The accompanying condensed and interim consolidated
financial statements are presented in accordance with U.S. generally accepted accounting principles for interim financial information
and the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required
by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal occurring adjustments) considered necessary in order to make the financial statements not misleading,
have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of results that
may be expected for the year ending December 31, 2016.
The condensed consolidated interim financial
statements of the Company appear elsewhere in this report beginning with the Index to Financial Statements on page F-1 and ending
on F-12.
CONTENTS
Condensed Interim Consolidated Balance Sheets as at March 31, 2016 & December 31, 2015 (unaudited)
|
F-2
|
|
|
Condensed Interim Consolidated Statements of Operations and Comprehensive (Loss) for the three months ended March 31, 2016 and 2015 (unaudited)
|
F-3
|
|
|
Condensed Interim Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (unaudited)
|
F-4
|
|
|
Condensed Interim Consolidated Statement of Stockholders'
Deficit for the three months ended March 31, 2016 (unaudited)
|
F-5
|
|
|
Notes to the Condensed Interim Consolidated Financial Statements (unaudited)
|
F-6 to F-11
|
MOPALS.COM, INC.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
Unaudited
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
6,079
|
|
|
$
|
6,079
|
|
Prepaid & Other Assets (Note 4)
|
|
|
294,591
|
|
|
|
295,253
|
|
Total Current Assets
|
|
|
300,670
|
|
|
|
301,332
|
|
|
|
|
|
|
|
|
|
|
Equipment, net (Note 5)
|
|
|
13,997
|
|
|
|
16,768
|
|
Total Assets
|
|
$
|
314,667
|
|
|
$
|
318,100
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Accounts Payable & Accrued Liabilities
|
|
|
256,502
|
|
|
|
231,726
|
|
Employee Tax Deductions Payable
|
|
|
1,009,252
|
|
|
|
832,831
|
|
MoCoins™ Liability
|
|
|
33,394
|
|
|
|
2,644
|
|
Share Based Accrual
|
|
|
14,924
|
|
|
|
14,924
|
|
Loans from Shareholder (Note 6)
|
|
|
1,822,117
|
|
|
|
1,429,055
|
|
Total Liabilities
|
|
$
|
3,136,189
|
|
|
$
|
2,511,180
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
(Note 7)
|
|
|
|
|
|
|
|
|
Capital Stock; par value $0.0001 (Note 8)
|
|
|
5,220
|
|
|
|
5,220
|
|
Additional Paid In Capital
|
|
|
3,557,387
|
|
|
|
3,469,078
|
|
Deficit
|
|
|
(6,688,605
|
)
|
|
|
(6,147,574
|
)
|
Foreign Currency Translation
|
|
|
304,476
|
|
|
|
480,196
|
|
Total Stockholders’ Deficit
|
|
$
|
(2,821,522
|
)
|
|
$
|
(2,193,080
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
314,667
|
|
|
$
|
318,100
|
|
The accompanying notes are an integral part
of these condensed interim consolidated financial statements.
MOPALS.COM, INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS
Unaudited
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
|
|
March 31, 2016
|
|
|
March 31, 2015
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
Salaries, Consultants & Contractors
|
|
$
|
337,601
|
|
|
$
|
291,421
|
|
General & Administrative Expenses
|
|
|
74,511
|
|
|
|
110,459
|
|
Occupancy Costs
|
|
|
27,601
|
|
|
|
33,362
|
|
Stock Based Compensation (Note 9)
|
|
|
97,658
|
|
|
|
98,927
|
|
Depreciation
|
|
|
3,660
|
|
|
|
3,821
|
|
Total Operating Expense & Loss before Income Taxes
|
|
|
541,031
|
|
|
|
537,990
|
|
Net loss
|
|
|
(541,031
|
)
|
|
|
(537,990
|
)
|
Foreign Currency Translation Adjustment, Net of Taxes
|
|
|
(175,720
|
)
|
|
|
(135,097
|
)
|
Other Comprehensive Income
|
|
|
(175,720
|
)
|
|
|
(135,097
|
)
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Loss
|
|
$
|
(365,311
|
)
|
|
$
|
(402,893
|
)
|
|
|
|
|
|
|
|
|
|
Loss per common share (Note 10):
|
|
|
|
|
|
|
|
|
Basic and diluted:
|
|
|
|
|
|
|
|
|
Net (Loss) per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Shares Outstanding - Basic and diluted during the period
|
|
|
52,200,700
|
|
|
|
45,804,884
|
|
The accompanying notes are an integral part
of these condensed interim consolidated financial statements.
