Society Pass Incorporated 8-K/A, filed Sep 16, 2022
Society Pass Incorporated. (SOPAQ)
About this 8-K/A
Society Pass Incorporated filed this 8-K/A on September 16, 2022, reporting on events of July 7, 2022.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Explanatory Note
On July 7, 2022 (the “Closing Date”), Society Pass Incorporated (the “Company”), through its wholly-owned subsidiary, Thoughtful Media Group Incorporated, a Nevada corporation (the “Buyer"), acquired from AdActive Media Group, Inc., a Delaware corporation (the “Seller”), (i) all of the outstanding capital stock of AdActive Media CA, Inc., a California corporation (the “CA Sub”), and (ii) 99.75% of all of the outstanding capital stock of Thoughtful Thailand Limited, a Thailand corporation (the “Thailand Sub and, together with the CA Sub, the “Acquired Subsidiaries”).
The pro forma financial information included in this Form 8-K/A has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that the Company and the Acquired Subsidiaries would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after the Acquisition.
Item 8.01 Other Events
On September 13, 2022, SOPA issued a press release announcing the matters described in the Explanatory Note of this report, a copy of which is attached hereto as Exhibit 99.4 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
AdActive Media, Inc. (United States business) audited combined consolidated financial statements for the years ended December 31, 2021 and 2020 and unaudited combined condensed consolidated financial statements for the three months ended March 31, 2022 and 2021 are attached hereto as Exhibit 99.1.
Thoughtful Thailand Limited audited consolidated financial statements for the years ended December 31, 2021 and 2020 and unaudited financial statements for the three months ended March 31, 2022 and 2021 are attached hereto as Exhibit 99.2.
(b) Pro forma financial information.
Unaudited pro forma condensed combined financial statements and explanatory notes for Society Pass Incorporated as of March 31, 2022, for the three months ended March 31, 2022 and for the year ended December 31, 2021 are attached hereto as Exhibit 99.3 and incorporated herein by reference.
Exhibit
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Society Pass Incorporated | ||
| Date: September 15, 2022 | By: | /s/ Dennis Nguyen |
| Name: | Dennis Nguyen | |
| Title: | Chief Executive Officer | |
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ADACTIVE MEDIA, INC
(United States business)
Combined Consolidated Financial Statements
For the Years Ended December 31, 2021 and 2020
| Pages | |
| Financial Statements - | |
| Report of Independent Registered Public Accounting Firm | 2 |
| Combined Consolidated Balance Sheets as of December 31, 2021 and 2020 | 3 |
| Combined Consolidated Statements of Operations for the Years ended December 31, 2021 and 2020 | 4 |
| Combined Consolidated Statement of Changes in Stockholders’ Deficit for the Years ended December 31, 2021 and 2020 | 5 |
| Combined Consolidated Statements of Cash Flows for the Years ended December 31, 2021 and 2020 | 6 |
| Notes to the Combined Consolidated Financial Statements | 7 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
AdActive Media Inc.
Opinion on the Combined consolidated financial statements
We have audited the accompanying combined consolidated balance sheets of AdActive Media Inc. a United States businesses (the Company) as of December 31, 2021 and 2020, and the related combined consolidated statements of operations, stockholders deficit and cash flows for each of the two years in the period ended December 31, 2021, and the related notes and schedule (collectively referred to as the combined consolidated financial statements). In our opinion, the combined consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Substantial doubt about the Company’s Ability to Continue as a Going Concern
The accompanying combined consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the combined consolidated financial statements, the Company has suffered recurring losses from operations and had an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The combined consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These combined consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s combined consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the combined consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the combined consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Emphasis of Matter
As discussed in Note 3, AdActive Media Inc. is a United States businesses and is not a stand-alone entity. The combined consolidated financial statements of AdActive Media Inc. reflect the assets, liabilities, revenue and expenses directly attributable to the United States businesses, as well as allocations deemed reasonable by management, to present the combined consolidated financial position, results of operations, stockholder’s deficit and cash flows of AdActive Media Inc. on a stand-alone basis and do not necessarily reflect the combined consolidated financial position, results of operations, stockholders’ deficit and cash flows of AdActive Media Inc in the future or what they would have been had AdActive Media Inc been a separate, stand-alone entity during the periods presented. Our opinion is not modified with respect to this matter.
/S/ RBSM LLP
We have served as the Company’s auditor since 2022
PCAOB ID 587
New York, NY
September 14, 2022
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AdActive Media, Inc .
(United States business)
Combined Consolidated Balance Sheet
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 11,679 | $ | 11,240 | ||||
| Accounts receivable | 624,324 | 1,005,527 | ||||||
| Total current assets | 636,003 | 1,016,767 | ||||||
| Property plant and equipment, net | 1,542 | 3,455 | ||||||
| Security deposits | 3,178 | 16,171 | ||||||
| Total Assets | $ | 640,723 | $ | 1,036,393 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 706,309 | $ | 1,060,265 | ||||
| Account payable – related party | 99,496 | 15,396 | ||||||
| Accrued liabilities and other payable | 1,445,159 | 579,219 | ||||||
| Accrued liabilities – related party | 127,379 | 127,650 | ||||||
| Accrued interest on loans | 79,488 | 61,489 | ||||||
| Convertible note | 67,500 | 67,500 | ||||||
| Loan from related party | 138,000 | 85,000 | ||||||
| SBA Loans | 300,000 | 300,000 | ||||||
| Total Liabilities | 2,963,331 | 2,296,519 | ||||||
| Commitments and contingencies | ||||||||
| Convertible preferred shares; $0.0001 par value, 28,921,732 shares authorized, Nil undesignated as of December 31, 2021 and 2020, respectively | ||||||||
| Series 1 preferred stock, $0.0001 par value, 21,000,000 designated, 11,507,260 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 581,004 | 581,004 | ||||||
| Series 2 preferred stock, $0.0001 par value, 7,921,732 designated 7,784,678 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 6,534,838 | 6,534,838 | ||||||
| Stockholders’ Deficit | ||||||||
| Common stock, $0.0001 par value, 87,000,000 authorized, 40,350,212 and 40,327,871 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 4,035 | 4,033 | ||||||
| Additional paid-in capital | 35,542,253 | 35,542,032 | ||||||
| Accumulated deficit | (44,984,738 | ) | (43,922,033 | ) | ||||
| Total stockholders' deficit | (9,438,450 | ) | (8,375,968 | ) | ||||
| Total Liabilities and Stockholders' deficit | $ | 640,723 | $ | 1,036,393 | ||||
The accompanying notes are an integral part of these combined consolidated financial statements
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AdActive Media, Inc.
(United States business)
Combined Consolidated Statements of Operations
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Revenue | $ | 5,423,118 | $ | 5,368,090 | ||||
| Cost of services | (4,683,158 | ) | (4,634,334 | ) | ||||
| Gross profit | 739,960 | 733,756 | ||||||
| Operating expenses | ||||||||
| Employee payroll | 350,279 | 306,991 | ||||||
| Professional fees | 265,433 | 875,503 | ||||||
| Insurance expenses | 98,368 | 92,298 | ||||||
| G&A expenses | 338,910 | 108,099 | ||||||
| Office rent | 51,945 | 88,083 | ||||||
| Marketing and advertising | — | 445 | ||||||
| Travel expenses | 15,858 | 5,956 | ||||||
| Litigation fee | 705,537 | — | ||||||
| Depreciation and amortization | 1,913 | 2,628 | ||||||
| Total operating expenses | 1,828,243 | 1,480,003 | ||||||
| Loss from operations | (1,088,283 | ) | (746,247 | ) | ||||
| Other income (expenses) | ||||||||
| Other income | 75,327 | 63,135 | ||||||
| Interest expenses | (29,999 | ) | (12,239 | ) | ||||
| Write-off of unrecoverable assets | (16,500 | ) | (296,210 | ) | ||||
| Total other income (expenses) | 28,828 | (245,314 | ) | |||||
| Net loss before income taxes | (1,059,455 | ) | (991,561 | ) | ||||
| Income taxes | 3,250 | 5,146 | ||||||
| Net loss/Total comprehensive loss | $ | (1,062,705 | ) | $ | (996,707 | ) | ||
| Net Loss Per Common Share, Basic and diluted | $ | (0.03 | ) | $ | (0.03 | ) | ||
| Weighted Average Number of shares outstanding | 40,345,547 | 37,793,440 | ||||||
| The accompanying notes are an integral part of these combined consolidated financial statements | ||||||||
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AdActive Media, Inc.
(United States business)
Combined Consolidated Statement of Changes in Shareholders' Deficit -
For the Years Ended December 31, 2021 and 2020
| Common stock | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficits | ||||||||||||||||
| Balance - January 1, 2020 | 19,303,614 | $ | 1,930 | $ | 35,210,519 | $ | (42,925,326 | ) | $ | (7,712,877 | ) | |||||||||
| Common stock issued for exercising stock option | 21,024,257 | 2,103 | 206,140 | 208,243 | ||||||||||||||||
| Related party liability reclassed into additional paid into capital | 125,373 | 125,373 | ||||||||||||||||||
| Net loss for the year | (996,707 | ) | (996,707 | ) | ||||||||||||||||
| Balance - December 31, 2020 | 40,327,871 | $ | 4,033 | $ | 35,542,032 | $ | (43,922,033 | ) | $ | (8,375,968 | ) | |||||||||
| Common stock issued for exercising stock option | 22,341 | 2 | 221 | 223 | ||||||||||||||||
| Net loss for the year | (1,062,705 | ) | (1,062,705 | ) | ||||||||||||||||
| Balance - December 31, 2021 | 40,350,212 | $ | 4,035 | $ | 35,542,253 | $ | (44,984,738 | ) | $ | (9,438,450 | ) | |||||||||
| The accompanying notes are an integral part of these combined consolidated financial statements | ||||||||||||||||||||
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AdActive Media, Inc.
(United States business)
Combined Consolidated Statements of Cash Flows
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss for the year | $ | (1,062,705 | ) | $ | (996,707 | ) | ||
| Adjustments to reconcile net loss from operations to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,913 | 2,628 | ||||||
| Write-off of unrecoverable assets | 16,500 | 296,210 | ||||||
| Gain on loss extinguishment | (75,327 | ) | (53,135 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 381,202 | 25,748 | ||||||
| Security deposit | (3,506 | ) | (70,350 | ) | ||||
| Accounts payable | (269,855 | ) | (526,155 | ) | ||||
| Accrued liabilities | 625,668 | 744,715 | ||||||
| Accrued interest | 17,999 | 12,240 | ||||||
| Contingent liability | 240,000 | — | ||||||
| Working capital loan – related party | 53,000 | 85,000 | ||||||
| Net cash used in operating activities | (75,111 | ) | (479,806 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property plant and equipment | — | (3,212 | ) | |||||
| Net cash provided by investing activities | — | (3,212 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from SBA loans | 75,327 | 353,135 | ||||||
| Proceeds from the issuance of common stock for stock option exercising | 223 | |||||||
| Proceeds from the issuance of preferred stock | — | 10,098 | ||||||
| Net cash provided by financing activities | 75,550 | 363,233 | ||||||
| Net change In Cash and Cash Equivalents | 439 | (119,786 | ) | |||||
| Cash and Cash Equivalents, Beginning of Year | 11,240 | 131,026 | ||||||
| Cash and Cash Equivalents, End of Year | $ | 11,679 | $ | 11,240 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the year: | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Income taxes paid | $ | — | $ | — | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Related party liabilities reclassed into additional paid in capital | $ | — | $ | 125,373 | ||||
| The accompanying notes are an integral part of these combined consolidated financial statements | ||||||||
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ADACTIVE MEDIA, INC.
(United States Business)
NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS –
YEARS ENDED DECEMBER 31, 2021 AND 2020
1 — NATURE OF OPERATIONS
Description of Business
AdActive Media, Inc., dba Thoughtful Media Group (TMG DE), is a Delaware Corporation incorporated on December 17, 2010 and has three (3) wholly owned direct subsidiaries, AdActive Media CA, Inc. (TMG CA), a California Corporation incorporated on April 12, 2010, Thoughtful (Thailand) Co., Ltd. Incorporated on September 9, 2014, and AdActive Media Asia Limited (TMG HKG), a Hong Kong Corporation incorporated on March 14, 2011. TMG HKG has two (2) wholly owned direct subsidiaries, AdActive Media Shanghai Limited, a PR China wholly foreign owned enterprise (“WFOE”) incorporated on June 15, 2011, AdActive Media Advertising Limited, a PR China wholly foreign owned enterprise (“WFOE”) incorporated on August 29, 2014,. Since 2018, TMG HKG and its direct subsidiaries have been dormant with no active business operations.
This financial statement is only presenting the combined consolidated operations of the United States businesses, TMG DE and TMG CA, collectively (the “Company”). The Company assists advertisers by helping them engage with their target market through online social media and “social influencers.” The Company manages this process with direct on-the-ground employees and through a strategic contractual relationship with Google/YouTube called a “Multi Channel Network” (MCN).
Description of subsidiaries incorporated by the TMG DE.
Schedule of Description of subsidiaries
| Name of Subsidiaries | Place and date of incorporation | Principal activities | Particulars of registered/ paid up share capital | Effective interest held by TMG DE | ||||||||
| AdActive Media CA,Inc. | California, April 12, 2010 | Digital marketing and Social media agency | $ | 252 | 100 | % | ||||||
| Thoughtful (Thailand) Co., Ltd | Thailand, September 9 2014 | Digital marketing and Social media agency | THB2,000,000 | 100 | %* | |||||||
| AdActive Media Asia Limited | Hong Kong, March 14, 2011 | Digital marketing and Social media agency | $ | 10,000 | 100 | % | ||||||
* Out of this, 0.50% share ownership is held by one directors on behalf of the TMG DE and the remaining 0.25% is held by an inactive former local representative
The Company including all three subsidiaries, collectively (the “group”).
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2 — GOING CONCERN
The financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. Given the impact of the COVID-19 pandemic, the Company has had recurring losses, and negative cash flows from operations. For the prior several years, the Company has relied on capital from investors, government EIDL loans, and working capital loans from the officers of the Company. While the Company’s operations are at present nearly cash flow break even, this and other factors raise reasonable doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon its ability to secure working capital financing against its receivables and additional investment capital to continue to execute its business plan. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
These financial statements are only presenting the combined consolidated operations of the United States businesses, TMG DE and TMG CA. All significant intercompany transactions and balances have been eliminated in consolidation.
Basis of Presentation
The carve-out financial statements and accounting records present the combined consolidated balance sheets as of December 31, 2021 and 2020 and the combined consolidated statements of operations, combined consolidated statements of changes in shareholders' deficit and combined consolidated statements of cash flows for the years ended December 31, 2021 and 2020.
These accompanying combined consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Throughout the periods covered by the combined consolidated financial statements, the Company did not operate as a separate stand-alone entity but, rather as a “United States business” of the Group. Consequently, stand-alone combined consolidated financial statements were not historically prepared for the Company. The combined consolidated financial statements have been prepared in connection with the transaction, and are derived from the accounting records of the Group using the historical results of operations and the historical bases of assets and liabilities of the Company, adjusted as necessary to conform to U.S. GAAP. The combined consolidated financial statements present the assets, liabilities, revenues, and expenses directly attributed to the Company as well as certain allocations from the Group. Intercompany balances and transactions between the Company and the Group have been presented in the Balance Sheets. The combined consolidated financial statements may, therefore, not reflect the results of operations, financial position or cash flows that would have resulted had the Company been operated as a separate entity.
Cost Allocation and Attribution
The combined consolidated Statements of Operations include all costs directly attributable to the Company. The Group costs were allocated to the combined consolidated financial statements for certain operating, selling, governance and corporate functions such as direct labor, overhead, sales and marketing, administration, legal and information technology. The costs for these services and support functions were allocated to the Company in full and have not being allocated to other subsidiaries not consolidating with the Company. Management believes the methodology for cost allocations is a reasonable reflection of common expenses incurred by the Group on the Company’s behalf.
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Foreign Currency
The Company’s reporting currency is the U.S. dollar. All accounts of TMG DE and TMG CA are held in U.S. dollars.
Use of Estimates and Assumptions
In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted. Significant estimates in the period include the allowance for doubtful accounts on accounts receivable, useful lives of long lives assets, stock option valuations and deferred taxes related valuation allowance.
Cash and Cash Equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. As of December 31, 2021 and 2020, the cash and cash equivalent was amounted to $11,679 and $11,240, respectively.
The Company currently has bank deposits with financial institutions in the U.S. which does not exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000, so there were uninsured balance of $0 and $0 as of December 31, 2021 and 2020, respectively.
Accounts receivable
Accounts receivables are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer’s financial condition, the customer creditworthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of fiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company considers the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of December 31, 2021 and 2020, the allowance for doubtful accounts amounted to $-0- and $0, respectively. The Company have entered into financing arrangement with Fastpay to expedite the accounts receivable recovery.
Financing and Security Agreement with FastPay
In October 2019, we executed a Financing and Security Agreement, as amended (collectively, the "FastPay Agreement"). with FPP Finance LLC to create an accounts receivable-based credit facility. The FastPay Agreement was further amended in October 2021.
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Under the October 2021 amended terms of the FastPay Agreement, FastPay may, at its sole discretion, purchase our eligible accounts receivable. Upon any acquisition of accounts receivable, FastPay will advance us up to 80% of the gross value of the purchased accounts, up to a maximum of $1,000,000 in advances. Each account receivable purchased by FastPay will be subject to a factoring fee rate specified in the FastPay Agreement calculated as a percentage of the gross value of the account outstanding and additional fees for accounts outstanding over 30 days. We are subject to a concentration limitation on the percentage of debt from any single customer of 25% to the total amount outstanding on its purchased accounts, subject to an increase to 100% for one specific large customer “Google LLC”.
We are obligated to repurchase accounts remaining uncollected after a specified deadline, and FastPay will generally have full recourse against us in the event of nonpayment of any purchased accounts. Our obligations under the FastPay Agreement are secured by a first position security interest in its accounts receivable, deposit accounts and all proceeds therefrom.
The FastPay Agreement contains covenants that are customary for agreements of this type and are primarily related to accounts receivable and audit rights. We are also required to provide FastPay with 30-day notice of any transaction that result, or would result in, a “change of control” as defined in the FastPay Agreement. The failure to satisfy covenants under the FastPay Agreement or the occurrence of other specified events that constitute an event of default, as defined, could result in the termination of the FastPay Agreement and/or the acceleration of our obligations. The FastPay Agreement contains provisions relating to events of default that are customary for agreements of this type.
The current FastPay Agreement has a term of 24 months and automatically renews thereafter for successive terms, subject to earlier termination by written notice by the Company, provided all obligations are paid, including the payment of an early termination fee.
At December 31, 2021 and 2020, $597,819 and $653,869, respectively, of accounts receivable purchased by FastPay remain outstanding and are subject to repurchase under the terms of the FastPay Agreement.
Property, Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values
| Expected useful lives | ||
| Computer equipment | 5 years |
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Revenue Recognition
The Company is an advertising content supplier to the Google/YouTube system and receives revenue from Google in relation to their “YouTube Properties”. The Company, via its content development partners, creates the inventory that generates the advertising revenue on YouTube by delivering both performance and brand advertising. We recognize revenues for performance advertising when a user engages with the advertisement, such as a click, a view, or a purchase. For brand advertising, we recognize revenues when the advertiser content is displayed within video content.
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The Company directly influences the value/price of that inventory through the optimization work that the Company does and takes risk on that inventory given its investment into helping their content partners improve the content and providing them elements for the content production (e.g. music licenses). The Company is a principal in the transaction.
The Company’s contracts are based on the completion and acceptance of defined contractual milestones. Milestone payments, which are generally based on the completion of certain deliverables in the contracts, are recognized as revenue when the milestones are achieved, collectability is reasonably assured and there are no significant future performance obligations in connection with the milestone. In those instances where the Company has collected milestone payments but has significant future performance obligations related to the development of the product, deferred revenue is recorded and revenue is recognized upon the client’s acceptance of the deliverable. No deferred revenue was recognised in the book currently and in the past.
The Company generates Platform Revenue from TMG’s development, production and procurement of video content that can be distributed across global social video platforms, like YouTube and Facebook, and be monetized through the selling of advertising; either via pre/mid/post roll ads or products being integrated into the content. Historically, platform revenue has varied due to rates paid to video creators based on the geography and demographics of the viewers along with the subject matter of the content.
