WEB NEWS Deal Flow
Item 1.01 Entry Into A Material Definitive Agreement.
On June 24, 2016, 2050 Motors Inc. (the “Company”) entered into an Equity Purchase Agreement (the “Agreement”) with Southridge Partners II LP (the “Investor”), pursuant to which the Company has the right to sell up to $10,000,000 of the Company’s common stock, subject to conditions the Company must satisfy as set forth in the Agreement, including the effectiveness of a registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”). Following effectiveness of our registration statement with the SEC, we can deliver a put under the Agreement by selling shares of our common stock to Southridge and Southridge will be obligated to purchase the shares.
We do not have the right to commence any sales to the Investor under the Agreement until the SEC has declared effective the registration statement. Thereafter, we may, from time to time and at our sole discretion, direct the Investor to purchase shares of our common stock. The purchase price per share will be equal to 88% of the lowest closing price of the common stock for the ten trading days immediately following the date in which we deposit the shares to be purchased by the Investor into its brokerage account. In consideration for entering into the Agreement, we issued to the Investor a Promissory Note in the principal amount of $75,000, which is payable with interest at 10% on June 24, 2017.
For each share of common stock purchased under the Agreement, the Investor will pay 88% of the lowest closing bid price on the Company’s principal market for the shares of common stock at such time as quoted by Bloomberg Finance L.P. for any of the 10 trading days immediately following the Company’s delivery of the shares of the Company’s common stock to the Investor’s brokerage account pursuant to the Company’s corresponding put notice to the Investor. In no event, however, shall the number of shares of common stock issuable to the Investor pursuant to a put notice cause the aggregate number of shares of common stock beneficially owned by the Investor and its affiliates to exceed 9.99% of the Company’s outstanding common stock at the time.
The shares of common stock to be issued to the Investor under the Agreement will be issued pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “ Securities Act “), pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder. The Investor represented to the Company that it is a “sophisticated investor” as defined in Rule 506(b)(2)(ii) under the Securities Act and an “accredited investor” as defined in Rule 501(a) under the Securities Act.
As a condition precedent to the Company’s right to deliver a put notice, the shares of common stock offered and sold under the Agreement must be registered for resale. The Company has entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investor, pursuant to which the Company has an obligation to file a registration statement with the SEC covering the resale by the Investor of any shares to be issued to the Investor under the Agreement.
The Company’s right to deliver a put notice and the obligations of the Investor with respect to a put is subject to the Company’s satisfaction of a number of conditions, including, but not limited to:
● That the Company’s common stock is trading on its principal market;
Unless earlier terminated in accordance with its terms, the Agreement shall terminate on the earlier of: (i) twenty four months from the date of an effective registration statement; or (ii) the date on which the Investor shall have purchased an aggregate of $10,000,000 of the Company’s common stock pursuant to the Agreement.
The preceding description of the Agreement and Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 10.1 to this report and incorporated herein by reference, and the Registration Rights Agreement, which is filed as Exhibit 10.2 to this report and the Promissory Note which is filed as exhibit 10.3 to this report, all of such Exhibits are incorporated herein by reference.
Comments & Business Outlook
2050 Motors, Inc.
Condensed Statement of Operations
(unaudited)
3 Months Ended
March 31, 2016 March 31, 2015
Operating revenue $ - $ -
Operating expenses:
R 33,868 3,500
General & administrative 123,555 142,783
Total operating expenses 157,423 146,283
Net loss from operations (157,423 ) (146,283 )
Interest expense (2,433 ) (2,958 )
Loss before income taxes (159,856 ) (149,241 )
Provision for income taxes - -
Net loss $ (159,856 ) $ (149,241 )
Net loss per share, basic and diluted $ (0.00 ) $ (0.00 )
Weighted average common equivalent shares outstanding, basic and diluted 33,750,797 33,465,568
Comments & Business Outlook
2050 Motors, Inc.
Year Ended
Year Ended
December 31, 2015
December 31, 2014
Operating revenue
$
-
$
-
Operating expenses:
R
97,734
-
Interest expense
11,438
3,961
General & administrative
622,352
542,111
Total operating expenses
731,524
546,072
Net loss from operations
(731,524
)
(546,072
)
Other income, net
2,600
-
Loss before income taxes
(728,924
)
(546,072
)
Provision for income taxes
-
-
Net loss
$
(728,924
)
$
(546,072
)
Net loss per share, basic and diluted
$
(0.02
)
$
(0.02
)
