from operations during the nine month period ended
November 30, 2016 was $19,270 compared to a loss from operations
of $24,733 during the nine month period ended November 30, 2015.
During the nine month period ended November 30, 2016 and November
30, 2015, respectively, we did not incur any other expense.
Therefore, we realized a net loss of $19,270 or $0.0000 per share
for the nine month period ended November 30, 2016 compared to a
net loss of $24,733 or $0.0000 per share for the nine month
period ended November 30, 2015. The weighted average number of
shares outstanding was 120,000,000 post Forward Stock Split for
the nine month periods ended November 30, 2016 and November 30,
2015, respectively.
For the three months ended November 30, 2016 and
2015.
Our net loss for the three month period ended November 30, 2016
was $3,870 compared to a net loss of $2,642 during the three
month period ended November 30, 2015 (an increase in net loss of
$1,228). We did not generate any revenue during the three month
periods ended November 30, 2016 and November 30, 2015,
respectively.
During the three month period ended November 30, 2016, we
incurred operating expenses of $3,870 compared to $2,642 incurred
during the three month period ended November 30, 2015 (a decrease
of $1,228). These operating expenses incurred during the three
month period ended November 30, 2016 consisted of: (i) general
and administrative of $1,795 (2015: $1,189); and (ii)
professional fees of $2,075 (2015: $1,453). Operating expenses
incurred during the three month period ended November 30, 2016
decreased compared to the three month period ended November 30,
2015 primarily due to an increase in professional fees of $622
and general and administrative costs of $606.
Our loss from operations during the three month period ended
November 30, 2016 was $3,870 compared to a loss from operations
of $2,642 during the three month period ended November 30, 2015.
During the three month period ended November 30, 2016 and
November 30, 2015, respectively, we did not incur any other
expense.
Therefore, we realized a net loss of $3,870 or $0.0000 per share
for the three month period ended November 30, 2016 compared to a
net loss of $2,642 or $0.0000 per share for the three month
period ended November 30, 2015. The weighted average number of
shares outstanding was 120,000,000 post-Forward Stock Split for
the three month periods ended November 30, 2016 and November 30,
2015, respectively.
Liquidity and Capital Resource
Cash Flows from Operating Activities
We have not generated positive cash flows from operating
activities. For the nine month period ended November 30, 2016,
net cash flows used in operating activities was $15,465 compared
to net cash flows used in operating activities of $26,278 for the
nine month period ended November 30, 2015. Net cash flows used in
operating activities consisted primarily of a net loss of $19,270
(2015: $24,733), which was partially adjusted by $3,805 (2015:
($1,325)) in accounts payable and accrued liabilities.
Cash Flows from Investing Activities
For the nine month period ended November 30, 2016 and November
30, 2015, net cash flows used in investing activities was $-0- .
Cash Flows from Financing Activities
For the nine month periods ended November 30, 2016 and November
30, 2015, net cash flows provided from financing activities was
$-0-.
Our cash balance at November 30, 2016 was $8. If additional funds
become required before generation of revenue, the additional
funding may come from debt financing or equity financing from the
sale of our common stock.
Our future financial results are also uncertain due to a number
of factors, some of which are outside our control. These factors
include, but are not limited to: (i) our ability to raise
additional funding; and (ii) interest by online users to retain
us for our services, which will generate revenue.
Due to our lack of operating history and present inability to
generate revenues, our auditors have stated their opinion that
there currently exists a substantial doubt about our ability to
continue as a going concern.
Our cash balance at November 30, 2016 was $8. If additional funds
become required before generation of revenue, the additional
funding may come from debt financing or equity financing from the
sale of our common stock.
Our future financial results are also uncertain due to a number
of factors, some of which are outside our control. These factors
include, but are not limited to: (i) our ability to raise
additional funding; and (ii) interest by online users to retain
us for our services, which will generate revenue.
Due to our lack of operating history and present inability to
generate revenues, our auditors have stated their opinion that
there currently exists a substantial doubt about our ability to
continue as a going concern.