Integrated Media Revenue results from placing advertiser information directly into video content rather than Google/YouTube selling it through their auction platform. This generally leads to higher advertising rates and gross margin percentage. Integrated media opportunities through agencies typically have a lower margin than selling direct to advertisers.
Regarding contractual milestones, approximately 98% of Company revenue is from Google and the milestones have been completed by the end of each calendar month that the revenue is recognized, and the Company receives this earned revenue from Google in the following month. The milestones within that month are creating content, uploading content, optimizing that content, gaining viewership. The value of all of those milestones are tallied up at the end of each calendar month. And there are no future performance obligations.
For Integrated Media Revenue, most projects are completed within one month, however, there are occasions where a project may execute over a series of months. The Company recognizes this revenue when the contractural milestones are met, which are typically the distribution of the custom content and the viewership by users of the advertising content within the content.
During December 31, 2021, and 2020, the Company has generated $5,423,118 and $5,368,090 respectively revenue from platform and media revenue.
Cost of sales
Cost of sales under creator revenue sharing consist of the cost of payments to individual content creation partners involved in the development of content uploaded to social media platforms (e.g. Google/YouTube) for monetization. The content creation partners are primarily in the regions of Thailand, Vietnam and Philippines and they are directly attributable to sales of platform video revenue.
Cost of sales under premium media consist of the cost of media purchased on various social media platforms (e.g. Google/YouTube, Facebook) for the promotion and amplification of advertising and marketing campaigns being executed directly with brands or their agencies.
Cost of sales under premium sales consist of the cost of content production with our content creation partners specifically for the support of the promotion and amplification of advertising and marketing campaigns being executed directly with brands or their agencies.
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The cost of personnel who is monitoring and advising the quality of the content was completed by employees in the company and their cost was capture in the employee payroll under operating expense.
Contract assets
In accordance with ASC Topic 606-10-45-3, contract asset is when the Company’s right to payment for goods and services already transferred to a customer if that right to payment is conditional on something other than the passage of time. The Company will recognize a contract asset when it has fulfilled a contract obligation but must perform other obligations before being entitled to payment.
There were no contract assets at December 31, 2021 and 2020.
Contract liabilities
In accordance with ASC Topic 606-10-45-2, a contract liability is Company’s obligation to transfer goods or services to a customer when the customer prepays consideration or when the customer’s consideration is due for goods and services that the Company will yet provide whichever happens earlier.
Contract liabilities represent amounts collected from, or invoiced to, customers in excess of revenues recognized, primarily from the billing of annual subscription agreements. The value of contract liabilities will increase or decrease based on the timing of invoices and recognition of revenue. There were no contract liabilities at December 31, 2021 and 2020.
Income Taxes
The Company accounts for income taxes using the assets and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
The Company recognizes liabilities for uncertain tax positions based on the two-step process prescribed by GAAP. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period. The Company recognizes interest and penalties as incurred in finance income (expense), net in the Statements of Operations. There were no liabilities recorded for uncertain tax positions at December 31, 2021 and 2020.
Earnings Per Share
Basic earnings per common share amounts are calculated based on weighted average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options, warrants and convertible stock, subject to anti-dilution limitations. All such potentially dilutive instruments were anti-dilutive for the years ended December 31, 2021 and 2020.
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| For the years ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| Net loss attributable to AdActive Media Inc | $ | (1,062,705 | ) | $ | (996,707 | ) | ||
| Weighted average common shares outstanding – Basic and diluted | 40,345,547 | 37,793,440 | ||||||
| Net loss per share – Basic and diluted | $ | (0.03 | ) | $ | (0.03 | ) | ||
Warrants
In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using a Black-Scholes Option Pricing Model as of the measurement date. The Company uses a Black-Scholes option model to estimate the fair value of compensation warrants. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period, or at the date of issuance, if there is not a service period.
Fair Value of Financial Instruments
Generally accepted accounting principles require disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.
In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value.
GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
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The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, deposits and other receivables, other payables approximate their fair values because of the short maturity of these instruments.
Recently Issued Accounting Principles
Accounting Standards Adopted
In August 2020, the FASB issued ASU 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity’s own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021 and early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company has evaluated and the adoption of this standard does not have a material impact on its financial position, results of operations or cash flows.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2021-04 clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The ASU provides guidance to clarify whether an issuer should account for a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. ASU 2021-04 is effective for annual beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has evaluated and the adoption of this standard does not have a material impact on its financial position, results of operations or cash flows
Accounting Standards Issued, Not Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning January 1, 2023. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the potential effect of this standard on its financial statements, but does not believe that it will have a material affect on its consolidated financial statements.
In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”: The amendments in this update are to clarify, correct errors in, or make minor improvements to a variety of ASC topics. The changes in ASU 2020-03 are not expected to have a significant effect on current accounting practices. The ASU improves various financial instrument topics in the Codification to increase stakeholder awareness of the amendments and to expedite the improvement process by making the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2022 with early application permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements, but does not believe that it will have a material affect on its consolidated financial statements.
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In October 2021, the FASB issued guidance which requires companies to apply Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact and timing of adoption of this guidance, however, it appears that more revenue will be recorded under this new requirement than was previously allowed.
No other new accounting pronouncements were issued or became effective in the period that had, or are expected to have, a material impact on our condensed combined consolidated Financial Statements.
4 — REVENUE
Revenue consisted of the following deliverables:
| Schedule of Revenue | December 31, | December 31 | ||||||
| 2021 | 2020 | |||||||
| Platform – Video | $ | 5,337,677 | $ | 4,974,648 | ||||
| Platform – Music. | 60,017 | 393,442 | ||||||
| Media Sales- Premium sales | 25,424 | — | ||||||
| $ | 5,423,118 | $ | 5,368,090 | |||||
5 — PROPERTY, PLANT AND EQUIPMENT
Plant and equipment, net consist of the following:
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Computer and software equipment | $ | 3,212 | $ | 7,960 | ||||
| Accumulated depreciation | (1,670 | ) | (4,505 | ) | ||||
| Property, Plant and equipment, net | $ | 1,542 | $ | 3,455 | ||||
Depreciation of plant and equipment amounted to approximately $1,913 and $2,628 for the years ended December 31, 2021 and 2020, respectively.
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6 — INCOME TAXES
The components of earnings before income tax expense for the years ended December 31, 2021 and 2020.
For the Years Ended December 31, | ||||||||
| Income (loss) before income taxes | 2021 | 2020 | ||||||
| Domestic | $ | (1,059,455 | ) | $ | (991,561 | ) | ||
| Foreign | $ | — | $ | — | ||||
| Total income (loss) before income taxes | $ | (1,059,455 | ) | $ | (991,561 | ) | ||
Income tax provision (benefit) consists of the following for the years ended December 31, 2021 and 2020:
| Income tax provision (benefit): | For the Years Ended December 31, | |||||||
| Current | 2021 | 2020 | ||||||
| Federal | — | — | ||||||
| State | 3,250 | 5,146 | ||||||
| Foreign | — | — | ||||||
| Total Current | $ | 3,250 | $ | 5,146 | ||||
| Deferred | ||||||||
| Federal | — | — | ||||||
| State | — | — | ||||||
| Foreign | — | — | ||||||
| Total Deferred | — | — | ||||||
| Total income tax provision (benefit) | $ | 3,250 | $ | 5,146 | ||||
A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows:
| Rate Reconciliation | For the Years Ended | |||||||
| December 31, 2021 | ||||||||
| Expected tax at statutory rates | $ | (222,486 | ) | 21 | % | |||
| Permanent Difference | 66,219 | (6) | % | |||||
| State Income Tax, Net of Federal benefit | (49,173 | ) | 5 | % | ||||
| Current Year Change in Valuation Allowance | 296,600 | (28) | % | |||||
| Prior Deferred True-Ups | (87,910 | ) | 8 | % | ||||
| Income tax provision (benefit) | $ | 3,250 | 0 | % | ||||
Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows:
| Deferred Tax Assets/(Liab.) detail | For the Years Ended | |||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Deferred Tax Assets/(Liabilities) | ||||||||
| Deferred Compensation | $ | 87,834 | $ | — | ||||
| Net Operating Losses | $ | 10,581,281 | $ | 10,372,516 | ||||
| Net deferred Tax Assets/(Liabilities) | 10,669,115 | 10,372,516 | ||||||
| Valuation allowance | (10,669,115 | ) | (10,372,516 | ) | ||||
| Net deferred Tax Assets/(Liabilities) | $ | — | $ | — | ||||
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The domestic U.S. net operating loss carryforwards increased from $37,665,837 at December 31, 2020 to $38,413,487 at December 31, 2021. After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2021 and 2020, due to the uncertainty of realizing the deferred income tax assets. Out of the $38,413,487 net operating losses carry forward, $30,661,502 will begin to expire in 2030 and $7,751,985 will have an indefinite life. There are also net operating losses from State of CA total to $36,005,052 as of December 31, 2021.
The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5% tax on certain income of controlled foreign corporations. We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse.
The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. U.S. federal income tax returns for 2018 and after remain open to examination. We and our subsidiaries are also subject to income tax in multiple states and foreign jurisdictions. Generally, foreign income tax returns after 2018 remain open to examination. No income tax returns are currently under examination. As of December 31, 2021 and 2020, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2021 and 2020, there were accrued penalties or interest recorded in interest expense.
7—ACCOUNT PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following:
| December 31, 2021 | December 31, 2020 | |||||||
| Account payable (a) | $ | 706,309 | $ | 1,060,265 | ||||
| Account payable – related party (b) | 99,496 | 15,396 | ||||||
| Accrued liabilities and other payable (d) | 1,445,159 | 579,219 | ||||||
| Accrued compensation – Related party (c) | 127,379 | 127,650 | ||||||
| Accrued interest on loan | 79,488 | 61,489 | ||||||
| Total | $ | 2,457,831 | $ | 1,844,019 | ||||
| (a) | Account payables represent due to one third-party balances of 2021: $693,970, 2020: $1,038,356 which is accrued cost of goods sold. |
| (b) | The amount represents due to one related party in respect to 2021: collection receive on behalf of Thoughtful (Thailand) Co Ltd. 2020: consulting fee payable to Thorman Development Inc. |
| (c) | The amounts related to compensation payable to Thorman Development Inc. |
| (d) | Accrued liabilities and other payable consisted of the following: |
| December 31, 2021 | December 31, 2020 | |||||||
| Accrued liabilities (e) | $ | 995,776 | $ | 379,814 | ||||
| Accrued salaries | 186,499 | 186,499 | ||||||
| Contingent liabilities (f) | 240,000 | — | ||||||
| Payable to credit cards | 10,884 | 12,906 | ||||||
| Accrued interest on penalty on taxes | 12,000 | — | ||||||
| Total | $ | 1,445,159 | $ | 579,219 | ||||
| (e) | This included $252,556 and $342,131 related to legal fees related to the Yeah1 arbitration as of December 31, 2021 and 2020. Also, in 2021, included $705,537 related to litigation settlement- refer contingencies footnotes. |
| (f) | This represents amounts accrued in 2021 related to penalties for non-filing of tax forms, refer contingencies footnotes. |
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8 --- LOANS
During the COVID-19 pandemic, the CEO of the Company, via his personal consulting company Thorman Development, Inc., made a series of interest free working capital loans to the company. The balances were $138,000 and $85,000 at December 31, 2021 and 2020, respectively
During the COVID-19 pandemic, the Company received SBA/EIDL loans in 2020 with a principal amount totaling $300,000. The effective interest rate is 3.75%. These loans are amortized over 30 years. The balances were $300,000 and $300,000 at December 31, 2021 and 2020, respectively.
The interest for the loan is $11,249 and $5,471 as of December 31, 2021 and 2020, respectively.
9 --- CONVERTIBLE NOTES
| December 31, 2021 | December 31, 2020 | |||||||
| Convertible promissory note payable | $ | 67,500 | $ | 67,500 | ||||
| Accrued interest payable | 62,768 | 56,018 | ||||||
| Convertible promissory note payable, net | $ | 130,268 | $ | 123,518 | ||||
The Company issued the following notes outstanding:
A $50,000 convertible note issued on August 28, 2012 at a rate of 10% that continues to accrue interest.
A $17,500 convertible note issued on November 5, 2012 at a rate of 10% that continues to accrue interest.
The interest expense for the loan is $6,750 and $6,769 as of December 31, 2021 and 2020.
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10 — EQUITY
Common Shares Authorized and Issued
The Company is authorized to issue a total of 87,000,000 shares of common stock, $0.0001 par value. There were 40,350,212 and 40,327,871 shares issued and outstanding as of December 31, 2021 and 2020, respectively.
During the year ended December 31, 2020, the Company issued 21,024,257 of common share from the exercise of stock options to company’s shareholders and employee, for the total proceeds of $208,243, however the Company have not recovered the same and therefore write off the said receivable.
During the year ended December 31, 2021, the company issued 22,341 of our common stock to from the exercise of stock options to Jezebel Communications Limited, a consultant to the company, for the total proceeds of $223.
Warrants
Below is a summary of the Company’s issued and outstanding warrants as of December 31, 2021 and 2020:
| Warrants | Weighted average exercise price | Weighted average remaining contractual life (in years) | ||||||||||
| Outstanding as of December 31, 2019 | 10,416,066 | $ | 0.77 | 3.11 | ||||||||
| Issued | — | $ | — | |||||||||
| Exercised | — | $ | — | |||||||||
| Expired | (2,130,830 | ) | 1.41 | |||||||||
| Outstanding as of December 31, 2020 | 8,285,236 | $ | 0.62 | 2.83 | ||||||||
| Issued | — | $ | — | |||||||||
| Exercised | — | — | ||||||||||
| Expired | (183,308 | ) | 1.65 | |||||||||
| Outstanding as of December 31, 2021 | 8,101,928 | 0.58 | 1.88 | |||||||||
During the year ended December 31, 2021 and 2020, no new warrants have been issued nor any warrants exercised.
During the year ended December 31, 2021 and 2020, the warrants expired were 183,308 and 2,130,830, respectively.
In October 2019, the Company repriced the warrants, where the Company and each Participating Investor (as defined below) holding a Existing Warrant shall be automatically amended immediately prior to the Initial Closing, without any further action from the Company or any Participating Investor, such that (a) the exercise price per share of Common Stock as set forth in the Existing Warrant shall be the fair market value of a share of Common Stock of the Company, as determined by the Board in good faith following the Company’s receipt of a written valuation report in compliance with Section 409A of the Internal Revenue Code as soon as practicable following the Initial Closing and (b) the termination date set forth in each Existing Warrant shall be amended to the date that is the later of (A) the fifth anniversary of the Initial Closing and (B) the termination date set forth in the Existing Warrant prior to the date hereof. As used herein, “Participating Investor” means, collectively: (i) any Investor who acquires at least such Investor’s pro rata share of the Series 1 Preferred Shares issued or issuable pursuant to Section 2.1(b) of this Agreement; and (ii) any Investor that is not an existing stockholder in the Company that holds a Note and purchases at least 198,043 shares of Series 1 Preferred pursuant to this Agreement.
The management believe that value that should be assigned to the warrant expenses at the time of repricing through the current date should be $0.0001, the par value of the common stock as there was no public market for the common stock in 2019 through the current date so there was no market value and therefore the Company have not accounted any incremental cost for warrants repriced in 2019.
There were few warrants earlier granted to purchase the preferred series A & B, however during the recapitalization in 2019, those Series A and B converted into common stock and therefore all warrants outstanding as of date, are for common stock.
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Stock option
Company’s stock options for the years ended December 31, 2021 and 2020, respectively, is as follows:
| Share option | Weighted average exercise price | Weighted average remaining contractual life (in years) | ||||||||||
| Outstanding as of December 31, 2019 | 21,558,186 | 0.018 | 8.58 | |||||||||
| Granted | — | — | ||||||||||
| Exercised | 21,024,257 | 0.010 | ||||||||||
| Expired | (133,832 | ) | — | |||||||||
| Outstanding as of December 31, 2020 | 400,097 | $ | 0.185 | 6.87 | ||||||||
| Granted | — | — | ||||||||||
| Exercised | 22,341 | 0.010 | ||||||||||
| Expired | — | — | ||||||||||
| Outstanding as of December 31, 2021 | 377,756 | 0.196 | 6.26 | |||||||||
The Company’s stock option plans provide for the grant of options to purchase shares of common stock to officers, directors, other key employees and consultants. The purchase price may be paid in cash or “net settled” in shares of the Company’s common stock. In a net settlement of an option, the Company does not require a payment of the exercise price of the option from the optionee, but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Options generally vest over a 3-4 year period from the date of grant and have a 1-2 year cliff term.
During the year ended December 31, 2021 and 2020, no new stock option granted.
During the year ended December 31, 2021 and 2020, the options holder exercised 22,341 and 21,024,257 options, respectively, as disclosed above under common stock section.
During the year ended December 31, 2021 and 2020, the stock option expired were -0- and 133,832, respectively.
In October 2019, the board believes it to be in the interests of the Company and its stockholders to motivate and restore competitive and appropriate equity incentives for the optionholders by amending each option held by the eligible optionholders to reduce the exercise price of each repriced option to $0.01 per share. The 5,513,125 stock option holder were eligible and their exercise price reduced to $0.01 per shares in 2019.
The management believe that value that should be assigned to the stock option expenses at the time of repricing through the current date should be $0.0001, the par value of the common stock as there was no public market for the common stock in 2019 through the current date so there was no market value and therefore the Company have not accounted any incremental cost for stock options repriced in 2019.
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NOTE—11 PREFERRED STOCKS
As of December 31, 2022 and 2021, the Company’s preferred stocks have been designated as follow:
| No. of shares | ||||
| Series 1 Preferred Stock | 11,507,260 | |||
| Series 2 Preferred Stock | 7,784,678 | |||
All of the Series 1 and Series 2 Preferred Shares were issued at a value of respective cash purchase price of $0.050494 per share and at a conversion price of $0.839449 per share, respectively. These all Series of Preferred Shares contain a conversion option, are convert into a fixed number of common shares or redeemable with the cash repayment at the liquidation, so as a result of this liquidation preference, under U.S GAAP, the Company has classified the all these Series of Preferred Shares within mezzanine equity in the combined consolidated balance sheet.
Voting Rights: (1) The affirmative vote of at least a majority of the holders of each series of preferred stock shall be necessary to:
| (a) | increase or decrease the par value of the shares of the Series 1 and Series 2 Preferred Stock , alter or change the powers, preferences or rights of the shares of Series 1 Preferred Stock or create, alter or change the powers, preferences or rights of any other capital stock of the Company if after such alteration or change such capital stock would be senior to or pari passu with Series 1 Preferred Stock ; and |
| (b) | adversely affect the shares of Series 1 Preferred Stock, including in connection with a merger, recapitalization, reorganization or otherwise. |
(2) The affirmative vote of at least a majority of the holders of the shares of the Series 1 Preferred Stock shall be necessary to:
| (a) | enter into a transaction or series of related transactions deemed to be a liquidation, dissolution or winding up of the Corporation, or voluntarily liquidate or dissolve; |
| (b) | authorize a merger, acquisition or sale of substantially all of the assets of the Company or any of its subsidiaries (other than a merger exclusively to effect a change of domicile of the Company to another state of the United States); |
| (c) | increase or decrease (other than decreases resulting from conversion of the Series 1 Preferred Stock) the authorized number of shares of the Company’s preferred stock or any series thereof, the number of shares of the Company’s common stock or any series thereof or the number of shares of any other class or series of capital stock of the Company; and |
| (d) | any repurchase or redemption of capital stock of the Company except any repurchase or redemption at cost upon the termination of services of a service provider to the Company or the exercise by the Company of contractual rights of first refusal as applied to such capital stock. |
Dividend Rights: The holders of the Company’s preferred stock are not entitled to any dividend rights.
