Form 1-A Issuer Information UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 1-A
REGULATION A OFFERING STATEMENT
UNDER THE SECURITIES ACT OF 1933
OMB APPROVAL

FORM 1-A

OMB Number: 3235-0286


Estimated average burden hours per response: 608.0

1-A: Filer Information

Issuer CIK
0001083468
Issuer CCC
XXXXXXXX
DOS File Number
Offering File Number
024-11608
Is this a LIVE or TEST Filing? LIVE TEST
Would you like a Return Copy?
Notify via Filing Website only?
Since Last Filing?

Submission Contact Information

Name
Phone
E-Mail Address

1-A: Item 1. Issuer Information

Issuer Infomation

Exact name of issuer as specified in the issuer's charter
ENTERTAINMENT ARTS RESEARCH, INC.
Jurisdiction of Incorporation / Organization
NEVADA
Year of Incorporation
1999
CIK
0001083468
Primary Standard Industrial Classification Code
BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS
I.R.S. Employer Identification Number
88-0422950
Total number of full-time employees
1
Total number of part-time employees
4

Contact Infomation

Address of Principal Executive Offices

Address 1
19109 W CATAWBA AVE.
Address 2
SUITE 200
City
CORNELIUS
State/Country
NORTH CAROLINA
Mailing Zip/ Postal Code
28031
Phone
980-999-0270

Provide the following information for the person the Securities and Exchange Commission's staff should call in connection with any pre-qualification review of the offering statement.

Name
Bernard Rubin
Address 1
Address 2
City
State/Country
Mailing Zip/ Postal Code
Phone

Provide up to two e-mail addresses to which the Securities and Exchange Commission's staff may send any comment letters relating to the offering statement. After qualification of the offering statement, such e-mail addresses are not required to remain active.

Financial Statements

Industry Group (select one) Banking Insurance Other

Use the financial statements for the most recent period contained in this offering statement to provide the following information about the issuer. The following table does not include all of the line items from the financial statements. Long Term Debt would include notes payable, bonds, mortgages, and similar obligations. To determine "Total Revenues" for all companies selecting "Other" for their industry group, refer to Article 5-03(b)(1) of Regulation S-X. For companies selecting "Insurance", refer to Article 7-04 of Regulation S-X for calculation of "Total Revenues" and paragraphs 5 and 7 of Article 7-04 for "Costs and Expenses Applicable to Revenues".

Balance Sheet Information

Cash and Cash Equivalents
$ 16695.11
Investment Securities
$ 0.00
Total Investments
$
Accounts and Notes Receivable
$ 44873.97
Loans
$
Property, Plant and Equipment (PP&E):
$ 0.00
Property and Equipment
$
Total Assets
$ 12983751.34
Accounts Payable and Accrued Liabilities
$ 287695.00
Policy Liabilities and Accruals
$
Deposits
$
Long Term Debt
$ 12517689.00
Total Liabilities
$ 12823870.00
Total Stockholders' Equity
$ 159881.00
Total Liabilities and Equity
$ 12983751.34

Statement of Comprehensive Income Information

Total Revenues
$ 254635.98
Total Interest Income
$
Costs and Expenses Applicable to Revenues
$ 263567.81
Total Interest Expenses
$
Depreciation and Amortization
$ 0.00
Net Income
$ -106839.00
Earnings Per Share - Basic
$ 0.00
Earnings Per Share - Diluted
$ 0.00
Name of Auditor (if any)
none

Outstanding Securities

Common Equity

Name of Class (if any) Common Equity
Common Stock
Common Equity Units Outstanding
88828220
Common Equity CUSIP (if any):
29382T400
Common Equity Units Name of Trading Center or Quotation Medium (if any)
OTC Pink

Preferred Equity

Preferred Equity Name of Class (if any)
Preferred Stock
Preferred Equity Units Outstanding
10802911
Preferred Equity CUSIP (if any)
none
Preferred Equity Name of Trading Center or Quotation Medium (if any)
none

Debt Securities

Debt Securities Name of Class (if any)
Series D Convertible
Debt Securities Units Outstanding
17000000
Debt Securities CUSIP (if any):
none
Debt Securities Name of Trading Center or Quotation Medium (if any)
none

1-A: Item 2. Issuer Eligibility

Issuer Eligibility

Check this box to certify that all of the following statements are true for the issuer(s)

1-A: Item 3. Application of Rule 262

Application Rule 262

Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.

Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.

1-A: Item 4. Summary Information Regarding the Offering and Other Current or Proposed Offerings

Summary Infomation

Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering Tier1 Tier2
Check the appropriate box to indicate whether the financial statements have been audited Unaudited Audited
Types of Securities Offered in this Offering Statement (select all that apply)
Equity (common or preferred stock)
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? Yes No
Does the issuer intend this offering to last more than one year? Yes No
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? Yes No
Will the issuer be conducting a best efforts offering? Yes No
Has the issuer used solicitation of interest communications in connection with the proposed offering? Yes No
Does the proposed offering involve the resale of securities by affiliates of the issuer? Yes No
Number of securities offered
100000000
Number of securities of that class outstanding
88828220

The information called for by this item below may be omitted if undetermined at the time of filing or submission, except that if a price range has been included in the offering statement, the midpoint of that range must be used to respond. Please refer to Rule 251(a) for the definition of "aggregate offering price" or "aggregate sales" as used in this item. Please leave the field blank if undetermined at this time and include a zero if a particular item is not applicable to the offering.

Price per security
$ 0.0750
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer
$ 14287500.00
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders
$ 700000.00
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement
$ 0.00
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement
$ 0.00
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs)
$ 14987500.00

Anticipated fees in connection with this offering and names of service providers

Underwriters - Name of Service Provider
Underwriters - Fees
$
Sales Commissions - Name of Service Provider
Sales Commissions - Fee
$
Finders' Fees - Name of Service Provider
Finders' Fees - Fees
$
Audit - Name of Service Provider
Audit - Fees
$
Legal - Name of Service Provider
various
Legal - Fees
$ 10000.00
Promoters - Name of Service Provider
Promoters - Fees
$
Blue Sky Compliance - Name of Service Provider
various
Blue Sky Compliance - Fees
$ 2500.00
CRD Number of any broker or dealer listed:
Estimated net proceeds to the issuer
$ 14987500.00
Clarification of responses (if necessary)

1-A: Item 5. Jurisdictions in Which Securities are to be Offered

Jurisdictions in Which Securities are to be Offered

Using the list below, select the jurisdictions in which the issuer intends to offer the securities

Selected States and Jurisdictions
COLORADO
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA
NEVADA
NEW JERSEY
NEW YORK
TEXAS
WYOMING

Using the list below, select the jurisdictions in which the securities are to be offered by underwriters, dealers or sales persons or check the appropriate box

None
Same as the jurisdictions in which the issuer intends to offer the securities
Selected States and Jurisdictions

COLORADO
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA
NEVADA
NEW JERSEY
NEW YORK
TEXAS
WYOMING

1-A: Item 6. Unregistered Securities Issued or Sold Within One Year

Unregistered Securities Issued or Sold Within One Year

None

Unregistered Securities Issued

As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:

(a)Name of such issuer
Entertainment Arts Research, Inc.
(b)(1) Title of securities issued
Common Stock
(2) Total Amount of such securities issued
6444444
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer.
0
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof.
0
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)).

Unregistered Securities Issued

As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:

(a)Name of such issuer
Entertainment Arts Research, Inc.
(b)(1) Title of securities issued
Common Stock
(2) Total Amount of such securities issued
5555556
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer.
0
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof.
0
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)).

Unregistered Securities Act

(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption
Securities Act Section 4(2)

Registration No. 24-11608

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 1-A/A

 

REGULATION A OFFERING CIRCULAR UNDER THE SECURITIES ACT OF 1933

 

ENTERTAINMENT ARTS RESEARCH, INC.

(Exact name of issuer as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

19109 W Catawba Ave, Suite 200

Cornelius, NC 28031

(980) 999-0270

(Address, including zip code, and telephone number,

including area code, of issuer’s principal executive office)

 

Incorp Services, Inc.

3773 Howard Hughes Pkwy, Suite 500S

Las Vegas, NV 86169-6014

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

2086

 

88-0422950

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer Identification

Number)

 

 

This Offering Circular shall only be qualified upon order of the Commission, unless a subsequent amendment is filed indicating the intention to become qualified by operation of the terms of Regulation A

 

 

 

 

 

 

 

 

 


i


 

EXPLANATORY NOTE

 

PRELIMINARY OFFERING CIRCULAR SUBJECT TO COMPLETION,

 

DATED OCTOBER 15, 2021

 

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission on August 12, 2021, including restated amendments made there to Form 1-A/A on September 10, 2021 (“Amendment No. 1”), September 16, 2021 (“Amendment No. 2), October 5, 2021 (“Amendment No. 3”), and now on October 5, 2021 (“Amendment No. 4”). This Amendment No.4 changes the per share price and maximum shares offered maintaining the same maximum proceeds from the offering. A revised subscription agreement is included with this Amendment No. 4 reflecting the changes.

 

These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. The offering statement shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Offering Circular was filed may be obtained.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


ii


 

Entertainment Arts Research, Inc.

MAXIMUM OFFERING AMOUNT: $15,000,000

MAXIMUM NUMBER OF SHARES OFFERED HEREBY: 200,000,000

 

This is a public offering (the “Offering”) of securities of Entertainment Arts Research, Inc., a Nevada corporation (the “Company”). We are offering a maximum of Two Hundred Million (200,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.00001 (the “Common Stock”) at an offering price of Seven and a Half Cents ($0.075) per share (the “Shares”) pursuant to Tier 1 of Regulation A. This Offering is being conducted on a “best efforts” basis, which means that there is no minimum number of Shares that must be sold by us for this offering to close; thus, we may receive no or minimal proceeds from this Offering. This Offering will expire on the first to occur of (a) the sale of all 200,000,000 shares of Common Stock offered hereby, (b) June 30, 2022, subject to extension for up to one hundred-eighty (180) days in the sole discretion of the Company, or (c) when the Company’s board of directors elects to terminate the Offering (as applicable, the “Termination Date”). There is no escrow established for this Offering. We will hold closings upon the receipt of investors’ subscriptions and acceptance of such subscriptions by the Company. If, on the initial closing date, we have sold less than the Maximum Offering, then we may hold one or more additional closings for additional sales, until the earlier of: (i) the sale of the Maximum Offering or (ii) the Termination Date. There is no aggregate minimum requirement for the Offering to become effective, therefore, we reserve the right, subject to applicable securities laws, to begin applying “dollar one” of the proceeds from the Offering in accordance with the Use of Proceeds section of this Offering Circular (See section “Use of Proceeds”) and such other uses as more specifically set forth in this offering circular (“Offering Circular”). We expect to commence the sale of the Shares as of the date on which the offering statement of which this Offering Circular is a part (the “Offering Statement”) is qualified by the United States Securities and Exchange Commission (the “SEC”). Purchasers of the Shares will not be entitled to a refund and could lose their entire investment.

 

The Company’s Common Stock is listed on the Over The Counter Bulletin Board (“OTCPINK”) under the symbol “EARI,” and qualified Pink Current Information Tier. For further information, see “Plan of Distribution - Exchange Listing” of this Offering Circular.

 

On October 14, 2021, the closing price of our common stock was $0.1023 per share.

 

Such Offering price and our valuation was determined by management in order to attract investors in this Offering. The valuation of our currently outstanding shares of Common Stock and the $0.075 per share Offering price of the Common Stock has been based upon the trading price and volume of trading of our Common Stock on the OTCPNK exchange and is not based on book value, assets, earnings or any other recognizable standard of value. (See Determination of Offering Price)

 

In this Offering Circular, unless otherwise noted or unless the context otherwise requires, references to “we,” “us,” “our,” and the “Company” refer to the activities of and the assets and liabilities of the business and operations of Entertainment Arts Research, Inc.

 

No sale may be made to you in this offering, if you do not satisfy the investor suitability standards described in this Offering Circular under Plan of Distribution-State Law Exemptions and Investor Suitability Standards (page 38). Before making any representation that you satisfy the established investor suitability standards, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

 

Investing in our Common Stock involves a high degree of risk. See “Risk Factors” for a discussion of certain risks that you should consider in connection with an investment in our Common Stock.


iii


 

THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

 

 

Price to Public

 

Commissions(1)

 

Proceeds to the Company(2)

Per Share

 

$

0.075

 

$

0.00

 

$

0.0714

Maximum Offering

 

$

15,000,000.00

 

$

0.00

 

$

14,287,500.00

 

(1)None of the Shares will be offered through registered broker-dealers to which we will pay commissions, nor will we pay finders for shares from this Offering. 

(2)Accounts for the payment of offering expenses, estimated at $12,500.00, convertible promissory notes of up to $700,000 for selling shareholders. See “Plan of Distribution” for further detail. 

 

THE SECURITIES UNDERLYING THIS OFFERING STATEMENT MAY NOT BE SOLD UNTIL QUALIFIED BY THE SECURITIES AND EXCHANGE COMMISSION. THIS OFFERING CIRCULAR IS NOT AN OFFER TO SELL, NOR SOLICITING AN OFFER TO BUY, ANY SHARES OF OUR COMMON STOCK IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH SALE IS PROHIBITED.

 

INVESTMENT IN SMALL BUSINESS INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE “RISK FACTORS” FOR A DISCUSSION OF CERTAIN RISKS YOU SHOULD CONSIDER BEFORE PURCHASING ANY SHARES IN THIS OFFERING.

 

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, WHICH WE REFER TO AS THE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO (2) BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

 

GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN TEN PERCENT (10%) OF THE GREATER OF YOUR ANNUAL INCOME OR YOUR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

 

This Offering Circular follows the disclosure format of Part II(a)(1)(ii) of Form 1-A.


iv


 

The date of this Offering Circular is October 15, 2021

 

The Company has not determined if it will require these services or such selected service providers. The Company reserves the right to engage one or more FINRA-member broker-dealers or placement agents in its discretion. Does not include expenses of the Offering, including fees for administrative, accounting, audit and legal services, FINRA filing fees, fees for EDGAR document conversion and filing, and website posting fees, estimated to be as much as $12,500.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


v


 

TABLE OF CONTENTS

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

1

OFFERING SUMMARY

2

THE OFFERING

4

OUR BUSINESS

5

RISK FACTORS

9

USE OF PROCEEDS

26

DILUTION

26

DETERMINATION OF OFFERING PRICE

28

MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS

29

DIRECTORS, EXECUTIVE OFFICERS & CORPORATE GOVERNANCE

33

EXECUTIVE COMPENSATION

35

CERTAIN RELATIONSHIPS & RELATED PARTY TRANSACTIONS

36

SECURITY OWNERSHIP OF MANAGEMENT & CERTAIN SECURITY HOLDERS

36

DESCRIPTION OF SECURITIES

37

DIVIDEND POLICY

39

PLAN OF DISTRIBUTION

39

LEGAL MATTERS

41

EXPERTS

41

WHERE YOU CAN FIND MORE INFORMATION

42

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

43

 

We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with any information other than the information contained in this Offering Circular. The information contained in this Offering Circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this Offering Circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this Offering Circular. This Offering Circular will be updated and made available for delivery to the extent required by the federal securities laws.

 

Unless otherwise indicated, data contained in this Offering Circular concerning the business of the Company are based on information from various public sources. Although we believe that these data are generally reliable, such information is inherently imprecise, and our estimates and expectations based on these data involve a number of assumptions and limitations. As a result, you are cautioned not to give undue weight to such data, estimates or expectations.

 

In this Offering Circular, unless the context indicates otherwise, references to “Entertainment Arts Research,” “we,” the “Company,” “our,” and “us” refer to the activities of and the assets and liabilities of the business and operations of Entertainment Arts Research, Inc.

 

 

 

 

 


vi


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements under “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Business” and elsewhere in this Offering Circular constitute forward-looking statements. Forward- looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate”, “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology.

 

You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Offering Circular, including in “Risk Factors” and elsewhere, identify important factors that you should consider in evaluating our forward-looking statements. These factors include, among other things:

 

·Our ability to effectively operate our business segments; 

 

·Our ability to manage our research, development, expansion, growth and operating expenses; 

 

·Our ability to evaluate and measure our business, prospects and performance metrics; 

 

·Our ability to respond and adapt to changes in technology and customer behavior; and 

 

·Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand. 

 

Although the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to re-issue this Offering Circular or otherwise make public statements updating our forward-looking statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


1


 

OFFERING CIRCULAR SUMMARY

 

The following summary highlights material information contained in this Offering Circular. This summary does not contain all of the information you should consider before purchasing our common stock. Before making an investment decision, you should read this Offering Circular carefully, including the Risk Factors section and the unaudited consolidated financial statements and the notes thereto. In this Offering Circular, unless otherwise noted or unless the context otherwise requires, references to “we,” “us,” “our,” and the “Company” refer to the activities of and the assets and liabilities of the business and operations of Entertainment Arts Research, Inc., a Nevada corporation.

 

Our Company

 

Entertainment and Arts Research, Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 19, 1999 as a real estate rental corporation under the name Property Investors Ventures, Inc. On November 24, 2008 the company effectuated a reverse merger and changed its name to Entertainment and Arts Research, Inc. The Company creates, develops and publishes apps, video games, web content and interactive entertainment.

 

Throughout the first half of fiscal year 2021, the Company gradually transitioned to becoming a diversified conglomerate of beverage brands. The Company has become a diversified holding company focused on growth opportunities in the newly developing brands in the beverage industry that can scale by taking advantage of the Company’s specialty beverage marketing operations.

