UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission File Number: 000-54635
EXCELSIS INVESTMENTS, INC.
Formerly, Pub Crawl Holdings Inc.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
27-2758155
(I.R.S. Employer Identification No.)
801 West Bay Drive, Suite 470
Largo, Florida 33770
(Address of principal executive offices, including zip code.)
727-330-2731
(Registrant’s telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES
[X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). YES [ ] NO [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,”“accelerated filer,”“non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large Accelerated [ ]
Filer
Non-accelerated
[ ]
Filer
(Do not check if smaller reporting company)
Accelerated Filer
[ ]
Smaller Reporting
Company
[X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES [ ]
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
196,198,413 as of November 18, 2013.
NO [X]
Table of Contents
TABLE OF CONTENTS
Page
PART I.
Item 1. Financial Statements.
3
Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
3
4
5
6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
14
Item 4. Controls and Procedures.
14
PART II.
Item 1A. Risk Factors.
14
Item 5. Other Information.
14
Item 6. Exhibits.
15
Signatures
17
Exhibit Index
18
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Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1.
CONSOLIDATED FINANCIAL STATEMENTS.
PUB CRAWL HOLDINGS INC.
Consolidated Balance Sheets
September 30, December 31,
2013
2012
$
$
(unaudited)
ASSETS
Cash
Due from factoring of accounts receivable
Prepaid expenses
57,271
226,047
4,110
103,241
–
25
287,428
103,266
Current Liabilities
Accounts payable and accrued liabilities
Derivative liabilities
Loan payable
194,731
664,397
100
20,341
395,285
–
Total Current Liabilities
859,228
415,626
17,063
5,144
876,291
420,770
Total Assets
LIABILITIES
Convertible debenture, net of unamortized discount of $132,937 and $144,856,
respectively
Total Liabilities
STOCKHOLDERS’ DEFICIT
Preferred Stock
Authorized: 500,000,000 preferred shares with a par value of $0.001 per share
Issued and outstanding: nil preferred shares
Common Stock
Authorized: 750,000,000 common shares with a par value of $0.001 per share
Issued and outstanding: 196,198,413 and 125,500,000 common shares,
respectively
Additional paid-in capital
Accumulated deficit
–
–
196,199
52,167
(837,229)
125,500
(125,500)
(317,504)
Total Stockholders’ Deficit
(588,863)
(317,504)
287,428
103,266
Total Liabilities and Stockholders’ Deficit
(The accompanying notes are an integral part of these consolidated financial statements)
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PUB CRAWL HOLDINGS INC.
Consolidated Statements of Operations
(unaudited)
Accumulated
from
November 7,
2012
(Date of
Three months Nine months
Inception)
ended
ended
to September
September 30, September 30,
30,
2013
2013
2013
$
$
$
Revenues
Cost of Sales
2,140,239
(1,794,871)
2,190,239
(1,794,871)
2,190,239
(1,794,871)
Gross Margin
345,368
395,368
395,368
22,290
142,407
158,588
30,298
120
25,796
263,959
249,725
83,003
360
50,796
270,775
269,207
97,753
360
353,703
622,843
688,891
(8,335)
(227,475)
(293,523)
50,988
(9,860)
(269,112)
(23,138)
(514,397)
(29,309)
Total Other Income (Expense)
41,128
(292,250)
(543,706)
Net Income (Loss)
32,793
(519,725)
(837,229)
0.00
0.00
(0.00)
(0.00)
188,766,391
323,901,391
148,967,062
748,967,062
Operating Expenses
Consulting
General and administrative
Payroll
Professional fees
Transfer agent fees
Total Operating Expenses
Loss Before Other Expense
Other Income (Expense)
Gain (Loss) on change in fair value of derivative
liabilities
Interest expense
Net Earnings (Loss) per Share – Basic
Net Earnings (Loss) per Share - Diluted
Weighted Average Shares Outstanding – Basic
Weighted Average Shares Outstanding – Diluted
(The accompanying notes are an integral part of these consolidated financial statements)
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PUB CRAWL HOLDINGS INC.
Consolidated Statements of Cashflows
(unaudited)
Accumulated
Nine months
from
ended
November 7,
September 30,
2012
2013
(date of
inception)
to September
30,
2013
$
$
Operating Activities
Net loss for the period
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on convertible debenture
Loss on change in fair value of derivative liabilities
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses and deposits
Accounts payable and accrued liabilities
(519,725)
(837,229)
11,919
269,112
17,063
514,397
(49,432)
(4,085)
53,041
(49,432)
(4,110)
73,382
(239,170)
(285,929)
Investing Activities
Cash received from acquisition of Career Start, Inc.
43,000
43,000
Net cash provided by investing activities
43,000
43,000
Financing Activities
Proceeds from issuance of common stock
Proceeds from issuance of convertible debentures
150,200
–
150,200
150,000
Net cash provided by financing activities
150,200
300,200
Increase (decrease) in cash
(45,970)
57,271
Cash, beginning of period
103,241
–
57,271
57,271
–
–
297,000
150,000
125,500
297,000
–
–
–
–
Net cash used in operating activities
Cash, end of period
Non-cash transactions
Discount on convertible note due to derivative liability
Effect of reverse merger
Fair value of shares issued for the acquisition of Career Start, Inc.
Supplemental Disclosures
Interest paid
Income tax paid
(The accompanying notes are an integral part of these consolidated financial statements)
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Table of Contents
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
1.
Nature of Operations and Continuance of Business
Pub Crawl Holdings, Inc. (the “Company”) was incorporated in the state of Nevada on May 27, 2010. On June 14, 2010, the Company
entered into an Assignment Agreement (the "Acquisistion") with PB PubCrawl.com LLC (“PubCrawl”), a California limited liability
company, whereby the Company acquired a 100% interest in the member shares of PubCrawl in exchange for 5,000,000 common shares
of the Company. The Acquisition was accounted for in accordance with ASC 805-50, Related Issues, as the companies were under
common control prior to acquisition. On September 3, 2012, the Company sold their rights to PubCrawl to the former President and
Director of the Company.
On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. (“Mobile Dynamic”), a
company incorporated in the state of Florida on November 7, 2012, in exchange for the issuance of 10,000,000 common shares. As part
of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director
of the Company and the management and directors of Mobile Dynamic acquired 75,000,000 common shares of the Company in a private
transaction with the former President and Director of the Company. Effectively, Mobile Dynamic held 73% of the issued and
outstanding common shares of the Company and the transaction has been accounted for as a reverse merger, where Mobile Dynamic is
deemed to be the acquirer for accounting purposes.
On July 13, 2013, the Company entered into a share exchange agreement with Career Start, Inc. (“Career”), a private corporation formed
under the state of Florida on February 4, 2013. Under the terms of the agreement, the Company acquired the net assets of Career in
exchange for 47,142,858 common shares of the Company and became a wholly-owned subsidiary of the Company. The acquisition was
between two related parties and has been accounted on a cost basis, as disclosed in Note 4 of the financial statements.
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its
assets and discharge its liabilities in the normal course of business. During the period ended September 30, 2013, the Company has a
working capital deficit of $571,800 and an accumulated deficit of $837,229. The continuation of the Company as a going concern is
dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and
obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors
raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any
adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation and Principles of Consolidation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the
United States (“US GAAP”) and are expressed in U.S. dollars. These consolidated financial statements comprise the accounts of
the Company and its wholly-owned subsidiary, Career Start, Inc., a Florida Company. All intercompany transactions have been
eliminated on consolidation. The Company’s fiscal year end is December 31.
b)
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates
estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and
assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may
differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates
and the actual results, future results of operations will be affected.
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Table of Contents
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
2.
Summary of Significant Accounting Policies (continued)
c)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash
equivalents. As at September 30, 2013 and December 31, 2012, the Company had $57,271 and $103,241 in cash, respectively.
d)
Interim Financial Statements
These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the
opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the
Company’s consolidated financial position, results of operations and cash flows for the periods shown. The results of operations for
such periods are not necessarily indicative of the results expected for a full year or for any future period.
e)
Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of
both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss
available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock
method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted
EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at September 30, 2013, the Company had 135,135,000
potentially dilutive shares (December 31, 2012 – 600,000,000) from the conversion feature within the convertible debenture.
f)
Revenue Recognition
The Company derives revenue from contracting employees to its customers and providing consulting services. In accordance with
ASC 605, Revenue Recognition, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred,
the amount is fixed and determinable, risk of ownership has passed to the customer and collection is reasonably assured.
g)
Accounts Receivable
Accounts receivable is comprised of amounts owing from customers, and is presented net of the allowance for estimated doubtful
accounts. The Company determines the allowance for doubtful accounts based on historical write-off experience and current
economic conditions and reviews the adequacy of its allowance for doubtful accounts on a regular basis. The Company has
factored its accounts receivable to a third party company, and the accounts receivable includes the net amount receivable to the
Company after commissions and charges.
h)
Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level
of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820
prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
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PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
2.
