ITEM 1. FINANCIAL STATEMENTS
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 2017
NOTE 1: BASIS OF PRESENTATION
Basis of Presentation
The unaudited interim financial statements of Moms Online, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information in accordance with Securities and Exchange Commission (SEC) Regulation S-X rule 8-03. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented herein. The financial data and other information disclosed in these notes to the interim financial statements related to the period are unaudited. The results for the nine month periods ended September 30, 2017 are not necessarily indicative of the results to be expected for any subsequent quarters or for the entire year ending December 31, 2017. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2016.
NOTE 2: GOING CONCERN AND CONTINGENCIES
Going Concern
As shown in the accompanying financial statements, we have incurred losses in each year since inception and have a working capital deficit of $312,904, and an accumulated deficit of $1,276,103 as of September 30, 2017. These conditions raise substantial doubt as to our ability to continue as a going concern.
In response to these conditions, we may raise additional capital through the sale of equity securities, through an offering of debt securities or through borrowings from financial institutions or individuals. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Repayment of investment from Sister Corp
There is an informal agreement between Social Quotient, Inc. (“SQI”), the company’s affiliate (sister corp.) and the Company that calls for the company to give recognition to SQI for the equity contributed to the company “from inception to the future date in which the company might be engaged in a merger or change in control”. The amount of consideration contingently due from the company was $95,224 at September 30, 2017 and December 31, 2016. This contingent liability amount can be satisfied in cash (minimum), or currently $.02 per share; debt; or equity conversion in the event of a merger or transaction in which there is a change in Control.
NOTE 3: RELATED PARTY TRANSACTIONS AND RELATIONSHIPS
All directors of the company are related parties. IceLounge Media, Inc. “ILMI” funded 100% of the development of the
Momscorner.com
website prior to December 31, 2013. ILMI spun off the website to the Company. All amounts due to related parties were converted to stock in 2013 by prior agreement. The stock fair value was determined to be $0.5168 per share, based on the fair values of the website and the anticipated public filing.
During the nine months ended September 30, 2017, the Company recognized $37,500 in platform lease expense due to ILMI and paid back $17,939. During the nine months ended September 30, 2016, ILMI paid net expenses on behalf of the Company of $13,665, respectively. As of September 30, 2017 and December 31, 2016, the outstanding amounts due to parent were $181,449 and $161,888, respectively.
In addition, Social Quotient Inc. paid $0 and $6,228 of expenses, respectively, for and in behalf of the Company, for the nine months ended September 30, 2017 and 2016, which were accounted for as paid in capital. The Company re-paid SQI $0 and $15,000, during the nine months ended September 30, 2017 and 2016, respectively.
On June 6, 2016 the Board of Directors of IMLI agreed to transfer from its own holdings of the company’s common stock, 25,000 shares to a company shareholder because he was the first to invest in all three of the IMLI family of companies.
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The Company licenses its technology platform from ILMI, under an Agreement which calls for an automatic 12 month renewal each year on October 1, and a monthly lease payment of $4,167. The company accrued $37,500 for platform lease expense for each of the nine month periods ended September 30, 2017 and 2016.
WB Capital, a related party with common principal ownership, provides Merger & Acquisition and project management services to the Company as a consultant. There is no written agreement governing the relationship. The Company accrued $2,500 a month for these services. Due to the Company’s lack of available cash, the amounts were not paid during either of the nine months ended September 30, 2017 or 2016. The Company owed WB Capital $82,500 as of September 30, 2017.
Scott E. Lybbert, prior CFO, provided accounting and reporting services to the Company as a consultant. There was no written agreement governing the relationship. For the nine months ended September 30, 2016, the Company accrued $12,708, for Lybbert’s services (no amounts were accrued for the nine months ended September 30, 2017). During the nine months ended September 30, 2017, the Company paid back $5,850. Mr. Lybbert passed away in February 2017. As of September 30, 2017, $17,858 was owed to Mr. Lybbert’s estate.
The company paid a former financial consultant, who began working for the company at the end of the first quarter of 2016 and is appointed to the Board of Directors on May 26, 2017. The company had accrued invoices from this consultant in the amount of $13,200 for the year ended December 31, 2016, of which all $13,200 has been paid back.
NOTE 4: WEBSITE AND INTANGIBLE ASSETS
Since inception, most of the Company’s resources have been focused on creating its business model and related website. Certain costs incurred in development of our website were capitalized with a total of $17,831 allocated to our website development in 2013. In 2014, the Company enhanced its website with mobile-enabled features and functionality. Consequently, $68,655 additional costs were capitalized to the website in 2014. No additional amounts have been capitalized since 2014. The Company began amortizing its capitalized website costs of $86,486 on January 1, 2015, over its estimated useful life of three years. The Company recognized amortization expense of $21,621 and $21,621, for the nine months ended September 30, 2017 and 2016, respectively.
NOTE 5: EQUITY
Common stock
The authorized capital stock of the Company consists of 75,000,000 shares of Common stock, par value $.001 per share, of which 4,770,674 were outstanding as of September 30, 2017.
The holders of Common Stock are entitled to one vote per share on each matter submitted to a vote at any meeting of shareholders. Shares of Common Stock do not carry cumulative voting rights and, therefore, a majority of the shares of outstanding Common Stock will be able to elect the entire board of directors and, if they do so, minority shareholders would not be able to elect any persons to the board of directors. Moms Online’s bylaws provide that a majority of the issued and outstanding shares of Moms Online constitutes a quorum for shareholders’ meetings.
Shareholders of Moms Online have no preemptive rights to acquire additional shares of Common Stock or other securities. The Common Stock is not subject to redemption and carries no subscription or conversion rights. In the event of liquidation of Moms Online, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction of all liabilities.
Holders of Common Stock are entitled to receive such dividends, as the board of directors may from time to time declare out of funds legally available for the payment of dividends. Moms Online seeks growth and expansion of its business through the reinvestment of profits, if any, and does not anticipate that we will pay dividends in the foreseeable future.
During the nine months ended September 30, 2017, the company recognized $18,750 of deferred stock compensation to recognize three quarters of a four year stock compensation agreement calling for the payment of 100,000 shares. These shares have not been issued yet due to a yet unfulfilled vesting clause, and are accounted for as a deferred compensation component of paid in capital. The company also recognized $15,000 of deferred stock compensation to recognize three quarters of a two year stock compensation agreement calling for the payment of 40,000 shares. These shares have not been issued yet due to a yet unfulfilled vesting clause, and are accounted for as a deferred compensation component of paid in capital. The company also recognized $7,500 of deferred stock compensation to recognize three quarters of a two year stock compensation agreement calling for the payment of 20,000 shares. These shares have not been issued yet due to a yet unfulfilled vesting clause, and are accounted for as a deferred compensation component of paid in capital.
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As of September 30, 2017, the Company issued an aggregate of 15,000 restricted shares to a third party contractor, for services. The Company recorded professional fees expense of $15,000 for these shares. The related agreement specifies 40,000 shares will be issued over a two year period, upon completion of certain milestones.
On August 1, 2017, the Company agreed to issue 100,000 shares of common stock to a third party contractor, with a vesting period of 2 years. 25% of the shares will vest 6 months from the date of the agreement, and the remaining 75% will vest in equal quarterly installments over the remaining 18 months, as long as the contractor provides continuous service.
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