UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2014
OR
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to ______________
Commission File No. 0-192227
2050 MOTORS, INC.
(Exact name of small business issuer as specified in its charter)
| CALIFORNIA | 7929 | 95-4040591 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
3420 Bunkerhill Drive
LAS VEGAS, NEVADA 89032
(Address of principal executive offices)
(702) 591-6029
(Registrant’s telephone number, including area code)
Zegarelli Group International, Inc.
80679 Camino Santa Elise, Indio, California 91352
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 past 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 (§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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-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 Act). Yes [ ] No [X]
The number of shares of Common Stock, no par value, of the registrant outstanding at May 19, 2014, was 30,557,929.
2050 MOTORS, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2014
TABLE OF CONTENTS
| 2 |
CONDENSED BALANCE SHEETS
| March 31, 2014 | December 31, 2013 | |||||||
| (Unaudited) | ||||||||
| ASSETS: | $ | - | $ | - | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Accrued expenses | $ | 7,000 | $ | - | ||||
| Advances from majority stockholder | 46,058 | 41,486 | ||||||
| Accrued interest | 4,365 | 3,657 | ||||||
| Convertible note payable | 47,199 | 47,199 | ||||||
| TOTAL CURRENT LIABILITIES | 104,622 | 92,342 | ||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock - $.01 par value, 1,000,000 shares authorized, 0 shares issued and outstanding | ||||||||
| Common stock, no par value, 25,000,000 shares authorized, 22,248,337 shares issued and outstanding | 7,436,101 | 7,436,101 | ||||||
| Contributed capital | 918,231 | 918,231 | ||||||
| Accumulated deficit | (8,458,954 | ) | (8,446,674 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (104,622 | ) | (92,342 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | - | $ | - | ||||
SEE ACCOMPANYING NOTES TO FINANCIALS.
| F-1 |
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
| Three Months ended 2014 | March 31, 2013 | |||||||
| REVENUES | $ | - | $ | - | ||||
| EXPENSES | ||||||||
| Administrative | 2,422 | 232 | ||||||
| Professional fees | 8,350 | 10,587 | ||||||
| TOTAL EXPENSES | 10,772 | 10,819 | ||||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest expense | 708 | 708 | ||||||
| LOSS BEFORE TAXES | (11,480 | ) | (11,527 | ) | ||||
| INCOME TAX EXPENSE | 800 | 800 | ||||||
| NET LOSS | $ | (12,280 | ) | $ | (12,327 | ) | ||
| NET INCOME (LOSS) PER COMMON SHARE | ||||||||
| Basis and diluted | 0 | 0 | ||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 22,248,337 | 22,248,337 | ||||||
SEE ACCOMPANYING NOTES TO FINANCIALS.
| F-2 |
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
| Three Months ended 2014 | March 31, 2013 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (12,280 | ) | $ | (12,327 | ) | ||
| Adjustments to reconcile net loss to net Cash provided by operations: | ||||||||
| Changes in liabilities: | ||||||||
| Increase in accrued expenses and interest | 7,708 | 10,820 | ||||||
| Net cash used in operating activities | (4,572 | ) | (1,507 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Advances from stockholder | 4,572 | 1,507 | ||||||
| Net cash provided by financing activities | 4,572 | 1,507 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ||||||||
| Cash and cash equivalents at beginning of period | - | - | ||||||
| Cash and cash equivalents at end of period | $ | - | $ | - | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Income taxes paid | $ | 800 | $ | 800 | ||||
| Interest paid | $ | - | $ | - | ||||
SEE ACCOMPANYING NOTES TO FINANCIALS.
| F-3 |
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. OPERATIONS AND BASIS OF PRESENTATION
Zegarelli Group International, Inc. (the “Company”) was incorporated on February 27, 1990. The Company manufactured cosmetic products for private label distributions throughout the United States. The Company ceased operations and has been inactive since 2002. The Company was publicly-traded company listed on the OTC Bulletin Board (“pink-sheets”). On November 9, 1998, the Company filed a Form 15 with the Securities and Exchange Commission (“SEC”) terminating its registration under Section 12(g) of the Securities Act of 1934, which relieved the Company of its requirement to file reports with the SEC. Even though the Company has not made any further filings with the SEC since 1998, the Company has had some minimal stock trading activity.