Future Financings
As at November 30, 2016, we had a working capital deficit of
$4,138 and we will require additional financing in order to
enable us to proceed with our plan of operations.
When we will require additional financing, there can be no
assurance that additional financing will be available to us, that
it can be obtained on commercially reasonable terms. If we are
not able to obtain the additional financing on a timely basis, we
will not be able to meet our other obligations as they become
due. We are pursuing various alternatives to meet our immediate
and long-term financial requirements.
We anticipate continuing to rely on equity sales of our common
stock in order to fund our business operations. Issuances of
additional shares will result in dilution to existing
stockholders. There is no assurance that we will achieve any
additional sales of equity securities or arrange for debt or
other financing to fund our planned business activities.
Our auditor has issued a going concern opinion. This means that
there is substantial doubt that we can continue as an on-going
business for the next twelve months unless we generate sufficient
revenues. There is no assurance we will ever reach that point. In
the meantime the continuation of the Company is dependent upon
the continued financial support from our shareholders, our
ability to obtain necessary equity financing to continue
operations and the attainment of profitable operations.
Our operations and financial results are subject to various risks
and uncertainties that could adversely affect our business,
financial condition and results of operations.
We require approximately $15,000 for the next 12 months as a
reporting issuer and additional funds are required. Before
generation of revenue, the additional funding may come from
equity financing from the sale of our common stock or loans from
management or related third parties. In the event we do not raise
sufficient capital to implement its planned operations or divest,
your entire investment could be lost.
Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements during nine-month
period ended November 30, 2016 that have, or are reasonably
likely to have, a current or future affect on our financial
condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are
material to the Corporations interests.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
The discussion and analysis of our financial condition and plan
of operations is based upon our consolidated financial
statements, which have been prepared in accordance with U.S.
generally accepted accounting principles (GAAP). The preparation
of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we
evaluate our estimates including, among others, those affecting
revenue, the allowance for doubtful accounts, the salability of
inventory and the useful lives of tangible and intangible assets.
The discussion below is intended as a brief discussion of some of
the judgments and uncertainties that can impact the application
of these policies and the specific dollar amounts reported on our
financial statements. We base our estimates on historical
experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form our
basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions, or if management made different
judgments or utilized different estimates. Many of our estimates
or judgments are based on anticipated future events or
performance, and as such are forward-looking in nature, and are
subject to many risks and uncertainties, including those
discussed elsewhere in this Current Report on Form 8-K. We do not
undertake any obligation to update or revise this discussion to
reflect any future events or circumstances.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Beneficial Ownership Chart
The following table sets forth certain information, as of the
date of this Current Report, with respect to the beneficial
ownership of the outstanding common stock by: (i) any holder of
more than five (5%) percent; (ii) each of the Corporations
executive officers and directors; and (iii) the Corporations
directors and executive officers as a group. Except as otherwise
indicated, each of the stockholders listed below has sole voting
and investment power over the shares beneficially owned. Unless
otherwise indicated, each of the stockholders named in the table
below has sole voting and investment power with respect to such
shares of common stock.Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise
indicated. As of the date of this Current Report, there are
125,248,626 shares of common stock issued and outstanding.
|
Name and Address of Beneficial |
Amount and Nature of Beneficial |
Percentage of Beneficial Ownership |
||||||
|
Directors and Officers: |
||||||||
|
Richard Hue 1282A Cornwall Road Oakville, Ontario Canada L6J 7W5 |
55,000,000 | 43.91 | % | |||||
|
James Liolios 1282A Cornwall Road Oakville, Ontario Canada L6J 7W5 |
11,000,000 | 8.78 | % | |||||
|
Mark Vange 1282A Cornwall Road Oakville, Ontario Canada L6J 7W5 |
500,000 | 0.40 | % | |||||
|
All executive officers and directors as a group (3 |
66,500,000 | 53.09 | % | |||||
|
5% or greater shareholders |
||||||||
|
1322975 Alberta Ltd. (2) 10033 80 Avenue Suite 101 Edmonton, Alberta Canada T6E 1T4 |
7,500,000 | 5.99 | % |
_____________
|
* |
Less than one percent. |
|
(1) |
Under Rule 13d-3, a beneficial owner of a security includes |
|
(2) |
The person who has sole dispositive and voting power over |
EXECUTIVE OFFICERS AND DIRECTORS
The Corporation refers to Item 1.01 and Item 3.02 above
concerning the change in control.
