As filed with the Securities and Exchange Commission on August 16, 2013
Registration No. ___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
EXEO ENTERTAINMENT, INC.
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Exact name of Registrant as specified in its charter)
Nevada
(State or other jurisdiction of
incorporation or organization)
3670
(Primary Standard Industrial
Classification Code Number)
45-2224704
(I.R.S. Employer
Identification Number)
4478 Wagon Trail Avenue
Las Vegas, NV 89118
(702) 361-3188
(Address, including zip code, and telephone number, including area code,
of Registrant’s principal executive offices)
Business Filings, Incorporated
311 S. Division Street
Carson City, Nevada 89703
(800) 981-7183
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all correspondence to:
South Milhausen P.A.
1000 Legion Place
Suite 1200
Orlando, FL 32801
Ph: (407) 539-1638
Fax: (407) 539-2679
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box: 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer o
Accelerated filer
o
Non-accelerated filer o (Do not check if smaller reporting company)
Smaller reporting company þ
Calculation of Registration Fee
Title of Class of Securities to be Registered
Common Stock, $0.0001 per share
Total
Amount to be
Registered (1)
510,000
510,000
Proposed
Maximum
Aggregate Price
Per Share (2)
$
0.05
$
0.05
Proposed
Maximum
Aggregate
Offering Price (2)
$
25,500
$
25,500
Amount of
Registration
Fee
$
3.48
$
3.48
(1) The shares of our Common Stock being registered hereunder are being registered for resale by the selling stockholders named in the
prospectus.
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be amended. The selling stockholders may not sell these securities until the
Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION DATED AUGUST 16, 2013
PRELIMINARY PROSPECTUS
EXEO ENTERTAINMENT, INC.
4478 Wagon Trail Avenue
Las Vegas, NV 89118
510,000 SHARES OF COMMON STOCK
OFFERING PRICE $0.05 PER SHARE
The selling stockholders named in this prospectus are offering for resale 510,000 shares of our common stock at an offering price of $0.05 per
share of common stock until our shares are quoted on the Over-the-Counter Bulletin Board, and thereafter at prevailing market prices or
privately negotiated prices. We will pay all expenses incurred in this offering (other than transfer taxes), and the selling stockholders will
receive all of the net proceeds from this offering.
OUR BUSINESS IS SUBJECT TO MANY RISKS AND AN INVESTMENT IN OUR COMMON STOCK WILL ALSO INVOLVE A
HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING
“RISK FACTORS” BEGINNING ON PAGE 6 BEFORE INVESTING IN OUR COMMON STOCK.
2
There is currently no public market for our common stock and we have not applied for listing or quotation on any public market. We intend to
seek a market maker to file an application with the Financial Industry Regulatory Authority to have our common stock quoted on the Over-theCounter Bulletin Board. We do not currently have a market maker who is willing to list quotations for our common stock, and there can be no
assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No underwriter or other person has been engaged to facilitate the sale of shares of common stock in this offering. You should rely only on the
information contained in this prospectus and the information we have referred you to. We have not authorized any person to provide you with
any information about this offering, Exeo Entertainment, Inc. or the shares of our common stock offered hereby that is different from the
information included in this prospectus. If anyone provides you with different information, you should not rely on it.
The date of this prospectus is August 16, 2013
3
TABLE OF CONTENTS
The following table of contents has been designed to help you find information contained in this prospectus. We encourage you to read the
entire prospectus.
PROSPECTUS SUMMARY
Page
5
RISK FACTORS
6
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
12
TAX CONSIDERATIONS
12
USE OF PROCEEDS
12
DETERMINATION OF THE OFFERING PRICE
12
MARKET FOR OUR COMMON STOCK
13
DIVIDEND POLICY
13
DILUTION
13
SELLING STOCKHOLDERS
13
PLAN OF DISTRIBUTION
19
DESCRIPTION OF SECURITIES
21
SHARES ELIGIBLE FOR FUTURE SALE
23
EXPERTS
24
LEGAL REPRESENTATION
24
OUR BUSINESS
24
LEGAL MATTERS
27
MANAGEMENT
27
EXECUTIVE COMPENSATION
28
COMPENSATION OF DIRECTORS
29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
30
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
31
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
32
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
32
FINANCIAL STATEMENTS
F-1
WHERE YOU CAN GET MORE INFORMATION
40
4
PROSPECTUS SUMMARY
This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including
our financial statements and related notes, and especially the risks described under “Risk Factors” beginning on page 6. All references to
“we,” “us,” “our,” “Exeo,” “Company” or similar terms used in this prospectus refer to Exeo Entertainment, Inc.. Unless otherwise
indicated, the term “fiscal year” refers to our fiscal year ending November 30. Unless otherwise indicated, the term “common stock” refers to
shares of the Company’s common stock.
Corporate Background and Business Overview
We were incorporated in the state of Nevada on May 12, 2011. Our offices are currently located at 4478 Wagon Trail Avenue, Las Vegas, NV
89118. Our telephone number is 702-361-3188. Our registered agent in the State of Nevada is Business Filings Incorporated, 311 S. Division
Street, Carson City, Nevada 89703.
We are in the business of designing, developing, licensing, manufacturing, and marketing consumer electronics in the video gaming and smart
TV sector. Products under development include The Zaaz™ wireless keyboard, The Extreme Gamer®; a multi-disc video game changer, and
the Psyko Krypton™ surround sound gaming headphones.
We are in process of completing the engineering on the three aforementioned products and are working with contractors in China to establish
manufacturing capabilities. Once manufacturing is established we intend on utilizing existing consumer electronics distributers, such as Synnex
Corp. (SNX) to distribute our products to big box retailers such as Best Buy, GameStop, and Fry’s Electronics.
We have not made any significant purchases or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. We
have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings.
We have two executive officers, our President, Jeffrey A. Weiland, and our Chief Financial Officer, Robert S. Amaral, both serve as our two
directors. Both of our officers and directors reside in the State of Nevada.
Summary of the Offering
510,000 shares of our common stock.
Shares of common stock being offered by the selling
stockholders:
Offering price:
Number of shares outstanding before the offering:
Number of shares outstanding after the offering, if all the shares
are sold:
$0.05 per share of common stock.
23,317,431
23,317,431
Our executive officers and directors currently hold approximately
74.00% of our outstanding shares, and, as a result, they retain
significant control over our direction.
There is no public market for our common stock. After the effective
date of the registration statement of which this prospectus is a part,
we intend to seek a market maker to file an application on our behalf
to have our common stock quoted on the Over-the-Counter Bulletin
Board. We currently have no market maker who is willing to list
quotations for our stock. There is no assurance that a trading market
will develop, or, if developed, that it will be sustained.
We will not receive any proceeds from the sale of the shares of
common stock by the selling stockholders identified in this
prospectus. The selling stockholders will receive all net proceeds
from the sale of the shares offered by this prospectus.
See “Risk Factors” beginning on page 6 and the other information in
this prospectus for a discussion of the factors you should consider
before deciding to invest in shares of our common stock.
We have not declared or paid any dividends on our common stock
since our inception, and we do not anticipate paying any such
dividends for the foreseeable future.
Market for the common stock:
Use of Proceeds:
Risk Factors:
Dividend Policy:
5
Summary Financial Information; Going Concern
The table below summarizes our audited financial statements for the fiscal years ended November 30, 2012 and December 31, 2011, as well as
the unaudited financial statements for the three and six months ended May 31, 2013 and June 30, 2012 and for the period from May 12, 2011
(inception) to May 31, 2013. In our auditor’s report included in the Company’s audited financial statements for fiscal years ended November
30, 2012 and December 31, 2011, our auditors expressed substantial doubt as to the Company’s ability to continue as a going concern. Our
ability to continue as a going concern is subject to our ability to generate sufficient revenues to fund our operations and/or our ability to obtain
additional capital, neither of which can be assured. We anticipate that our auditors will continue to express substantial doubt about our ability to
continue as a going concern for the near future.
Balance Sheet Summary:
Fiscal Year Ended
At November 30, 2012
At December 31, 2011
(Audited)
(Audited)
Balance Sheet
Cash and Cash Equivalents
Total Assets
Total Liabilities
Total Stockholders’ Equity (Deficit)
$
$
$
$
130,676
252,308
82,846
169,462
$
$
$
$
26,825
26,825
43,934
(17,109 )
At May 31,
2013
(Unaudited)
$
$
$
$
131,197
288,207
85,310
202,897
Statement of Operations Summary:
For the Fiscal Year
Ended
11/30/12
12/31/11
(Audited)
(Audited)
Statement of
Operations:
Revenue
Net Loss
Net Loss Per Share of
Common Stock , basic
$
$
0.00
(670,200 )
(0.03 )
$
0.00
(120,240 )
(0.01 )
For the Three Months
May 31,
June 30,
2013
2012
(Unaudited)
(Unaudited)
$
$
0.00
(198,346 )
0.00
(149,523 )
(0.01 )
(0.01 )
For the Period May 12, 2011
(Inception) to May 31, 2013
(Unaudited)
$
$
0.00
(1,202,396 )
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and other
information in this prospectus before deciding to invest in our Company. If any of the following risks actually occur, our business, financial
condition, results of operations and prospects for growth could be seriously harmed. As a result, the trading price of our common stock could
decline and you could lose all or part of your investment.
Risks Related to Our Business
Because we are a development stage company with no revenue and we have a history of significant operating losses, it is difficult to
predict the likelihood of future profits.
Our future revenue and operating profitability are difficult to predict and are uncertain. We are a development stage company and we have no
revenue. We recorded an operating loss of $667,111 for the fiscal year ended November 30, 2012, and ended the fiscal year with an
accumulated deficit of $790,440. In addition, we recorded an operating loss of $119,441 from inception (May 12, 2011) to December 31,
2011. Further, we recorded an operating loss of $411,757 for the six-month period ended May 31, 2013, with an accumulated deficit of
$1,202,396 for the period from inception to May 31, 2013. We expect to continue to incur operating losses for the foreseeable future, and such
losses may be substantial. Given our history of operating losses, we cannot assure you that we will be able to achieve or maintain operating
profitability on an annual or quarterly basis or at all.
6
Because our auditor has issued a going concern opinion regarding our Company, there is an increased risk associated with an
investment in our Company.
We have no revenue. We have incurred significant losses during our development stage and we are dependent upon obtaining financing to
continue operations. We had cash and cash equivalents in the amount of $131,197 and $130,676 as of May 31, 2013 and November 30, 2012,
respectively. Our future is dependent upon our ability to obtain financing and upon future profitable operations. We plan to seek additional
funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is
unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds or the acquisition of our common
stock. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern. We
agree with this assessment. As a result, there is an increased risk that you could lose the entire amount of your investment in our Company.
Our expenditures include various costs associated with maintaining public company reporting obligations. This includes projected professional
fees to be incurred over a twelve (12) month period as follows: Accounting $18,000, Auditing $24,000 and Legal $12,000. We plan to seek
additional funds of $1,124,242 to meet our on-going obligations, which include Advertising $90,000, Product Development $60,000 and
various other items for a total of $1,124,272.
Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose
challenges for our management team.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and SEC
regulations promulgated there under, have created uncertainty for public companies and significantly increased the costs and risks associated
with accessing the U.S. public markets. Our management team will need to devote significant time and financial resources to comply with both
existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of
management time and attention from potential revenue generating activities to compliance activities.
Because we have a no operating history, it is difficult to evaluate your investment in our stock.
Your evaluation of our business will be difficult because we have no operating history. We are a development stage company, as discussed in
Item 1. We face a number of risks encountered by early-stage companies, including our need to develop infrastructure to support growth and
expansion; our need to obtain long-term sources of financing; our need to establish our marketing, sales and support organizations, and our
need to manage expanding operations. Our business strategy may not be successful, and we may not successfully address these risks. If we are
unable to sustain profitable operations, investors may lose their entire investment in us.
If any of our designs infringe on the intellectual property rights of others, we may find ourselves involved in costly litigation, which will
negatively affect the financial results of our business operations.
Although we have not received notices of any alleged infringement by us, we cannot be certain that our designs do not infringe on issued
patents, trademarks and/or copyright rights of others. We may be subject to legal proceedings and claims from time to time in our ordinary
course of business arising out of intellectual property rights of others. These legal proceedings associated with infringement actions can be very
costly, and thus could have a material adverse effect on our business, financial condition, or results of operations. We may not seek to register
every one of our marks either in the U.S. or in every country in which it is used. As a result, we may not be able to adequately protect those
unregistered marks. Furthermore, because of the differences in foreign trademark, patent and other intellectual property or proprietary rights
laws, we may not receive the same protection in other countries as we would in the U.S. Failure to protect such proprietary information and
brand names could impact our ability to compete effectively and could adversely affect our business, financial condition, or results of
operations.
If we are not granted trademark and copyright protection for our designs, we may have difficulty safeguarding our designs potentially
resulting in our competitors utilizing them impairing our ability to achieve profitable operations.
Our success will depend, in part, on our ability to obtain and enforce intellectual property rights over our name and original designs in the
United States. We own several U.S. federally registered trademarks and have one patent pending on our Extreme Gamer®, video game
peripheral . No assurance can be given that any intellectual property rights owned by us will not be challenged, invalidated or circumvented, or
that any rights granted will provide a competitive advantage to us. Intellectual property litigation is expensive and time-consuming, and it can
be used by well-funded adversaries as a strategy for depleting the resources of a small company such as us. There is no assurance that we will
have sufficient resources to successfully prosecute our interests in any litigation that may be brought. The failure to adequately protect our
intellectual property and original designs could result in our competitors utilizing our designs and impair our ability to achieve profitable
operations.
7
The loss of the services of key personnel could disrupt our business and negatively affect operations.
We depend on the continued services and performance of our two (2) officers, and we do not currently employ a Vice President responsible for
sales and marketing of our products and services. We do not have “key person” life insurance policies on any employee and believe that the
loss of any of our officers could interrupt our business development and harm our business.
We are dependent upon outside advisors as we have insufficient personnel.
We are required to employ accountants, technical experts, engineers, attorneys, and other consultants or advisors to help further the Company’s
business plan. The selection of any such advisors will be made by the Company's officers and directors without any input
from stockholders. Furthermore, it is anticipated that such advisors may be engaged on an “as needed” basis without a continuing fiduciary or
other obligation to the Company.
Failure to attract, train, and retain personnel to manage our growth could adversely impact our future operating results.
Our strategy to grow our operations may place a greater strain on our managerial, financial and human resources than that experienced by our
larger competitors, as they have a larger employee base and administrative support group. As we grow we will need to:
●
build and train sales and marketing staff to create an expanding presence in the evolving marketplace for our products and services,
and to keep staff informed regarding the features, issues and key selling points of our products and services;
●
attract and retain qualified personnel in order to continue to develop reliable and saleable products and services that respond to
evolving customer needs; and
●
focus personnel on expanding our internal management, financial and product controls significantly, so that we can maintain control
over our operations and provide support to other functional areas within our business as the number of personnel and the size of our
operations increases.
Competition for such personnel can be intense, and we cannot assure you that we will be able to attract or retain highly qualified marketing,
product engineers, sales and managerial personnel in the future. Our inability to attract and retain the necessary personnel may adversely affect
our future growth and profitability. It may be necessary for us to increase the level of compensation paid to existing or new employees to a
degree that our operating expenses could be materially increased.
We face competition by other companies that carry significant credit lines as well as strong capitalization making it difficult for us to
compete.
Our business is rapidly evolving and intensely competitive. Our potential competitors include existing computer hardware manufacturers that
may expand into the video gaming peripheral market. Although we believe that we do not compete directly with any single company that
offers our entire range of merchandise, within each category, we have competitors and we may face competition from new entrants. Many of
our potential competitors have greater resources, better access to credit, more customers and greater brand recognition. As a result, they may
secure better terms and adopt more aggressive pricing from parts suppliers and distributors. They may also be better positioned to devote more
resources to software programming, fulfillment, and marketing or to invest in or form joint ventures with our competitors. Increased
competition from these or other competitors could negatively impact our business by reducing our potential sales and negatively impacting
future profits.
If our products are improperly manufactured, packaged, or labeled or become adulterated, those items may need to be recalled.
We have yet to manufacture our products. We may need to recall the products we sell if products are improperly manufactured, packaged, or
labeled or if they become adulterated. Widespread product recalls could result in significant losses due to the costs of a recall and lost sales due
to the unavailability of product for a period of time. A significant product recall could also result in adverse publicity, damage to our reputation,
and loss of customer confidence in our products, which could have a material adverse effect on our business, financial condition, or results of
operations.
Insurance policies may not cover all operating risks and a casualty loss beyond the limits of any reasonable insurance coverage.
We presently have no product liability insurance. Our business is subject to all of the operating hazards and risks normally incidental to
handling, storing, and transporting the products we sell. We expect to maintain insurance policies in such amounts and with such coverage and
deductibles that we believe will be reasonable and prudent. Nevertheless, our insurance coverage may not be adequate to protect us from all
liabilities and expenses that may arise from claims for personal injury or death or property damage arising in the ordinary course of business.
8
Declining economic conditions could negatively impact our business
Our operations are affected by local, national and worldwide economic conditions. Markets in the US and elsewhere have been experiencing
extreme volatility and disruption for more than twelve (12) months, due in part to the financial stresses affecting the liquidity of the banking
system and the financial markets generally. The consequences of a potential or prolonged recession may include a lower level of economic
activity and uncertainty regarding energy prices and the capital and commodity markets. Instability in the financial markets, as a result of
recession or otherwise, also may affect the cost of capital and our ability to raise capital.
Nevada law and our articles of incorporation may protect our directors from certain types of lawsuits.
Nevada law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of
conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection
with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders
from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The
indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising
out of their negligence, poor judgment, or other circumstances.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud.
We are subject to reporting obligations under the US securities laws. The SEC, as required by Section 404(a) of the SOX, adopted rules
requiring every public company to include a management report on such company's internal controls over financial reporting in its annual
report, which contains management's assessment of the effectiveness of our internal controls over financial reporting. In addition, if our market
capitalization exceeds $75,000,000 we may in the future be required under Section 404(b) to have an independent registered public accounting
firm attest to and report on management's assessment of the effectiveness of our internal controls over financial reporting. Our management
may conclude that our internal controls over our financial reporting are not effective. Moreover, even if our management concludes that our
internal controls over financial reporting are effective, our independent registered public accounting firm, if required, may still decline to attest
to our management's assessment or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls
are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. Our reporting obligations as a
public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future.
Effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our
failure to achieve and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the
reliability of our financial statements, which in turn could harm our business and negatively impact the trading price of our stock. Furthermore,
we anticipate that we will incur considerable costs and use significant management time and other resources in an effort to comply with Section
404(a) and other requirements of the SOX.
Risks Related to Our Common Stock
If a market for our common stock does not develop, stockholders may be unable to sell their shares.
A market for our common stock may never develop. We intend to contact a market-maker for sponsorship of our securities on the OTC
Bulletin Board or OTC Markets QB upon the effectiveness of this registration statement. However, our shares may never be traded on the
bulletin board, or, if traded, a public market may not materialize.
If our common stock is not traded on the bulletin board or if a public market for our common stock does not develop, investors may not be able
to re-sell the shares of our common stock that they have purchased and may lose all of their investment.
Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase our
common stock.
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 business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. Our payment of any future
dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial
condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time.
Accordingly, investors must rely on sales of their own common stock after price appreciation, which may never occur, as the only way to
realize their investment. Investors seeking cash dividends should not purchase our common stock.
9
Because we may be subject to the “Penny Stock” rules once our shares are quoted on the over-the-counter bulletin board, the level of
trading activity in our stock may be reduced.
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some
national securities exchanges or quoted on Nasdaq). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, 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, and monthly account statements showing
the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than
established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing
the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock
may find it difficult to sell their shares.
If our shares are quoted on the over-the-counter bulletin board, we will be required to remain current in our filings with the SEC and
our securities will not be eligible for quotation if we are not current in our filings with the SEC.
Upon the effectiveness of this registration statement, we are required to maintain current, periodic and annual reporting with the U.S. SEC. In
the event that our shares are quoted on the over-the-counter bulletin board, we must remain current in our filings with the SEC in order for
shares of our common stock to be eligible for quotation. In the event that we become delinquent in our required filings with the SEC, quotation
of our common stock will be terminated following a 30 day grace period if we do not make our required filing during that time. If our shares
are not eligible for quotation on the over-the-counter bulletin board, investors in our common stock may find it difficult to sell their shares.
Additional issuances of equity securities may result in dilution to our existing stockholders.
Our Articles of Incorporation authorize the issuance of 100,000,000 shares of common stock of which there are currently 23,317,431 shares
issued and outstanding. The Board of Directors has the authority to issue additional shares of our capital stock up to the authorized amount to
provide additional financing in the future and the issuance of any such shares may result in a reduction of the book value or market price of the
outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will cause a reduction in the
proportionate ownership and voting power of all other stockholders. As a result of such dilution, if you acquire shares of our common stock,
your proportionate ownership interest and voting power could be decreased. Further, any such issuances could result in a change of control.
Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our
stock.
The SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than
$5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock
rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and
"accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $10,000,000 or individuals with a
net worth in excess of $1,000,000, not including any equity in that person's or person's spouse's primary residence, or annual income exceeding
$200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current
bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have
the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage
investor interest in and limit the marketability of our common stock.
FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
In addition to the "penny stock" rules promulgated by the SEC, the Financial Industry Regulatory Authority (FINRA) has adopted rules that
require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must
make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable
for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock.
10
There is currently no public market for our securities, and there can be no assurance that any public market will develop or that our
common stock will be quoted for trading.
Prior to this offering, there has been no public market for our securities and there can be no assurance that an active trading market for the
securities offered herein will develop after this offering, or, if developed, be sustained. After the effective date of the registration statement of
which this prospectus is a part, we intend to identify a market maker to file an application with the Financial Industry Regulatory Authority
(“FINRA”) to have our common stock quoted on the Over-the-Counter Bulletin Board. We do not currently have a market maker who is
willing to participate in this application process, and even if we identify a market maker, there can be no assurance as to whether such
application will be accepted. Our common stock may never be quoted on the Over-the-Counter Bulletin Board, or, even if quoted, a public
market may not materialize. If our securities are not eligible for initial quotation, or if quoted, are not eligible for continued quotation on the
Over-the-Counter Bulletin Board or a public trading market does not develop, purchasers of the common stock may have difficulty selling or
be unable to sell their securities should they desire to do so, rendering their shares effectively worthless and resulting in a complete loss of their
investment.
A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our
operations .
A decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to
raise additional capital for our operations. Since our operations to date have been principally financed through the sale of equity securities, a
decline in the price of our common stock could have an adverse effect upon our liquidity and our continued operations. A reduction in our
ability to raise equity capital in the future would have a material adverse effect upon our business plan and operations, including our ability to
continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations
sufficient to meet our obligations.
Shares eligible for future sale may adversely affect the market price of our common stock, as the future sale of a substantial amount of
our restricted stock in the public marketplace could reduce the price of our common stock.
From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary
brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act ("Rule 144"), subject to certain
limitations. In general, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied the required
holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater
of 1% of the then outstanding shares of common stock or the average weekly trading -volume of the class during the four calendar weeks prior
to such sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitations, by a non-affiliate of our
company that has satisfied a one-year holding period. Any substantial sale of common stock pursuant to Rule 144 or pursuant to any resale
prospectus may have an adverse effect on the market price of our securities.
State securities laws may limit secondary trading, which may restrict the states in which you can sell the shares offered by this
prospectus.
If you purchase shares of our common stock sold by the selling stockholders in this offering, you may not be able to resell the shares in any
state unless and until the shares of our common stock are qualified for secondary trading under the applicable securities laws of such state or
there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state.
There can be no assurance that we will be successful in registering or qualifying our common stock for secondary trading, or identifying an
available exemption for secondary trading in our common stock in every state. If we fail to register or qualify, or to obtain or verify an
exemption for the secondary trading of, our common stock in any particular state, the shares of common stock could not be offered or sold to,
or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock,
the market for the common stock will be limited which could drive down the market price of our common stock and reduce the liquidity of the
shares of our common stock and a stockholder’s ability to resell shares of our common stock at all or at current market prices, which could
increase a stockholder’s risk of losing some or all of his investment.
11
The price of our shares in this offering was determined by us and may not reflect the actual market price for the securities.
The initial offering price of the common stock offered by the selling stockholders pursuant to this prospectus was determined by us arbitrarily.
The price is not based on our financial condition and prospects, market prices of similar securities of comparable publicly traded companies,
certain financial and operating information of companies engaged in similar activities to ours, or general conditions of the securities market.
The price may not be indicative of the market price, if any, for the common stock in the trading market after this offering. The market price of
the securities offered herein, if any, may decline below the initial public offering price. The stock market has experienced extreme price and
volume fluctuations. In the past, securities class action litigation has often been instituted against various companies following periods of
volatility in the market price of their securities. If instituted against us, regardless of the outcome, such litigation would result in substantial
costs and a diversion of management’s attention and resources, which would increase our operating expenses and affect our financial condition
and business operations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements and information relating to our business that are based on our beliefs as well as
assumptions made by us or based upon information currently available to us. These statements reflect our current views and assumptions with
respect to future events and are subject to risks and uncertainties. Forward-looking statements are often identified by words like: “believe,”
“expect,” “estimate,” “anticipate,” “intend,” “project” and similar expressions or words which, by their nature, refer to future events. In
some cases, you can also identify forward-looking statements by terminology such as “may,” “will,” “should,” “plans,” “predicts,”
“potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve
known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors beginning on page ____, that
may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In addition, you are directed
to factors discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operation section beginning on page
__, and the section entitled “Our Business” beginning on page __, and as well as those discussed elsewhere in this prospectus. Other factors
include, among others: general economic and business conditions; industry capacity; industry trends; competition; changes in business
strategy or development plans; project performance; availability, terms, and deployment of capital; and availability of qualified personnel.
These forward-looking statements speak only as of the date of this prospectus. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by
applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any
update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these
statements to actual results.
TAX CONSIDERATIONS
We are not providing any tax advice as to the acquisition, holding or disposition of the securities offered herein. In making an investment
decision, investors are strongly encouraged to consult their own tax advisor to determine the U.S. federal, state and any applicable foreign tax
consequences relating to their investment in our securities.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by the selling stockholders pursuant to this prospectus. The selling
stockholders named herein will receive all proceeds from the sale of the shares of our common stock in this offering. Please see “Selling
Stockholders” below for a list of these individuals.
We will pay all expenses (other than transfer taxes) of the selling stockholders in connection with this offering.
DETERMINATION OF THE OFFERING PRICE
There is no established public market for our shares of common stock. The offering price of $0.05 per share was determined by us
arbitrarily. We believe that this price reflects the appropriate price that a potential investor would be willing to invest in our company at this
initial stage of our development. This price bears no relationship whatsoever to our business plan, the price paid for our shares by our founders,
our assets, earnings, book value or any other criteria of value. The offering price should not be regarded as an indicator of the future market
price of the securities, which is likely to fluctuate.
The selling stockholders will offer the shares of common stock for resale at $0.05 per share until our shares are quoted on the Over-the-Counter
Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. See “Plan of Distribution” for additional information.
12
MARKET FOR OUR COMMON STOCK
Market Information
There is no established public market for our common stock. After the effective date of the registration statement of which this prospectus is a
part, we intend to seek a market maker to file an application with the Financial Industry Regulatory Authority, Inc., or FINRA, to have our
common stock quoted on the Over-the-Counter Bulletin Board. We do not currently have a market maker who is willing to list quotations for
our common stock, and there can be no assurance that an active trading market for our shares will develop, or, if developed, that it will be
sustained.
We have issued 23,317,431 shares of our common stock since the Company’s inception on May 12, 2011, all of which are restricted shares.
See “Certain Relationships and Related Transactions” below for information with respect to some of these shares.
Warrants
During the period August 17, 2012 to November 30, 2012, in connection with a private placement, the Company raised $312,260 from the sale
of securities to 20 investors. For each $1.00 received from these investors, the Company issued one common share and granted two stock
warrants. 624,520 stock warrants to purchase common stock were granted in conjunction with the purchase by each investor of our common
stock. The terms of the stock warrant include the right to exercise all or a portion of the warrants granted, shall be no more than 2 years from
the date of grant of the warrant, and the exercise price is $1.00 per warrant. The warrant may not be transferred or assigned in whole or in part
by the grantee.
Stock Options
Pursuant to the employee incentive stock option plan, on July 15, 2012, we granted 2,000,000 shares to each of our two officers and directors.
The option agreement provides the employee has no more than five years from the date of the grant to exercise the options at an exercise price
of $0.25 per share. The employee may only exercise such options based upon the contracted vesting schedule, which provides that the options
vest on a pro-rata basis over 60 months of future services to be rendered by such employee. In addition, on August 15, 2012, we granted
100,000 incentive stock options to another officer of the Company. This employee received the right to exercise the options on the date of grant
at an exercise price of $0.25 per share.
Securities Authorized for Issuance under Equity Compensation Plans
Up to Five Million (5,000,000) shares of our common stock are eligible for issuance pursuant to our 2012 Employees/Consultants Stock
Compensation Plan established on July 6, 2012.
Holders
We had 83 holders of record of our common stock as of August 12, 2013.
DIVIDEND POLICY
We have not paid any dividends since our incorporation and do not anticipate the payment of dividends in the foreseeable future. At present,
our policy is to retain earnings, if any, to develop and market our product. The payment of dividends in the future will depend upon, among
other factors, our earnings, capital requirements, and operating financial conditions.
DILUTION
The shares of common stock to be sold by the selling stockholders are shares that are currently issued and outstanding. Accordingly, there will
be no dilution to our existing stockholders as a result of the offering by the selling stockholders pursuant to this prospectus.
SELLING STOCKHOLDERS
The selling stockholders named in this prospectus are offering all of the 510,000 shares of common stock offered through this prospectus. The
selling stockholders acquired the 510,000 shares of common stock offered through this prospectus from us in two (2) separate private
placements pursuant to Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) which closed on July 5, 2012 and July
19, 2013, respectively thus exempting these offerings from the registration requirements of the Securities Act.
The following table provides as of August 12, 2013, information regarding the beneficial ownership of our common stock held by each of the
selling stockholders, including:
13
1.
The number and percentage of shares beneficially owned prior to this offering;
2.
The total number of shares to be offered hereby; and
3.
The total number and percentage of shares that will be beneficially owned upon completion of this offering.
All expenses incurred with respect to the registration of the offering by the selling stockholders of these shares of common stock (other than
transfer taxes) will be borne by us, but we will not be obligated to pay any underwriting fees, discounts, commissions or other expenses
incurred by the selling stockholders in connection with the sale of such shares.
The shares beneficially owned have been determined in accordance with rules promulgated by the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for any other purpose. The information in the table below is current as of
the date of this prospectus. All information contained in the table below is based upon information provided to us by the selling stockholders
and we have not independently verified this information. The selling stockholders are not making any representation that any shares covered by
this prospectus will be offered for sale. The selling stockholders may from time to time offer and sell pursuant to this prospectus any or all of
the common stock covered hereby.
For purposes of this table, beneficial ownership is determined in accordance with the Securities and Exchange Commission rules, and includes
investment power with respect to shares and shares owned pursuant to warrants or options exercisable within 60 days, if applicable. Except as
indicated below, no selling stockholders is the beneficial owner of any additional shares of common stock or other equity securities issued by
us or any securities convertible into, or exercisable or exchangeable for, our equity securities.
We may require the selling stockholders to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that
makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of
statements in these documents in order to make statements in those documents not misleading.
Selling Shareholders
American Pension Services, Inc.,
Administrator for Scott
McCormick
Andrew Carlson
Andrew Carlson IRA
Angela O’Brien
Ann McElligott
Betsy B. Neu Trustee Betsy B Neu
Trust DTD 12/16/2004
Betty June Bell
Blake & Sharon Stephens JWROS
Bradley Dye
Charles I. Clarke
Chet Sena
Shares of
Common
Stock Owned
Prior to
Offering
Shares of
Common
Stock to be
Offered for
Sale
Shares of
Common
Stock Owned
After the
Offering
Percentage of
Common
Stock Owned
Before the
Offering
Percentage of
Common
Stock Owned
After the
Offering
500,000
20,000
10,000
10,000
60,000
5,000
5,000
5,000
5,000
5,000
495,000
15,000
5,000
5,000
55,000
2.14 %
0.09 %
0.04 %
0.04 %
0.26 %
2.12 %
0.06 %
0.02 %
0.02 %
0.24 %
209,300
40,000
12,500
100,000
12,500
22,500
5,000
5,000
5,000
5,000
5,000
5,000
204,300
35,000
7,500
95,000
7,500
17,500
0.90 %
0.17 %
0.05 %
0.43 %
0.05 %
0.10 %
0.88 %
0.15 %
0.03 %
0.41 %
0.03 %
0.08 %
14
Chet & Sue Sena
Clayton & Michel Olsen JWROS
Clyde Y. Ota
Curtis Langkrahr
Dale G. Buchta Revocable Trust
Daniel Barnhill
David C. Tyrell
Dirk Olsen
Dirk Olsen & Jim Whiteley
Equity Trust Company Custodian FBO Allen
M. Ernst IRA
Equity Trust Company Custodian FBO James
F. Sharpe IRA
Equity Trust Company Custodian FBO Robert
Vance Chalfant IRA
Equity Trust Company DBA Sterling Trust
Custodian FBO Dorothy L. Behne IRA
Equity Trust Company DBA Sterling Trust
Custodian FBO John Dempsey IRA
Equity Trust Company DBA Sterling Trust
Custodian FBO Michael Felice IRA
Equity Trust Company DBA Sterling Trust
Custodian FBO Nathan R. Behne IRA
Equity Trust Company DBA Sterling Trust
Custodian FBO Robert Clark IRA
Equity Trust Company DBA Sterling Trust
Custodian FBO Urule Igbavboa IRA
Equity Trust Company, Custodian FBO Robert
Vance Chalfant A/C 401549
Estate of Donald Errickson
Eugene Sussli
Fred J. Mocking Trust DTD Dec 17, 2003
20,000
25,000
172,725
10,000
137,000
18,750
12,500
25,000
100,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
15,000
20,000
167,725
5,000
132,000
13,750
7,500
20,000
95,000
0.09 %
0.11 %
0.74 %
0.04 %
0.59 %
0.08 %
0.05 %
0.11 %
0.43 %
0.06 %
0.09 %
0.72 %
0.02 %
0.57 %
0.06 %
0.03 %
0.09 %
0.41 %
49,771
5,000
44,771
0.21 %
0.19 %
25,000
5,000
20,000
0.11 %
0.09 %
100,000
5,000
95,000
0.43 %
0.41 %
20,000
5,000
15,000
0.09 %
0.06 %
125,000
5,000
120,000
0.54 %
0.51 %
10,000
5,000
5,000
0.04 %
0.02 %
32,500
5,000
27,500
0.14 %
0.12 %
12,260
5,000
7,260
0.05 %
0.03 %
25,000
5,000
20,000
0.11 %
0.09 %
30,000
71,000
165,000
15,000
5,000
5,000
5,000
5,000
25,000
66,000
160,000
10,000
0.13 %
0.30 %
0.71 %
0.06 %
0.11 %
0.28 %
0.69 %
0.04 %
15
Fred Van Natta
Gail Braden
Gary R. Wilson
George Jordan & Betty P. Jordan
Gerald Simonson
I. Robert Beton
IRA Resources, Inc. FBO Ann McElligott IRA
#16433
IRA Resources, Inc. FBO Thomas C. Jensen
35-35217
Ivan Stoltzfus & Darla E. Stoltzfus
J.S. Santi
Jack, Betty, Karen Wegener
Jacquelyn B. Grant Revocable Living Trust
James & Trina Sharpe
Jane Edwards
Jane Edwards Ingersol
Jean F. Wright Revocable Living Trust DTD
12/21/92
John & Suzanne Dempsey JWROS
John H. Marino
John J. Mastel
John Liston
Juel Jordahl
Lensford McKenzie
Lewis George Prowse II
25,000
25,000
263,500
45,000
60,104
40,000
5,000
5,000
5,000
5,000
5,000
5,000
20,000
20,000
258,500
40,000
55,104
35,000
0.11 %
0.11 %
1.13 %
0.19 %
0.26 %
0.17 %
0.09 %
0.09 %
1.11 %
0.17 %
0.24 %
0.15 %
40,000
5,000
35,000
0.17 %
0.15 %
52,500
64,113
121,500
42,500
30,000
60,000
10,000
20,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
47,500
59,113
116,500
37,500
25,000
55,000
5,000
15,000
0.23 %
0.27 %
0.52 %
0.18 %
0.13 %
0.26 %
0.04 %
0.09 %
0.20 %
0.25 %
0.50 %
0.16 %
0.11 %
0.24 %
0.02 %
0.06 %
25,000
125,000
12,500
25,000
25,000
230,000
10,000
25,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
20,000
120,000
7,500
20,000
20,000
225,000
5,000
20,000
0.11 %
0.54 %
0.05 %
0.11 %
0.11 %
0.99 %
0.04 %
0.11 %
0.09 %
0.51 %
0.03 %
0.09 %
0.09 %
0.96 %
0.02 %
0.09 %
16
Liberty Trust Company Ltd. Custodian FBO
Robert A. Kiesz IRA #TC003181
Lorraine F. Meisner
Lorraine Faxon Meisner Rev Tr Lorraine Faxon
Meisner Ttee
Mackie Klingbeil
Michael & Cynthia Quinajon JWROS
Michael A. Felice
Michael J. Bailey & Shirley W. Bailey JWROS
Narasimharao Uppalapati
Patricio Osses
Ray Bissell
Raymond & Jolanta Champagne JWROS
Raymond Champagne
Raymond Champagne & Jolanta Champagne
JWROS
Rene Solc
Richard C. Ernest Revocable Trust
Robert & Justine Clarke JWROS
Robert A. Kiesz
Robert A. Norikane
Robert G. Bohnenkamp
Robert Kramer Jr. ATF Kramer Survivor Trust
DTD 3/30/2000
Robert Kramer Jr. Kramer Survivor Trust DTD
3/30/2000
Robert V. Chalfant
Robert W. Halprin & Jacqueline B. Halprin
WROS
12,500
40,000
5,000
5,000
7,500
35,000
0.05 %
0.17 %
0.03 %
0.15 %
210,105
25,000
12,500
12,500
12,500
50,000
25,000
20,000
6,250
25,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
205,105
20,000
7,500
7,500
7,500
45,000
20,000
15,000
1,250
20,000
0.90 %
0.11 %
0.05 %
0.05 %
0.05 %
0.21 %
0.11 %
0.09 %
0.03 %
0.11 %
0.88 %
0.09 %
0.03 %
0.03 %
0.03 %
0.19 %
0.09 %
0.06 %
0.01 %
0.09 %
15,500
25,000
175,000
82,500
12,500
128,225
70,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
10,500
20,000
170,000
77,500
7,500
123,225
65,000
0.07 %
0.11 %
0.75 %
0.35 %
0.05 %
0.55 %
0.30 %
0.05 %
0.09 %
0.73 %
0.33 %
0.03 %
0.53 %
0.28 %
24,000
5,000
19,000
0.10 %
0.08 %
110,000
31,531
5,000
5,000
105,000
26,531
0.47 %
0.14 %
0.45 %
0.11 %
90,000
5,000
85,000
0.39 %
0.36 %
17
Roger Marshall
Ronald Chelsvig
Roy Cappadona
Roy Cappodonna
Scott McCormick
Stephanie A. & Walter M. Grimm JWROS
Stephen Romsdahl
Stephens Family Trust DTD April 30, 2012
Sterling Trust Company FBO Robert V.
Chalfant
Sterling Trust, Custodian FBO: Gary R. Wilson
Steven D. Adams
Steven E. Drake & Jane E. Redicker JWROS
Sunwest Trust Company Custodian FBO Lynn
A. Rudolph IRA
Sunwest Trust Inc. FBO Robert A. Norikane
The David Church Revocable Trust DTD June
2009
Theresia A. Hermann Trust DTD Aug 7, 2001
Thomas C. Jensen
Tim Parks
Trina Sharpe
Vernelle I. Puerta
Virginia J. Easley & William T. Easley JWROS
Walter B. Harrison & Karen L. Harrison
JWROS
Walter B. Harrison Jr. & Karen L. Harrison
Total
70,000
55,000
20,000
6,613
58,180
50,000
240,000
12,500
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
65,000
50,000
15,000
1,613
53,180
45,000
235,000
7,500
0.30 %
0.24 %
0.09 %
0.03 %
0.25 %
0.21 %
1.03 %
0.05 %
0.28 %
0.21 %
0.06 %
0.01 %
0.23 %
0.19 %
1.01 %
0.03 %
20,000
99,100
12,500
12,500
5,000
5,000
5,000
5,000
15,000
94,100
7,500
7,500
0.09 %
0.43 %
0.05 %
0.05 %
0.06 %
0.40 %
0.03 %
0.03 %
50,000
25,000
5,000
5,000
45,000
20,000
0.21 %
0.11 %
0.19 %
0.09 %
112,500
25,000
66,000
30,000
19,838
110,880
50,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
107,500
20,000
61,000
25,000
14,838
105,880
45,000
0.48 %
0.11 %
0.28 %
0.13 %
0.09 %
0.48 %
0.21 %
0.46 %
0.09 %
0.26 %
0.11 %
0.06 %
0.45 %
0.19 %
25,000
100,000
6,061,245
5,000
5,000
510,000
20,000
95,000
5,551,245
0.11 %
0.43 %
25.99 %
0.09 %
0.41 %
23.81 %
18
(1) The named party beneficially owns and has sole voting and investment power over all shares or rights to these shares, unless otherwise
shown in the table. The numbers in this table assume that none of the selling stockholders sells shares of common stock not being
offered pursuant to this prospectus or purchases additional shares of common stock, and assumes that all shares offered are sold.
(2) Applicable percentage of ownership is based on 23,317,431 shares of common stock outstanding as of August 12, 2013, on a basic
basis. On a fully diluted basis, the total common shares as of August 12, 2013, is 26,135,084.
Except as disclosed above, none of the selling stockholders:
(i)
has had a material relationship with us or any of our affiliates other than as a stockholder at any time within the past three
years;
(ii)
served as one of our officers or directors; nor
(iii)
is a registered broker-dealer or an affiliate of a broker-dealer.
PLAN OF DISTRIBUTION
This prospectus relates to the registration of the resale of 510,000 shares of our common stock on behalf of the selling stockholders named
herein.
The selling stockholders may sell some or all of their shares at a fixed price of $0.05 per share until our shares are quoted on the Over-theCounter Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Sales by selling stockholders must be made at
the fixed price of $0.05 until a market develops for the stock.
The shares may be sold or distributed from time to time by the selling stockholders or by pledgees, donees or transferees of, or successors in
interest to, the selling stockholders, directly to one or more purchasers (including pledgees) or through brokers or dealers who act solely as
agents. The distribution of the shares may be effected in one or more of the following methods:

Ordinary broker transactions, which may include long or short sales;

Transactions involving cross or block trades on any securities or market where our common stock is trading;

Purchases by brokers or dealers as principal and resale by such purchasers for their own accounts pursuant to this prospectus;

an exchange distribution in accordance with the rules of the applicable exchange;

ordinary brokerage transactions and transactions in which the broker solicits purchasers;

privately negotiated transactions;

at the market to or through market makers or into an existing market for the shares;

through transactions in options, swaps or other derivatives (whether exchange listed or otherwise);

In other ways not involving market makers or established trading markets, including direct sales to purchasers or sales effected
through agents; or

Any combination of the foregoing.
19
The selling security holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in shares in the course of hedging
the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with brokerdealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus.
Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent (which
compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can
presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other
stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We do not anticipate that either our stockholders or we will
engage an underwriter in the selling or distribution of our shares.
We will not receive any proceeds from the sale of the shares of the selling stockholders pursuant to this prospectus. We have agreed to bear the
expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $53,500.
The selling stockholders named in this prospectus must comply with the requirements of the Securities Act and the Exchange Act in the offer
and sale of the common stock being offered by them. The selling stockholders and any broker-dealers who execute sales for the selling
stockholders may be deemed to be an “underwriter” within the meaning of the Securities Act in connection with such sales. In particular,
during such times as the selling stockholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered
to be an underwriter, they must comply with applicable laws and may among other things:
1.
Not engage in any stabilization activities in connection with our common stock;
2.
Furnish each broker or dealer through which common stock may be offered, such copies of this prospectus from time to time, as
may be required by such broker or dealer, and
3.
Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities permitted under the
Exchange Act.
Any commissions received by broker-dealers and any profit on the resale of shares sold by them while acting as principals might be deemed to
be underwriting discounts or commissions under the Securities Act.
State Securities - Blue Sky Laws
Transfer of our common stock may also be restricted under the securities regulations or laws promulgated by various states and foreign
jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be
traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the Blue Sky laws of any
state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be
aware that there may be significant state Blue-Sky law restrictions upon the ability of investors to sell the securities and of purchasers to
purchase the securities. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold the shares of our
common stock for an indefinite period of time.
Regulation M
We have informed the selling stockholders that Regulation M promulgated under the Exchange Act may be applicable to them with respect to
any purchase or sale of our common stock. In general, Rule 102 under Regulation M prohibits any person connected with a distribution of our
common stock from directly or indirectly bidding for, or purchasing for any account in which it has a beneficial interest, any of the shares or
any right to purchase the shares, for a period of one business day before and after completion of its participation in the distribution.
During any distribution period, Regulation M prohibits the selling stockholders and any other persons engaged in the distribution from
engaging in any stabilizing bid or purchasing our common stock except for the purpose of preventing or retarding a decline in the open market
price of the common stock. None of these persons may affect any stabilizing transaction to facilitate any offering at the market. As the selling
stockholders will be offering and selling our common stock at the market, Regulation M will prohibit them from effecting any stabilizing
transaction in contravention of Regulation M with respect to the shares.
20
We also have advised the selling stockholders that they should be aware that the anti-manipulation provisions of Regulation M under the
Exchange Act will apply to purchases and sales of shares of common stock by the selling stockholders, and that there are restrictions on
market-making activities by persons engaged in the distribution of the shares. Under Regulation M, the selling stockholders or their agents may
not bid for, purchase, or attempt to induce any person to bid for or purchase, shares of our common stock while such selling stockholders are
distributing shares covered by this prospectus. Regulation M may prohibit the selling stockholders from covering short sales by purchasing
shares while the distribution is taking place, despite any contractual rights to do so under the Agreement. We have advised the selling
stockholders that they should consult with their own legal counsel to ensure compliance with Regulation M.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.0001 per share.
The holders of our common stock:

Have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by our Board of Directors;

Are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or
winding up of our affairs;