Weighted average common equivalent shares outstanding, basic and diluted
33,553,057
31,589,646
Comments & Business Outlook
2050 Motors, Inc.
Condensed Statements of Operations
(unaudited)
3 Months Ended 9 Months Ended
September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Operating revenue $ - $ - $ - $ -
Operating expenses:
R 27,140 - 47,580 -
General & Administrative 131,885 163,689 412,888 339,280
Total operating expenses 159,025 163,689 460,468 339,280
Net loss from operations (159,025 ) (163,689 ) (460,468 ) (339,280 )
Interest expenses (3,024 ) (937 ) (8,974 ) (937 )
Net loss before income taxes (162,049 ) (164,626 ) (469,442 ) (340,217 )
Provision for income taxes - - - -
Net loss $ (162,049 ) $ (164,626 ) $ (469,442 ) $ (340,217 )
Net loss per share, basic and diluted $ (0.00 ) $ (0.01 ) $ (0.01 ) $ (0.02 )
Weighted average common equivalent shares outstanding, basic and diluted (1) 33,523,599 31,755,553 33,504,468 19,813,426
Management Discussion and Analysis
During the nine months ended September 30, 2015 and 2014, the Company incurred research and development expenses of $47,580 and $0 respectively. Research and development expenses were related to exploring hydrogen rich alcohol engines and solar battery technologies.
During the nine months ended September 30, 2015 and 2014, the Company had no revenues. During the nine months ended September 30, 2015, the Company incurred operating expenses of $460,468 consisting primarily of consulting fees and travel expenses and other general and administrative costs of 2050 Motors. During the nine months ended September 30, 2014 the Company incurred operating expenses of $339,280 consisting primarily of expenses related to the Company’s consulting expenses in connection with the commercialization of the e-Go-EV as well as professional expenses related to the Company’s SEC compliance with its reporting obligations. These operating expenses combined with a lack of revenues resulted in net losses of $(469,442) and $(340,217) for the nine month periods ended September 30, 2015 and 2014, respectively. As of September 30, 2015 and December 31, 2014 the Company had stockholders’ equity of $429,305 and $868,747, respectively. The decrease in stockholders’ equity was due to net loss of $469,442 and issuance of stock for $30,000.
Comments & Business Outlook
2050 Motors, Inc.
Condensed Statements of Operations
(unaudited)
3 Month Ended
6 Month Ended
June 30, 2015
June 30, 2014
June 30, 2015
June 30, 2014
Operating revenue
$
-
$
-
$
-
$
-
Operating expenses:
R
16,940
-
20,440
-
General & Administrative
141,212
119,625
286,953
175,590
Total operating expenses
158,152
119,625
307,393
175,590
Net loss from operations
(158,152
)
(119,625
)
(307,393
)
(175,590
)
Provision for income taxes
-
-
-
-
Net loss
$
(158,152
)
$
(119,625
)
$
(307,393
)
$
(175,590
)
Net loss per share, basic and diluted
$
(0.00
)
$
(0.00
)
$
(0.01
)
$
(0.01
)
Weighted average common equivalent shares outstanding, basic and diluted (1)
33,523,599
30,556,749
33,494,744
24,992,184
Management Discussion and Analysis
Plan of Operation
The Company completed the acquisition of all of the issued and outstanding capital stock of 2050 Motors on May 2, 2014. The acquisition was effected pursuant to the terms of a Plan and Agreement of Reorganization (the “Agreement”) entered into on February 5, 2014, by and between the Company, 2050 Motors and Certain Shareholders of 2050 Motors. Pursuant to the terms of the Agreement, the Company acquired all of the outstanding shares of capital stock of 2050 Motors in exchange for 24,994,670post-split shares of the Company’s common stock (aggregating approximately 82% of its issued and outstanding common stock).
