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Stockholders' Equity
9 Months Ended
Sep. 30, 2018
Stockholders' Equity [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 13 – STOCKHOLDERS’ EQUITY

 

Preferred stock designated

 

On September 7, 2018, the Company filed with the State of Nevada a Certificate of Designation establishing the designations, preferences, limitations and relative rights of the Series A Preferred Stock (the “Designation”). The Designation authorized 10,000,000 shares of Series A Preferred Stock. Each share of Series A Preferred Stock shall be convertible into one (1) share of the Company’s common stock, at the option of the holder, on or after the date and subject to the conditions set forth in the Designation.

 

Common stock issued for services

 

During the nine months ended September 30, 2018, the Company has issued 426,870 shares as bonus to certain directors, employees and consultants for performance targets to be achieved for the year in 2018, and the Company has also issued 5,610 shares as salary and staff benefits. These shares were valued at the fair market value on the entitlement or grant date using the reported closing share price on the date of entitlement or grant. During the nine months ended September 30, 2018, the Company recorded stock-based compensation expense of $879,258 and prepaid expenses of $496,654 which will be amortized over the remaining service period. 

 

During the nine months ended September 30, 2018, pursuant to consulting and service agreements, the Company issued an aggregate of 3,422,120 shares of common stock to 94 consultants and vendors for the services rendered and to be rendered. These shares were valued at the fair market value on the grant date using the reported closing share price on the date of grant. As of September 30, 2018, in connection with the issuance of the shares to consultants and vendors, the Company recorded prepaid expenses of $7,159,087 which is being amortized over the respective service period.

 

Additionally, the Company issued/will issue an additional 1,595,025 share of common stock to 36 consultants and vendors as follows: 1,255,588 shares between October 2018 and December 2018; 339,437 shares during year 2019, provided that these agreements are not terminated prior to the issuance of such shares and subject to the approval and execution of the Plan of Compliance currently under review by the Nasdaq. The initial fair value of these shares was valued at the fair market value on the grant or contract date using the reported closing share price on the date of contract or grant. The Company will recognize stock-based professional fees over the period during which the services are rendered by such consultant or vendor. At the end of each financial reporting period prior to issuance of these shares, the fair value of these shares is remeasured using the then-current fair value of the Company’s common stock. As of September 30, 2018, there was $2,633,897 of unvested stock-based consulting and service fees to be recognized over the remaining service periods.

 

In October 2018, the Company mutually agreed or terminated the consulting and service agreements of 6 consultants and vendors. Both parties forgo their respective rights as stated in the agreements, the Company has no obligation to issue in aggregate of 614,929 shares in effect.

  

For the nine months ended September 30, 2018, in connection with the above share issuances and the amortization of prepaid stock-based consulting and service fees from shares issued in 2017, the Company recorded stock-based consulting and service fees of $9,132,385

 

For part of the consultancy agreements, if, on the first date when the restrictive legend on the certificate of each lot of the shares issued to the consultant/vendor pursuant these agreements are removed and such lot of shares becomes freely tradeable in the NASDAQ Capital Market without restriction, the closing price of the shares drops below the issue price, the Company will compensate the consultants and vendors for the drop in value of such lot of shares, which will be calculated by multiplying the number of Shares by the difference between the closing price and the issue price (“Shortfall”). The total maximum number of shares issued for the Shortfall of these consultancy agreements shall not exceed 291,169 Shares.

 

Additionally, pursuant to a two-year consulting agreement between the Company’s wholly-owned subsidiary, EC Advertising and an individual, the Company shall, within one month from the date of this Agreement (October 9, 2017), issue such number of ordinary shares of EC Advertising to the Consultant (or his nominee) so that he (or his nominee) will hold 15% of EC Advertising issued share capital as enlarged by the share issue pursuant to this agreement. Additionally, within one month after the Consultant achieves all the performance targets as outlined in the agreement, EC Advertising shall issue, or shall cause its major shareholder to transfer, such number of EC Advertising’s ordinary shares to the Consultant (or its nominee) so that he (and his nominee) will, together with the 15% issued share capital discussed above, hold a total of 49% of EC Advertising’s issued share capital as enlarged by the share issue or after the transfer (as the case may be). Performance targets include the achievement by the Company of total revenue of $10,000,000 and profit after tax of $4,000,000 during the term of the agreement. 