 

The Company’s transition was accomplished with the following transactions

 

1)Acquisition of Foody TV and Sports Entertainment Network streaming channels (food and sports media streaming company) 

 

2)Betta4u Brands and its wholly owned subsidiaries, Fury Beverages LLC, Rhino Spirits LLC, Zegen, and brands Tickle Water and Neo Alkaline Water 

 

The purpose of this Offering is to raise capital for (i) sales and marketing for our beverage brand portfolio and (ii) acquisition of two additional beverage brands that it has already identified.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


2


 

 

Offering Summary

 

Issuer:

 

Entertainment Arts Research, Inc.

 

 

 

Shares Offered:

 

A maximum of Two Hundred Million (200,000,000) shares of our Common Stock (the “Maximum Offering”), at an offering price of Seven and a Half Cents ($0.075) per share (the “Shares”).

 

 

 

Number of shares of Common Stock Outstanding before the Offering:

 

88,828,220 shares of Common Stock.

 

 

 

Number of shares of Common Stock to be Outstanding after the Offering:

 

188,828,220 shares of Common Stock if the Maximum Offering is sold.

 

 

 

Price per Share:

 

Seven and a Half Cents ($0.075).

 

 

 

Listing:

 

Our shares of Common Stock are listed on Over the Counter Pink Sheets exchange under the symbol “EARI.”

 

There can be no assurance that the Company Common Stock sold in this Offering will be continue to be approved for listing on OTCPNK or other recognized securities exchange. For more information see the section “Risk Factors.”

 

 

 

Maximum Offering:

 

Two Hundred Million (200,000,000) shares of our Common Stock (the “Maximum Offering”), at an offering price of Seven and a Half Cents ($0.075) per share (the “Shares”), for total gross sales of Fifteen Million Dollars ($15,000,000).

 

 

 

Minimum Number of Shares to Be Sold in this Offering:

 

None.

 

 

 

Use of Proceeds:

 

If we sell all of the Shares being offered, our net proceeds (after our estimated Offering expenses and allotments for Selling Shareholders) will be $14,287,500. We will use these net proceeds for operations of our business brands, working capital, strategic acquisitions for our beverage brand portfolio, and general corporate purposes, and such other purposes described in the “Use of Proceeds” section of this Offering Circular.

 

 

 

Risk Factors:

 

Investing in our Common Stock involves a high degree of risk. See “Risk Factors”.

 

 

 

Corporate Information:

 

19109 W Catawba Ave., Suite 200, Cornelius, NC 28031

www.earigroup.com

(980) 999-0270

 

 

 


3


 

THE OFFERING:

REGULATION A+; CONTINTUOUS REPORTING

REQUIREMENTS UNDER REGULATION A

 

We are offering our Common Stock pursuant to recently adopted rules by the Securities and Exchange Commission mandated under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. These offering rules are often referred to as “Regulation A+.” We are relying upon “Tier 1” of Regulation A+, which allows us to offer of up to $20 million in a 12-month period.

 

In accordance with the requirements of Tier 1 of Regulation A+, we will be required to update certain issuer information by electronically filing a Form 1-Z exit report with the Commission on EDGAR not later than 30 calendar days after termination or completion of an offering.

 

This Offering Circular contains a fair summary of the material terms of documents summarized herein. All concepts, goals, estimates and business intentions are revealed and disclosed as such are known to management as of the date of this Offering Circular. Circumstances may change so as to alter the information presented herein at a later date. This material will be updated by Amendment to this document and by means of press releases and other communications to Shareholders. You should carefully read the entire Offering Circular, including the risks associated with an investment in the company discussed in the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

 

As used in this Offering Circular, all references to “Entertainment Arts Research,” “capital stock,” “Common Stock,” “Shares,” “preferred stock,” “stockholders,” “shareholders” applies only to Entertainment Arts Research, Inc. As used in this Offering Circular, the terms “Company,” “we,” “our” or words of like import mean Entertainment Arts Research, Inc., and its direct and indirect subsidiaries. All references in this Offering Circular to “years” and “fiscal years” means the twelve-month period ended December 31.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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OUR BUSINESS

 

Corporate History and Information

 

Entertainment and Arts Research, Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 19, 1999 as a real estate rental corporation under the name Property Investors Ventures, Inc. On November 24, 2008 the company effectuated a reverse merger and changed its name to Entertainment and Arts Research, Inc. The Company creates, develops and publishes apps, video games, web content and interactive entertainment.

 

Throughout the first half of fiscal year 2021, the Company gradually transitioned to becoming a diversified conglomerate of beverage brands. The Company has become a diversified holding company focused on growth opportunities in the newly developing brands in the beverage industry that can scale by taking advantage of the Company’s specialty beverage marketing operations.

 

This Prospectus includes market and industry data that we have developed from publicly available information, various industry publications and other published industry sources and our internal data and estimates. Although we believe the publications and reports are reliable, we have not independently verified the data. Our internal data, estimates and forecasts are based upon information obtained from trade and business organizations and other contacts in the market in which we operate and our management’s understanding of industry conditions. As of the date of the preparation of this Prospectus, these and other independent government and trade publications cited herein are publicly available on the Internet without charge. Upon request, the Company will also provide copies of such sources cited herein.

 

Business Overview

 

The Company’s transition was accomplished with the following transactions;

 

1)Acquisition of assets from StreetBeatz Inc, a video streaming network that develops branding, marketing and advertising content for Foody’s Video and Social Media Platform worldwide. StreetBeatz Brands Inc consists of 50% holdings of Foody TV Acquisitions of Florida Inc and 100% of (Assets) Sports & Entertainment TV. 

 

2)Acquisition of Betta4u Brands Inc., and its wholly owned subsidiaries and brands; 

 

a)Fury Beverages LLC, 

b)Rhino Spirits LLC, 

c)Zegen Company (Philippines) 

d)Tickle Water Brand 

e)Neo Alkaline Water Brand 

 

The purpose of this Offering is to raise capital for (i) sales and marketing for our beverage brand portfolio and (ii) acquisition of and newly developing beverage brands and (iii) build international distribution.

 

These 3 areas will be where the Company will be focusing its efforts moving forward, and its use of proceeds for the Offering will be focused on enhancing opportunities in these three areas. Notwithstanding, the three different areas of focus the Company will consolidate its financials into one statement and not report as different segments.

 

Management’s criteria for identifying its acquisition targets, which it may change at any time for any reason, is food and beverage companies with:

 

1.Products with gross margins of 50% plus. 

2.Products in market segments showing high growth, 20% plus. 

3.Products with excellent consumer acceptance. 

4.Companies and Brands with a proven track record and a dynamic management team. 


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With these criteria, Management identified and executed a term sheet with Ambhar Global Spirits LLC (see discussion of Brand 5 below), and has identified a distillery with which it is negotiating acquisition.  Management has already identified the targets we will acquire with the Use of Proceeds from this offering.

 

The Company has also designated a new class of stock, Preferred Series C, which it may issue only for mergers, acquisitions and strategic partnerships or investment. (please see Description of Securities for more information about the Preferred Series C Stock)

 

During the second quarter of 2021, the company acquired Betta4u Brands Inc., a Delaware corporation and its wholly owned subsidiaries, Fury Beverages LLC, Rhino Spirits LLC, Zegen, and brands Tickle Water and Neo Alkaline Water. Betta4u Brands was incorporated on 20 February 2018 (“Betta4u Brands “) and acquired by EARI via a Share Exchange Agreement. Betta4u Brands Inc. is a beverage sales marketing and business development company and operates the website, www.betta4ubrands.com. Over the last two years, Betta4u Brands has acquired US based brands and companies Neo Alkaline Water, Tickle Water, Fury Beverages LLC, Rhino Spirits LLC and a Philippine based Distribution company, Zegen. For the year ended December 31 2020, Betta4u Brands Inc. and its subsidiaries sold approximately $750,000 of product, which was significantly lower than approximately $6M in 2019, due to the pandemic. With the use of proceeds from the offering, the company will reinvigorate and expand sales, distribution and marketing efforts for all the brands.

 

Brands in the Water Category - 1) Neo Water and 2) Tickle Water

 

Entertainment Arts Research Inc. intends to grow Neo and Tickle Water by introducing new packaging and by appointing key personnel, already identified in strategic market segments. Product development is well underway in new and emerging categories in this functional hydration segment. Management believes the sparkling and alkaline water segment of the beverage industry is poised for exceptional growth over the next five years. Functional water is one of the biggest trends in non-alcoholic beverages currently. Functional water is water that has been enhanced with nutrients or other ingredients in an aim to provide additional health and wellness benefits, such as stress relief and skin, hair, and nail care. In 2015, sales of functional bottled water amounted to 3.24 billion U.S. dollars in the United States and are expected to grow to a value of over five billion dollars by 2022.

 

TOPLINE CATEGORY VOLUME

SPORTS DRINKS

$7,986,151,091

10.1%

 

ENERGY DRINKS

$14,485,313,644

6.7%

BOTTLED JUICES

$7,730,105,507

8.5%

 

TEA/COFFEE

$7,344,734,789

6.6%

BOTTLED WATER

$18,999,973,759

2.1%

 

LIQUID DRINK ENHANCERS

$468,395,226

25.1%

 

 

 

 

 

 

 

SOURCE: IRI, a Chicago-based market research firm - @IrIworldwide% 52 Weeks through 3/21/21

 

Brand 3: Sports Beverage and Functional Hydration - Fury Beverages

 

Fury Beverages LLC., a Minnesota corporation formed on April 03, 2012 (“Fury) was acquired by Betta4u Brands in the second quarter of 2021 via a membership acquisition agreement. Fury is a sports hydration drink hat sells its products under the brand “Nature’s Fury” and operates the website https://www.drinkfury.com. Its business model is identical to that of Tickle and Neo Water, whereby production is outsourced to various contract packers and the route to market is similar. For the year ended December 31 2020, Fury Beverages sold approximately $240,000 Dollars in product. With the use of proceeds from the offering, we will produce inventory and expand our sales and marketing efforts. Sports Drinks powered through the pandemic to over $7.5 billion in sales over the past year. Yet even as the category’s dominant brands continue to expand the space - analysts are predicting it to pass $10 billion by 2024

 

Entertainment Arts Research Inc. intends to grow Fury by achieving economies of scale with the group’s brands in the areas of production, sales networks, distribution, customer acquisition, administration, freight, logistics and marketing. Management believe that the three segments of the beverage industry operated in, namely craft spirits, functional waters and nutritional sports drinks are poised for exceptional growth over the next five years.

 

Brand 4: Rhino Vodka

 

During the course of 2020, Betta4u Brands acquired Rhino Spirits LLC (D/B/A White Rhino Vodka), a California registered corporation that was formed on July 28, 2016 (“White Rhino”) via a membership acquisition


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agreement.  White Rhino Vodka operates the website, https://www.whiterhinovodka.com  nd its business model is to produce, market and develop premium spirit brands in the craft spirit alcohol segment with contract packers and distributors. For the year ended December 31 2020, White Rhino had no revenue due to the pandemic but sold approximately $20,000 of product in 2019 to test the market in Southern California, where it was exceptionally well received by consumers. With the use of proceeds from the offering, we will build inventory, expand sales and marketing efforts with plans well underway for national distribution. The brand has committed to donate a portion of revenue to the International White Rhino foundation, a worthy cause to save the White Rhino from extinction.

 

Management believes the craft spirit category; specifically flavored vodka is poised for exceptional growth over the next five years. The alcoholic beverages market is forecast to grow by nearly 19 percent by 2024 to over 1.7 trillion U.S. dollars in value from an initial value of 1.5 trillion dollars. In 2020, the global market size of alcoholic beverages amounted to over 1.49 trillion U.S. dollar. The yearly revenue decreased by around 200 billion dollars compared to 2019. While estimates assume that the market size will again increase in 2021, it will take at least until 2022 before the market recovers and surpass the 2019 pre-pandemic revenue. However, the Statista Consumer Market Outlook estimates that by 2025 the global market size of alcoholic beverages will increase to over 2.2 trillion U.S. dollars.

 

Brand 5: Ambhar Tequila (Prospective)

 

We have continued to identify and negotiate the acquisition of beverage companies that will be accretive to our balance sheet. We have recently executed a term sheet and are finalizing the definitive documents for the acquisition of Ambhar Global Spirits LLC, owner of the “Ambhar Tequila” brand with a website of https://ambhar.com/index.php (“Ambhar”), which we disclosed on otcmarkets.com1.

 

Ambhar is a fast growing, ultra-premium 100% agave tequila brand that was first launched in the U.S. in 2011, and in Mexico in 2013. AMBHAR is currently distributed in Texas, Florida, New York, New Jersey, Colorado, and Oklahoma, and is available for purchase nationally through a managed ecommerce platform. Internationally, the brand is distributed in Mexico, the UK, parts of Canada, and in duty free. Additional markets are scheduled to soon open, including California.

 

Product Description AMBHAR Tequila is a high-quality, luxury spirit available in five marks: Plata (blanco), Reposado, Añejo, and newly launched Cristalino and Extra Añejo. We are also currently working on two additional variants, AMBHAR Smoky and AMBHAR Cannabis (subject to regulations per markets). Our tequila is elegantly presented in a distinctive and eye-catching Cognac-like bottle, adorned with our signature Dragonfly emblem (a symbol of joy, life, and luck).

 

Ambhar was valued at was valued at $12 million USD based upon standard market valuation based on cases of Tequila sold to date.  Per the executed term sheet, we will acquire 51% of Ambhar and have the right to acquire the other 49% of the LLC upon successful completion of our funding obligation set forth in the term sheet of $3 million USD for Ambhar working capital, which will mostly be spent on marketing, which is set forth as part of the Use of Proceeds of this Offering. The $12 million valuation will make it a significant portion of our balance sheet: 50%.

 

During the last 3 fiscal years, Ambhar had sales of $1,232,097 (2018); $1,439,058 (2019); and $530,336 (2020). Management believes the 2020 sales figures are an outlier because of the Covid-19 pandemic; Ambhar has projected 2021 sales of $2,600,000 with the financials it provided in due diligence. These unaudited financial statements are attached at Exhibit 99.1 in accordance with paragraph (b)(7)(iii) on part F/S of Form 1-A. Ambhar was the subject of a Harvard Business Review case study regarding its growth strategy2, which management has used to evaluate the provided projection figures. The case study is also available from our office. - see Where I can Find More Information on page 42.

 


1 https://backend.otcmarkets.com/otcapi/company/financial-report/297901/content

2Tequila Ambhar: Designing a Growth Strategy for the US Market” by Mary Conway Dato-on and Silvia Cacho-Elizondo. Harvard Business Review: Case Study.  Published April 13, 2020.


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Risks Related to Our Business

 

Our business and our ability to execute our business strategy are subject to a number of risks as more fully described in the section titled “Risk Factors.” These risks include, but are not limited to the following:

 

·Our limited operating history by which potential investors may measure our chances of achieving success in under our business model. In addition, our executive officers have a lack of experience in managing companies similar to the Company. 

 

·Our ability to pay significant indebtedness. 

 

·Our ability to effectively operate our business segments and respond to the highly competitive and rapidly evolving marketplace and regulatory environment in which we intend to operate. 

 

·Our ability to manage our expansion, growth and operating expenses. 

 

·Our management team’s lack of prior managerial experience managing a divers portfolio of businesses. 

 

·No active market for our common stock exists or may develop, and you may not be able to resell your common stock at or above the initial public offering price. 

 

·Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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RISK FACTORS

 

An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this Offering Circular, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our shares of common stock could decline and you may lose all or part of your investment.

 

The discussions and information in this Offering Circular may contain both historical and forward-looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of our business, please be advised that our actual financial condition, operating results, and business performance may differ materially from that projected or estimated by us in forward-looking statements. We have attempted to identify, in context, certain of the factors we currently believe may cause actual future experience and results to differ from our current expectations. See “Cautionary Note Regarding Forward Looking Statements” above for a discussion of forward-looking statements and the significance of such statements in the context of this Offering Circular.

 

RISKS RELATED TO OUR COMPANY

 

We have a limited operating history in our current business plan as a beverage brand conglomerate, so there is limited track record on which to judge our business prospects and management.

 

We have limited operating history as a diversified holding company and in our business segment of beverage brands upon which to base an evaluation of our business and prospects. You must consider the risks and difficulties we face as a small operating company with limited operating history.

 

If we do not successfully address these risks, our business, prospects, operating results and financial condition will be materially and adversely harmed. Operating results for future periods are subject to numerous uncertainties and we cannot assure you that the Company will achieve or sustain profitability. The Company’s prospects must be considered in light of the risks encountered by small operating companies with limited operating history, particularly companies in new and rapidly evolving markets. Operating results will depend upon many factors, including our success in attracting and retaining motivated and qualified personnel, our ability to establish short term credit lines or obtain financing from other sources, such as the contemplated Regulation A offering, our ability to develop and market new products, control costs, and general economic conditions. We cannot assure you that the Company will successfully address any of these risks.

 

The Company’s success is reliant on one executive who is predominantly responsible for operations and identifying strategic business opportunities.

 

The Company’s success depends substantially upon one key employee. If he becomes unable or unwilling to perform his functions for the Company, its chances for success will be greatly diminished and the Company may not be able to survive.  The Company does not maintain key-person insurance for this executive, and does not have a contingent plan for his death or incapacity at this time.  From time to time, there may be changes in the Company’s executive management team resulting from the hiring or departure of executives. Such changes in the Company’s executive management team may be disruptive to its business. There can be no assurances the Company will be able to find or hire competent executives so it will not be as dependent on one employee. The Company does not maintain a chief financial officer or in house bookkeeper and so is totally reliant on third parties for the maintenance of its books, preparation of financial statements, and financial analysis of strategic partners and acquisitions.

 

The Current Coronavirus Pandemic May Adversely Affect the Global Economy and the Company’s Operations

 

As has been widely reported, the emergence of a novel coronavirus (SARS-CoV-2) and a related respiratory disease (COVID-19) in China resulted in the spread to additional countries throughout the world, including the United States, leading to a global pandemic.