Do not have pre-emptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and

Are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.
The shares of common stock are not subject to any future call or assessment and all have equal voting rights. There are no special rights or
restrictions of any nature attached to any of the common shares and they all rank at equal rate or “ pari passu,” each with the other, as to all
benefits, which might accrue to the holders of the common shares. All registered stockholders are entitled to receive a notice of any general
annual meeting to be convened by our Board of Directors.
At any general meeting, subject to the restrictions on joint registered owners of common shares, on a showing of hands every stockholder who
is present in person and entitled to vote has one vote, and on a poll every stockholder has one vote for each shares of common stock of which
he is the registered owner and may exercise such vote either in person or by proxy. To the knowledge of our management, at the date hereof,
our officers and directors are the only persons to exercise control, directly or indirectly, over more than 10% of our outstanding common
shares. See “Security Ownership of Certain Beneficial Owners and Management.”
We refer you to our Articles of Incorporation and Bylaws, copies of which were filed with the registration statement of which this prospectus is
a part, and to the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of our
securities.
As of August 12, 2013 there were 23,317,431 shares of our common stock issued and outstanding.
Preferred Stock
Our Articles of Incorporation authorize the issuance of 1,000,000 shares of preferred stock with a par value of $0.0001 per share. The terms of
the preferred shares are at the discretion of the board of directors. Currently no preferred shares are issued and outstanding and have the
following rights, preferences and privileges:
Ranking: Our Series A Preferred Stock (“Series A Stock”) ranks, as to dividends and upon liquidation, senior and prior to our common stock,
par value $0.0001 per share (the “Common Stock”) and to all other classes or class of stock issued by the Issuer, except as otherwise approved
by the affirmative vote or consent of the holders of a majority of the shares of outstanding Series A Stock.
Liquidation Rights . With respect to rights on liquidation, the Series A Stock shall rank senior and prior to our Common Stock and to all other
classes or series of stock issued by the Company, except as otherwise approved by the affirmative vote or consent of the holders of at least a
majority of outstanding Series A Stock.
Voting . The Series A Stockholders shall be entitled to one (1) vote for each share of Series A Stock held on any matters requiring a
shareholder vote of the Company.
21
Conversion . Subject to the limitations set forth in the Certificate of Designation (the “Certificate”), each share of the Series A Stock shall be
convertible at any time after the First Conversion Date (as defined in the Certificate) in whole but not in part, unless previously redeemed, at
the option of the holder of record thereof, into the number of fully paid and non-assessable shares of Common Stock equal to the quotient
obtained by dividing (i) the aggregate liquidation preference of the share of Series A Stock being converted by (ii) the Conversion Price (as
defined in the Certificate) upon surrender to the Corporation or its transfer agent of the certificate or certificates representing the Series A Stock
to be converted, as provided below, or if the holder notifies the Corporation or its transfer agent that such certificate or certificates have been
lost, stolen or destroyed, upon the execution and delivery of an agreement satisfactory to the Corporation to indemnify’ the Corporation from
any losses incurred by it in connection therewith. The conversion rights herein provided shall be apportioned ratably among the holders of the
Series A Stock in proportion to the number of shares of Series A Stock owned by such holders.
Options, Warrants and Rights
Stock-Based Compensation to Employees
Pursuant to the employee incentive stock option plan, on July 15, 2012, we granted 2,000,000 shares to each of our two officers and directors.
The option agreement provides the employee has no more than five years from the date of the grant to exercise the options at an exercise price
of $0.25 per share. The employee may only exercise such options based upon the contracted vesting schedule, which provides that the options
vest on a pro-rata basis over 60 months of future services to be rendered by such employee. In addition, on August 15, 2012, we granted
100,000 incentive stock options to another officer of the Company. This employee received the right to exercise the options on the date of grant
at an exercise price of $0.25 per share.
The following is a summary of the status of all of the Company’s stock options as of November 30, 2012 and the changes from inception to
November 30, 2012.
Weighted
Average
Exercise Price
# of Options
Weighted
Average
Remaining Life
Inception ( May 12, 2011)
Granted
Exercised
Cancelled
Outstanding at December 31, 2011
Granted
Exercised
Cancelled
4,100,000
-
$
$
$
$
$
$
$
$
0.25
-
Outstanding at November 30, 2012
4,100,000
$
0.25
Exercisable at November 30, 2012
400,000
$
0.25
60 months
55.75
months
55.75
months
Warrants
During the period August 17, 2012 to November 30, 2012, in connection with a private placement, the Company raised $312,260 from the sale
of securities to 20 investors. For each $1.00 received from these investors, the Company issued one common share and granted two stock
warrants. 624,520 stock warrants to purchase common stock were granted in conjunction with the purchase by each investor of our common
stock. The terms of the stock warrant include the right to exercise all or a portion of the warrants granted, shall be no more than 2 years from
the date of grant of the warrant, and the exercise price is $1.00 per warrant. The warrant may not be transferred or assigned in whole or in part
by the grantee.
Stock Warrants Issued to Investors
The following is a summary of the status of all of the Company’s stock warrants as of November 30, 2012 and changes during the period from
inception to November 30, 2012.
Weighted
Average
Exercise Price
# of
Warrants
Inception (May 12, 2011)
Granted
-
$
$
Weighted
Average
Remaining Life
-
-
Exercised
Cancelled
Outstanding at December 31, 2011
Granted
Exercised
Cancelled
Outstanding at November 30, 2012
Exercisable at November 30, 2012
624,520
624,520
624,520
22
$
$
$
$
$
$
$
$
1.00
1.00
1.00
24 months
22 months
22 months
Non-cumulative Voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the
outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the
holders of the remaining shares will not be able to elect any of our directors.
Cash Dividends
As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at
the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, our general
economic and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, into our business.
Transfer Agent
We have appointed the following transfer agent for our shares of common stock:
Globex Transfer, L.L.C. 780 Deltona Blvd., Suite 202, Deltona, FL 32725. Phone: (813) 344-4490 Fax: (386) 267-3124. The transfer agent is
responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.
SHARES ELIGIBLE FOR FUTURE SALE
There is no public market for our common stock. We cannot predict the effect, if any, that market sales of shares of our common stock or the
availability of shares of our common stock for sale will have on the market price of our common stock. Sales of substantial amounts of our
common stock in the public market could adversely affect the market prices of our common stock and could impair our future ability to raise
capital through the sale of our equity securities.
Upon completion of this offering, based on our outstanding shares as of August 12, 2013, we will have outstanding an aggregate of 23,317,431
shares of our common stock. Of these shares, upon effectiveness of the registration statement of which this prospectus forms a part, the 510,000
shares covered hereby will be freely transferable without restriction or further registration under the Securities Act.
The remaining 22,763,881 restricted shares of common stock to be outstanding after this offering are owned by our executive officers and
directors, known as our “affiliates,” and other shareholders, and may not be resold in the public market except in compliance with the
registration requirements of the Securities Act or under an exemption under Rule 144 under the Securities Act or otherwise.
Rule 144
In general, under Rule 144 as currently in effect, a person who is not one of our affiliates and who is not deemed to have been one of our
affiliates at any time during the three months preceding a sale and who has beneficially owned shares of our common stock that are deemed
restricted securities for at least six months would be entitled after such six-month holding period to sell the common stock held by such person,
subject to the continued availability of current public information about us (which current public information requirement is eliminated after a
one-year holding period).
23
A person who is one of our affiliates, or has been an affiliate of ours at any time during the three months preceding a sale, and who has
beneficially owned shares of our common stock that are deemed restricted securities for at least six months would be entitled after such sixmonth holding period to sell his or her securities, provided that he or she sells an amount that does not exceed 1% of the number of shares of
our common stock then outstanding, or 232,738 shares immediately after this offering (or, if our common stock is listed on a national securities
exchange, the average weekly trading volume of the shares during the four calendar weeks preceding the filing of a notice on Form 144 with
respect to the sale), subject to the continued availability of current public information about us, compliance with certain manner of sale
provisions, and the filing of a Form 144 notice of sale if the sale is for an amount in excess of 10,000 shares or for an aggregate sale price of
more than $50,000 in a three-month period.
Rule 144 is not available for resale of restricted securities of shell companies or former shell companies until one year elapses from the time
that such company is no longer considered a shell company.
EXPERTS
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the
validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was
employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the
Company, nor was any such person connected with the Company as a promoter, managing or principal underwriter, voting trustee, director,
officer or employee.
Our financial statements for the period from May 12, 2011 (inception) to November 30, 2012, included in this prospectus have been audited by
DeJoya Griffith as set forth in their report included in this prospectus.
LEGAL REPRESENTATION
The validity of the issuance of the common stock offered hereby will be passed upon for us by South Milhausen P.A. included in the opinion
letter filed as an exhibit to the Registration Statement of which this prospectus is a part.
BUSINESS
Overview
Exeo Entertainment, Inc. designs, develops, licenses, manufacturers, and markets consumer electronics in the video gaming and smart TV
sector. Our current business objectives are:

Establish name recognition for Exeo Entertainment, Inc., Psyko Audio ™, Zaaz ™ and Extreme Gamer®
Activities to date
We incorporated in the state of Nevada on May 12, 2011. We are a development stage company. From our inception to date we have not
generated any revenues and continue to operate at a loss. Our operations have centered on the design and engineering of peripherals in the
video gaming and smart TV sector.
We have accomplished the following:
1.) We have executed an exclusive license agreement with Digital Extreme Technologies, Inc. to secure the rights to manufacture and distribute
the Extreme Gamer®, Zaaz™ keyboard and the Reality Pro™ handheld gaming system.
2.) We are completing the mechanical design on the Extreme Gamer ® and have four one-off prototypes.
3.) We are completing the industrial/mechanical/electrical/ software engineering on the Zaaz™ keyboards and have five one-off, preproduction samples.
4.) In June 2013 we executed a license agreement with Psyko Audio Labs Canada to manufacture and distribute the Carbon and Krypton line of
patented headphones; Patent US # 8,000,486
5.) In June 2013 we debuted the Extreme Gamer®, the Zaaz™ keyboard, and the Psyko™ Krypton headphones to the public at the 2013
Electronic Entertainment Expo (E3) held June 11-13.
6.) In July 2013 we executed a contract with Elite Product Management, Ltd. Honk Kong to handle the sourcing, procurement, QA, Logistics
and manufacturing of the Psyko™ headphones, Zaaz™ keyboard, and the Extreme Gamer®.
24
Products and Services
Products under development include The Zaaz™ wireless keyboard, The Extreme Gamer®; a multi-disc video game changer, and the Psyko
Krypton™ surround sound gaming headphones. We have completed the engineering on the three aforementioned products and are in process of
establishing manufacturing capabilities.
Strategy and Marketing Plan
Once manufacturing is established we intend on utilizing existing consumer electronics distributers, such as Synnex Corp. (SNX) to distribute
our products to big box retailers such as Best Buy, GameStop, and Fry’s Electronics.
Competition
Psyko ™ Headphones
While our Psyko™ headphone offering differs from the competition in the method of 5.1-surround sound delivery, we will face competition
from manufacturers with established channels of distribution, mature capital structures, and significantly larger marketing budgets. Well
established gaming headphone manufacturers include Turtle Beach; a private company, Tritton – a subsidiary of Mad Catz Interactive (MCZ),
and Astro Gaming which is a subsidiary of Skullcandy (SKUL).
While other headphone manufacturers replicate 5.1 surround sound through Digital Signal Processing (DSP), the Psyko™ headphones use a
patented method of sound delivery that doesn’t require the use of DSP. Management believes that the difference in audio quality is a major
differentiating factor between our product offering and what is currently available on the market.
Zaaz™ Keyboard
The majority of the competition in the Bluetooth wireless keyboard arena is concentrated amongst a few well-known companies such as
Logitech (LOGI), Microsoft (MSFT), Apple (AAPL), and Samsung (SSNLF). While management believes that only Samsung makes
keyboards specifically designed to interact with smart TVs, and that their keyboards only work with certain Samsung TVs, there can be no
assurance that other companies do not currently manufacture, or plan to manufacture, such units in the future. Any such companies that
manufacture keyboards capable of connecting to a smart TV would further increase competition.
Exeo Entertainment, Inc. intends on differentiating the Zaaz™ keyboard through a set of features designed specifically for smart TV users. The
Zaaz™ keyboard features a customized set of “one touch access keys” that allows users to access specific, user defined features of the
consumers smart TV. Examples include one touch access to the following: Netflix, Facebook, Hulu, and Amazon. Additionally, the Zaaz™
keyboard will differentiate itself by including a full size track pad – built into the keyboard – to navigate, point, click, and select.
Extreme Gamer®
The Extreme Gamer® is a patent pending (patent application 12/543,296) multi-disc video game changer that connects to current generation
video game consoles offered by Nintendo, Microsoft, and Sony. `
Management believes from attending the Consumer Electronics Show (CES) January 11-13, 2013, having a booth and its products on display at
the Electronic Entertainment Expo (E3) June 11 – 13, 2013 (booth 4010), and from regularly reading Video Gaming news from sources such as
IGN.com, EGNnow.com, 1up.com, and gamespot.com that no other company is currently manufacturing a multi-disc video game changer. If
such a unit is being made management is unaware of its existence.
Management however acknowledges that while it cannot find any commercially available products that our patents may never be awarded and
that we could face competition from any number of existing video game accessory manufacturers.
Sources and Availability of Suppliers and Supplies
Currently we have access to an adequate supply of products, from various manufacturers. These companies and their products are new, not
well established, and are a subject to significant risk and uncertainty.
Research and Development Expenditures
Total research and development expenses were $30,425 for the three months ended May 31, 2013 compared to $57,353 for the three months
ended June 30, 2012. Total research and development cost increased to $193,405 for the year ended November 30, 2012 as compared to $0 for
the period from inception (May 12, 2011) to year ended December 31, 2011. These increases were primarily due to increasing expenditures
associated with research and development. For the period from inception (May 12, 2011) to May 31, 2013, the Company incurred $281,243 in
research and development expenses.
25
Dependence on One or a few Major Customers
We do not anticipate dependence on one or a few major customers into the foreseeable future.
Patents, Trademarks, Licenses, Franchise Restrictions and Contractual Obligations and Concessions
We entered into a license agreement with Digital Extreme Technologies, Inc., a Delaware corporation, (also referred to as DXT) for use of
certain intellectual property associated with the products being designed and developed by us. The Black Widow keyboard is now known as the
Zaaz keyboard. DXT worked to design and develop the Extreme Gamer as well as the Black Widow keyboard. We continue to work under a
license agreement with DXT to advance the use of technologies designed by DXT.
DXT applied to the U.S. PTO for a patent of its Multi Video Game Changer. The agency assigned an application number of 12/543,296 to its
application, which was published on February 25, 2010. The proposed 10 disk Video Game Changer is designed to interface directly with Sony
PS3®, Nintendo Wii®, and Mircosoft Xbox 360®. The Company anticipates incorporating Blu-Ray® compatible optics technology under a
license agreement. This would allow users to insert Blu-Ray® discs into the Video Game Changer, and once connected to the video game
console, to play movies on television. Sony PS3® is now capable of playing Blu-Ray® discs, but only with a capacity for a single disk. This
technology would provide for the loading of up to 10 DVD’s, CD’s or Blu-Ray® discs into a single console that communicates with a video
game console via USB. Furthermore, users would be able to plug in any external hard disc drive (“HDD”) directly into the console via an
internal ATPI port, allowing movies, music and pictures to be played directly from the HDD.
Bankruptcy or Similar Proceedings
There has been no bankruptcy, receivership or similar proceedings.
Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the operation of
any facility in any jurisdiction in which we would conduct activities.
Need for Government Approval for its Product or Services
We are not required to apply for or have any government approval for our products or services.
Employees
In addition to our two (2) officers, Jeffery A. Weiland and Robert S. Amaral, we have one (1) additional employee.
DESCRIPTION OF PROPERTY
We currently lease 10,068 sq. ft. of office and warehouse space at 4478 Wagon Trail Avenue, Las Vegas, Nevada 89118. Our current lease
term expires on September 30, 2013, but is automatically renewable for an additional twelve (12) months under the original lease terms. It is
our intention to renew the lease when the term expires. Our monthly lease payment is $7006.00. This location serves as our only facility for day
to day operations. We believe our current premises are adequate for our current operations and we do anticipate that we will require additional
premises in the next 9-12 months. We do not have any investments or interests in any real estate. Our company does not invest in real estate
mortgages, nor does it invest in securities of, or interests in, persons primarily engaged in real estate activities.
REPORTS TO SECURITY HOLDERS
We will voluntarily make available to our stockholders an annual report, including audited financials, on Form 10-K.
We are not currently a reporting company, but upon effectiveness of the registration statement of which this prospectus forms a part, we will be
required to file reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended. These reports include annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You may obtain copies of these reports from the SEC’s Public
Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. or on the SEC’s
website, at www.sec.gov. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
26
LEGAL MATTERS
We know of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation.
There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse
party or has a material interest adverse to our interest. Our address for service of process in Nevada is 311 S. Division Street, Carson City,
Nevada 89703.
MANAGEMENT
The name, age and position of each of our directors and executive officers are as follows:
Name
Jeffrey A. Weiland
Robert S. Amaral
Age
51
45
Position
President and Director
CEO, Treasurer, Secretary and Director
Jeffrey A. Weiland, Age 51, President/Director
Mr. Weiland has over 20 years’ experience in management, sales and marketing, and product development. Mr. Weiland was a Sergeant in the
United States Marine Corps and served from 1985 - 1993. Mr. Weiland was awarded several military service medals, including the Navy
Achievement Medal, and received various letters of appreciation and meritorious masts, personal commendations, and good conduct
medals. He was honorably discharge after serving in Desert Storm. From 1993 - 1997, Mr. Weiland was a metrology supervisor for Gensia
Laboratories, LTD/Sicor Pharmaceuticals, based in Irvine California. Mr. Weiland received his Bachelor of Science in Business Management,
from the University of Phoenix in 1997. From 1997 - 2003, Mr. Weiland was the National Marketing Director for Guardian Technologies USA
based in Irvine, California. From 2003 - 2007, Mr. Weiland was a sole proprietor of Weiland Media, which focused on new product
development. From 2008 - 2011, Mr. Weiland has devoted 100 percent of his efforts to Digital Extreme Technologies, Inc. From May 2011 –
present Mr. Weiland has devoted 100 percent of his energy as President of Exeo Entertainment, Inc. Mr. Weiland is not currently, nor has he
previously served as an officer or director of any public company.
Robert S. Amaral, Age 45, CEO, Secretary/Treasurer/Director
Mr. Amaral received his MBA in 1997 from Southern Oregon University. In 1996 he received his Bachelor’s Degree in Marketing from
Southern Oregon State College. From 1997 – 2000 he was the Director of Marketing of CG Leasing Inc., which later merged with USA Capital
Leasing. From 2000 – 2001 Mr. Amaral was a proprietor of a company named Finance Marketing Group, which generated lease finance
applications from small businesses across the United States. In 2001, he worked as a Series 3 licensed commodity broker with U.S. Options
Corp and Concorde Trading Group. In 2002 Mr. Amaral started Amaral Consultancy where he focused on funding development stage
companies. Companies which Mr. Amaral performed contract labor for: L&L Financial, which subsequently changed its name to L& L Energy
(LLEN); VSI Wireless, which was acquired by SARS Corporation (SARO.PK); Advanced Ultrasound Imaging, a private healthcare company
located in Scottsdale, AZ; American Eagle Motorcycles based in Carlsbad, CA; and Ambient Control Systems located in El Cajon, CA. From
2008 – 2011 Mr. Amaral focused his energies on Digital Extreme Technologies, Inc. From May 2011 – present Mr. Amaral has devoted 100
percent of his energy to serving as Chief Executive Officer of Exeo Entertainment, Inc. Mr. Amaral is not currently, nor has he previously
served as an officer or director of any public company.
Board Composition
Our Bylaws provide that the Board of Directors shall consist of one (1) or more members, but not more than nine (9), and that our shareholders
shall determine the number of directors at each regular meeting. Each director serves for a term that expires at the next regular meeting of the
shareholders or until his successor is elected and qualified.
Committees of the Board of Directors
We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or
any other committees of our Board of Directors. Nor do we have an audit committee “financial expert.” As such, our entire Board of Directors
acts as our audit committee and handles matters related to compensation and nominations of directors.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed
by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the
authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware
of any other conflicts of interest with any of our executives or directors.
27
Director Independence
We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at
this time required to have our board comprised of a majority of “independent directors.” Our determination of independence of directors is
made using the definition of “independent director” contained in Rule 4200(a)(15) of the Marketplace Rules of the NASDAQ Stock Market
(“NASDAQ”) , even though such definitions do not currently apply to us because we are not listed on NASDAQ. We have determined that
none of our directors currently meet the definition of “independent” as within the meaning of such rules as a result of their current positions as
our executive officers.
Significant Employees
We have only one (1) additional employee other than the executive officers described above.
Family Relationships
There are no family relationships between our officers and directors.
Involvement in Certain Legal Proceedings
No director, person nominated to become a director, executive officer, promoter or control person of our company has, during the last five
years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses);
(ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state
securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding
any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an
executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.
Stockholder Communications with the Board
We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors.
Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as
applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe that we are responsive to stockholder
communications, and therefore have not considered it necessary to adopt a formal process for stockholder communications with our Board.
During the upcoming year, our Board will continue to monitor whether it would be appropriate to adopt such a process.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain compensation information for: (i) each person who served as the chief executive officer of our company
at any time during the year ended November 30, 2012, regardless of compensation level, and (ii) each of our other executive officers, other
than the chief executive officer, serving as an executive officer at any time during 2012. The foregoing persons are collectively referred to
herein as the “Named Executive Officers.” Compensation information is shown for fiscal years ended November 30, 2012 and December 31,
2011.
Name/Principal Position
Robert Scott Amaral
Chief Executive Officer,
Treasurer, Secretary & Director
Jeffrey Weiland
President and Director
Year
Ended
Stock-based
Compensation
Salary
Total
2012
2011
$
$
56,500
2,500
$
$
37,500
18,675
$
$
94,000
21,175
2012
2011
$
$
56,500
2,500
$
$
37,500
20,000
$
$
94,000
22,500
28
Outstanding Equity Awards at 2012 Fiscal Year-End
Pursuant to the employee incentive stock option plan, on July 15, 2012, we granted 2,000,000 shares to each of our two officers and directors.
The option agreement provides the employee has no more than five years from the date of the grant to exercise the options at an exercise price
of $0.25 per share. The employee may only exercise such options based upon the contracted vesting schedule, which provides that the options
vest on a pro-rata basis over 60 months of future services to be rendered by such employee. In addition, on August 15, 2012, we granted
100,000 incentive stock options to another officer of the Company. This employee received the right to exercise the options on the date of grant
at an exercise price of $0.25 per share. There were no additional awards through the end of our fiscal year 2012.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
Employment Arrangements
As of November 30, 2012, we were a party to employment agreements with Jeffrey A. Weiland (dated December 16, 2011) and Robert S.
Amaral (dated December 16, 2011), each of which is described directly below.
Employment Agreements with Jeffrey A. Weiland and Robert S. Amaral
Term and Compensation
The initial term of employment of each of Mr. Weiland and Mr. Amaral under their respective employment agreements is until such time the
employment agreements are terminated by either party pursuant to the terms of the employment agreements..
Pursuant to his employment agreement, Mr. Weiland is entitled to an initial base salary of $60,000. Pursuant to his employment agreement,
Mr. Amaral is entitled to an initial base salary of $60,000. In addition, Mr. Weiland's employment agreement provides for the payment of
$10,000 in compensation earned prior to the incorporation of the Company.
Severance
Each employment agreement provides for a severance equal to one month’s pay, less taxes and social security required to be withheld upon a
termination by us without cause upon thirty (30) days written notice.
Consulting Agreements
On June 4, 2013, we entered into a Consulting Agreement with Hildebrandt Technologies, Inc. (“HTI”). Pursuant to the Consulting Agreement
HTI agreed to consult in the sales and distribution of our products for a monthly fee of Ten Thousand Dollars ($10,000). This fee includes
services based on ten (10) days per month. Any time required of HTI in addition to the ten (10) days per month would be charged to us at One
Hundred Twenty Dollars ($120) per hour. The term of the Consulting Agreement is twelve (12) months.
Consulting Agreement with Elite Product Management Ltd.
In July 2013 we executed a contract with Elite Product Management, Ltd. Hong Kong to handle the sourcing, procurement, quality control,
logistics and manufacturing of the Psyko™ headphones, Zaaz™ keyboard, and the Extreme Gamer®. In addition Elite will also assist the
Company with product development and design modifications. The term of the Agreement is for one year. The monthly retainer fee is $5,250
per month.
Advisory Board Member Agreement with James Hildebrandt
On June 4, 2013, the Company entered into an agreement with James Hildebrandt (a founder and principal party of Psyko Audio Labs)
whereby Mr. Hildebrandt agreed to join a Board of Advisors as a founding member. Subsequently, the parties mutually agreed to nullify such
Agreement effective retroactively to June 4, 2013. As of August 16, 2013 the Company has not yet formed an Advisory Board.
COMPENSATION OF DIRECTORS
We have no formal plan for compensating our directors for their services in their capacity as directors. Directors are entitled to reimbursement
for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our Board of Directors. The Board
of Directors may award special remuneration to any director undertaking any special services on behalf of Exeo other than services ordinarily
required of a director.
29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Advances and Expenses paid on behalf of the Company
On August 1, 2011, the Company entered into a promissory note agreement with DXT for any advances to the Company or expenses paid on
behalf of the Company during the period from inception (May 12, 2011) to November 30, 2012. This note is unsecured, with 8% interest rate
per annum, and a due date of July 31, 2013. The Company has received a total of $9,820 and $11,656 from DXT as advances or expenses paid
on behalf of the Company during the period from inception (May 12, 2011) to December 31, 2011 and during the year ended November 30,
2012, respectively. The Company has incurred interest expense of $158 and $1,347 during the period from inception (May 12, 2011) to
December 31, 2011 and during the year ended November 30, 2012, respectively.
Leasehold Interest in Real Estate
On September 27, 2011, the Company entered into a sub-lease agreement with DXT. The term of the lease was through October 1, 2012 and
required the Company to pay $7,006 per month for use of the office space and 10,000 square foot warehouse leased by DXT from the real
property management company. The monthly amount due is the same amount that is due to be paid by DXT to the real property management
company. The Company made various payments to DXT under the terms of the sublease agreement while the Company occupied the rental
space. As discussed in Note K, on October 25, 2012, the Company entered into an agreement with the real property management company
whereby it agreed to become a co-tenant and to become directly obligated for future rent payments associated with the DXT lease.
In addition, under the sub-lease and the new lease agreements entered into on September 27, 2011 and October 25, 2012, the Company agreed
to pay the arrearage rents total of $19,850 and $22,850 as of December 31, 2011 and November 30, 2012. This amount consists of $10,832
incurred by DXT prior to the Company subleasing from DXT, $9,018 incurred by the Company during the period from inception (Ma y 12,
2011) to December 31, 2011, and $3,000 incurred by the Company during the year ended November 30, 2012. The Company netted the
$10,832 expense incurred by DXT with the payable amount of $9,978, which consists of principal amount of $9,820 and accrued interest of
$158. The net amount of$854 has been recorded as an advance to DXT as of December 31, 2011.
The Company has made two payments toward the arrearage rents to the real property management company totaling $17,138 in November
2012 and $5,712 in January 2013. The Company recorded a payable balance of $19,850 and $5,712 as of December 31, 2011 and November
30, 2012, respectively.
License for Intellectual Property and Other Proprietary Rights Owned by DXT
On May 25, 2011, the Company was granted by DXT an exclusive, perpetual, non-transferable right and license throughout the world to
develop, manufacture, distribute, market, advertise and sublicense the DXT Products. The Company agreed to pay a royalty equal to 5% of any
and all gross revenue generated from the commercial exploitation of the DXT Products. The royalty is to be paid on a monthly basis
commencing 30 days after the initial sale of any DXT Product. DXT waived any initial licensing fee in consideration of the Company’s
agreement to complete product development on the Extreme Gamer and Black Widow (now known as Zaaz) Keyboard.
According to the license agreement, the DXT products are defined as the following:
Extreme Gamer – all associated patents, copyrights, trademarks, trade names, service marks, acquisition of any and all design documentation
including: prototypes, beta units, any work in process, CAD files, portfolios, marketing materials, and the rights to patent “Multi Video Game
Changer #20100048306” Also to include any prospective customer lists, marketing research, business, marketing, manufacturing, distribution,
or operational plans, including the following domain names: www.digitalextremegamer.com and www.digitalextremegamer.info
Black Widow Keyboard – all associated patents, copyrights, trade names, trademarks, service marks, design documentation, prototypes, any
and all marketing materials, prospective customer lists, marketing research, business, marketing, manufacturing, distribution, or operational
plans.
Reality Pro – all associated patents, copyrights, trade names, trademarks, service marks, design documentation, prototypes, any and all
marketing materials, prospective customer lists, marketing research, business, marketing, manufacturing, distribution, or operational plans, and
including the following domains: www.motionsimpro.com ; www.motionsimpro.net ; www.vrealitypro.com ; www.vrealitypro.net ; and
www.vr-forum.com
30
Compensation of Officers
On May 12, 2011, two officers/directors were issued 10,000,000 common shares each as founder’s shares at Par Value $0.001. One
officer/director received such shares in lieu of compensation owed for services rendered on behalf of the Company pre-organization/formation.
The value of such services was determined to be $10,000 and was recorded as his capital contribution. Post organization, the Company ratified
such compensation as a legal obligation of the Company post-formation. The other officer/director paid organizational expenses on behalf of
the Company and was credited $875 to his capital stock account in exchange for 875,000 founder’s shares issued at par value. In addition, he
received 8,675,000 common shares in lieu of compensation owed for service rendered on behalf of the Company per-organization/formation.
The value of such services was determined to be $8,675 and was recorded as his capital contribution. Post organization, the Company ratified
such compensation as a legal obligation of the Company post-formation. In addition, this officer received an additional 450,000 common shares
at inception in exchange for cash paid by the officer in the amount of $450 on behalf of the Company.
The Company entered into officer compensation agreements with two officer/directors whereby each receives $60,000 per annum as cash
compensation. The Company pays each officer $5,000 per month. The amount each person actually received in fiscal year end November 30,
2012 was $56,500. In fiscal year end December 31, 2011, each person received $22,500. In addition, each officer/director received additional
compensation in the form of non-cash incentive stock options granted on July 15, 2012. Each person received 2,000,000 stock options. For
further discussion of the terms of the grant of stock options, see Note G.
One other officer received a grant of 100,000 stock options on August 15, 2012. This former officer vested full rights to exercise all or a
portion of such stock options at the date of grant. Therefore, the Company recorded the entire fair value of 100,000 stock options at the date of
grant.
Due to Related Party
On September 21, 2012, the Company used a vehicle belonging to an officer for the purpose of a trade-in to acquire a pre-owned company
vehicle from a dealer. This amount, limited to its cost basis, is recorded as a short-term obligation due to the officer as a current liability of
$3,810. The Company accrues interest on the amount owed to the officer/director at a rate of 8% per annum. The Company has incurred a total
of $138 interest expense for the year ended November 30, 2012.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of August 12, 2013, for:

each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock;

each of our executive officers;

each of our directors; and

all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. These rules generally
attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those
securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership
within 60 days. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to
all shares shown as beneficially owned by them, subject to applicable community property laws, and the address for each person listed in the
table is c/o Exeo Entertainment, Inc., 4478 Wagon Trail Ave., Las Vegas, Nevada 89118.
The percentage ownership information shown in the table below is calculated based on 23,317,431 shares of our common stock issued and
outstanding as of August 12, 2013. We do not have any outstanding options, warrants or other securities exercisable for or convertible into
shares of our common stock.
Title of Class
Common
Common
Name of Beneficial Owner
Jeffrey A. Weiland
President/Director
Robert S. Amaral
Chief Executive Officer/Director
Amount and Nature
of Beneficial Ownership
Percentage of Class
8,628,093
37.00 %
8,628,093
37.00 %
All Officers, Directors and 5%
Beneficial Shareholders as a Group
17,256,186
31
74.00 %
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our
Company.
Except for the Stock Options and Warrants set forth in the section of this Registration Statement entitled Description of Securities, we do not
have any issued and outstanding securities that are convertible into common stock. Other than the shares covered by the registration statement
of which this prospectus is a part, we have not registered any shares for sale by security holders under the Securities Act. None of our
stockholders are entitled to registration rights.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to our directors, officers or
persons controlling us, we have been advised that it is the Securities and Exchange Commission’s opinion that such indemnification is against
public policy as expressed in such act and is, therefore, unenforceable.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion of our financial condition and results of operation should be read in conjunction with the financial statements and
related notes that appear elsewhere in this prospectus. This discussion contains forward-looking statements and information relating to our
business that reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties, including the
risks in the section entitled Risk Factors beginning on page 8, that may cause our or our industry’s actual results, levels of activity,
performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
These forward-looking statements speak only as of the date of this prospectus. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by
applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any
update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these
statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with accounting principles generally
accepted in the United States.
Plan of Operation
Our Business
Exeo Entertainment, Inc. designs, develops, licenses, manufacturers, and markets consumer electronics in the video gaming and smart TV
sector. Products under development include The Zaaz™ wireless keyboard, The Extreme Gamer®; a multi-disc video game changer, and the
Psyko Krypton™ surround sound gaming headphones. Our corporate office is located at 4478 Wagon Trail Ave. Las Vegas, NV 89118. The
10,068 facilities consist of 3700 square feet of office and 6,368 of square feet of warehouse space including a grade level door and loading
dock. Our two directors and officers, Mr. Robert Scott Amaral and Jeffrey Weiland work from this location.
We have completed the engineering on the three aforementioned products and are in process of establishing manufacturing capabilities. Once
manufacturing is established we intend on utilizing existing consumer electronics distributers, such as Synnex Corp. (SNX) to distribute our
products to big box retailers such as Best Buy, GameStop, and Fry’s Electronics.
Our goals over the next twelve (12) months are to:




Commercialization of the Zaaz™ keyboard
Development and Commercialization of the Psyko™ Krypton headphones for video game consoles (Microsoft Xbox and Sony
PlayStation).
Commercialization of the Extreme Gamer®
Increase sales, engineering, and support personnel
32
Expenditures
The following chart provides an overview of our budgeted expenditures by significant area of activity over the next twelve (12) months,
assuming we are able to attract sufficient debt or equity financing. There can be no assurance that we will be able to attract financing and we
may be required to scale back operations accordingly (See “Risk Factors”).
The following table outlines the planned use of working capital and does not take Inventory expenses into account. If we are able to attract
sufficient debt or equity financing and are successful in securing manufacturing facilities for the Psyko™ headphones, Zaaz™ keyboards, and
the Extreme Gamer® and are able to secure orders, we will need to secure inventory financing. There can be no assurance that such financing
will be available to us, and our inability to obtain such financing would materially impact our ability to execute our business plan as outlined in
this Registration Statement (See “Risk Factors”).
Facilities Lease
Payroll
Loans
Supplies
Utilities
Accounting
Legal
Auditing
CFO
VP Sales
Consulting
Project Management
Product Development
Engineering
Mechanical
Electrical
Software
Marketing
Advertising
Promotion
Investor Relations
Total Expenditures
Total 12
months
$
84,072
$
168,000
$
10,200
$
18,000
$
9,000
$
18,000
$
12,000
$
24,000
$
90,000
$
60,000
Months 1-3
$
21,018
$
42,000
$
2,550
$
4,500
$
2,250
$
4,500
$
3,000
$
6,000
$
22,500
$
15,000
Months 4 - 6
$
21,018
$
42,000
$
2,550
$
4,500
$
2,250
$
4,500
$
3,000
$
6,000
$
22,500
$
15,000
Months 7-9
$
21,018
$
42,000
$
2,550
$
4,500
$
2,250
$
4,500
$
3,000
$
6,000
$
22,500
$
15,000
Months 10-12
$
21,018
$
42,000
$
2,550
$
4,500
$
2,250
$
4,500
$
3,000
$
6,000
$
22,500
$
15,000
$
$
16,500
30,000
$
$
16,500
30,000
$
16,500
$
16,500
$
$
66,000
60,000
$
$
$
22,500
22,500
10,000
$
$
$
22,500
22,500
10,000
$
$
$
22,500
22,500
10,000
$
$
$
22,500
22,500
10,000
$
$
$
90,000
90,000
40,000
224,818
$
$
$
$
30,000
30,000
15,000
299,818
$
$
$
$
30,000
30,000
45,000
299,818
$
$
$
$
30,000
30,000
45,000
299,818
$
$
$
$
90,000
90,000
105,000
1,124,272
$
Milestones
Months 1 through 3
During the first three (3) months we plan to:
o
o
o
o
o
o
o
Complete development on the Dolby™ converter box for the Psyko™ Krypton Headphones
Define SOP / QA and testing procedures (Psyko™)
Complete BOM and lock in pricing (Psyko™)
Sign contract with factory for production (Psyko™)
Molding for Zaaz™ keyboard
Produce test samples (Zaaz™)
Hire financial, sales, engineering staff
Converter Box
Prior to Exeo Entertainment, Inc.’s license agreement with Psyko Audio Labs Canada, the Psyko™ Krypton and Carbon line of
headphones had been sold and were compatible with video gaming on the personal computer (PC). It is our intention to make the
necessary modifications to the system, namely the development of a Dolby converter box, to make the headphones available for Xbox
and PlayStation (console) use. We have working prototypes of the Dolby converter box, but we will need to source components, make
engineering refinements, and have molds for mass production made.
33
SOP/QA/Testing
We have recently engaged the services of Elite Product Management Ltd, HK to oversee and manage the manufacturing process in
Shenzhen China. We expect that during month one through three Elite will be able to clearly define standard operating procedures for
the assembly line, testing, and quality assurance. These procedures will be the foundation for all manufacturing of the Psyko™ line
going forward.
Complete BOM
In months one through three the company anticipates to be able to complete the bill of materials and lock in supplier pricing given our
minimum order quantity (MOQ) that we’ve negotiated. While we may continue to use suppliers, who had previously done business
with Psyko Audio Labs Canada, during this time frame we will get competitive bids from a number of suppliers. Additionally, since
we intend to make the headphones compatible with video game consoles, we will need to source all components associated with the
Dolby converter box.
Contract with Factory
During the month one through three period Exeo Entertainment, Inc. intends on signing a contract with Shenzhen Bada Sheng
Electronic CO, Ltd. for the assembly of the Psyko™ carbon and Krypton line of headphones. We are in contact with the factory
through our consultant Kitty Lo of Elite Product Management Ltd, HK. We will need to specify minimum order quantities, QA,
Billing terms, and determine the percentage of returns credited towards future production.
Zaaz™ Molding
We presently work with TecPower Co. Ltd. HK as a manufacturing rep on prototyping, engineering, manufacturing, and tooling.
During this period we intend on securing all work in process inventory, CAD files, design documentation, prototypes and any and all
intellectual property owned by Exeo Entertainment, Inc. in order to transfer that to Elite Product Management Ltd, HK. We expect
that Elite will utilize existing contacts to secure the best price on manufacturing molds for the Zaaz™ keyboard production. The actual
cost of the mold has not been built into the use of proceeds as it is anticipated that we will be able to spread the cost over the
production of the Zaaz™ keyboard thereby incurring no upfront cost.
Molds generally take 4-6 weeks to manufacture and that time increases with any changes that need to be made. Based on the fact that
we already have Prototypes that have gone through several revisions, we expect to have minimal, if any, changes during the molding
phase. As such we can reasonably expect that molds should be complete by month three.
Zaaz™ Test Samples
Assuming we were successful in previous tasks we expect to have test samples generated in month three. If everything is correct and
to specification and assuming no further changes the samples become the golden sample that all future units are measured against.
These test samples differ from the one-off custom built units that we currently own in that they are built utilizing steel molds. The
steel molds are capable of producing hundreds of thousands of units in an assembly line production facility.
Financial/Sales/Engineering Staff
The company plans on hiring three engineers, one CFO, and one VP sales during months one through three. One engineer for
hardware, one for software, and one for mechanical. If in the event we are unable to secure engineers with the required skills
necessary we will continue to outsource such functions. We believe, however, that having in house engineers will significantly reduce
the amount of time we spend going back and forth with outsourced service providers.
34
In anticipation of being publicly listed the company intends on hiring a CFO to handle financial reporting. If the company is unable to
attract a full time person we will look to engage a contract CFO. In addition, we expect that during months one through three that we
will hire a VP of sales to handle product sales to distributors and retailers for the Psyko™ headphones, the Zaaz™ keyboard, and the
Extreme Gamer®.
Months 4 through 6
During the following three (3) months, we expect to achieve the following:
o
o
o
o
o
o
o
o
Receipt of first 5000 units (Psyko™)
Bids from suppliers (Zaaz™)
Solidify BOM (Zaaz™)
Define SOP / QA / Testing (Zaaz™)
Begin Zaaz™ Production
Samples to distributors (Zaaz™)
Hire financial, sales, engineering staff
Begin advertising / promotion campaign (Psyko™)
Receipt of Psyko™ Units
If successful in prior months, with prior tasks, Exeo Entertainment, Inc. expects to receive its first batch of Psyko™ Headphones
compatible with the Xbox and PlayStation consoles.
Zaaz™ Supplier Bids
We intend on switching the emphasis from the Psyko™ headphones to the Zaaz™ keyboard during months four through six. We
expect that the first task will be to utilize the resources of Elite Product Management Ltd, HK for the various subcomponents utilized
in the manufacturing of the Zaaz™ keyboard.
Exeo Entertainment has prototype samples from TecPower and has also paid to have custom circuit boards designed to our
specification. However, these components still need to be manufactured in quantities of 5000. Components we will need to source in
quantity include: plastics, keys, batteries, backlighting, and Bluetooth as well as IRDA modules. Included in the sourcing component,
expected to happen beginning in month four, is competitive bids from Chinese factories for the assembly of all aforementioned
assemblies.
Zaaz™ BOM
During the month four to six timeframe Exeo Entertainment, Inc. anticipates receiving a complete bill of materials from Elite Product
management. The process and what is contained in the BOM is exactly as detailed above for the Psyko™ headphones.
SA/QA/Testing
After signing off on the BOM Exeo Entertainment, Inc. anticipates having to establish the same type of standard operating procedures
that the company created in earlier months for the Psyko™ headphones. All procedures indicating which station, on the production
line, checks which component – at what frequency – and the potential outcomes of said procedures and any further actions necessary.
The SOP details step by step exactly what occurs on the assembly line, who is responsible for testing, what the acceptable results of
the test should be, and what happens next.
Zaaz™ Production
Assuming we were successful in earlier steps and have secured the necessary funding we anticipate being able to go into production
on the Zaaz™ keyboard in month six.
Advertising & Promotion (Psyko™)
Exeo Entertainment, Inc. anticipates beginning an advertising campaign in the month four through six periods. We expect to start
small, via social media outlets such as: Facebook, Google +, Twitter, and YouTube. The plan is to utilize existing gamers to create
videos, share media, do product reviews and engage their friends in their purchase of the Psyko™ headphones.
35
Additionally, the company intends on using sponsorship of professional video gamers and endorsements in order to create brand
awareness. Electronic sports tournaments draw thousands of spectators and many teams have sponsorship arrangements with gaming
headphone manufacturers such as Astro, Tritton, and Turtle Beach. Examples of electronic sports organizations include World Cyber
Games ( http://us.wcg.com ) and Major League Gaming ( http://www.majorleaguegaming.com ).
Months 7 through 9
During the following three (3) months, we expect to achieve the following:
o
o
o
o
Distributer samples – Zaaz™ keyboard
Extreme Gamer ® Sourcing
Begin Engineering on wireless Psyko™ headphones
Psyko™ wireless renderings
Distributor Samples
If we were successful in previous months it is anticipated that in the months seven through nine periods that we will have the Zaaz
keyboard complete and send samples to distributors as well as big box retailers. In talking with distributors such as Synnex
Corporation, our understanding is that new products are evaluated and tested by a committee and then taken to retailers to gauge
interest. Retailer interest determines initial order levels.
We expect that we will retain the rights to service the major big box retailers directly. Management believes that companies such as
Best Buy, GameStop, Target, Fry’s Electronics, etc. would be best served direct – without the use of a distributer. As such in our
negotiations we expect that we will have to send product samples to the major aforementioned chains.
Extreme Gamer® Sourcing
At present the company only has four functional one-off units of the Extreme Gamer®. The units demonstrate the operation of the
product and will be used as a guide in determining the best suppliers to use for the various subcomponents. We will need to negotiate
terms from suppliers on subcomponents as well as lock in pricing on final assembly. The sourcing function for the Extreme Gamer®,
as well as our other products, is covered under our contract with Elite Product Management.
Psyko Wireless Engineering
In our contract with James Hildebrandt and Hildebrandt technologies, Inc. we have specified that we are contracting for the
development of a wireless version on the Psyko™ headphones. We expect the development process to span several months and not be
completed prior to month twelve. However, once the previous tasks related to the Psyko™ have been completed we expect to begin
work on the wireless version.
Psyko™ Wireless Renderings
As discussed in the previous section, we expect to begin working on the wireless version of the Psyko™ headphones in months seven
to nine. The first step in that process is to have conceptual drawings- both pen/paper as well as 3D – completed. We will use these
drawing to determine the direction we want the “look and feel” of the product to take. These will be the drawings we refer to in later
months as we begin building physical prototypes.
Months 10 through 12
o
o
o
o
o
Define SOP/ QA / Testing procedures (Extreme Gamer™)
Extreme Gamer® tooling
Extreme Gamer® Samples
Physical models Psyko™ wireless
Sourcing on Psyko™ wireless units
36
During the following three (3) months, we expect to achieve the following:
SOP/QA/Testing
Assuming we’ve been successful in previous tasks, in prior months, we expect that we will begin defining exactly what needs to be
done from an assembly standpoint to mass manufacture (5000+ units) the Extreme Gamer®. We will additionally need to establish
testing procedures and policies relating to various outcomes of each test. In other words, what happens to the component if it fails a
test? Possible outcomes include: rework, reject, retest, etc.
Extreme Gamer® Tooling (molds)
Exeo Entertainment, Inc. will need to begin the tooling phase early in the month ten through twelve period in order to have time for
subsequent tasks, which are dependent on having molds available. From discussion with Chinese mold makers’ management believes
that we can have molds completed within a six-week period assuming minimal corrections need to be made. The molds will be used in
conjunction with injection molding machines to cast plastics components for the Extreme Gamer®.
Extreme Gamer® Samples
Assuming we begin the prior step – tooling, early enough in the month 10 through 12 period, we expect that we will have time to
generate samples that were manufactured from the molds that we had manufactured. If everything is correct and is within spec we can
begin securing purchase orders.
Psyko™ wireless modeling
Assuming we’ve been successful in previous tasks the company will be in a position to change the emphasis from manufacturing the
Extreme Gamer to designing and creating the wireless version of the Psyko™ headphones. After renderings have been created we
expect to begin building physical models of the wireless headphones. The physical models serve as a “proof” in order to verify and/or
change any designs. The company intends to use rapid prototyping services, which utilize 3D printers that the company has used on
previous projects (Zaaz™ / Extreme Gamer®).
Psyko™ wireless sourcing
Once physical models of the wireless version of the Psyko™ headphones are complete we will need to begin sourcing supplier for all
of the subcomponents. We expect that we will use the majority of the suppliers that we, would at the time, be using on the Psyko (nonwireless) build. The headphones remain identical between units the thing that changes is a wireless, blue tooth charging station. It is
those particular components that the company will need to source during this period. As with the sourcing on the previously discussed
products – Exeo Entertainment, Inc. has executed a contract with Elite Product Management Group, Ltd. to specifically handle such
tasks.
We do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing.
There can be no assurance that additional financing will be available to us, or on terms that are acceptable. Consequently, we may not be able
to proceed with our intended business plans or complete the development and commercialization of our product.
Liquidity and Results of Operations
Comparison of Second Quarter Results –For the Three Months Ended May 31, 2013 and June 30, 2012; and the Years Ended
November 30, 2012 and December 31, 2011
Revenues and Gross Profit
Revenues and Gross Profit for the three months ended May 31, 2013 and June 30, 2012 are zero. The Company is a development stage
company and has incurred significant costs in research and development activities. See discussion below for further information. At November
30, 2012, the Company had incurred an accumulated deficit of $790,440 since inception.
Costs and Expenses
Total operating cost and expenses increased to $198,271 for the three months ended May 31, 2013 as compared to $148,705 for the three
months ended June 30, 2012. Total cost and expenses increased to $667,111 for the year ended November 30, 2012 as compared to $119,441
for the period from inception (May 12, 2011) to the year ended December 31, 2011. These increases were primarily due to increasing costs
associated with research and development.
37
Total research and development expenses were $30,425 for the three months ended May 31, 2013 compared to $57,353 for the three months
ended June 30, 2012. Total research and development cost increased to $193,405 for the year ended November 30, 2012 as compared to $0 for
the period from inception (May 12, 2011) to year ended December 31, 2011. These increases were primarily due to increasing expenditures
associated with research and development. For the period from inception (May 12, 2011) to May 31, 2013, the Company incurred $281,243 in
research and development expenses.
Other Income and Expenses
Interest expense decreased to $75 in the three months ended May 31, 2013 as compared to $818 for the three months ended June 30, 2012.
Income Taxes
The Company had no income tax expenses or income tax benefit for each of the three months ended May 31, 2013 and June 30, 2012 due to
incurrence of net operating loss in each of these periods. As of November 30, 2012, the Company’s available unused operating loss carryback
are approximately $639,495. As presented in the financial statements found elsewhere in this Statement, the Company determined a total
deferred tax asset of $219,429, which was calculated by multiplying a 34% estimated tax rate by the cumulative net operating loss (NOL). The
company had no income tax expense or income tax benefit for years 2011 and 2012 due to incurrence of net operating losses. There are no
income tax refund opportunities currently available.
Effect of Inflation
Inflation has not had a significant impact on the Company’s operations or cash flows.
Liquidity and Capital Resources
Long-Term Debt / Note Payable and Other Commitments
The Company had no material commitments for capital expenditures at May 31, 2013 or November 30, 2012. As of November 30, 2012, the
Company owed a related party officer $3,810 as well as a related party company $11,656 for advances made to the Company. In addition, the
Company is liable for monthly payments of $863 on a note associated with vehicle finance. The principal owed is $39,055 and the interest
expense to be incurred is $1,502.
On May 25, 2011 Exeo Entertainment, Inc. entered into an exclusive license agreement with Digital Extreme Technologies, Inc. whereby Exeo
Entertainment, Inc. will manufacture and market the Extreme Gamer and Zaaz keyboard. Exeo Entertainment, Inc. will pay Digital Extreme
Technologies, Inc. a 5% royalty fee on gross sales of both products. On June 10, 2013 Exeo Entertainment, Inc. entered into a license
agreement with Psyko Audio Labs, Canada whereby Exeo Entertainment. Inc. will manufacture and market the Psyko Krypton and Carbon line
of gaming headphones. The company will owe a 5% royalty on all headphone sales to Psyko Audio Labs. Payments are due quarterly on
January 15, April 15, July 15, and October 15.
Cash Flow Information
The Company had working capital of approximately $111,921 and a current ratio of 2.82 at May 31, 2013, The Company had working capital
of $91,599 and a current ratio of 2.70 at November 30, 2012. The decrease in working capital and the current ratio at May 31, 2013 as
compared to November 30, 2012 was primarily due to the use of working capital for operations as well as research and development expenses.
The Company believes it has sufficient cash resources to meet its liquidity requirements for the next 12 months.
During the three months ended May 31, 2013, the Company had cash and cash equivalents of approximately $131,197 as compared to cash and
cash equivalents of $130,676 at November 30, 2012. This represents a slight increase in cash of $521.
Cash used in operating activities
The Company used approximately $313,180 of cash for operating activities in the six months ended May 31, 2013 as compared to using
$257,532 of cash for operating activities in the six months ended June 30, 2012. This increase in cash used in operating activities is primarily
attributed to the net loss generated in the three months ended May 31, 2013.
Cash used for Investing Activities
Investing activities for the six months ended May 31, 2013 used approximately $20,057 of cash as compared to using $28,813 of cash in the six
months ended June 30, 2012. This increase in use is principally attributable to acquisition of vehicles and equipment.
Cash Provided by Financing Activities
Financing activities in the six months ended May 31, 2013 provided $333,758 of cash as compared to providing $347,274 of cash in the six
months ended June 30, 2012. The Company did not incur any debt issuance costs in 2013.
38
The Company’s principal sources and uses of funds are investments from accredited investors. The Company would need to raise additional
capital in order to meet its business plan. Management intends to secure additional funds using borrowing or the further sale of Regulation D,
Section 506 securities to accredited investors in the future. There is no assurance that Company may secure funding, or whether it can do so on
terms acceptable to it, or at all, and its liquidity would be severely compromised.
The accompanying financial statements have been prepared assuming that the company will continue as a going concern which contemplates,
amongst other things, the realization of assets and satisfaction of liabilities in the course of business.
We anticipate that our future liquidity requirements will arise from the need to fund our growth, pay our current obligations and future capital
expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional
funds from private sources and/or debt financing.
Going Concern Consideration
Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements expressing concerns
about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that
lead to this disclosure by our independent auditors.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues, and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical
experience and on various other information and assumptions that are believed to be reasonable under the circumstance. Estimates and
assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as additional
information is obtained, as more experience is acquired, as our operating environment changes and as new events occur. Our critical accounting
policies are listed in the notes to our audited financial statements included in of this registration Statement.
39
FINANCIAL STATEMENTS
EXEO ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(unaudited)
May 31,
2013
November 30,
2012
ASSETS
Current Assets
Cash and cash equivalents
Prepaid expenses
Total current assets
$
131,197
41,948
173,145
$
115,062
Property and equipment, net
TOTAL ASSETS
130,676
14,506
145,182
107,126
$
288,207
$
252,308
$
35,983
15,543
9,698
61,224
$
22,076
16,097
15,410
53,583
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current liabilities
Accounts payable and accrued expenses
Due to related parties
Notes payable
Total current liabilities
Long-term liabilities
Notes payable
Total long-term liabilities
$
Total Liabilities
Stockholders' equity
Preferred stock - $0.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding,
respectively
Common stock - $0.0001 par value, 100,000,000 shares authorized; 22,857,860 and 22,495,360
shares issued and outstanding, respectively
Additional paid-in capital
Deficit accumulated during the development stage
Total stockholders' equity
The accompanying notes are an integral part of these financial statements.
F- 1
$
29,263
29,263
85,310
82,846
-
-
2,286
1,403,007
(1,202,396 )
202,897
$
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
24,086
24,086
288,207
2,250
957,652
(790,440 )
169,462
$
252,308
EXEO ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(unaudited)
Three month
period ending
May 31, 2013
REVENUES
$
OPERATING EXPENSES
Automobile and truck
Bank service charges
Compensation - non-directors
Compensation - officers / directors
Stock-based compensation to officers and employee
Computer and internet
Depreciation
Filing fees
Legal and professional
Meals and entertainment
Office rent
Office expense
Organizational cost
Promotions / trade show exhibit
Research and product development
Utilities
TOTAL OPERATING EXPENSES
LOSS FROM OPERATIONS
OTHER INCOME (EXPENSE)
Other Income
Interest expense
TOTAL OTHER INCOME (EXPENSES)
LOSS BEFORE PROVISION FOR INCOME TAXES
Three month
period ending
June 30, 2012
-
166
132
39,450
35,500
50,001
58
6,332
475
860
215
7,016
5,132
7,334
30,425
6,124
189,219
$
-
$
174
77
23,910
36,000
437
555
45
89
23,557
2,589
-
-
$
From May 12,
2011
(Inception) to
May 31, 2013
-
-
57,353
3,921
148,705
80,699
10,899
259,730
4,231
860
191,516
218,250
219,293
1,177
18,151
1,442
30,904
721
162,324
23,296
875
7,334
281,243
36,692
1,198,309
(189,219 )
(148,705 )
(411,757 )
(259,730 )
(1,198,309 )
(75 )
(75 )
(818 )
(818 )
(199 )
(199 )
(1,492 )
(1,492 )
(4,087 )
(4,087 )
(189,294 )
(149,523 )
(411,956 )
(261,222 )
(1,202,396 )
0
286
101
36,750
61,000
572
603
13,484
182
50,482
4,672
-
0
0
NET LOSS
$
(189,294 )
$
(149,523 )
$
(411,956 )
$
(261,222 )
NET LOSS PER SHARE: BASIC
$
(0.01 )
$
(0.01 )
$
(0.02 )
$
(0.01 )
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING: BASIC
$
662
642
76,825
60,250
100,002
387
12,121
725
3,705
310
42,036
8,055
7,334
87,838
10,865
411,757
0
PROVISION FOR INCOME TAXES
Six month
period ending
June 30,
2012
Six month
period ending
May 31, 2013
22,914,867
21,365,100
The accompanying notes are an integral part of these financial statements.
F- 2
22,773,864
21,028,250
0
$
(1,202,396 )
N/A
N/A
EXEO ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Six month
period ending
May 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation
Stock-based compensation
Organization costs paid with stock
Imputed Interest
Changes in assets and liabilities
Increase in accrued expenses
Increase in pre-paid expenses
Short-term note payable to company officer
Net Cash Used in Operating Activities
$
Six month
period ending
June 30, 2012
(411,956 )
$
12,121
100,002
38
From May 12,
2011 (Inception)
to May 31, 2013
(261,222 )
$
603
890
(1,202,396 )
18,151
219,293
875
2,271
13,907
(27,442 )
150
(313,180 )
1,595
602
(257,532 )
35,983
(41,948 )
1,793
(965,978 )
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment
Cash Flows Used in Investing Activities
(20,057 )
(20,057 )
(28,813 )
(28,813 )
(89,579 )
(89,579 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party
Payments to related party debt
Payments on auto loan
Payments on notes payable
Proceeds from issuance of common stock
Proceeds from notes payable
Cash Flows Provided by Financing Activities
(704 )
(5,177 )
(5,712 )
345,351
333,758
11,650
332,624
3,000
347,274
21,476
(704 )
(6,040 )
(22,850 )
1,182,854
12,018
1,186,754
521
60,929
131,197
130,676
28,825
-
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of the period
Cash and cash equivalents, end of the period
$
131,197
$
89,754
$
131,197
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
39,824
Vehicle purchased using a related party trade-in vehicle
$
-
$
-
$
3,810
Assumption of related party debt
$
-
$
-
$
10,832
Cash paid for taxes
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Vehicle purchased with financing
The accompanying notes are an integral part of these financial statements.
F- 3
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Exeo Entertainment, Inc. (the “Company”) is presented to assist in understanding the
Company’s financial statements. The accompanying financial statements have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of
operations, and cash flows at May 31, 2013, and for all periods presented herein, have been made. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto included in the Company’s November 31, 2012 audited financial
statements. The results of operations for the period ended May 31, 2013 are not necessarily indicative of the operating results for the full years.
These accounting policies conform to generally accepted accounting principles and have been consistently applied to the preparation of the
financial statements. The Company will adopt accounting policies and procedures based upon the nature of future transactions.
Nature of Business
The Company was incorporated in Nevada on May 12, 2011, and is in the development stage. The Company is based in Las Vegas, Nevada,
and designs, develops, licenses, manufactures, and distributes its products. The Company plans to market the Zaaz™ Keyboard , to be used
with Samsung’s Smart TV® as well as other smart devices, the Extreme Gamer™ , and other new peripheral products for the video gaming
industry, including the Psyko Krypton™ surround sound gaming headphones.
Development Stage Company
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to
development-stage companies. A development-stage company is one in which planned principal operations have not commenced or if its
operations have commenced, there has been no significant revenues there from.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States
of America and are presented in US dollars.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP”
accounting). The Company has adopted a November 30 fiscal year end for 2012. Prior to that, the Company adopted a calendar year end for
2011.
Cash and Cash Equivalents
The Company considers cash on hand, cash in banks, certificates of deposit, time deposits, and U.S. government and other short-term securities
with maturities of three months or less when purchased as cash and cash equivalents.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts payable, notes payable, and accrued expenses. The
carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate
prevailing market rates unless otherwise disclosed in these financial statements.
F- 4
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful
lives of the assets, as follows:
Description
Furniture & Equipment
Vehicles
Estimated Life
5 years
5 years
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual
life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the
manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets.
Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred.
Gains or losses on disposition of property and equipment are included in the statements of operations. There were no dispositions during the
periods presented.
Impairment of Long-Lived Assets
The Company evaluates its property and equipment and other long-lived assets for impairment in accordance with related accounting standards.
The Company has impaired no fixed assets during the periods presented. For assets to be held and used (including projects under development),
fixed assets are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company first
groups its assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows
of other assets and liabilities (the “asset group”). Secondly, the Company estimates the undiscounted future cash flows that are directly
associated with and expected to arise from the completion, use and eventual disposition of such asset group. The Company estimates the
undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the
carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured
based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under
development, future cash flows include remaining construction costs.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities
are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the
currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence,
are not expected to be realized.
Management Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of 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.
F- 5
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. From
inception, the Company recognized no revenue.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average
number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to
common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Stock-Based Compensation
Pursuant to ASC Topic 718, the Company recorded the fair value of the stock options on a monthly basis over the vesting period as stock-based
compensation expense. The fair value of the options is calculated using the Black-Scholes method as of the date of grant. In fiscal year 2012,
the Company adopted an incentive stock option plan for its employees. In fiscal year 2012 the Company granted stock options to three officers
of the Company. These are described in Note G- Stock Options and Warrants.
Concentrations of Risk
The Company’s bank accounts are deposited in insured institutions. The funds are insured up to $250,000. The Company’s bank deposits did
not exceed the insured amounts. At June 30, 2013 and November 30, 2012, the Company’s bank deposits did not exceed the insured amounts.
Accounting for Research and Development Costs
The Company records an expense in the current period for all research and development costs, which include Hardware Development Costs.
The Company does not capitalize such amounts. Pursuant to ASC Topic 730 Research and Development, once we determine that our Extreme
Gamer video game console is technologically feasible and a working model is put into use, the Company will capitalize Software Development
costs associated with its products. Once this occurs we will determine a useful life of our software and apply a reasonable economic life of five
years or less. At this time, our software development costs only relate to the Extreme Gamer and Zaaz keyboard hardware. The software
development costs cannot be separated from the associated hardware development. We do not develop stand alone software for sale to the retail
consumers, rather we develop software in order to operate the designed hardware. The software is designed to be encoded within chips inside
the hardware. Thus, it has been determined that the current software development costs, which are intertwined within the hardware
development, are to be expensed rather than capitalized pursuant to ASC Topic 730.
This conclusion is also based upon our decision to devote further research and development costs in the support of our product interface to the
video game players: Sony PS3® (and other products such as Nintendo Wii® and Microsoft Xbox 360®).
F- 6
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Liquidity and Going Concern
Management believes that the Company has sufficient capital reserves to operate without the need for an infusion of additional capital for the
next 12 months. However, this would not be sufficient to allow the Company to continue with its current budget for research and development
required to complete its designs for the Psyko Krypton™ surround sound gaming headphones, the Zaaz™ keyboard and the Extreme
Gamer™.
The Company has incurred an accumulated deficit of $1,202,396 since inception and receives no revenue from the sales of products. The
Company incurred significant initial research and product development costs, including expenditures associated with hardware engineering and
the design and development of its hardware components and prototypes associated with the Zaaz™ keyboard and the Extreme Gamer. The
Company also incurred costs associated with its acquisition of property, plant and equipment for its 10,000 square foot office and warehouse.
These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock or
obtaining debt financing and attaining future profitable operations. Management’s plan includes selling its equity securities and obtaining debt
financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these
efforts.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flow.
Note B: PROPERTY AND EQUIPMENT
The Company owned property and equipment, recorded at cost, which consisted of the following at May 31, 2013 and November 30, 2012:
May 31, 2013
$
20,000
26,741
86,471
133,212
(18,150 )
$
115,062
Furniture and fixtures
Office & computer equipment
Vehicles
Subtotal
Less: Accumulated depreciation
Property and equipment, net
November 30,
2012
$
15,000
11,685
86,471
113,156
(6,030 )
$
107,126
Depreciation expense was $6,332 and $555 for the three month periods ended May 31, 2013 and June 30, 2012, respectively. Depreciation
expense was $12,121 and $603 for the six month periods ending May 31, 2013 and June 30, 2012, respectively.
F- 7
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note C: HARDWARE DEVELOPMENT COSTS
The Company incurred $30,425 and $57,353 for research and development costs during the three month periods ending May 31, 2013 and June
30, 2012, respectively. The Company incurred $87,838 and $80,699 for the six month period ending May 31, 2013 and June 30, 2012,
respectively. These costs relate to hardware engineering, design and development of the Zaaz Keyboard and the Extreme Gamer.
Note D: PREPAID EXPENSES
Prepaid expenses consist of audit fees of $5,000, research and development costs of $7,500, and tradeshow and promotion costs of $29,448.
The Company incurred $41,948 and $14,506 for pre-paid costs during the three months ending May 31, 2013 and November 30, 2012,
respectively.
Note F: COMMON STOCK
The Company has 100,000,000 shares at $0.0001 par value common stock authorized and 22,857,860 and 22,495,360 shares issued and
outstanding at May 31, 2013 and November 30, 2012, respectively. During the six month period ending May 31, 2013, the Company granted
725,000 stock warrants to investors in exchange for cash. Details associated with stock warrants are described in Note G.
On December 24, 2012, the Company filed an amendment to its Articles of Incorporation to change the par value of its common stock from
$0.001 to $0.0001 and to add to the authorized capital of the Company 1,000,000 Series A Preferred Stock at par value $0.0001. As of July 25,
2013, there have been no issuances of Preferred Stock. The Company has no other class of stock authorized by the State of Nevada.
During the six month period ending May 31, 2013, the Company issued 362,500 common shares to investors in exchange for cash. The
Company recorded this stock issuance at the dollar amount of total capital raised from this group, which equals $362,500. Each person
executed a stock subscription agreement and delivered funds in exchange for our equity at a price of $1.00 for each common share and two
stock warrants.
We incurred equity issuance costs of $7,489 and $3,180 for the three month period ending May 31, 2013 and June 30, 2012, respectively. We
incurred equity issuance costs of $17,149 and $19,332 for the six month period ending May 31, 2013 and the year ended November 30, 2012,