The Company’s board is now considering merging with another entity that has viable operations. As such, the existing company is not going to continue as a going concern after any merger. The financial statements do not contain any adjustments that would be necessary should the Company not continue as a going concern.
During interim periods, management follows the accounting policies set forth in Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and apply appropriate interim financial reporting standards for a fair statement of Company’s operating results and financial position in conformity with accounting principles generally accepted in the United States of America, as codified by the Financial Accounting Standards Board (FASB) in the Accounting Standards Codification (ASC) (referred to herein as U.S. GAAP), as indicated below. Users of financial information produced for interim periods are encouraged to read this Quarterly Report on Form 10-Q in conjunction with Company’s financial statements and notes thereto filed with the Securities and Exchange Commission (SEC) in Company’s 2012 Annual Report on Form 10-K.
Interim financial reporting standards require management to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at that time. Inevitably, some assumptions will not materialize, unanticipated events or circumstances may occur which vary from those estimates and such variations may significantly affect Company’s future results.
The accompanying unaudited condensed financial statements have been prepared in accordance with the SEC’s requirements for Form 10-Q and, in the opinion of management, contain all adjustments, of a normal and recurring nature, which are necessary for a fair statement of; (i) the condensed statements of operations for the three month periods ended March 31, 2014 and 2013; (ii) the condensed balance sheets at March 31, 2014 and December 31, 2013; and (iii) the condensed statements of cash flows for the three month periods ended March 31, 2014 and 2013. However, the accompanying unaudited condensed financial statements do not include all information and notes required by U.S. GAAP. The condensed consolidated balance sheet, included in this report, as of December 31, 2013 was derived from Company’s 2013 audited financial statements, but does not include all disclosures required by U.S. GAAP.
2. GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) that contemplate continuation of the Company as a going concern. During the three months ended March 31, 2014, the Company incurred a net loss of $12,280. In addition, the Company had an accumulated deficit of $8,458,954 as of March 31, 2014. The Company has not earned any significant revenues since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s ability to continue in existence is dependent on its ability to develop additional sources of capital, and/or achieve profitable operations and positive cash flows. Management’s plan is to aggressively pursue its present business plan. Since inception the Company has funded its operations through the issuance of common stock and related party loans and advances, and will seek additional debt or equity financing as required. However, there can be no assurance that the Company will be successful in raising such additional funds. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reported period. Actual results could differ from those estimates.
Cash and Cash Equivalents – Cash equivalents consist of highly liquid investments with original maturities of three months or less.
| F-4 |
Revenue Recognition – The Company recognizes revenue upon concluding that all of the fundamental criteria for revenue recognition have been met. The criteria are usually met at the time products are shipped. The Company performs ongoing credit evaluations of its customers’ financial condition and records a reserve for sales returns and allowances based on the historical rate of returns on its products.
Research and Development Costs – The Company expenses research and development costs as incurred. The Company had no such expenses for the three month periods ended March 31, 2014 and 2013.
Advertising Costs – Costs incurred for producing and communicating advertising are expensed when incurred and included in selling general and administrative expenses. Advertising expense amounted to $0 for the three months ended March 31, 2014 and 2013, respectively.
Property and Equipment – Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. Property and equipment are depreciated over the useful lives of the asset using the straight line method.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Share – Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding including potentially dilutive securities such as options, warrants and convertible debt.
Impairment of Long-Lived Assets and Assets – The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash flows is less that the carrying amount of the asset, an impairment loss is recorded. No impairment losses were recognized for the three months ended March 31, 2014 and 2013.
Income Taxes – The Company accounts for income taxes in accordance with FASB Codification, “Accounting for Income Taxes.” This statement requires an asset and liability approach for accounting for income taxes. The accounting principles generally accepted in the United States of America provides accounting and disclosure guidance about positions taken by an entity in its tax returns that might be uncertain.
The accounting principles generally accepted in the United States of America provides accounting and disclosure guidance about positions taken by an organization in its tax returns that might be uncertain. Management has considered its tax positions and believes that all of the positions taken by the Company in its Federal and State tax returns are more likely than not to be sustained upon examination. The Company files income tax returns in the U.S. and various state jurisdictions. The Company is subject to examinations by U.S. Federal and State tax authorities from 2010 to the present, generally for three years after they are filed.