2050 Motors principal activity is the importation and the marketing and selling of electric automobiles. 2050 Motors, Inc. has an exclusive license, subject to minimum sales requirements, to import, market and sell in the United States, Puerto Rico, the US Territories and Peru, the “e-Go” lightweight carbon fiber all-electric vehicle design and electric light truck, manufactured by Jiangsu Aoxin New Energy Automobile Co., LTD (“Aoxin Automobile”) located in the Peoples Republic of China (“PRC”). Aoxin Automobile is a wholly-owned subsidiary of Dongfeng Motors Corporation (“Dongfeng Motor”) which is one of the largest automobile manufacturers in China, produced over 3.76 million cars and trucks in 2012. Aoxin Automobile was funded by Dongfeng Motors to develop and manufacture a lightweight, super-efficient, carbon fiber e-Go EV electric car (“e-Go EV”).
The e-Go EV is a unique concept electric vehicle. It will be the only production line electric vehicle with a carbon fiber body manufactured by a new process that uses robotics to produce parts, which significantly reduces the production time and cost of carbon fiber components. The carbon fiber composite material is five times stronger than steel, and one third the weight.
The exclusive license contract between 2050 Motors and Aoxin Automobile requires that 2050 Motors complete US crash testing according to US Department of Transportation (“DOT”) safety standards. 2050 Motors has entered into negotiations with Calspan Corporation (‘Calspan”). Calspan is committed to the evolution of safety in the air and on the ground, and has assisted in developing new aircraft; training world-class test pilots; performing ground-breaking automobile accident research; and contributing to safety innovations on the ground and in the air over its 70-year history. It’s important to note that one of the three demonstration vehicles that will be shipped to the United States by June 2015 will be used to evaluate this overlap crash test at Calspan’s facilities during the summer of 2015. This will be a definitive evaluation of the effectiveness of the design modifications incorporated into the e-Go EV vehicle. There is no assurance that the e-Go EV will pass this crash test in June 2015 or at any other time.
2050 Motors intends to import all vehicles completely fabricated and assembled in China from Aoxin Automobile. 2050 Motors will market the e-Go EV vehicles in designated markets and is not expected to need any raw materials, components or equipment, except spare parts which will be supplied by Aoxin Automobile. However, the e-Go EV and all of its parts and equipment must be DOT approved. After the demonstration vehicles are delivered to the USA, some of the existing parts of the e-Go EV may or may not meet DOT specifications. Aoxin Automobile has made every effort to build the e-Go EV according to American standards. However, there is no certainty that all the parts will be DOT approved. 2050 Motors may elect to secure replacement parts here in the USA or in China for installation either in the United States or in China, if required.
2050 Motors intends to initially sell the e-Go EV to a network of customers primarily in the Las Vegas, Nevada area. 2050 Motors plans to establish a service and parts center, which would be separate from the Showroom. The Showroom facility will be at an area with high volume of people in Las Vegas, were visitors to the city can directly view the e-Go EV. 2050 Motors may also elect to sell the e-Go EV at selected distributors in the Las Vegas Area, which have already provided letters of interest to sell our vehicles. 2050 Motors’ initial plan is not to sell the vehicle outside of the Las Vegas vicinity, consisting of an area within a radius of 100 miles. This is the Company’s current marketing plan in order to effectively market to and support people that work in Las Vegas and/or live in Las Vegas, which in Las Vegas metro area the population equals 1.9 million.
2050 Motors is a development stage company with no operating history and may never be able to carry out its business plan or achieve any revenues or profitability. 2050 Motors was established in October 2012 and it has not generated any revenues nor has it realized a profit from its operations to date, and there is little likelihood that it will generate any revenues or realize any profits in the short term. Any profitability in the future from its business will be dependent upon the successful marketing and sales of the e-Go EV. 2050 Motors may not be able to successfully carry out its business plan. There can be no assurance that it will ever achieve any revenues or profitability. Accordingly, its prospects must be considered in light of the risks, expenses, and difficulties frequently encountered in establishing a new business, especially one in the automobile industry, and therefore it is a highly speculative venture involving significant financial risk.
We are completely dependent on Aoxin Automobile to supply us with the e-Go EV and other trucks and automobiles and parts and components thereto. The inability of Aoxin Automobile to continue to deliver, or their refusal to deliver such vehicles and parts at prices and volumes acceptable to us would have a material adverse effect on our business, prospects and operating results. Changes in business conditions, global financial instability, wars, governmental changes, and other factors beyond our control or which we do not presently anticipate, could also affect Aoxin Automobile’s ability to deliver vehicles and/or parts on a timely basis and cause material adverse consequences to 2050 Motors.