Summary of Significant Accounting Policies (continued)
h)
Financial Instruments (continued)
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with
insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are
observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to
the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, and
convertible debentures. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of
quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments
approximate their current fair values because of their nature and respective maturity dates or durations.
The following table represents assets and liabilities that are measured and recognized in fair value as of September 30, 2013, on a
recurring basis:
Level 1
$
Derivative liabilities
Total
–
–
Level 2
$
–
–
Level 3
$
664,397
664,397
Total gains
and
(losses)
(269,112)
(269,112)
During the year ended December 31, 2012, the Company had a derivative liability amount of $395,285, which was classified as a
Level 3 financial instrument, and a loss on change in fair value of derivative liabilities of $245,285.
i)
3.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any
material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other
new accounting pronouncements that have been issued that might have a material impact on its financial position or results of
operations.
Reverse Merger
On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. (“Mobile Dynamic”), a
company incorporated in the state of Florida on November 7, 2012, in exchange for the issuance of 10,000,000 common shares. As part
of the acquisition, the Company cancelled 150,000,000 issued and outstanding common shares held by the former President and Director
of the Company and the management and directors of Mobile Dynamic acquired 75,000,000 common shares of the Company in a private
transaction with the former President and Director of the Company. Effectively, Mobile Dynamic held 73% of the issued and
outstanding common shares of the Company and the transaction has been accounted for as a reverse merger, where Mobile Dynamic is
deemed to be the acquirer for accounting purposes.
As part of the acquisition transaction, all assets and liabilities of Pub Crawl at the date of acquisition were assumed by the former
management.
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Table of Contents
PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
4.
Acquisition of Career Start, Inc.
On July 13, 2013, the Company entered into a share purchase agreement with Career and the shareholders of all of the issued and
outstanding common shares of Career. The Company acquired 100% of the issued and outstanding shares of Career in exchange for
47,142,858 common shares of the Company. Following the close of the share exchange agreement, there are 196,198,413 common
shares outstanding, of which the former shareholders of Career will control approximately 47,142,858 common shares, or 24% of the
total issued and outstanding common shares of the Company. As a result, Career becomes a wholly-owned subsidiary of the Company.
The Company and Career are related parties, and the acquisition of the net assets was carried at cost.
The common shares issued to the Career shareholders were determined to have a fair value of $297,000. The purchase price allocation
allocated to the following assets and liabilities:
$
Fair value of Career Start net assets – at cost
Cash
Accounts receivable
Accounts payable and accrued liabilities
Due to a related party
43,000
176,615
(121,349)
(100)
Net assets on acquisition
Purchase price (47,142,858 common shares)
98,166
297,000
Excess of purchase price over net assets acquired
198,834
The fair value of the common shares over the cost of Career’s net assets as at July 13, 2013, has been allocated to additional paid-in
capital due to the related party nature of the transaction.
5.
Convertible Debentures
On December 6, 2012, the Company entered into a convertible promissory note agreement for $150,000. Pursuant to the agreement, the
loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible into common shares at
a conversion price equal to 25% of the average of the three lowest closing prices for the Company’s common shares in the ten trading
days prior to conversion, at the option of the note holder, commencing on December 6, 2012.
In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the intrinsic
value of the embedded beneficial conversion feature of $150,000. During the period ended September 30, 2013, the Company recorded
accretion expense of $11,919.
6.
Derivative Liabilities
As at September 30, 2013 and December 31, 2012, the following are the fair value of the derivative to account for the convertibility
feature of the convertible debenture as well as the fact that there is no lower limit on the number of issuable common shares upon
conversion:
September 30, December 31,
2013
2012
$
$
(unaudited)
664,397
395,285
Convertible promissory note, due December 5, 2014
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PUB CRAWL HOLDINGS INC.
Notes to the Consolidated Financial Statements
6.
Derivative Liabilities (continued)
During the period ended September 30, 2013, the Company recorded a loss on the fair value of the derivative liability of $269,112
(December 31, 2012 - $245,285). The fair value of the derivative financial liabilities was determined using the multinomial lattice
models and the following assumptions:
Expected
Risk-free
Volatility
Interest Rate
318%
0.25%
240%
0.10%
At December 6, 2012 (issuance date)
At September 30, 2013
7.
Expected
Dividend Expected Life
Yield
(in years)
0%
2.00
0%
1.18
Related Party Transactions
a)
During the period ended September 30, 2013, the Company incurred payroll expense of $84,600 (2012 - $nil) to management and
officers of the Company.
b)
During the period ended September 30, 2013, the Company acquired the net assets of Career Start Inc., a related company. Refer to
Note 4 of the financial statements.
8.
Loan Payable
As of September 30, 2013, the Company had $100 owed to a shareholder of the Company, which is non-interest bearing, unsecured, and
due on demand.
9.
Common Shares
a) On November 6, 2012, the Company issued 1,000,000 founders share with a fair value of $1,000 to management and directors of the
Company. The amounts have been recorded as contributed capital. Upon the reverse merger as described in Note 7b), these amounts
have been recorded to additional paid-in capital.
b) On November 28, 2012, the Company acquired 100% of the members shares of Mobile Dynamic Marketing, Inc. in exchange for
the issuance of 10,000,000 common shares. As part of the acquisition, the Company cancelled 150,000,000 issued and outstanding
common shares held by the former President and Director of the Company and 1,000,000 founders’ shares held by the management
and directors of Mobile Dynamic.
c) On May 7, 2013, the Company issued 10,000,000 common shares at $0.0075 per share for proceeds of $75,000.
d) On June 10, 2013, the Company issued 5,555,555 common shares at $0.009 per share for proceeds of $50,000.
e) On July 13, 2013, the Company issued 47,142,858 common shares with a fair value of $297,000 for the acquisition of Career, as
noted in Note 4.
f) On July 17, 2013, the Company issued 8,000,000 common shares at $0.0032 per share for proceeds of $25,200.
10.
Subsequent Events
In accordance with ASC 855, we have evaluated subsequent events through the date of issuance of the financial statements, and did not
have any material recognizable subsequent events.
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Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking
statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the
use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or
continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should
consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although
we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those
expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking
statements for any reason.
RESULTS OF OPERATIONS
On July 19, 2013, we acquired all of the issued and outstanding shares of common stock of Career Start, Inc., a Florida
corporation, in consideration of 47,142,957 restricted shares of our common stock. Career Start, Inc. is a full service human
resources firm that provides numerous services, including P.E.O., staffing, employee leasing, and payroll. Career Start works
with governmental and charitable entities on a federal, state and local level to supplement its business. Our current website is
www.careerstartinc.com.
Working Capital
September 30, December 31,
2013
2012
$
$
287,428
103,266
859,228
415,626
(571,800)
(312,360)
Current Assets
Current Liabilities
Working Capital (Deficit)
Cash Flows
September 30, September 30,
2013
2012
$
$
(239,170)
N/A
43,000
N/A
150,200
N/A
(45,970)
N/A
Cash Flows from (used in) Operating Activities
Cash Flows from (used in) Investing Activities
Cash Flows from (used in) Financing Activities
Net Increase (decrease) in Cash During Period
Operating Revenues
During the three months ended September 30, 2013, the Company earned revenues of $2,140,239 and gross profit of $345,368
from contracting and consulting services.
During the nine months ended September 30, 2013, the Company earned revenues of $2,190,239 and gross profit of $395,368
from contracting and consulting services.
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Operating Expenses and Net Loss
During the three months ended September 30, 2013, the Company recorded operating expenses of $353,703. Operating expenses
were comprised of $158,588 for payroll costs incurred for management and head office salaries, $142,407 for general and
administrative expenses relating to overhead costs incurred for the Company’s head office and business operations, $22,290 for
consulting expenses, and $30,298 for professional fees relating to accounting, audit, and legal fees incurred for the Company’s
SEC filings.
During the nine months ended September 30, 2013, the Company recorded operating expenses of $622,843. Operating expenses
were comprised of $249,725 for payroll costs incurred for management and head office salaries, $263,959 for general and
administrative expenses relating to overhead costs incurred for the Company’s head office and business operations, $25,796 for
consulting expenses, and $83,003 for professional fees relating to accounting, audit, and legal fees incurred for the Company’s
SEC filings.