MOPALS.COM, INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS
Unaudited
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
|
|
March 31,
2016
|
|
|
March 31,
2015
|
|
Cash Flows used in Operating Activities
|
|
|
|
|
|
|
|
|
Net (Loss)
|
|
$
|
(541,031
|
)
|
|
$
|
(537,990
|
)
|
Adjustments to reconcile net (loss) income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
3,660
|
|
|
|
3,821
|
|
Stock-based compensation expense
|
|
|
88,309
|
|
|
|
98,927
|
|
Increase (Decrease) in net assets:
|
|
|
|
|
|
|
|
|
(Decrease) in Prepaids & Other Assets
|
|
|
(9,853
|
)
|
|
|
(1,675
|
)
|
Increase (Decrease) in MoCoins™ liability
|
|
|
28,897
|
|
|
|
(158
|
)
|
Increase (Decrease) in
Accounts Payable & Accrued Liabilities and Employee Tax Deductions Payable
|
|
|
128,246
|
|
|
|
(3,612
|
)
|
Net Cash Flows used in Operating Activities
|
|
|
(301,771
|
)
|
|
|
(440,687
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Shares to be issued
|
|
|
-
|
|
|
|
70
|
|
Additional Paid In Capital (Cash portion)
|
|
|
-
|
|
|
|
204,397
|
|
Increase in Shareholder’s Loan
|
|
|
282,064
|
|
|
|
120,840
|
|
Net Cash Flows from Financing Activities
|
|
|
282,064
|
|
|
|
325,307
|
|
|
|
|
|
|
|
|
|
|
Cash Flows used in Investing Activities
|
|
|
|
|
|
|
|
|
Purchases of Capital Equipment
|
|
|
-
|
|
|
|
(1,129
|
)
|
Net Cash Flows used in Investing Activities
|
|
|
-
|
|
|
|
(1,129
|
)
|
|
|
|
|
|
|
|
|
|
Net Cash Flows
|
|
$
|
(19,707
|
)
|
|
$
|
(116,509
|
)
|
|
|
|
|
|
|
|
|
|
Effects of Exchange Rate on Cash
|
|
|
19,707
|
|
|
|
38,737
|
|
|
|
|
|
|
|
|
|
|
Cash – Beginning of Period
|
|
|
6,079
|
|
|
|
143,482
|
|
Cash – End of Period
|
|
$
|
6,079
|
|
|
$
|
65,710
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
Interest Paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Income Taxes Paid
|
|
|
-
|
|
|
|
-
|
|
The accompanying notes are an integral part
of these condensed interim consolidated financial statements.
MOPALS.COM, INC.
CONDENSED INTERIM CONSOLIDATED STATEMENT
OF STOCKHOLDERS’ DEFICIT
Unaudited
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
other
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid in
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Shareholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Income
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2016
|
|
|
52,200,700
|
|
|
$
|
5,220
|
|
|
$
|
3,469,078
|
|
|
$
|
(6,147,574
|
)
|
|
$
|
480,196
|
|
|
$
|
(2,193,080
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares granted to employees (Note 9)
|
|
|
-
|
|
|
|
-
|
|
|
|
88,309
|
|
|
|
-
|
|
|
|
-
|
|
|
|
88,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of director stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(175,720
|
)
|
|
|
(175,720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(541,031
|
)
|
|
|
-
|
|
|
|
(541,031
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2016
|
|
|
52,200,700
|
|
|
|
5,220
|
|
|
|
3,557,387
|
|
|
|
(6,688,605
|
)
|
|
|
304,476
|
|
|
|
(2,821,522
|
)
|
The accompanying notes are an integral part
of these condensed interim consolidated financial statements.