Liquidation Rights: In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (a "Liquidation Event"), the holders of each series of preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Company’s common stock by reason of their ownership thereof, an amount per share in cash equal to the greater of (x) the aggregate Stated Value for all shares of such series of Preferred Stock then held by then or (y) the amount payable per share of the Company’s common stock which such holder of preferred stock would have received if such holder had converted to common stock immediately prior to the Liquidation Event all of such series of preferred stock then held by such holder (the "Series Stock Liquidation Preference"). If, upon the occurrence of a Liquidation Event, the funds thus distributed among the holders of the preferred stock shall be insufficient to permit the payment to the holders of the preferred stock the full Series Stock Liquidation Preference for all series, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the preferred stock in proportion to the aggregate Series Liquidation Preferences that would otherwise be payable to each of the holders of preferred stock. Such payment shall constitute payment in full to the holders of the preferred stock upon the Liquidation Event. After such payment shall have been made in full, or funds necessary for such payment shall have been set aside by the Company in trust for the account of the holders of preferred stock, so as to be immediately available for such payment, such holders of preferred stock shall be entitled to no further participation in the distribution of the assets of the Company. The sale of all or substantially all of the assets of the Company, or merger, tender offer or other business combination to which the Company is a party in which the voting stockholders of the Company prior to such transaction do not own a majority of the voting securities of the resulting entity or by which any person or group acquires beneficial ownership of 50% or more of the voting securities of the Company or resulting entity shall be deemed to be a Liquidation Event.
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Other Matters: The holders of the Company’s preferred stock have no subscription or redemption privileges and are not subject to redemption. The Company’s Series Preferred Stock does not entitle its holders to preemptive rights. All of the outstanding shares of the Company’s preferred stock are fully paid and non-assessable.
The Company is authorized to issue a total of 28,921,732 shares of preferred stock consisting of: Series 1 Preferred stock, $0.0001 par value, 21,000,000 authorized, and 11,507,260 and Series 2 Preferred stock, $0.0001 par value, 7,921,732 authorized, and 7,784,678 shares issued and outstanding as of December 31, 2021 and 2020.
In October 2019, the Company recapitalized a series of convertible notes issued by the Company between 2012 and 2017 totaling $6,534,837 into 7,784,678 shares of Series 2 Preferred Stock at a share price of $0.839449 per share
There were Series 1 Preferred Shares 239,608 issued during the year ended December 31, 2020 for the total consideration of $12,098, out of which the Company have not collected $2,000 and the same was write off.
There were no Series 1 Preferred shares issued during the year ended December 31, 2021.
There were no Series 2 Preferred Shares issued during the years ended December 31, 2021 and 2020.
12 — COMMITMENTS
As of the preparation of these combined consolidated financials, the Company’s principal offices are located at 599 N Fair Oaks Ave, Suite 201, Pasadena, CA 91103. The Company leases its office space in a shared space work environment. The lease, which commenced on March 1, 2022 and expires on February 29, 2024, has a monthly rate of $1,500 based on a minimum occupancy of three (3) people and scales in cost per person. Additional seats will be charged at $450 per month for up to five (5) people and $400 per month for up to ten (10) people. Currently, this location serves as the principal executive office and is the location of all of its books and records and the operational offices for TMG CA.
During the years ending at December 31, 2021 and 2020, respectively, the Company leased office space from WeWork on a flexible space arrangement as its principal executive office. However, during the COVID-19 pandemic, staff primarily worked from home.
Material contracts
Contract with Google
On September 23, 2011, AdActive Media, Inc. entered into a business cooperation agreement with Google/YouTube for the operation of the Company’s multi-channel network (MCN) business unit. This contract allows the company to manage the analytics and collect monetization from Google across multiple content partners on YouTube.
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Contract with FastPay
On October 31, 2019, the subsidiary AdActive Media CA, Inc. entered into a business cooperation agreement with FPP Finance LLC (dba FastPay) for the monthly factoring of the Company’s revenue receivable from Google.
Contract with Vdiooly
On March 29, 2016, AdActive Media CA, Inc. entered into a business cooperation agreement with Vidooly for the operation of the Company’s backend creator payment processing management system. The Vidooly system processes the raw Google data reports on a monthly basis to break down and summarize the earnings per content partner. The system also tracks the revenue sharing agreement and payment method information provided by our content partners.
13 --CONCENTRATION OF CREDIT RISK
Credit risk
The Company is exposed to the following concentrations of risk:
(a) Major customers
For the December 31, 2021 and 2020, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances at period-end dates, are presented as follows:
| December 31 , 2021 | December 31, 2021 | |||||||||||
| Customers | Revenues | Percentage
of revenues | Accounts
receivable | |||||||||
| Customer A | $ | 5,337,677 | 98.4 | % | $ | 597,819 | ||||||
| December 31, 2020 | December 31, 2020 | |||||||||||
| Customers | Revenues | Percentage
of revenues | Accounts
receivable | |||||||||
| Customer A | $ | 4,974,648 | 92.7 | % | $ | 653,869 | ||||||
The customer is in United States
| 23 |
(b) Major vendors
For the December 31, 2021 and 2020, there is customer who accounts for 10% or more of the Company’s cost of goods sold and its outstanding payable balances as at period-end dates.
| December 31 , 2021 | December 31, 2021 | |||||||||||
| Vendors | Purchases | Percentage
of purchases | Accounts
payable | |||||||||
| Vendor A | $1, 336,086 | 28.5 | % | $ | 175,087 | * | ||||||
| December 31, 2020 | December 31, 2020 | |||||||||||
| Vendors | Purchases | Percentage
of revenues | Accounts
payable | |||||||||
| Vendor A | $ | 1,165,442 | 25.1 | % | $ | 237,614 | * | |||||
| Vendor B | $ | 498,005 | 10.7 | % | $ | 29,477 | * | |||||
The Vendors is in Vietnam, Thailand and Philippines.
*Included in accrued expenses as the bills submitted subsequent to the each month end.
14 --RELATED PARTY TRANSACTIONS
From time to time, the shareholder and director of the Company advanced funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.
The Company paid to the related company, the total servicing partner Fees of $25,424 and $0 for the years ended December 31, 2021 and 2020, respectively.
The Company paid to the related company, the consulting fee of $188,004 and $226,330 for the years ended December 31, 2021 and 2020, respectively.
The Company paid to the Thoughtful Thailand Ltd, the payment of $1,067,913 and $362,234 to destitute to the respective Multi Channel Network (MCN) content partners for the years ended December 31, 2021 and 2020, respectively.
The Company paid to three senior management employee, the total salaries of $363,559 and $326,745 for the years ended December 31, 2021 and 2020, respectively.
15 — CONTINGENCIES
The Company is subject, from time to time, to claims by third parties under various legal theories. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows. The Company was involved in an international arbitration that was initiated in 2019 and ultimately concluded in December 2021. During this arbitration, the Company was not successful in piercing the corporate veil of the respondents and consequently did not succeed in the arbitration. The arbitration panel ruled that the Company should reimburse the respondents legal and procedural fees, which have been stated to be $705,537. The procedural fee had been accrued as of December 31, 2021.
| 24 |
In August 2019, TMG DE was awarded an $11,000,000 financial judgment in its US Federal Court action against three former company executives. The lead defendant, Mr. Ingrouille, is a United Kingdom citizen and the other two defendants are Vietnamese citizens. TMG DE has not yet been successful in collecting this judgment, however, the Company continues to explore the best paths to enforce the judgement against the defendants.
IRC Sec. 6038 requires every U.S. person to furnish, for any foreign business entity that person controls, the information listed in IRC Sec. 6038(a)(1). It has been determined that operations of two wholly owned indirect subsidiaries, AdActive Media Shanghai Limited and AdActive Media Advertising Limited should have been reported on Form 5471 pursuant to IRC §6038. Failure to timely file a Form 5471 is generally subject to a $10,000 per information return. AdActive Media Shanghai Limited was incorporated on June 11, 2011 and AdActive Media Advertising Limited was incorporated on August 29, 2014. Total penalty associated with failure to file Form 5471 is $190,000. Pursuant to IRC Sec. 951A, A U.S. shareholder with an ownership interest in a Controlled Foreign Corporation (CFC) must calculate and report Global Intangible Low-Taxed Income (GILTI) using Form 8992. GILTI is calculated based on combing tested income and tested losses from various CFCs. Like other foreign information returns, failure to file Form 8992 or provide complete information can result in a $10,000 penalty pursuant to Treasury Regulation Section 1.6038-5. Total penalty associated with failure to file form 8992 is $50,000. Total combined civil penalty associated with failure to file both Forms 5471 and 8992 is $240,000. Estimated interest from the penalty is $12,000.
16 — SUBSEQUENT EVENTS
On July 7, 2022 (the “Closing Date”), AdActive Media, Inc., a Delaware corporation (the “Seller”), entered into a Stock Purchase Agreement with Society Pass Incorporated a Nevada corporation (the “Buyer"). The subsidiaries of AdActive Media, Inc. acquired under the Stock Purchase Agreement consist of (i) all of the outstanding capital stock of AdActive Media CA, Inc., a California corporation (the “CA Sub”), and (ii) 99.75% of all of the outstanding capital stock of Thoughtful Thailand Limited, a Thailand corporation.
The consideration paid to the Company by the Buyer, is included in a Stock Purchase Agreement. The purchase consideration in the “Stock Purchase Agreement”, was 609,327 shares of the Buyer’s common stock. The Buyer also issued the seller a warrant, expiring on July 7, 2023, to purchase 203,109 shares of the buyer’s common stock at an exercise price of $2.1335. The Buyer also assumed two loans, with a principal balance of $300,000 not including interest, payable by the Seller and the CA Sub (“Assumed Liabilities”). The Seller, however, agree to indemnify the Buyer if the Buyer make payments for any liabilities of the Seller and the CA Sub greater than $700,000, including the Assumed Loans. The Stock Purchase Agreement include representations, warranties and covenants of the Buyer and the Seller as well as other customary closing conditions.
In this above share purchase transaction, the Society Pass Incorporated (the Buyer) did not acquire or assume any common stock, preferred stock, warrants, options, or any other equity instruments related to TMG DE (the seller).
| 25 |
ADACTIVE MEDIA, INC
(United States business)
Unaudited Combined Condensed Consolidated Financial Statements
For the Period Ended March 31, 2022 and 2021
| Pages | |
| Financial Statements - | |
| Combined Condensed Consolidated Balance Sheets for as of March 31, 2022 (Unaudited) and December 31, 2021 | 27 |
| Unaudited Combined Condensed Consolidated Statements of Operations for for the Three Months ended March 31, 2022 And 2021 | 28 |
| Unaudited Combined Condensed Consolidated Statement of Changes in Stockholders' Deficit for the Three Months ended March 31, 2022 And 2021 | 29 |
| Unaudited Combined Condensed Consolidated Statements of Cash Flows for Three Months ended March 31, 2022 And 2021 | 30 |
| Notes to the Unaudited Condensed Combined Consolidated Financial Statements - | 31 |
| 26 |
AdActive Media, Inc.
(United States business)
Combined Condensed Consolidated Balance Sheet
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Unaudited | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 6,976 | $ | 11,679 | ||||
| Accounts receivable | 492,231 | 624,324 | ||||||
| Total current assets | 499,207 | 636,003 | ||||||
| Property plant and Equipment, net | 1,542 | 1,542 | ||||||
| Security deposits | 1,000 | 3,178 | ||||||
| Right of Use - Assets | 34,307 | — | ||||||
| Total Assets | $ | 536,056 | $ | 640,723 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 544,778 | $ | 706,309 | ||||
| Account payable – related party | 15,163 | 99,496 | ||||||
| Accrued expenses | 705,537 | 705,537 | ||||||
| Accrued liabilities and other payable | 733,834 | 739,622 | ||||||
| Accrued liabilities – related party | 127,379 | 127,379 | ||||||
| Accrued interest on loans | 83,926 | 79,488 | ||||||
| Convertible note | 67,500 | 67,500 | ||||||
| Lease liabilities | 15,292 | — | ||||||
| Loan from related party | 284,000 | 138,000 | ||||||
| SBA Loans | 300,000 | 300,000 | ||||||
| Total Current Liabilities | 2,877,409 | 2,963,331 | ||||||
| Operating lease liabilities | 19,104 | — | ||||||
| Total Liabilities | $ | 2,896,513 | 2,963,331 | |||||
| Commitments and contingencies | ||||||||
| Convertible preferred shares; $0.0001 par value, 28,921,732 shares authorized, Nil undesignated as of March 31, 2022 and December 31, 2021, respectively | ||||||||
| Series 1 Preferred stock, $0.0001 par value, 21,000,000 authorized, and 11,507,260 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 581,004 | 581,004 | ||||||
| Series 2 Preferred stock, $0.0001 par value, 7,921,732 authorized, and 7,784,678 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 6,534,838 | 6,534,838 | ||||||
| Stockholders' Deficit | ||||||||
| Common stock, $0.0001 par value, 87,000,000 authorized, 40,372,553 and 40,350,212 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 4,037 | 4,035 | ||||||
| Additional paid-in capital | 35,542,475 | 35,542,253 | ||||||
| Accumulated deficit | (45,022,811 | ) | (44,984,738 | ) | ||||
| Total stockholders' deficit | (9,476,299 | ) | (9,438,450 | ) | ||||
| Total Liabilities and Stockholders' deficit | $ | 536,056 | $ | 640,723 | ||||
| The accompanying notes are an integral part of these unaudited combined condensed consolidated financial statements | ||||||||
| 27 |
| AdActive Media, Inc. | ||||||||
| (United States business) | ||||||||
| Unaudited Combined Condensed Consolidated Statements of Operations | ||||||||
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | 1,208,485 | $ | 1,201,415 | ||||
| Cost of services | (1,061,737 | ) | (1,042,790 | ) | ||||
| Gross profit | 146,748 | 158,625 | ||||||
| Operating expenses | ||||||||
| Employee payroll | 89,318 | 87,898 | ||||||
| Professional fees | 53,001 | 105,026 | ||||||
| Insurance expenses | 17,194 | 15,106 | ||||||
| G&A expenses | 17,019 | 20,242 | ||||||
| Office rent | 9,455 | 15,549 | ||||||
| Marketing and advertising | 95 | — | ||||||
| Travel expenses | (6,049 | ) | 1,722 | |||||
| Total operating expenses | 180,033 | 245,543 | ||||||
| Loss from operations | (33,285 | ) | (86,918 | ) | ||||
| Other Income (expenses) | ||||||||
| Interest expenses | (4,438 | ) | (2,774 | ) | ||||
| Write-off of unrecoverable assets | 500 | — | ||||||
| Total other income (expenses) | (3,938 | ) | (2,774 | ) | ||||
| Net loss before income taxes | (37,223 | ) | (89,692 | ) | ||||
| Income taxes | 850 | 1,650 | ||||||
| Net loss/ Total comprehensive loss | $ | (38,073 | ) | $ | (91,342 | ) | ||
| Net Loss Per Common Share, Basic and diluted | $ | (0.001 | ) | $ | (0.002 | ) | ||
| Weighted Average Number of shares outstanding | 40,367,282 | 40,331,134 | ||||||
| The accompanying notes are an integral part of these unaudited combined condensed consolidated financial statements | ||||||||
| 28 |
| AdActive Media, Inc. | ||||||||||||||||||||
| (United States business) | ||||||||||||||||||||
| Unaudited Combined Condensed Consolidated Statement of Changes in Shareholders' Deficit | ||||||||||||||||||||
| For the Three Months Ended March 31, 2021 and 2022 | ||||||||||||||||||||
| Common stock | ||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Stockholders’ Deficits | ||||||||||||||||
| Balance – January 1, 2021 | 40,327,871 | $ | 4,033 | $ | 35,542,032 | $ | (43,922,033 | ) | $ | (8,375,968 | ) | |||||||||
| Common stock issued for exercising stock option | 22,341 | 2 | 221 | 223 | ||||||||||||||||
| Net loss for the period | (91,342 | ) | (91,342 | ) | ||||||||||||||||
| Balance - March 31, 2021 | 40,350,212 | $ | 4,035 | $ | 35,542,253 | $ | (44,013,375 | ) | $ | (8,467,087 | ) | |||||||||
| Balance - January 1, 2022 | 40,350,212 | 4,035 | 35,542,253 | (44,984,738 | ) | (9,438,450 | ) | |||||||||||||
| Common stock issued for exercising stock option | 22,341 | 2 | 222 | 224 | ||||||||||||||||
| Net loss for the period | (38,073 | ) | (38,073 | ) | ||||||||||||||||
| Balance - March 31, 2022 | 40,372,553 | $ | 4,037 | $ | 35,542,475 | $ | (45,022,811 | ) | $ | (9,476,299 | ) | |||||||||
| The accompanying notes are an integral part of these unaudited combined condensed consolidated financial statements | ||||||||||||||||||||
| 29 |
| AdActive Media, Inc. | ||||||||
| (United States business) | ||||||||
| Unaudited Combined Condensed Consolidated Statements of Cash Flows | ||||||||
| Three month ended March 31, | Three month ended March 31, | |||||||
| 2022 | 2021 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (38,073 | ) | $ | (91,342 | ) | ||
| Adjustments to reconcile net loss from operations to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 132,094 | 581,894 | ||||||
| Security deposit | 2,178 | — | ||||||
| Accounts payable | (245,864 | ) | (555,902 | ) | ||||
| Accrued interest on loan | 4,438 | 2,773 | ||||||
| Accrued liabilities | (5,562 | ) | (64,950 | ) | ||||
| Working capital loan | 146,000 | 50,000 | ||||||
| Right to use | 1,292 | — | ||||||
| Leases liabilities | (1,206 | ) | — | |||||
| Net cash used in operating activities | (4,703 | ) | (77,525 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from SBA loans | — | 75,327 | ||||||
| Proceeds from the issuance of common stock for stock option exercising | — | 223 | ||||||
| Net cash provided by financing activities | — | 75,550 | ||||||
| Net changes in cash and cash equivalents | (4,703 | ) | (1,977 | ) | ||||
| Cash and Cash Equivalents, Beginning of Quarter | 11,679 | 11,240 | ||||||
| Cash and Cash Equivalents, End of Quarter | $ | 6,976 | $ | 9,263 | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid during the Quarter: | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Income taxes paid | $ | — | $ | — | ||||
| Non Cash Investing and Financing | ||||||||
| Initial Right of use and related Leases liabilities recognised | $ | 35,823 | $ | — | ||||
| Stock option proceeds adjusted with accrued liabilities | $ | 224 | $ | — | ||||
| The accompanying notes are an integral part of these unaudited combined condensed consolidated financial statements | ||||||||
| 30 |
ADACTIVE MEDIA, INC.
(UNITED STATES BUSINESS)
NOTES TO UNAUDITED COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
PERIOD ENDED MARCH 31, 2022 AND 2021
1 — NATURE OF OPERATIONS
Description of Business
AdActive Media, Inc., dba Thoughtful Media Group (TMG DE), is a Delaware Corporation incorporated on December 17, 2010 and has three (3) wholly owned direct subsidiaries, AdActive Media CA, Inc. (TMG CA), a California Corporation incorporated on April 12, 2010, Thoughtful (Thailand) Co., Ltd. incorporated on September 9, 2014, and AdActive Media Asia Limited (TMG HKG), a Hong Kong Corporation incorporated on March 14, 2011. TMG HKG has two (2) wholly owned direct subsidiaries, AdActive Media Shanghai Limited, a PR China wholly foreign owned enterprise (“WFOE”) incorporated on June 15, 2011, AdActive Media Advertising Limited, a PR China wholly foreign owned enterprise (“WFOE”) incorporated on August 29, 2014, collectively (the “Company”). Since 2018, TMG HKG and its direct subsidiaries have been dormant with no active business operations.
This financial statement is only presenting the combined condensed consolidated operations of the United States businesses, TMG DE and TMG CA. The Company assists advertisers by helping them engage with their target market through online social media and “social influencers.” The Company manages this process with direct on-the-ground employees and through a strategic contractual relationship with Google/YouTube called a “Multi Channel Network” (MCN).