|
Name |
Position |
Age |
||
|
Richard Hue |
President/Chief Executive Officer, Secretary, |
|
||
|
James Liolios |
Chief Operating Officer and a Director |
|
||
|
Mark Vange |
Chief Technical Officer and a Director |
|
Our directors hold office for one-year terms or until their
successors have been elected and qualified.
The biographies of the new directors and officers are set forth
below as follows:
Richard Hue. Mr. Hue has worked with companies
in the service and technology industries. He is an experienced,
passionate entrepreneur and self-professed, startup junkie. Mr.
Hues experience working with companies in the service and
technology sectors has offered founders experience and contacts
in numerous fields. As lead investment manager of a privately
managed family fund for the past twenty years, Mr. Hue also
oversees many investments from real estate to technology. Mr. Hue
began his career as an investment banker with one of Wall Streets
major investment banking institutions providing him with many
years of management and investment banking experience. His duties
and responsibilities included: (i) researching and analyzing
solutions for diversification and enhancement of portfolios; (ii)
monitoring finances by analyzing cash flow and other financial
statements; (iii) preparing valuation analyses; and (iv)
analyzing data pertaining to debt and credit opportunities for
various companies. And, as the former president of RT Equity
Inc., a boutique merchant banking firm that was eventually
acquired by a financial institution, Mr. Hue was responsible for
overseeing the development of startups, restructuring business
operations and expansions of private and public companies, many
in the technology and biotech sector. Mr. Hue continues to
successfully apply his investment and management skills to small
and mid-cap companies both in North America and internationally.
James Liolios. Mr. Liolios is the companies
resident expert on information security and cloud infrastructure.
His expertise spans from the public sector where he was involved
in complex systems security architectures for the Department of
Defence to the private sector as Sr. Security Analyst for
numerous Fortune 1000 companies. As a Co-Founder and
Vice-President of the InfoSec Society (an official association)
at Seneca College in the area of information security, James is
involved in mentoring young people in this space. His experience
as guest speaker at numerous infosec events and recipient of
numerous Blackhat Conference Scholarships when he was a student,
allows students he mentors an inside perspective into the world
of cyber security. Mr. Liolios is also Co-Founder at Red Trait
Ventures, where he provides a unique blend of leadership and
management skills applied in a technical context with development
teams steering them towards a common technical vision.
Mark Vange. Mr. Vange has been a technologist
and entrepreneur for over two decades. Mr. Vange was chief
technology officer of VR1 Inc. where he led the development of
network technology to facilitate massively multiplayer online
games. During 2004, Mr. Vange founded Mobile Post Production for
rapid porting of applications between various mobile telephony
platforms. He is also the former Chief Technology Officer of
Electronic Arts and a successful advisor to companies and
investment funds for technology that enables community building
and business operations.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes all compensation awarded to, earned
by, or paid to the executive officers by any person for all
services rendered in all capacities for the fiscal year ended
February 29, 2016.
|
Fiscal |
AnnualSalary |
Bonus |
Stock Awards |
Option Awards |
Total |
|||||||||||||||||
|
Name and Principal Position |
Year |
($) |
($) |
($) |
($) |
($) |
||||||||||||||||
|
Rosy Rodriguez Prior President/Chief Executive Officer |
|
$ | -0- | $ | $ | $ | $ | -0- |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
As of February 29, 2016, there were no outstanding equity awards
held by executive officers.