MOPALS.COM, INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 2016
1.
|
NATURE OF OPERATIONS AND ORGANIZATION
|
Mopals.com, Inc. ("Mopals" or the
“Company”) was incorporated August 7, 2012 and was organized under the laws of the State of Nevada.
Mopals’ operations are presently conducted
through the Company’s wholly owned subsidiary, Mopals Canada Inc. (an Ontario, Canada company). The planned
operations of the Company consist of becoming a social media rewards platform in Canada and the United States. The Company is currently
conducting development activities to operationalize certain technology that the Company has developed so it can attract users to
its platform. The Company also is in the process of raising additional equity capital to support the completion of its development
activities to begin the launch of its application.
The Company’s activities are subject
to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s current
technology before another company develops similar technology and applications.
These unaudited condensed interim consolidated
financial statements should be read in conjunction with the annual financial statements for Mopals.com, Inc. for the most recently
completed fiscal year ended December 31, 2015. These unaudited condensed interim consolidated financial statements do not include
all disclosures required in annual financial statements, but rather are prepared in accordance with recommendations for interim
financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
These unaudited condensed interim consolidated financial statements have been prepared using the same accounting policies and methods
as those used by the Company in the annual consolidated financial statements for the year ended December 31, 2015, except when
disclosed below.
The unaudited condensed interim consolidated
financial statements contain all adjustments (consisting of only normal recurring adjustments) which are necessary to present fairly
the financial position of the Company as at March 31, 2016, and the results of its operations for the three month periods ended
March 31, 2016 and 2015 and its cash flows for the three month periods ended March 31, 2016 and 2015. Note disclosures have been
presented for material updates to the information previously reported in the annual consolidated financial statements.
MOPALS.COM, INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 2016
2.
|
BASIS OF PRESENTATION (Continued)
|
a) Estimates
The preparation of these consolidated financial
statements has required management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of the revenues and expenses
during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to accrued liabilities,
income taxes and stock based compensation. The Company bases its estimates on historical experiences and on various other assumptions
believed to be reasonable under the circumstances. Actual results could differ from those estimates. As adjustments become necessary,
they are reported in earnings in the period in which they become known.
These financial statements have been prepared
assuming the Company will continue on a going-concern basis. The Company is in the development stage and has not yet realized profitable
operations and has relied on non-operational sources to fund operations. The Company has suffered recurring losses and additional
future losses are anticipated as the Company has not yet been able to generate revenue. The Company has incurred losses since inception
and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to
continue to raise adequate financing. Accumulated losses from inception to March 31, 2016 total $6,688,605 and the Company had
a working capital deficiency of $2,835,519 as at March 31, 2016. In order for the Company to meet its liabilities as
they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing. The
Company will continue to seek additional forms of debt or equity financing, but it cannot provide assurances that it will be successful
in doing so. These circumstances raise substantial doubt as to the ability of the Company to meet its obligations as they come
due and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The accompanying condensed
consolidated interim financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern. Such adjustments could be material.
4.
|
PREPAID AND OTHER ASSETS
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2015
|
|
|
|
|
|
|
|
|
Prepaid Assets
|
|
$
|
145,521
|
|
|
$
|
158,894
|
|
Harmonized Sales Tax
|
|
|
149,070
|
|
|
|
136,359
|
|
Total
|
|
$
|
294,591
|
|
|
$
|
295,253
|
|
The Harmonized Sales Tax (“HST”)
is a federal - provincial harmonized sales tax that applies to the supply of most property and services in Canada. Generally, HST
registrants must charge and account for the HST on taxable supplies of property and services made in Canada. The HST rate in Ontario
is 13%. Registrants collect the HST on most of their sales and pay HST on most purchases they make to operate their business. They
can claim an input tax credit, to recover the HST paid or payable on the purchases they use in their commercial activities.