Description of subsidiaries incorporated by the TMG DE
Schedule of Description of subsidiaries
| Name | Place and date of incorporation | Principal activities | Particulars of registered/ paid up share capital | Effective interest held | ||||||
| AdActive Media CA,Inc. | California, April 12, 2010 | Digital marketing and Social media agency | $252 | 100 | % | |||||
Thoughtful (Thailand) Co., Ltd |
Thailand, September 9 2014 | Digital marketing and Social media agency | THB2,000,000 | *100 | % | |||||
| AdActive Media Asia Limited | Hong Kong, March 14, 2011 | Digital marketing and Social media agency | $10,000 | 100 | % | |||||
* Out of this, 0.50% share ownership is held by one directors on behalf of the TMG DE and the remaining 0.25% is held by an inactive former local representative
The Company including all three subsidiaries, collectively (the “group”).
| 31 |
2 — GOING CONCERN
The combined condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. Given the impact of the COVID-19 pandemic, the Company has had recurring losses, and negative cash flows from operations. For the prior several years, the Company has relied on capital from investors, government EIDL loans, and working capital loans from the officers of the Company. While the Company’s operations are at present nearly cash flow break even, this and other factors raise reasonable doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon its ability to secure working capital financing against its receivables and additional investment capital to continue to execute its business plan. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
These condensed combined consolidated financial statements are only presenting the consolidated operations of the United States businesses, TMG DE and TMG CA. All significant intercompany transactions and balances have been eliminated in consolidation.
Basis of Presentation
The carve-out financial statements and accounting records present the combined condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021 and the combined condensed consolidated statements of operations, combined condensed consolidated statements of changes in shareholders' deficit and combined condensed consolidated statements of cash flows for the three month period ended March 31, 2022 and 2021.
These accompanying combined condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Throughout the periods covered by the combined condensed consolidated financial statements, the Company did not operate as a separate stand-alone entity but, rather as a “United States business” of the Group. Consequently, stand-alone combined consolidated financial statements were not historically prepared for the Company. The combined condensed consolidated financial statements have been prepared in connection with the transaction and are derived from the accounting records of the Group using the historical results of operations and the historical bases of assets and liabilities of the Company, adjusted as necessary to conform to U.S. GAAP. The combined condensed consolidated financial statements present the assets, liabilities, revenues, and expenses directly attributed to the Company as well as certain allocations from the Group. Intercompany balances and transactions between the Company and the Group have been presented in the Balance Sheets. The combined condensed consolidated financial statements may, therefore, not reflect the results of operations, financial position or cash flows that would have resulted had the Company been operated as a separate entity.
Cost Allocation and Attribution
The combined consolidated Statements of Operations include all costs directly attributable to the Company. The Group costs were allocated to the combined consolidated financial statements for certain operating, selling, governance and corporate functions such as direct labor, overhead, sales and marketing, administration, legal and information technology. The costs for these services and support functions were allocated to the Company in full and have not been allocated to other subsidiaries not consolidating with the Company. Management believes the methodology for cost allocations is a reasonable reflection of common expenses incurred by the Group on the Company’s behalf.
Foreign Currency
The Company’s reporting currency is the U.S. dollar. All accounts of TMG DE and TMG CA are held in U.S. dollars.
Use of Estimates and Assumptions
In preparing these condensed combined consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted. Significant estimates in the period include the allowance for doubtful accounts on accounts receivable, incremental borrowing rate used to calculate right of use assets and lease liabilities, useful lives of long- lives assets, stock option valuations and deferred taxes related valuation allowance.
| 32 |
Cash and Cash Equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. As of March 31, 2022 and December 31, 2021, the cash and cash equivalent was amounted to $6,976 and $11,679, respectively.
The Company currently has bank deposits with financial institutions in the U.S. which does not exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000, so there were uninsured balance of $0 and $0 in parent entity as of March 31, 2022 and December 31, 2021, respectively.
Accounts receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer’s financial condition, the customer creditworthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of fiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company considers the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of March 31, 2022 and 2021, the allowance for doubtful accounts amounted to $-0- and $0, respectively. The Company have entered into financing arrangement with Fastpay to expedite the accounts receivable recovery.
Financing and Security Agreement with FastPay
In October 2019, we executed a Financing and Security Agreement, as amended (collectively, the "FastPay Agreement"). with FPP Finance LLC to create an accounts receivable-based credit facility. The FastPay Agreement was further amended in October 2021.
Under the October 2021 amended terms of the FastPay Agreement, FastPay may, at its sole discretion, purchase our eligible accounts receivable. Upon any acquisition of accounts receivable, FastPay will advance us up to 80% of the gross value of the purchased accounts, up to a maximum of $1,000,000 in advances. Each account receivable purchased by FastPay will be subject to a factoring fee rate specified in the FastPay Agreement calculated as a percentage of the gross value of the account outstanding and additional fees for accounts outstanding over 30 days. We are subject to a concentration limitation on the percentage of debt from any single customer of 25% to the total amount outstanding on its purchased accounts, subject to an increase to 100% for one specific large customer “Google LLC”.
We are obligated to repurchase accounts remaining uncollected after a specified deadline, and FastPay will generally have full recourse against us in the event of nonpayment of any purchased accounts. Our obligations under the FastPay Agreement are secured by a first position security interest in its accounts receivable, deposit accounts and all proceeds therefrom.
The FastPay Agreement contains covenants that are customary for agreements of this type and are primarily related to accounts receivable and audit rights. We are also required to provide FastPay with 30-day notice of any transaction that result, or would result in, a “change of control” as defined in the FastPay Agreement. The failure to satisfy covenants under the FastPay Agreement or the occurrence of other specified events that constitute an event of default, as defined, could result in the termination of the FastPay Agreement and/or the acceleration of our obligations. The FastPay Agreement contains provisions relating to events of default that are customary for agreements of this type.
The current FastPay Agreement has a term of 24 months and automatically renews thereafter for successive terms, subject to earlier termination by written notice by the Company, provided all obligations are paid, including the payment of an early termination fee.
At March 31, 2022 and December 31, 2021, $460,310 and $597,819, respectively, of accounts receivable purchased by FastPay remain outstanding and are subject to repurchase under the terms of the FastPay Agreement.
| 33 |
Property, Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Expected useful lives | ||
| Computer equipment | 5 years |
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Revenue Recognition:
The Company is an advertising content supplier to the Google/YouTube system and receives revenue from Google in relation to their “YouTube Properties”. The Company, via its content development partners, creates the inventory that generates the advertising revenue on YouTube by delivering both performance and brand advertising. We recognize revenues for performance advertising when a user engages with the advertisement, such as a click, a view, or a purchase. For brand advertising, we recognize revenues when the advertiser content is displayed within video content.
The Company directly influences the value/price of that inventory through the optimization work that the Company does and takes risk on that inventory given its investment into helping their content partners improve the content and providing them elements for the content production (e.g. music licenses). The Company is a principal in the transaction.
The Company’s contracts are based on the completion and acceptance of defined contractual milestones. Milestone payments, which are generally based on the completion of certain deliverables in the contracts, are recognized as revenue when the milestones are achieved, collectability is reasonably assured and there are no significant future performance obligations in connection with the milestone. In those instances where the Company has collected milestone payments but has significant future performance obligations related to the development of the product, deferred revenue is recorded and revenue is recognized upon the client’s acceptance of the deliverable. No deferred revenue was recognised in the book currently and in the past.
The Company generates Platform Revenue from TMG’s development, production and procurement of video content that can be distributed across global social video platforms, like YouTube and Facebook, and be monetized through the selling of advertising; either via pre/mid/post roll ads or products being integrated into the content. Historically, platform revenue has varied due to rates paid to video creators based on the geography and demographics of the viewers along with the subject matter of the content.
Integrated Media Revenue results from placing advertiser information directly into video content rather than Google/YouTube selling it through their auction platform. This generally leads to higher advertising rates and gross margin percentage. Integrated media opportunities through agencies typically have a lower margin than selling direct to advertisers.
Regarding contractual milestones, approximately 98% of Company revenue is from Google and the milestones have been completed by the end of each calendar month that the revenue is recognized, and the Company receives this earned revenue from Google in the following month. The milestones within that month are creating content, uploading content, optimizing that content, gaining viewership. The value of all of those milestones are tallied up at the end of each calendar month. And there are no future performance obligations.
For Integrated Media Revenue, most projects are completed within one month, however, there are occasions where a project may execute over a series of months. The Company recognizes this revenue when the contractural milestones are met, which are typically the distribution of the custom content and the viewership by users of the advertising content within the content.
| 34 |
For three months ended March 31, 2022, and 2021, the Company has generated $1,208,485 and $1,201,415, respectively revenue from platform and media revenue.
Cost of sales
Cost of sales under creator revenue sharing consist of the cost of payments to individual content creation partners involved in the development of content uploaded to social media platforms (e.g. Google/YouTube) for monetization. The content creation partners are primarily in the regions of Thailand, Vietnam and Philippines and they are directly attributable to sales of platform video revenue.
Cost of sales under premium media consist of the cost of media purchased on various social media platforms (e.g. Google/YouTube, Facebook) for the promotion and amplification of advertising and marketing campaigns being executed directly with brands or their agencies.
Cost of sales under premium sales consist of the cost of content production with our content creation partners specifically for the support of the promotion and amplification of advertising and marketing campaigns being executed directly with brands or their agencies.
The cost of personnel who is monitoring and advising the quality of the content was by completed by employee in the company and the cost was capture in the employee payroll under operating expense.
Contract assets
In accordance with ASC Topic 606-10-45-3, contract asset is when the Company’s right to payment for goods and services already transferred to a customer if that right to payment is conditional on something other than the passage of time. The Company will recognize a contract asset when it has fulfilled a contract obligation but must perform other obligations before being entitled to payment.
There were no contract assets at March 31, 2022 and December 31, 2021.
Contract liabilities
In accordance with ASC Topic 606-10-45-2, a contract liability is Company’s obligation to transfer goods or services to a customer when the customer prepays consideration or when the customer’s consideration is due for goods and services that the Company will yet provide whichever happens earlier.
Contract liabilities represent amounts collected from, or invoiced to, customers in excess of revenues recognized, primarily from the billing of annual subscription agreements. The value of contract liabilities will increase or decrease based on the timing of invoices and recognition of revenue. There were no contract liabilities at March 31, 2022 and December 31, 2021.
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Income Taxes
The Company accounts for income taxes using the assets and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized.
The Company recognizes liabilities for uncertain tax positions based on the two-step process prescribed by GAAP. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period. The Company recognizes interest and penalties as incurred in finance income (expense), net in the Statements of Operations. There were no liabilities recorded for uncertain tax positions at March 31, 2022 and 2021.
Leases
The Company adopted Topic 842, Leases (“ASC 842”) to determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the condensed combined consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the condensed combined consolidated balance sheets.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company generally use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.
When a lease is terminated before the expiration of the lease term, irrespective of whether the lease is classified as a finance lease or an operating lease, the lessee would derecognize the ROU asset and corresponding lease liability. Any difference would be recognized as a gain or loss related to the termination of the lease. Similarly, if a lessee is required to make any payments or receives any consideration when terminating the lease, it would include such amounts in the determination of the gain or loss upon termination.
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As of March 31, 2022, right-of-use assets were $34,307 and lease liabilities were $34,396.
As of December 31, 2021, there is no right of use assets and lease liabilities.
Earnings Per Share
Basic earnings per common share amounts are based on weighted average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options, warrants and convertible stock, subject to anti-dilution limitations. All such potentially dilutive instruments were anti-dilutive for the 3 months ended March 31, 2022 and 2021.
Schedule of computation of diluted net loss per share
| 2022 | 2021 | |||||||
| Net loss attributable to AdActive Media Inc | $ | (38,072 | ) | $ | (91,342 | ) | ||
| Weighted average common shares outstanding – Basic and diluted | 40,367,282 | 40,331,134 | ||||||
| Net loss per share – Basic and diluted | $ | (0.001 | ) | $ | (0.002 | ) | ||
Warrants
In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using a Black-Scholes Option Pricing Model as of the measurement date. The Company uses a Black-Scholes option model to estimate the fair value of compensation warrants. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period, or at the date of issuance, if there is not a service period.
Fair Value of Financial Instruments
Generally accepted accounting principles require disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.
In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value.
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GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, deposits and other receivables, other payables approximate their fair values because of the short maturity of these instruments.
Recently Issued Accounting Principles
Accounting Standards Adopted
In August 2020, the FASB issued ASU 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity’s own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021 and early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company has evaluated and the adoption of this standard does not have a material impact on its financial position, results of operations or cash flows.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2021-04 clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The ASU provides guidance to clarify whether an issuer should account for a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. ASU 2021-04 is effective for annual beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has evaluated and the adoption of this standard does not have a material impact on its financial position, results of operations or cash flows
Accounting Standards Issued, Not Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning January 1, 2023. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the potential effect of this standard on its financial statements, but does not believe that it will have a material affect on its consolidated financial statements.
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In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”: The amendments in this update are to clarify, correct errors in, or make minor improvements to a variety of ASC topics. The changes in ASU 2020-03 are not expected to have a significant effect on current accounting practices. The ASU improves various financial instrument topics in the Codification to increase stakeholder awareness of the amendments and to expedite the improvement process by making the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2022 with early application permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements, but does not believe that it will have a material affect on its consolidated financial statements.
In October 2021, the FASB issued guidance which requires companies to apply Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact and timing of adoption of this guidance, however, it appears that more revenue will be recorded under this new requirement than was previously allowed.
No other new accounting pronouncements were Issued or became effective in the period that had, or are expected to have, a material impact on our condensed combined consolidated Financial Statements.
4 — REVENUE
Revenue consisted of the following deliverables:
| March 31, | March 31 | |||||||
| 2022 | 2021 | |||||||
| Platform – Video | $ | 1,203,070 | $ | 1,179,037 | ||||
| Platform – Music. | 190 | 22,378 | ||||||
| Media Sales- Premium sales | 5,225 | — | ||||||
| $ | 1,208,485 | $ | 1,201,415 | |||||
5 — PROPERTY, PLANT AND EQUIPMENT
Plant and equipment, net consist of the following:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Computer and software equipment | $ | 3,212 | $ | 3,212 | ||||
| Accumulated depreciation | (1,670 | ) | (1,670 | ) | ||||
| Property, Plant and equipment, net | $ | 1,542 | $ | 1,542 | ||||
Depreciation of plant and equipment amounted to approximately $-0- and $-0- for the periods ended March 31, 2022 and 2021, respectively.
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6 — INCOME TAXES
The following table sets forth the components of income tax expense for the years ended March 31, 2022 and 2021.
March 31, 2022 | March 31, 2021 | |||||||
| Current expenses | ||||||||
| State and local | 850 | 1,650 | ||||||
| Total | $ | 850 | $ | 1,650 | ||||
The effective tax rate for the three months ended March 31, 2022 and 2021 varied from the expected statutory rate due to the Company continuing to provide a 100% valuation allowance on net deferred tax assets. The Company determined that it was appropriate to continue the full valuation allowance on net deferred tax assets as of March 31, 2022, primarily because of the Company’s history of operating losses.
The Company has incurred operating losses in recent years, and it continues to be in a three-year cumulative loss position at March 31, 2022. Accordingly, the Company determined there was not sufficient positive evidence regarding its potential for future profits to outweigh the negative evidence of our three-year cumulative loss position under the guidance provided in ASC 740. Therefore, it determined to continue to provide a 100% valuation allowance on its net deferred tax assets. The Company expects to continue to maintain a full valuation allowance until it determines that it can sustain a level of profitability that demonstrates its ability to realize these assets. To the extent the Company determines that the realization of some or all of these benefits is more likely than not based upon expected future taxable income, a portion or all of the valuation allowance will be reversed. The Company has approximately $38 million (based on its December 31, 2021 tax return) in net operating loss carryforwards to offset future taxable income as of March 31, 2022.
7— ACCOUNT PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following:
March 31, 2022 | December 31, 2021 | |||||||
| Account payable (a) | $ | 544,778 | $ | 706,309 | ||||
| Account payable – related party (b) | 15,163 | 99,496 | ||||||
| Accrued expenses (b) | 705,537 | 705,537 | ||||||
| Accrued liabilities and other payable (d) | 733,834 | 739,622 | ||||||
| Accrued salaries – Related party (c) | 127,379 | 127,379 | ||||||
| Accrued interest on loan | 83,926 | 79,488 | ||||||
| Total | $ | 2,210,617 | $ | 2,457,831 | ||||
| (a) | Account payables represent due to one third-party balances as of March 31, 2022 and $529,910 as of December 2021: $484,178 which accrued cost of goods sold. |
| (b) | The amount represents due to one related party in respect to consulting fee to Thorman Development Inc. (collection receive on behalf of Thoughtful (Thailand) Co Ltd. ). Also, $705,537 amount represented litigation settlement- refer contingencies footnotes |
| (c) | The amounts related to compensation payable to Thorman Development Inc. |
| (d) | Accrued liabilities and other payable consisted of the following: |
| March 31, 2022 | December 31, 2021 | |||||||
| Accrued liabilities (e) | $ | 290,239 | $ | 290,239 | ||||
| Accrued salaries | 186,498 | 186,499 | ||||||
| Contingent liabilities (f) | 240,000 | 240,000 | ||||||
| Payable to credit cards | 5,097 | 10,884 | ||||||
| Accrued interest on penalty on taxes | 12,000 | 12,000 | ||||||
| Total | $ | 733,834 | $ | 739,622 | ||||
| (e) | This included: $252,557 related to legal fees related to the Yeah1 arbitration. |
| (f) | This represents amounts accrued in 2021 related to penalties for non-filing of tax forms, refer contingencies footnotes. |
8 — LOANS
During the COVID-19 pandemic, the CEO of the Company, via his personal consulting company Thorman Development, Inc., made a series of interest free working capital loans to the company. The balances were $284,000 and $138,000 for 3 months ended March 31, 2022 and for the year ended December 31, 2021, respectively.
During the COVID-19 pandemic, the Company received SBA/EIDL loans in 2020 with a principal amount totaling $300,000. The effective interest rate is 3.75%. These loans are amortized over 30 years and payments are currently scheduled to be due starting in late 2022.The balances were $300,000 and $300,000 for 3 months ended March 31, 2022 and for the year ended December 31, 2021, respectively
The interest for the loan for three months ended March 31, 2022: $2,774 and for March 31, 2021 : $2,774
9 — CONVERTIBLE NOTES
| March 31, 2022 | December 31, 2021 | |||||||
| Convertible promissory note payable | $ | 67,500 | $ | 67,500 | ||||
| Accrued interest payable | 64,432 | 62,768 | ||||||
| Convertible promissory note payable, net | $ | 131,932 | $ | 130,268 | ||||
The Company issued the following notes outstanding:
A $50,000 convertible note issued on August 28, 2012 at a rate of 10% that continues to accrue interest.
A $17,500 convertible note issued on November 5, 2012 at a rate of 10% that continues to accrue interest.
The interest for the loan for three months ended March 31, 2022: $1,664 and for March 31, 2021 : $1,664
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NOTE—10 LEASES
The ASU No. 2016-02, Leases, effective from January 1, 2019. We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as we have elected the practical expedient. Some of our operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.
Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term. We had no financing leases as of March 31, 2022 and December 31, 2021.
The Company adopts a 2.5 % as weighted average Incremental borrowing rate to determine the present value of the lease payments. The weighted average remaining life of the lease was 2 years.
During the three months ended March 31, 2022, the Company enter into new lease arrangements, and accounted as per ASC Topic 842, the ROU asset and lease obligation of $35,823.
The following tables summarize the lease expense, as follows:
| March 31, 2022 | March 31, 2021 | |||||||
| Operating lease expense (per ASC 842) | $ | 1,589 | $ | — | ||||
| Total lease expense | $ | 1,589 | $ | — | ||||
As of March 31, 2022, right-of-use assets were $34,307 and lease liabilities were $34,396.
As of December 31, 2021, there is no right of use assets and lease liabilities.
Components of Lease Expense
We recognize lease expense on a straight-line basis over the term of our operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.
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Future Contractual Lease Payments as of March 31, 2022
The below table summarizes our (i) minimum lease payments over the next two years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next twenty-three months ending March 31:
| Years ended March 31, | Operating lease amount | |||
| 2023 | $ | 18,045 | ||
| 2024 | 20,204 | |||
| Total | 38,249 | |||
| Less: interest | (3,852 | ) | ||
| Present value of lease liabilities | $ | 34,395 | ||
| Less: non-current portion | 15,292 | |||
| Present value of lease liabilities – current liability | $ | 19,103 | ||
11 — EQUITY
(a) Common Shares Authorized and Issued
The Company is authorized to issue a total of 87,000,000 shares of common stock, $0.0001 par value. There were 40,372,553 and 40,350,212 shares issued and outstanding as of March 31, 2022, and December 31, 2021 respectively.