For the three months ended September 30, 2013, the Company had a net income of $32,793 and basic and diluted net income per
share of $nil. In addition to operating expenses, the Company also incurred a gain of $50,988 for the change in fair value of
derivative liabilities relating to the floating conversion price of its’ convertible debenture, and interest expense of $9,860 relating
to interest charges incurred on its’ convertible debenture.
For the nine months ended September 30, 2013, the Company had a net loss of $519,725 and loss per share of $nil. In addition to
operating expenses, the Company also incurred a loss of $269,112 for the change in fair value of derivative liabilities relating to
the floating conversion price of its’ convertible debenture, and interest expense of $23,138 relating to interest charges incurred on
its’ convertible debenture.
Liquidity and Capital Resources
As at September 30, 2013, the Company had a cash balance of $57,271 and asset total of $287,428 compared with $103,241 of
cash and total assets of $103,266 as at December 31, 2012. The decrease in cash is due to the fact that the Company has incurred
more cash for operating activities relating to overhead costs relating to the business operations of the Company and its whollyowned subsidiary. The increase in total assets is due to the acquisition of Career Start, Inc. including accounts receivable of
$226,047.
The overall working capital deficit increased from $312,360 at December 31, 2012 to $571,800 at September 30, 2013 due in part
to the fact that the Company had a higher value of derivative liability relating to the fair value of the floating conversion price of
the convertible debenture.
During the nine months ended September 30, 2013, the Company raised $150,200 from the issuance of 23,555,555 common
shares, and also issued 47,142,858 common shares for the acquisition of Career Start, Inc., the Company’s wholly-owned
subsidiary.
Cashflow from Operating Activities
During the nine months ended September 30, 2013, the Company used $239,170 of cash for operating activities, which is
reflective of the cash used for day-to-day business operations which included the operations of the Company and its wholly-owned
subsidiary, Career Start Inc.
Cashflow from Investing Activities
During the nine months ended September 30, 2013, the Company received cash of $43,000 from the acquisition of Career Start,
Inc.
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Table of Contents
Cashflow from Financing Activities
During the nine months ended September 30, 2013, the Company received cash of $150,200 from the issuance of common shares.
Convertible Promissory Note
On December 6, 2012, the Company entered into a convertible promissory note agreement for $150,000. Pursuant to the
agreement, the loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible
into common shares at a conversion price equal to 25% of the average of the three
lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note
holder, commencing on December 6, 2012.
In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the
intrinsic value of the embedded beneficial conversion feature of $150,000. During the period ended September 30, 2013, the
Company recorded accretion expense of $11,919.
Critical Accounting Policies and Estimates
We prepared our financial statements and the accompanying notes in conformity with accounting principles generally accepted in
the United States of America, which require management to make estimates and assumptions about future events that affect the
reported amounts in the financial statements and the accompanying notes. We identified certain accounting policies as critical
based on, among other things, their impact on the portrayal of our financial condition, results of operations, or liquidity and the
degree of difficulty, subjectivity, and complexity in their deployment. Critical accounting policies cover accounting matters that
are inherently uncertain because the future resolution of such matters is unknown. Management routinely discusses the
development, selection, and disclosure of each of the critical accounting policies. The following is a discussion of our most critical
accounting policies:
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly
evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its
estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and
the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company
may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the
estimates and the actual results, future results of operations will be affected.
Financial Instruments
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820
prioritizes the inputs into three levels that may be used to measure fair value:
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Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset
or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or
liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations
in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are
significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities,
and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist
of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments
approximate their current fair values because of their nature and respective maturity dates or durations.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to
provide the information under this item.
ITEM 4.
CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal
Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act
Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and
Principal Financial Officer have concluded that these disclosure controls and procedures are not effective.
Management’s assessment identified several material weaknesses in our internal control over financial reporting. These material
weaknesses include the following:
- Insufficient number of qualified accounting personnel governing the financial close and reporting process
- Lack of proper segregation of duties
There was no change in our internal control over financial reporting during the quarter ended September 30, 2013 that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Table of Contents
PART II - OTHER INFORMATION.
ITEM 1A.
RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to
provide the information under this item.
ITEM 5.
OTHER INFORMATION.
On July 19, 2013, we acquired all of the issued and outstanding shares of common stock of Career Start, Inc., a Florida
corporation, in consideration of 47,142,957 restricted shares of our common stock. Career Start, Inc. is a full service human
resources firm that provides numerous services, including P.E.O., staffing, employee leasing, and payroll. Career Start works
with governmental and charitable entities on a federal, state and local level to supplement its business. Our current website is
www.careerstartinc.com. The foregoing shares of common stock were issued pursuant to exemption from registration contained
in section 4(a)(2) of the Securities Act of 1933, as amended.
ITEM 6.
EXHIBITS.
Exhibit
Number Document Description
Incorporated by reference
Filed
Form
Date Number Herewith
2.1
Exchange Agreement between Pub Crawl Holdings, Inc.
and Mobile Dynamic Marketing, Inc.
2.2
Exchange Agreement between Pub Crawl Holdings, Inc.
and Career Start, Inc.
3.1
Articles of Incorporation - Pub Crawl
3.2
Articles of Incorporation - Mobile Dynamic Marketing, Inc.
3.3
8-K
1/30/13
2.1
X
S-1
10/07/10
3.1
10-K/A
4/16/13
3.2
Bylaws - Pub Crawl Holdings, Inc.
S-1
10/07/10
3.2
3.4
Bylaws - Mobile Dynamic Marketing, Inc.
S-1
6/14/13
3.4
10.1
Assignment Agreement between the Company, Peter
Kremer, and PBPubCrawl.com, LLC dated June 14, 2010
S-1
10/07/10
10.1
10.2
Form of Management Agreement between the Company
and Peter Kremer dated June 22, 2010
S-1
10/07/10
10.2
10.3
Promissory Note between the Company and Sun Valley
Investments dated August 5, 2010
S-1
10/07/10
10.3
10.4
Consulting Agreement between the Company and Voltaire
Gomez dated September 23, 2010
S-1
10/07/10
10.4
10.5
Settlement Agreement between the Company and Sun
Valley Investments dated May 25, 2012
8-K
08/11/11
10.1
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10.6
Promissory Note between the Company and Deville
Enterprises, Inc. dated June 1, 2012
8-K
08/11/11
10.2
14.1
Code of Ethics
S-1
10/07/10
14.1
21.1
List of Subsidiaries
S-1
6/14/13
21.1
31.1
Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
X
Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
X
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
X
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
X
31.2
32.1
32.2
101.INS XBRL Instance Document.
X
101.SCHXBRL Taxonomy Extension – Schema.
X
101.CALXBRL Taxonomy Extension – Calculations.
X
101.DEF XBRL Taxonomy Extension – Definitions.
X
101.LABXBRL Taxonomy Extension – Labels.
X
101.PRE XBRL Taxonomy Extension – Presentation.
X
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized on this 19th day of November, 2013.
EXCELSIS INVESTMENTS, INC.
Formerly, Pub Crawl Holdings Inc.
BY:
BRIAN MCFADDEN
Brian McFadden
Principal Executive Officer and Director
BY:
MICHELLE PANNONI
Michelle Pannoni
Principal Financial Officer, Principal Accounting
Officer and Treasurer
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EXHIBIT INDEX
Exhibit
Number Document Description
Incorporated by reference
Filed
Form
Date Number Herewith
2.1
Exchange Agreement between Pub Crawl Holdings,
Inc. and Mobile Dynamic Marketing, Inc.
8-K
2.2
Exchange Agreement between Pub Crawl Holdings, Inc.
and Career Start, Inc.
3.1
Articles of Incorporation - Pub Crawl
3.2
Articles of Incorporation - Mobile Dynamic Marketing, Inc.
3.3
1/30/13
2.1
X
S-1
10/07/10
3.1
10-K/A
4/16/13
3.2
Bylaws - Pub Crawl Holdings, Inc.
S-1
10/07/10
3.2
3.4
Bylaws - Mobile Dynamic Marketing, Inc.