 

The COVID-19 pandemic has led to severe disruptions and volatility in the global supply chain, market and economies, and those disruptions have since intensified and will likely continue for some time. Concern about the potential effects of COVID-19 and the effectiveness of measures being put in place by global governmental bodies


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at various levels as well as by private enterprises (such as workplaces, trade groups, amateur and professional sports leagues and conferences, places of worship, schools and retail establishments, among others) to contain or mitigate the spread of COVID-19 have adversely affected economic conditions and markets globally, and have led to significant, sustained and unprecedented volatility in the financial markets. Measures implemented in the United States to limit the spread of COVID-19, such as quarantines, event cancellations and social distancing, will significantly limit economic activity. There can be no assurance that such measures or other additional measures implemented from time to time will be successful in limiting the spread of the virus and what effect those measures will have on the economy generally or on the Company.

 

There can be no assurance that any measures undertaken by the federal government, or by state or local governments, will be effective to mitigate the negative near-term and potentially longer-term impact of the COVID-19 pandemic on employment, construction and the global economy more generally.

 

Many businesses have moved to a remote working environment, temporarily suspended operations, laid-off or furloughed a significant percentage of their workforce or shut down completely. Other businesses have transitioned or may in the future transition all or a substantial portion of their operations to remote working environments (as a result of state or local requirements or otherwise in response to the COVID-19 pandemic). Although the Company had already implemented a remote work environment, there is no assurance that the continued remote working environment will not have a material adverse impact on the Company or its customers, which may adversely impact the Company and its operations.

 

The COVID-19 pandemic did not require the closure of Company operations. The Company suspended in-person client and business development meetings in late March 2020. During the timeframe in which in- person meetings were suspended, Company management reallocated resources to on-line client and business development.

 

Management’s outlook for the near-term business operations will mirror the overall continued reopening of business operations within the state of North Carolina. For the Company to return to pre-COVID-19 levels of operation, it will be necessary businesses across the states of North Carolina to be allowed to return to full operations and capacities.

 

Natural disasters and other events beyond our control could materially adversely affect us.

 

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services to our customers and could decrease demand for our services. In the spring of 2020, large segments of the U.S. and global economies were impacted by COVID-19, a significant portion of the U.S. population are subject to “stay at home” or similar requirements. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers (both issuers using our services and investors investing on our platform) and our sales cycles, impact on our customer, employee or industry events, and effect on our vendors, all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain. To date, the COVID-19 outbreak, has significantly impacted global markets, U.S. employment numbers, as well as the business prospects of many small business (our potential clients). To the extent COVID- 19 continues to wreak havoc on the markets and limits investment capital or personally impacts any of our key employees, it may have significant impact on our results and operations.

 

We will need but may be unable to obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensome financial restrictions on our business.

 

We have relied upon cash from financing activities and in the future, we hope to rely more predominantly on revenues generated from operations to fund all of the cash requirements of our activities. However, there can be no assurance that we will be able to generate significant cash from our operating activities in the future to funds our continuing operations. Future financings may not be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to the Common Stock will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants would have a material adverse effect on our business, prospects, financial condition and results of operations


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because we could lose our existing sources of funding and impair our ability to secure new sources of funding. However, there can be no assurance that the Company will be able to generate any investor interest in its securities.

 

We have a history of losses and we expect significant increases in our costs and expenses to result in continuing losses for at least the foreseeable future.

 

For the fiscal year ended December 31, 2019, we generated a loss of approximately ($114,895), bringing the accumulated deficit to approximately ($10,331,620) at December 31, 2019. Increases in costs and expenses may result in a continuation of losses for the foreseeable future. There can be no assurance that we will be commercially successful.

 

We have outstanding debt and lease commitments, which is secured by our assets and it may make it more difficult for us to make payments on the notes and our other debt and lease obligations.

 

As of December 31, 2020, we had liabilities totaling approximately $362,710. Our debt commitments could have important consequences to you. For example, they could:

 

·make it more difficult for us to obtain additional financing in the future for our acquisitions and operations, working capital requirements, capital expenditures, debt service or other general corporate requirements; 

 

·require us to dedicate a substantial portion of our cash flows from operations to the repayment of our debt and the interest associated with our debt rather than to other areas of our business; 

 

·limit our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt, creating liens on our properties, making acquisitions or paying dividends; 

 

·make it more difficult for us to satisfy our obligations with respect to the notes; 

 

·place us at a competitive disadvantage compared to our competitors that have less debt; and 

 

·make us more vulnerable in the event of adverse economic and industry conditions or a downturn in our business. 

 

Our ability to meet our debt service and lease obligations depends on our future financial and operating performance, which will be impacted by general economic conditions and by financial, business and other competitive factors, many of which are beyond our control. These factors could include operating difficulties, increased operating costs, competition, regulatory developments and delays in our business strategies. Our ability to meet our debt service and lease obligations may depend in significant part on the extent to which we can successfully execute our business strategy and successfully operate our business segments. We may not be able to execute our business strategy and our business operations may be materially impacted.

 

If our business does not generate sufficient cash flow from operations or future sufficient borrowings are not available to us under our credit agreements or from other sources we might not be able to service our debt and lease commitments, including the notes, or to fund our other liquidity needs. If we are unable to service our debt and lease commitments, due to inadequate liquidity or otherwise, we may have to delay or cancel acquisitions, sell equity securities, sell assets or restructure or refinance our debt. We might not be able to sell our equity securities, sell our assets or restructure or refinance our debt on a timely basis or on satisfactory terms or at all. In addition, the terms of our agreements with original equipment manufacturers or debt agreements may prohibit us from pursuing any of these alternatives.

 

Regulatory issues. We are subject to a wide variety of regulatory activities, including:

 

Governmental regulations, claims and legal proceedings. Governmental regulations affect almost every aspect of our business, including the fair treatment of our employees, wage and hour issues, and our financing activities with customers. We could also be susceptible to claims or related actions if we fail to operate our business in accordance with applicable laws.

 

Accounting rules and regulations. The Financial Accounting Standards Board is currently evaluating several significant changes to generally accepted accounting standards in the U.S., including the rules governing the


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accounting for leases. Any such changes could significantly affect our reported financial position, earnings and cash flows. In addition, the Securities and Exchange Commission is currently considering adopting rules that would require us to prepare our financial statements in accordance with International Financial Reporting Standards, which could also result in significant changes to our reported financial position, earnings and cash flows.

 

Inadequacy of capital. The expected gross offering proceeds of a maximum of $15,000,000 may never be realized. While we believe that such proceeds will capitalize and sustain us to allow for the continued execution and operation of our business segments, if only a fraction of this Offering is sold, or if certain business segments financially underperform expectations, we may have inadequate funds to fully develop our business. Although we believe that the proceeds from this Offering will be sufficient to help sustain our development process and business operations, there is no guarantee that we will raise all the funds needed to adequately fund the operations of our business segments.

 

We may not be able to obtain adequate financing to continue marketing our brands or close acquisitions of new brands for our Beverage Brand Portfolio.

 

We will need to raise additional funds through the issuance of equity, equity-related, or debt securities or through obtaining credit from government or financial institutions. This capital will be necessary to acquire the the brands we are targeting and to diversify our beverage for our target demographics for sales and marketing business. We cannot be certain that additional funds will be available to us on favorable terms when required, or at all. If we cannot raise additional funds when we need them, our financial condition, results of operations, business and prospects would be materially and adversely affected.

 

We may pursue strategic transactions which could be difficult to implement, disrupt our business or change our business profile significantly.

 

Any future strategic acquisition or disposition of assets or a business could involve numerous risks, including: (i) potential disruption of our ongoing business and distraction of management; (ii) difficulty integrating the acquired business or segregating assets and operations to be disposed of; (iii) exposure to unknown, contingent or other liabilities, including litigation arising in connection with the acquisition or disposition or against any business we may acquire; (iv) changing our business profile in ways that could have unintended negative consequences; and (v) the failure to achieve anticipated synergies.

 

If we enter into significant strategic transactions, the related accounting charges may affect our financial condition and results of operations, particularly in the case of an acquisition. The financing of any significant acquisition may result in changes in our capital structure, including the incurrence of additional indebtedness. A material disposition could require the amendment or refinancing of our outstanding indebtedness or a portion thereof.

 

We rely on our management team, which has little experience working together.

 

We depend on a small number of executive officers and other members of management to work effectively as a team, to execute our business strategy and operating business segments, and to manage employees and consultants. Our success will be dependent on the personal efforts of Bernard Rubin and Richard Papaleo, our president and CEO respectively, and such other key personnel. Any of our officers or employees can terminate his or her employment relationship at any time, and the loss of the services of such individuals could have a material adverse effect on our business and prospects. Our management team has worked together for only a very short period of time and may not work well together as a management team.

 

We may need to raising additional capital by issuing additional securities  which could hurt the market for our securities or be on terms more favorable than those of our current shareholders.

 

We will need to, or desire to, raise substantial additional capital in the future. Our future capital requirements will depend on many factors, including, among others:

 

·Our degree of success in generating revenue from our Beverage Brand Portfolio; 

 

·The costs of establishing or acquiring sales, marketing, and distribution capabilities for our beverage brands; 


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·The extent to which we acquire or invest in businesses, products, or technologies, and other strategic relationships; and 

 

·The costs of financing unanticipated working capital requirements and responding to competitive pressures. 

 

If we raise additional funds by issuing equity or convertible debt securities, we will reduce the percentage of ownership of the then-existing shareholders, and the holders of those newly-issued equity or convertible debt securities may have rights, preferences, or privileges senior to those possessed by our then-existing shareholders. Additionally, future sales of a substantial number of shares of our Common Stock, or other equity-related securities in the public market could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity or equity-linked securities. We cannot predict the effect that future sales of our Common Stock, or other equity-related securities would have on the market price of our Common Stock at any given time.

 

Limitations of Director Liability and Indemnification of Directors and Officers and Employees.

 

Our Certificate of Incorporation limits the liability of directors to the maximum extent permitted by Nevada  law. Nevada law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:

 

·breach of their duty of loyalty to us or our stockholders; 

 

·act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; 

 

·unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Nevada General Corporation Law; or 

 

·transactions for which the directors derived an improper personal benefit. 

 

These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission. Our bylaws provide that we will indemnify our directors, officers and employees to the fullest extent permitted by law. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding. We believe that these bylaw provisions are necessary to attract and retain qualified persons as directors and officers. The limitation of liability in our Certificate of Incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might provide a benefit to us and our stockholders. Our results of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

 

Risks of borrowing.

 

If we incur additional indebtedness, a portion of our future revenues will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants, which may impair our operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to our rights. A judgment creditor would have the right to foreclose on any of our assets resulting in a material adverse effect on our business, ability to generate revenue, operating results or financial condition.

 

Unanticipated obstacles to the operations of our business segments.

 

Marketing of our beverage brands may be capital intensive and subject to ever diffusing attention span and tastes and trends. The Board of Directors believes that the market projections and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of our principals and advisors. The Board of Directors reserve the right to make significant modifications to our stated strategies depending on future events.


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Risks of operations.

 

Our operating results may be volatile, difficult to predict and may fluctuate significantly in the future due to a variety of factors, many of which may be outside of our control. Due to the nature of our target markets and our lack of experience in them, we may be unable to accurately forecast our future revenues and operating results. There are no assurances that we can generate significant revenue or achieve profitability. We anticipate having a sizeable amount of fixed expenses, and we expect to incur losses due to the execution of our business strategy, continued development efforts and related expenses. As a result, we will need to generate significant revenues while containing costs and operating expenses if we are to achieve profitability. We cannot be certain that we will ever achieve sufficient revenue levels to achieve profitability.

 

Minimal employees or infrastructure.

 

We will have a small number of employees and we don’t have any operational infrastructure or prior operating history. We intent to rely on our management team, our advisors, third-party consultants, outside attorneys, advisors, accountants, auditors, and other administrators. The loss of services of any of such personnel may have a material adverse effect on our business and operations and there can be no assurance that if any or all of such personnel were to become unavailable, that qualified successors can be found, on acceptable terms.

 

Limitation on remedies; indemnification.

 

Our Certificate of Incorporation, as amended from time to time, provides that officers, directors, employees and other agents and their affiliates shall only be liable to the Company and its shareholders for losses, judgments, liabilities and expenses that result from the fraud or other breach of fiduciary obligations. Additionally, we intend to enter into corporate indemnification agreements with each of our officers and directors consistent with industry practice. Thus, certain alleged errors or omissions might not be actionable by the Company. Our governing instruments also provide that, under the broadest circumstances allowed under law, we must indemnify its officers, directors, employees and other agents and their affiliates for losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by them in connection with the Company, including liabilities under applicable securities laws.

 

No dividends or return of profits.

 

We have not had any profits from any operations to date. We have never declared or paid any cash dividends on our Common Stock. We currently intend to retain future earnings, if any, to finance the expansion of our operations. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

 

Force Majeure.

 

Our business is uniquely susceptible to unforeseen delays or failures that are caused by forces of nature and related circumstances. These factors are outside and beyond our control. Delay or failure may be due to any act of God, fire, war, terrorism, flood, strike, labor dispute, disaster, transportation or laboratory difficulties or any similar or dissimilar event beyond our control. We will not be held liable to any shareholder in the event of any such failure.

 

We may not be able to manage our growth effectively.

 

Our growth is expected to place, a significant strain on our managerial, operational and financial resources. As our businesses grow in scale and attract more customers, there can be no assurance that our systems, procedures or controls will be adequate to support our operations or that our management will be able to achieve the rapid execution necessary to successfully grow and scale our services, products and offerings. Our operating results will also depend on our ability to expand sales and marketing commensurate with the growth of our diversified businesses. If we are unable to manage growth effectively, our business, results of operations and financial condition will be adversely affected.

 

Maintaining favorable brand recognition is essential to our success, and failure to do so could materially adversely affect our results of operations, financial condition, liquidity and cash flows.


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Our business is heavily dependent upon the favorable brand recognition that our Beverage Brand Portfolio brand names have in the markets in which they participate. Factors affecting brand recognition are often outside our control, and our efforts to maintain or enhance favorable brand recognition, such as marketing and advertising campaigns, may not have their desired effects. In addition, it may be difficult to monitor or enforce such requirements, particularly in foreign jurisdictions and various laws may limit our ability to enforce the terms of these agreements or to terminate the agreements. Any decline in perceived favorable recognition of our brands could materially adversely affect our results of operations, financial condition, liquidity and cash flows.

 

Changes in U.S., global or regional economic conditions.

 

A decrease in economic activity in the United States or in other regions of the world in which we plan to offer our beverages could adversely affect demand, thus reducing our ability to generate revenue. A decline in economic conditions could reduce our users interest in utilizing our products and services. In addition, an increase in price levels generally, or in price levels in a particular sector such as ingredients needed to appeal to discerning tastes, could result in a overall decrease in disposable income and higher prices for products outside of domestic needs, all of which could also adversely affect our revenues and, at the same time, increase our costs.

 

Fluctuations in beverage ingredient and supply costs or reduced supplies could harm our business.

 

We could be adversely affected by limitations on certain ingredients, the imposition of mandatory international trade allocations or closing of international borders (such as what has been seen in the COVID19 Pandemic). A severe or protracted disruption of fuel supplies or significant increases in fuel prices could have a material adverse effect on supply chains and our financial condition and results of operations, either by directly interfering with our normal activities or by disrupting travel and leisure upon which a significant portion of our alcohol beverage sales business relies.

 

The concentration of our accounting and information technology functions at a limited number of facilities in North Carolina creates risks for us.

 

We have concentrated our accounting functions for the United States in one office location in Cornelius, North Carolina. In addition, our major information systems are centralized in our office location in Cornelius. A disruption of normal business at any of our principal office location in Cornelius, North Carolina, whether as the result of localized conditions (such as a fire or explosion) or as the result of events or circumstances of broader geographic impact (such as an earthquake, storm, flood, epidemic, strike, act of war, civil unrest or terrorist act), could materially adversely affect our business by disrupting normal reservations, customer service, accounting and systems activities.

 

The misuse or theft of information we possess could harm our reputation or competitive position, adversely affect the price at which shares of our common stock trade or give rise to material liabilities.

 

We possess non-public information with respect to individuals, including our customers and our current and former employees, and businesses, as well as non-public information with respect to our own affairs. The misuse or theft of that information by either our employees or third parties could result in material damage to our brand, reputation or competitive position or materially affect the price at which shares of our Common Stock trade. In addition, depending on the type of information involved, the nature of our relationship with the person or entity to which the information relates, the cause and the jurisdiction whose laws are applicable, that misuse or theft of information could result in governmental investigations or material civil or criminal liability. The laws that would be applicable to such a failure are rapidly evolving and becoming more burdensome.

 

If we acquire any businesses in the future, they could prove difficult to integrate, disrupt our business, or have an adverse effect on our results of operations.

 

We intend to pursue growth primarily through internal growth, but from time to time we may consider opportunistic acquisitions which may be significant. Any future acquisition would involve numerous risks including, without limitation:

 

·potential disruption of our ongoing business and distraction of management; 

 

·difficulty integrating the acquired business; and 


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·exposure to unknown liabilities, including litigation against the companies we may acquire. 

 

If we make acquisitions in the future, acquisition-related accounting charges may affect our balance sheet and results of operations. In addition, the financing of any significant acquisition may result in changes in our capital structure, including the incurrence of additional indebtedness. We may not be successful in addressing these risks or any other problems encountered in connection with any acquisitions.

 

Manufacturer safety recalls could create risks to our business.

 

Depending on the current state of international markets, any one recall on any specific brand of our beverages, can incur a loss of business to us.  However at this time we offer a variety of beverages to mitigate such an event.