BOARD INDEPENDENCE
None of our directors qualify as independent directors as that
term is defined by applicable listing standards of The NASDAQ
Stock Market and SEC rules, including the rules relating to the
independence standards of an audit committee and the non-employee
director definition of Rule 16b-3 promulgated under the Exchange
Act. As a requirement to listing the Corporations common stock on
The Bulletin Board or the NASDAQ Capital Market or other
exchange, the Corporation intends in the future to retain
independent directors. The Board of Directors composition (and
that of its committees) will be subject to the corporate
governance provisions of its primary trading market, including
the requirement for appointment of independent directors in
accordance with the Sarbanes-Oxley Act of 2002, and regulations
adopted by the SEC and NASD thereto.
Director Compensation
The Corporation does not currently compensate our directors with
cash for acting as such, although we may do so in the future. The
Corporation also reimburses its directors for reasonable expenses
incurred in connection with their service as directors.
Code of Ethics
The Corporation intends to adopt a code of ethics that applies to
its officers, directors and employees, including our Chief
Executive Officer and Chief Financial Officer, but has not done
so to date.
BOARD COMMITTEES
Audit Committee. The Corporation intends to
establish an audit committee of the Board of Directors, which
will consist of independent directors, of which at least one
director will qualify as a qualified financial expert as defined
in Item 407(d)(5)(ii) of Regulation S-K.The audit committees
duties would be to recommend to the Board of Directors the
engagement of independent auditors to audit the Corporations
financial statements and to review its accounting and auditing
principles.The audit committee would review the scope, timing and
fees for the annual audit and the results of audit examinations
performed by the internal auditors and independent public
accountants, including their recommendations to improve the
system of accounting and internal controls. The audit committee
would at all times be composed exclusively of directors who are,
in the opinion of the Board of Directors, free from any
relationship which would interfere with the exercise of
independent judgment as a committee member and who possess an
understanding of financial statements and generally accepted
accounting principles.
Compensation Committee. The Corporation intends
to establish a compensation committee of the Board of Directors.
The compensation committee would review and approve the
Corporations salary and benefits policies, including compensation
of executive officers. The compensation committee would also
administer any stock option plans and recommend and approve
grants of stock options under such plans.
STOCK INCENTIVE PLANS
The Corporation currently does not have any stock incentive plan
adopted. The Corporation may adopt a stock incentive plan in the
future in order to further the growth and general prosperity of
the Corporation by enabling our employees, contractors and
service providers to acquire its common stock, increasing their
personal involvement in the Corporation and thereby enabling the
Corporation to attract and retain its employees, contractors and
service providers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions with any related persons (as that term
is defined in Item 404 in Regulation SK) since the beginning of
the Corporations last two fiscal year, or any currently proposed
transaction, in which the Corporation was or is to be a
participant and the amount involved which the amount exceeds the
lesser of $120,000 or one percent of the average of the
Corporation’s assets at year end for the last two completed
fiscal years, and in which any related person had a direct or
indirect material interest.
ITEM 3.02 UNREGISTERED SALES OF EQUITY
SECURITIES
SHARE EXCHANGE AGREEMENT
Effective on February 28, 2017, the Corporation issued an
aggregate of 5,248,626 shares of its restricted common stock to
the MBE Shareholders, which are non-United States residents. In
accordance with the terms and provisions of the Share Exchange
Agreement, the MBE Shareholders acquired an aggregate of
5,248,626 shares of the Corporations restricted common stock in
exchange for one hundred percent (100%) of the total issued and
outstanding shares of MBE held of record by the MBE Shareholders
in a private transaction.
The shares were issued to non-United States residents in reliance
on Regulation S promulgated under the United States Securities
Act of 1933, as amended (the Securities Act). The shares of
common stock have not been registered under the Securities Act or
under any state securities laws and may not be offered or sold
without registration with the United States Securities and
Exchange Commission or an applicable exemption from the
registration requirements. The MBE Shareholders acknowledged that
the securities to be issued have not been registered under the
Securities Act, that they understood the economic risk of an
investment in the securities, and that they had the opportunity
to ask questions of and receive answers from the Corporations
management concerning any and all matters related to acquisition
of the securities.