respectively. Rather than expense these costs, such items are charged against the Company’s equity. These costs include mailing, copying,
courier, and other miscellaneous costs associated with the duplication and delivery of our offering circular to investors and paying for the return
delivery of signed stock subscription agreements.
Note G: STOCK OPTIONS AND WARRANTS
Stock-Based Compensation to Employees
Pursuant to the employee incentive stock option plan, on July 15, 2012, the Company granted 2,000,000 shares to each of its two officers and
directors. The option agreement provides the employee has no more than five years from the date of the grant to exercise the options at an
exercise price of $0.25 per share. The employee may only exercise such options based upon the contracted vesting schedule, which provides
that the options vest on a pro-rata basis over 60 months of future services to be rendered by such employee. In addition, on August 15, 2012,
the Company granted 100,000 incentive stock options to another officer of the Company. This employee received the right to exercise the
options on the date of grant at an exercise price of $0.25 per share. As the officer was fully vested in his right to such exercise at the time of the
grant, the Company recorded the entire fair value of his stock options at the date of grant.
F- 8
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note G: STOCK OPTIONS AND WARRANTS (CONTINUED)
The fair value of the options is calculated using the Black-Scholes method as of the date of grant. The factors used to calculate fair value of the
stock options include the following: 1) Risk free interest rate, 2) Volatility of returns of the underlying asset, 3) current stock price, 4) Term of
the Option, and 5) The exercise price. The risk free interest rate used in this calculation equals 0.63% and 0.80% for the stock options granted
on July 15, 2012 and August 15, 2012, respectively. The term of the option is 5 years from the date of the grant. The exercise price is $0.25 per
share. The current stock price at the dates of grant, which is July 15, 2012 and August 15, 2012, is $0.25 based on the sale of common shares to
investors for the eleven months prior to the date of grant. Several industry comparables to this Company were used in order to determine an
approximation of the volatility. The approximate volatility based on these comparables is approximately 458%.
The following is a summary of the status of all of the Company’s stock options issued to the Company’s management as of May 31, 2013 and
the changes from December 1, 2012 to May 31, 2013.
Outstanding November 30, 2012
Granted
Exercised
Cancelled
Outstanding at May 31, 2013
Exercisable at May 31, 2013
# of Options
4,100,000
100,000
4,000,000
700,000
$
$
$
$
$
$
Weighted
Average
Exercise Price
0.25
0.25
0.25
0.25
Weighted
Average
Remaining Life
52.75 months
49.50 months
49.50 months
Stock Warrants Issued to Investors
There were no stock warrants granted by the Company from inception through August 16, 2012. For each common share purchased by an
investor, for no additional consideration, each investor acquired a warrant to purchase an additional two shares at the fixed price of $1.00 per
share. During the period December 1, 2012 to May 31, 2013, in connection with a private placement, the Company raised $362,500 from the
sale of securities to 20 investors. 725,000 stock warrants to purchase common stock were granted in conjunction with the purchase by each
investor of our common stock. The terms of the stock warrant include the right to exercise all or a portion of the warrants granted, shall be no
more than 2 years from the date of grant of the warrant, and the exercise price is $1.00 per warrant. The warrant may not be transferred or
assigned in whole or in part by the grantee.
F- 9
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note G: STOCK OPTIONS AND WARRANTS (CONTINUED)
The following is a summary of the status of all of the Company’s stock warrants as of May 31, 2013 and the changes from December 1, 2012
to May 31, 2013.
Outstanding at November 30, 2012
Granted
Exercised
Cancelled
Outstanding at May 31, 2013
Exercisable at May 31, 2013
# of Warrants
624,520
725,000
1,349,520
1,349,520
$
$
$
$
$
$
Weighted
Average
Exercise Price
1.00
1.00
1.00
1.00
Weighted
Average
Remaining Life
19 months
24 months
19 months
19 months
Note H: RELATED PARTY TRANSACTIONS
Advances and Expenses paid on behalf of the Company
On August 1, 2011, the Company entered into a promissory note agreement with DXT for any advances to the Company or expenses paid on
behalf of the Company during the period from inception (May 12, 2011) to May 31, 2013. This note is unsecured, with 8% interest rate per
annum, and a due date of November 1, 2013. At May 31, 2013 and November 30, 2012, the Company has owed a total of $11,445 and
$12,149, respectively, to DXT as advances or expenses paid on behalf of the Company. Subsequently, the Company has paid off the entire note
as of July 31, 2013.
Compensation of Officers
The Company entered into officer compensation agreements with two officer/directors whereby each receives $60,000 per annum as cash
compensation. The Company pays each officer $5,000 per month. The total amount paid to the two officers was $35,500 and $36,000 for the
three month period ending May 31, 2013 and June 30, 2012, respectively. The total amount paid to the two officers was $60,250 and $61,000
for the six month period ending May 31, 2013 and June 30, 2012, respectively. In addition, each officer/director received additional
compensation in the form of non-cash incentive stock options granted on July 15, 2012. Each person received 2,000,000 stock options. For
further discussion of the terms of the grant of stock options, see Note G.
Due to related party
On September 21, 2012, the Company used a vehicle belonging to an officer for the purpose of a trade-in acquire a pre-owned company vehicle
from a dealer. This amount, limited to its cost basis, is recorded as a short-term obligation due to the officer as a current liability of $3,810. The
Company accrues interest on the amount owed to the officer/director at a rate of 8% per annum. The Company has incurred interest expense
total of $288 and $0 as of May 31, 2013 and June 30, 2012.
F- 10
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note I: COMMITMENTS AND CONTINGENCIES
Operating Lease Obligation
On October 25, 2012, the Company signed a lease for its current office and warehouse. The Company became a co-tenant along with DXT.
The new lease agreement expires September 30, 2014 and has an option for a three year renewal. The typical monthly rent expense is $7,006,
which includes base rent of $5,496 and common area maintenance of $1,510. The Company is not obligated to pay a security deposit to the
management company. A deposit to secure the current lease was made by DXT in 2009. DXT will receive the security deposit at the end of the
lease.
As of May 31, 2013, the monthly minimum rental payment is $7,006. Rent expense was $21,018 and $21,018 for the three month periods
ending May 31, 2013 and June 30, 2012, respectively. Rent expense was $42,036 and $45,036 for the six month periods ending Ma y 31, 2013
and June 30, 2012, respectively.
As of May 31, 2013, mminimum rent to be paid under this lease agreement is summarized as follows:
Years ended November 30, 2013
2014
Total Lease Obligation
$
$
Minimum rent
payments
49,042
70,060
119,102
Note Payable for Vehicle Financing Obligations
On September 27, 2012, the Company acquired a pre-owned company vehicle on credit. The total cost basis is $49,824. The Company paid
$10,000 as a down payment. The amount financed by the seller is $39,824, and the Company makes monthly payments of $863. The Company
is obligated to pay a total of $41,420 over the course of the loan. This note bears interest at the annual percentage rate of 1.9%, and the term is
48 months. The total finance charge associated with this note is $1,596.
Minimum financing payment to be paid under this finance agreement is summarized as follows:
Years ended November 30, 2013
2014
2015
2016
Total Lease Obligation
Minimum financing
payments
$
6,046
10,356
10,356
9,489
$
36,247
Note J: SUBSEQUENT EVENTS
Common stock and warrants issued to investors
During the two month period ending July 31, 2013, the Company issued 436,021 common shares to 18 investors in exchange for cash. The
Company recorded this stock issuance at the dollar amount of total delivered funds in exchange for our equity at a price of $1.00 each for each
common share and two warrants. A total of 872,042 stock warrants were granted to such individuals.
F- 11
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
MAY 31, 2013
Note J: SUBSEQUENT EVENTS (CONTINUED)
Exclusive License Agreement with Psyko™ Audio Labs
On June 4, 2013, the Company entered into a license agreement with Psyko™ Audio Labs in reference to the Psyko™ Krypton surround
sound gaming headphones. Psyko is a federally registered trademark on the principal register, and is assigned the number 4140590 by the U.S.
PTO. The Company acquired the exclusive license to develop, manufacture, distribute, market, advertise and sublicense (if applicable) the
Psyko™ Products within the video gaming segment on a world-wide basis. The term of the Agreement is in perpetuity. In exchange, the
licensor shall receive a royalty of 5% of any and all gross proceeds, less returns and allowances, from the sale of the Psyko™ product line.
Royalties are due on a quarterly basis. In addition, the Company agreed to make a one-time non-refundable pre-payment of royalty fees to the
Licensor in the amount of $50,000. Such amount was paid in June 2013 and recorded as a pre-paid cost. The licensee agreed to apply a
maximum of $10,000 against each royalty payment until the $50,000 is fully recovered.
Consulting Agreement with Hildebrandt Technologies, Inc.
On June 4, 2013, the Company entered into an agreement with Hildebrandt Technologies, Inc. (the “Consultant”) whereby Mr. Hildebrandt and
his corporation agreed to provide consulting services to the Company on an on-going basis. Hildebrandt Technologies, Inc. works along side
Psyko Audio Labs. The Consultant agreed to assist the Company with its sales and distribution of its products. In addition, the Consultant shall
assist the Company with the identification of new manufacturing facilities for the Psyko™ Headphones; securing distribution in big box retail
stores, and possible future development of headphones specific to other applications, which are proprietary in nature and therefore not more
fully described herein. In exchange, the Consultant shall receive consideration of $10,000 per month for ten days of work, starting July 1, 2013.
In the event Consultant works greater than 10 hours per month, the Consultant shall bill the Company at the rate of $120 per hour for the
additional time.
Consulting Agreement with Elite Product Management Ltd.
In July 2013 we executed a contract with Elite Product Management, Ltd. Honk Kong to handle the sourcing, procurement, quality control,
logistics and manufacturing of the Psyko™ headphones, Zaaz™ keyboard, and the Extreme Gamer®. In addition Elite will also assist the
Company with product development and design modifications. The term of the Agreement is for one year. The monthly retainer fee is $5,250
per month.
F- 12
EXEO ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
(Audited)
EXEO ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
(Audited)
Report of Independent Registered Public Accounting Firm
F1
Balance Sheets as of November 30, 2012 and December 31, 2011
F2
Statements of Operations for the Year Ended November 30, 2012, and for the Periods from Inception (May 12, 2011) to
December 31, 2011 and November 30, 2012
F–
3
Statements of Stockholders’ Equity (Deficit) for the Period from Inception (May 12, 2011) to November 30, 2012
F4
Statements of Cash Flows for the Year Ended November 30, 2012, and for the Periods from Inception (May 12, 2011) to
December 31, 2011 and November 30, 2012
Notes to Financial Statements
F -5
F6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Exeo Entertainment, Inc.
We have audited the accompanying balance sheets of Exeo Entertainment, Inc. (A Development Stage Company) (the “Company”) as of
November 30, 2012 and December 31, 2011 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the year
ended November 30, 2012, for the period from inception (May 12, 2011) to December 31, 2011, and for the cumulative period from inception
(May 12, 2011) to November 30, 2012. Exeo Entertainment, Inc.’s management is responsible for these financial statements. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Exeo Entertainment,
Inc. (A Development Stage Company) as of November 30, 2012 and December 31, 2011 and the related statements of operations, stockholders’
equity (deficit) and cash flows for the year ended November 30, 2012, for the period from inception (May 12, 2011) to December 31, 2011, and
for the cumulative period from inception (May 12, 2011) to November 30, 2012 in conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note A
to the financial statements, the Company has incurred losses from operations, which raise substantial doubt about its ability to continue as a
going concern. Management’s plans in regard to these matters are also described in Note A. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ De Joya Griffith, LLC
Henderson, Nevada
July 25, 2013
Corporate Headquarters:
De Joya Griffith, LLC
2580 Anthem Village Drive, Henderson, NV 89052 Phone: (702) 563-1600 Fax: (702) 920-8049
F- 1
EXEO ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
(Audited)
2012
2011
ASSETS
Current assets
Cash and cash equivalents
Prepaid expenses
Total current assets
$
130,676
14,506
145,182
$
107,126
Property and equipment, net
TOTAL ASSETS
26,825
26,825
-
$
252,308
$
26,825
$
22,076
16,097
15,410
53,583
$
24,084
19,850
43,934
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
Current liabilities
Accounts payable and accrued expenses
Due to related parties
Notes payable
Total current liabilities
Long-term liabilities
Note payable
Total long-term liabilities
29,263
29,263
-
Total liabilities
82,846
43,934
-
-
Stockholders' equity (deficit)
Preferred stock - $0.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding,
respectively
Common stock - $0.0001 par value, 100,000,000 shares authorized; 22,495,360 and 20,340,000 shares
issued and outstanding, respectively
Additional paid-in capital
Advance to related party
Deficit accumulated during the development stage
Total stockholders' equity (deficit)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
2,250
957,652
(790,440 )
169,462
$
The accompanying notes are an integral part of these financial statements.
F- 2
252,308
2,034
101,951
(854 )
(120,240 )
(17,109 )
$
26,825
EXEO ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Audited)
From Inception
(May 12, 2011)
to December 31,
2011
Year ended
November 30,
2012
$
REVENUES
OPERATING EXPENSES
Automobile and truck
Bank service charges
Compensation - non-directors
Compensation - officers/directors
Stock-based compensation to officers and employee
Computer and internet
Depreciation
Filing fees
Legal and professional
Meals and entertainment
Office rent
Office expense
Organizational cost
Research and product development
Utilities
TOTAL OPERATING EXPENSES
LOSS FROM OPERATIONS
OTHER EXPENSE
Interest expense
TOTAL OTHER EXPENSE
-
$
From Inception
(May 12, 2011) to
November 30,
2012
-
415
40
2,400
45,000
18,675
218
11,411
34,750
315
875
5,342
119,441
3,569
218
114,691
158,000
119,291
790
6,030
717
27,199
411
120,288
15,241
875
193,405
25,827
786,552
(667,111 )
(119,441 )
(786,552 )
(3,089 )
(3,089 )
(799 )
(799 )
(3,888 )
(3,888 )
$
(670,200 ) $
(120,240 )
NET LOSS PER SHARE: BASIC
$
(0.03 ) $
(0.01 )
21,519,519
20,117,897
The accompanying notes are an integral part of these financial statements.
F- 3
-
3,154
178
112,291
113,000
100,616
572
6,030
717
15,788
411
85,538
14,926
193,405
20,485
667,111
NET LOSS
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING: BASIC
$
$
(790,440 )
EXEO ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
PERIOD FROM INCEPTION (MAY 12, 2011) TO NOVEMBER 30, 2012
(Audited)
Preferred Stock
Issued and
Preferred
Stock
at Par
Value
Outstanding
Beginning Balance at
Inception, May 12,
2011
Outstanding
During the
Development
Stockholders'
Equity
Capital
Party
Stage
(Deficit)
-
18,675,000
1,868
16,808
-
-
18,675
-
-
875,000
88
788
-
-
875
-
-
450,000
45
405
-
-
450
-
-
340,000
-
34
-
-
-
-
-
-
-
635
-
-
635
-
-
-
-
-
-
(854 )
Net loss for the period
ended December 31,
2011
-
-
-
-
-
Balance, December
31, 2011
-
-
20,340,000
2,034
101,951
-
-
1,843,100
184
460,591
-
-
460,775
-
-
312,260
31
312,229
-
-
312,260
-
-
-
-
100,616
(19,332 )
-
-
100,616
(19,332 )
-
-
-
-
1,598
-
-
1,598
-
-
-
-
-
854
-
854
Net loss for the year
ended November 30,
2012
-
-
-
-
-
-
Balance, November
30, 2012
-
-
22,495,360
$ 2,250
$
$
Advances
to Related
-
Shares issued for cash
at $0.25 per share
Shares issued for cash
at $1.00 per share
Stock-based
compensation to
officers and employee
Equity issuance costs
Imputed interest on
payable
Proceeds from related
party
-
Additional
Paid-in
-
Shares issued for
officers' compensation
Shares issued for
organizational cost
Shares issued to
founder for cash at
$0.001 per share
Shares issued for cash
at $0.25 per share
Equity issuance cost
Imputed interest on
payable
Advance to related
party
$
Total
-
-
$
Common Stock
Issued and
Commo
n
Stock
at Par
Value
Deficit
Accumulated
-
$
84,966
(1,650 )
$
957,652
-
(854 )
-
(854 )
$
-
The accompanying notes are an integral part of these financial statements.
F- 4
$
-
$
85,000
(1,650 )
(120,240 )
(120,240 )
(120,240 )
(17,109 )
(670,200 )
$
-
(790,440 )
(670,200 )
$
169,462
EXEO ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOWS
(Audited)
From Inception
(May 12, 2011)
to December 31,
2011
Year ended
November 30,
2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation
Stock-based compensation
Organization costs paid by stock
Imputed interest
Changes in assets and liabilities
Increase in prepaid expenses
Increase (decrease) in accrued expenses
Increase in accrued interest due to related parties
Net cash used in operating activities
$
(670,200 )
$
From Inception
(May 12, 2011) to
November 30,
2012
(120,240 )
$
(790,440 )
6,030
100,616
1,598
18,675
875
635
6,030
119,291
875
2,233
(14,506 )
(2,008 )
1,485
(576,985 )
24,084
158
(75,813 )
(14,506 )
22,076
1,643
(652,798 )
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment
Cash flows used in investing activities
(69,522 )
(69,522 )
-
(69,522 )
(69,522 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of issuance costs
Proceeds from related party debt
Proceeds from notes payable
Payments on notes payable
Payments on notes payable - auto loan
Net cash flows provided by financing activities
753,703
11,656
3,000
(17,138 )
(863 )
750,358
83,800
9,820
9,018
102,638
837,503
21,476
12,018
(17,138 )
(863 )
852,996
Net increase in cash and cash equivalents
103,851
26,825
130,676
26,825
-
-
Cash and cash equivalents, beginning of the period
Cash and cash equivalents, end of the period
$
130,676
$
26,825
$
130,676
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
$
-
$
-
$
-
$
-
$
-
$
-
$
39,824
$
-
$
39,824
Vehicle purchased using a related party trade-in vehicle
$
3,810
$
-
$
3,810
Assumption of related party debt
$
-
$
10,832
$
10,832
Cash paid for taxes
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Vehicle purchased with financing
The accompanying notes are an integral part of these financial statements.
F- 5
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Exeo Entertainment, Inc. (the “Company”) is presented to assist in understanding the
Company’s financial statements. The financial statements and notes are representations of the Company ’s management, who is responsible for
their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently
applied to the preparation of the financial statements. The Company will adopt accounting policies and procedures based upon the nature of
future transactions.
Nature of Business
The Company was incorporated in Nevada on May 12, 2011, and is in the development stage. The Company is based in Las Vegas, Nevada,
and designs, develops, licenses, manufactures, and distributes its products. The Company plans to market the Zaaz™ Keyboard , to be used
with Samsung’s Smart TV® as well as other smart devices, the Extreme Gamer™ , and other new peripheral products for the video gaming
industry, including the Psyko Krypton™ surround sound gaming headphones.
Development Stage Company
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to
development-stage companies. A development-stage company is one in which planned principal operations have not commenced or if its
operations have commenced, there has been no significant revenues there from.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States
of America and are presented in US dollars.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP”
accounting). The Company has adopted a November 30 fiscal year end for 2012. Prior to that, the Company adopted a calendar year end for
2011.
Cash and Cash Equivalents
The Company considers cash on hand, cash in banks, certificates of deposit, time deposits, and U.S. government and other short-term securities
with maturities of three months or less when purchased as cash and cash equivalents.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts payable, notes payable, and accrued expenses. The
carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate
prevailing market rates unless otherwise disclosed in these financial statements.
F- 6
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful
lives of the assets, as follows:
Description
Estimated Life
5 years
5 years
Furniture & Equipment
Vehicles
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual
life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the
manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets.
Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred.
Gains or losses on disposition of property and equipment are included in the statements of operations. There were no dispositions during the
periods presented.
Impairment of Long-Lived Assets
The Company evaluates its property and equipment and other long-lived assets for impairment in accordance with related accounting standards.
The Company has impaired no fixed assets during the periods presented. For assets to be held and used (including projects under development),
fixed assets are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company first
groups its assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows
of other assets and liabilities (the “asset group”). Secondly, the Company estimates the undiscounted future cash flows that are directly
associated with and expected to arise from the completion, use and eventual disposition of such asset group. The Company estimates the
undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the
carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured
based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under
development, future cash flows include remaining construction costs.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities
are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the
currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence,
are not expected to be realized.
Management Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of 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.
F- 7
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured. From
inception, the Company recognized no revenue.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average
number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to
common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Stock-Based Compensation
Pursuant to ASC Topic 718, the Company recorded the fair value of the stock options on a monthly basis over the vesting period as stock-based
compensation expense. The fair value of the options is calculated using the Black-Scholes method as of the date of grant. In fiscal year 2012,
the Company adopted an incentive stock option plan for its employees. In fiscal year 2012 the Company granted stock options to three officers
of the Company. These are described in Note G- Stock Options and Warrants.
Concentrations of Risk
The Company’s bank accounts are deposited in insured institutions. The funds are insured up to $250,000. At November 30, 2012, the
Company’s bank deposits did not exceed the insured amounts. At June 30, 2013, the Company’s bank deposits did exceed the insured amounts.
Accounting for Research and Development Costs
The Company records an expense in the current period for all research and development costs, which include Hardware Development Costs.
The Company does not capitalize such amounts. Pursuant to ASC Topic 730 Research and Development, once we determine that our Extreme
Gamer video game console is technologically feasible and a working model is put into use, the Company will capitalize Software Development
costs associated with its products. Once this occurs we will determine a useful life of our software and apply a reasonable economic life of five
years or less. At this time, our software development costs only relate to the Extreme Gamer and Zaaz keyboard hardware. The software
development costs cannot be separated from the associated hardware development. We do not develop stand alone software for sale to the retail
consumers, rather we develop software in order to operate the designed hardware. The software is designed to be encoded within chips inside
the hardware. Thus, it has been determined that the current software development costs, which are intertwined within the hardware
development, are to be expensed rather than capitalized pursuant to ASC Topic 730.
This conclusion is also based upon our decision to devote further research and development costs in the support of our product interface to the
video game players: Sony PS3® (and other products such as Nintendo Wii® and Microsoft Xbox 360®).
F- 8
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Liquidity and Going Concern
Management believes that the Company has sufficient capital reserves to operate without the need for an infusion of additional capital for the
next 12 months. However, this would not be sufficient to allow the Company to continue with its current budget for research and development
required to complete its designs for the Zaaz™ keyboard and the Extreme Gamer™.
The Company has incurred an accumulated deficit of $790,440 since inception. The Company incurred significant initial research and product
development costs, including expenditures associated with hardware engineering and the design and development of its hardware components
and prototypes associated with the Zaaz™ keyboard and the Extreme Gamer. The Company also incurred costs associated with its acquisition
of property, plant and equipment for its 10,000 square foot office and warehouse.
These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common stock or
obtaining debt financing and attaining future profitable operations. Management’s plan includes selling its equity securities and obtaining debt
financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these
efforts.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flow.
Note B: PROPERTY AND EQUIPMENT
The Company owned property and equipment, recorded at cost, which consisted of the following at
November 30, 2012 and December 31, 2011:
2012
2011
$ 15,000 $
11,685
86,471
113,156
(6,030 )
$ 107,126 $
Furniture and fixtures
Office & computer equipment
Vehicles
Subtotal
Less: Accumulated depreciation
Property and equipment, net
-
Depreciation expense was $6,030 and $0 for the year ended November 30, 2012 and from inception (May 12, 2011) to December 31, 2011,
respectively. Prior to purchasing its own property and equipment, the Company rented computer equipment, office equipment and furniture
from Digital Extreme Technologies, Inc., a related party. The Company recorded a rental expense in fiscal years 2011 and 2012. See Note H –
Related Party Transactions for further details.
F- 9
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note C: HARDWARE DEVELOPMENT COSTS
The Company incurred a total of $193,405 and $0 for research and development costs during fiscal year November 30, 2012 and from
inception (May 12, 2011) to December 31, 2011, respectively. These costs relate to hardware engineering, design and development of the Zaaz
Keyboard and the Extreme Gamer.
Note D: PREPAID EXPENSES
On November 29, 2012, we recorded a pre-paid expense of $7,006. This relates to our office rent expense for the month of December 2012,
which was due December 1, 2012. Additional information regarding the Company’s office lease is described in Note K – Commitments and
Contingencies. In addition, we recorded a prepaid expense of $7,500, which relates to research and development costs.
Note E: PATENT AND TRADEMARKS
The Company entered into a license agreement with Digital Extreme Technologies, Inc., a Delaware corporation, (also referred to as DXT) for
use of certain intellectual property associated with the products being designed and developed by the Company. The specific terms of the
license agreement are addressed under the following note for related party transactions. The Black Widow keyboard is now known as the Zaaz
keyboard. DXT worked to design and develop the Extreme Gamer as well as the Black Widow keyboard. The Company continues to work,
under a license agreement, with DXT to advance the use of technologies designed by DXT.
DXT applied to the U.S. PTO for a patent of its Multi Video Game Changer. The agency assigned an application number of 12/543,296 to its
application, which was published on February 25, 2010. The proposed 10 disk Video Game Changer is designed to interface directly with Sony
PS3®, Nintendo Wii®, and Mircosoft Xbox 360®. The Company anticipates incorporating Blu-Ray® compatible optics technology under a
license agreement. This would allow users to insert Blu-Ray® discs into the Video Game Changer, and once connected to the video game
console, to play movies on television. Sony PS3® is now capable of playing Blu-Ray® discs, but only with a capacity for a single disk. This
technology would provide for the loading of up to 10 DVD’s, CD’s or Blu-Ray® discs into a single console that communicates with a video
game console via USB. Furthermore, users would be able to plug in any external hard disc drive (“HDD”) directly into the console via an
internal ATPI port, allowing movies, music and pictures to be played directly from the HDD.
Note F: COMMON STOCK
The Company has 100,000,000 shares at $0.0001 par value common stock authorized and 22,495,360 and 20,340,000 shares issued and
outstanding for fiscal years ended November 30, 2012 and December 31, 2011, respectively. The Company granted 4,100,000 stock options to
three employees, and 624,520 stock warrants to 20 investors. Details associated with stock options and warrants are described in Note G.
As of November 30, 2012, the Company has no other class of stock authorized by the State of Nevada. As discussed in Note M – Subsequent
Events, in December, 2012, the Company amended its Articles of Incorporation to change the par value of its Common Stock and to add
Preferred Stock.
F- 10
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note F: COMMON STOCK (CONTINUED)
At inception on May 12, 2011, the Company issued 875,000 common shares to an officer in exchange for organizational expenses he incurred
on behalf of the Company. The Company recorded this stock issuance at the dollar amount of cash paid by the officer on behalf of the
Company, which equals $875.
At inception on May 12, 2011, the Company issued 450,000 common shares to an officer in exchange for cash. The Company recorded this
stock issuance at the dollar amount of contributed cash, which equals $450.
At inception on May 12, 2011, the Company issued 18,675,000 common shares in total to two officers in exchange for services each person
rendered. The Company recorded the services rendered at $18,675 in accordance with the fair value for the shares issued for cash received on
the same day.
During the period from inception to December 31, 2011, the Company issued 340,000 shares to investors in exchange for cash. The Company
recorded this stock issuance at the dollar amount of total capital raised from this group, which equals $85,000.
During the period from January 1, 2012 to November 30, 2012, the Company issued 2,155,360 common shares to investors in exchange for
cash. The Company recorded this stock issuance at the dollar amount of total capital raised from this group, which equals $773,035.
We incurred equity issuance costs of $19,332 and $1,650 for the year ended November 30, 2012 and for the period from inception (May 12,
2011) to December 31, 2011, respectively. Rather than expense these costs, such items are charged against the Company’s equity. These costs
include mailing, copying, courier, and other miscellaneous costs associated with the duplication and delivery of our offering circular to
investors and paying for the return delivery of signed stock subscription agreements.
Note G: STOCK OPTIONS AND WARRANTS
Stock-Based Compensation to Employees
Pursuant to the employee incentive stock option plan, on July 15, 2012, the Company granted 2,000,000 shares to each of its two officers and
directors. The option agreement provides the employee has no more than five years from the date of the grant to exercise the options at an
exercise price of $0.25 per share. The employee may only exercise such options based upon the contracted vesting schedule, which provides
that the options vest on a pro-rata basis over 60 months of future services to be rendered by such employee. In addition, on August 15, 2012,
the Company granted 100,000 incentive stock options to another officer of the Company. This employee received the right to exercise the
options on the date of grant at an exercise price of $0.25 per share. As the officer was fully vested in his right to such exercise at the time of the
grant, the Company recorded the entire fair value of his stock options at the date of grant.
F- 11
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note G: STOCK OPTIONS AND WARRANTS (CONTINUED)
The fair value of the options is calculated using the Black-Scholes method as of the date of grant. The factors used to calculate fair value of the
stock options include the following: 1) Risk free interest rate, 2) Volatility of returns of the underlying asset, 3) current stock price, 4) Term of
the Option, and 5) The exercise price. The risk free interest rate used in this calculation equals 0.63% and 0.80% for the stock options granted
on July 15, 2012 and August 15, 2012, respectively. The term of the option is 5 years from the date of the grant. The exercise price is $0.25 per
share. The current stock price at the dates of grant, which is July 15, 2012 and August 15, 2012, is $0.25 based on the sale of common shares to
investors for the eleven months prior to the date of grant. Several industry comparables to this Company were used in order to determine an
approximation of the volatility. The approximate volatility based on these comparables is approximately 458%.
The following is a summary of the status of all of the Company’s stock options as of November 30, 2012 and the changes from inception to
November 30, 2012.
Weighted
Average
Exercise Price
# of Options
Inception ( May 12, 2011)
Granted
Exercised
Cancelled
Outstanding at December 31, 2011
Granted
Exercised
Cancelled
4,100,000
-
$
$
$
$
$
$
$
$
0.25
-
Outstanding at November 30, 2012
4,100,000
$
0.25
Exercisable at November 30, 2012
400,000
$
0.25
Weighted
Average
Remaining Life
60 months
55.75
months
55.75
months
Stock Warrants Issued to Investors
There were no stock warrants granted by the Company from inception through August 16, 2012. During the period August 17, 2012 to
November 30, 2012, in connection with a private placement, the Company raised $312,260 from the sale of securities to 20 investors. For each
$1.00 received from these investors, the Company issued one common share and granted two stock warrants. 624,520 stock warrants to
purchase common stock were granted in conjunction with the purchase by each investor of our common stock. The terms of the stock warrant
include the right to exercise all or a portion of the warrants granted, shall be no more than 2 years from the date of grant of the warrant, and the
exercise price is $1.00 per warrant. The warrant may not be transferred or assigned in whole or in part by the grantee.
F- 12
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note G: STOCK OPTIONS AND WARRANTS (CONTINUED)
Stock Warrants Issued to Investors
The following is a summary of the status of all of the Company’s stock warrants as of November 30, 2012 and changes during the period from
inception to November 30, 2012.
Weighted
Average
Exercise Price
# of
Warrants
Inception (May 12, 2011)
Granted
Exercised
Cancelled
Outstanding at December 31, 2011
Granted
Exercised
Cancelled
Outstanding at November 30, 2012
Exercisable at November 30, 2012
624,520
624,520
624,520
$
$
$
$
$
$
$
$
$
$
1.00
1.00
1.00
Weighted
Average
Remaining Life
24 months
22 months
22 months
Note H: RELATED PARTY TRANSACTIONS
Transactions with Digital Extreme Technologies, Inc.
DXT is considered to be a related party to the Company as the two officer/directors of the Company are also officer/directors of DXT. Further,
there is common ownership between DXT and the Company. The majority owners of both DXT and the Company are the same two
officers/directors. The Company records all related party transactions between the two companies on an arms-length basis while applying a
determination of fair market value of goods or services provided from one entity to the other.
Rental of Office Equipment and Furniture
The Company rented from DXT its office furniture and certain equipment. The Company recorded as rental expense within office expenses the
fair market value of such equipment and furniture. The expense was $5,284 and $4,720 for the fiscal year ended November 30, 2012 and from
inception (May 12, 2011) to December 31, 2011, respectively.
Purchase of Office Equipment and Furniture in 2012
The Company purchased from DXT its furniture and certain office equipment. This was subsequent to the rental of such items as discussed
above. On May 23, 2012, the Company agreed to purchase the telephone equipment of DXT for $2,000. On June 22, 2012, the Company
agreed to purchase the office furniture owned by DXT for $15,000. The Company purchased additional office furniture and office equipment
from unrelated retailers for a total of $9,685 in fiscal year end November 31, 2012. The Company determined the fair market value of these
used assets by consulting various for sale listings in local publications and internet sites.
F- 13
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note G: STOCK OPTIONS AND WARRANTS (CONTINUED)
Advances and Expenses paid on behalf of the Company
On August 1, 2011, the Company entered into a promissory note agreement with DXT for any advances to the Company or expenses paid on
behalf of the Company during the period from inception (May 12, 2011) to November 30, 2012. This note is unsecured, with 8% interest rate