 

If we are unable to purchase adequate supplies of competitively priced leads and the cost of marketing increases, our financial condition, results of operations, liquidity and cash flows may be materially adversely affected.

 

The price and other terms at which we can acquire beverage distribution leads vary based on specific markets and other conditions. For example, certain states offer tax incentives, therefore sales leads in said states are usually higher priced.  Consequently, there is no guarantee that we can purchase a sufficient number of sales leads  at competitive prices and on competitive terms and conditions. If we are unable to obtain an adequate supply of qualified sales leads, or if we obtain less favorable pricing and other terms when we acquire Marketing dollars  and are unable to pass on any increased costs to our customers, then our financial condition, results of operations, liquidity and cash flows may be materially adversely affected.

 

If third parties claim that we infringe their intellectual property, it may result in costly litigation.

 

We cannot assure you that third parties will not claim our current or future products or services infringe their intellectual property rights. Any such claims, with or without merit, could cause costly litigation that could consume significant management time. As the number of small batch beverages increase taking advantage of similar market trends there will be increasingly overlap in brand identifications and tread-dress, companies such as ours consolidating multiple brands may become increasingly subject to infringement claims. Such claims also might require us to enter into royalty or license agreements. If required, we may not be able to obtain such royalty or license agreements or obtain them on terms acceptable to us.

 

Failure to comply with federal and state privacy laws and regulations, or the expansion of current or the enactment of new privacy laws or regulations, could adversely affect our business.

 

A variety of federal and state laws and regulations govern the collection, use, retention, sharing and security of consumer data. The existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations. In addition, various federal, state and foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy matters. Further, several states have adopted legislation that requires businesses to implement and maintain reasonable security procedures and practices to protect sensitive personal information and to provide notice to consumers in the event of a security breach. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, Federal Trade Commission requirements or orders or other federal, state or international privacy or consumer protection-related laws, regulations or industry self- regulatory principles could result in claims, proceedings or actions against us by governmental entities or others or other liabilities, which could adversely affect our business. In addition, a failure or perceived failure to comply with industry standards or with our own privacy policies and practices could adversely affect our business. Federal and state governmental authorities continue to evaluate the privacy implications inherent in the use of third-party web “cookies” for behavioral advertising. The regulation of these cookies and other current online advertising practices could adversely affect our business. Our ability to collect marketing data could be adversely effected.

 

No assurances of protection for proprietary rights; reliance on trade secrets.

 

In certain cases, we may rely on trade secrets to protect intellectual property, proprietary technology and processes, which we have acquired, developed or may develop in the future. There can be no assurances that secrecy


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obligations will be honored or that others will not independently develop similar or superior products or technology. The protection of intellectual property and/or proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated. The prosecution of proprietary claims or the defense of such claims is costly and uncertain given the uncertainty and rapid development of the principles of law pertaining to this area. We may also be subject to claims by other parties with regard to the use of intellectual property, technology information and data, which may be deemed proprietary to others.

 

We currently have a small sales and marketing organization. If we are unable to expand our direct media and marketing services to promote our beverage brands and related products, the commercial appeal and brand awareness for our products and services may be diminished.

 

We currently have a small sales and marketing organization. The Company may expand the core sales and marketing team to oversee the sales and marketing of our “Entertainment Arts Research!” business. We will incur significant additional expenses and commit significant additional management resources to expand and grow our sales force. We may not be able to build on the expansion of these capabilities despite these additional expenditures. If we elect to rely on third parties to sell our products in the U.S., we may receive less revenue than if we sold our products directly. In addition, although we would intend to diligently monitor their activities, we may have little or no control over the sales efforts of those third parties. In the event we are unable to develop and expand our own sales force or collaborate with a third party to sell our products, we may not be able to operate our products and/or services which would negatively impact our ability to generate revenue. We may not be able to enter into any marketing arrangements on favorable terms or at all. If we are unable to enter into a marketing arrangement for our products, we may not be able to develop an effective sales force to successfully operate our products and/or services. If we fail to enter into marketing arrangements for our products and are unable to develop an effective sales force, our ability to generate revenue would be limited.

 

RISKS RELATED TO THIS OFFERING

 

Our Offering differs significantly from an underwritten initial public offering.

 

This is not an underwritten initial public offering. This listing differs from an underwritten initial public offering in several significant ways, which include, but are not limited to, the following:

 

·There are no underwriters. Consequently, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient price discovery; 

 

·There can be no assurance that we will be able to stay current with OTC Bulletin Board Pink Current Information requirements; 

 

·There may be low trading volume of our Common Stock limiting their liquidity; 

 

·We are not currently working with a market maker, therefore is no underwriters’ option to purchase additional shares to help stabilize, maintain, or affect the public price of our Common Stock; 

 

·Given that there will be no underwriters’ option to purchase additional shares or otherwise underwriters in engaging in stabilizing transactions, there could be greater volatility in the public price of our Common Stock during the period immediately following qualification of this Offering; and 

 

·We will not conduct a traditional “roadshow” with underwriters prior to the qualification of this Offering. As a result, there may not be efficient price discovery with respect to our ordinary shares or sufficient demand among investors immediately after our listing, which could result in a more volatile public price of our ordinary shares. 

 

Such differences from an underwritten initial public offering could result in a volatile market price for our Common Stock and uncertain trading volume and may adversely affect your ability to sell your Common Stock.

 

The public price of our Common Stock may be volatile, and could, following a sale decline significantly and rapidly.


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As this Offering is taking place via a process that is not an underwritten initial public offering, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient price discovery with respect to the opening trades on securities exchange markets. Following this Offering, the public price of our Common Stock on the OTCPNK exchange may lead to price volatility.

 

No minimum capitalization.

 

We do not have a minimum capitalization and we may use the proceeds from this Offering immediately following our acceptance of the corresponding subscription agreements. It is possible we may only raise a minimum amount of capital, which could leave us with insufficient capital to operate our business segments, potentially resulting in greater operating losses unless we are able to raise the required capital from alternative sources. There is no assurance that alternative capital, if needed, would be available on terms acceptable to us, or at all.

 

We may not be able maintain a listing of our Common Stock.

 

To maintain our listing on the OTCPNK exchange, we must meet certain financial and liquidity criteria to maintain such listing. If we violate the maintenance requirements for continued listing of our Common Stock, our Common Stock may be delisted. In addition, our board may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our Common Stock from the OTCPNK Market may materially impair our stockholders’ ability to buy and sell our Common Stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock. In addition, in order to maintain our listing, we will be required to, among other things, file our regular quarterly reports on otcmarkets.com. The post-qualification amendment of the Offering Statement is subject to review by the SEC, and there is no guarantee that such amendment will be qualified promptly after filing. Any delay in the qualification of the post-qualification amendment may cause a delay in the trading of offering Shares. For all of the foregoing reasons, you may experience a delay between the closing of your purchase of shares of our Common Stock and the commencement of exchange trading of our Common Stock. In addition, the delisting of our Common Stock could significantly impair our ability to raise capital.

 

There may be significantly less trading volume and analyst coverage of, and significantly less investor interest in, our Common Stock, which may lead to lower trading prices for our Common Stock.

 

This Offering has not been reviewed by independent professionals.

 

We have not retained any independent professionals to review or comment on this Offering or otherwise protect the interest of the investors hereunder. Although we have retained our own counsel, neither such counsel nor any other counsel has made, on behalf of the investors, any independent examination of any factual matters represented by management herein. Therefore, for purposes of making a decision to purchase our Shares, you should not rely on our counsel with respect to any matters herein described. Prospective investors are strongly urged to rely on the advice of their own legal counsel and advisors in making a determination to purchase our Shares.

 

There has been no public market for our Common Stock prior to this Offering, and an active market in which investors can resell their shares may not develop.

 

Prior to this Offering, there has been no public market for our Common Stock. We cannot predict the extent to which an active market for our Common Stock will develop or be sustained after this Offering, or how the development of such a market might affect the market price of our Common Stock. The initial offering price of our Common Stock in this offering is based on a number of factors, including market conditions in effect at the time of the offering, and it may not be in any way indicative of the price at which our shares will trade following the completion of this offering. Investors may not be able to resell their shares at or above the initial offering price.

 

The market price of our Common Stock may fluctuate, and you could lose all or part of your investment.

 

The offering price for our Common Stock is based on a number of factors. The price of our Common Stock may decline following this Offering. The stock market in general, and the market price of our Common Stock, will likely be subject to fluctuation, whether due to, or irrespective of, our operating results, financial condition and prospects. Our financial performance, our industry’s overall performance, changing consumer preferences, technologies and advertiser requirements, government regulatory action, tax laws and market conditions in general


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could have a significant impact on the future market price of our Common Stock. Some of the other factors that could negatively affect our share price or result in fluctuations in our share price includes:

 

·actual or anticipated variations in our periodic operating results; 

 

·increases in market interest rates that lead purchasers of our Common Stock to demand a higher yield; 

 

·changes in earnings estimates; 

 

·changes in market valuations of similar companies; 

 

·actions or announcements by our competitors; 

 

·adverse market reaction to any increased indebtedness we may incur in the future; 

 

·additions or departures of key personnel; 

 

·actions by stockholders; 

 

·speculation in the press or investment community; and 

 

·our intentions and ability to list our Common Stock on a national securities exchange and our subsequent ability to maintain such listing. 

 

We do not expect to declare or pay dividends in the foreseeable future.

 

We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business. Therefore, holders of our Common Stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

 

Sales of our Common Stock under Rule 144 could reduce the price of our stock.

 

In general, persons holding “restricted securities,” including affiliates, must hold their shares for a period of at least six (6) months, may not sell more than one percent (1%) of the total issued and outstanding shares in any ninety (90) day period, and must resell the shares in an unsolicited brokerage transaction at the market price. However, Rule 144 will only be available for resale in the ninety (90) days after the Company files its semi-annual reports on Form 1-SA and annual reports on Form 1-K, unless the Company voluntarily files interim quarterly reports on Form 1-U, which the Company has not yet decided to do. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

 

Our failure to maintain effective internal controls over financial reporting could have an adverse impact on us.

 

We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.

 

Management discretion as to the actual use of the proceeds derived from this Offering.

 

The net proceeds from this Offering will be used for the purposes described under “Use of Proceeds.” However, we reserve the right to use the funds obtained from this Offering for other similar purposes not presently


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contemplated which we deem to be in the best interests of the Company and our shareholders in order to address changed circumstances or opportunities. As a result of the foregoing, our success will be substantially dependent upon the discretion and judgment of the Board of Directors with respect to application and allocation of the net proceeds of this Offering. Investors who purchase our Common Stock will be entrusting their funds to our Board of Directors, upon whose judgment and discretion the investors must depend.

 

The offering price of our Common Stock was arbitrarily determined and does not reflect the value of the company, our assets or our business.

 

The offering price of our Common Stock was arbitrarily determined by our management and is not based on book value, assets, earnings or any other recognizable standard of value. We arbitrarily established the offering price considering such matters as the state of our business development and the general condition of, and opportunities present in, the industry in which we operate. No assurance can be given that our Common Stock Shares, or any portion thereof, could be sold for the offering price or for any amount. If profitable results are not achieved from our operations, of which there can be no assurance, the value of our Common Stock sold pursuant to this Offering will fall below the offering price and become worthless. Prospective investors should not consider the offering price of the Common Stock as indicative of their actual value. The offering price bears little relationship to our assets, net worth, or any other objective criteria.

 

General securities investment risks.

 

All investments in securities involve the risk of loss of capital. No guarantee or representation is made that an investor will receive a return of its capital. The value of our Common Stock can be adversely affected by a variety of factors, including development problems, regulatory issues, technical issues, commercial challenges, competition, legislation, government intervention, industry developments and trends, and general business and economic conditions.

 

Multiple securities offerings and potential for integration of our offerings.

 

We are currently and will in the future be involved in one or more additional offers of our securities in other unrelated securities offerings. Any two or more securities offerings undertaken by us could be found by the SEC, or a state securities regulator, agency, to be “integrated” and therefore constitute a single offering of securities, which finding could lead to a disallowance of certain exemptions from registration for the sale of our securities in such other securities offerings. Such a finding could result in disallowance of one or more of our exemptions from registration, which could give rise to various legal actions on behalf of a federal or state regulatory agency and the Company.

 

Offering not reviewed by independent professionals.

 

We have not retained any independent professionals to review or comment on this Offering or otherwise protect the interest of the investors hereunder. Although we have retained our own counsel, neither such counsel nor any other counsel has made, on behalf of the investors, any independent examination of any factual matters represented by management herein. Therefore, for purposes of making a decision to purchase our Common Stock, you should not rely on our counsel with respect to any matters herein described. Prospective investors are strongly urged to rely on the advice of their own legal counsel and advisors in making a determination to purchase our Common Stock.

 

We cannot guarantee that we will sell any specific number of Common Stock shares in this Offering.

 

There is no commitment by anyone to purchase all or any part of the Common Stock Shares offered hereby and, consequently, we can give no assurance that all of the Common Stock shares in this Offering will be sold. Additionally, there is no underwriter for this Offering; therefore, you will not have the benefit of an underwriter’s due diligence efforts that would typically include the underwriter being involved in the preparation of this Offering Circular and the pricing of our Common Stock shares offered hereunder. Therefore, there can be no assurance that this Offering will be successful or that we will raise enough capital from this Offering to further our development and business activities in a meaningful manner. Finally, prospective investors should be aware that we reserve the right to withdraw, cancel, or modify this Offering at any time without notice, to reject any subscription in whole or in part, or to allot to any prospective purchaser fewer Common Stock Shares than the number for which he or she subscribed.


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Investors will experience immediate and substantial dilution in the book value of their investment, and will experience additional dilution in the future.

 

If you purchase our Common Stock in this Offering, you will experience immediate and substantial dilution because the price you pay will be substantially greater than the net tangible book value per share of the shares you acquire. Since we will require funds in addition to the proceeds of this Offering to conduct our planned business, we will raise such additional funds, to the extent not generated internally from operations, by issuing additional equity and/or debt securities, resulting in further dilution to our existing stockholders (including purchasers of our Common Stock in this Offering).

 

We may be unable to meet our current and future capital requirements from capital raised by this Offering.

 

Our capital requirements depend on numerous factors, including but not limited to the rate and success of our development efforts, marketing efforts, market acceptance of our products and services and other related services, our ability to establish and maintain our agreements with the services currently operating, our ability to maintain and expand our user base, the rate of expansion of our user community, the level of resources required to develop and operate our products and services, information systems and research and development activities, the availability of software and services provided by third-party vendors and other factors. The capital requirements relating to development of our technology and the continued and expanding operations of our business segments will be significant. We cannot accurately predict the timing and amount of such capital requirements. However, we are dependent on the proceeds of this Offering as well as additional financing that will be required in order to operate our business segments and execute on our business plans. However, in the event that our plans change, our assumptions change or prove to be inaccurate, or if the proceeds of this Offering prove to be insufficient to operate our business segments, we would be required to seek additional financing sooner than currently anticipated. There can be no assurance that any such financing will be available to us on commercially reasonable terms, or at all. Furthermore, any additional equity financing may dilute the equity interests of our existing shareholders (including those purchasing shares pursuant to this Offering), and debt financing, if available, may involve restrictive covenants with respect to dividends, raising future capital and other financial and operational matters. If we are unable to obtain additional financing as and when needed, we may be required to reduce the scope of our operations or our anticipated business plans, which could have a material adverse effect on our business, operating results and financial condition.

 

There may be little to no volume in the trading of our common stock, and you may not be able to resell your Common Stock at or above the initial public offering price.

 

There can no assurance that our Common Stock shares will maintain a sufficient trading market sufficient for the shares in this offering. If no active trading market for our Common Stock is sustained following this Offering, you may be unable to sell your shares when you wish to sell them or at a price that you consider attractive or satisfactory. The lack of an active market may also adversely affect our ability to raise capital by selling securities in the future or impair our ability to license or acquire other product candidates, businesses or technologies using our shares as consideration.

 

The market price of our Common Stock may fluctuate significantly, and investors in our Common Stock may lose all or a part of their investment.

 

If a market for our Common Stock develops following this Offering, the trading price of our Common Stock could be subject to wide fluctuations in response to various factors, some of which are beyond our control. The market prices for securities of penny-stock companies have historically been highly volatile, and the market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as:

 

·actual or anticipated adverse results or delays in our research and development efforts; 

 

·our failure to operate our business; 

 

·unanticipated serious safety concerns related to our business; 


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·adverse regulatory decisions; 

 

·legal disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our intellectual property, government investigations and the results of any proceedings or lawsuits, including patent or stockholder litigation; 

 

·changes in laws or regulations applicable to our businesses; 

 

·our dependence on third parties; 

 

·announcements of the introduction of new products by our competitors; 

 

·market conditions in our business sectors; 

 

·announcements concerning product development results or intellectual property rights of others; 

 

·future issuances of our Common Stock or other securities; 

 

·the addition or departure of key personnel; 

 

·actual or anticipated variations in quarterly operating results; 

 

·announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; 

 

·our failure to meet or exceed the estimates and projections of the investment community; 

 

·issuances of debt or equity securities; 

 

·trading volume of our Common Stock; 

 

·sales of our Common Stock by us or our stockholders in the future; 

 

·overall performance of the equity markets and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies; 

 

·failure to meet or exceed any financial guidance or expectations regarding development milestones that we may provide to the public; 

 

·ineffectiveness of our internal controls; 

 

·general political and economic conditions; 

 

·effects of natural or man-made catastrophic events; 

 

·other events or factors, many of which are beyond our control; and 

 

·publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts. 