S-1
6/14/13
3.4
10.1
Assignment Agreement between the Company, Peter
Kremer, and PBPubCrawl.com, LLC dated June 14, 2010
S-1
10/07/10
10.1
10.2
Form of Management Agreement between the
Company and Peter Kremer dated June 22, 2010
S-1
10/07/10
10.2
10.3
Promissory Note between the Company and Sun
Valley Investments dated August 5, 2010
S-1
10/07/10
10.3
10.4
Consulting Agreement between the Company and
Voltaire Gomez dated September 23, 2010
S-1
10/07/10
10.4
10.5
Settlement Agreement between the Company and Sun
Valley Investments dated May 25, 2012
8-K
08/11/11
10.1
10.6
Promissory Note between the Company and Deville
Enterprises, Inc. dated June 1, 2012
8-K
08/11/11
10.2
14.1
Code of Ethics
S-1
10/07/10
14.1
21.1
List of Subsidiaries
S-1
6/14/13
21.1
31.1
Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
X
Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
X
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
X
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
X
31.2
32.1
32.2
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Table of Contents
101.INS XBRL Instance Document.
X
101.SCHXBRL Taxonomy Extension – Schema.
X
101.CALXBRL Taxonomy Extension – Calculations.
X
101.DEF XBRL Taxonomy Extension – Definitions.
X
101.LABXBRL Taxonomy Extension – Labels.
X
101.PRE XBRL Taxonomy Extension – Presentation.
X
-19-
Exhibit 2.2
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement , dated July 13, 2013 (“Agreement”) by and among Career Start, Inc., a Florida Corporation(“CSI”), the
individuals holding 100% of the Shares in CSI (the “CSI Shareholders”), Pub Crawl Holdings, Inc., a Nevada corporation (“PBCW”), and
the majority stockholders of PBCW (the “PBCW Controlling Stockholder”).
WHEREAS, the CSI Majority Stockholders own 100% of the issued and outstanding ordinary shares of CSI;
WHEREAS, (i) the CSI Majority Stockholders and CSI believe it is in the best interests of CSI and its stockholders (the “ CSI
Shareholders”) to exchange 100% of the Shares of CSI (the “CSI Shares”) for 47, 142,858 newly-issued shares of common stock, $0.001 par
value per share, of PBCW (the “PBCW Common Stock”), as set forth on Schedule I hereto (the “PBCW Shares”), and (ii) PBCW believes it
is in its best interest and the best interest of its stockholders to acquire the CSI Interest in exchange for the PBCW Shares, all upon the terms
and subject to the conditions set forth in this Agreement (the “Share Exchange”); and
WHEREAS, it is the intention of the parties that: (i) the Share Exchange shall qualify as a tax-free reorganization under Section 368(a)(l)(B)
of the Internal Revenue Code of 1986, as amended (the “Code”); and (ii) the Share Exchange shall qualify as a transaction in securities
exempt from registration or qualification under the Securities Act of 1933, as amended and in effect on the date of this Agreement (the
“Securities Act”); and
NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the parties hereto agree as
follows:
ARTICLE I
EXCHANGE OF CSISHARES FOR PBCW SHARES
Section 1.1
Agreement to Exchange CSI Shares for PBCW Shares. On the Closing Date (as hereinafter defined) and upon the terms and
subject to the conditions set forth in this Agreement, the CSI Shareholders shall assign, transfer, convey and deliver the CSI Shares to PBCW.
In consideration and exchange for the CSI Shares, PBCW shall issue, transfer, convey and deliver the PBCW Shares to the CSI Shareholders.
Section 1.2 Closing and Actions at Closing. The closing of the Share Exchange (the “Closing”) shall take place remotely via the exchange
of documents and signatures on the day the conditions to closing set forth in Articles V and VI herein have been satisfied or waived, or at such
other time and date as the parties hereto shall agree in writing (the “Closing Date”).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PBCW
PBCW represents, warrants and agrees that all of the statements in the following subsections of this Article
II are true and complete as of the date hereof.
Section 2.1
·
Corporate Organization
PBCW is a corporation duly organized, validly existing and in good standing w1der the laws of Nevada, and has all requisite
corporate power and authority to own its properties and assets and governmental licenses, authorizations, consents and approvals to
conduct its business as now conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the
nature of its activities makes such qualification and being in good standing necessary, except where the failure to be so qualified and
in good standing will not have a Material Adverse Effect on the activities, business, operations, properties, assets, condition or
results of operation of PBCW. “ Material Adverse Effect ” means, when used with respect to PBCW, any event, occurrence, fact,
condition, change or effect, which, individually or in the aggregate, would reasonably be expected to be materially adverse to the
business, operations, properties, assets, condition (financial or otherwise), or operating results of
PBCW, or materially impair the ability of PBCW to perform its obligations under this Agreement, excluding any change, effect or
circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this
Agreement, or (ii) changes in the United States securities markets generally.
B.
Copies of the articles of incorporation and by-laws of PBCW with all amendments thereto, as of the date hereof (the “ PBCW
Charter Documents”), have been furnished to the CSI Shareholders and to CSI, and such copies are accurate and complete as of the date
hereof. The minute books of PBCW are current as required by law, contain the minutes of all meetings of the PBCW Board and stockholders
of PBCW from its date of incorporation to the date of this Agreement, and adequately reflect all material actions taken by the PBCW Board
and stockholders of PBCW. PBCW is not in violation of any of the provisions of the PBCW Charter Documents.
Section 2.2
Capitalization of PBCW.
A.
The authorized capital stock of the Company immediately prior to this Share Exchange consists of 750,000,000 shares of Common
Stock, $0.001 par value, of which 141,055,555 shares of Common Stock are issued and outstanding and 500,000,000 shares of Preferred
Stock, $0.001 par value, of which none are issued and outstanding.
B.
All of the issued and outstanding shares of Common Stock of PBCW immediately prior to this Share Exchange are, and all shares of
Common Stock of PBCW when issued in accordance with the terms hereof will be, duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all applicable U.S. federal and state securities laws and state corporate laws, and have been
issued free of preemptive rights of any security holder. Except with respect to securities to be issued in connection with the Private Placement
and to the CSI Shareholders pursuant to the terms hereof, as of the date of this Agreement there are no outstanding or authorized options,
warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire or
receive any shares of PBCW’s capital stock, nor are there or will there be any outstanding or authorized stock appreciation, phantom stock,
profit participation or similar rights, preemptive rights or rights of first refusal with respect to PBCW or any Common Stock, or any voting
trusts, proxies or other agreements, understandings or restrictions with respect to the voting of PBCW’s capital stock. There are no registration
or anti-dilution rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to which PBCW
is a party or by which it is bound with respect to any equity security of any class of PBCW. PBCW is not a party to, and it has no knowledge
of, any agreement restricting the transfer of any shares of the capital stock of PBCW. The issuance of all of the shares of PBCW described in
this Section 2.2 have been, or will be, as applicable, in compliance with U.S. federal and state securities laws and state corporate laws and no
stockholder of PBCW has any right to rescind or bring any other claim against PBCW for failure to comply with the Securities Act of 1933, as
amended (the “Securities Act”), or state securities laws.
C.
There are no outstanding contractual obligations (contingent or otherwise) of PBCW to retire, repurchase, redeem or otherwise
acquire any outstanding shares of capital stock of, or other ownership interests in, PBCW or to provide funds to or make any investment (in
the form of a loan, capital contribution or otherwise) in any other person.
Section 2.3 Subsidiaries and Equity Investments. PBCW does not directly or indirectly own any capital stock or other securities of, or any
beneficial ownership interest in, or hold any equity or similar interest, or have any investment in any corporation, limited liability company,
partnership, limited partnership, joint venture or other company, person or other entity other than Mobile Dynamic Marketing, Inc. and PB
PubCrawl.com. LLC.
Section 2.4 Authorization. Validity and Enforceability of Agreements. PBCW has all corporate power and authority to execute and deliver
this Agreement and all agreements, instruments and other documents to be executed and delivered in connection with the transactions
contemplated by this Agreement to perform its obligations hereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement by PBCW and the consummation by PBCW of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action of PBCW, and no other corporate proceedings on the part of PBCW are
necessary to authorize this Agreement or to consummate the transactions contemplated hereby and thereby. This Agreement constitutes the
valid and legally binding obligation of PBCW and is enforceable in accordance with its terms, except as such enforcement may be limited by
general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally.
PBCW does not need to give any notice to, make any filings with, or obtain any authorization, consent or approval of any government or
governmental agency or other person in order for it to consummate the transactions contemplated by this Agreement, other than filings that
may be required or permitted under states securities laws, the Securities Act and/or the Exchange Act resulting
from the issuance of the PBCW Shares or in connection with the Share Exchange.