During the three months ended March 31, 2022 and 2021 the company issued 22,341 and 22,341 of our common stock from the exercise of stock options to Jezebel Communications Limited, a consultant to the company value of $224 and $223 respectively, however for 2022 issuance, the Company have adjusted the $224 with consultant liabilities.
Warrants
Below is a summary of the Company’s issued and outstanding warrants as of March 31, 2022 and December 31, 2021:
| Warrants | Weighted average exercise price | Weighted average remaining contractual life (in years) | |||||||||||
| Outstanding as of December 31, 2020 | 8,285,236 | 0.62 | 2.83 | ||||||||||
| Issued | — | — | |||||||||||
| Exercised | — | — | |||||||||||
| Expired | (183,308 | ) | 1.65 | ||||||||||
| Outstanding as of December 31, 2021 (b) | 8,101,928 | 0.58 | 1.88 | ||||||||||
| Issued | — | — | |||||||||||
| Exercised | — | — | |||||||||||
| Expired | — | — | |||||||||||
| Outstanding as of March 31, 2022 | 8,101,928 | 0.58 | 1.64 | ||||||||||
During the three months ended March 31, 2022, there were no new warrants issued nor any warrants exercised or expired
In October 2019, the Company repriced the warrants, where the Company and each Participating Investor (as defined below) holding a Existing Warrant shall be automatically amended immediately prior to the Initial Closing, without any further action from the Company or any Participating Investor, such that (a) the exercise price per share of Common Stock as set forth in the Existing Warrant shall be the fair market value of a share of Common Stock of the Company, as determined by the Board in good faith following the Company’s receipt of a written valuation report in compliance with Section 409A of the Internal Revenue Code as soon as practicable following the Initial Closing and (b) the termination date set forth in each Existing Warrant shall be amended to the date that is the later of (A) the fifth anniversary of the Initial Closing and (B) the termination date set forth in the Existing Warrant prior to the date hereof. As used herein, “Participating Investor” means, collectively: (i) any Investor who acquires at least such Investor’s pro rata share of the Series 1 Preferred Shares issued or issuable pursuant to Section 2.1(b) of this Agreement; and (ii) any Investor that is not an existing stockholder in the Company that holds a Note and purchases at least 198,043 shares of Series 1 Preferred pursuant to this Agreement.
The management believe that value that should be assigned to the warrant expenses at the time of repricing through the current date should be $0.0001, the par value of the common stock as there was no public market for the common stock in 2019 through the current date so there was no market value and therefore the Company have not accounted any incremental cost for warrants repriced in 2019.
There were few warrants earlier granted to purchase the preferred series A & B, however during the recapitalization in 2019, those Series A and B converted into common stock and therefore all warrants outstanding as of date, are for common stock.
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Stock option
Company’s stock options for the period ended March 31, 2022 and December 31 2021, respectively, is as follows:
| Share option | Weighted average exercise price | Weighted average remaining contractual life (in years) | |||||||||||
| Outstanding as of December 31, 2020 | 400,097 | $ | 0.185 | 6.87 | |||||||||
| Granted | — | — | |||||||||||
| Exercised | 22,341 | 0.010 | |||||||||||
| Expired | — | — | |||||||||||
| Outstanding as of December 31, 2021 | 377,756 | 0.196 | 6.26 | ||||||||||
| Granted | |||||||||||||
| Exercised | 22,341 | 0.010 | |||||||||||
| Expired | |||||||||||||
| Outstanding as of March 31, 2022 | 355,415 | $ | 0.196 | 6.41 | |||||||||
The Company’s stock option plans provide for the grant of options to purchase shares of common stock to officers, directors, other key employees and consultants. The purchase price may be paid in cash or “net settled” in shares of the Company’s common stock. In a net settlement of an option, the Company does not require a payment of the exercise price of the option from the optionee, but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Options generally vest over a 3-4 year period from the date of grant and have a 1-2 year cliff term.
During the three months ended March 31 2022, no new stock option granted nor expired.
During the three months ended March 31, 2022, the options holder exercised 22,341 options, as disclosed above under common stock section.
In October 2019, the board believes it to be in the interests of the Company and its stockholders to motivate and restore competitive and appropriate equity incentives for the optionholders by amending each option held by the eligible optionholders to reduce the exercise price of each repriced option to $0.01 per share. The 5,513,125 stock option holder were eligible and their exercise price reduced to $0.01 per shares in 2019.
The management believe that value that should be assigned to the stock option expenses at the time of repricing through the current date should be $0.0001, the par value of the common stock as there was no public market for the common stock in 2019 through the current date so there was no market value and therefore the Company have not accounted any incremental cost for stock options repriced in 2019 .
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NOTE — 12 PREFERRED STOCKS
As of December 31, 2021 and March 31, 2022, the Company’s preferred stocks have been designated as follow:
| No. of shares | ||||
| Series 1 Preferred Stock | 11,507,260 | |||
| Series 2 Preferred Stock | 7,784,678 | |||
All of the Series 1 and Series 2 Preferred Shares were issued at a value of respective cash purchase price of $0.050494 per share and at a conversion price of $0.839449 per share, respectively. These all Series of Preferred Shares contain a conversion option, are convert into a fixed number of common shares or redeemable with the cash repayment at the liquidation, so as a result of this liquidation preference, under U.S GAAP, the Company has classified these Series of Preferred Shares within mezzanine equity in the combined condensed consolidated balance sheet.
Voting Rights:
(1) The affirmative vote of at least a majority of the holders of each series of preferred stock shall be necessary to:
| (a) | increase or decrease the par value of the shares of the Series 1 and Series 2 Preferred Stock, alter or change the powers, preferences or rights of the shares of Series 1 Preferred Stock or create, alter or change the powers, preferences or rights of any other capital stock of the Company if after such alteration or change such capital stock would be senior to or pari passu with Series 1 Preferred Stock; and |
| (b) | adversely affect the shares of Series 1 Preferred Stock, including in connection with a merger, recapitalization, reorganization or otherwise. |
(2) The affirmative vote of at least a majority of the holders of the shares of the Series 1 Preferred Stock shall be necessary to:
| (a) | enter into a transaction or series of related transactions deemed to be a liquidation, dissolution or winding up of the Corporation, or voluntarily liquidate or dissolve; |
| (b) | authorize a merger, acquisition or sale of substantially all of the assets of the Company or any of its subsidiaries (other than a merger exclusively to effect a change of domicile of the Company to another state of the United States); |
| (c) | increase or decrease (other than decreases resulting from conversion of the Series 1 Preferred Stock) the authorized number of shares of the Company’s preferred stock or any series thereof, the number of shares of the Company’s common stock or any series thereof or the number of shares of any other class or series of capital stock of the Company; and |
| (d) | any repurchase or redemption of capital stock of the Company except any repurchase or redemption at cost upon the termination of services of a service provider to the Company or the exercise by the Company of contractual rights of first refusal as applied to such capital stock. |
Dividend Rights: The holders of the Company’s preferred stock are not entitled to any dividend rights.
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Liquidation Rights: In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (a "Liquidation Event"), the holders of each series of preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Company’s common stock by reason of their ownership thereof, an amount per share in cash equal to the greater of (x) the aggregate Stated Value for all shares of such series of Preferred Stock then held by then or (y) the amount payable per share of the Company’s common stock which such holder of preferred stock would have received if such holder had converted to common stock immediately prior to the Liquidation Event all of such series of preferred stock then held by such holder (the "Series Stock Liquidation Preference"). If, upon the occurrence of a Liquidation Event, the funds thus distributed among the holders of the preferred stock shall be insufficient to permit the payment to the holders of the preferred stock the full Series Stock Liquidation Preference for all series, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the preferred stock in proportion to the aggregate Series Liquidation Preferences that would otherwise be payable to each of the holders of preferred stock. Such payment shall constitute payment in full to the holders of the preferred stock upon the Liquidation Event. After such payment shall have been made in full, or funds necessary for such payment shall have been set aside by the Company in trust for the account of the holders of preferred stock, so as to be immediately available for such payment, such holders of preferred stock shall be entitled to no further participation in the distribution of the assets of the Company. The sale of all or substantially all of the assets of the Company, or merger, tender offer or other business combination to which the Company is a party in which the voting stockholders of the Company prior to such transaction do not own a majority of the voting securities of the resulting entity or by which any person or group acquires beneficial ownership of 50% or more of the voting securities of the Company or resulting entity shall be deemed to be a Liquidation Event.
Other Matters: The holders of the Company’s preferred stock have no subscription or redemption privileges and are not subject to redemption. The Company’s Series Preferred Stock does not entitle its holders to preemptive rights. All of the outstanding shares of the Company’s preferred stock are fully paid and non-assessable.
The Company is authorized to issue a total of 28,921,732 shares of preferred stock consisting of: Series 1 Preferred stock, $0.0001 par value, 21,000,000 authorized, and 11,507,260 and Series 2 Preferred stock, $0.0001 par value, 7,921,732 authorized, and 7,784,678 shares issued and outstanding as of March 31 2022 and December 31, 2021.
In October 2019, the Company recapitalized a series of convertible notes issued by the Company between 2012 and 2017 totaling $6,534,837 into 7,784,678 shares of Series 2 Preferred Stock at a share price of $0.839449 per share
There were no Series 1 Preferred Shares issued during the period ended March 31, 2022 and 2021.
There were no Series 2 Preferred Shares issued during the period ended March 31, 2022 and 2021.
13 — COMMITMENTS
As of the preparation of these consolidated financials, the Company’s principal offices are located at 599 N Fair Oaks Ave, Suite 201, Pasadena, CA 91103. The Company leases its office space in a shared space work environment. The lease, which commenced on March 1, 2022 and expires on February 29, 2024, has a monthly rate of $1,500 based on a minimum occupancy of three (3) people and scales in cost per person. Additional seats will be charged at $450 per month for up to five (5) people and $400 per month for up to ten (10) people. Currently, this location serves as the principal executive office and is the location of all of its books and records and the operational offices for TMG CA.
During the years ending at December 31, 2021 and 2020, respectively, the Company leased office space from WeWork on a flexible space arrangement as its principal executive office. However, during the COVID-19 pandemic, staff primarily worked from home.
Material contracts
Contract with Google
On September 23, 2011, the AdActive Media,Inc. entered into a business cooperation agreement with Google/YouTube for the operation of the Company’s multi-channel network (MCN) business unit. This contract allows the company to manage the analytics and collect monetization from Google across multiple content partners on YouTube.
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Contract with FastPay
On October 31, 2019, the subsidiary AdActive Media CA, Inc entered into a business cooperation agreement with FPP Finance LLC (dba FastPay) for the monthly factoring of the Company’s revenue receivable from Google.
Contract with Vdiooly
On March 29, 2016, AdActive Media CA,Inc. entered into a business cooperation agreement with Vidooly for the operation of the Company’s backend creator payment processing management system. The Vidooly system processes the raw Google data reports on a monthly basis to break down and summarize the earnings per content partner. The system also tracks the revenue sharing agreement and payment method information provided by our content partners.
14–-CONCENTRATION OF CREDIT RISK
Credit risk
(a) The Company is exposed to the following concentrations of risk: Major customers
For the three months ended March 31, 2022 and 2021, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances at period-end dates, are presented as follows:
| Three months ended March 31, 2022 | March 31, 2022 | |||||||||||
| Customers | Revenues | Percentage
of revenues |
Accounts
receivable | |||||||||
| Customer A | $ | 1,203,069 | 99.5 | % | $ | 460,310 | ||||||
| Three months ended March 31, 2021 | March 31, 2021 | |||||||||||
| Customers | Revenues | Percentage
of revenues |
Accounts
receivable | |||||||||
| Customer A | $ | 1,179,037 | 98.1 | % | $ | 404,366 | ||||||
(b) The customers are in United States Major vendors
For the three months ended March 31, 2022 and 2021, there is vendors who accounts for 10% or more of the Company’s cost of goods sold and its outstanding payables balances at period-end dates, are presented as follows:
| March 31 2022 | March 31, 2022 | |||||||||||
| Vendors | Purchases | Percentage
of revenues | Accounts
payable | |||||||||
| Vendor A | $ | 292,196 | 27.5 | % | $ | 94,369 | * | |||||
| Vendor B | $ | 195,910 | 18.5 | % | $ | 75,693 | * | |||||
| March 31 , 2021 | March 31, 2021 | |||||||||||
| Vendors | Purchases | Percentage
of purchases | Accounts
payable | |||||||||
| Vendor A | $ | 336,754 | 32.3 | % | $ | 113,514 | * | |||||
The Vendors is in Vietnam, Thailand and Philippines.
*Included in accrued expenses as the bills submitted subsequent to the each month end.
| 46 |
15 — RELATED PARTY TRANSACTIONS
From time to time, the shareholder and director of the Company advanced funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.
The Company paid to the related company, the consulting fee of $47,001 and $47,001 for three months ended March 31, 2022 and 2021, respectively.
The Company paid to the Thoughtful Thailand Ltd, the payment of $320,494 and $212,959 to destitute to the respective Multi Channel Network (MCN) content partners for the three month ended March 31, 2022 and 2021, respectively.
The Company paid to the related company, the Office lease fee of $1,500 and $0 for three months ended March 31, 2022 and 2021.
The Company paid to the three senior management employee, the total salaries of $79,150 and $79,150 for the three month ended March 31, 2022 and 2021, respectively
16 — CONTINGENCIES
The Company is subject, from time to time, to claims by third parties under various legal theories. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows. The Company was involved in an international arbitration that was initiated in 2019 and ultimately concluded in December 2021. During this arbitration, the Company was not successful in piercing the corporate veil of the respondents and consequently did not succeed in the arbitration. The arbitration panel ruled that the Company should reimburse the respondents legal and procedural fees, which have been stated to be $705,537. The procedural fee had been accrued as of March 31, 2022.
In August 2019, TMG DE was awarded an $11,000,000 financial judgment in its US Federal Court action against three former company executives. The lead defendant, Mr. Ingrouille, is a United Kingdom citizen and the other two defendants are Vietnamese citizens. TMG DE has not yet been successful in collecting this judgment, however, the Company continues to explore the best paths to enforce the judgement against the defendants.
IRC Sec. 6038 requires every U.S. person to furnish, for any foreign business entity that person controls, the information listed in IRC Sec. 6038(a)(1). It has been determined that operations of two wholly owned indirect subsidiaries, AdActive Media Shanghai Limited and AdActive Media Advertising Limited should have been reported on Form 5471 pursuant to IRC §6038. Failure to timely file a Form 5471 is generally subject to a $10,000 per information return. AdActive Media Shanghai Limited was incorporated on June 11, 2011 and AdActive Media Advertising Limited was incorporated on August 29, 2014. Total penalty associated with failure to file Form 5471 is $190,000. Pursuant to IRC Sec. 951A, A U.S. shareholder with an ownership interest in a Controlled Foreign Corporation (CFC) must calculate and report Global Intangible Low-Taxed Income (GILTI) using Form 8992. GILTI is calculated based on combing tested income and tested losses from various CFCs. Like other foreign information returns, failure to file Form 8992 or provide complete information can result in a $10,000 penalty pursuant to Treasury Regulation Section 1.6038-5. Total penalty associated with failure to file form 8992 is $50,000. Total combined civil penalty associated with failure to file both Forms 5471 and 8992 is $240,000. Estimated interest from the penalty is $12,000.
| 47 |
17 — SUBSEQUENT EVENTS
On July 7, 2022 (the “Closing Date”), AdActive Media, Inc., a Delaware corporation (the “Seller”), entered into a Stock Purchase Agreement with Society Pass Incorporated a Nevada corporation (the “Buyer"). The subsidiaries of AdActive Media, Inc. acquired under the Stock Purchase Agreement consist of (i) all of the outstanding capital stock of AdActive Media CA, Inc., a California corporation (the “CA Sub”), and (ii) 99.75% of all of the outstanding capital stock of Thoughtful Thailand Limited, a Thailand corporation.
The consideration paid to the Company by the Buyer, is included in a Stock Purchase Agreement. The purchase consideration in the “Stock Purchase Agreement”, was 609,327 shares of the Buyer’s common stock. The Buyer also issued the seller a warrant, expiring on July 7, 2023, to purchase 203,109 shares of the buyer’s common stock at an exercise price of $2.1335. The Buyer also assumed two loans, with a principal balance of $300,000 not including interest, payable by the Seller and the CA Sub (“Assumed Liabilities”). The Seller, however, agree to indemnify the Buyer if the Buyer make payments for any liabilities of the Seller and the CA Sub greater than $700,000, including the Assumed Loans. The Stock Purchase Agreement include representations, warranties and covenants of the Buyer and the Seller as well as other customary closing conditions.
In this above share purchase transaction, the Society Pass Incorporated (the Buyer) did not acquire or assume any common stock, preferred stock, warrants, options, or any other equity instruments related to TMG DE (the seller).
| 48 |
THOUGHTFUL (THAILAND) CO., LTD.
The Special Purpose Of
the Financial Statement
For the year end 31 December 2021
and
Auditor report
| 1 |
INDEPENDENT AUDITOR'S REPORT
To The shareholders of THOUGHTFUL (THAILAND) CO., LTD.
Opinion
We have audited the special purpose of the financial statements of THOUGHTFUL (THAILAND) CO., LTD., which comprise the statement of financial position as at December 31, 2021, the statement of income, and statement of changes in equity and cash flow statement for the year ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying the special purpose of financial statements present fairly, in all material respects, the financial position of the THOUGHTFUL (THAILAND) CO., LTD., as at December 31, 2021, and its financial performance for the year ended in accordance with Thai Financial Reporting Standards for Non - Publicly Accountable Entities( TFRS for Non- Publicly Accountable Entities : NPAEs ).
Basis for Opinion
We conducted our audit in accordance with Thai Standards on Auditing ("TSAs") and US generally accepted auditing standard. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Federation of Accounting Professions under the Royal Patronage of his Majesty the King's Code of Ethics for Professional Accountants together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The special purpose of the financial statements have been prepared for the specific purposes of management.
This the special purpose of the financial statements are presented in US dollars convert from Thai Baht which is the Company's functional currency.
Responsibilities of Management for the special purpose of the Financial Statements
Management is responsible for the preparation and fair presentation of the special purpose of the financial statements in accordance with Thai Financial Reporting Standards for Non - Publicly Accountable Entities, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the special purpose of the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the special purpose of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the special purpose of the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Thai Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these special purpose of the financial statements.
As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • | Identify and assess the risks of material misstatement of the special purpose of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| • | Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a gomg concern. |
| • | Evaluate the overall presentation, structure and content of the fmancial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
/s/ Benjamas Bunnasitrat
Miss Benjamas Bunnasitrat
Certified Public Accountant (Thailand)
Registration No. 9221
56/138 Theparek road, Bangplee, Samutprakarn.