 

Further, price and volume fluctuations result in volatility in the price of our common stock, which could cause a decline in the value of our Common Stock. Price volatility of our common stock might worsen if the trading volume of our Common Stock is low. The realization of any of the above risks or any of a broad range of other risks, including those described in these “Risk Factors,” could have a dramatic and material adverse impact on the market price of our Common Stock.


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A sale of a substantial number of shares of the Common Stock may cause the price of our Common Stock to decline.

 

If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons, substantial amounts of our Common Stock in the public market, including shares issued in connection with the exercise of outstanding options or warrants, the market price of our Common Stock could fall. Sales of a substantial number of shares of our Common Stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management’s attention and harm our business. The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the Common Stock of pharmaceutical companies. These broad market fluctuations may cause the market price of our Common Stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of a company’s securities. We may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect our business.

 

Our semi-annual operating results may fluctuate significantly.

 

We expect our operating results to be subject to semi-annual fluctuations. Our net loss and other operating results will be affected by numerous factors, including:

 

·variations in the level of expenses related to our business segments; 

 

·any intellectual property infringement lawsuit in which we may become involved; 

 

·regulatory developments affecting our business and industry; and 

 

·our execution of any collaborative, licensing or similar arrangements, and the timing of payments we may make or receive under these arrangements. 

 

If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our Common Stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our Common Stock to fluctuate substantially.

 

Our ability to use our net operating loss carry forwards may be subject to limitation.

 

Generally, a change of more than fifty percent (50%) in the ownership of a company’s stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes. An ownership change may limit our ability to use our net operating loss carryforwards attributable to the period prior to the change. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may become subject to limitations, which could potentially result in increased future tax liability for us.

 

The number of securities traded on an ATS may be very small, making the market price more easily manipulated.

 

While we understand that many ATS platforms have adopted policies and procedures such that security holders are not free to manipulate the trading price of securities contrary to applicable law, and while the risk of market manipulation exists in connection with the trading of any securities, the risk may be greater for our Common Stock because the ATS we choose may be a closed system that does not have the same breadth of market and liquidity as the national market system. There can be no assurance that the efforts by an ATS to prevent such behavior will be sufficient to prevent such market manipulation.

 

The preparation of our financial statements involves the use of estimates, judgments and assumptions, and our financial statements may be materially affected if such estimates, judgments or assumptions prove to be inaccurate.

 

Financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) typically require the use of estimates, judgments and assumptions that affect the


23


reported amounts. Often, different estimates, judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes in these estimates, judgments and assumptions may occur from period to period over time. These estimates, judgments and assumptions are inherently uncertain and, if our estimates were to prove to be wrong, we would face the risk that charges to income or other financial statement changes or adjustments would be required. Any such charges or changes could harm our business, including our financial condition and results of operations and the price of our securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an understanding of our consolidated financial statements and our business.

 

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our Common Stock could be negatively affected.

 

Any trading market for our Common Stock will be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our Common Stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage or us, the market price and market trading volume of our Common Stock could be negatively affected.

 

Our management has broad discretion as to the use of certain of the net proceeds from this Offering.

 

We intend to use a significant portion of the net proceeds from this Offering (if we sell all of the shares being offered) for working capital and other general corporate purposes. However, we cannot specify with certainty the particular uses of such proceeds. Our management will have broad discretion in the application of the net proceeds designated for use as working capital or for other general corporate purposes. Accordingly, you will have to rely upon the judgment of our management with respect to the use of these proceeds. Our management may spend a portion or all of the net proceeds from this Offering in ways that holders of our Common Stock may not desire or that may not yield a significant return or any return at all. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may also invest the net proceeds from this offering in a manner that does not produce income or that loses value. Please see “Use of Proceeds” below for more information.

 

Our Common Stock could be subject to the “Penny Stock” rules of the Securities and Exchange Commission if it were publicly traded and may be difficult to sell.

 

Our shares of Common Stock are considered to be “penny stocks” because they are not registered on a national securities exchange or listed on an automated quotation system sponsored by a registered national securities association, pursuant to Rule 3a51- 1(a) under the Exchange Act. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny stocks and that the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market, which sets forth the basis on which the broker or dealer made the suitability determination and that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

 

The market for penny stocks has suffered in recent years from patterns of fraud and abuse.

 

Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

 

·control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; 

 

·manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; 


24


·boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; 

 

·excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and 

 

·the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses. 

 

The foregoing risk factors are not to be considered a definitive list of all the risks associated with an investment in our Offered Shares. This Offering Circular contains forward-looking statements that are based on our current expectations, assumptions, estimates, and projections about our business, our industry, and the industry of our clients. When used in this Offering Circular, the words “expects,” anticipates,” “estimates,” “intends,” “believes” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The cautionary statements made in this Offering Circular should be read as being applicable to all related forward-looking statements wherever they appear in this Offering Circular.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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USE OF PROCEEDS

 

Assuming the sale by us of the Maximum Offering of $15,000,000 and no estimated expenses, the total net proceeds to us would be $14,287,500 less the portion of the Offering that is allotted for sales on behalf of noteholders converting their debt holding of convertible debt; we currently intend to use the net proceeds as set forth below. We expect from time to time to evaluate the acquisition of businesses, products and technologies for which a portion of the net proceeds may be used, although we currently are not planning or negotiating any such transactions. As of the date of this Offering Circular, we cannot specify with certainty all of the particular uses for the net proceeds to us from the sale of Common Stock. Accordingly, we will retain broad discretion over the use of these proceeds, if any. The following table represents management’s best estimate of the uses of the net proceeds received from the sale of Common Stock assuming the sale of, respectively, 100%, 75%, 50% and 25% of the Common Stock shares offered for sale in this Offering.

 

Percentage of Offering Sold

 

 

100%

75%

50%

25%

Marketing & Customer Acquisition Incentives for Brands in Beverage Brand Portfolio(1)

$1,200,000.00

$900,000.00

$600,000.00

$300,000.00

Professional Services(2)

$300,000.00

$225,000.00

$150,000.00

$75,000.00

Strategic Partnerships/Acquisitions(3)

$9,000,000.00

$6,750,000.00

$4,500,000.00

$2,250,000.00

Working Capital, Inventory and Operations

$2,250,000.00

$1,687,500.00

$1,125,000.00

$562,500.00

Miscellaneous Operating Expenses(4)

$2,250,000.00

$1,687,500.00

$1,125,000.00

$562,500.00

TOTAL

$15,000,000.00

$11,250,000.00

$7,500,000.00

$3,750,000.00

 

(1)Includes budgets for marketing campaigns for all the brands in our Beverage Brand Portfolio. 

(2)The Issuer may issue the qualified Regulation A Shares directly to vendors for these use of proceeds instead of selling shares and using the cash proceeds to pay them. 

(3)Includes but is not limited $3 million USD for the acquisition of Ambhar Global Spirits (d/b/a Ambhar Tequila), with whom we have executed a term sheet and are now finalizing definitive documents. 

(4)Miscellaneous Operating Expenses includes but may not be limited to paying its office lease, maintaining its OTC markets listing, and covering various other expenses incidental its business and publicly listed security; the Company does not plan to pay back salary or service long term debt with proceeds of the Offering. It also includes our Offering expenses of $12,500.00. The decreased Use of Proceeds for any of the approximately $700 thousand USD in convertible notes included in the Offering for selling shareholders that is converted into Offering shares will be taken from this line item. 

 

Because the offering is a “best efforts” offering without a minimum offering amount, we may close the offering without sufficient funds for all the intended purposes set out above, or even to cover the costs of this offering.

 

The amounts set forth above are estimates, and we cannot be certain that actual costs will not vary from these estimates. Our management has significant flexibility and broad discretion in applying the net proceeds received in this Offering. We cannot assure you that our assumptions, expected costs and expenses and estimates will prove to be accurate or that unforeseen events, problems or delays will not occur that would require us to seek additional debt and/or equity funding, which may not be available on favorable terms, or at all. See “Risk Factors.”

 

This expected use of the net proceeds from this Offering represents our intentions based upon our current financial condition, results of operations, business plans and conditions. As of the date of this Offering Circular, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this Offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this Offering.

 

We may also use a portion of the net proceeds for the investment in strategic partnerships and possibly the acquisition of complementary businesses, products or technologies, although we have no present commitments or agreements for any specific acquisitions or investments. Pending our use of the net proceeds from this Offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.


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DILUTION

 

If you purchase shares in this Offering, your ownership interest in our Common Stock will be diluted immediately, to the extent of the difference between the price to the public charged for each share in this Offering and the net tangible book value per share of our Common Stock after this Offering. You will experience immediate and substantial dilution because the price you pay will be substantially greater than the net tangible book value per share of the shares you acquire, which is currently $0.0018 per share.

 

On June 30, 2021; September 30, 2021; and the date of this circular, there were an aggregate of 88,828,220 shares of Company Common Stock issued and outstanding. Our net book value as of June 30, 2021, was $160,000 or $0.0018 per then-outstanding share of our Common Stock.

 

The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this offering:

 

Funding Level

 

$

15,000,000

 

$

11,250,000

 

$

7,500,000

 

$

3,750,000

Offering Price

 

$

0.075

 

$

0.075

 

$

0.075

 

$

0.075

Historical net tangle book value per Common

Stock share before the Offering

 

$

0.0018

 

$

0.0018

 

$

0.0018

 

$

0.0018

Increase in net tangible book value per share

attributable to new investors in this Offering

 

$

0.0506

 

$

0.0477

 

$

0.0387

 

$

0.0264

Net tangle book value per share, after the Offering

 

$

0.0524

 

$

0.0459

 

$

0.0405

 

$

0.0282

Dilution per share to new investors

 

$

0.0226

 

$

0.0273

 

$

0.0344

 

$

0.0468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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DETERMINATION OF OFFERING PRICE

 

Prior to the Offering, there has been a limited public market for our Common Stock. Accordingly, the price of the Shares in this Offering was determined by the Company. The principal factors we considered in determining such price include:

 

§the information set forth in this Offering Circular and otherwise available; 

 

§our history and prospects and the history of and prospects for the industry in which we compete; 

 

§our past and present financial performance; 

 

§our prospects for future earnings and the present state of our development; 

 

§the general condition of the securities markets at the time of this Offering; 

 

§the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and 

 

§other factors deemed relevant by us. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of our operations together with our consolidated financial statements and the notes thereto appearing elsewhere in this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors,” “Cautionary Statement regarding Forward-Looking Statements” and elsewhere in this Offering Circular. Please see the notes to our Financial Statements for information about our Significant Accounting Policies and Recent Accounting Pronouncements.

 

Overview

 

Entertainment and Arts Research, Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 19, 1999 as a real estate rental corporation under the name Property Investors Ventures, Inc. On November 24, 2008 the company effectuated a reverse merger and changed its name to Entertainment and Arts Research, Inc. The Company creates, develops and publishes apps, video games, web content and interactive entertainment.

 

Throughout the first half of fiscal year 2021, the Company gradually transitioned to becoming a diversified conglomerate of beverage brands.  The Company has become a diversified holding company focused on growth opportunities in the newly developing brands in the beverage industry that can scale by taking advantage of the Company’s specialty beverage marketing operations.

 

The Company’s transition was accomplished with the following transactions;

 

1)Acquisition of assets of StreetBeatz Inc, a video streaming network that develops branding, marketing and advertising content for Foody’s Video and Social Media Platform worldwide. StreetBeatz Brands Inc consists of 50% holdings of Foody TV Acquisitions of Florida Inc and 100% of (Assets) Sports & Entertainment TV. 

 

2)Acquisition of Betta4u Brands Inc., and its wholly owned subsidiaries and brands; 

 

a)Fury Beverages LLC, 

b)Rhino Spirits LLC, 

c)Zegen Distribution (Philippines) 

d)Tickle Water Brand 

e)Neo Alkaline Water Brand 

 

Financial Statement Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the Company ended December 31, 2020. The balance sheet as of December 31, 2020 has been derived from the unaudited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the Company’s financial statements and notes thereto. The notes to the unaudited condensed consolidated financial statements are presented on a continuing basis unless otherwise noted.


29


 

Summary of Results

 

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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Revenue Recognition

 

Revenue is recognized when all of the following elements are satisfied: (i) there are no uncertainties regarding customer acceptance; (ii) there is persuasive evidence that an agreement exists; (iii) delivery has occurred; (iv) legal title to the products has transferred to the customer; (v) the sales price is fixed or determinable; and (vi) collectability is reasonably assured. At this time the company is in a reorganization phase and has minimal to no revenue.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist mainly of cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable, accrued expenses, derivative liabilities, and loans payable. The carrying values of the financial instruments approximate their fair value due to the short-term nature of these instruments. The fair values of the loans payable have interest rates that approximate market rates.

 

Derivative Instruments

 

The Company does not enter into derivative contracts for purposes of risk management or speculation. However, from time to time, the Company enters into contracts, namely convertible notes payable, that are not considered derivative financial instruments in their entirety, but that include embedded derivative features.

 

In accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 815-15, Embedded Derivatives, and guidance provided by the SEC Staff, the Company accounts for these embedded features as a derivative liability or equity at fair value.

 

The recognition of the fair value of the derivative instrument at the date of issuance is applied first to the debt proceeds. The excess fair value, if any, over the proceeds from a debt instrument, is recognized immediately in the statement of operations as interest expense. The value of derivatives associated with a debt instrument is recognized at inception as a discount to the debt instrument and amortized to interest expense over the life of the debt instrument. A determination is made upon settlement, exchange, or modification of the debt instruments to determine if a gain or loss on the extinguishment has been incurred based on the terms of the settlement, exchange, or modification and on the value allocated to the debt instrument at such date.

 

Cash and Cash Equivalents

 

$16,695 at June 30, 2021.

 

The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are stated at cost and consist of bank deposits. The carrying amount of cash and cash equivalents approximates fair value.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

$44,874 at June 30, 2021

 

The Company will bill its customers after its products are shipped. The Company bases its allowance for doubtful accounts on estimates of the creditworthiness of customers, analysis of delinquent accounts, payment histories of its customers and judgment with respect to the current economic conditions. The Company generally does not require collateral. The Company believes the allowances are sufficient to cover uncollectible accounts. The Company reviews its accounts receivable aging on a regular basis for past due accounts, and writes off any uncollectible amounts against the allowance.


30


 

Inventory

 

For Q2 of Fiscal year 2021 Inventory of finished goods was $179,793

 

Inventory is stated at the lower of cost or market. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when required. The Company is in the process of pricing and ordering inventory.

 

Property and Equipment

 

None at present or for fiscal year 2021

 

Property and equipment is recorded at cost less accumulated depreciation. Replacements, maintenance and repairs which do not improve or extend the lives of the respective assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

 

Impairment of Long-Lived Assets

 

None at present or for fiscal year 2021

 

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the book value of the assets may not be recoverable. In accordance with Accounting Standards Codification (“ASC”) 360-10-35-15 Impairment or Disposal of Long-Lived Assets, recoverability is measured by comparing the book value of the asset to the future net undiscounted cash flows expected to be generated by the asset.

 

No events or changes in circumstances have been identified which would impact the recoverability of the Company’s long- lived assets reported at December 31, 2020 and 2021.

 

Current Plan of Operations

 

Our plan of operations is to shift into a diversified holding company of various beverage brands with growth oriented development can trajectory that can take advantage of our dedicated specialized media marketing operations to grow their sales and distribution. We expect to incur substantial expenditures in the foreseeable future for the development and sales and marketing of our beverage brands and ongoing internal research and development. At this time, we cannot reliably estimate the nature, timing or aggregate amount of such costs. We intend to continue to build our corporate and operational infrastructure and to build interest in our product and service offerings and as such are unable to project those costs at this time.

 

As noted above, the pivot to this plan of operations requires us to raise significant additional capital immediately. If we are successful in raising capital through the sale of shares offered for sale in this Offering Circular we believe that the Company will have sufficient cash resources to fund its plan of operations for the next twelve months.

 

We continually evaluate our plan of operations discussed above to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that we will successfully obtain the required capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations. The inability to secure additional capital would have a material adverse effect on us, including the possibility that we would have to sell or forego a portion or all of our assets or cease operations. If we discontinue our operations, we will not have sufficient funds to pay any amounts to our stockholders.

 

Even if we raise additional capital in the near future, if our operating business segments fail to achieve anticipated financial results, our ability to raise additional capital in the future to fund our operating business segments would likely be seriously impaired. If in the future we are not able to demonstrate favorable financial results or projections from our operating business segments, we will not be able to raise the capital we need to


31


continue our then current business operations and business activities, and we will likely not have sufficient liquidity or cash resources to continue operating.

 

Because our working capital requirements depend upon numerous factors there can be no assurance that our current cash resources will be sufficient to fund our operations. At present, we have no committed external sources of capital, and do not expect any significant product revenues for the foreseeable future. Thus, we will require immediate additional financing to fund future operations. There can be no assurance, however, that we will be able to obtain funds on acceptable terms, if at all.

 

Company Growth Strategy

 

Our long-term strategy is focused on four priorities: expanding and diversifying our revenues from sales of our own brands of beverages; improving our sales and marketing effectiveness of our media operations through analysis of our marketing data grow sales of our branded beverages faster; disciplined acquisition of upstart beverage brands; developing a stream of revenue from providing our sales and marketing services to third party brands.

 

Credit Facilities

 

As of December 31, 2020, the Company had notes payable of $283,300 in convertible notes payable, other current liabilities of $18,486 and accounts payable of $60,924. Other than the foregoing, and to vendors and service providers in the ordinary course of our business, we do not have any other credit facilities or other access to bank credit. The Company has added $400,000 in additional in convertible notes payable so far in fiscal year 2021.

 

Off-Balance Sheet Arrangements

 

The Company does not have any derivative financial instrument or other off-balance sheet arrangements.