Section 2.5 No Conflict or Violation. Neither the execution and delivery of this Agreement by PBCW, nor the consummation by PBCW of
the transactions contemplated hereby will: (i) contravene, conflict with, or violate any provision of the PBCW Charter Documents; (ii) violate
any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government,
governmental agency, court, administrative panel or other tribunal to which PBCW is subject, (iii) conflict with, result in a breach of,
constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract,
lease, license, instrument or other arrangement to which PBCW is a party or by which it is bound, or to which any of its assets or properties are
subject; or (iv) result in or require the creation or imposition of any encumbrance of any nature upon or with respect to any of PBCW’s assets,
including without limitation the PBCW Shares.
Section 2.6 Agreements. Except as disclosed on documents filed with the Securities and Exchange Commission (the “Commission”), PBCW
is not a party to or bound by any contracts, including, but not limited to, any:
A.
employment, advisory or consulting contract;
B.
plan providing for employee benefits of any nature, including any severance payments;
C.
lease with respect to any property or equipment;
D.
contract, agreement, understanding or commitment for any future expenditure in excess of $5,000 in the aggregate;
E.
contract or commitment pursuant to which it has assumed, guaranteed, endorsed, or otherwise become liable for any obligation of any
other person, entity or organization; or
F.
agreement with any person relating to the dividend, purchase or sale of securities, that has not been settled by the delivery or payment
of securities when due, and which remains unsettled upon the date of this Agreement, except with respect to the PBCW Shares or the securities
to be issued pursuant to the Securities Purchase Agreement.
PBCW has provided to CSI and the CSI Shareholders, prior to the date of this Agreement, true, correct and complete copies of each contract
(whether written or oral), including each amendment, supplement and modification thereto (the “PBCW Contracts’’). The Company shall
satisfy all liabilities due under the PBCW Contracts as of the date of Closing. All such liabilities shall be satisfied or released at or prior to
Closing. Any amounts accrued post Closing shall be the sole responsibility of CSI.
Section 2.7
Litigation. There is no action, suit, proceeding or investigation (“Action”) pending or, to the knowledge of PBCW, currently
threatened against PBCW or any of its affiliates, that may affect the validity of this Agreement or the right of PBCW to enter into this
Agreement or to consummate the transactions contemplated hereby or thereby. There is no Action pending or, to the knowledge of PBCW,
currently threatened against PBCW or any of its affiliates, before any court or by or before any governmental body or any arbitration board or
tribunal, nor is there any judgment, decree, injunction or order of any court, governmental department, commission, agency, instrumentality or
arbitrator against PBCW or any of its affiliates, with the exception of a lawsuit filed by George Sharp relating to Violation of Restrictions on
Unsolicited Commercial Email Advertisers. Neither PBCW nor any of its affiliates is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or instrumentality. There is no Action by PBCW or any of its affiliates
relating to PBCW currently pending or which PBCW or any of its affiliates intends to initiate.
Section 2.8 Compliance with Laws. PBCW has been and is in compliance with, and has not received any notice of any violation of any,
applicable law, order, ordinance, regulation or rule of any kind whatsoever, including without limitation the Securities Act, the Exchange Act,
the applicable rules and regulations of the SEC or the applicable securities laws and rules and regulations of any state.
Section 2.9
Financial Statements: SEC Filings.
A.
PBCW’s financial statements (the “Financial Statements”) contained in its periodic reports filed with the SEC have been prepared in
accordance with generally accepted accounting principles applicable in the United States of America (“U.S. GAAP”) applied on a consistent
basis throughout the periods indicated, except that those Financial Statements that are not audited do not contain all footnotes required by U.S.
GAAP. The Financial Statements fairly present the financial condition and operating results of PBCW as of the dates, and for the periods,
indicated therein, subject to normal year-end audit adjustments. PBCW has no material liabilities (contingent or otherwise). PBCW is not a
guarantor or indemnitor of any indebtedness of any other person, entity or organization. PBCW maintains a standard system of accounting
established and administered in accordance with U.S. GAAP.
B.
PBCW has timely made all filings with the SEC that it has been required to make under the Securities Act and the Exchange Act (the
“Public Reports”). Each of the Public Reports has complied in all material respects with the applicable provisions of the Securities Act, the
Exchange Act, and the Sarbanes/Oxley Act of2002 (the “ Sarbanes/Oxley Act ”) and/or regulations promulgated there under. None of the
Public Reports, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary to
make the statements made therein not misleading. There is no event, fact or circumstance that would cause any certification signed by any
officer of PBCW in connection with any Public Report pursuant to the Sarbanes/Oxley Act to be untrue, inaccurate or incorrect in any respect.
There is no revocation order, suspension order, injunction or other proceeding or law affecting the trading of PBCW’s Common Stock, it
being acknowledged that none of PBCW’s securities are approved or listed for trading on any exchange or quotation system.
Section 2.10 Books, Financial Records and Internal Controls. All the accounts, books, registers, ledgers, PBCW Board minutes and financial
and other records of whatsoever kind of PBCW have been fully, properly and accurately kept and completed; there are no material
inaccuracies or discrepancies of any kind contained or reflected therein; and they give and reflect a true and fair view of the financial,
contractual and legal position of PBCW. PBCW maintains a system of internal accounting controls sufficient, in the judgment of PBCW, to
provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions are taken with respect to any
differences.
Section 2.11 Employee Benefit Plans. PBCW does not have any “Employee Benefit Plan” as defined in the U.S. Employee Retirement
Income Security Act of 1974 or similar plans under any applicable laws.
Section 2.12 Tax Returns. Payments and Elections . PBCW has filed Tax (as defined below) returns, statements, reports, declarations and
other forms and documents (including, without limitation, estimated tax returns and reports and material information returns and reports)
(“Tax Returns”) required pursuant to applicable law to be filed with any Tax Authority (as defined below) with the exception of the
completion of2013 filings. All such Tax Returns are accurate, complete and correct in all material respects, and PBCW has timely paid all
Taxes due and adequate provisions have been and are reflected in PBCW’s Financial Statements for all current taxes and other charges to
which PBCW is subject and which are not currently due and payable with the exception of 2013 filings. None of PBCW’s federal income tax
returns have been audited by the Internal Revenue Service. PBCW has no knowledge of any additional assessments, adjustments or contingent
tax liability (whether federal or state) of any nature whatsoever, whether pending or threatened against the PBCW for any period, nor of any
basis for any such assessment, adjustment or contingency. For purposes of this Agreement, the following terms have the following meanings:
“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any and all taxes including, without limitation, (x) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, value added, net worth,
license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax,
custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any addition to tax or
additional amount imposed by any United States, local or foreign governmental authority or regulatory body responsible for the imposition of
any such tax (domestic or foreign) (a “Tax Authority ”), (y) any liability for the payment of any amounts of the type described in (x) as a
result of being a member of an affiliated, consolidated, combined or unitary group for any taxable period or as the result of being a transferee
or successor thereof, and (z) any liability for the payment of any amounts of the type described in (x) or (y) as a result of any express or
implied obligation to indemnify any other person.
Section 2.13 No Debt Obligations. Upon the Closing Date, PBCW will have no debt, obligations or liabilities of any kind whatsoever other
than with respect to the transactions contemplated hereby and those disclosed in public filings. PBCW is not a guarantor of any indebtedness
of any other person, entity or corporation except as disclosed in public filings.
Section 2.14 No Broker Fees. No brokers, finders or financial advisory fees or commissions will be payable by or to PBCW or any of their
affiliates with respect to the transactions contemplated by this Agreement.
Section 2.15 No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or anticipated by
PBCW to arise, between PBCW and any accountants and/or lawyers formerly or presently engaged by PBCW. PBCW is current with respect
to fees owed to its accountants and lawyers.
Section 2.16 Disclosure. This Agreement and any certificate attached hereto or delivered in accordance with the terms hereby by or on behalf
of PBCW in connection with the transactions contemplated by this Agreement do not contain any untrue statement of a material fact or omit
any material fact necessary in order to make the statements contained herein and/or therein not misleading.
Section 2.17 Absence of Undisclosed Liabilities. Since the date of the filing of its quarterly report on Form 10-Q for the quarter ended March
30,2013, except as specifically disclosed in the Public Reports: (A) there has been no event, occurrence or development that has resulted in or
could result in a Material Adverse Effect; (B) PBCW has not incurred any liabilities, obligations, claims or losses, contingent or otherwise,
including debt obligations, other than professional fees; (C) PBCW has not declared or made any dividend or distribution of cash or property
to its shareholders, purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, or issued any equity
securities other than with respect to transactions contemplated hereby; (D) PBCW has not made any loan, advance or capital contribution to or
investment in any person or entity; (E) PBCW has not discharged or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary course of business; (F) PBCW has not suffered any substantial
losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of
prospective business; and (G) except for the Share Exchange, PBCW has not entered into any other transaction other than in the ordinary
course of business, or entered into any other material transaction, whether or not in the ordinary course of business.