Date 30 August 2022
We conducted our audit in accordance with Thai Standards on Auditing ("TSAs") and US generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Federation of Accounting Professions under the Royal Patronage of his Majesty the King's Code of Ethics for Professional Accountants together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
| 2 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2021
| 2021 | 2020 | |||||||||||
| Assets | Notes | |||||||||||
| Cash and cash equivalents | 14,672.11 | 53,130.02 | ||||||||||
| Account receivable and others receivable | 4 | 129,231.91 | 180,629.23 | |||||||||
| Total current assets | 143,904.02 | 233,759.25 | ||||||||||
| Non-current assets | ||||||||||||
| Equipment | 5 | 3,998.32 | 5,838.95 | |||||||||
| Deposit | 3,137.13 | 8,567.87 | ||||||||||
| Other non - current assets | 84,804.13 | 87,940.12 | ||||||||||
| Total non - current assets | 91,939.58 | 102,346.94 | ||||||||||
| Total assets | 235,843.60 | 336,106.19 | ||||||||||
| Liabilities and Shareholders' equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable and others payables | 6 | 11,233.75 | 14,785.69 | |||||||||
| Total current liabilities | 11,233.75 | 14,785.69 | ||||||||||
| Non - current liabilities | ||||||||||||
| Long - term loans | 7 | 485,482.32 | 515,671.16 | |||||||||
| Total non - current liabilities | 485,482.32 | 515,671.16 | ||||||||||
| Total liabilities | 496,716.07 | 530,456.85 | ||||||||||
| Shareholders' equity | ||||||||||||
| Share capital | 59,536.39 | 66,210.26 | ||||||||||
| Retained earnings (Deficit) | (320,408.86 | ) | (260,560.92 | ) | ||||||||
| Total shareholders' equity | (260,872.47 | ) | (194,350.66 | ) | ||||||||
| Total liabilities and shareholders' equity | 235,843.60 | 336,106.19 | ||||||||||
| 3 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021
| 2021 | 2020 | |||||||
| Revenue | ||||||||
| Revenue from services | 232,183.91 | 558,730.65 | ||||||
| Other revenues | 493.60 | 1,980.33 | ||||||
| Total | 232,677.51 | 560,710.98 | ||||||
| Expense | ||||||||
| Cost of services | 159,022.28 | 430,451.27 | ||||||
| Administrative expenses | 158,395.16 | 283,946.20 | ||||||
| Total | 317,417.44 | 714,397.47 | ||||||
| Net profit (loss) | (84,739.93 | ) | (153,686.49 | ) | ||||
| 4 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2021
| Issued and paid-up share capital | Retained earnings (deficit) | Total | ||||||||||
| Balance as at December 31, 2019 | 66,210.26 | (106,874.43 | ) | (40,664.17 | ) | |||||||
| Profit for the period | — | (153,686.49 | ) | (153,686.49 | ) | |||||||
| Balance as at December 31, 2020 | 66,210.26 | (260,560.92 | ) | (194,350.66 | ) | |||||||
| Balance as at December 31, 2020 | 59,536.39 | (235,668.93 | ) | (176,132.54 | ) | |||||||
| Profit for the period | — | (84,739.93 | ) | (84,739.93 | ) | |||||||
| Balance as at December 31, 2021 | 59,536.39 | (320,408.86 | ) | (260,872.47 | ) | |||||||
| 5 |
THOUGHTFUL (THAILAND) CO., LTD.
CASH FLOW STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 2021
| Cash flows from operating activities | 2021 | |||
| Profit(loss) | (84,739.93 | ) | ||
| Adjustments to reconcile Profit(loss) to net cash | ||||
| Depreciation and amortisation | 2,355.42 | |||
| Operating assets (increase) decrease | ||||
| Trade and other receivables | 51,397.32 | |||
| Other non-current assets | ||||
| Operating liabilities increase (decrease) | 8,566.73 | |||
| Trade and other payables | (3,551.94 | ) | ||
| Net cash from operating activities | (25,972.40 | ) | ||
| Cash flows from investing activities | ||||
| Cash paid for payable for purchase of equipment | (1,244.44 | ) | ||
| Net cash used in investing activities | (1,244.44 | ) | ||
| Cash flows from financing activities | ||||
| Increase (decrease) in long-term loan | (30,188.84 | ) | ||
| Net cash used in financing activities | (30,188.84 | ) | ||
| Decrease in translation adjustment | 18,947.77 | |||
| Net decrease in cash and cash equivalents | (38,457.91 | ) | ||
| Cash and cash equivalents at beginning of period | 53,130.02 | |||
| Cash and cash equivalents at end of period | 14,672.11 | |||
| 6 |
THOUGHTFUL (THAILAND) CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021
These notes form an integral part of the finanacial statement.
1. GENERAL INFORMATION
The Company was registered as a juristic person dated on September 2, 2014. Registration No. 0105557128041. Head office was located on No. 8 Soi Sukhumvit 40, Sukhumvit Rd, Khwaeng Phra Khanong, Khet Khlong Toei, Bangkok.
The principle businesses of the Company is the advertising agency of the digital video and the business of publishing production and promote the video online and support the Thai enterprises in the market both in Thailand and abroad.
2. THE SPECIAL PURPOSE OF THE FINANCIAL STATEMENTS PREPARATION BASIS
2.1 These the special purpose of the financial statements have been presented based on accordance with the notification of the Department of Business Developmendated on September 28, 2011 regarding to the abbreviated items which must be shown in the financial statements B.E. 2554 presentfor the objective of reporting for domestic use and writing in Thai.
The financial statements have been prepared in accordance with the Financial Reporting Standard for Non - Publicly Accountable Entities ( TFRS for Non-Publicly Accountable Entities : NPAEs ), which has been approved in the 20th (1/2554) Meeting of Accounting Professional Governance Committee on March 10, 2011.
Preparation of the special purpose of the financial statements in conformity with Financial Reporting Standard for
Non - Publicly Accountable Entities requires the company to make estimates and assumptions that affect the policies stipulation and reported amounts of revenues,assets, liabilities, and expenses. The estimates and assumptions from the past experiences and other factors affecting operating result and financial position of company as a result of World economic crisis may differ from actual results.
Estimates and assumptions for preparation of the special purpose of financial statements will be continuously reviewed, changes of estimates will recognize in the period which estimate is reviewed if effect only in that period. If the change in estimated effect to the period which estimated is reviewed and in the future, this will recognize in the present and future periods.
2.2 Functional and presentation currency
The special purpose of the financial statements are presented in US dollars convert from Thai Baht which is the Company's functional currency. All financial information presented in US dollars has been rounded in the notes to the financial statements
| 7 |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting policies are under the stipulation of each accounting standard Financial Reporting Standard for Non-Publicly Accountable Entities and follow conceptual framework and key objectives of financial reporting according to this standard.
3.1 Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash at banks and high-liquid short-term investments with an original maturity of three months or less and free from withdrawal restrictions.
3.2 Trade account receivable and other account receivable
Trade account receivable are stated at receiving value less than allowance for doubtful accounts (if any).
The Company provides allowance for doubtful accounts equal to the estimated losses that may be incurred in the collection of all receivables. The estimated losses are based on historical collection experience and a review of the current status of the existing receivables under the management policies.
3.3 Equipments
Equipments is stated at cost less accumulated depreciation and allowance for loss on imparement of assets (if any).
Depreciation is recorded as expenses and calculated by reference to their costs on a straight – line basis over the estimated useful life within 3-5 years
3.4 Revenues
3.4.1 Revenue from services is recognized as percentage of completion at the date of financial statement.
3.4.2 Other income is recognized on accrual basis.
3.5 Expenses
Other expense is recognized on accrual basis.
3.6 Use of Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting priniples require management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from estimates.
4. ACCOUNTS RECEIVABLE AND OTHERS RECEIVABLE
| 2021 | 2020 | |||||||
| Accounts receivable | 128,283.91 | 177,486.90 | ||||||
| Prepaid expenses | 0.00 | 416.87 | ||||||
| Others | 948.00 | 2,725.46 | ||||||
| Total | 129,231.91 | 180,629.23 | ||||||
| 8 |
5. EQUIPMENTS
| Increase - decrease during the year | ||||||||||||||||
| Descriptions | Balance as at December 31, 2020 | Increase and purchase | Disposals and transfer | Balance as at December 31, 2021 | ||||||||||||
| Cost | ||||||||||||||||
| Office equipments | 34,630.88 | 1,244.44 | 3,646.67 | 32,228.65 | ||||||||||||
| Total | 34,630.88 | 1,244.44 | 3,646.67 | 32,228.65 | ||||||||||||
| Accumulated depreciation | ||||||||||||||||
| Office equipments | 28,791.93 | 2,355.42 | 2,917.02 | 28,230.33 | ||||||||||||
| Total | 28,791.93 | 2,355.42 | 2,917.02 | 28,230.33 | ||||||||||||
| Equipments - net | 5,838.95 | 3,998.32 | ||||||||||||||
6. ACCOUNTS PAYABLE AND OTHERS PAYABLES
| 2021 | 2020 | |||||||
| Accrued expenses | 1,786.09 | 2,191.56 | ||||||
| Revenue Department Payable | 1,113.18 | 817.54 | ||||||
| Suspense Output Tax | 8,111.22 | 11,395.90 | ||||||
| Others | 223.26 | 380.69 | ||||||
| Total | 11,233.75 | 14,785.69 | ||||||
7. LONG - TERM LOANS
The Company has long-term loans from one of director without interest.
8. RECONCILIATION OF NET LOSS TO U.S GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
The Company has concluded there are no material variations to the net losses reported for the years ended December 31, 2021 in order to reconcile to losses that would be reported under US GAAP .
The Company has concluded there are no material variations to the Company’s balance sheets at December 31, 2021 and cash flow statements for the years ended December 31, 2021 to in order to reconcile the statements that would be reported under US GAAP.
| 9 |
THOUGHTFUL (THAILAND) CO., LTD.
The Special Purpose of
the Financial Statement
For the year end 31 December 2020
and Auditor report
| 10 |
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of THOUGHTFUL (THAILAND) CO., LTD.
Opinion
We have audited the special purpose of the financial statements of THOUGHTFUL (THAILAND) CO., LTD., which comprise the statement of financial position as at December 31, 2020, the statement of income, and statement of changes in equity and cash flow statement for the year ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying the special purpose of financial statements present fairly, in all material respects, the financial position of the THOUGHTFUL (THAILAND) CO., LTD., as at December 31, 2020, and its financial performance for the year ended in accordance with Thai Financial Reporting Standards for Non - Publicly Accountable Entities( TFRS for Non - Publicly Accountable Entities : NPAEs ).
Basis for Opinion
We conducted our audit in accordance with Thai Standards on Auditing (''TSAs") and US generally accepted auditing standard. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Federation of Accounting Professions under the Royal Patronage of his Majesty the King's Code of Ethics for Professional Accountants together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The special purpose of the financial statements have been prepared for the specific purposes of management.
This the special purpose of the financial statements are presented in US dollars convert from Thai Baht which is the Company's functional currency.
Responsibilities of Management for the special purpose of the Financial Statements
Management is responsible for the preparation and fair presentation of the special purpose of the financial statements in accordance with Thai Financial Reporting Standards for Non - Publicly Accountable Entities, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the special purpose of the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the special purpose of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the special purpose of the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Thai Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these special purpose of the financial statements.
As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • | Identify and assess the risks of material misstatement of the special purpose of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| • | Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a gomg concern. |
| • | Evaluate the overall presentation, structure and content of the fmancial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
/s/ Benjamas Bunnasitrat
Miss Benjamas Bunnasitrat
Certified Public Accountant (Thailand)
Registration No. 9221
56/138 Theparek road, Bangplee, Samutprakarn.
Date 29 August 2022
We conducted our audit in accordance with Thai Standards on Auditing ("TSAs") and US generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Federation of Accounting Professions under the Royal Patronage of his Majesty the King's Code of Ethics for Professional Accountants together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
| 11 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2020
| 2020 | 2019 | |||||||||||
| Assets | Notes | |||||||||||
| Cash and cash equivalents | 53,130.02 | 15,420.54 | ||||||||||
| Account receivable and others receivable | 4 | 180,629.23 | 330,774.51 | |||||||||
| Total current assets | 233,759.25 | 346,195.05 | ||||||||||
| Non - current assets | ||||||||||||
| Equipment | 5 | 5,838.95 | 1,398.27 | |||||||||
| Deposit | 8,567.87 | 8,536.63 | ||||||||||
| Other non - current assets | 87,940.12 | 73,396.45 | ||||||||||
| Total non - current assets | 102,346.94 | 83,331.35 | ||||||||||
| Total assets | 336,106.19 | 429,526.40 | ||||||||||
| Liabilities and Shareholders' equity Current liabilities | ||||||||||||
| Accounts payable and others payables | 6 | 14,785.69 | 53,889.08 | |||||||||
| Total current liabilities | 14,785.69 | 53,889.08 | ||||||||||
| Non - current liabilities | ||||||||||||
| Long - term loans | 7 | 515,671.16 | 413,447.73 | |||||||||
| Total non - current liabilities | 515,671.16 | 413,447.73 | ||||||||||
| Total liabilities | 530,456.85 | 467,336.81 | ||||||||||
| Shareholders' equity | ||||||||||||
| Share capital | 66,210.26 | 65,938.49 | ||||||||||
| Retained earnings (Deficit) | (260,560.92 | ) | (103,748.90 | ) | ||||||||
| Total shareholders' equity | (194,350.66 | ) | (37,810.41 | ) | ||||||||
| Total liabilities and shareholders' equity | 336,106.19 | 429,526.40 | ||||||||||
| 12 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020
| 2020 | 2019 | |||||||
| Revenue | ||||||||
| Revenue from services | 558,730.65 | 542,003.83 | ||||||
| Other revenues | 1,980.33 | 3,816.35 | ||||||
| Total | 560,710.98 | 545,820.18 | ||||||
| Expense | ||||||||
| Cost of services | 430,451.27 | 462,497.10 | ||||||
| Administrative expenses | 283,946.20 | 358,184.41 | ||||||
| Total | 714,397.47 | 820,681.51 | ||||||
| Net profit (loss) | (153,686.49 | ) | (274,861.33 | ) | ||||
| 13 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020
| Issued and paid-up share capital | Retained earnings (Deficit) | Total | ||||||||||
| Balance as at December 31, 2018 | 65,938.49 | 171,112.43 | 237,050.92 | |||||||||
| Profit for the period | — | (274,861.33 | ) | (274,861.33 | ) | |||||||
| Balance as at December 31, 2019 | 65,938.49 | (103,748.90 | ) | (37,810.41 | ) | |||||||
| Balance as at December 31, 2019 | 66,210.26 | (106,874.43 | ) | (40,664.17 | ) | |||||||
| Profit for the period | — | (153,686.49 | ) | (153,686.49 | ) | |||||||
| Balance as at December 31, 2020 | 66,210.26 | (260,560.92 | ) | (194,350.66 | ) | |||||||
| 14 |
THOUGHTFUL (THAILAND) CO., LTD.
CASH FLOW STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 2020
| Cash flows from operating activities | 2020 | |||
| Profit(loss) | (153,686.49 | ) | ||
| Adjustments to reconcile Profit(loss) to net cash | ||||
| Depreciation and amortisation | 2,110.27 | |||
| Operating assets (increase) decrease | ||||
| Trade and other receivables | 150,145.28 | |||
| Other non-current assets | ||||
| Operating liabilities increase (decrease) | (14,574.91 | ) | ||
| Trade and other payables | (39,103.39 | ) | ||
| Net cash from operating activities | (55,109.24 | ) | ||
| Cash flows from investing activities | ||||
| Cash paid for payable for purchase of equipment | — | |||
| Net cash used in investing activities | — | |||
| Cash flows from financing activities | ||||
| Increase (decrease) in long-term loan | 102,223.43 | |||
| Net cash used in financing activities | 102,223.43 | |||
| Decrease in translation adjustment | (9,404.71 | ) | ||
| Net decrease in cash and cash equivalents | 37,709.48 | |||
| Cash and cash equivalents at beginning of period | 15,420.54 | |||
| Cash and cash equivalents at end of period | 53,130.02 | |||
| 15 |
THOUGHTFUL (THAILAND) CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020
These notes form an integral part of the financial statement.
1. GENERAL INFORMATION
The Company was registered as a juristic person dated on September 2, 2014. Registration No. 0105557128041. Head office was located on No. 8 Soi Sukhumvit 40, Sukhumvit Rd, Khwaeng Phra Khanong, Khet Khlong Toei, Bangkok.
The principle businesses of the Company is the advertising agency of the digital video and the business of publishing production and promote the video online and support the Thai enterprises in the market both in Thailand and abroad.
2. THE SPECIAL PURPOSE OF THE FINANCIAL STATEMENTS PREPARATION BASIS
2.1 These the special purpose of the financial statements have been presented based on accordance with the notification of the Department of Business Developmendated on September 28, 2011 regarding to the abbreviated items which must be shown in the financial statements B.E. 2554 presentfor the objective of reporting for domestic use and writing in Thai.
The financial statements have been prepared in accordance with the Financial Reporting Standard for Non - Publicly Accountable Entities ( TFRS for Non-Publicly Accountable Entities : NPAEs ), which has been approved in the 20th (1/2554) Meeting of Accounting Professional Governance Committee on March 10, 2011.
Preparation of the special purpose of the financial statements in conformity with Financial Reporting Standard for
Non - Publicly Accountable Entities requires the company to make estimates and assumptions that affect the policies stipulation and reported amounts of revenues,assets, liabilities, and expenses. The estimates and assumptions from the past experiences and other factors affecting operating result and financial position of company as a result of World economic crisis may differ from actual results.
Estimates and assumptions for preparation of the special purpose of financial statements will be continuously reviewed, changes of estimates will recognize in the period which estimate is reviewed if effect only in that period. If the change in estimated effect to the period which estimated is reviewed and in the future, this will recognize in the present and future periods.
2.2 Functional and presentation currency
The special purpose of the financial statements are presented in US dollars convert from Thai Baht which is the Company's functional currency. All financial information presented in US dollars has been rounded in the notes to the financial statements.
| 16 |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting policies are under the stipulation of each accounting standard Financial Reporting Standard for Non-Publicly Accountable Entities and follow conceptual framework and key objectives of financial reporting according to this standard.
3.1 Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash at banks and high-liquid short-term investments with an original maturity of three months or less and free from withdrawal restrictions.
3.2 Trade account receivable and other account receivable
Trade account receivable are stated at receiving value less than allowance for doubtful accounts (if any).
The Company provides allowance for doubtful accounts equal to the estimated losses that may be incurred in the collection of all receivables. The estimated losses are based on historical collection experience and a review of the current status of the existing receivables under the management policies.
3.3 Equipments
Equipments is stated at cost less accumulated depreciation and allowance for loss on imparement of assets (if any).
Depreciation is recorded as expenses and calculated by reference to their costs on a straight – line basis over the estimated useful life within 3-5 years
3.4 Revenues
3.4.1 Revenue from services is recognized as percentage of completion at the date of financial statement.
3.4.2 Other income is recognized on accrual basis.
3.5 Expenses
Other expense is recognized on accrual basis.
3.6 Use of Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting priniples require management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from estimates.
4. ACCOUNTS RECEIVABLE AND OTHERS RECEIVABLE
| 2020 | 2019 | |||||||
| Accounts receivable | 177,486.90 | 326,749.27 | ||||||
| Prepaid expenses | 416.87 | 388.53 | ||||||
| Others | 2,725.46 | 3,636.71 | ||||||
| Total | 180,629.23 | 330,774.51 | ||||||
| 17 |
5. EQUIPMENTS
| Increase - decrease during the year | ||||||||||||||||
| Descriptions | Balance as at December 31, 2019 | Increase and purchase | Disposals and transfer | Balance as at December 31, 2020 | ||||||||||||
| Cost | ||||||||||||||||
| Office equipments | 28,079.93 | 6,550.95 | 0 | 34,630.88 | ||||||||||||
| Total | 28,079.93 | 6,550.95 | 0 | 34,630.88 | ||||||||||||
| Accumulated depreciation | ||||||||||||||||
| Office equipments | 26,681.66 | 2,110.27 | 0 | 28,791.93 | ||||||||||||
| Total | 26,681.66 | 2,110.27 | 0 | 28,791.93 | ||||||||||||
| Equipments - net | 1,398.27 | 5,838.95 | ||||||||||||||
6. ACCOUNTS PAYABLE AND OTHERS PAYABLES
| 2020 | 2019 | |||||||
| Accrued expenses | 2,191.56 | 33,841.00 | ||||||
| Revenue Department Payable | 817.54 | 2,096.58 | ||||||
| Suspense Output Tax | 11,395.90 | 17,456.96 | ||||||
| Others | 380.69 | 494.54 | ||||||
| Total | 14,785.69 | 53,889.08 | ||||||
7. LONG - TERM LOANS
The Company has long-term loans from one of director without interest.
8. RECONCILIATION OF NET LOSS TO U.S GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
The Company has concluded there are no material variations to the net losses reported for the years ended December 31, 2020 in order to reconcile to losses that would be reported under US GAAP .
The Company has concluded there are no material variations to the Company’s balance sheets at December 31, 2020 and cash flow statements for the years ended December 31, 2020 to in order to reconcile the statements that would be reported under US GAAP.
| 18 |
THOUGHTFUL (THAILAND) CO., LTD.
The Special Purpose Of
the Interim Financial Information
For the three months period end
31 March 2022 and 2021
| 19 |
REPORT ON REVIEW OF THE SPECIAL PURPOSE OF THE INTERIM FINANCIAL INFORMATION
BY THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of THOUGHTFUL (THAILAND) CO., LTD.