Research by Aoxin Automobile over the past five years developed this advanced all-electric vehicle. The e-Go EV is a five passenger sedan which weighs only 1,400 lbs with its battery pack included. It will be the first vehicle of this advanced type to be sold for distribution at a price of less than $35,000.
The body components are built out of carbon fiber which is five times stronger than steel and one third its weight constructed over a strong ultralight aluminum frame chassis and race car suspension. This ensures that the vehicle will be the safest and strongest ever built for the consumer market. It will also be the most efficient vehicle ever built, capable of achieving 200+ miles to the gallon energy equivalent.
2050 Motors projects expenses associated with its business over the next six months to be approximately $500,000.
Comments & Business Outlook
2050 Motors, Inc.
Condensed Statement of Operations
(unaudited)
3 Months Ended
March 31, 2015 March 31, 2014
Operating revenue
$
-
$
-
Operating expenses:
Total operating expenses
149,241
55,965
Net loss from operations
(149,241
)
(55,965
)
Provision for income taxes
-
-
Net loss
$
(149,241
)
$
(55,965
)
Net loss per share, basic and diluted
$
(0.00
)
$
(0.00
)
Weighted average common equivalent shares outstanding, basic and diluted (1)
33,465,568
24,994,670
Management Discussion and Analysis
During the three months ended March 31, 2015 and 2014, the Company had no revenues. During the three months ended March 31, 2015, the Company incurred operating expenses of $149,241 consisting primarily of consulting fees and travel expenses and other general and administrative costs of 2050 Motors. During the three months ended March 31, 2014 the Company incurred operating expenses of $10,772 consisting primarily of expenses related to the Company’s search for a suitable business to acquire as well as professional expenses related to the Company’s SEC compliance with its reporting obligations. These operating expenses combined with a lack of revenues resulted in net losses of $(149,241) and $(55,965) for the three month periods ended March 31, 2015 and 2014, respectively. As of March 31, 2015 and December 31, 2014 the Company had stockholders’ equity of $749,506 and $868,748, respectively. The decrease in stockholders’ equity was due to net loss of $149,241 and private placements of securities of approximately $30,000 during the three months ended March 31, 2015.
Comments & Business Outlook
2050 Motors, Inc.
Statements of Operations
Year Ended
Year Ended
December 31, 2014
December 31, 2013
Operating revenue
$
-
$
-
Operating expenses:
Total operating expenses
546,072
282,206
Net loss from operations
(546,072
)
(282,206
)
Provision for income taxes
-
-
Net loss
$
(546,072
)
$
(282,206
)
Net loss per share, basic and diluted
$
(0.02
)
$
(0.01
)
Weighted average common equivalent shares outstanding, basic and diluted (1)
31,589,646
30,634,670
Management Discussion and Analysis
Results of Operation for the years ended December 31, 2014 and 2013
Comments & Business Outlook
2050 Motors, Inc.
Condensed Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2014 2013 2014 2013
Operating revenue
$
-
$
-
$
-
$
-
Operating expenses:
Total operating expenses
164,626
13,468
340,217
34,341
Net loss from continuing operations
(164,626
)
(13,468
)
(340,217
)
(34,341
)
Provision for income taxes
-
-
-
-
Net loss
$
(164,626
)
$
(13,468
)
$
(340,217
)
$
(34,341
)
Net loss per share, basic and diluted
$
(0.01
)
$
(0.00
)
$
(0.02
)
$
(0.01
)
Weighted average common equivalent shares outstanding, basic and diluted (1)
31,743,131
5,562,084
19,809,687
5,562,084
Management Discussion and Analysis
During the three months ended September 30, 2014 and 2013, the Company had no revenues. During the three months ended September 30, 2014, the Company incurred operating expenses of $164,626 consisting primarily of consulting fees and travel expenses and other general and administrative costs of 2050 Motors. During the three months ended September 30, 2013 the Company incurred operating expenses of $2,998 consisting primarily of expenses related to the Company’s search for a suitable business to acquire as well as professional expenses related to the Company’s SEC compliance with its reporting obligations. These operating expenses combined with a lack of revenues resulted in net losses of $(164,000) and $(3,706) for the periods ended September 30, 2014 and 2013, respectively. As of September 30, 2014 the Company had stockholders’ equity of $760,556 compared to a stockholders’ deficit of $(86,908) as of September 30, 2013. The increase in stockholders’ equity was due to the acquisition of 2050 Motors in May 2014 and private placements of securities of approximately $680,000 during the three months ended September 30, 2014.