DESCRIPTION OF SECURITIES
The following description of our securities and provisions of our
articles of incorporation and bylaws is only a summary. The
Corporation refers to the copies of its articles of incorporation
and bylaws, copies of which have been incorporated by reference
as exhibits to this Current Report on Form 8-K. The following
discussion is qualified in its entirety by reference to such
exhibits. Management of the Corporation has access to all
corporate books and records, including transfer agent records.
Authorized Capital Stock
The total number of stock authorized that may be issued by the
Corporation is 320,000,000 shares of which 20,000,000 shall be
shares of preferred stock with a par value of $0.001 per share
and 300,000,000 shall be shares of common stock with a par value
of $0.001 per share.
Capital Stock Issued and Outstanding
After giving effect to the Share Exchange Agreement, the
Corporations issued and outstanding securities, on a fully
diluted basis, is as follows:
|
125,248,626 shares of common stock; approximately 4.2% of |
|
No shares of preferred stock issued and outstanding; |
|
No options to purchase any capital stock or securities |
||
|
No warrants to purchase any capital stock or securities |
As of the date of this Current Report, there are 74 shareholders
of record.
Description of Common Stock
The holders of common stock are entitled to one vote per share.
The Corporations Articles of Incorporation do not provide for
cumulative voting. The holders of common stock are entitled to
receive ratably such dividends, if any, as may be declared by the
Board of Directors out of legally available funds; however, the
current policy of the Board of Directors is to retain earnings,
if any, for operations and growth. Upon liquidation, dissolution
or winding-up, the holders of common stock are entitled to share
ratably in all assets that are legally available for
distribution. The holders of common stock have no preemptive,
subscription, redemption or conversion rights.
Description of Preferred Stock
There are 20,000,000 shares of blank check shares of preferred
stock authorized. The Board of Directors in its sole discretion
has the power and authority to designate such shares into series
with respective rights and preferences. As of the date of this
Current Report, no shares have preferred stock have been
designated.
Market Price and Dividends
MBE is, and has always been a privately-held company. There is
not, and never has been, a public market for the securities of
MBE. The Corporations common stock is currently approved for
quotation on the OTC Markets under the symbol GRPV but there is
currently no liquid trading market.
Dividends may be declared and paid out of legally available
funds. Shares of one class or series of securities may not be
issued as a share dividend to shareholders of another class or
series unless approved by a majority of the shareholders. The
Corporation has not previously paid any cash dividends on our
common stock and does not anticipate or contemplate paying
dividends on its common stock in the foreseeable future. The
Corporation currently intends to utilize all available funds to
develop our business. The Corporation can give no assurances that
it will ever have excess funds available to pay dividends.
As of the date of this Current Report, there are 125,248,626
outstanding shares of the Corporation’s common stock that are
restricted securities as that term is defined in Rule 144 under
the Securities Act of 1933, as amended (the Securities Act).
Although the Securities Act and Rule 144 place certain
prohibitions on the sale of restricted securities, restricted
securities may be sold into the public market under certain
conditions. Approximately 5,248,626 shares of restricted common
stock will be able to be sold under Rule 144commencing February
22, 2018, which shares were issued to the Share Exchange
Agreement. The shares would be eligible for resale under Rule
144(b) hold periodcommencing February 22, 2018 and after the
Corporations status as a shell corporation as defined in Rule
230.405 of the Securities Act has been resolved. During fiscal
year 2008, prior management of the Corporation designated the
Corporation a shell corporation, thus the Corporation must cure
itself of its shell status by: (i) no longer fitting the
definition of a shell company as defined in Rule 144(i)(1); (ii)
subjecting to the reporting requirements under the Securities
Exchange Act of 1934, as amended, (the “Exchange Act”) and
filing all reports (other than Form 8-K reports) required under
the Exchange Act for the preceding twelve months; and (iii)
filing current Form 10 information with the Securities and
Exchange Commission reflecting its status as an entity that is no
longer an issuer described in Rule 144(i)(1) and one year has
elapsed since the filing of the “Form 10 information” with the
Securities and Exchange Commission. The Corporation filed its
“Form 10 information” February 22, 2017.