Opinion
We have reviewed the special purpose of the interim financial statements of THOUGHTFUL (THAILAND) CO., LTD., as at March 31, 2022 and 2021 and the related statements of profit or loss and other comprehensive income, changes in shareholders' equity and cash flows for the three months period then ended, and the condensed notes to the financial statements. The Company's management is responsible for the preparation and fair presentation of this interim financial information in accordance with Thai Accounting Standard No. 34 "Interim Financial Reporting". Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with Thai Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. A review of the special purpose of the interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the aforementioned interim financial information has not been prepared, in all material respects, in accordance with Thai Accounting Standard No. 34 "Interim Financial Reporting".
/s/ Benjamas Bunnasitrat
Miss Benjamas Bunnasitrat
Certified Public Accountant (Thailand)
Registration No. 9221
56/138, Theparek road, Bangplee, Samutprakam.
Date 30 August 2022
| 20 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF FINANCIAL POSITION
AS AT MARCH 31, 2022 AND DECEMBER 31, 2021
31 March 2022 (Unaudited) | 31 December 2021 (Audited) | |||||||||||
| Assets | Notes | |||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 24,985.28 | 14,672.11 | ||||||||||
| Account receivable and others receivable | 4 | 131,795.40 | 129,231.91 | |||||||||
| Total current assets | 156,780.68 | 143,904.02 | ||||||||||
| Non - current assets | ||||||||||||
| Equipment | 5 | 3,441.50 | 3,998.32 | |||||||||
| Deposit | 3,147.32 | 3,137.13 | ||||||||||
| Other non - current assets | 87,730.03 | 84,804.13 | ||||||||||
| Total non - current assets | 94,318.85 | 91,939.58 | ||||||||||
| Total assets | 251,099.53 | 235,843.60 | ||||||||||
| Current liabilities | ||||||||||||
| Accounts payable and others payables | 11,003.55 | 11,233.75 | ||||||||||
| Total current liabilities | 11,003.55 | 11,233.75 | ||||||||||
| Non - current liabilities | ||||||||||||
| Long - term loans | 6 | 553,917.48 | 485,482.32 | |||||||||
| Total non - current liabilities | 553,917.48 | 485,482.32 | ||||||||||
| Total liabilities | 564,921.03 | 496,716.07 | ||||||||||
| Shareholders' equity | ||||||||||||
| Share capital | 59,781.26 | 59,536.39 | ||||||||||
| Retained earnings (Deficit) | (373,602.76 | ) | (320,408.86 | ) | ||||||||
| Total shareholders' equity | (313,821.50 | ) | (260,872.47 | ) | ||||||||
| Total liabilities and shareholders' equity | 251,099.53 | 235,843.60 | ||||||||||
| 21 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021
| 2022 | 2021 | |||||||
| Revenue | ||||||||
| Revenue from services | 104,501.78 | 63,497.28 | ||||||
| Other revenues | — | 140.80 | ||||||
| Total | 104,501.78 | 63,638.08 | ||||||
| Expense | ||||||||
| Cost of services | 125,775.38 | 34,098.15 | ||||||
| Administrative expenses | 30,024.34 | 56,654.66 | ||||||
| Total | 155,799.72 | 90,752.81 | ||||||
| Net profit (loss) | (51,297.94 | ) | (27,114.73 | ) | ||||
| 22 |
THOUGHTFUL (THAILAND) CO., LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021
| Issued and paid-up share capital | Retained earnings (Deficit) | Total | ||||||||||
| Balance as at January 1, 2021 | 63,481.58 | (251,285.59 | ) | (187,804.01 | ) | |||||||
| Profit for the period | — | (27,114.73 | ) | (27,114.73 | ) | |||||||
| Balance as at March 31, 2021 | 63,481.58 | (278,400.32 | ) | (214,918.74 | ) | |||||||
| Balance as at January 1, 2022 | 59,536.39 | (322,304.82 | ) | (262,768.43 | ) | |||||||
| Profit for the period | — | (51,297.94 | ) | (51,297.94 | ) | |||||||
| Balance as at March 31, 2022 | 59,536.39 | (373,602.76 | ) | (314,066.37 | ) | |||||||
| 23 |
THOUGHTFUL (THAILAND) CO., LTD.
CASH FLOW STATEMENT
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021
| Cash flows from operating activities | 2022 | |||
| Profit(loss) | (51,297.94 | ) | ||
| Adjustments to reconcile Profit(loss) to net cash | ||||
| Depreciation and amortisation | 535.11 | |||
| Operating assets (increase) decrease | ||||
| Trade and other receivables | (2,563.49 | ) | ||
| Other non-current assets | ||||
| Operating liabilities increase (decrease) | (2,936.09 | ) | ||
| Trade and other payables | (230.20 | ) | ||
| Net cash from operating activities | (56,492.61 | ) | ||
| Cash flows from investing activities | ||||
| Cash paid for payable for purchase of equipment | — | |||
| Net cash used in investing activities | — | |||
| Cash flows from financing activities | ||||
| Increase (decrease) in long-term loan | 68,435.16 | |||
| Net cash used in financing activities | 68,435.16 | |||
| Decrease in translation adjustment | (1,629.38 | ) | ||
| Net decrease in cash and cash equivalents | 10,313.17 | |||
| Cash and cash equivalents at beginning of period | 14,672.11 | |||
| Cash and cash equivalents at end of period | 24,985.28 | |||
| 24 |
THOUGHTFUL (THAILAND) CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2022 AND 2021
These notes form an integral part of the financial statement.
1. GENERAL INFORMATION
The Company was registered as a juristic person dated on September 2, 2014. Registration No. 0105557128041. Head office was located on No. 8 Soi Sukhumvit 40, Sukhumvit Rd, Khwaeng Phra Khanong, Khet Khlong Toei, Bangkok.
The principle businesses of the Company is the advertising agency of the digital video and the business of publishing production and promote the video online and support the Thai enterprises in the market both in Thailand and abroad.
2. BASIS FOR PREPARATION OF THE SPECIAL PURPOSE OF THE INTERIM FINANCIAL STATEMENTS
2.1 Statement of compliance
The special purpose of the interim financial statements are prepared in US dollars convert from Thai Baht and compliance with Thai Accounting Standard (“TAS”) No. 34 “Interim Financial Reporting” and accounting practices generally accepted in Thailand and the Notification of the Department of Business Development regarding “The Brief Particulars in the Financial Statement (No.3) B.E. 2562” dated December 26, 2019.
The statement of financial position as at December 31, 2021, presented herein for comparison, has been derived from the financial statements of the Company for the year then ended which had been previously audited.
The unaudited results of operations presented in the three-month period ended March 31, 2022 and 2021 are not necessarily indicative of the operating results anticipated for the full year.
2.2 Functional and presentation currency
The interim financial statements are presented in US dollars convert from Thai Baht which is the Company's functional currency. All financial information presented in US dollars has been rounded in the notes to the financial statements.
| 25 |
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting policies are under the stipulation of each accounting standard Financial Reporting Standard for Non-Publicly Accountable Entities and follow conceptual framework and key objectives of financial reporting according to this standard.
3.1 Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash at banks and high-liquid short-term investments with an original maturity of three months or less and free from withdrawal restrictions.
3.2 Trade account receivable and other account receivable
Trade account receivable are stated at receiving value less than allowance for doubtful accounts (if any).
The Company provides allowance for doubtful accounts equal to the estimated losses that may be incurred in the collection of all receivables. The estimated losses are based on historical collection experience and a review of the current status of the existing receivables under the management policies.
3.3 Equipments
Equipments is stated at cost less accumulated depreciation and allowance for loss on imparement of assets (if any).
Depreciation is recorded as expenses and calculated by reference to their costs on a straight – line basis over the estimated useful life within 3-5 years
3.4 Revenues
3.4.1 Revenue from services is recognized as percentage of completion at the date of financial statement.
3.4.2 Other income is recognized on accrual basis.
3.5 Expenses
Other expense is recognized on accrual basis.
3.6 Use of Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting priniples require management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from estimates.
4. ACCOUNTS RECEIVABLE AND OTHERS RECEIVABLE
| March 31, 2022 (Unaudited) | December 31, 2021 (Audited) | |||||||
| Accounts receivable | 129,787.94 | 128,283.91 | ||||||
| Others | 2,007.46 | 948.00 | ||||||
| Total | 131,795.40 | 129,231.91 | ||||||
| 26 |
5. EQUIPMENTS
| Increase - decrease during the year | ||||||||||||||||
| Descriptions | Balance as at December 31, 2021 | Increase and purchase | Disposals and transfer | Balance as at March 31, 2022 | ||||||||||||
| Cost | ||||||||||||||||
| Office equipments | 32,228.65 | 0 | 0 | 32,228.65 | ||||||||||||
| Total | 32,228.65 | 0 | 0 | 32,228.65 | ||||||||||||
| Accumulated depreciation | ||||||||||||||||
| Office equipments | 28,230.33 | 661.46 | 0 | 28,891.79 | ||||||||||||
| Total | 28,230.33 | 661.46 | 0 | 28,891.79 | ||||||||||||
| Equipments - net | 3,998.32 | 3,336.86 | ||||||||||||||
6. ACCOUNTS PAYABLE AND OTHERS PAYABLES
| March 31, 2022 (Unaudited) | December 31, 2021 (Audited) | |||||||
| Accrued expenses | 1,793.44 | 1,786.09 | ||||||
| Revenue Department Payable | 815.72 | 1,113.18 | ||||||
| Suspense Output Tax | 8,215.05 | 8,111.22 | ||||||
| Others | 179.34 | 223.26 | ||||||
| Total | 11,003.55 | 11,233.75 | ||||||
7. LONG - TERM LOANS
The Company has long-term loans from one of director without interest.
8. RECONCILIATION OF NET LOSS TO U.S GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
The Company has concluded there are no material variations to the net losses reported for the three months ended March 31, 2022 and 2021 in order to reconcile to losses that would be reported under US GAAP.
The Company has concluded there are no material variations to the Company’s balance sheets at March 31, 2022 and December 31, 2021 and cash flow statements for the three months ended March 31, 2022 and 2021 in order to reconcile the statements that would be reported under US GAAP.
| 27 |
Society Pass Incorporated and AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd.
Notes to the unaudited pro forma combined financial information
| Society Pass Incorporated and Adactive Media CA Inc and Thoughtful (Thailand) Co. Ltd | ||||||||||||||||||||||||
| Unaudited Proforma Combined Consolidated Balance Sheet as of March 31, 2022 | ||||||||||||||||||||||||
| (Expressed in United States Dollars) | ||||||||||||||||||||||||
| SOPA | AdActive Media CA(F) | Thoughtful Thailand Co., Ltd | Transaction Adjustments | Note | Pro Forma Combined | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 30,967,561 | $ | 5,198 | $ | 24,985 | $ | (700,306 | ) | A/E | $ | 30,297,438 | ||||||||||||
| Due from related parties | — | — | $ | — | ||||||||||||||||||||
| Accounts receivable, net | 47,574 | 492,231 | 131,795 | (200,654 | ) | E | $ | 470,946 | ||||||||||||||||
| Inventories | 267,409 | — | — | $ | 267,409 | |||||||||||||||||||
| Deposits, prepayment and other receivables | 5,798,748 | 1,000 | 90,877 | (1,059 | ) | E | $ | 5,889,566 | ||||||||||||||||
| Total current assets | 37,081,292 | 498,429 | 247,657 | (902,019 | ) | 36,925,359 | ||||||||||||||||||
| Non-current assets: | ||||||||||||||||||||||||
| Intangible assets, net | 3,200,000 | — | — | 3,200,000 | ||||||||||||||||||||
| Property, plant and equipment, net | 81,081 | — | 3,442 | (1,542 | ) | E | 82,981 | |||||||||||||||||
| Right of use assets, net | 807,869 | 34,307 | 842,176 | |||||||||||||||||||||
| Customer based intangible asset | 1,105,000 | C | 1,105,000 | |||||||||||||||||||||
| Goodwill | 454,519 | — | 730,795 | D | 1,185,314 | |||||||||||||||||||
| — | ||||||||||||||||||||||||
| Total non-current assets | 4,543,469 | 34,307 | 3,442 | 1,834,253 | 6,415,471 | |||||||||||||||||||
| Total assets | $ | 41,624,761 | $ | 532,736 | $ | 251,099 | $ | 932,234 | $ | 43,340,830 | ||||||||||||||
| LIABILITIES AND SHAREHOLDERS' | ||||||||||||||||||||||||
| DEFICIT | ||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||
| Accounts payables | $ | 204,577 | 598,167 | — | (450,591 | ) | E | 352,153 | ||||||||||||||||
| Contract liabilities | 18,644 | — | — | — | 18,644 | |||||||||||||||||||
| Accrued liabilities and other payables | 778,073 | 284,000 | 11,004 | (295,004 | ) | E | 778,073 | |||||||||||||||||
| Due to related parties | 25,411 | 14,857 | 518,061 | (532,918 | ) | E | 25,411 | |||||||||||||||||
| Loan | 159,539 | 35,856 | (45,395 | ) | E | 150,000 | ||||||||||||||||||
| Operating lease liabilities | 302,101 | 15,292 | 12,382 | E | 329,775 | |||||||||||||||||||
| Due to first insurance funding | 373,653 | — | — | 373,653 | ||||||||||||||||||||
| Total current liabilities | 1,702,459 | 1,071,855 | 564,921 | (1,311,526 | ) | 2,027,709 | ||||||||||||||||||
| Non-current liabilities | ||||||||||||||||||||||||
| Operating lease liabilities | 508,750 | 19,104 | — | — | 527,854 | |||||||||||||||||||
| TOTAL LIABILITIES | 2,211,209 | 1,090,959 | 564,921 | (1,311,526 | ) | 2,555,563 | ||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||||
| Common shares; $0.0001 par value, 95,000,000 shares authorized; 23,761,094 and 19,732,406 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 2,375 | 4,037 | 59,781 | (63,757 | ) | A/B/E | 2,436 | |||||||||||||||||
| Preferred stock -Series 1 | — | — | ||||||||||||||||||||||
| Preferred stock -Series 2 | — | — | ||||||||||||||||||||||
| Additional paid-in capital | 93,557,338 | 501,748 | 1,133,228 | B/E | 95,192,314 | |||||||||||||||||||
| Accumulated other comprehensive loss | (96,501 | ) | — | — | (96,501 | ) | ||||||||||||||||||
| Accumulated deficit | (47,309,429 | ) | (1,064,008 | ) | (322,306 | ) | 1,122,992 | E | (47,572,751 | ) | ||||||||||||||
| Current year earnings | (6,591,405 | ) | (51,297 | ) | 51,297 | E | (6,591,405 | ) | ||||||||||||||||
| Total equity attributable to Society Pass Incorporated | 39,562,378 | (558,223 | ) | (313,822 | ) | 2,243,760 | 40,934,093 | |||||||||||||||||
| Non-controlling interest | (148,826 | ) | (148,826 | ) | ||||||||||||||||||||
| Total shareholders' deficit | 39,413,552 | (558,223 | ) | (313,822 | ) | 2,243,760 | 40,785,267 | |||||||||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||||||||||||
| SHAREHOLDERS' DEFICIT | $ | 41,624,761 | 532,736 | $ | 251,099 | 932,234 | $ | 43,340,830 | ||||||||||||||||
| A | Adjustment to record the cash portion of the purchase price | $ | 700,000 | ||
| Record the common stock and warrant portion of the purchase price | |||||
| Par value of 609,327 common shares at $0.0001 per share | $ | 61 | |||
| Accumulated paid-capital portion of common shares | |||||
| Total fair value of common stock and warrant compensation | $ | 1,372,512 | |||
| Par value of 609,327 common stock and 203,109 warrant at $0.0001 per share | (61 | ) | |||
| Eliminate accumulated common stock | (59,781 | ) | |||
| Eliminate retained deficit | 322,306 | ||||
| B | Net adjustment to accumulated paid-in capital | $ | 1,634,976 | ||
| C | Customer based intangible assets | $ | 1,105,000 | ||
| D | Record goodwill on the transaction (based on June result) | ||||
| Goodwill amount | $ | 730,795 | |||
| Total goodwill recorded | $ | 730,795 | |||
| E | Adjustment for assets and liabilities (March vs June) | ||||
| Cash and cash equivalent | $ | (306 | ) | ||
| Property, plant and equipment, net | $ | (1,542 | ) | ||
| Account receivables | $ | (200,654 | ) | ||
| Deposits, prepayment and other receivables | $ | (1,059 | ) | ||
| Account payables | $ | (450,591 | ) | ||
| Accrued liabilities and other payables | $ | (295,004 | ) | ||
| Due to related parties | $ | (532,918 | ) | ||
| Loan | $ | (45,395 | ) | ||
| Operating lease liabilities | $ | 12,382 | |||
| Common shares | $ | (63,818 | ) | ||
| Additional paid-in capital | $ | (501,748 | ) | ||
| Accumulated deficit | $ | 1,122,992 | |||
| Current year earnings | $ | 51,297 | |||
| F | The purpose of this schedule and the adjusting items is to reconcile the AdActive Media Delaware financial statements to the starting point for the pro forma balance sheet shown above. These adjustments were necessary to separate AdActive Media California from its parent company AdActive Media Delaware since Society Pass Incorporated("SoPa") only purchased the California operation from AdActive Media Delaware. The amounts shown in the AdActive Media California column in the above table are the standalone balance sheet amounts of AdActive Media California and are the starting point for making the acquisition adjustments to combine SoPa with both AdActive Media California and Thoughtful Thailand Co., Ltd in the accompanying pro forma financial statements reconciliation as of March 31, 2022. | ||||
| 1 |
| AdActive Media, Inc. | ||||||||||||
| (United States business) | ||||||||||||
| Combined Condensed Consolidated Balance Sheet | ||||||||||||
| As of March 31, 2022 | ||||||||||||
| AdActive Media Delaware | Adjustments to Eliminate AdActive Media Delaware Balances | AdActive Media California | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| ASSETS | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 6,976 | (1,778 | ) | $ | 5,198 | ||||||
| Accounts receivable | 492,231 | — | 492,231 | |||||||||
| Total current assets | 499,207 | (1,778 | ) | 497,429 | ||||||||
| Property plant and Equipment, net | 1,542 | (1,542 | ) | — | ||||||||
| Security deposits | 1,000 | — | 1,000 | |||||||||
| Right of Use - Assets | 34,307 | — | 34,307 | |||||||||
| Total Assets | $ | 536,056 | (3,320 | ) | $ | 532,736 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current Liabilities: | ||||||||||||
| Accounts payable | $ | 544,778 | $ | 53,389 | $ | 598,167 | ||||||
| Account payable - related party | 15,163 | (306 | ) | 14,857 | ||||||||
| Accrued expenses | 705,537 | (705,537 | ) | — | ||||||||
| Accrued liabilities and other payable | 733,834 | (449,834 | ) | 284,000 | ||||||||
| Accrued salaries - Related party | 127,379 | (127,379 | ) | — | ||||||||
| Accrued interest on loans | 83,926 | (83,926 | ) | — | ||||||||
| Convertible note | 67,500 | (67,500 | ) | — | ||||||||
| Lease liabilities | 15,292 | — | 15,292 | |||||||||
| Loan from related company | 284,000 | (284,000 | ) | — | ||||||||
| SBA Loans | 300,000 | (140,461 | ) | 159,539 | ||||||||
| Total Current Liabilities | 2,877,409 | (1,805,554 | ) | 1,071,855 | ||||||||
| Operating lease liabilities | 19,104 | — | 19,104 | |||||||||
| Total Liabilities | 2,896,513 | (1,805,554 | ) | $ | 1,090,959 | |||||||
| Commitments and contingencies | ||||||||||||
| Convertible preferred shares; $0.0001 par value, 28,921,732 shares authorized, Nil undesignated as of March 31, 2022 and December 31, 2021, respectively Series 1 Preferred stock, $0.0001 par value, 21,000,000 authorized, and 11,507,260 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 581,004 | (581,004 | ) | — | ||||||||
| Series 2 Preferred stock, $0.0001 par value, 7,921,732 authorized, and 7,784,678 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 6,534,838 | (6,534,838 | ) | — | ||||||||
| Stockholders' Deficit | ||||||||||||
| Common stock, $0.0001 par value, 87,000,000 authorized, 40,372,553 and 40,350,212 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 4,037 | — | 4,037 | |||||||||
| Additional paid-in capital | 35,542,475 | (35,040,727 | ) | 501,748 | ||||||||
| Accumulated deficit | (45,022,811 | ) | 43,958,803 | (1,064,008 | ) | |||||||
| Total stockholders' deficit | (9,476,299 | ) | 8,918,076 | (558,223 | ) | |||||||
| $ | 536,056 | $ | (3,320 | ) | $ | 532,736 | ||||||
| Adjustments to separate AdActive Media CA from AdActive Media Delaware | ||||
| Cash | $ | (1,778 | ) | |
| Property, plant and equipment | $ | (1,542 | ) | |
| Accounts payable grouping adjustment | $ | 53,389 | ||
| Accounts payable - related party | $ | (306 | ) | |
| Accrued expenses | $ | (705,537 | ) | |
| Accrued liaibilities and other payable | $ | (449,834 | ) | |
| Accrued salaries - related party | $ | (127,379 | ) | |
| Accrued interest on loans | $ | (83,926 | ) | |
| Convertible note | $ | (67,500 | ) | |
| Loan from related company | $ | (284,000 | ) | |
| SBA loans | $ | (140,461 | ) | |
| Series 1 convertible preferred stock | $ | (581,004 | ) | |
| Series 2 convertible preferred stock | $ | (6,534,838 | ) | |
| Additional paid-in capital | $ | (35,040,727 | ) | |
| Accumulated deficit | $ | 43,958,803 | ||
| 2 |
Note 1 — Description of the Acquisition
On July 07, 2022, Society Pass Incorporated (the “Company” or “SOPA”) acquired all of the outstanding capital stock of wholly owned subsidiary of AdActive Media Inc., dba Thoughtful Media Group (“TMG DE”), the Seller which is AdActive Media CA,Inc (“TMG CA”) and Thoughtful (Thailand) Co., Ltd (“TMG Thailand”) pursuant to a Share Purchase Agreement (the “Agreement”) between SOPA and TMG DE.