per annum, and a due date of July 31, 2013. The Company has received a total of $9,820 and $11,656 from DXT as advances or expenses paid
on behalf of the Company during the period from inception (May 12, 2011) to December 31, 2011 and during the year ended November 30,
2012, respectively. The Company has incurred interest expense of $158 and $1,347 during the period from inception (May 12, 2011) to
December 31, 2011 and during the year ended November 30, 2012, respectively.
Leasehold Interest in Real Estate
On September 27, 2011, the Company entered into a sub-lease agreement with DXT. The term of the lease was through October 1, 2012 and
required the Company to pay $7,006 per month for use of the office space and 10,000 square foot warehouse leased by DXT from the real
property management company. The monthly amount due is the same amount that is due to be paid by DXT to the real property management
company. The Company made various payments to DXT under the terms of the sublease agreement while the Company occupied the rental
space. As discussed in Note K, on October 25, 2012, the Company entered into an agreement with the real property management company
whereby it agreed to become a co-tenant and to become directly obligated for future rent payments associated with the DXT lease.
In addition, under the sub-lease and the new lease agreements entered into on September 27, 2011 and October 25, 2012, the Company agreed
to pay the arrearage rents total of $19,850 and $22,850 as of December 31, 2011 and November 30, 2012. This amount consists of $10,832
incurred by DXT prior to the Company subleasing from DXT, $9,018 incurred by the Company during the period from inception (Ma y 12,
2011) to December 31, 2011, and $3,000 incurred by the Company during the year ended November 30, 2012. The Company netted the
$10,832 expense incurred by DXT with the payable amount of $9,978, which consists of principal amount of $9,820 and accrued interest of
$158. The net amount of
$854 has been recorded as an advance to DXT as of December 31, 2011.
The Company has made two payments toward the arrearage rents to the real property management company totaling $17,138 in November
2012 and $5,712 in January 2013. The Company recorded a payable balance of $19,850 and $5,712 as of December 31, 2011 and November
30, 2012, respectively.
License for Intellectual Property and Other Proprietary Rights Owned by DXT
On May 25, 2011, the Company was granted by DXT an exclusive, perpetual, non-transferable right and license throughout the world to
develop, manufacture, distribute, market, advertise and sublicense the DXT Products. The Company agreed to pay a royalty equal to 5% of any
and all gross revenue generated from the commercial exploitation of the DXT Products. The royalty is to be paid on a monthly basis
commencing 30 days after the initial sale of any DXT Product. DXT waived any initial licensing fee in consideration of the Company’s
agreement to complete product development on the Extreme Gamer and Black Widow (now known as Zaaz) Keyboard.
F- 14
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note H: RELATED PARTY TRANSACTIONS (CONTINUED)
According to the license agreement, the DXT products are defined as the following:
Extreme Gamer – all associated patents, copyrights, trademarks, trade names, service marks, acquisition of any and all design documentation
including: prototypes, beta units, any work in process, CAD files, portfolios, marketing materials, and the rights to patent “Multi Video Game
Changer #20100048306” Also to include any prospective customer lists, marketing research, business, marketing, manufacturing, distribution,
or operational plans, including the following domain names: www.digitalextremegamer.com and www.digitalextremegamer.info
Black Widow Keyboard – all associated patents, copyrights trade names, trademarks, service marks, design documentation, prototypes, any and
all marketing materials, prospective customer lists, marketing research, business, marketing, manufacturing, distribution, or operational plans.
Reality Pro – all associated patents, copyrights, trade names, trademarks, service marks, design documentation, prototypes, any and all
marketing materials, prospective customer lists, marketing research, business, marketing, manufacturing, distribution, or operational plans, and
including the following domains: www.motionsimpro.com ; www.motionsimpro.net ; www.vrealitypro.com ; www.vrealitypro.net ; and
www.vr-forum.com
Compensation of Officers
On May 12, 2011, two officers/directors were issued 10,000,000 common shares each as founder’s shares at Par Value $0.001. One
officer/director received such shares in lieu of compensation owed for services rendered on behalf of the Company pre-organization/formation.
The value of such services was determined to be $10,000 and was recorded as his capital contribution. Post organization, the Company ratified
such compensation as a legal obligation of the Company post-formation. The other officer/director paid organizational expenses on behalf of
the Company and was credited $875 to his capital stock account in exchange for 875,000 founder’s shares issued at par value. In addition, he
received 8,675,000 common shares in lieu of compensation owed for service rendered on behalf of the Company per-organization/formation.
The value of such services was determined to be $8,675 and was recorded as his capital contribution. Post organization, the Company ratified
such compensation as a legal obligation of the Company post-formation. In addition, this officer received an additional 450,000 common shares
at inception in exchange for cash paid by the officer in the amount of $450 on behalf of the Company.
The Company entered into officer compensation agreements with two officer/directors whereby each receives $60,000 per annum as cash
compensation. The Company pays each officer $5,000 per month. The amount each person actually received in fiscal year end November 30,
2012 was $56,500. In fiscal year end December 31, 2011, each person received $22,500. In addition, each officer/director received additional
compensation in the form of non-cash incentive stock options granted on July 15, 2012. Each person received 2,000,000 stock options. For
further discussion of the terms of the grant of stock options, see Note G.
One other officer received a grant of 100,000 stock options on August 15, 2012. This former officer vested full rights to exercise all or a
portion of such stock options at the date of grant. Therefore, the Company recorded the entire fair value of 100,000 stock options at the date of
grant. For further discussion of the terms of this grant of stock options, see Note G.
F- 15
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note H: RELATED PARTY TRANSACTIONS (CONTINUED)
Due to related party
On September 21, 2012, the Company used a vehicle belonging to an officer for the purpose of a trade-in to acquire a pre-owned company
vehicle from a dealer. This amount, limited to its cost basis, is recorded as a short-term obligation due to the officer as a current liability of
$3,810. The Company accrues interest on the amount owed to the officer/director at a rate of 8% per annum. The Company has incurred a total
of $138 interest expense for the year ended November 30, 2012.
Note I: INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and
operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. The Company's marginal tax rate is at 34% and its
effective tax rate differs from the federal statutory rate due to a 100% valuation allowance effectively provided for any tax benefits that may
result from net operating losses incurred, because of uncertainty discussed in Note A “Liquidity and Going Concern.”
Note J: INCOME TAXES - DEFERRED TAX ASSET
As of the most recent balance sheet date presented, the Company’s available unused operating loss carry- forwards are estimated to
approximate $639,495.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset
and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in effect currently.
FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will
generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the
deferred tax asset would be recorded. The total deferred tax asset is $219,429 which is calculated by multiplying a 34% estimated tax rate by
the cumulative net operating loss (NOL).
F- 16
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note J: INCOME TAXES - DEFERRED TAX ASSET (CONTINUED)
Net deferred tax assets consist of the following components as of November 30, 2012 and December 31, 2011:
Net loss for the period
Adjustments:
Accrued expenses
Prepaid
Stock-based compensation
Tax loss for the year
Estimated effective tax rate
Deferred tax asset
2012
670,200
$
$
(22,076 )
14,506
(100,616 ) $
562,014
34 %
191,085 $
$
$
2011
120,240
(24,084 )
(18,675 )
77,481
34 %
26,344
The total valuation allowance is $191,085 and 26,344 as of November 30, 2012 and December 31, 2011. Details are as follows:
Deferred tax asset
Valuation allowance
Provision for income tax
$
$
2012
191,085
(191,085 )
—
$
$
2011
26,344
(26,344 )
—
Below is a chart showing the estimated corporate federal net operating loss (NOL) and the year in which it will expire.
Year
2011
2012
Amount
$
$
Expiration
77,481
562,014
2031
2032
Net operating loss carry forwards of $639,495 for federal income tax reporting purposes are subject to annual limitations. Should a change in
ownership occur in the future, net operating loss carry forwards may be limited as to use in future years.
Note K: COMMITMENTS AND CONTINGENCIES
Operating Lease Obligation
Prior to October 25, 2012, the Company sublet office space and warehouse from DXT, a related party. The terms of this agreement are
discussed in the notes under related party transactions. Under that agreement, the Company paid on-going monthly rent.
On October 25, 2012, the Company signed a lease for its current office and warehouse. The Company became a co-tenant along with DXT.
The new lease agreement expires September 30, 2014 and has an option for a three year renewal. The typical monthly rent expense is $7,006,
which includes base rent of $5,496 and common area maintenance of $1,510. The Company is not obligated to pay a security deposit to the
management company. A deposit to secure the current lease was made by DXT in 2009. DXT will receive the security deposit at the end of the
lease.
F- 17
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note K: COMMITMENTS AND CONTINGENCIES (CONTINUED)
As of November 30, 2012, the monthly minimum rental payment is $7,006. Rent expense was $80,066 and $30,039 for the years ended
November 30, 2012 and December 31, 2011, respectively.
Minimum rent to be paid under this lease agreement is summarized as follows:
Years ending November 30,
2013 $
2014
Total Lease Obligation $
Minimum rent
payments
84,072
70,060
154,132
Note Payable for Vehicle Financing Obligations
On September 27, 2012, the Company acquired a pre-owned company vehicle on credit. The total cost basis is $49,824. The Company paid
$10,000 as a down payment. The amount financed by the seller is $39,824, and the Company makes monthly payments of $863. The Company
is obligated to pay a total of $41,420 over the course of the loan. This note bears interest at the annual percentage rate of 1.9%, and the term is
48 months. The total finance charge associated with this note is $1,596.
Payments to be paid under this finance agreement is summarized as follows:
Years ending November 30,
Total Payments
2013 $
10,355
2014
10,355
2015
10,355
2016
9,492
Total Financing Obligation $
40,557
$
$
Principal
9,698
9,883
10,073
9,401
39,055
Interest
$
657
472
282
91
$
1,502
Note L: SUBSEQUENT EVENTS
On December 24, 2012, the Company filed an amendment to its Articles of Incorporation to change the par value of its common stock from
$0.001 to $0.0001 and to add to the authorized capital of the Company 1,000,000 Series A Preferred Stock at par value $0.0001. As of July 25,
2013, there have been no issuances of Preferred Stock.
Sales of Unregistered Securities – Exempt from Registration under the Securities Act of 1933 – Section 4(2) and Regulation 506
During the period from December 1, 2012 to July 2, 2013, the Company raised $778,521 from 34 pre- existing investors. Each person executed
a stock subscription agreement and delivered funds in exchange for our equity at a price of $1.00 for each common share and two stock
warrants. For each common share Purchased by the investor, for no additional consideration, each investor acquired a warrant to purchase an
additional two shares at the fixed price of $1.00 per share. The term of the warrant is two years from the date of the grant. The total number of
common shares issued by the Company subsequent to December 1, 2012 through July 2, 2013 is 778,521. The total number of stock warrants
granted by the Company subsequent to December 1, 2012 through July 2, 2013 is 1,557,042.
F- 18
EXEO ENTERTAINMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
NOVEMBER 30, 2012 AND DECEMBER 31, 2011
Note L: SUBSEQUENT EVENTS (CONTINUED)
Other Financial Obligations Associated with Hardware Development Costs
In December 2012, the Company agreed to pay an engineering firm $28,000 for services to be rendered in relation to the development of the
ZAAZ™ keyboard. In the 1st Quarter of 2013, the Company made two payments towards this project.
Exclusive License Agreement with Psyko™ Audio Labs
On June 4, 2013, the Company entered into a license agreement with Psyko™ Audio Labs in reference to the Psyko™ Krypton surround
sound gaming headphones. Psyko is a federally registered trademark on the principal register, and is assigned the number 4140590 by the U.S.
PTO. The Company acquired the exclusive license to develop, manufacture, distribute, market, advertise and sublicense (if applicable) the
Psyko™ Products within the video gaming segment on a world-wide basis. The term of the Agreement is in perpetuity. In exchange, the
licensor shall receive a royalty of 5% of any and all gross proceeds, less returns and allowances, from the sale of the Psyko™ product line.
Royalties are due on a quarterly basis. In addition, the Company agreed to make a one-time non-refundable pre-payment of royalty fees to the
Licensor in the amount of $50,000. Such amount was paid in June 2013. The licensee agreed to apply a maximum of $10,000 against each
royalty payment until the $50,000 is fully recovered.
Consulting Agreement with Hildebrandt Technologies, Inc.
On June 4, 2013, the Company entered into an agreement with Hildebrandt Technologies, Inc. (the “Consultant”) whereby Mr. Hildebrandt and
his corporation agreed to provide consulting services to the Company on an on-going basis. Hildebrandt Technologies, Inc. works along side
Psyko Audio Labs. The Consultant agreed to assist the Company with its sales and distribution of its products. In addition, the Consultant shall
assist the Company with the identification of new manufacturing facilities for the Psyko™ Headphones; securing distribution in big box retail
stores, and possible future development of headphones specific to other applications, which are proprietary in nature and therefore not more
fully described herein. In exchange, the Consultant shall receive consideration of $10,000 per month for ten days of work, starting July 1, 2013.
In the event Consultant works greater than 10 hours per month, the Consultant shall bill the Company at the rate of $120 per hour for the
additional time.
F- 19
WHERE YOU CAN GET MORE INFORMATION
In accordance with the Securities Act of 1933, we are filing with the SEC a registration statement on Form S-1, of which this prospectus is a
part, covering the securities being offering in this offering. As permitted by rules and regulations of the SEC, this prospectus does not contain
all of the information set forth in the registration statement. For further information regarding both our Company and the securities in this
offering, we refer you to the registration statement, including all exhibits and schedules, which you may inspect without charge at the public
reference facilities of the SEC’s Washington, D.C. office, 100 F Street, N.E., Washington, D.C. 20549, on official business days during the
hours of 10am and 3pm, and on the SEC Internet site at http:\\www.sec.gov. Information regarding the operation of the public reference rooms
may be obtained by calling the SEC at 1-800-SEC-0330.
Dealer Prospectus Delivery Obligation
Until 90 days from the effective date of this Registration Statement, all dealers effecting transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
40
You should rely only on the information contained in this prospectus. We have not authorized any dealer, salesperson or other person
to give you different information. This prospectus does not constitute an offer to sell nor are they seeking an offer to buy the securities
referred to in this prospectus in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus
and the documents incorporated by reference are correct only as of the date shown on the cover page of these documents, regardless of
the time of the delivery of these documents or any sale of the securities referred to in this prospectus.
EXEO ENTERTAINMENT, INC.
510,000
Shares
of
Common Stock
PROSPECTUS
August 16, 2013
41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution
The following table sets forth the expenses in connection with the issuance and distribution of the securities being registered hereby. All such
expenses will be borne by the registrant.
Name of Expense
Securities and Exchange Commission registration fee
Transfer Agent Fees
Legal, accounting fees and expenses (1)
Edgar filing, printing and engraving fees (1)
Total (1)
$
$
$
$
$
Amount
3.48
5000
48,500
1,500
55.003.48
(1) Estimated.
ITEM 14. Indemnification of Directors and Officers
Our officers and directors are indemnified as provided by the Nevada Revised Statutes and by our Bylaws.
Under the Nevada Revised Statutes, director immunity from liability to a company or its stockholders for monetary liabilities applies
automatically unless it is specifically limited by a company’s Articles of Incorporation. Our Articles of Incorporation do not specifically limit
our directors’ immunity. Excepted from that immunity are: (a) a willful failure to deal fairly with the company or its stockholders in connection
with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to
believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which
the director derived an improper personal profit; and (d) willful misconduct.
Our Bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however,
that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we
shall not be required to indemnify any director or officer in connection with any proceeding, or part thereof, initiated by such person unless
such indemnification: (a) is expressly required to be made by law, (b) the proceeding was authorized by our Board of Directors, (c) is provided
by us, in our sole discretion, pursuant to the powers vested in us under Nevada law or (d) is required to be made pursuant to the Bylaws.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and control persons
pursuant to the foregoing provisions or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy, and is, therefore, unenforceable.
ITEM 15. Recent Sales of Unregistered Securities
During the period from December 1, 2012 to July 2, 2013, the Company raised $778,521 from 34 pre- existing investors. Each person executed
a stock subscription agreement and delivered funds in exchange for our equity at a price of $1.00 for each common share and two stock
warrants. For each common share Purchased by the investor, for no additional consideration, each investor acquired a warrant to purchase an
additional two shares at the fixed price of $1.00 per share. The term of the warrant is two years from the date of the grant. The total number of
common shares issued by the Company subsequent to December 1, 2012 through July 2, 2013 is 778,521. The total number of stock warrants
granted by the Company subsequent to December 1, 2012 through July 2, 2013 is 1,557,042.
Pursuant to the employee incentive stock option plan, on July 15, 2012, the Company granted 2,000,000 shares to each of its two officers and
directors. The option agreement provides the employee has no more than five years from the date of the grant to exercise the options at an
exercise price of $0.25 per share. The employee may only exercise such options based upon the contracted vesting schedule, which provides
that the options vest on a pro-rata basis over 60 months of future services to be rendered by such employee. In addition, on August 15, 2012,
the Company granted 100,000 incentive stock options to another officer of the Company. This employee received the right to exercise the
options on the date of grant at an exercise price of $0.25 per share. As the officer was fully vested in his right to such exercise at the time of the
grant, the Company recorded the entire fair value of his stock options at the date of grant.
42
We claimed exemption from registration under the Securities Act for the sale and issuance of securities in the transactions described in
paragraph (1) above by virtue of Section 4(a)(2) and/or Regulation D promulgated thereunder as transactions not involving any public offering.
All of the purchasers of unregistered securities for which we relied on Section 4(a)(2) and/or Regulation D represented that they were
accredited investors as defined under the Securities Act. We claimed such exemption on the basis that (a) the purchasers in each case
represented that they intended to acquire the securities for investment only and not with a view to the distribution thereof and that they either
received adequate information about the registrant or had access, through employment or other relationships, to such information and
(b) appropriate legends were affixed to the stock certificates issued in such transactions.
We claimed exemption from registration under the Securities Act for the sales and issuances of securities in the transactions described in
paragraph (2) above under Section 4(a)(2) of the Securities Act in that such sales and issuances did not involve a public offering or under
Rule 701 promulgated under the Securities Act, in that they were offered and sold either pursuant to written compensatory plans or pursuant to
a written contract relating to compensation, as provided by Rule 701.
ITEM 16. Exhibits and Financial Statement Schedules
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
Exhibit
Description
3.1
3.2
3.3
3.4
5.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
23.1
Articles of Incorporation
Amendment to Articles of Incorporation
Bylaws
Certificate of Designation
Opinion of South Milhausen P.A.
Employment Agreement (Weiland)
Employment Agreement (Amaral)
Consulting Agreement (Hildebrandt)
Exclusive License Agreement (Psyko)
Exclusive License Agreement (DTX)
Project Management Agreement (Elite Product Management)
Consulting Services Agreement (Markel)
2012 Employees/Consultants Stock Compensation Plan
Consent of DeJoya Griffith
Undertakings
The undersigned Registrant hereby undertakes:
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(a)
To include any prospectus required by Section 10(a) (3) of the Securities Act of 1933;
(b)
To reflect in the prospectus any facts or events arising after the effective date of this registration statement, or most recent posteffective amendment, which, individually or in the aggregate, represent a fundamental change in the information set forth in this
registration statement; and
(c)
To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or
any material change to such information in the registration statement.
That, for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the Offering of such securities at that time shall be deemed to be the initial
bona fide Offering thereof.
To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the
termination of the Offering.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions described above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
43
In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement, as amended, to be signed
on its behalf by the undersigned, thereunto duly authorized, in Las Vegas, Nevada this 16th day of August, 2013.
EXEO ENTERTAINMENT, INC.
By: /s/ Jeffrey A. Weiland
Name: Jeffrey A. Weiland
Title: President and Director
(Principal Executive Officer
By: /s/ Robert S. Amaral
Name: Robert S. Amaral
Title: Chief Executive Officer, Treasurer and
Director
(Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration statement, as amended, has been signed by the following persons in
the capacities and on the dates indicated.
Signature
Title
Date
/s/ Jeffrey A. Weiland
President and Director
(Principal Executive Officer)
August 16, 2013
/s/ Robert S. Amaral
Chief Executive Officer,
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
August 16, 2013
44
INDEX TO EXHIBITS
Exhibit
Description
3.1
3.2
3.3
3.4
5.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
23.1
Articles of Incorporation
Amendment to Articles of Incorporation
Bylaws
Certificate of Designation
Opinion of South Milhausen P.A.
Employment Agreement (Weiland)
Employment Agreement (Amaral)
Consulting Agreement (Hildebrandt)
Exclusive License Agreement (Psyko)
Exclusive License Agreement (DTX)
Project Management Agreement (Elite Product Management)
Consulting Services Agreement (Markel)
2012 Employees/Consultants Stock Compensation Plan
Consent of DeJoya Griffith
45
FIRST AMENDED BY-LAWS
OF
EXEO ENTERTAINMENT, INC.
(A NEVADA CORPORATION)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in the State of Nevada shall be at such place as the board shall resolve.
Section 2. Other Offices. The corporation shall also have and maintain an office or principal place of business at such place as may be fixed
by the Board of Directors, and may also have offices at such other places, both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal. The corporate seal shall consist of a die bearing the name of the corporation and the inscription, “Corporate SealNevada.” Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS’ MEETINGS
Section 4. Place of Meetings. Meetings of the stockholders of the corporation shall be held at such place, either within or without the State of
Nevada, as may be designated from time to time by the Board of Directors, or, if not so designated, then at the office of the corporation
required to be maintained pursuant to Section 2 hereof.
Section 5. Annual Meeting.
(a)
The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other business
as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors.
1
(b)
At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before
the meeting. To be properly brought before an annual meeting, business must be: (A) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (B) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (C) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be
timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation not later than the
close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the
preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the date of the
annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement,
notice by the stockholder to be timely must be so received not earlier than the close of business on the ninetieth (90th) day prior to such annual
meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or, in the event public
announcement of the date of such annual meeting is first made by the corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first
made by the corporation. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the
annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as they appear on the corporation’s books, of the stockholder proposing such
business, (iii) the class and number of shares of the corporation which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required to be provided by the stockholder pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the “1934 Act”), in his capacity as a proponent to a stockholder proposal.
Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy
for a stockholder’s meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the provisions of this paragraph (b), and, if he should so determine, he
shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.
2
(c)
Only persons who are confirmed in accordance with the procedures set forth in this paragraph (c) shall be eligible for election
as directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting who
complies with the notice procedures set forth in this paragraph (c). Such nominations, other than those made by or at the direction of the Board
of Directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation in accordance with the provisions of
paragraph (b) of this Section 5. Such stockholder’s notice shall set forth (i) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal
occupation or employment of such person, (c) the class and number of shares of the corporation which are beneficially owned by such person,
(D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the 1934 Act (including without limitation such person’s written consent to being named in the proxy statement, if any,
as a nominee and to serving as a director if elected ); and (ii) as to such stockholder giving notice, the information required to be provided
pursuant to paragraph (b) of this Section 5. At the request of the Board of Directors, any person nominated by a stockholder for election as a
director shall furnish to the Secretary of the corporation that information required to be set forth in the stockholder’s notice of nomination
which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the
procedures set forth in this paragraph (c). The chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare at
the meeting, and the defective nomination shall be disregarded.
(d)
For purposes of this Section 5, “public announcement” shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
Section 6. Special Meetings.
(a)
Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the Chairman of
the Board of Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total
number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution
is presented to the Board of Directors for adoption), and shall be held at such place, on such date, and at such time, as the Board of Directors
shall determine.
(b)
If a special meeting is called by any person or persons other than the Board of Directors, the request shall be in writing,
specifying the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the Chairman of the Board of Directors, the Chief Executive Officer, or the Secretary of the
corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The Board of Directors shall
determine the time and place of such special meeting, which shall be held not less than thirty-five (35) nor more than one hundred twenty (120)
days after the date of the receipt of the request. Upon determination of the time and place of the meeting, the officer receiving the request shall
cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of Section 7 of these Bylaws. If the notice is not
given within sixty (60) days after the receipt of the request, the person or persons requesting the meeting may set the time and place of the
meeting and give the notice. Nothing contained in this paragraph (b) shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the Board of Directors may be held.
3
Section 7. Notice of Meetings. Except as otherwise provided by law or the Articles of Incorporation, written notice of each meeting
of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to
vote at such meeting, such notice to specify the place, date and hour and purpose or purposes of the meeting. Notice of the time, place and
purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, either before or after such
meeting, and will be waived by any stockholder by his attendance thereat in person or by proxy, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects
as if due notice thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Articles of Incorporation,
or by these Bylaws, the presence, in person or by proxy duly authorized, of the holder or holders of not less than fifty percent (50%) of the
outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of
stockholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at
which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, all action taken by the holders of
a majority of the votes cast, excluding abstentions, at any meeting at which a quorum is present shall be valid and binding upon the corporation;
provided, however, that directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the
meeting and entitled to vote on the election of directors. Where a separate vote by a class or classes or series is required, except where
otherwise provided by the statute or by the Articles of Incorporation or these Bylaws, a majority of the outstanding shares of such class or
classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that
matter and, except where otherwise provided by the statute or by the Articles of Incorporation or these Bylaws, the affirmative vote of the
majority (plurality, in the case of the election of directors) of the votes cast, including abstentions, by the holders of shares of such class or
classes or series shall be the act of such class or classes or series.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be
adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares casting votes, excluding
abstentions. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at
the meeting.
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Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders,
except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as
provided in Section 12 of these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall have the
right to do so either in person or by an agent or agents authorized by a proxy granted in accordance with Nevada law. An agent so appointed
need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation unless the proxy provides for a longer period.
Sect ion 11. Joint Owners of Stock. If shares or other securities having voting power stand of record in the names of two (2) or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or
more persons have the same fiduciary relationship respecting the name shares, unless the Secretary is given written notice to the contrary and is
furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to
voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority so voting
binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question
proportionally, or may apply to the Nevada Court of Chancery for relief as provided in the General Corporation Law of Nevada, Section
217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the
purpose of subsection (c) shall be a majority or even-split in interest.
Section 12. List of Stockholders. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the
meeting is to be held. The list shall be produced and kept at the time and place of meeting during the whole time thereof and may be inspected
by any stockholder who is present.
Section 13. Action Without Meeting. No action shall be taken by the stockholders except at an annual or special meeting of
stockholders called in accordance with these Bylaws, or by the written consent of the stockholders setting forth the action so taken and signed
by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote upon were present and voted.
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Section 14. Organization.
(a)
At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or, if the President is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to
vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the
President, shall act as secretary of the meeting.
(b)
The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the
chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the
judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation,
establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those
present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted
proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the chairman of the
meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number and Qualification. The authorized number of directors of the corporation shall be not less than one (1) nor more
than six (6) as fixed from time to time by resolution of the Board of Directors; provided that no decrease in the number of directors shall
shorten the term of any incumbent directors. Directors need not be stockholders unless so required by the Articles of Incorporation. If for any
cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting
of the stockholders called for that purpose in the manner provided in these Bylaws.
Section 16. Powers. The powers of the corporation shall be exercised, its business conducted and its property controlled by the Board
of Directors, except as may be otherwise provided by statute or by the Articles of Incorporation.
Section 17. Election and Term of Office of Directors. Members of the Board of Directors shall hold office for the terms specified in
the Articles of Incorporation, as it may be amended from time to time, and until their successors have been elected as provided in the Articles
of Incorporation.
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Section 18. Vacancies. Unless otherwise provided in the Articles of Incorporation, any vacancies on the Board of Directors resulting
from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the
number of directors, shall unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall
be filled by stockholder vote, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum
of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy
in the Board of Directors shall be deemed to exist under this Bylaw in the case of the death, removal or resignation of any director.
Section 19. Resignation. Any director may resign at any time by delivering his written resignation to the Secretary, such resignation
to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such
specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from the
Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director
so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his successor shall have
been duly elected and qualified.
Section 20. Removal. Subject to the Articles of Incorporation, any director may be removed by the affirmative vote of the holders of a
majority of the outstanding shares of the Corporation then entitled to vote, with or without cause.
Section 21. Meetings.
(a)
Annual Meetings. The annual meeting of the Board of Directors shall be held immediately after the annual meeting of
stockholders and at the place where such meeting is held. No notice of an annual meeting of the Board of Directors shall be necessary and such
meeting shall be held for the purpose of electing officers and transacting such other business as may lawfully come before it.
(b)
Regular Meetings. Except as hereinafter otherwise provided, regular meetings of the Board of Directors shall be held in the
office of the corporation required to be maintained pursuant to Section 2 hereof. Unless otherwise restricted by the Articles of Incorporation,
regular meetings of the Board of Directors may also be held at any place within or without the state of Nevada which has been designated by
resolution of the Board of Directors or the written consent of all directors.