Fair Value of Financial Instruments – The carrying values of cash equivalents, accounts receivable, accounts payable, short-term debt to a related party and accrued liabilities and those potentially subject to valuation risk at March 31, 2014 and December 31, 2013 approximated fair value due to their short maturity or nature.
Concentration of Credit Risk – Financial instruments, which potentially subject the company to concentrations of credit risk, consist principally of cash and cash equivalents. At March 31, 2014 and December 31, 2013 the Company had no cash and cash equivalents.
4. RELATED PARTY TRANSACTIONS
The majority stockholder has advanced the Company funds to bring it into compliance with various regulations and tax laws. During the three month periods ended March 31, 2014 and 2013, this stockholder advanced $4,572 and $1,507, respectively. The advances are due upon demand and bear no interest. As of March 31, 2014 and December 31, 2013 the outstanding balance was $46,058 and $41,486, respectively.
5. CONVERTIBLE NOTE PAYABLE
On September 14, 2012, the Company acknowledged and formalized monies advanced to the Company over the past three years by entering into a 6% convertible promissory note in favor of Alfred Booth, Jr. in the principal amount of $47,199, which was the outstanding balance owed to Mr. Booth as of June 30, 2012. The entire note balance plus accrued interest of $4,365 was outstanding as of March 31, 2014.
| F-5 |
6. SUBSEQUENT EVENTS
On January 30, 2014, the Company entered into an agreement and plan of reorganization (the “Reorganization”) by and among the Company, 2050 Motors, Inc. and certain shareholders of 2050 Motors, Inc. On May 2, 2014, the transactions contemplated by the Reorganization closed (the “Closing”). Pursuant to the Reorganization the shareholders representing 100% of 2050 Motors, Inc. issued and outstanding shares of common stock exchanged their shares for 24,994,670 shares of the Company’s common stock. The issuances were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and each of the investors was either accredited or sophisticated and familiar with Company’s operations.
The following table sets forth selected pro-forma financial data as of March 31, 2014 assuming the acquisition occurred on January 1, 2014.
| Zegarelli Group | 2050 | Pro Forma | Pro Forma | |||||||||||||
| International, Inc. | Motors, Inc. | Adjustments | Combined | |||||||||||||
| Operating Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| Operating Expenses | $ | 10,772 | $ | 55,596 | $ | - | $ | 66,368 | ||||||||
| Interest Expenses | $ | 708 | $ | - | $ | - | $ | 708 | ||||||||
| Income Taxes | $ | 800 | $ | - | $ | - | $ | 800 | ||||||||
| Net Loss | $ | 12,280 | $ | 55,965 | $ | - | $ | 68,245 | ||||||||
| Current Assets | $ | - | $ | 216,346 | $ | - | $ | 216,346 | ||||||||
| Other Assets | $ | - | $ | 140,600 | $ | - | $ | 140,600 | ||||||||
| Accrued Expenses | $ | 11,365 | $ | - | $ | (7,436 | ) | $ | 3,929 | |||||||
| Related Party Liabilities | $ | 93,257 | $ | 763 | $ | (93,257 | ) | $ | 763 | |||||||
| Total Stockholders’ Equity (Deficit) | $ | (104,622 | ) | $ | 356,183 | $ | 105,385 | $ | 356,946 | |||||||
On May 2, 2014, in accordance with the Reorganization the shareholder of 2050 Motors, Inc. became the owners of approximately 82% of the issued and outstanding common stock of the Company. As a result of the Reorganization, the Company acquired the operations and assets of 2050 Motors, Inc.
On May 2, 2014, in connection with the Reorganization, Michael Hu became a member of the Company’s Board of Directors, President and Chief Financial Officer. In addition, also on May 2, 2014, in connection with the Reorganization, Bernd Schaefers became a director and secretary and Mark R. Edwards, Ph.D. became a director.
Upon the appointment of the three new directors, Mr. Alfred E. Booth, Jr, resigned as a director and officer of the Company and Ms. Zegarelli and Ms. Booth also resigned as directors and/or officers of the Company.
In connection with the transactions described above, effective on May 2, 2014, amendments to the Company’s Article of Incorporation changing the Company’s name to 2050 Motors, Inc. effectuating a 1-for-4 reverse stock split and increasing the Company’s authorized common stock from 25,000,000 shares to 100,000,000 shares.
In connection with the reorganization, the Company agreed to issue 106,000 restricted shares of Company’s common stock to Mr. Booth in exchange for the cancellation of the total outstanding liabilities owed to Mr. Booth.
| F-6 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events. Refer also to “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” in Item 1 above.