MOPALS.COM, INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 2016
The net book value of equipment as of March
31, 2016 was as follows:
|
|
Cost
|
|
|
Amortization
|
|
|
NBV
|
|
Computer Hardware
|
|
$
|
21,577
|
|
|
$
|
14,735
|
|
|
$
|
6,842
|
|
Computer Software
|
|
|
24,923
|
|
|
|
20,983
|
|
|
|
3,940
|
|
Furniture & Equipment
|
|
|
7,700
|
|
|
|
4,485
|
|
|
|
3,215
|
|
Total
|
|
$
|
54,200
|
|
|
$
|
40,203
|
|
|
$
|
13,997
|
|
The net book value of property, plant &
equipment as of December 31, 2015 was as follows:
|
|
Cost
|
|
|
Amortization
|
|
|
NBV
|
|
Computer hardware
|
|
$
|
20,247
|
|
|
$
|
12,308
|
|
|
$
|
7,939
|
|
Computer Software
|
|
|
23,387
|
|
|
|
17,936
|
|
|
|
5,451
|
|
Furniture & Equipment
|
|
|
7,225
|
|
|
|
3,847
|
|
|
|
3,378
|
|
Total
|
|
$
|
50,859
|
|
|
$
|
34,091
|
|
|
$
|
16,768
|
|
Depreciation expense for the three months ending
March 31, 2016 and 2015 was $3,660 and $3,821, respectively.
6.
|
LOANS FROM SHAREHOLDER
|
As of March 31, 2016, the controlling shareholder
and Chief Executive Officer of the Company had advanced $1,822,117 (December 31, 2015 - $1,429,055) to fund the working capital
of the Company. The advances are unsecured, non-interest bearing and due on demand.
7.
|
COMMITMENTS & CONTINGENCIES
|
On February 10, 2014, the Company entered into
a lease agreement for office space. The schedule below outlines the expected remaining lease payments over the life of the
lease.
2016
|
|
|
99,660
|
|
2017
|
|
|
139,542
|
|
2018
|
|
|
47,466
|
|
In the normal course of business, the Company
becomes involved in various legal actions seeking compensatory and occasionally punitive damages, including actions brought on
behalf of various purported classes of claimants and claims relating to employee and third-parties.
a) Authorized
100,000,000 Common Shares with a par value
of $0.0001.
MOPALS.COM, INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 2016
9.
|
STOCK-BASED COMPENSATION
|
The Company’s Stock Option Plan is currently
being established in order to enable the Company to attract and retain the services of highly qualified and experienced directors,
officers, employees and consultants, and to give such persons an interest in the success of the Company and its subsidiaries.
The options and awards will be granted at the discretion of the Board of Directors. The fair value of each option granted is estimated
at the time of grant using the Black-Scholes option pricing model.
During the year ended December 31, 2015, the Company agreed
to grant 2,109,000 common shares to certain employees. Of these common shares, 675,000 vest over 12 months, 750,000 vest over
18 months and the remaining 684,000 vested immediately. These shares were valued at $527,250 based on the current stock price
at the date of grant of $0.25 and an estimate forfeiture rate of 56%, of which $385,756 was recorded at March 31, 2016 (December
31, 2015 - $214,947) as additional paid in capital and recorded as stock based compensation on the condensed consolidated interim
statements of operations. During the year ended December 31, 2015, 50,000 common shares were issued in accordance with an employment
agreement and valued at $12,500.
As at March 31, 2016, the Company had
1,194,000 (December 31, 2015 - 704,000) vested share grants. As at March 31, 2016, the number of unvested share grants expected
to vest (including the impact of expected forfeitures) was estimated at 1,425,000 (December 31, 2015 – 1,425,000). As at
March 31, 2016, the total fair value of future expense to be recorded in subsequent periods (assuming no forfeiture occurs) is
$268,994 (December 31, 2015 - $254,802). The weighted average time remaining for these share grants to vest is 0.85 years (December
31, 2015 – 0.86 years).