Any significant downward pressure on the price of our common
stock as the shareholders sell their shares of the Corporation’s
common stock could encourage short sales by the selling
shareholders or others. Any such sales could place further
downward pressure on the price of the Corporation’s common
stock.
Market Information
On March 4, 2015, our shares were listed for trading on the OTC
Electronic Bulletin Board (OTCBB). The current symbol is GRPV
There has been no active trading of our securities, and,
therefore, no high and low bid pricing.
We became a reporting company on September 4, 2014 after we had
filed a prospectus that relates to the offering of a total of
3,000,000 shares of our common stock on a “self-underwritten”
basis at a fixed price of $0.015 per share. In December 2014, we
completed the sale of 3,000,000 common shares at the price of a
$0.015 per share for total proceeds of $45,000.
Our stock is listed on the OTCQB. The OTCQB is a regulated
quotation service that displays real-time quotes, last sale
prices and volume information in over-the-counter (OTC)
securities. The OTCQB is not an issuer listing service, market or
exchange. Although the OTCQB does not have any listing
requirements, as such, to be eligible for quotation on the OTCQB,
issuers must remain current in their filings with the SEC or
applicable regulatory authority. Market Makers are not permitted
to begin quotation of a security whose issuer does not meet this
filing requirement. Securities already quoted on the OTCQB that
become delinquent in their required filings will be removed
following a 30 or 60 day grace period if they do not make their
required filing during that time.
Indemnification of Directors and Officers
Under Nevada law, a corporation may indemnify its directors,
officers, employees and agents under certain circumstances,
including indemnification of such persons against liability under
the Securities Act of 1933, as amended. In addition, a
corporation may purchase or maintain insurance on behalf of its
directors, officers, employees or agents for any liability
incurred by him in such capacity, whether or not the corporation
has the authority to indemnify such person.
Limitation of Liability for Officers and
Directors
A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director if he (i) is not liable
under NRS 78.138; or (ii) acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to be believe his
conduct was unlawful. If the NRS, or any other applicable law, is
amended to authorize corporation action further eliminating or
limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the NRS, or any other
applicable law, as so amended. Any repeal or modification of this
Section (a) by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
Each person who has or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (herein
a proceeding), by reason of the fact that he or she or a person
of whom he or she is the legal representative is or was a
director or officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer or employee
or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such
proceeding is an alleged action in an official capacity as a
director, officer, employee or agent, shall be indemnified and
held harmless by the Corporation to the fullest extent authorized
by the NRS, or any other applicable law, as the same exists or
may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all
expenses, liability and loss (including attorneys fees,
judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his
or her heirs, executors and administrators; provided, however,
that except as provided in paragraph (2) of this section (b) with
respect to proceedings seeking to enforce rights to
indemnification, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or
part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this
Section (b) shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending
any such proceeding in advance of its final disposition;
provided, however, that if the NRS, or any other applicable law,
requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director of officer (and not
in any other capacity in which service was or is rendered by such
person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of
the final disposition of a proceeding shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of
such director or officer to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is
not entitled to be indemnified under this Section (b) or
otherwise.
If a claim under Paragraph (1) of this Section (b) is not paid in
full by the Corporation within thirty days after a written claim
has been received by the Corporation, the claimant, may at any
time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense
of prosecuting such claim. It shall be a defense to such any such
action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant
has not met the standard of conduct that makes it permissible
under the NRS, or any other applicable law, for the Corporation
to indemnify the claimant for the amount claimed, but the burden
of providing such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of Directors,
stockholders or independent legal counsel) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstance
because he or she has met the applicable standard of conduct set
forth in the NRS, or any other applicable law, nor an actual
determination by the Corporation (including the Board of
Directors, stockholders or independent legal counsel) that the
claimant has not met such applicable standard of conduct shall be
a defense to the action or create a presumption that the claimant
has not met the applicable standard of conduct.