The Company has been inactive since April 1, 2000. The Company has not had any revenues from operations during the last seven fiscal years nor any interim period in the current fiscal year for which financial statements are furnished in this Registration or amendments thereto. Therefore, the Company is not able to nor required to provide comparative period-to-period analysis of its operations pursuant to Item 303 of Regulation B.
We are currently investigating to acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next six months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
The Company does not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations and administering the Company’s business for the next six months are established to be as follows:
(i) filing of Exchange Act reports, (approximately $10,000) and
(ii) costs relating to consummating an acquisition (approximately $10,000).
We believe we will be able to meet these costs through additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. During the three months ended March 31, 2014, our CEO and President, Alfred Booth, loaned us $4,572.
The Company may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
None of our officers or directors has had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing, and the dilution of interest for present and prospective shareholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
The Company anticipates that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital that we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
| 3 |
Sources of Business Opportunities
The Company intends to use various sources in its search for potential business opportunities including its officers and directors, consultants, special advisors, securities broker-dealers, venture capitalists, members of the financial community and others who may present management with unsolicited proposals. Because of the Company’s limited capital, it may not be able to retain on a fee basis professional firms specializing in business acquisitions and reorganizations. The Company will most likely have to rely on outside sources, not otherwise associated with the Company that will accept their compensation only after the Company has finalized a successful acquisition or merger. The Company will rely upon the expertise and contacts of such persons, use notices in written publications and personal contacts to find merger and acquisition candidates, the exact number of such contacts are dependent upon the skill and industriousness of the participants and the conditions of the marketplace. To date the Company has not engaged nor entered into any definitive agreements nor understandings regarding retention of any consultant to assist the Company in its search for business opportunities, nor is management presently in a position to actively seek or retain any prospective consultants for these purposes.
Management does not have any plans to borrow funds to compensate any persons, consultants, or promoters in conjunction with its efforts to find and acquire or merge with another business opportunity. Management does not have any plans to borrow funds to pay compensation to any prospective business opportunity, or shareholders, management, creditors, or other potential parties to the acquisition or merger. In either case, it is unlikely that the Company would be able to borrow significant funds for such purposes from any conventional lending sources. In all probability, a public sale of the Company’s securities would also be unfeasible, and management does not contemplate any form of new public offering at this time. In the event that the Company does need to raise capital, it would most likely have to rely on the private sale of its securities. Such a private sale would be limited to persons exempt under the Commissions’ Regulation D or other rule, or provision for exemption, if any applies. However, no private sales are contemplated by the Company’s management at this time. If a private sale of the Company’s securities is deemed appropriate in the future, management will endeavor to acquire funds on the best terms available to the Company. However, there can be no assurance that the Company will be able to obtain funding when and if needed, or that such funding, if available, can be obtained on terms reasonable or acceptable to the Company. The Company does not anticipate using Regulation S promulgated under the Securities Act of 1933 to raise any funds any time within the next year, subject only to its potential applicability after consummation of a merger or acquisition.
Employees
Apart from management, we have no employees. Mr. Booth, our Chairman, President and Chief Executive Officer, Ms. Zegarelli, our Vice-President and Secretary, and Ms. Booth our Chief Financial Officer, will be responsible for managing our administrative affairs, including our reporting obligations pursuant to the requirements of the Exchange Act. It is anticipated that management will engage consultants, attorneys and accountants as necessary for us to conduct our business operations and to implement and successfully complete our business plan. Our directors and officers are engaged in outside business activities and anticipate that they will devote very limited time to our business until the acquisition of a successful business opportunity has been identified.
Competition
The Company will remain an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise than the Company. In view of the Company’s extremely limited financial resources and limited management availability, the Company will continue to be at a significant competitive disadvantage compared to the Company’s competitors.
Item 3. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report on Form 10-Q, our President (principal executive officer) and our Chief Financial Officer performed an evaluation of the effectiveness of and the operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our President and Chief Financial Officer each concluded that as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures are effective in timely alerting them to material information relating to Zegarelli Group International, Inc. required to be included in our Exchange Act filings.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the quarter ended March 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 4 |
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On May 2, 2014, in accordance with the close of an Agreement and Plan of Reorganization the shareholders representing 100% of 2050 Motors, Inc.’s issued and outstanding shares of common stock exchanged their shares for 24,994,670 shares of the Company’s post split common stock. The issuances were exempt from registration pursuant to Section 4(2) and/or Regulation D of the Securities Act of 1933, and each of the investors was either accredited or sophisticated and familiar with the Company’s operations.