Notable Share Transactions
LAS VEGAS, Oct. 15, 2014 (GLOBE NEWSWIRE ) -- Today, Michael Hu, President of 2050 Motors, Inc. (OTCQB:ETFM), announced the signing of an MOU to sell ten percent (10%) of 2050 Motors equity stock to Yancheng Municipal State-Owned Asset Investment Group, Co. Ltd. (YMSIG), an investment and property development company founded by the Yancheng Municipal Government. Earlier this year, YMSIG also purchased Jiangsu Aoxin New Energy Automobile, Co. Ltd. (Aoxin Automobile) from Dongfeng Motor, Co. Ltd. YMSIG has made major equity investments in the real estate, finance, engineering, culture, science and technology industries in the Yancheng, Jiangsu Province.
In 2012, 2050 Motors signed a contract with Aoxin Automobile to exclusively import and assemble an advanced lightweight carbon fiber five passenger electric automobile called the e-Go EV. The e-Go electric vehicle (EV) was developed under a five year program by Dongfeng Motor in conjunction with Italian automotive engineers. Since 2012, 2050 Motors' engineers have worked diligently with Aoxin's automotive engineers to design and modify the e-Go for entrance into the US automobile market.
The purchase by YMSIG of a 10% equity position of 2050 Motors still must be approved by officials in China. Michael Hu stated, "The signing of the MOU demonstrates a vote of confidence by YMSIG in 2050 Motors to successfully launch the sale of the advanced e-Go electric five passenger automobile in the United States."
The e-Go EV is being built on an all-aluminum lightweight advanced design frame with an all-carbon-fiber body. Carbon fiber is five times stronger than steel and one third its weight, which makes the total weight of the e-Go (including its battery pack) only 1,450 lbs. As a matter of comparison, the entire weight of the e-Go is approximately one half the weight of competitive automobiles of other manufacturers such as the Nissan Leaf, BMW i3 and the Mitsubishi iMiEV; over 2,000 lbs. lighter than the Toyota RAV4 electric; and, 3,200 lbs. lighter than the Tesla Model-S. The e-Go's huge weight reduction because of the use of carbon fiber and aluminum will make it the most efficient urban driving vehicle ever offered to the consumer market at an estimated retail price of less than $35,000 USD before government incentives.
It is planned that the e-Go will be sold with four different battery pack sizes, offering the customer a variety of driving ranges up to and exceeding 200 miles per charge. The e-Go will also feature two different power drive systems for customers who require higher performance acceleration. These features will ensure that the e-Go can match any customer's needs based on range and acceleration. It is estimated that the high performance package of the e-Go will be capable of accelerating from 0 to 60 mph in approximately 7 seconds. It is also planned that certain models of the e-Go will be sold with battery pack warranties equal to those offered by Tesla Motors which are 8-year unlimited mile warranties.
The first demonstration vehicles will arrive to the United States in approximately six weeks. Also, the factory to mass produce the e-Go is presently under construction in Yancheng, China under the guidance of Aoxin Automobile engineers and YMSIG Management. The e-Go must undergo US DOT required crash test sequences and achieve DOT approval before being permitted to sell in the United States. However, plans are in the works for the e-Go to be offered for sale at an earlier date in certain countries in South America under the guidance and leadership of 2050 Motors.
When the e-Go EV is approved for sale in the United States it will be the first Chinese carbon fiber automobile to be sold in the USA. 2050 Motors is already planning an assembly plant for the e-Go in Las Vegas, Nevada and has been in meetings with the Urban Development Authority of Las Vegas for potential locations to build such a facility and initially create several hundred local jobs.