The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition
conferred in this Section (b) shall not be exclusive of any other
right which any person may have or hereafter acquire under any
statute, provision of these Articles of Incorporation, Bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise.
The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability
or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss
under the NRS, or any other applicable law.
The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification, and
rights to be paid by the Corporation the expenses incurred in
defending any proceeding in advance of its final disposition, to
any employee or agent of the Corporation to the fullest extent of
the provisions of this Section (b) with respect to the
indemnification and advancement of expenses of directors and
officers of the Corporation.
Any repeal or modification of this Section (b) by the
stockholders of the Corporation shall not adversely affect any
right or protection of a director, officer, employee or agent of
the Corporation existing at the time of such repeal or
modification.
The By-Laws provide, among other things, that a director,
officer, employee or agent of the corporation may be indemnified
against expenses (including attorneys fees inclusive of any
appeal), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such claim,
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
of our interests, and with respect to any criminal action or
proceeding, he had no reasonable cause to believe that his
conduct was unlawful.
The effect of these provisions may be to eliminate the rights of
the Corporation and its stockholders (through stockholder
derivative suits on behalf of the Corporation) to recover
monetary damages against a director, officer, employee or agent
for breach of fiduciary duty.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be provided for
directors, officers, employees, agents or persons controlling an
issuer to the foregoing provisions, the opinion of the SEC is
that such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended, and is therefore
unenforceable.
Emerging Growth Company
The Corporation is considered an “emerging growth company” as
defined under the Jumpstart Out Business Startups Act (“jobs”),
which was recently signed into law April 5, 2012. An emerging
growth company is a company with annual gross revenues of less
than $1,000,000,000 during its most recently completed fiscal
year. An emerging growth company retains its status and reduced
regulatory and reporting requirements associated with it until
the earliest of:
|
|
the last day of the first fiscal year during which the |
|
|
|
the last day of the first fiscal year following the fifth |
|
|
the date on which the Corporation has, during the previous |
|
|
|
the date on which the Corporation is deemed to be a large |
Since the Corporation is an emerging growth company, the
Corporation would be exempt from certain regulatory and reporting
requirements under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). The JOBS Act facilitates the IPO
process for emerging growth companies by exempting them from:
|
|
Section 14A(a) and (b) of the Exchange Act implemented by |
|
|
|
Section 14(i) of the Exchange Act, which will require |
|
|
Section 953(b)(1) of the Dodd-Frank Act, which will require |
|
|
|
The requirement to provide certain other executive |
|
|
An emerging growth company will not be required to provide |
|
|
|
An emerging growth company will not have to comply with any |
|
|
An emerging growth company will not have to comply with any |
Transfer Agent and Registrar
The transfer agent and registrar for the Corporation is Globex
Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona, FL 32725.
They can be contacted by telephone at (813)-344-4490 and by
facsimile at (386-267-3124).
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT
Reference is made to the disclosure set forth under Item 2.01 of
this Current Report on Form 8-K, which disclosure is incorporated
herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a)Financial Statements of Businesses Acquired.In
accordance with Item 9.01(a), MBE Holdings Inc. audited financial
statements for the fiscal years ended December 31, 2015 and 2014
are included in this filing and reviewed for nine month period
ended September 30, 2016.
(b)Pro Forma Financial Information. In accordance with
Item 9.01(b), our unaudited pro forma combined financial
statements are filed in this Current Report on Form 8-K as
Exhibit 99.2.
The Acquisition Transaction will be accounted for as a common
control transaction in accordance with the Financial Accounting
Standards Board (ASC 805-50, Business Combinations Common control
transactions). The management of the Corporation has evaluated
the guidance contained in ASC 805 with respect to the
combinations among entities or businesses under common control
and conclude that since Richard Hue is a majority shareholder of
Gripevine Inc. and MBE Holdings, therefore, this is a common
control transaction and do not result in a change in control at
the ultimate parent or the controlling shareholder level.