 

Quantitative and Qualitative Disclosures about Market Risk

 

In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Litigation

 

From time to time we become the subject of litigation that is incurred in the ordinary course of its business. However, to date, we have not been made aware of any actual, pending or threatened litigation against the Company.


32


 

Property

 

We lease and maintain our primary offices at 19109 W. Catawba Avenue, Suite 200, Cornelius, NC 28031. We do not currently own any real estate.

 

DIRECTORS, EXECUTIVE OFFICERS & CORPORATE GOVERNANCE

 

The following are our executive officers and directors and their respective ages and positions as of the date of this Offering Circular:

 

Name

 

Position

 

Age

 

Term of Office

 

Approximate

hours per

week for

part-time

employees

Executive Officers:

 

 

 

 

 

 

 

 

Bernard Rubin

 

Chief Executive Officer

 

53

 

Since Jan. 2021*

 

40

 

During the past five (5) years, none of the persons identified above has been involved in any bankruptcy or insolvency proceeding or convicted in a criminal proceeding, excluding traffic violations and other minor offenses. There is no arrangement or understanding between the persons described above and any other person pursuant to which the person was selected to his or her office or position.

 

*Has served as CEO of the Company’s wholly owned subsidiary, Better4U Brands Inc., since 2018.

 

Executive Officers and Directors

 

Bernard Rubin- CEO Entertainment Arts Research Inc.  Sole Director.

 

Since January 2021 to the present Mr. Rubin has over 25 years in the global CPG/FMCG Drinks, Juice, Water, and Beverage Industry. In 2004, after 10 years in the beverage industry, Mr. Rubin earned his Masters in Business Administration graduated from the Bond University (Australia) and continued working in the beverage industry until he founded Betta4U Brands, Inc. in 2018. He is an entrepreneurial, hands on leader in the beverage industry and has acquired diverse skills in developing and delivering profitable business ventures.

https://www.linkedin.com/in/bernard-rubin/

 

Board Leadership Structure and Risk Oversight

 

The Board oversees our business and considers the risks associated with our business strategy and decisions. The Board currently implements its risk oversight function as a whole. Each of the Board committees, when established, will also provide risk oversight in respect of its areas of concentration and reports material risks to the board for further consideration.

 

Term of Office

 

Directors serve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve for one (1) year until the meeting of the Board following the annual meeting of shareholders and until their successors have been elected and qualified.

 

Family Relationships

 

There are no family relationships among any of our officers or directors.

 

Involvement in Certain Legal Proceedings

 

To our knowledge, none of our current directors or executive officers has, during the past ten (10) years:

 

·been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 


33


 

·had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two (2) years prior to that time; 

 

·been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; 

 

·been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 

 

·been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 

 

·been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self- regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a) (29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 

 

Except as set forth above and in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

 

We are not currently a party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, we believe will have a material adverse effect on our business, financial condition or operating results.

 

Code of Business Conduct and Ethics

 

Our Board plans to adopt a written code of business conduct and ethics (“Code”) that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. We intend to post on our website a current copy of the Code and all disclosures that are required by law in regard to any amendments to, or waivers from, any provision of the Code.

 

Director Compensation

 

Our directors are not compensated for their role on the Board of Directors.  Our sole director, Bernard Rubin, is compensated by the Company but that compensation is for his role as CEO of the Company.

 

 

 


34


 

EXECUTIVE COMPENSATION

 

The following table represents information regarding the total compensation our executive officers and director of the Company as of September 30, 2021:

 

Name and Principal Position

 

Cash

Compensation

$

 

Other

Compensation

$

 

Total

Compensation

$

Bernard Rubin, CEO, Director

 

$

180,000

 

 

100,000

 

$

280,000

 

 

 

 

 

 

 

 

 

 

Total

 

$

180,000

 

 

100,00

 

$

280,000

 

(1)Any values reported in the “Other Compensation”, if applicable, column represents the aggregate grant date fair value, computed in accordance with Accounting Standards Codification (“ASC”) 718 Share Based Payments, of grants of stock options to each of our named executive officers and directors. 

 

Employment Agreements.

 

The company is currently in negotiations to fill the following positions;

 

Appointment of Board of Directors

Appointment of Advisory Board

Vice President Finance

Vice President Sales

Vice President Marketing

Vice President Operations

 

Outstanding Equity Awards

 

The Company has not made any equity awards to date.

 

Long-Term Incentive Plans

 

We currently have no long-term incentive plans.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


35


 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Related Transactions

 

Other than as given herein, there have been no transactions and there are no currently proposed transaction, in which the Company was or is to be a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s Common Stock, or an immediate family member of any of those persons.

 

SECURITY OWNERSHIP OF MANAGEMENT & CERTAIN SECURITYHOLDERS

 

The following table shows the beneficial ownership of our Common Stock as of the date of this Offering Circular held by (i) each person known to us to be the beneficial owner of more than five percent (5%) of any class of our shares; (ii) each director; (iii) each executive officer; and (iv) all directors and executive officers as a group. As of September 30, 2021, they collectively hold 32,000,000 shares of our Common Stock issued and outstanding.

 

Beneficial ownership is determined in accordance with the rules of the Commission, and generally includes voting power and/or investment power with respect to the securities held. Shares of Common Stock subject to options and warrants currently exercisable or which may become exercisable within sixty (60) days of the date of this Offering Circular, are deemed outstanding and beneficially owned by the person holding such options or warrants for purposes of computing the number of shares and percentage beneficially owned by such person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnotes to this table, the persons or entities named have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.

 

The percentages below are based on fully diluted shares of our Common Stock as of the date of this Offering Circular.

 

 

 

Number of shares

of Common Stock

Beneficially

Owned as of

Sept 30, 2021

 

Percentage

Before

Offering

 

Beneficially

Owned(5)

After

Maximum

Offering

Directors and Officers: (1)(2)

 

 

 

 

 

 

 

 

 

B4U Holdings (Common Series B)

 

 

20,000,000

 

 

22.5%

 

 

10.6%

Joseph Saulter

 

 

 

 

 

 

 

 

 

Dr Thomas Mensa

 

 

 

 

 

 

 

 

 

Greater than 5% Beneficial Owners:

 

 

 

 

 

 

 

 

 

Jonathan Eubanks

 

 

2,500,000

 

 

5%

 

 

<5%

Dr. Thomas Mensa (Preferred Series D)

 

 

2,000,000

 

 

8%

 

 

8%

Joseph Saulter

 

 

10,000,000

 

 

40%

 

 

40%

 

(1)Unless otherwise indicated, the principal address of the named directors and officers of the Company is c/o Entertainment Arts Research Inc., 19109 W Catawba Avenue, Suite 200, Cornelius, NC 28031. 

(2)Bernard Rubin, by virtue of his ownership of preferred stock, has over 3,9BN votes and, therefore, control over all matters submitted to shareholders. 

 

 

 


36


 

DESCRIPTION OF SECURITIES

 

The following is a summary of the rights of our capital stock as provided in our certificate of incorporation, bylaws and certificate of designation. For more detailed information, please see our certificate of incorporation, bylaws and certificate of designation, which have been filed as exhibits to the Offering Statement of which this Offering Circular is a part.

 

Indebtedness.

 

As of June 30, 2021, the Company had a total outstanding indebtedness of $12,823,870, of which $12,234,389 is indebtedness in the form of stock payable. This was the last time, since the latest amendment to this Registration Statement that the Company issued any notes in exchange for cash or bona fide services. Additional information about the Company’s outstanding notes and debentures can be found in the Section below entitled “Entertainment Arts Research Inc., Recent Financing Activities.” Other investors also provided financing, information about which can also be found in the Section entitled “Entertainment Arts Research Inc., Recent Financing Activities.”

 

Common Stock

 

As of October 15, 2021, the Company had 200,000,000 shares of Common Stock authorized and 88,828,220 shares of Common Stock issued and outstanding.

 

The holders of the Common Stock are entitled to one vote for each share held at all meetings of shareholders (and written actions in lieu of meeting). There shall be no cumulative voting. The holders of shares of Common Stock are entitled to dividends when and as declared by the Board from funds legally available therefor, and upon liquidation are entitled to share pro rata in any distribution to holders of Common Stock. There are no preemptive, conversion or redemption privileges, nor sinking fund provisions with respect to the Common Stock.

 

The number of authorized shares of Common Stock may be increased or decreased subject to the Company’s legal commitments at any time and from time to time to issue them, by the affirmative vote of the holders of a majority of the stock of the Company entitled to vote.

 

Preferred Stock

 

The following table is a summary of the Company’s preferred stock. Please refer to the information following the table for the full terms.

 

Designation

Authorized Shares

Shares Issued

Ownership

Voting

 

 

 

 

 

Common B

50,000,000

1,900,000

Joseph N Saulter

8%

Votes per share

100

2,500,000

Jonathan Eubanks

10%

 

 

20,000,000

B4U Holdings Inc.

79%

 

 

800,000

Multiple Shareholders

3%

 

 

25,200,000

Class Total

100%

 

 

 

 

 

Preferred Series A

200,000,000

2,000,000

Jonathan Eubanks

26%

Votes per share

0

5,565,011

Multiple Shareholders

74%

 

 

7,565,011

Class Total

100%

 

 

 

 

 

Preferred Series B

25,000,000

2,237,900

Multiple Shareholders

13%

Votes per share

100

15,000,000

B4U Holdings Inc.

87%

 

 

17,237,900

Class Total

100%

 

 

 

 

 

Preferred Series D

25,000,000

10,000,000

Joseph N Saulter

40%

Votes per share

50

2,000,000

Dr Thomas Mensa

8%

 

 

8,000,000

B4U Holdings Inc.

32%

 

 

5,000,000

Multiple Shareholders

20%

 

 

25,000,000

Class Total

100%


37


 

 

 

B4U

Holdings

Joseph N

Saulter

Dr Thomas

Mensa

Jonathan

Eubanks

Multiple

Shareholders

Total Votes

3,900,000,000

692,192,575

101,500,000

250,770,075

624,169,407

Voting %

70%

12%

2%

5%

11%

Total Votes Available

5,568,632,057

 

The designations, preferences, limitations and relative rights of the shares of each such class are as follows:

 

Series “A” Preferred Stock

 

There are no Series A shares outstanding.

 

The designation, preferences, limitations and relative rights of the Series “A” Preferred Stock are as follows:

 

This series of Preferred Stock shall be designated as “Series ‘A’ Convertible Preferred Stock” and the number of shares of such series shall be 200,000,000 shares.

 

Series B Preferred Stock

 

There are no Series B shares outstanding.

 

The designation, preferences, limitations and relative rights of the Series “B” Preferred Stock are as follows:

 

This series of Preferred Stock shall be designated as “Series ‘B’ Preferred Stock” and the number of shares of such series shall be 25,000,000 shares.

 

Series C Preferred Stock

 

There are no Series C shares outstanding.

 

The designation, preferences, limitations and relative rights of the Series “C” Preferred Stock are as follows:

 

This series of Preferred Stock shall be designated as “Series ‘C’ Preferred Stock” and the number of shares of such series shall be 20,000,000 shares.

 

May only be issued for Mergers and Acquisitions and Investments.

 

No Voting Rights.

 

Stated value of $1.00; can convert to common stock at the trading price (eg. if EARI stock price is $.10, then one Series C Preferred share would convert to 10 shares of EARI common stock).

 

Preferred C Holders must give EARI 5 business days to convert.

 

Series D Preferred Stock

 

There are no Series D shares outstanding.

 

The designation, preferences, limitations and relative rights of the Series “D” Preferred Stock are as follows:

 

This series of Preferred Stock shall be designated as “Series ‘D’ Convertible Preferred Stock” and the number of shares of such series shall be 25,000,000 shares.

 

Transfer Agent and Registrar


38


 

The transfer agent and registrar for our Common Stock is Empire Stock Transfer, Inc., 1859 Whitney Mesa Drive, Henderson, NV 89014, telephone 702-974-1444, www.empirestock.com. The transfer agent is registered under the Exchange Act and operates under the regulatory authority of the SEC and FINRA.

 

Penny Stock Regulation

 

The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price of less than Five Dollars ($5.00) per share or an exercise price of less than Five Dollars ($5.00) per share. Such securities are subject to rules that impose additional sales practice requirements on broker-dealers who sell them. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker- dealer’s presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As our Common Stock immediately following this Offering may be subject to such penny stock rules, purchasers in this Offering will in all likelihood find it more difficult to sell their Common Stock shares in the secondary market.

 

DIVIDEND POLICY

 

We plan to retain any earnings for the foreseeable future for our operations. We have never paid any dividends on our Common Stock and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our Board and will depend on our financial condition, operating results, capital requirements and such other factors as our Board deems relevant.

 

PLAN OF DISTRIBUTION

 

The shares are being offered by us on a “best-efforts” basis by our officers, directors and employees, with the assistance of independent consultants, and possibly through registered broker-dealers who are members of the Financial Industry Regulatory Authority (“FINRA”) and finders.

 

There is no aggregate minimum to be raised in order for the Offering to become effective and therefore the Offering will be conducted on a “rolling basis.” This means we will be entitled to begin applying “dollar one” of the proceeds from the Offering towards our business strategy, offering expenses, reimbursements, and other uses as more specifically set forth in the “Use of Proceeds” contained elsewhere in this Offering Circular.

 

We are including in this Offering, the underlying common stock for conversions of our outstanding convertible promissory notes.  The cumulative outstanding balance of these convertible notes is presently $680,000, and we are common stock for conversion of up to $700,000 in notes is allotted for this Offering.  The average conversion price for these notes is $.10 (a 1/3 discount to the Offering Price) so up 7,000,000 shares of Offering stock may be issued to these noteholders as part of the Offering. The Company has 7 outstanding convertible promissory notes. One is in default with a balance of $206,000 and so maybe converted at anytime. One is a demand note for $175,000 (issued for an acquisition) and also may be converted at any time. The remaining promissory notes were are due at various times in 2022 and may only be converted on or after their due date, though management may negotiate early conversion to clear debt from the balance sheet and stop further interest from accruing.

 

We may pay selling commissions to participating broker-dealers who are members of FINRA for shares sold by them, equal to a percentage of the purchase price of the Common Stock shares. We may pay finder’s fees to persons who refer investors to us. We may also pay consulting fees to consultants who assist us with the Offering, based on invoices submitted by them for advisory services rendered. Consulting compensation, finder’s fees and brokerage commissions may be paid in cash, Common Stock or warrants to purchase our Common Stock. We may also issue shares and grant stock options or warrants to purchase our common stock to broker- dealers for sales of shares attributable to them, and to finders and consultants, and reimburse them for due diligence and marketing costs on an accountable or non-accountable basis. We have not entered into selling agreements with any broker-dealers to


39


date, though we may engage a FINRA registered broker-dealer firm for offering administrative services. Participating broker-dealers, if any, and others may be indemnified by us with respect to this offering and the disclosures made in this Offering Circular.

 

We expect to commence the offer and sale of the Shares as of the date on which the Form 1-A Offering Statement of which this Offering Circular is a part (the “Offering Circular”) is qualified by the U.S. Securities and Exchange Commission (which we refer to as the “SEC” or the “Commission”).

 

Our Offering will expire on the first to occur of (a) the sale of all 200,000,000 shares of Common Stock offered hereby, (b) June 30, 2022, subject to extension for up to one hundred-eighty (180) days in the sole discretion of the Company, or (c) when our board of directors elects to terminate the Offering.

 

Offering Period and Expiration Date

 

This Offering will start on or immediately prior to the date on which the SEC initially qualifies this Offering Statement (the “Qualification Date”) and will terminate on the Termination Date.

 

Minimum Purchase Requirements

 

The minimum investment amount is Five Thousand Dollars ($5,000.00).

 

Procedures for Subscribing

 

If you decide to subscribe for our Common Stock shares in this Offering, you should:

 

1.Electronically receive, review, execute and deliver to us a subscription agreement; and 

 

2.Deliver funds directly by wire or electronic funds transfer via ACH to the Company’s bank account designated in the Company’s subscription agreement. 

 

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity to review this Offering Circular.

 

Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to our designated account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.

 

Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

 

State Law Exemptions

 

This Offering Circular does not constitute an offer to sell or the solicitation of an offer to purchase any Shares in any jurisdiction in which, or to any person to whom, it would be unlawful to do so. An investment in the Shares involves substantial risks and possible loss by investors of their entire investments (See Risk Factors).

 

The Shares have not been qualified under the securities laws of any state or jurisdiction. However, in the case of each state in which we sell the Shares, we may qualify the Shares for sale with the applicable state securities regulatory body or we will sell the Shares pursuant to an exemption from registration found in the applicable state’s securities, or Blue Sky, law.

 

Investor Suitability Standards

 

The Offered Shares may only be purchased by investors residing in a state in which this Offering Circular is duly qualified who have the financial capacity to hold the investment for an indefinite amount of time.


40


 

Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed Ten Percent (10%) of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed Ten Percent (10%) of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).

 

NOTE: For the purposes of calculating your net worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary if the fiduciary directly or indirectly provides funds for the purchase of the Shares.

 

In order to purchase our Common Stock shares and prior to the acceptance of any funds from an investor, an investor will be required to represent, to the Company’s satisfaction, that he is either an accredited investor or is in compliance with the Ten Percent (10%) of net worth or annual income limitation on investment in this Offering.

 

Advertising, Sales and Other Promotional Materials

 

In addition to this Offering Circular, subject to limitations imposed by applicable securities laws, we expect to use additional advertising, sales and other promotional materials in connection with this offering. These materials may include information relating to this offering, articles and publications concerning industries relevant to our business operations or public advertisements and audio-visual materials, in each case only as authorized by us. In addition, the sales material may contain certain quotes from various publications without obtaining the consent of the author or the publication for use of the quoted material in the sales material. Although these materials will not contain information in conflict with the information provided by this Offering Circular and will be prepared with a view to presenting a balanced discussion of risk and reward with respect to the Offered Shares, these materials will not give a complete understanding of our company, this offering or the Offered Shares and are not to be considered part of this Offering Circular. This offering is made only by means of this Offering Circular, and prospective investors must read and rely on the information provided in this Offering Circular in connection with their decision to invest in the Shares.