Section 2.18 No Integrated Offering. PBCW has one current registration statement pending before the Commission or currently under the
Commission’s review and since the Closing Date, except as contemplated under this Agreement, PBCW has not offered or sold any of its
equity securities or debt securities convertible into shares of Common Stock.
Section 2.19 Employees.
A.
PBCW has no employees.
B.
Other than Michelle Pannoni and Brian McFadden, PBCW does not have any officers or directors. No director or officer of PBCW is
a party to, or is otherwise bound by, any contract (including any confidentiality, non-competition or proprietary rights agreement) with any
other person that in any way adversely affects or will materially affect (a) the performance of her duties as a director or officer of PBCW or
(b) the ability of PBCW to conduct its business.
Section 2.20 No Undisclosed Events or Circumstances. No event or circumstance has occurred or exists with respect to PBCW or its
respective businesses, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by PBCW but which has not been so publicly announced or disclosed. PBCW has not provided to CSI, or the CSI
Shareholders, any material non-public information or other information which, according to applicable law, rule or regulation, was required to
have been disclosed publicly by PBCW but which has not been so disclosed, other than with respect to the transactions contemplated by this
Agreement and/or the Private Placement.
Section 2.21 Disclosure. This Agreement and any certificate attached hereto or delivered in accordance with the terms hereof by or on behalf
of PBCW or any of the PBCW Controlling Stockholders in connection with the transactions contemplated by this Agreement, when taken
together, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
contained herein and/or therein not misleading.
Section 2.22 No Assets or Real Property. Except as set forth on the most recent Financial Statements, PBCW does not have any assets of any
kind. PBCW does not own or lease any real property.
Section 2.23 Interested Party Transactions. Except as disclosed on Schedule 2.23 and in Commission filings, no officer, director or
shareholder of PBCW or any affiliate or “associate” (as such term is defined in Rule 405 of the Commission under
the Securities Act) of any such person or entity, has or has had, either directly or indirectly, (a) an interest in any person or entity which (i)
furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by PBCW, or (ii) purchases from or
sells or furnishes to, or proposes to purchase from, sell to or furnish PBCW any goods or services; or (b) a beneficial interest in any contract or
agreement to which PBCW is a party or by which it may be bound or affected.
Section 2.24 Intellectual Property. Except as in documents filed with the Commission, PBCW does not own, use or license any intellectual
property in its business as presently conducted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSI
CSI represents, warrants and agrees that all of the statements in the following subsections of this Article III, pertaining to CSI, are true and
complete as of the date hereof.
Section 3.1 Incorporation. CSI is a company duly incorporated, validly existing, and in good standing under the laws of the State of Florida
and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry
on its business in all material respects as it is now being conducted. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any provision of CSI’s Articles of Incorporation or bylaws. CSI has
taken all actions required by law, its Articles of Incorporation or bylaws, or otherwise to authorize the execution and delivery of this
Agreement. CSI has full power, authority, and legal capacity and has taken all action required by law, its Articles of Incorporation or bylaws,
and otherwise to consummate the transactions herein contemplated.
Section 3.2 Authorized Shares. The number of Common shares which CSI is authorized to issue is 750,000,000 with a par value of 0.001.
The number of Preferred shares which CSI is authorized to issue is 500,000,000 with a par value of 0.001. There are 1,000,000 shares of
common stock issued and outstanding and no shares of Preferred shares issued and outstanding. The issued and outstanding shares are validly
issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.
Section 3.3 Subsidiaries and Predecessor Corporations. CSI does not directly or indirectly own any capital stock or other securities of, or
any beneficial ownership interest in, or hold any equity or similar interest, or have any investment in any corporation, limited liability
company, partnership, limited partnership, joint venture or other company, person or other entity.
Section 3.4 Financial Statements. CSI has kept all books and records since inception and such audited financial statements have been
prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved. The balance sheets
are true and accurate and present fairly as of their respective dates the financial condition of CSI. As of the date of such balance sheets, except
as and to the extent reflected or reserved against therein, CSI had no liabilities or obligations (absolute or contingent) which should be
reflected in the balance sheets or the notes thereto prepared in accordance with generally accepted accounting principles, and all assets
reflected therein are properly reported and present fairly the value of the assets of CSI, in accordance with generally accepted accounting
principles. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by
generally accepted accounting principles.
CSI has duly and punctually paid all Governmental fees and taxation which it has become liable to pay and has duly allowed for all taxation
reasonably foreseeable and is under no liability to pay any penalty or interest in connection with any claim for governmental fees or taxation
and CSI has made any and all proper declarations and returns for taxation purposes and all information contained in such declarations and
returns is true and complete and full provision or reserves have been made in its financial statements for all Governmental fees and taxation.
The books and records, financial and otherwise, of CSI are, in all material aspects, complete and correct and have been maintained in
accordance with good business and accounting practices.
All of CSI’s assets are reflected on its financial statements, and CSI has no material liabilities, direct or indirect, matured or unmatured,
contingent or otherwise.
Section 3.5 Information. The information concerning CSI set forth in this Agreement is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 3.6 Absence of Certain Changes or Events. Since July 13, 2013 (a) there has not been any material adverse change in the business,
operations, properties, assets, or condition (financial or otherwise) of CSI; and (b) CSI has not (i) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its shares; (ii) made any material change in its method of management, operation or accounting, (iii) entered into
any other material transaction other than sales in the ordinary course of its business; or (iv) made any increase in or adoption of any profit
sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for,
or with its officers, directors, or employees; and
Section 3.7 Litigation and Proceedings. There are no actions, suits, proceedings, or investigations pending or, to the knowledge of CSI after
reasonable investigation, threatened by or against CSI or affecting CSI or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. CSI does not have any knowledge of any
material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality or of any circumstances
Section 3.8 No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated
by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the
terms of any indenture, mortgage, deed of trust, or other material agreement, or instrument to which CSI is a party or to which any of its assets,
properties or operations are subject.
Section 3.9
Compliance With Laws and Regulations. To the best of its knowledge, CSI has complied with all applicable statutes and
regulations of any federal, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially
and adversely affect the business, operations, properties, assets, or condition of CSI or except to the extent that noncompliance would not
result in the occurrence of any material liability for CSI. This compliance includes, but is not limited to, the filing of all reports to date with
federal and state securities authorities.
Section 3.10 Approval of Agreement. The Board of Directors of CSI has authorized the execution and delivery of this Agreement by CSI and
has approved this Agreement and the transactions contemplated hereby.
Section 3.11 Valid Obligation. This Agreement and all agreements and other documents executed by CSI in connection herewith constitute
the valid and binding obligation of CSI, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of
equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CSI SHAREHOLDERS
The CSI Shareholders hereby represents and warrants to PBCW:
Section 4.1 Authority. The CSI Shareholders have the right, power, authority and capacity to execute and deliver this Agreement to which
the CSI Shareholders are a party, to consummate the transactions contemplated by this Agreement to which the CSI Shareholders are a party,
and to perform the CSI Shareholders’ obligations under this Agreement to which the CSI Shareholders are a party. This Agreement has been
duly and validly authorized and approved, executed and delivered by the majority of CSI Shareholders. Assuming this Agreement has been
duly and validly authorized, executed and delivered by the parties thereto other than the CSI Shareholders, this Agreement is duly authorized,
executed and delivered by the CSI Shareholders and constitutes the legal, valid and binding obligation of the CSI Shareholders, enforceable
against the CSI Shareholders in accordance with their respective terms, except as such enforcement is limited by general equitable principles,
or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.
Section 4.2 No Conflict. Neither the execution or delivery by the CSI Shareholders of this Agreement to which the CSI Shareholders are a
party nor the consummation or performance by the CSI Shareholders of the transactions contemplated hereby or thereby will, directly or
indirectly, (a) contravene, conflict with, or result in a violation of any provision of the organizational documents of the CSI Shareholders (if
the CSI Shareholders are not a natural person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice
or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which
the CSI Shareholders are a party or by which the properties or assets of the CSI Shareholders are bound; or (c) contravene, conflict with, or
result in a violation of, any Law or Order to which the CSI
Shareholders, or any of the properties or assets of the CSI Shareholders, may be subject.