Therefore, unlike accounting for business combinations, common
control transactions are not accounted for at fair value. Rather,
common control transactions are generally accounted for at the
carrying amount of the net assets or equity interests
transferred.
As the transactions among entities under common control do not
result in a change in control at the ultimate parent level, the
ultimate parents consolidated financial statements will not be
affected by a common control transaction. Any differences between
the proceeds received or transferred and the carrying amounts of
the net assets are considered equity transactions that would be
eliminated in consolidation, and no gain or loss would be
recognized in the consolidated financial statements of the
ultimate parent. Resultantly, the financial position and the
results of operations of Gripevine and MBE Holdings are combined
together as if they were operating as one entity from the
beginning.
The unaudited pro forma combined financial statements are
provided for informational purposes only and do not purport to
represent what the actual combined results of operations or the
combined financial position of the combined company would be had
the Acquisition Transaction occurred on the dates assumed, nor
are they necessarily indicative of future combined results of
operations or combined financial position. The unaudited combined
financial statements do not reflect any cost savings or synergies
that the management of Gripevine Inc. and MBE Holdings Inc. could
have achieved if they were together through this period.
The unaudited pro forma combined statements of operations for the
periods presented give effect to the Acquisition Transaction as
if they had been consummated, beginning of the earliest period
presented. The unaudited pro forma balance sheets give effect to
the Acquisition Transaction as if they had occurred on the dates
of those balances sheets.
Such pro forma financial statements are based on the historical
financial statements of the Corporation andMBE after giving
effect to the share exchange transaction. Based on the
assumptions and adjustments described in the accompanying notes
to the unaudited pro forma combined financial statements, MBE is
considered the accounting acquirer. The share exchange
transaction was completed on February 28, 2017. Because MBEs
owners as a group retained or received only approximately 5% of
the voting rights in the combined entity and MBEs senior
management represents a majority of the senior management of the
combined entity, MBE was considered the acquirer for accounting
purposes and will account for the share exchange transaction as a
business acquisition reverse acquisition as the power to control
MBE exists with senior management. The acquisition will be
accounted for as the recapitalization of MBE. Our fiscal year
will end on February 28th.
(d)Exhibits. The exhibits listed in the following
Exhibit Index are filed as part of this Current Report on Form
8-K.
|
Exhibit Number |
Description |
|
|
3. 1 |
Articles of Incorporation of Baixo Relocation Services Inc. |
|
|
3.1.2 |
Amendment to Articles of Incorporation of Baixo Relocation |
|
|
3.2 |
Bylaws of Baixo Relocation Services Inc. incorporated |
|
|
10.1 |
Lease Agreement between Katalex Holdings Inc. and MBE |
|
|
10.2 |
Lease Agreement between Katalex Holdings Inc. and MBE |
|
|
10.3 |
Share Exchange Agreement between Gripvevine Inc., MBE |
|
|
List of Subsidiaries. |
||
|
99.1 |
Audited financial statements of Baixo Relocation Services |
|
|
99.2 |
Unaudited pro forma combined financial statements of MBE |
|
|
99.3 |
Audited financial statements of MBE Holdings Inc. for |
About GRIPEVINE, INC. (OTCMKTS:GRPV)
Gripevine Inc, formerly Baixo Relocation Services Inc, is a Canada-based company, which operates a consulting business. The Company provides relocation services to clients, both individual and corporate, relocating to the state of Goa, India. The Company assists clients intending to relocate to the region for temporary, long-term and permanent periods. It offers a range of relocation services, including arranging and assisting with transportation in the state of Goa; household goods movement; immigration documentation; real estate rental and purchases; children’s education registration; area orientation; housekeeping; utilities connections; banking introductions; local transportation; tax compliance, and language and cultural training. The Company has not generated any revenue. GRIPEVINE, INC. (OTCMKTS:GRPV) Recent Trading Information
GRIPEVINE, INC. (OTCMKTS:GRPV) closed its last trading session up +0.05 at 1.05 with shares trading hands.