Comments & Business Outlook
2050 Motors, Inc.
(A development stage company)
Condensed Statements of Operations
(unaudited)
Cumulative
Three Month Ended
Six Month Ended
from Inception
June 30, June 30, June 30, June 30, (November 1, 2012)
2014 2013 2014 2013 to June 30, 2014
Operating revenue $ - $ - $ - $ - $ -
Operating expenses:
General and administrative expenses 119,625 20,873 175,590 20,873 676,392
Net loss from operations (119,625 ) (20,873 ) (175,590 ) (20,873 ) (676,392 )
Provision for income taxes - - - - -
Net loss $ (119,625 ) $ (20,873 ) $ (175,590 ) $ (20,873 ) $ (676,392 )
Net loss per share, basic and diluted $ (0.01 ) $ (0.00 ) $ (0.01 ) $ (0.00 )
Weighted average common equivalent shares outstanding, basic and diluted (1) 21,836,142 5,562,084
13,744,069
5,562,084
Management Discussion and Analysis
Plan of Operation
The Company completed the acquisition of all of the issued and outstanding capital stock of 2050 Motors on May 2, 2014. The acquisition was effected pursuant to the terms of a Plan and Agreement of Reorganization (the “Agreement”) entered into on February 5, 2014, by and between the Company, 2050 Motors and Certain Shareholders of 2050 Motors. Pursuant to the terms of the Agreement, the Company acquired all of the outstanding shares of capital stock of 2050 Motors in exchange for 24,994,670post-split shares of the Company’s common stock (aggregating approximately 82% of its issued and outstanding common stock).
2050 Motors principal activity is the importation and the marketing and selling of electric automobiles. 2050 Motors, Inc. has an exclusive license, subject to minimum sales requirements, to import, market and sell in the United States, Puerto Rico, the US Territories and Peru, the “e-Go” lightweight carbon fiber all-electric vehicle design and electric light truck, manufactured by Jiangsu Aoxin New Energy Automobile Co., LTD (“Aoxin Automobile”) located in the Peoples Republic of China (“PRC”). Aoxin Automobile is a wholly-owned subsidiary of Dongfeng Motors Corporation (“Dongfeng Motor”) which is one of the largest automobile manufacturers in China, producing over 3.76 million cars and trucks in 2012. Aoxin Automobile was funded by Dongfeng Motors to develop and manufacture a lightweight, super-efficient, carbon fiber e-Go EV electric car (“e-Go EV”).
The e-Go EV is a unique concept electric vehicle. It will be the only production line electric vehicle with a carbon fiber body manufactured by a new process that uses robotics to produce parts, which significantly reduces the production time and cost of carbon fiber components. The carbon fiber composite material is five times stronger than steel, and one third the weight.
The exclusive license contract between 2050 Motors and Aoxin Automobile requires that 2050 Motors complete US crash testing according to US Department of Transportation (“DOT”) safety standards. 2050 Motors has entered into negotiations with Calspan Corporation (‘Calspan”). Calspan is committed to the evolution of safety in the air and on the ground, and has assisted in developing new aircraft; training world-class test pilots; performing ground-breaking automobile accident research; and contributing to safety innovations on the ground and in the air over its 70-year history. It’s important to note that one of the three demonstration vehicles that will be shipped to the United States by June 2014 will be used to evaluate this overlap crash test at Calspan’s facilities during the summer of 2014. This will be a definitive evaluation of the effectiveness of the design modifications incorporated into the e-Go EV vehicle. There is no assurance that the e-Go EV will pass this crash test in June 2014 or at any other time.
2050 Motors intends to import all vehicles completely fabricated and assembled in China from Aoxin Automobile. 2050 Motors will market the e-Go EV vehicles in designated markets and is not expected to need any raw materials, components or equipment, except spare parts which will be supplied by Aoxin Automobile. However, the e-Go EV and all of its parts and equipment must be DOT approved. After the demonstration vehicles are delivered to the USA, some of the existing parts of the e-Go EV may or may not meet DOT specifications. Aoxin Automobile has made every effort to build the e-Go EV according to American standards. However, there is no certainty that all the parts will be DOT approved. 2050 Motors may elect to secure replacement parts here in the USA or in China for installation either in the United States or in China, if required.