 

Issuance of Certificates

 

Upon settlement, that is, at such time as an investor’s funds have cleared and we have accepted an investor’s subscription agreement, we will issue a certificate or certificates representing such investor’s purchased Shares, but the Company reserves the right to issue the Offered Shares in “book entry” with our transfer agent. If the Offered Shares are registered in book entry, you will not receive a certificate but will receive an account statement from our transfer agent acknowledging the number of Shares you own.

 

Transferability of the Offered Shares

 

The Shares will be generally freely transferable, subject to any restrictions imposed by applicable securities laws or regulations.

 

LEGAL MATTERS

 

Certain legal matters with respect to the shares of Common Stock offered hereby will be passed upon by Milan Saha, Esq., of Plattsburgh, NY.

 

EXPERTS

 

The financial statements of the Company appearing elsewhere in this Offering Circular have been included herein in reliance upon the report of Wendell Hacker, an independent certified public accounting firm, appearing elsewhere herein, and upon the authority of that firm as experts in accounting and auditing.


41


 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act of 1993, as amended, with respect to the shares of Common Stock offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the information set forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us and the Common Stock offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements contained in this Offering Circular regarding the contents of any contract or other document that is filed as an exhibit to the Offering Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the Offering Statement. You may read and copy this information at the SEC’s Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov. In addition, you can find all of our public filings on otcmarkets.com, and specifically at this link: https://www.otcmarkets.com/stock/EARI/disclosure.

 

For Any Further Questions, Please Contacts us at:

 

Entertainment Arts Research, Inc.

www.earigroup.com

info@earigroup.com

(980) 999-0270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


42


 

ENTERTAINMENT ARTS RESEARCH INC.

INDEX TO FINANCIAL STATEMENTS

 

 

Page

Annual Financial Statement December 31, 2020

 

 

 

CONSOLIDATED BALANCE SHEET

F-1

STATEMENT OF OPERATIONS

F-2

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

F-3

STATEMENT OF CASH FLOWS

F-4

NOTES TO FINANCIAL STATEMENTS

F-5

 

 

Interim Financial Statement June 30, 2021

 

 

 

CONSOLIDATED BALANCE SHEET

F-11

STATEMENT OF OPERATIONS

F-12

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

F-13

STATEMENT OF CASH FLOWS

F-14

NOTES TO FINANCIAL STATEMENTS

F-15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


43


ENTERTAINMENT ARTS RESEARCH, INC.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

 

 

December 31

2020

 

December 31

2019

Assets

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

-

 

$

-

Accounts Receivable

 

-

 

 

-

Deposit

 

-

 

 

-

Total Current Assets

 

-

 

 

-

 

 

 

 

 

 

Intangible Assets-Goodwill-Technology License

 

509,000

 

 

509,000

 

 

 

 

 

 

Total Assets

 

509,000

 

 

509,000

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accrued Derivative

 

8,117

 

 

8,117

Accounts Payable

 

60,924

 

 

60,924

Notes Payable

 

283,300

 

 

283,300

Convertible Notes Payable-Net of Discount

 

10,369

 

 

10,369

Total Liabilities

 

362,710

 

 

362,710

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

Common Stock, 200,000,000 authorized

51,303,133 and 45,558,385 issued and outstanding

@$.00001 respectively

 

512

 

 

512

Common Stock B, 50,000,000 authorized,

5,200,000 issued '@ $.00001

 

52

 

 

52

Preferred Stock A 200,000,000 authorized and

7,663,010 shares issued @ $.00001 par value, respectively

 

77

 

 

77

Preferred Stock B, 25,000,000 shares authorized,

2,237,900 shares @$.00001 respectively

 

22

 

 

22

Preferred Stock, D 25,000,000 shares authorized

17,000,000 shares issued @ $.00001 par value

 

170

 

 

170

Additional Paid in Capital

 

10,477,077

 

 

10,477,077

Retained Earnings (Deficit)

 

(10,331,620)

 

 

(10,331,620)

Total Stockholders' Equity

 

146,290

 

 

146,290

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

$

509,000

 

$

509,000

 

 

See accompanying notes to these financials.


F-1


 

ENTERTAINMENT ARTS RESEARCH, INC.

STATEMENT OF OPERATIONS

FOR YEARS ENDED DECEMBER 31, 2020 AND 2019

(UNAUDITED)

 

 

December 31

2020

 

December 31

2019

 

 

 

 

 

 

Total Revenue

$

-

 

$

-

 

 

 

 

 

 

Expenses

 

 

 

 

 

Investor Relations

 

-

 

 

-

General and Administrative

 

-

 

 

114,895

Total operating expenses

 

-

 

 

(114,895)

 

 

 

 

 

 

Loss from operations

 

-

 

 

(114,895)

Loss (Gain) on Derivatives

 

-

 

 

-

Amortization of Deferred Costs

 

-

 

 

-

 

 

 

 

 

 

Profit (Loss)

$

-

 

$

(114,895)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these financials.


F-2


ENTERTAINMENT ARTS RESEARCH, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2019

 

 

Common Stock

 

Common Stock B

 

Preferred Stock A

 

Preferred Stock B

 

Preferred Stock D

 

 

 

 

 

 

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Additional

Paid in

Capital

 

Accumulated

Deficit

 

Total

Stockholders'

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2018

45,558,385

455

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,362,239

 

(10,216,725)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2019

45,558,385

455

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,362,239

 

(10,216,725)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2019

45,558,385

455

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,362,239

 

(10,216,725)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2019

45,558,385

455

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,362,239

 

(10,216,725)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock issued

5,744,748

57

 

-

-

 

-

-

 

-

-

 

-

-

 

114,838

 

-

 

-

Net Loss

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

 

(114,838)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2019

51,303,133

512

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,477,077

 

(10,331,620)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2020

45,558,385

455

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,477,077

 

(10,331,620)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2020

45,558,385

455

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,477,077

 

(10,331,620)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2020

45,558,385

455

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,477,077

 

(10,331,620)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2020

51,303,133

512

 

5,200,000

52

 

7,663,010

77

 

2,237,900

22

 

17,000,000

170

 

10,477,077

 

(10,331,620)

 

146,290

 

 

 

 

See accompanying notes to these financials.


F-3


ENTERTAINMENT ARTS RESEARCH, INC.

STATEMENT OF CASH FLOWS

FOR YEARS ENDED DECEMBER 31, 2020 AND DECEMBER 31, 2019

 

 

December 31

2020

 

December 31

2019

 

 

 

 

 

 

Net income (Loss)

$

-

 

$

(114,895)

 

 

 

 

 

 

Stock issued

 

 

 

 

 

Derivative

 

-

 

 

-

Accounts Receivable

 

-

 

 

-

Accounts Payable and accrued expenses

 

-

 

 

-

Amortization of Note Discount

 

 

 

 

 

 

 

-

 

 

(114,895)

Net cash provided by operating activities

 

 

 

 

 

 

 

 

 

 

 

Cash flow from Investing activities

 

-

 

 

-

 

 

 

 

 

 

Cash flow from Financing Activities

 

-

 

 

114,895

Proceeds from notes

 

-

 

 

-

Contributions

 

-

 

 

-

Reduction of Debt

 

-

 

 

-

Net cash provided by investing and financing activities

 

-

 

 

114,895

 

 

 

 

 

 

Net increase (decrease) in cash

 

-

 

 

-

Cash-beginning

 

-

 

 

-

Cash - ending

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these financials.


F-4


 

ENTERTAINMENT ARTS RESEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2020

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Entertainment and Arts Research, Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 19, 1999 as a real estate rental corporation under the name Property Investors Ventures, Inc. On November 24, 2008 the company effectuated a reverse merger and changed its name to Entertainment and Arts Research, Inc. The Company creates, develops and publishes apps, video games, web content and interactive entertainment.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).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 reporting period. Actual results could differ from those estimates.

 

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

 

(A) Use of Estimates

 

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and  revenues  and  expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based payments and derivative instruments and recorded debt discount, valuation of deferred tax assets and valuation of in-kind contribution of services and interest.

 

(B) Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2019 and December 31, 2020, the Company had no cash equivalents.

 

(C) Loss Per Share

 

In accordance with the accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share” basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

 

The computation of basic and diluted loss per share at December 31, 2020 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

 

December 31, 2020

 

 

Fully Diluted Shares

51,303,133

 Total

51,303,133


F-5


(D) Business Segments

 

The Company operates in one segment and therefore segment information is not presented.

 

(E) Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized  or  realizable  and  earned  when  all  of  the  following  criteria  are  met:  (i)  persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company specifically derives income from the following:

 

1.App and game design development, contract for services 

2.Clients pay a fee for a feature app or downloading apps 

3.Consulting services for consulting on designs 

4.In the future clients will pay for products and services that help build brand identity. For the years ended December 31, 2020 and 2019 there was no revenue. 

 

(F) Fair Value of Financial Instruments

 

The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

 

The guidance also establishes a fair value hierarchy for measurements of fair value as follows:

 

·Level 1 - quoted market prices in active markets for identical assets or liabilities. 

 

·Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 

 

·Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 

 

The Company's financial instruments consist of accounts payable, accrued expenses,  notes  payable, notes payable - related party, loan payable - related party, convertible notes payable, convertible notes payable - related party and deferred rent payable. The carrying amount of the Company's financial instruments approximates their fair value as of December 31, 2019 and December 31, 2020, due to the short-term nature of these instruments.

 

The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3 (see Note 8).

 

(G) Embedded Conversion Features

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features.


F-6


 

(H) Derivative Financial Instruments

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

 

(I) Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt.

(J) Debt Issue Costs and Debt Discount

 

The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

(K) Stock-Based Compensation - Non Employees

 

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

 

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub- topic 505-50”).

 

Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black- Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:

 

·Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term  


F-7


of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

 

·Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. 

 

·Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within theexpected term of the share options and similar instruments. 

 

·Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments. 

 

Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505- 50- 45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505 -50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.

 

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.

 

Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

 

(L) Recent Accounting Pronouncements

 

Newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.


F-8


 

NOTE 3 - GOING CONCERN

 

As reflected in the accompanying financial statements, the Company has minimal operations, has negative working capital a stockholders’ deficit and limited revenue. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

 

NOTE 4 - RELATED PARTY TRANSACTIONS

 

Free office space

 

The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.

 

NOTE 5 - NOTE PAYABLE AND CONVERTIBLE NOTE PAYABLE

 

At September 30, 2017 the Company is obligated to an unrelated third party for $48,000 without interest payable on demand.

 

On July 10, 2015 the Company acquired Go loyal Inc. agreed to pay the balance owed in the form of a note for $275,000 payable in 12 monthly installments of $22,916.67 commencing in August of 2015. Thru September 30, 2017 the Company paid $39,700 leaving a balance of $235,300 The Company is in default of its obligation.

 

At September 30, 2017 the note payable shown on the balance sheet of $283,300 is comprised of $48,000 plus $235,300 discussed above.

 

Also at September 30, 2017 the Company is obligated on one remaining convertible note which began on August 14, 2015.The note is payable in one year and are convertible at a 40% discount, from the lowest trading price for the last 20 days before conversion. The liability remaining is $10,369. The debt discount has been fully amortized.

 

The Company calculated a derivative liability using the black shoes module using a volatility rate of 198% and a risk free interest rate of .017% which resulted in a liability of $8,117.

 

NOTE 6 - INTANGIBLE ASSET-LICENSE TECHNOLOGY AND GOODWILL

 

The Company in November 2012 acquired technology related to the “Daily App Dream” for a total price of $62,000, payable over 12 months @ $3,500 per month plus a one time payment of $6,500 and $13,500 worth of the Company’s stock. The Company has evaluated the asset of $62,000 for future cash flows and determined that there should not be any impairment on this asset.

 

On July 10, 2015 the Company acquired Go Loyal, Inc. for a note of $275,000, cash of $75,000 and 500,000 shares of preferred a stock valued at market on July 10, 2015, at.16 per share or $80,000 for a total of $430,000. The Company assumed the cash balance in go loyal of $13,000 and thus the value was $417,000. The Company has evaluated the asset and determined that there should not be any impairment at this time.

 

In September of 2017 the Company issued stock valued at $30,000 for 100% control of Stencyl Exams, LLC. The Company has determined that there should not be any impairment at this time.

 

NOTE 7 - STOCKHOLDERS’ EQUITY

 

Issuance of common stock

 

For the year ending 2020 the Company had 51,303,133 shares issued and outstanding.


F-9


 

 

Common Stock B

 

The Company has 50,000,000 authorized shares of Common Stock B, convertible on a 1 to 1 basis with Common Stock. At December 31, 2020 the total of 5, 200,000 shares are issued and outstanding of which the CEO retains 2,700,000 shares.

 

Preferred Stock

 

The Company has authorized 200,000,000 of preferred stock A and 25,000,000 shares each of preferred stock B, and D with a par value of .00001. At December 31, 2020, the total of 7,663,010 shares of preferred A were outstanding, 2,237,900 of B, and 17,000,000 of D. All classes of preferred are convertible on a 1 to 1 basis to common.

 

NOTE 8 - SUBSEQUENT EVENTS

 

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no subsequent events to be disclosed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


F-10


 

ENTERTAINMENT ARTS RESEARCH, INC.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

 

 

June 30

2021

 

December 31

2020

Assets

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

16,695

 

$

-

Accounts Receivable

 

44,874

 

 

-

Inventory

 

178,793

 

 

-

Deposit

 

-

 

 

-

Total Current Assets

 

240,362

 

 

-

 

 

 

 

 

 

Intangible Assets-Goodwill-Technology License

 

509,000

 

 

509,000

Investment in Betta4uBrands

 

11,734,389

 

 

-

Investments in FoodTV and Sports Entertainment Network

 

500,000

 

 

-

 

 

 

 

 

 

Total Assets

 

12,983,751

 

 

509,000

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accrued Derivative

 

8,117

 

 

8,117

Accounts Payable

 

287,695

 

 

60,924

Notes Payable

 

283,300

 

 

283,300

Stock Payable

 

12,234,389

 

 

-

Convertible Notes Payable-Net of Discount

 

10,369

 

 

10,369

Total Liabilities

 

12,823,870

 

 

362,710

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

Common Stock, 200,000,000 authorized

56,450,220 and 51,303,133 issued and outstanding

@$.00001 respectively

 

563

 

 

512

Common Stock B, 50,000,000 authorized,

25,200,000 and 5,200,000 issued and outstanding

@$.00001 respectively

 

252

 

 

52

Preferred Stock A 200,000,000 authorized and

7,565,011  and 7,663,010 shares issued @ $.00001

par value, respectively

 

76

 

 

77

Preferred Stock B, 25,000,000 shares authorized,

17,237,900 and 2,237,900 issued and outstanding

shares @$.00001 respectively

 

172

 

 

22

Preferred Stock, D 25,000,000 shares authorized

25,000,000 and 17,000,000 issued and outstanding

shares issued @ $.00001  respectively

 

250

 

 

170

Additional Paid in Capital

 

10,597,027

 

 

10,477,077

Retained Earnings (Deficit)

 

(10,438,459)

 

 

(10,331,620)

Total Stockholders' Equity

 

159,881

 

 

146,290

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

$

12,983,751

 

$

509,000

 

See accompanying notes to these financials.


F-11


 

ENTERTAINMENT ARTS RESEARCH, INC.

STATEMENT OF OPERATIONS

(UNAUDITED)

 

 

Six Months Ended

 

Three Months Ended

 

June 30

2021

 

June 30

2020

 

June 30

2021

 

June 30

2020

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

$

254,636

 

$

-

 

$

254,636

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

263,568

 

 

-

 

 

263,568

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

(8,932)

 

 

-

 

 

(8,932)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Investor Relations

 

-

 

 

-

 

 

-

 

 

-

Marketing

 

316

 

 

-

 

 

316

 

 

-

General and Administrative

 

97,591

 

 

-

 

 

97,161

 

 

-

Total operating expenses

 

97,907

 

 

-

 

 

97,477

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(106,839)

 

 

-

 

 

(106,409)

 

 

-

Loss (Gain) on Derivatives

 

-

 

 

-

 

 

-

 

 

-

Amortization of Deferred Costs

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Profit (Loss)

$

(106,839)

 

$

-

 

$

(106,409)

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these financials.


F-12


ENTERTAINMENT ARTS RESEARCH, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2021

 

 

Common Stock

 

Common Stock B

 

Preferred Stock A

 

Preferred Stock B

 

Preferred Stock D

 

 

 

 

 

 

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Additional

Paid in

Capital

 

Accumulated

Deficit

 

Total

Stockholders'

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2021

74,842,057

747

 

25,200,000

252

 

7,565,011

76

 

17,237,900

172

 

25,000,000

250

 

10,476,843

 

(10,332,050)

 

146,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock issued

12,000,000

120

 

-

-

 

-

-

 

-

-

 

-

-

 

119,880

 

-

 

-

Common Stock cancelled

(30,391,837)

(304)

 

-

-

 

-

-

 

-

-

 

-

-

 

304

 

-

 

-

Net Loss

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

 

(106,409)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2021

56,450,220

563

 

25,200,000

252

 

7,565,011

76

 

17,237,900

172

 

25,000,000

250

 

10,597,027

 

(10,438,459)

 

159,881

 

 

 

 

 

See accompanying notes to these financials.


F-13


ENTERTAINMENT ARTS RESEARCH, INC.