In addition, in connection with the acquisition, the Company agreed to issue 106,000 restricted shares of Company’s common stock to Mr. Booth, its former director and President, in exchange for the cancellation of the total outstanding liabilities owed to Mr. Booth of approximately
106,000.
All of the shares issued, or to be issued above are “Restricted Securities” and all stock certificates were affixed with legends restricting sales and transfers. See Item 5 for more information.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
On May 2, 2014 (the “Closing”), pursuant to an Agreement and Plan of Reorganization (the “Acquisition Agreement”), the Company acquired all of the issued and outstanding capital stock of 2050 Motors, Inc. (“2050 Motors”) in exchange for 24,994,670 shares of the Company’s common stock. As a result of the acquisition, 2050 Motors became a wholly-owned subsidiary of the Company and its operations and assets became the sole business of the Company and its shareholders became the owners of approximately 82% of the Company’s common stock.
In accordance with the Acquisition Agreement the following actions were taken and became effective on May 2, 2014:
A one for four (1:4) reverse stock split (the “Reverse Stock Split”). This Reverse Stock Split caused the total number of shares of common stock outstanding before the Closing to be 5,563,259 and 30,557,929 after the Closing.
Amendment to the Company’s Certificate of Incorporation to i) increase the authorized common stock to 100,000,000 shares, and
Amendment to the Company’s Certificate of Incorporation changing the Company’s name from Zegarelli Group International, Inc. to 2050 Motors, Inc., to better reflect the business of the Company.
On May 2, 2014, in connection with the Acquisition Agreement, Mr Booth, Ms. Zegarelli and Ms. Booth resigned as directors and/or officers and Michael Hu became a member of our Board of Directors, President and Chief Financial Officer, and Mr. Bernd Schaefers became a director and Secretary and Mark R. Edwards, Ph.D. became a director.
Furthermore, in connection with the acquisition, the Company agreed to issue 106,000 restricted shares of Company’s common stock to Mr. Booth in exchange for the cancellation of the total outstanding liabilities owed to Mr. Booth.
(a) Exhibits.
| Exhibit | Item | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | XBRL Instance Document.** | |
| 101.SCH | XBRL Taxonomy Extension Schema Document.** | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.** | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.** | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document.** | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.** |
* Filed herewith.
** Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibits 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
| 5 |
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| 2050 MOTORS, INC. | |
| Date: May 20, 2014 | /s/ Michael Hu |
Michael Hu, President (Principal Executive Officer) | |
| Date: May 20, 2014 | /s/ Michael Hu |
Michael Hu, Chief Financial Officer (Principal Financial and Accounting Officer) |
| 6 |
| Exhibit | Item | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 * | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 * | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * | |
| 101.INS | XBRL Instance Document.** | |
| 101.SCH | XBRL Taxonomy Extension Schema Document.** | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.** | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.** | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document.** | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.** |
* Filed herewith.
** Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibits 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
| 7 |
EXHIBIT 31.1
CERTIFICATION
I, Michael Hu, certify that:
| 1. | I have reviewed this report on Form 10-Q of 2050 Motors, 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)) for the registrant and have: |
| 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. | 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 | |
| c. | 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. |
| 5. | 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 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. |
| /s/ Michael Hu | |
| Michael Hu | |
| President (Principal Executive Officer) | |
| May 20, 2014 |
EXHIBIT 31.2
CERTIFICATION
I, Michael Hu, certify that:
| 1. | I have reviewed this report on Form 10-Q of 2050 Motors, 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)) for the registrant and have: |
| 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. | 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 | |
| c. | 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. |
| 5. | 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 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. |
| /s/ Michael Hu | |
| Michael Hu | |
| Chief Financial Officer | |
| May 20, 2014 |
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 report of 2050 Motors, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| (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 the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Michael Hu | |
| Michael Hu | |
| President (Principal Executive Officer) | |
| May 20, 2014 | |
| /s/ Michael Hu | |
| Michael Hu | |
| Chief Financial Officer | |
| May 20, 2014 |