2050 Motors intends to initially sell the e-Go EV to a network of customers primarily in the Las Vegas, Nevada area. 2050 Motors plans to establish a service and parts center, which would be separate from the Showroom. The Showroom facility will be at an area with high volume of people in Las Vegas, were visitors to the city can directly view the e-Go EV. 2050 Motors may also elect to sell the e-Go EV at selected distributors in the Las Vegas Area, which have already provided letters of interest to sell our vehicles. 2050 Motors’ initial plan is not to sell the vehicle outside of the Las Vegas vicinity, consisting of an area within a radius of 100 miles. This is the Company’s current marketing plan in order to effectively market to and support people that work in Las Vegas and/or live in Las Vegas, which in Las Vegas metro area the population equals 1.9 million.
2050 Motors is a development stage company with no operating history and may never be able to carry out its business plan or achieve any revenues or profitability. 2050 Motors was established in October 2012 and it has not generated any revenues nor has it realized a profit from its operations to date, and there is little likelihood that it will generate any revenues or realize any profits in the short term. Any profitability in the future from its business will be dependent upon the successful marketing and sales of the e-Go EV. 2050 Motors may not be able to successfully carry out its business plan. There can be no assurance that it will ever achieve any revenues or profitability. Accordingly, its prospects must be considered in light of the risks, expenses, and difficulties frequently encountered in establishing a new business, especially one in the automobile industry, and therefore it is a highly speculative venture involving significant financial risk.
We are completely dependent on Aoxin Automobile to supply us with the e-Go EV and other trucks and automobiles and parts and components thereto. The inability of Aoxin Automobile to continue to deliver, or their refusal to deliver such vehicles and parts at prices and volumes acceptable to us would have a material adverse effect on our business, prospects and operating results. Changes in business conditions, global financial instability, wars, governmental changes, and other factors beyond our control or which we do not presently anticipate, could also affect Aoxin Automobile’s ability to deliver vehicles and/or parts on a timely basis and cause material adverse consequences to 2050 Motors.
Research by Aoxin Automobile over the past five years developed this advanced all-electric vehicle. The e-Go EV is a five passenger sedan which weighs only 1,400 lbs with its battery pack included. It will be the first vehicle of this advanced type to be sold for distribution at a price of less than $35,000.
The body components are built out of carbon fiber which is five times stronger than steel and one third its weight constructed over a strong ultralight aluminum frame chassis and race car suspension. This ensures that the vehicle will be the safest and strongest ever built for the consumer market. It will also be the most efficient vehicle ever built, capable of achieving 200+ miles to the gallon energy equivalent.
2050 Motors projects expenses associated with its business over the remainder of 2014 to be approximately $385,000.
Results of Operation for the six months ended June 30, 2014 and 2013
During the six months ended June 30, 2014 and 2013, the Company had no revenues. During the six months ended June 30, 2014, the Company incurred general and administrative expenses of $175,590 consisting primarily of operational expenses of 2050 Motors and professional fees related to preparation of the Company’s 10-K and 10-Q and acquisition costs relating to the reorganization with 2050 Motors. During the six months ended June 30, 2013 the Company incurred travel and professional expenses of $20,873. These operating expenses combined with a lack of revenues resulted in net losses of $175,590 and $20,873 for the periods ended June 30, 2014 and 2013, respectively. As of June 30, 2014 the Company had stockholders’ equity of $236,558 compared to a stockholders’ equity of $407,648 as of December 31, 2013.
Comments & Business Outlook
2050 MOTORS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months ended
March 31, 2013
REVENUES
$
-
$
-
EXPENSES
Administrative
2,422
232
Professional fees
8,350
10,587
TOTAL EXPENSES
10,772
10,819
OTHER INCOME (EXPENSE):
Interest expense
708
708
LOSS BEFORE TAXES
(11,480
)
(11,527
)
INCOME TAX EXPENSE
800
800
NET LOSS
$
(12,280
)
$
(12,327
)
NET INCOME (LOSS) PER COMMON SHARE
Basis and diluted
0
0
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
22,248,337
22,248,337
Reverse Merger Activity
On May 2, 2014 became a public entity via a
reverse merger transaction .
Company Snapshot:
development stage company formed to import, market, and sell electric cars manufactured in China.