AdActive Media CA,Inc, a company located in the California and Thoughtful (Thailand) Co., Ltd., a company located in Thailand operates an digital marketing and social media agency.
Pursuant to the terms of the Agreement, the total purchase price paid by SOPA for the AdActive Media CA,Inc and Thoughtful (Thailand) Co., Ltd.’s shares, that was payable to the Sellers as follows:
1) 609,327 shares of the Company’s common stock valued at $1.3 million
2) a warrant, expiring one year after the Closing Date on July 7, 2023, to purchase 203,109 shares of the Company’s common stock at an exercise price of $2.1335;
3) assumption of liabilities up to $700,000 of the TMG CA and the TMG Thailand, including two assumed loans, with an aggregate principal balance of $300,000 not including interest, payable by the Seller and the TMG CA (“Assumed Liabilities”).
Note 2 — Basis of Presentation
The following unaudited pro forma condensed combined financial information of the combined company is presented to illustrate the proposed effects of the Acquisition. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by Securities and Exchange Commission (“SEC”) Final Rule Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaced the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The combined company has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.
The Thoughtful Thailand Co Ltd.’s financial statements disclosed on Exhibit 99.2 are derived from financial statements that were originally presented in Thai Bath. For purposes of presentation in the accompanying pro forma information, the Thai Baht financial information has been translated to US dollars using the then current rate of 33.1393 Thai Baht to the US dollar.
The unaudited pro forma condensed combined financial information and explanatory notes have been prepared to illustrate the effects of the Acquisition involving the Company and AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. under the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805, Business Combinations, with Company treated as the accounting acquirer. Under the acquisition method of accounting, the identifiable assets acquired, and liabilities assumed of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. are recognized and measured as of the acquisition date at fair value, defined in ASC 820, Fair Value Measurement, and added to those of the Company which are based on its respective historical financial information.
ASC 820 defines the term “fair value” and sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers unrelated to the Company in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, the Company may be required to record assets which are not intended to be used or sold and/or to value assets at fair value measures that do not reflect the intended use of those assets. Many of these fair value measurements can be highly subjective and it is also possible that others, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.
Management has made significant estimates and assumptions in its determination of the Transaction Accounting Adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded might differ materially from the information presented.
Upon consummation of the Acquisition, a final determination of the fair value of ’s assets acquired and liabilities assumed will be performed. Any changes in the fair values of the net assets or total consideration as compared with the information shown in the unaudited pro forma condensed combined financial information may change the amount of the total purchase consideration allocated to goodwill and other assets and liabilities and may impact the Company’s statement of operations following the consummation of the Acquisition. The final consideration allocation may be materially different than the preliminary allocation presented in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information is provided for illustrative and information purposes only and is not intended to represent or necessarily be indicative of the combined company’s results of operations or financial condition had the Acquisition been completed on the dates indicated, nor do they purport to project Company’s results of operations or financial condition for any future period or as of any future date. The unaudited pro forma condensed combined financial information does not include any expected cost savings or operating synergies, which may be realized subsequent to the combination or the impact of any non-recurring activity and one-time transaction-related or integration-related items. Moreover, the pro forma adjustments represent best estimates based upon the information available to date and are preliminary and subject to change after more detailed information is obtained.
Note 3 — Accounting Policies and Reclassification Adjustments
The Company has not identified all adjustments necessary to conform AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd.’s accounting policies to the Company’s accounting policies. Upon consummation of the Acquisition, or as more information becomes available, the Company will perform a more detailed review of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. ’s accounting policies. Upon consummation of the Acquisition, the Company will perform a comprehensive review of its accounting policies. The Company may, as a result, identify additional differences between the accounting policies of the two companies which, when conformed, could have a material impact on the combined consolidated financial statements.
Under the acquisition method of accounting, the identifiable assets acquired, and liabilities assumed of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. are recognized and measured as of the acquisition date at fair value and added to those of the Company. The determination of fair value used in the pro forma adjustments are presented herein.
Note 4 — Acquisition Consideration
The accompanying unaudited pro forma condensed combined financial statements reflect a purchase price of approximately $ 2,072,512 (the “Acquisition Consideration”) comprised of the following:
| Fair value | ||||
| Stock (609,327 Shares of SOPA common stock) | 1,176,002 | |||
| Warrant (203,109 shares) | 196,510 | |||
| Cash | 700,000 | |||
| Total Purchase Price | 2,072,512 | |||
Note 5 — Purchase Price Allocation
SOPA has performed a preliminary allocation of the Acquisition Consideration to the identifiable assets acquired and liabilities assumed of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. Using the total Acquisition Consideration for the Acquisition, the Company has valued the allocations to such assets and liabilities. The purchase price allocation is based on financial information of AdActive Media CA Inc. and Thoughtful (Thailand) Co. Ltd. as of the closing date which represents the best information available to management at the time of this filing.
The following table summarizes the allocation of the estimated preliminary Acquisition Consideration:
| Assets Acquired | ||||
| Cash and cash equivalent | $ | 29,877 | ||
| Account receivables | $ | 423,372 | ||
| Deposits, prepayment and other receivables | $ | 90,818 | ||
| Property, plant and equipment | $ | 2,697 | ||
| Right of use assets | $ | 34,307 | ||
| Total assets acquired | $ | 581,071 | ||
| Liabilities assumed | ||||
| Account payables | $ | 147,576 | ||
| Loan | $ | 150,000 | ||
| Operating lease liabilities | $ | 46,778 | ||
| Total liabilities assumed | $ | 344,354 | ||
| Net tangible assets | $ | 236,717 | ||
| Intangible Assets Acquired | ||||
| Customer Based | $ | 1,105,000 | ||
| GoodWill (1) | $ | 730,795 | ||
| Total Intangible Assets Acquired | $ | 1,835,795 | ||
| Purchase price allocated | $ | 2,072,512 | ||
| (1) | Goodwill represents the excess of Acquisition Consideration over the fair value of the underlying net assets acquired. In accordance with ASC 350, Goodwill and Other Intangible Assets, goodwill will not be amortized but rather subject to annual impairment test, absent any indicators of impairment. Goodwill recorded in the Acquisitions is not expected to be deductible for tax purposes. SOPA management is still in the process of valuing any identifiable intangible assets, to which the valuation may impact the final goodwill amount. |
This purchase price allocation has been used to prepare the Transaction Accounting Adjustments in the condensed combined pro forma balance sheet and statements of operations and is described in more detail in the explanatory notes in Note 6 — Pro Forma Adjustments.
Note 6 — Pro Forma Adjustments
The following is a description of the unaudited pro forma adjustments reflected in the unaudited pro forma condensed combined financial statements:
Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2022
| A | Adjustment to record the cash portion of the purchase price | $ | 700,000 | ||
| Record the common stock and warrant portion of the purchase price | |||||
| Par value of 609,327 common shares at $0.0001 per share | $ | 61 | |||
| Accumulated paid-capital portion of common shares | |||||
| Total fair value of common stock and warrant compensation | $ | 1,372,512 | |||
| Par value of 609,327 common stock and 203,109 warrant at $0.0001 per share | (61 | ) | |||
| Eliminate accumulated common stock | (59,781 | ) | |||
| Eliminate retained deficit | 322,306 | ||||
| B | Net adjustment to accumulated paid-in capital | $ | 1,634,976 | ||
| C | Customer based intangible assets | $ | 1,105,000 | ||
| D | Record goodwill on the transaction (based on June result) | ||||
| Goodwill amount | $ | 730,795 | |||
| Total goodwill recorded | $ | 730,795 | |||
| E | Adjustment for assets and liabilities (March vs June) | ||||
| Cash and cash equivalent | $ | (306 | ) | ||
| Property, plant and equipment, net | $ | (1,542 | ) | ||
| Account receivables | $ | (200,654 | ) | ||
| Deposits, prepayment and other receivables | $ | (1,059 | ) | ||
| Account payables | $ | (450,591 | ) | ||
| Accrued liabilities and other payables | $ | (295,004 | ) | ||
| Due to related parties | $ | (532,918 | ) | ||
| Loan | $ | (45,395 | ) | ||
| Operating lease liabilities | $ | 12,382 | |||
| Common shares | $ | (63,818 | ) | ||
| Additional paid-in capital | $ | (501,748 | ) | ||
| Accumulated deficit | $ | 1,122,992 | |||
| Current year earnings | $ | 51,297 |
| 3 |
| SOCIETY PASS INCORPORATED | ||||||||||||||||||||||
| Unaudited Proforma Combined Consolidated Statement of Operation | ||||||||||||||||||||||
| FOR THE PERIOD ENDED MARCH 31, 2022 | ||||||||||||||||||||||
| (Expressed in United States Dollars) | ||||||||||||||||||||||
| SOPA | Consolidation AdAdctive Media | Thoughtful Thailand Co., Ltd | Transaction Adjustments | Note | Pro Forma Combined | |||||||||||||||||
| Revenue | 445,090 | 1,208,485 | 104,502 | 1,758,077 | ||||||||||||||||||
| Cost of sales | (459,883 | ) | (1,061,737 | ) | (125,775 | ) | (1,647,395) | |||||||||||||||
| Gross profits | (14,793 | ) | 146,748 | (21,273 | ) | 110,682 | ||||||||||||||||
| Development cost | (19,548 | ) | (19,548) | |||||||||||||||||||
| Marketing expense | (196,102 | ) | (196,102) | |||||||||||||||||||
| Impairment loss of goodwill | (528,583 | ) | (528,583) | |||||||||||||||||||
| Administrative expenses | (5,840,698 | ) | (30,024 | ) | (5,870,722) | |||||||||||||||||
| Operating expenses | (180,033 | ) | (180,033) | |||||||||||||||||||
| Loss from operation | (6,599,724 | ) | (33,285 | ) | (51,297 | ) | (6,684,306) | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Interest income | 45 | 45 | ||||||||||||||||||||
| Other income | 13,621 | 13,621 | ||||||||||||||||||||
| Write off unrecoverable assets | 500 | (500 | ) | A | - | |||||||||||||||||
| Interest expense | (4,045 | ) | (4,438 | ) | 1,664 | A | (6,819) | |||||||||||||||
| Loss before income tax | (6,590,103 | ) | (37,223 | ) | (51,297 | ) | (6,677,459) | |||||||||||||||
| Income tax expense | (1,302 | ) | (850 | ) | 850 | A | (1,302) | |||||||||||||||
| NET LOSS | (6,591,405 | ) | (38,073 | ) | (51,297 | ) | (6,678,761) | |||||||||||||||
| A | ||||
| Being elimination of TMG DE expenses | ||||
| Write off unrecoverable assets | $ | 500 | ||
| Interest expenses on convertible debts | $ | 1,664 | ||
| Income tax expense | $ | 850 | ||
| 4 |
| SOCIETY PASS INCORPORATED | ||||||||||||||||||||||
| Audited Proforma Combined Consolidated Statement of Operation | ||||||||||||||||||||||
| FOR THE PERIOD ENDED DECEMBER 31, 2021 | ||||||||||||||||||||||
| (Expressed in United States Dollars) | ||||||||||||||||||||||
| SOPA | Consolidation AdAdctive Media | Thoughtful Thailand Co., Ltd | Transaction Adjustments | Note | Pro Forma Combined | |||||||||||||||||
| Revenue | 519,885 | 5,423,118 | 232,184 | 6,175,187 | ||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||
| Cost of sales | (710,683 | ) | (4,683,158 | ) | (159,022 | ) | (5,552,863) | |||||||||||||||
| Gross profits | (190,798 | ) | 739,960 | 73,162 | 622,324 | |||||||||||||||||
| - | ||||||||||||||||||||||
| Development cost | (95,809 | ) | (95,809) | |||||||||||||||||||
| Marketing expense | (327,195 | ) | (327,195) | |||||||||||||||||||
| Impairment loss | (200,000 | ) | (200,000) | |||||||||||||||||||
| Administrative expenses | (33,398,401 | ) | (158,395 | ) | (33,556,796) | |||||||||||||||||
| Operating expenses | (1,828,243 | ) | 705,537 | A | (1,051,878) | |||||||||||||||||
| 15,486 | A | |||||||||||||||||||||
| 1,913 | A | |||||||||||||||||||||
| 53,429 | A | |||||||||||||||||||||
| Loss from operation | (34,212,203 | ) | (1,088,283 | ) | (85,233 | ) | (34,609,354) | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Interest income | 116 | 116 | ||||||||||||||||||||
| Other income | 8,360 | 75,327 | 494.00 | 84,181 | ||||||||||||||||||
| Loss on settlement of litigation | (550,000 | ) | (550,000) | |||||||||||||||||||
| Warrant extension expense | (58,363 | ) | (58,363) | |||||||||||||||||||
| Write off of unrecoverable assets | (16,500 | ) | 16,500 | A | - | |||||||||||||||||
| Interest expense | (41,514 | ) | (29,999 | ) | 12,000 | A | (52,763) | |||||||||||||||
| 6,750 | A | |||||||||||||||||||||
| Loss before income tax | (34,853,604 | ) | (1,059,455 | ) | (84,739 | ) | (35,186,183) | |||||||||||||||
| Income tax expense | (11,136 | ) | (3,250 | ) | 2,450 | A | (11,936) | |||||||||||||||
| NET LOSS | (34,864,740 | ) | (1,062,705 | ) | (84,739 | ) | (35,198,119) | |||||||||||||||
| A | ||||
| Being elimination of TMG DE expenses | ||||
| Litigation fee | $ | 705,537 | ||
| Litigation related travel fee | $ | 15,486 | ||
| Depreciation Expense | $ | 1,913 | ||
| Consulting - Legal Services | $ | 53,429 | ||
| Write off unrecoverable assets | $ | 16,500 | ||
| Accrued interest on penalty on taxes | $ | 12,000 | ||
| Interest expenses on convertible debts | $ | 6,750 | ||
| Income tax expense | $ | 2,450 | ||
| 5 |
Filing of Society Pass (Nasdaq: SOPA) Form 8-K/A in Connection of
Acquisitions of AdActive Media CA, Inc and Thoughtful Thailand Ltd;
Acquired Subsidiaries Recognise 2021 Revenues of US$5.6 million
New York, NY, 15 September 2022 – Society Pass Incorporated (Nasdaq: SOPA) (“SoPa” or the “Company”), Southeast Asia’s (“SEA”) leading data-driven loyalty and e-commerce ecosystem, today announces the filing of Form 8-K/A with the Securities and Exchange Commission (“SEC”) in connection of acquisitions of AdActive Media CA, Inc (the “CA Sub”) and Thoughtful Thailand Ltd (the “Thailand Sub”), (the Thailand Sub and the CA Sub comprise the “Acquired Subsidiaries”).
Summary Points:
| • | On 07 July 2022, SoPa, through its wholly-owned subsidiary, Thoughtful Media Group Incorporated (“Thoughtful Media” or “TMG), a Nevada corporation, a Thailand-based, a social commerce-focused, premium digital video Multi-Platform Network (“MPN”)/social media influencer advertising platform, acquired from AdActive Media Group, Inc., a Delaware corporation, (i) all of the outstanding capital stock of the CA Sub, and (ii) 99.75% of all of the outstanding capital stock of the Thailand Sub. |
| • | Integrating the Acquired Subsidiaries onto its platform, TMG is a social commerce-focused, premium digital video MPN/social media influencer advertising platform headquartered in Thailand with an operating presence in the US, Vietnam, and Philippines. TMG expects to expand to Indonesia and Singapore in 4Q 2022. |
| • | The combined 1Q 2022 revenues and loss from operations from the Acquired Subsidiaries totaled $1,312,986 and $84,582, respectively. |
| • | The combined 1Q 2021 revenues and loss from operations from the Acquired Subsidiaries totaled $1,265,053 and $114,032, respectively. |
| • | The combined 2021 revenues and loss from operations from the Acquired Subsidiaries totaled $5,655,795 and $1,173,022, respectively. |
| • | The combined 2020 revenues and loss from operations from the Acquired Subsidiaries totaled $5,928,800 and $899,933, respectively. |
About Society Pass Inc
Founded in 2018 as a digitally-focused loyalty and data marketing ecosystem in the fast-growing markets of Vietnam, Indonesia, Philippines, Singapore and Thailand, which account for more than 80% of the SEA population, and with offices located in Angeles, Bangkok, Hanoi, Ho Chi Minh City, Jakarta, Manila, and Singapore, SoPa is an acquisition-focused e-commerce holding company operating 6 interconnected verticals (loyalty, digital media, travel, telecoms, lifestyle, and F&B), which seamlessly connects millions of registered consumers and hundreds of thousands of registered merchants/brands across multiple product and service categories throughout SEA.
Society Pass completed an initial public offering and began trading on the Nasdaq under the ticker SOPA in November 2021. SOPA shares were added to the Russell 2000 index in December 2021.
SoPa acquires fast growing e-commerce companies and expands its user base across a robust product and service ecosystem. SoPa integrates these complementary businesses through its Society Pass loyalty platform and circulation of its universal loyalty points or Society Points, which has entered beta testing and is expected to launch broadly at the beginning of 2023. Society Pass loyalty program members earn and redeem Society Points and receive personalised promotions based on SoPa’s data capabilities and understanding of consumer shopping behaviour. SoPa has amassed more than 3.3 million registered consumers and over 205,000 registered merchants and brands. It has invested 2+ years building proprietary IT architecture to effectively scale and support its consumers, merchants, and acquisitions.
Society Pass leverages technology to tailor a more personalised experience for customers in the purchase journey and to transform the entire retail value chain in SEA. SoPa operates Thoughtful Media Group, a Thailand-based, a social commerce-focused, premium digital video multi-platform network; NusaTrip, a leading Indonesia-based Online Travel Agency; Gorilla Networks, a Singapore-based, web3-enabled mobile blockchain network operator; Leflair.com, Vietnam’s leading lifestyle e-commerce platform; Pushkart.ph, a popular grocery delivery company in Philippines; Handycart.vn, a leading online restaurant delivery service based in Vietnam; andMangan, a leading local restaurant delivery service in Philippines.
For more information, please check out: http://thesocietypass.com/.
Cautionary Note Concerning Forward-Looking Statements
This press release may include “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this press release are forward-looking statements. When used in this press release, words such as “anticipate”, “believe”, “estimate”, “expect”, “intend” and similar expressions, as they relate to us or our management team, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in the Company’s filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of the Company’s registration statement and prospectus relating to the Company’s initial public offering filed with the SEC. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
Media Contacts:
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