Common stock sold for cash

 

In March 2018, pursuant to a stock purchase agreement, the Company sold 69,676 shares of common stock to an investor at a purchase price of $3.68 per share for net cash proceeds a total of $256,410. The Company did not engage a placement agent with respect to these sales.

 

Common stock issued debt conversion

 

In January 2018, the Company issued 200,100 shares of its common stock upon conversion of debt (see Note 11).

 

Common stock issued in connection with acquisitions

 

On January 19, 2018 (the “Closing Date”), the Company completed the acquisition of 60% of the issued and outstanding capital stock of 3D Discovery from its shareholders pursuant to the terms and conditions of a Sale and Purchase Agreement entered into among the Company and the 3D Discovery Stockholders on the Closing Date. In connection with the acquisition, the Company issued 68,610 unregistered shares of its common stock valued at $442,535, based on the acquisition-date fair value of our common stock of $6.45 per share based on the quoted market price of the Company’s common stock on the Closing date (See Note 2).

 

On January 30, 2018 (the “Closing Date”), the Company completed the acquisition of 80% of the issued and outstanding capital stock of AnyWorkspace from its shareholders pursuant to the terms and conditions of a Sale and Purchase Agreement entered into among the Company and the AnyWorkspace Stockholders on the Closing Date. In connection with the acquisition, the Company issued 106,464 unregistered shares of its common stock valued at $534,449, based on the acquisition-date fair value of our common stock of $5.02 per share based on the quoted market price of the Company’s common stock on the Closing date (See Note 2).

 

On June 26, 2018, pursuant to the sub-licensing agreement entered between the Company and a related party, Ecrent Capital Holdings Limited, the Company issued 250,000 unregistered shares of its common stock valued at $1,040,000, or $4.16 per share, based on the quoted market price of the Company’s common stock on the amended Agreement date of May 24, 2018. In connection with this agreement, during the three and nine months ended September 30, 2018, the Company recorded license fee expense of $145,213 and $210,213, respectively, which is included in cost of sales, and at September 30, 2018, recorded a prepaid license fee – related party of $829,787 which will be amortized over the remaining license period (see Note 12).

 

Shares issued for donation

 

On July 10, 2018, the Company issued 58,000 shares as donation to Ng Hong Man Educational Foundation Limited. The Foundation would use the funds raised from the donation to support and promote the delivery of education and the operation of the Foundation, to set up a co-working facility and community for training the low skill people, and to coordinate with schools and education institutes to support and promote the education of sharing economy to the teenage groups. These shares were valued at $241,860, or $4.17 per share, based on the quoted market price of the Company’s common stock on the donation date. In connection with this donation, during the three and nine months ended September 30, 2018, the Company recorded donation expense of $241,860 and $241,860, respectively, which is included in operating expenses.

 

Shares issued in connection with Tenancy Agreement for office complex of Shaw Movie City

 

Sharing Film International Limited (“Sharing Film”), a wholly owned subsidiary of the Company, entered into a tenancy agreement with Shaw Movie City Hong Kong Limited (“Landlord”). The Landlord let and Sharing Film took one level of office complex of Shaw Movie City for one year commencing from 1 November 2018 renewable on a yearly basis. On July 24, 2018, the Company issued 311,357 shares as the payment for the annual rental and part of the management fee for the one year tenure and 54,777 shares as the payment of part of the tenancy deposit. During the nine months ended September 30, 2018, the Company recorded stock-based rental and management fee of $26,773 and prepaid expenses of $1,048,659 which will be amortized over the remaining service period. The fair value of the tenancy deposit was valued at $189,185.