STATEMENT OF CASH FLOWS

 

 

For the six

months ended

June 30, 2021

 

For the six

months ended

June 30, 2020

 

 

 

 

 

 

Net income (Loss)

$

(106,839)

 

$

-

 

 

 

 

 

 

Stock issued

 

-

 

 

 

Derivative

 

-

 

 

-

Accounts Receivable

 

(44,874)

 

 

-

Inventory

 

(178,793)

 

 

-

Accounts Payable and accrued expenses

 

226,771

 

 

-

Amortization of Note Discount

 

 

 

 

-

 

 

 

 

 

-

Net cash provided by operating activities

 

(103,735)

 

 

 

 

 

 

 

 

 

Cash flow from Investing activities

 

 

 

 

 

 

 

 

 

 

 

Cash flow from Financing Activities

 

120,430

 

 

-

Proceeds from notes

 

-

 

 

-

Contributions

 

-

 

 

-

Reduction of Debt

 

-

 

 

-

Net cash provided by investing and financing activities

 

120,430

 

 

-

 

 

 

 

 

 

Net increase (decrease) in cash

 

16,695

 

 

-

Cash - beginning

 

-

 

 

-

Cash - ending

$

16,695

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these financials.


F-14


 

ENTERTAINMENT ARTS RESEARCH, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2021

(Unaudited)

 

Company Overview and History

 

Entertainment and Arts Research, Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 19, 1999 as a real estate rental corporation under the name Property Investors Ventures, Inc. On November 24, 2008, the company effectuated a reverse merger and changed its name to Entertainment and Arts Research, Inc.

 

On 4 January 2021, the company issued preferred stock which resulted in a change of control and management. (see the disclosure of change of control). The company continues to develop virtual reality applications and software but will now diversify into streaming media channels and packaged consumer goods in the beverage space. This diversification and growth by acquisition strategy will allow the company to generate immediate revenue from existing consumer brands that will in turn be supported by owned media, with content generation to market and advertise our brands.

 

Our mailing address is Entertainment Arts Research Inc., 19109 West Catawba Ave, Suite 200, Cornelius, NC 28031 and our telephone number is (980) 999-0270. The company website address is www.earigroup.com

 

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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company specifically derives income from the following:

 

1.Virtual Reality Application design development, contract for services. 

2.Business Consulting Services 

3.Streaming Media Channels and Advertising 

 

For the period June 30 31 to June 30, 2021, there was $254,636 in total revenue.

 

Fair Value of Financial Instruments

 

The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

 

The guidance also establishes a fair value hierarchy for measurements of fair value as follows:

 

·Level 1 - quoted market prices in active markets for identical assets or liabilities. 

 

·Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in  


F-15


markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

·Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 

 

The Company's financial instruments consist of accounts payable, accrued expenses, notes payable, notes payable - related party, loan payable - related party, convertible notes payable, convertible notes payable - related party and deferred rent payable. The carrying amount of the Company's financial instruments approximates their fair value as of December 31, 2019 and December 31, 2020, due to the short-term nature of these instruments.

 

The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3.

 

Embedded Conversion Features

 

The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features.

 

Derivative Financial Instruments

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

 

Beneficial Conversion Feature

 

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.

 

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt.

Debt Issue Costs and Debt Discount

 

The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

 

Stock-Based Compensation - Non Employees

 

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

 

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub- topic 505-50”).


F-16


Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. If the Company is a newly formed corporation or shares of the Company are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black- Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:

 

·Expected term of share options and similar instruments: Pursuant to Paragraph 718-10- 50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. 

 

·Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. 

 

·Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments. 

 

·Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments. 

 

Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505- 50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non- forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.


F-17


 

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.

 

Pursuant to ASC paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

 

Cash and Cash Equivalents

 

$16,695 at June 30, 2021.

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

$44,874 at June 30, 2021.

 

The Company bases its allowance for doubtful accounts on estimates of the creditworthiness of customers, analysis of delinquent accounts, payment histories of its customers and judgment with respect to the current economic conditions. The Company generally does not require collateral. The Company believes the allowances are sufficient to cover uncollectible accounts. The Company reviews its accounts receivable aging on a regular basis for past due accounts and writes off any uncollectible amounts against the allowance.

 

Inventory

 

$178,793 at June 30, 2021

 

Inventory is stated at the lower of cost or market. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company's management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when required. The Company is in the process of pricing and ordering Inventory.

 

Property and Equipment

 

None at June 30, 2021

 

Property and equipment is recorded at cost less accumulated depreciation. Replacements, maintenance and repairs which do not improve or extend the lives of the respective assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

 

Impairment of Long-Lived Assets

 

None at 30 June 2021

 

Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the book value of the assets may not be recoverable. In accordance with Accounting Standards Codification ("ASC") 360-10-35-15 Impairment or Disposal of Long-Lived Assets, recoverability is measured by comparing the book value of the asset to the future net undiscounted cash flows expected to be generated by the asset.


F-18


 

Going Concern

 

The ability of the Company to continue as a going concern is dependent on management's plans, which includes implementation of its business plan and continuing to raise funds through debt or equity raises. The Company will likely continue to rely upon related-party debt or equity financing to ensure the continuing existence of the business. The Company is in the process of concluding acquisitions that generate revenue in the global consumer goods market.

 

On January 15, 2021, the Company entered into a Stock Purchase Agreement with Biznet Worldwide Ventures Inc. to acquire Streetbeatz Brands Inc (A Wyoming Corporation) along with their holdings, Foody TV Acquisitions of Florida Inc and Sports & Entertainment TV for $250,000 and 5 million common shares of EARI. The company plans to fund Streetbeatz Brands Inc with $250,000 over a 12-month period and in return, will receive 25% of all profits that are generated.

 

On June 1, 2021, the Issuer executed a Stock Purchase Agreement to acquire 100% of the issued and outstanding Common and Series A Preferred Stock, which represents the controlling interest, of Betta4u Brands Inc., a Delaware corporation, for the issuance 32 million new shares of common stock and payment of $250 thousand USD cash in tranches as it brings in new funding. The Issuer has not yet issued the common stock that is part of the consideration for the acquisition. Betta4u Brands Inc., owns and operates Neo Water, Tickle Water, Zegen Company, Fury Beverages LLC and Rhino Spirits LLC

 

Prepaid Expenses and Other Assets

 

None

 

Loans payable

 

At September 30, 2017 the note payable shown on the balance sheet of $283,300 is comprised of $48,000 plus $235,300 discussed above. The Company calculated a derivative liability using the black shoes module using a volitivity rate of 198% and a risk-free interest rate of .017% which resulted in a liability of $8,117. On January 12, 2021, a judgement was filed and approved for $206,000 from funds that were accepted by the company on June 2, 2015. The company has entered into an interim agreement with a funding group to acquire this note once the judgement has been vacated.

 

The company has secured funding commitments and is currently negotiating with several investment groups to restructure all outstanding loan notes and finance required for working capital.

 

Equity

 

Preferred and Common Stock For the period ending June 30, 2021 issued and outstanding.

 

Common Stock, 700,000,000 shares authorized, 56,450,220 issued and outstanding.

 

Common Stock B, 50,000,000 shares authorized, 25,200,000 issued and outstanding.

 

Preferred Stock A, 200,000,000 shares authorized, 7,565,011 shares issued and outstanding.

 

Preferred Stock B, 25,000,000 shares authorized, 17,237,900 issued and outstanding.

 

Preferred Stock D, 25,000,000 shares authorized, 25,000,000 issued and outstanding.

 

Subsequent Events

 

None

 


F-19


PART III - EXHIBITS

 

Index to Exhibits

 

Exhibit Number

Exhibit Description

2.1

Articles of Incorporation

2.2

By-Laws

4.1

Subscription Agreement

11.1

Consent of Milan Saha, Esq.

12.1

Opinion of Milan Saha, Esq.

99.1

Ambhar Global Spirits 2020 Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


II-1


 

SIGNATURE

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on behalf by the undersigned, thereunto duly authorized, in Cornelius, North Carolina, on October 15, 2021.

 

 

Entertainment Arts Research, Inc.

 

This Offering Statement has been signed by the following persons in the capacities and on the dates indicated.

 

 

By: /s/ Bernard Rubin

Name: Bernard Rubin

Title: Chief Executive Officer, Director and Principal Financial Officer

 

Date: October 15, 2021

 

 

By: /s/ Bernard Rubin

Name: Bernard Rubin

Title: Chief Financial Officer (Principal Financial Officer)

 

Date: October 15, 2021

 

 

SIGNATURES OF DIRECTORS:

 

 

By: /s/ Bernard Rubin

Name: Bernard Rubin

Title: Chairperson, Director

 

Date: October 15, 2021

 

 

 

 

 

 

 

 

 


II-2

ENTERTAINMENT ARTS RESEARCH INC.

 

FORM OF SUBSCRIPTION AGREEMENT

 

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING THROUGH THE WEBSITE MAINTAINED BY THE COMPANY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

PROSPECTIVE INVESTORS MAY NOT TREAT THE CONTENTS OF THE SUBSCRIPTION AGREEMENT, THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS RELATING TO THE OFFERING AND PRESENTED TO INVESTORS ON THE COMPANY’S WEBSITE OR PROVIDED BY THE BROKER (COLLECTIVELY, THE “OFFERING MATERIALS”) OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING “TESTING THE WATERS” MATERIALS) AS INVESTMENT, LEGAL OR TAX ADVICE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED. EACH PROSPECTIVE INVESTOR SHOULD CONSULT THE INVESTOR’S OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISOR AS TO INVESTMENT, LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THE INVESTOR’S PROPOSED INVESTMENT.

 

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.


THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.

 

THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THIS OFFERING.

 

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

 

 

Ladies and Gentlemen:

 

1. Subscription.

 

(a) The undersigned (“Subscriber”) hereby irrevocably subscribes for and agrees to purchase Common Stock (the “Securities”), of Entertainment Arts Research Inc., a Nevada corporation (the “Company”), at a purchase price of $0.075 per share of Common Stock (the “Per Security Price”), upon the terms and conditions set forth herein.

 

(b) Subscriber understands that the Securities are being offered pursuant to an offering circular (the “Offering Circular”) filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement, including exhibits thereto, and any other information required by the Subscriber to make an investment decision.

 

(c) The Subscriber’s subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber’s subscription is rejected, Subscriber’s payment (or portion thereof if partially rejected) will be returned to Subscriber without interest and all of Subscriber’s obligations hereunder shall terminate.

 

(d) The aggregate number of Securities sold for the Company shall not exceed 200,000,000 shares (the “Maximum Offering”). The Company may accept subscriptions until the termination date given in the Offering Circular, unless otherwise extended by the Company in its sole discretion in accordance with applicable SEC regulations for such other period required to sell the Maximum Offering (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).

 

(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.

 

2. Purchase Procedure.

 

(a) Payment. The purchase price for the Securities shall be paid simultaneously with the execution and delivery to the Company of the signature page of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement (which may be executed and delivered electronically), along with payment for the aggregate purchase price of the Securities by ACH electronic transfer or wire transfer to an account designated by the Company, or by any combination of such methods.


 

(b) No Escrow. The proceeds of this offering will not be placed into an escrow account. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.

 

3. Representations and Warranties of the Company.

 

The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.

 

(a) Organization and Standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Nevada. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

 

(b) Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable.

 

(c) Authority for Agreement. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.

 

(d) No filings. Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.

 

(e) Capitalization. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth in “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.

 

(f) Financial statements. Complete copies of the Company’s financial statements consisting of the balance sheets of the Company given in the Offering Circular and the related statements of income, stockholders’ equity and


cash flows for the two-year period then ended (the “Financial Statements”) have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated.

 

(g) Proceeds. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in “Use of Proceeds to issuer” in the Offering Circular.

 

(h) Litigation. There is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.

 

4. Representations and Warranties of Subscriber. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber’s respective Closing Date(s):

 

(a) Requisite Power and Authority. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement and other agreements required hereunder and to carry out their provisions. All action on Subscriber’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

 

(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber’s representations contained in this Subscription Agreement.

 

(c) Illiquidity and Continued Economic Risk. Subscriber acknowledges and agrees that there is a limited public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.

 

(d) Company Information. Subscriber understands that the Company is subject to all the risks that apply to early-stage companies, whether or not those risks are explicitly set out in the Offering Circular. Subscriber has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company’s business, management and financial affairs with managers, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber’s advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.

 

(e) Valuation. The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. The Subscriber further


acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber’s investment will bear a lower valuation.

 

(f) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page.

 

(g) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.

 

(h) Issuer-Directed Offering; No Underwriter. Subscriber understands that the offering is being conducted by the Company directly (issuer-directed) and the Company has not engaged a selling agent such as an underwriter or placement agent.

 

(i) Foreign Investors. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.

 

5. Survival of Representations. The representations, warranties and covenants made by the Subscriber herein shall survive the Termination Date of this Agreement.

 

6. Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of Nevada.

 

7. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:

 

If to the Company, to:

Entertainment Arts Research Inc.

19109 W Catawba Ave, Suite 200

Cornelius, NC 28031

(980) 999-0270

 

If to a Subscriber, to Subscriber’s address as shown on the signature page hereto

 

or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.

 

8. Miscellaneous.

 

(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

 

(b) This Subscription Agreement is not transferable or assignable by Subscriber.


(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

 

(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.

 

(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.

 

(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

 

(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.

 

(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

 

(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

 

(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.

 

(l) No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 


 

 

Entertainment Arts Research Inc.

 

SUBSCRIPTION AGREEMENT SIGNATURE PAGE

 

The undersigned, desiring to purchase Common Stock of Entertainment Arts Research Inc. by executing this signature page, hereby executes, adopts and agrees to all terms, conditions and representations of the Subscription Agreement.

 

(a)The number of shares of Common Stock the undersigned hereby irrevocably subscribes for is: ______________________________ (print number of Shares) 

 

(b)The aggregate purchase price (based on a purchase price of $0.075 per Share) for the Common Stock the undersigned hereby irrevocably subscribes for is: $___________________ (print aggregate purchase price) 

 

(c)The Securities being subscribed for will be owned by, and should be recorded on the Company’s books as held in the name of: ________________________________ (print name of owner or joint owners) 

 

If the Securities are to be purchased in joint names, both Subscribers must sign

 

 

 

 

Signature

 

Signature

 

 

 

Name (Please Print)

 

Name (Please Print)

 

 

 

 

 

 

Entity Name (if applicable)

 

 

 

 

 

 

 

 

Signatory title (if applicable)

 

 

 

 

 

 

 

 

Email address

 

Email address

 

 

 

 

 

 

Address

 

Address

 

 

 

 

 

 

Telephone Number

 

Telephone Number

 

 

 

 

 

 

Social Security Number/EIN

 

Social Security Number

 

 

 

 

 

 

Date

 

Date

 

* * * * *

Entertainment Arts Research Inc.

 

This Subscription is accepted on _______, 2021

 

By: __________________________

Name:

Title:

MILAN SAHA, ESQ.

Milan Saha, Esq.

80 Barton Road

Plattsburgh, NY 12901

(646) 397-9056

Admitted in the State of New York

 

October 15, 2021

 

Bernard Rubin

Chief Executive Officer

Entertainment Arts Research, Inc.

19109 W. Catawba Avenue, Suite 200

Cornelius, NC 28031

 

Dear Mr. Rubin:

 

I have acted, at your request, as special counsel to Entertainment Arts Research, Inc., a Nevada corporation (the “Company”), for the purpose of rendering an opinion as to the legality of 200,000,000 shares of common stock offered by the Company at $0.075 per share of Company common stock, par value $0.0001 per share to be offered and distributed by the Company (the “Shares”), pursuant to an Offering Statement filed under Regulation A of the Securities Act of 1933, as amended, by the Company with the U.S. Securities and Exchange Commission (the "SEC") on Form 1-A, for the purpose of registering the offer and sale of the Shares (“Offering Statement”).

 

In rendering this opinion, I have reviewed (a) statutes of the State of Nevada, to the extent I deem relevant to the matter opined upon herein; (b) true copies of the Articles of Incorporation of Company and all amendments thereto; (c) the By-Laws of the Company; (d) selected proceedings of the board of directors of the Company authorizing the issuance of the Shares; (e) certificates of officers of the Company and of public officials; (f) and such other documents of the Company and of public officials as I have deemed necessary and relevant to the matter opined upon herein.

 

I have assumed (a) all of the documents referenced herein (collectively, the "Documents") are true and correct copies of the original documents and the signatures on such documents are genuine; (b) the persons that executed the Documents have the legal capacity to execute the Documents; and (c) the status of the Documents as legally valid and binding instruments is not affected by any (i) violations of statutes, rules, regulations or court or governmental orders, or (ii) failures to obtain required consents, approvals or authorizations from, or make required registrations, declarations or filings with, governmental authorities.

 

Based upon my review described herein, it is my opinion the Shares are duly authorized and when/if issued and delivered by Company against payment therefore, as described in the offering statement, will be validly issued, fully paid, and non-assessable.

 

I have not been engaged to examine, nor have I examined, the Offering Statement for the purpose of determining the accuracy or completeness of the information included therein or the compliance and conformity thereof with the rules and regulations of the SEC or the requirements of Form 1-A, and I express no opinion with respect thereto. The forgoing opinion is strictly limited to matters of Nevada corporation law; and, I do not express an opinion on the federal law of the United States of America or the law of any state or jurisdiction therein other than Nevada, as specified herein.


I hereby consent to the filing of this opinion as Exhibit 12.1 to the Offering Statement and to the reference to our firm under the caption “Legal Matters” in the Offering Circular constituting a part of the Offering Statement. We assume no obligation to update or supplement any of the opinion set forth herein to reflect any changes of law or fact that may occur following the date hereof.

 

 

Sincerely,

 

MILAN SAHA, ESQ.

 

 

/s/ Milan Saha

Milan Saha