The following table summarizes the stock option
activities of the Company:
|
|
Number of Options
|
|
|
Weighted Average Exercise Price
|
|
Balance, December 31, 2014
|
|
|
3,050,000
|
|
|
$
|
0.36
|
|
Exercised
|
|
|
(600,000
|
)
|
|
|
0.30
|
|
Options Forfeited
|
|
|
(1,300,000
|
)
|
|
|
0.35
|
|
Balance, December 31, 2015 and March 31, 2016
|
|
|
1,150,000
|
|
|
$
|
0.41
|
|
MOPALS.COM, INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2016
9.
|
STOCK-BASED COMPENSATION (Continued)
|
The Company’s computation of expected volatility
for the periods ended March 31, 2016 is based on the Company’s market close price over the period equal to the expected life
of the options. The Company’s computation of expected life reflects actual historical exercise activity and assumptions regarding
future exercise activity of unexercised, outstanding options.
The Company’s expected dividend yield is 0%,
since there is no history of paying dividends and there are no plans to pay dividends. The Company’s risk-free interest rate
is the Canadian Treasury Bond rate for the period equal to the expected term.
The total number of options outstanding as at March
31, 2016 was 1,150,000 (December 31, 2015 – 1,150,000).
As at March 31, 2016, the Company had 1,150,000 (December
31, 2015 – 1,150,000) vested options. As at March 31, 2016, the number of unvested options expected to vest (including the
impact of expected forfeitures) had been estimated at nil (December 31, 2015 – nil) with a weighted average contractual life
of n/a years (2015 – n/a years) and exercise price of $n/a (2015 - $n/a).
The Company recognizes compensation expense for the
fair values of stock options using the graded vesting method over the requisite service period for the entire award.
The following table presents information relating to
stock options outstanding and exercisable at March 31, 2016.
Options Outstanding
|
|
|
Options Exercisable
|
|
Number
of Shares
|
|
|
Weighted Average Remaining Contractual
Life (Years)
|
|
|
Weighted Average Exercise Price
|
|
|
Number
of Shares
|
|
|
Weighted
Average Exercise Price
|
|
|
Weighted Average Remaining Contractual
Life (Years)
|
|
|
900,000
|
|
|
|
0.39
|
|
|
$
|
0.25
|
|
|
|
900,000
|
|
|
$
|
0.25
|
|
|
|
0.39
|
|
|
250,000
|
|
|
|
2.07
|
|
|
|
1.00
|
|
|
|
250,000
|
|
|
|
1.00
|
|
|
|
2.07
|
|
|
1,150,000
|
|
|
|
0.76
|
|
|
$
|
0.41
|
|
|
|
1,150,000
|
|
|
$
|
0.41
|
|
|
|
0.76
|
|
The Company recorded $97,658 for share-based compensation
expense for the three month period ending March 31, 2016 (2015 - $98,927).
MOPALS.COM, INC.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2016
The Company calculates basic loss per common share
using net loss divided by the weighted-average number of common shares outstanding. The Company calculates diluted earnings per
common share in the same manner as basic, except we use the weighted-average number of diluted common shares outstanding in the
denominator, when the stock options and warrants are not anti-dilutive.
|
|
Three Months ended
March 31, 2016
|
|
|
Three months ended
March 31, 2015
|
|
Weighted average number of common shares outstanding
|
|
|
52,200,700
|
|
|
|
45,804,884
|
|
Weighted-average number of diluted common shares outstanding
|
|
|
52,200,700
|
|
|
|
45,804,884
|
|
The Company accounts for income taxes in accordance
with ASC 740-20. ASC 740-20 prescribes the use of the liability method whereby deferred tax asset and liability account balances
are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using
the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated.
Under ASC 740-20 income taxes are recognized for the
following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences
of events that have been recognized differently in the financial statements than for tax purposes.
As of March 31, 2016, the Company did not have any
amounts recorded pertaining to uncertain tax positions. Deferred taxes as at March 31, 2016 and December 31, 2015 have not been
recorded due to the fact that they are fully reserved. All tax years remain open to examination by the Internal Revenue Service
and the Canada Revenue Agency.