Post Merger Share Calculation : (Adjusted fora 1 for 4 reverse split)
5,563,259: Pre reverse merger outstanding shares
24,994,670: Newly issued shares of Common Stock
GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: 27,912,500
Financial Snapshot: December Year End
Zero Revenues
In accordance with the exclusive license agreement signed with Aoxin, in order to maintain exclusive rights for the United States (US), the Company is required to purchase and sell certain amount of e-Go EV model vehicles per year for a certain period of time starting from the completion of the requirements established by the United States Department of Transportation’s protocols for the e-Go EV model. The required amount of vehicles that the company needs to sell per year are as follows: Year one-2,000 vehicles; Year 2-6,000 vehicles; Year 3-12,000 vehicles; Year 4-24,000 vehicles and Year 5-48,000 vehicles.
Reverse Merger Activity
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
As previously reported on Current Report on Form 8-K filed on February 5, 2014, Zegarelli Group International, Inc. (“we,” “our,” “us,” or the “Company”) entered into a definitive Plan and Agreement of Reorganization (the “Acquisition Agreement”) with 2050 Motors, Inc. (“2050 Motors”) and certain shareholders of 2050 Motors (collectively the “2050 Motors Shareholders”) wherein the Company agreed to acquire all of the outstanding shares of common stock of 2050 Motors in accordance with the Acquisition Agreement. In exchange for the 2050 Motors shares, the Company will issue to the 2050 Motors Shareholders up to 24,994,670 shares of the Company’s common stock, post-split. The exchange of the 2050 Motors shares for the Company’s common stock is referred to in this Current Report on Form 8-K as the “Share Exchange.” After the closing of the Share Exchange (the “Closing”), 2050 Motors will become our wholly-owned subsidiary, and the 2050 Motors Shareholders will own approximately 82% of our common stock, on an as converted, fully diluted basis.
Acquisition Activity
Comments & Business Outlook
STATEMENTS OF OPERATIONS
10-K
Years ended December 31,
2013
2012
REVENUES
$
-
$
-
EXPENSES
Administrative
3,908
728
Professional fees
18,750
16,975
TOTAL EXPENSES
22,658
17,703
OTHER INCOME (EXPENSE):
Gain from write off of accrued expenses
-
54,147
Interest expense
(2,832
)
(825
)
INCOME (LOSS) BEFORE TAXES
(25,490
)
35,619
INCOME TAX PROVISION
800
800
NET INCOME (LOSS)
(26,290
)
34,819
NET INCOME (LOSS) PER COMMON SHARE
Basis and diluted
0.00
0.00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
22,248,337
22,248,337
Management Discussion and Analysis
Results of Operations
Because we currently do not have any business operations, we have not had any revenues during our fiscal years ended December 31, 2013 and December 31, 2012.
Comparison of Years Ended December 31, 2013 and 2012.
General and Administrative Expenses. General and administrative expenses for the years ended December 31, 2013 and 2012 were $22,658 and $17,703 respectively. During the year ended December 31, 2013, such expenses consisted of professional fees associated with various corporate matters. We anticipate that our general and administrative expenses will remain low until such time as we effect a merger or other business combination with an operating business, if at all. Alfred Booth, Jr., our President and CEO, paid these professional fees on our behalf. As of December 31, 2013 and 2012, we owed Mr. Booth $88,685 and $65,252, respectively.
Net Income (Loss). Our net income and (loss) for the years ended December 31, 2013 and 2012 was ($26,290) and $34,819, respectively. The difference was due principally to a gain from write off of accrued expenses in 2012.
Reverse Merger Activity
Zegarelli Group International (“Zegarelli”)(OTCBB: ZEGG), a blank check company, announced today it has entered into a Plan and Agreement of Reorganization (the “Acquisition Agreement”) with 2050 Motors, Inc. (“2050 Motors”) and certain stockholders of 2050 Motors, whereby Zegarelli will acquire all of the issued and outstanding shares of 2050 Motors common stock in exchange for 24,993,665 shares of Zegarelli common stock, and the 2050 Motors stockholders will become the majority owners of Zegarelli. Iith this announcement, Zegarelli will file a Schedule 14F-1 with the U.S. Securities and Exchange Commission (“SEC”) relating to the change in the majority of its board of directors to a group of directors designated by 2050 Motors. In accordance with the close of the transaction Zegarelli will change its name to 2050 Motors, Inc. and affect a reverse stock split of 1 for 4, reducing its total issued and outstanding shares to 5, 562,084 shares prior to the exchange of shares with 2050 Motors. The close of the transaction is expected to take place around March 16, 2014.