Section 4.3
Litigation. There is no pending Action against the CSI Shareholders that involves the CSI Shares or that challenges, or may
have the effect of preventing, delaying or making illegal, or otherwise interfering with, any of the transactions contemplated by this
Agreement or the business of CSI and, to the knowledge of the CSI Shareholders, no such Action has been threatened, and no event or
circumstance exists that is reasonably likely to give rise to or serve as a basis for the commencement of any such Action.
Section 4.4 Acknowledgment. The CSI Shareholders understand and agree that the PBCW Shares to be issued pursuant to this Agreement
have not been registered under the Securities Act or the securities laws of any state of the U.S. and that the issuance of the PBCW Shares is
being effected in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an
issuer not involving a public offering or Regulation D promulgated there under or Regulation S for offers and sales of securities outside the
U.S.
Section 4.5
Stock Legends. The CSI Shareholders hereby agrees with PBCW as follows:
A.
Securities Act Legend Accredited Investors. The certificates evidencing the PBCW Shares issued to the CSI Shareholders will bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (3) IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON
AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONADLY SATISFACTORY TO THE COMPANY, THAT
THE PROVISIONS OF REGULATIONS HAVE BEEN SATISFIED.
B .
Other Legends. The certificates representing such PBCW Shares, and each certificate issued in transfer thereof, will also bear any
other legend required under any applicable law, including, without limitation, any U.S. state corporate and state securities law, or contract.
C .
Opinion. The CSI Shareholders shall not transfer any or all of the PBCW Shares pursuant to Rule 144, under the Securities Act,
Regulation S or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition
of the PBCW Shares, without first providing PBCW with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the
PBCW) to the effect that such transfer will be made in compliance with Rule 144, under the Securities Act, Regulation S or will be exempt
from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any
applicable U.S. state securities laws.
Section 4.6 Ownership of Shares. The CSI Shareholders are the beneficial owners of the CSI Shares. The CSI Shareholders are not the
record or beneficial owner of any other interest in CSI. The CSI Shareholders have and shall transfer at the Closing, good and marketable title
to the CSI Shares, free and clear of all liens, claims, charges, encumbrances, pledges, mortgages, security interests, options, rights to acquire,
proxies, voting trusts or similar agreements, restrictions on transfer or adverse claims of any nature whatsoever, excepting only restrictions on
future transfers imposed by applicable law.
Section 4.7 Pre-emptive Rights. At Closing, no CSI Shareholders have any pre-emptive rights or any other rights to acquire any shares of
CSI that have not been waived or exercised.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF CSI AND THE CSI SHAREHOLDERS
The obligations of CSI and the CSI Shareholders to consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by CSI and the CSI
Shareholders at their sole discretion:
Section 5.1 Representations and Warranties of PBCW . All representations and warranties made by PBCW in this Agreement shall be true
and correct in all material respects on and as of the Closing Date, except insofar as the representations and warranties relate expressly and
solely to a particular date or period, in which case, subject to the limitations applicable to the particular date or period, they will be true and
correct in all material respects on and as of the Closing Date with respect to such date or period.
Section 5.2
Agreements and Covenants. PBCW shall have performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with on or prior to the Closing Date.
Section 5.3
Consents and Approvals. All consents, waivers, authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this
Agreement shall be in full force and effect on the Closing Date.
Section 5.4
No Violation of Orders . No preliminary or permanent injunction or other order issued by any court or governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any
government or governmental or regulatory authority, which declares this Agreement invalid in any respect or prevents the consummation of
the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or
financial condition of PBCW shall be in effect; and no action or proceeding before any court or governmental or regulatory authority, domestic
or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any
other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which
challenges the validity or enforceability of this Agreement
Section 5.5
Other Closing Documents. CSI shall have received such certificates, instruments and documents in confirmation of the
representations and warranties of PBCW, PBCW’s performance of its obligations hereunder, and/or in furtherance of the transactions
contemplated by this Agreement as the CSI Shareholders and/or their respective counsel may reasonably request.
Section 5.6
Documents. PBCW must have caused the following documents to be delivered to CSI and the CSI Shareholder:
A.
share certificates evidencing the PBCW Shares registered in the name of the CSI Shareholders;
B.
this Agreement is duly executed;
C.
such other documents as CSI may reasonably request for the purpose of (A) evidencing the accuracy of any of the representations
and warranties of PBCW, (B) evidencing the performance of, or compliance by PBCW with any covenant or obligation required to be
performed or complied with by PBCW, (C) evidencing the satisfaction of any condition referred to in this Article V, or (D) otherwise
facilitating the consummation or performance of any of the transactions contemplated by this Agreement.
Section 5.7 No Material Adverse Effect. There shall not have been any event, occurrence or development that has resulted in or could result
in a Material Adverse Effect on or with respect to PBCW.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PBCW
The obligations of PBCW to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be waived by PBCW in its sole discretion:
Section 6.1 Representations and Warranties of CSI and the CSI Shareholders . All representations and warranties made by CSI and the CSI
Shareholders on behalf of themselves individually in this Agreement shall be true and correct on and as of the Closing Date except insofar as
the representation and warranties relate expressly and solely to a particular date or period, in which case, subject to the limitations applicable
to the particular date or period, they will be true and correct in all material respects on and as of the Closing Date with respect to such date or
period.
Section 6.2 Agreements and Covenants. CSI and the CSI Shareholders shall have performed and complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied with by each of them on or prior to the Closing Date.
Section 6.3
Consents and Approvals. All consents, waivers, authorizations and approvals of any governmental or regulatory authority,
domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this
Agreement, shall have been duly obtained and shall be in full force and effect on the Closing Date.
Section 6.4 No Violation of Orders . No preliminary or permanent injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any
government or governmental or regulatory authority, domestic or foreign, that declares this Agreement invalid or unenforceable in any respect
or which prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties,
operations, prospects, net income or financial condition of CSI shall be in effect; and no action or proceeding before any court or government
or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory
authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.
Section 6.5
Other Closing Documents. PBCW shall have received such certificates, instruments and documents in confirmation of the
representations and warranties of CSI and the CSI Shareholders, the performance of CSI and the CSI Shareholders’ respective obligations
hereunder and/or in furtherance of the transactions contemplated by this Agreement as PBCW or its counsel may reasonably request.
Section 6.6
Documents. CSI and the CSI Shareholders must deliver to PBCW at the Closing:
·
share certificates evidencing the number of CSI Shares, along with executed share transfer forms transferring such CSI Shares
to PBCW;
·
this Agreement to which the CSI and the CST Shareholders is a party, duly executed;
·
such other documents as PBCW may reasonably request for the purpose of (A) evidencing the accuracy of any of the
representations and warranties of the CSI and the CSI Shareholders , (B) evidencing the performance of, or compliance by CSI
and the CSI Shareholders with, any covenant or obligation required to be performed or complied with by CSI and the CSI
Shareholders, as the case may be, (C) evidencing the satisfaction of any condition referred to in this Article VI, or (D)
otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.
Section 6.7 No Claim Regarding Stock Ownership or Consideration. There must not have been made or threatened by any Person, any claim
asserting that such Person (a) is the holder of, or has the right to acquire or to obtain beneficial ownership of the CSI Shares, or any other
stock, voting, equity, or ownership interest in, CSI, or (b) is entitled to all or any portion of the PBCW Shares.
ARTICLE VII
POST-CLOSING AGREEMENTS
Section 7.1
SEC Documents. From and after the Closing Date, in the event the SEC notifies PBCW of its intent to review any Public
Report filed prior to the Closing Date or PBCW receives any oral or written comments from the SEC with respect to any Public Report filed
prior to the Closing Date, PBCW shall promptly notify the PBCW Controlling Stockholders and the PBCW Controlling Stockholders shall
reasonably cooperate with PBCW in responding to any such oral or written comments.
ARTICLE VIII
INDEMNIFICATION
Section 8.1
Survival of Provisions. The respective representations, warranties, covenants and agreements of each of the parties to this
Agreement (except covenants and agreements which are expressly required to be performed and are performed in full on or before the Closing
Date) shall expire on the first day of the one-year anniversary of the Closing Date (the “Survival Period”). The right to indemnification,
payment of damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
Section 8.2
·
·
Indemnification.
Indemnification Obligations in favor of the Controlling Stockholders of PBCW. From and after the Closing Date until the
expiration of the Survival Period, CSI shall reimburse and hold harmless the PBCW Controlling Stockholder (each such person
and his heirs, executors, administrators, agents, successors and assigns is referred to herein as a “PBCW Indemnified Party”)
against and in respect of any and all damages, losses, settlement payments, in respect of deficiencies, liabilities, costs, expenses
and claims suffered, sustained, incurred or required to be paid by any PBCW Indemnified Party, and any and all actions, suits,
claims, or legal, administrative, arbitration, governmental or other procedures or investigation against any PBCW Indemnified
Party, which arises or results from a third party claim brought against a PBCW Indemnified Party to the extent based on a
breach of the representations and warranties with respect to the business, operations or assets of CSI. All claims of PBCW
pursuant to this Section 8.2 shall be brought by the PBCW Controlling Stockholders on behalf of PBCW and those Persons
who were stockholders of PBCW Company immediately prior to the Closing Date. In no event shall any such indemnification
payments exceed $100,000 in the aggregate from CSI. No claim for indemnification may be brought under this Section 8.2(a)
unless all claims for indemnification, in the aggregate, total more than $10,000.
Indemnification in favor of CSI and the CSI Shareholders. From and after the Closing Date until the expiration of the Survival
Period, the PBCW Controlling Stockholders will, severally and not jointly, indemnify and hold harmless CSI, the CSI Shareholders,
and their respective officers, directors, agents, attorneys and employees, and each person, if any, who controls or may “control”
(within the meaning of the Securities Act) any of the forgoing persons or entities (hereinafter referred to individually as a “CSI
Indemnified Person”) from and against any and all losses, costs, damages, liabilities and expenses arising from claims, demands,
actions, causes of action, including, without limitation, legal fees, (collectively, “Damages’’) arising out of any (i) any breach of
representation or warranty made by PBCW or the PBCW Controlling Stockholders in this Agreement, and in any certificate
delivered by PBCW or the PBCW Controlling Stockholders pursuant to this Agreement, (ii) any breach by PBCW or the PBCW
Controlling Stockholders of any covenant, obligation or other agreement made by PBCW or the PBCW Controlling Stockholders in
this Agreement, and (iii) a third-party claim based on any acts or omissions by PBCW or the PBCW Controlling Stockholders. In no
event shall any such indemnification payments exceed $100,000 in the aggregate from all PBCW Controlling Stockholders. No
claim for indemnification may be brought under this Section 8.2(b) unless all claims for indemnification, in the aggregate, total more
than $10,000.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Publicity. No party shall cause the publication of any press release or other announcement with respect to this Agreement or the
transactions contemplated hereby without the consent of the other parties, unless a press release or announcement is required by Jaw. If any
such announcement or other disclosure is required by law, the disclosing party agrees to give the non-disclosing parties prior notice and an
opportunity to comment on the proposed disclosure.
Section 9.2
Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and assigns; provided, however, that no party shall assign or delegate any of the obligations created under this
Agreement without the prior written consent of the other parties.
Section 9.3 Fees and Expenses. Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or
expenses.
Section 9.4 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have
been given or made if in writing and delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested) or
facsimile to the parties at the following addresses:
If to CSI or the CSI Shareholders, to:
Lindsay Taliento
412 Westside Drive
Rochester, NY 14624
Tel: 585-370-4303
Peter Schuster
140 Island Way #280
Clearwater, FL 33767
Tel: 727-479-5000
Danielle Pannoni
17337 Kennedy Drive
North Redington Beach, FL 33708
Tel: 585-831-3787
Allison Drogan
51 Woodhaven Drive
Rochester, NY 14625
Tel: 585-749-8563
If to PBCW or the PBCW Controlling Stockholders, to:
Pub Crawl Holdings, Inc.
c/o The Law Office of Conrad C. Lysiak, P.S.
601 West First Avenue
Suite 903
Spokane, Washington 99201
Tel: (509) 624-1475
or to such other persons or at such other addresses as shall be furnished by any party by like notice to the others, and such notice or
communication shall be deemed to have been given or made as of the date so delivered or mailed. No change in any of such addresses shall be
effective insofar as notices under this Section 9.4 are concerned unless such changed address is located in the United States of America and
notice of such change shall have been given to such other party hereto as provided in this Section 9.4.
Section 9.5 Entire Agreement. This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the
parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with this
Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith.
This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement. No
prior drafts of this Agreement and no words or phrases from any such prior drafts shall be admissible into evidence in any action or suit
involving this Agreement.
Section 9.6 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar
in terms to such invalid or unenforceable provision as may be possible so as to be valid and enforceable.
Section 9.7 Titles and Headings. The Article and Section headings contained in this Agreement are solely for convenience of reference and
shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof.
Section 9.8 Counterparts. This Agreement may be executed in two or more counterparts. each of which shall be deemed an original and all
of which together shall be considered one and the same agreement. Fax and PDF copies shall be considered originals for all purposes.
Section 9.9 Convenience of Forum: Consent to Jurisdiction. The parties to this Agreement, acting for themselves and for their respective
successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum
for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction
of, the courts of the State of Nevada, and/or the United States District Court for Nevada, in respect of any matter arising under this
Agreement. Service of process, notices and demands of such courts may be made upon any party to this Agreement by personal service at any
place where it may be found or giving notice to such party as provided in Section 9.4.
Section 9.10 Enforcement of the Agreement . The parties hereto agree that irreparable damage would occur if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions
hereto, this being in addition to any other remedy to which they are entitled at law or in equity.
Section 9.11 Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of
Nevada without giving effect to the choice of law provisions thereof.
Section 9.12 Amendments and Waivers. Except as otherwise provided herein, no amendment or waiver of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the parties hereto. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any
such prior or subsequent occurrence.
[REST OF PAGE DELIBERATELY LEFT BLANK]
[SIGNATURE PAGE TO SHARE EXCHANGE AGREEMENT)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
Career Start, Inc.
LINDSAY TALIENTO
Lindsay Taliento
PETER SCHUSTER
Peter Schuster
President/CEO/Director
Secretary/Treasurer/Director
DANIELLE PANNONI
Danielle Pannoni
ALLISON DROGAN
Allison Drogan
Vice President-Sales/Director
Director
PUB CRAWL HOLDINGS, INC.
BRIAN MCFADDEN
Name: Brian McFadden
Title: Chief Executive Officer
PBCW CONTROLLING STOCKHOLDERS
BRIAN MCFADDEN
Name: Brian McFadden
MICHELLE PANNONI
Michelle Pannoni
CSI SHAREHOLDERS – SCHEDULE I
LINDSAY TALIENTO
Lindsay Taliento
PETER SCHUSTER
Peter Schuster
DANIELLE PANNONI
Danielle Pannoni
ALLISON DROGAN
Allison Drogan
SCHEDULE I
CSI
SHARES HELD
PBCW Shares
To Be Issued
660,000
31,114,286
Peter Schuster
140 Island Way #280
Clearwater, FL 33767
Tel: 727-479-5000
150,000
7,071,429
Danielle Pannoni
1733 7 Kennedy Drive
North Redington Beach, FL 33708
Tel: 585-831-3787
140,000
6,600,000
Allison Drogan
51 Woodhaven Drive
Rochester, NY 14625
Tel: 585-749-8563
50,000
2,357,143
Name
Lindsay Taliento
412 Westside Drive
Rochester, NY 14624
Tel: 585-370-4303
Exhibit 31.1
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Brian McFadden, certify that:
1.
I have reviewed this Form 10-Q for the period ending September 30, 2013 of Pub Crawl Holdings, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
5.
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date:November 19, 2013
BRIAN MCFADDEN
Brian McFadden
Principal Executive Officer
Exhibit 31.2
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Michelle Pannoni, certify that:
1.
I have reviewed this Form 10-Q for the period ending September 30, 2013 of Pub Crawl Holdings, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
5.
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date:November 19, 2013
MICHELLE PANNONI
Michelle Pannoni
Principal Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pub Crawl Holdings, Inc. (the “Company”) on Form 10-Q for the
period ended September 30, 2013, as filed with the Securities and Exchange Commission on the date here of (the
“report”), I, Brian McFadden, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2)
The information contained in this Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Dated this 19 th day of November, 2013.
BRIAN MCFADDEN
Brian McFadden
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pub Crawl Holdings, Inc. (the “Company”) on Form 10-Q for the
period ended September 30, 2013, as filed with the Securities and Exchange Commission on the date here of (the
“report”), I, Michelle Pannoni, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2)
The information contained in this Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Dated this 19 th day of November, 2013.
MICHELLE PANNONI
Michelle Pannoni
Chief Financial Officer