(c)
Special Meetings. Unless otherwise restricted by the Articles of Incorporation, special meetings of the Board of Directors
may be held at any time and place within or without the State of Nevada whenever called by the Chairman of the Board, the President or any
two of the directors.
(d)
Telephone Meetings. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by
means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each
other, and participation in a meeting by such means shall constitute presence in person at such meeting.
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(e)
Notice of Meetings. Notice of the time and place of all special meetings of the Board of Directors shall be orally or in
writing, by telephone, facsimile, telegraph or telex, during normal business hours, at least twenty-four (24) hours before the date and time of
the meeting, or sent in writing to each director by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice
of any meeting may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat,
except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
(f)
Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof,
however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be
present and if, either before or after the meeting, each of the directors not present shall sign a written waiver of notice. All such waivers shall be
filed with the corporate records or made a part of the minutes of the meeting.
Section 22. Quorum and Voting.
(a)
Unless the Articles of Incorporation requires a greater number and except with respect to indemnification questions arising
under Section 43 hereof, for which a quorum shall be one-third of the exact number of directors fixed from time to time in accordance with the
Articles of Incorporation, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to
time by the Board of Directors in accordance with the Articles of Incorporation provided, however, at any meeting whether a quorum be
present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the
Board of Directors, without notice other than by announcement at the meeting.
(b)
At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the
affirmative vote of a majority of the directors present, unless a different vote be required by law, the Articles of Incorporation or these Bylaws.
Section 23. Action Without Meeting. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board of Directors or committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee.
Section 24. Fees and Compensation. Directors shall be entitled to such compensation for their services as may be approved by the
Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for
attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing
herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee,
or otherwise and receiving compensation therefor.
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Section 25. Committees.
(a)
Executive Committee. The Board of Directors may by resolution passed by a majority of the whole Board of Directors
appoint an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent
permitted by law and provided in the resolution of the Board of Directors shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation, including without limitation the power or authority to declare a
dividend, to authorize the issuance of stock and to adopt a certificate of ownership and merger, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Articles of
Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of
stock adopted by the Board of Directors fix the designations and any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any
other class or classes or any other series of the same or any other class or classes of stock of the corporation or fix the number of shares of any
series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the bylaws of the corporation.
(b)
Other Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, from
time to time appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall
consist of one (1) or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the
resolution or resolutions creating such committees, but in no event shall such committee have the powers denied to the Executive Committee in
these Bylaws.
(c)
Term. Each member of a committee of the Board of Directors shall serve a term on the committee coexistent with such
member’s term on the Board of Directors. The Board of Directors, subject to the provisions of subsections (a) or (b) of this Bylaw may at any
time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee
member shall terminate on the date of his death or voluntary resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy
created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee,
and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified member.
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(d)
Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other
committee appointed pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors, or by any
such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be
given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such
committee, and may be called by any director who is a member of such committee, upon written notice to the members of such committee of
the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors
of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing
at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special
meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. A majority of the authorized number of members of any such committee shall constitute a quorum for the
transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such
committee.
Section 26. Organization. At every meeting of the directors, the Chairman of the Board of Directors, or, if a Chairman has not been
appointed or is absent, the President, or if the President is absent, the most senior Vice President, or, in the absence of any such officer, a
chairman of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary, or in his absence, an
Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
Section 27. Officers Designated. The officers of the corporation shall include, if and when designated by the Board of Directors, the
Chairman of the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial
Officer, the Treasurer, the Controller, all of whom shall be elected at the annual organizational meeting of the Board of Directors. The Board of
Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents
with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers
as it shall deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited
therefrom by law. The salaries and other compensation of the officers of the corporation shall be fixed by or in the manner designated by the
Board of Directors.
Section 28. Tenure and Duties of Officers.
(a)
General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly
elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the
Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.
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(b)
Duties of Chairman of the Board of Directors. The Chairman of the Board of Directors, when present, shall preside at all
meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. If
there is no President or CEO designated by the Board, then the Chairman of the Board of Directors shall also serve as the Chief Executive
Officer of the corporation and shall have the powers and duties prescribed in paragraphs and paragraph (c) and (d) of this Section 28.
(c)
Duties of Chief Executive Officer. The Company may separately appoint a Chief Executive Officer. If there is no President
appointed by the Board, the CEO shall have the powers and duties described in paragraph (d) of this Section 28. If there is a President, then the
Chief Executive Officer shall have general supervision of the President as well as all other officers appointed by the Company, subject to the
control of the Board of Directors, and shall exercise direction and control over the business of the company. The CEO shall perform other
duties commonly incident to his office and shall perform such other duties and have such other powers as the Board of Directors shall designate
from time to time.
(d)
Duties of President. The President shall preside at all meetings of the stockholders and at all meetings of the Board of
Directors, unless the CEO or Chairman of the Board have been appointed and one of whom is present. Unless some other officer has been
elected Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the
control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The President
shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(e)
Duties of Vice Presidents. The Vice Presidents may assume and perform the duties of the President in the absence or
disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from
time to time.
(f)
Duties of Secretary. The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall record
all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these Bylaws of all
meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall
perform all other duties given him in these Bylaws and other duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to
assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
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(g)
Duties of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as
required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the
custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to
time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform
the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer
and each Controller and Assistant Controller shall perform other duties commonly incident to his office and shall also perform such other
duties and have such other powers as the Board of Directors or the President shall designate from time to time.
Section 29. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to
any other officer or agent, notwithstanding any provision hereof.
Section 30. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or
to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later
time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the
acceptance of any such resignation shall no t be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any,
of the corporation under any contract with the resigning officer.
Section 31. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a
majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or
superior officers upon, whom such power of removal may have been conferred by the Board of Directors.
Section 32. Salaries. Officers of the corporation shall be entitled to such salaries, emolument, compensation or reimbursement as shall
be fixed or allowed from time to time by the board of directors.
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ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 32. Execution of Corporate Instrument. The Board of Directors may, in its discretion, determine the method and designate
the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to
sign on behalf of the corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation, except where
otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or otherwise required by law, promissory notes, deeds of trust,
mortgages and other evidences of indebtedness of the corporation, and other corporate instruments or documents requiring the corporate seal,
and certificates of shares of stock owned by the corporation, shall be executed, signed or endorsed by the Chairman of the Board of Directors,
or the President or any Vice President, and by the Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All other
instruments and documents requiting the corporate signature, but not requiring the corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the
corporation shall be signed by such person, or persons as the Board of Directors shall authorize so to do.
Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall
have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose
or for any amount.
Section 33. Voting of Securities Owned by the Corporation. All stock and other securities of other corporations owned or held by
the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the
person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of
Directors, the Chief Executive Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
Section 34. Form and Execution of Certificates. Certificates for the shares of stock of the corporation shall be in such form as is
consistent with the Articles of Incorporation and applicable law. Every holder of stock in the corporation shall be entitled to have a certificate
signed by or in the name of the corporation by the Chairman of the Board of Directors, or the President or any Vice President and by the
Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation. Any
or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it
may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the
face or back thereof, in full or in summary, all of the powers, designations, preferences, and rights, and the limitations or restrictions of the
shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the corporation will
furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other
special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a
reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required by law or with respect
to this section a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations
or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of
certificates representing stock of the same class and series shall be identical.
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Section 35. Lost Certificates. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore
issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or
certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to advertise the same in such
manner as it shall require or to give the corporation a surety bond in such form and amount as it may direct as indemnity against any claim that
may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 36. Transfers.
(a)
Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares.
(b)
The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or
more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such
stockholders in any manner not prohibited by the General Corporation Law of Nevada.
Section 37. Fixing Record Dates.
(a)
In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten
(10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is
given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned meeting.
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(b)
In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for
the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If
no record date is filed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
Section 38. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Nevada.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 39. Execution of Other Securities. All bonds, debentures and other corporate securities of the corporation, other than stock
certificates (covered in Section 34), may be signed by the Chairman of the Board of Directors, the President or any Vice President, or such
other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted
thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant
Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature,
or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be
the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or such other person as may
be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have
signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest
coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been
delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though
the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the corporation.
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ARTICLE IX
DIVIDENDS
Section 40. Declaration of Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the Articles of
Incorporation, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in
cash, in property, or in shares of the capital stock, subject to the provisions of the Articles of Incorporation.
Section 41. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available
for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the
Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.
ARTICLE X
FISCAL YEAR
Section 42. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. Pursuant to the
Resolutions of the Company, the Company has elected a fiscal year ending November, 30.
ARTICLE XI
INDEMNIFICATION
Section 43. Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents.
(a)
Directors Officers. The corporation shall indemnify its directors and officers to the fullest extent not prohibited by the
Nevada General Corporation Law; provided, however, that the corporation may modify the extent of such indemnification by individual
contracts with its directors and officers; and, provided, further, that the corporation shall not be required to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by
law, (ii) the proceeding was authorized by the Board, of Directors of the corporation, (iii) such indemnification is provided by the corporation,
in its sole discretion, pursuant to the powers vested in the corporation under the Nevada General Corporation Law or (iv) such indemnification
is required to be made under subsection (d).
(b)
Employees and Other Agents. The corporation shall have power to indemnify its employees and other agents as set forth in
the Nevada General Corporation Law.
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Directors and Officers will be immune from monetary liabilities for breach of fiduciary duty as a director or officer to the fullest extent not
prohibited by Nevada General Corporation Law. Excepted from that immunity are:
•
the payment of unlawful dividend distributions;
•
any breach of loyalty including, but not limited to a willful failure to deal fairly with the corporation or its shareholders in connection
with a matter in which the director has a material conflict of interest;
•
any acts or omissions not in good faith or which involve intentional misconduct, fraud or knowing violation of law unless the director
had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was
unlawful;
•
a transaction from which the director derived an improper personal profit; and
•
willful misconduct.
(c)
Expense. The corporation shall advance to any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that
he is or was a director or officer, of the corporation, or is or was serving at the request of the corporation as a director or executive officer of
another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following
request therefor, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on
behalf of such person to repay said mounts if it should be determined ultimately that such person is not entitled to be indemnified under this
Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this Bylaw, no advance shall be made by the
corporation to an officer of the corporation (except by reason of the fact that such officer is or was a director of the corporation in which event
this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is
reasonably and promptly made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and
convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of
the corporation.
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(d)
Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to
directors and officers under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a
contract between the corporation and the director or officer. Any right to indemnification or advances granted by this Bylaw to a director or
officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for
indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request
therefor. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting
his claim. In connection with any claim for indemnification, the corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standard of conduct that make it permissible under the Nevada General Corporation Law for the corporation to
indemnify the claimant for the amount claimed. In connection with any claim by an officer of the corporation (except in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such officer is or was a director of the
corporation) for advances, the corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such
person acted in bad faith or in a manner that such person did not believe to be in or not opposed in the best interests of the corporation, or with
respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful. Neither the
failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Nevada General Corporation Law, nor an actual determination by the corporation (including its Board of
Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or officer to
enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or officer is not entitled
to be indemnified, or to such advancement of expenses, under this Article XI or otherwise shall be on the corporation.
(e)
Non-Exclusivity of Rights. The rights conferred on any person by this Bylaw shall not be exclusive of any other right which
such person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding
office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents
respecting indemnification and advances, to the fullest extent not prohibited by the Nevada General Corporation Law.
(f)
Survival of Rights. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a
director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(g)
Insurance. To the fullest extent permitted by the Nevada General Corporation Law, the corporation, upon approval by the
Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Bylaw.
(h)
Amendments. Any repeal or modification of this Bylaw shall only be prospective and shall not affect the rights under this
Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of
the corporation.
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(i)
Saving Clause. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction,
then the corporation shall nevertheless indemnify each director and officer to the full extent not prohibited by any applicable portion of this
Bylaw that shall not have been invalidated, or by any other applicable law.
(j)
Certain Definitions. For the purposes of this Bylaw, the following definitions shall apply:
(i)
The term “proceeding” shall be broadly construed and shall include, without limitation, the investigation,
preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative.
(ii)
The term “expenses” shall be broadly construed and shall include, without limitation, court costs, attorneys’ fees,
witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with
any proceeding.
(iii)
The term the “corporation” shall include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer,
employee or agent or another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the
provisions of this Bylaw with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
(iv)
References to a “director,” “executive officer,” “officer,” “employee,” or “agent” of the corporation shall include,
without limitation, situations where such person is serving at the request of the corporation as, respectively, a director, executive officer,
officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.
(v)
References to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include
any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner “not opposed to the best interests of the corporation” as referred to in this Bylaw.
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ARTICLE XII
NOTICES
Section 44. Notices.
(a)
Notice to Stockholders. Whenever, under any provisions of these Bylaws, notice is required to be given to any stockholder, it
shall be given in writing, timely and duly deposited in the United States mail, postage prepaid, and addressed to his last known post office
address as shown by the stock record of the corporation or its transfer agent.
(b)
Notice to directors. Any notice required to be given to any director may be given by the method stated in subsection (a), or
by facsimile, telex or telegram, except that such notice other than one which is delivered personally shall be sent to such address as such
director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such director.
(c)
Affidavit of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its
transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the
stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving
the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained.
(d)
Time Notices Deemed Given. All notices given by mail, as above provided, shall be deemed to have been given as at the
time of mailing, and all notices given by facsimile, telex or telegram shall be deemed to have been given as of the sending time recorded at time
of transmission.
(e)
Methods of Notice. It shall not be necessary that the same method of giving notice be employed in respect of all directors, but
one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in
respect of any other or others.
(f)
Failure to Receive Notice. The period or limitation of time within which any stockholder may exercise any option or right, or
enjoy any privilege or benefit, or be required to act, or within which any director may exercise any power or right, or enjoy any privilege,
pursuant to any notice sent him ill the manner above provided, shall not be affected or extended in any manner by the failure of such
stockholder or such director to receive such notice.
(g)
Notice to Person with Whom Communication Is Unlawful. Whenever notice is required to be given, under any provision of
law or of the Articles of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful, the giving of such
notice to such person shall not be require and there shall be no duty to apply to any governmental authority or agency for a license or permit to
give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any provision of the Nevada General Corporation Law, the certificate shall
state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom
communication is unlawful.
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(h)
Notice to Person with Undeliverable Address. Whenever notice is required to be given, under any provision of law or the
Articles of Incorporation or Bylaws of the corporation, to any stockholder to whom (i) notice of two consecutive annual meetings, and all
notices of meetings or of the taking of action by written consent without a meeting to such person during the period between such two
consecutive annual meetings, or (ii) all. and at least two, payments (if sent by first class mail) of dividends or interest on securities during a
twelve-month period, have been mailed addressed to such person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be required. Any action or meeting which shall be taken or held
without notice to such person shall have the same force and effect as if such notice had been duly given. If any such person shall deliver to the
corporation a written notice setting forth his then current address, the requirement that notice be given to such person shall be reinstated. In the
event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the Nevada General
Corporation Law, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to
this paragraph.
ARTICLE XII
AMENDMENTS
Section 45. Amendments.
The Board of Directors shall have the sole power to adopt, amend, or repeal Bylaws as set forth in the Articles of Incorporation.
ARTICLE XIV
LOANS TO OFFICERS
Section 46. Loans to Officers. The corporation may lend money to, or guarantee any obligation of. or otherwise assist any officer or
other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its
subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the
corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the
Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
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ARTICLE XV
BOARD OF ADVISORS
Section 47. Board of Advisors. The Board of Directors, in its discretion, may establish a Board of Advisors consisting of individuals
who may or may not be stockholders or directors of the corporation. The purpose of the Board of Advisors would be to advise the officers and
directors of the corporation with respect to such matters as such officers and directors shall choose, and any other such matters which the
members of such Board of Advisors deem appropriate in furtherance of the best interest of the corporation. The Board of Advisors shall meet
on such basis as the members thereof may determine. The Board of Directors may eliminate the Board of Advisors at any time, No member of
the Board of Advisors, nor the Board of Advisors itself, shall have any authority within the corporation or any decision making power and shall
be merely advisory in nature. Unless the Board of Directors determines another method of appointment, the President shall recommend
possible members to the Board of Directors, who shall approve or reject such appointments.
These First Amended Bylaws of EXEO Entertainment. Inc. are effective as of the date signed below. Signed this 11 th day of December, 2012.
/s/ Robert Scott Amaral
Robert Scott Amaral, CEO,
Secretary & Treasurer
/s/ Jeff A Weiland
Jeff A Weiland, President
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CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE
PREFERRED STOCK OF EXEO ENTERTAINMENT, INC.
EXEO ENTERTAINMENT, INC., a corporation organized and existing under the laws of the State of Nevada (the “ Corporation ”), DOES
HEREBY CERTIFY THAT:
Pursuant to authority conferred upon the Board of Directors (the “Board”) by the Certificate of Incorporation of the Corporation (the “
Certificate of Incorporation ”) and pursuant to the provisions of the Nevada General Corporation Law, the Board, pursuant to a unanimous
written consent effective as of January 1, 2013, adopted the following resolution providing for the designations, preferences and relative,
participating, optional and other rights, and the qualifications, limitations and restrictions, of the Series A Convertible Preferred Stock.
WHEREAS, the Certificate of Incorporation provides for two classes of shares known as common stock, $0.0001 par value per share (the “
Common Stock”) , and preferred stock, $0.0001 par value per share (the “ Preferred Stock” ) and
WHEREAS, the Board is authorized by the Certificate of Incorporation to provide for the issuance of the shares of Preferred Stock in series,
and by filing a certificate pursuant to the applicable law of the State of Nevada, to establish from time to time the number of shares to be
included in such series and to fix the designations, preferences and rights of the shares of each such series and the qualifications, limitations
and restrictions thereof.
NOW, THEREFORE, BE IT RESOLVED, that the Board deems it advisable to, and hereby does, designate a Series A Convertible Preferred
Stock and fixes and determines the preferences, rights, qualifications, limitations and restrictions relating to the Series A Convertible Preferred
Stock as follows:
CERTAIN DEFINITIONS
For purposes of this Certificate of Designation, the following terms shall have the following meanings:
A.
"Closing Bid Price" means, for any security as of any date, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg Financial Markets or a comparable reporting
service of national reputation selected by the Corporation and reasonably acceptable to holders of a majority of the then outstanding shares of
Series A Preferred Stock if Bloomberg Financial Markets is not then reporting closing bid prices of such security (collectively, "Bloomberg"),
or if the foregoing does not apply, the last reported sale price of such security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg
B.
"Conversion Date" means, for any Conversion, the date specified in the notice of conversion in the form attached hereto (the
"Notice of Conversion"), so long as the copy of the Notice of Conversion is faxed (or delivered by other means resulting in notice) to the
Corporation before 11:59 p.m., Las Vegas, NV time, on the Conversion Date indicated in the Notice of Conversion. If the Notice of
Conversion is not so faxed or otherwise delivered before such time, then the Conversion Date shall be the date the holder faxes or otherwise
delivers the Notice of Conversion to the Corporation.
C.
"Conversion Price" means the Fixed Conversion Price or the Variable Conversion Price, one or the other in effect as of such date
and subject to adjustment as provided herein.
D.
"First Conversion Date" means the earliest of (i) the 180th day following the Issuance Date, (ii) the date any person, group or
entity (including the Corporation) publicly announces a tender offer, exchange offer or another transaction to purchase 50% or more of the
Corporation's outstanding Common Stock or otherwise publicly announces an intention to replace a majority of the Corporation's Board of
Directors by waging a proxy battle.
E.
“Fixed Conversion Price " means $1.00 and shall be the sole conversion price in effect until 24 months after the issuance date.
F.
“Issuance Date " means the date of the closing under the Securities Purchase Agreement by and among the Corporation and the
purchasers named therein with respect to the initial issuance of the Series A Preferred Stock (the "Securities Purchase Agreement").
1.
Designation. The shares of such series of Preferred Stock shall be designated “Series A Convertible Preferred Stock” (referred to
herein as the “ Series A Stock”).
2.
3.
Authorized Number. The authorized number of shares constituting the Series A Stock shall be one million(1,000,000)
This Section Intentionally Left Blank
4.
Liquidation.
(a)
Liquidation Procedure. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of shares of Series A Stock shall be entitled, before any distribution or payment is made upon any Junior Securities, to
be paid an amount equal to (i) $1.00 per share of Series A Stock, representing the liquidation preference per share of the Series A Stock (as
adjusted for any combinations, divisions or similar recapitalizations affecting the shares of Series A Stock) (the “ Series A Stock Issue Price ”),
plus (ii) all accrued and unpaid dividends on the Series A Stock to such date (together with the Series A Stock Issue Price, the “ Liquidation
Payments ”). If upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of shares of Series A Stock and Parity Securities shall be insufficient to permit payment in full to the holders of
shares of Series A Stock and any Parity Securities of the distributions to which they are entitled, then the holders of all such securities shall
share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which
the holders of outstanding shares of Series A Stock and Parity Securities are entitled were paid in full. A consolidation or merger of the
Corporation with or into any other corporation or corporations or other entity (other than a merger in which the Corporation is the survivor and
the stockholders of the Corporation prior to such merger own more than a majority of the voting securities of the Corporation following such
merger), a transaction or a series of related transactions in which the stockholders of the Corporation transfer a majority of the voting securities
of the Corporation to any person or a sale, lease or transfer of all or substantially all of the assets of the Corporation shall be deemed to be a
liquidation, dissolution, or winding up of the Corporation as those terms are used in this Section 4; provided, however, that no such
consolidation, merger, transaction or series of related transactions that is approved by a vote pursuant to Section 11 hereof shall be deemed to
be a liquidation, dissolution or winding up of the Corporation. The Corporation shall provide to holders of shares of Series A Stock thirty (30)
days’ prior written notice of any such sale, conveyance, exchange, transfer, consolidation or merger.
(b)
Remaining Assets. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after the holders of shares of Series A Stock shall have been paid in full the Liquidation Payments, the remaining assets of the
Corporation may be distributed ratably per share in order of preference to the holders of Junior Securities in accordance with their respective
terms.
(c)
Notice of Liquidation. Written notice of a liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, stating a payment date, the amount of the Liquidation Payments and the place where said Liquidation Payments shall be
payable, shall be given by mail, postage prepaid, not less than thirty (30) days prior to the payment date stated therein, to each holder of record
of shares of Series A Stock at his post office addresses as shown by the records of the Corporation.
(d)
Fractional Shares. The Liquidation Payments with respect to each outstanding fractional share of Series A Stock shall
be equal to a ratably proportionate amount of the Liquidation Payments with respect to each outstanding share of Series A Stock.
5.
Conversion.
The holders of shares of Series A Stock shall have the following conversion rights:
(a)
Conversion. Subject to the limitations set forth below, each share of the Series A Stock shall be convertible at any time
after the First Conversion Date in whole but not in part, unless previously redeemed, at the option of the holder of record thereof, into the
number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (i) the aggregate liquidation
preference of the share of Series A Stock being converted by (ii) the Conversion Price upon surrender to the Corporation or its transfer agent of
the certificate or certificates representing the Series A Stock to be converted, as provided below, or if the holder notifies the Corporation or its
transfer agent that such certificate or certificates have been lost, stolen or destroyed, upon the execution and delivery of an agreement
satisfactory to the Corporation to indemnify’ the Corporation from any losses incurred by it in connection therewith. The conversion rights
herein provided shall be apportioned ratably among the holders of the Series A Stock in proportion to the number of shares of Series A Stock
owned by such holders.
(b)
Converted Shares. Any shares of Series A Stock which have been converted shall be cancelled and all dividends on
converted shares of Series A Stock shall cease to accrue and the certificates representing shares of Series A Stock so converted shall represent
the right to receive such number of shares of Common Stock into which such shares of Series A Stock are convertible. The Board shall at all
times, so long as any shares of Series A Stock remain outstanding, reserve a sufficient number of authorized but unissued shares of Common
Stock to be issued in satisfaction of the conversion rights and privileges aforesaid.
(c)
Mechanics of Conversion. In the case of a conversion, before any holder of Series A Stock shall be entitled to convert
the same into shares of Common Stock, it shall surrender the certificate or certificates therefore, duly endorsed, at the office of the Corporation
or its transfer agent for the Series A Stock, and shall give written notice to the Corporation of the election to convert the same and shall state
therein the name or names in which the certificate of certificates for shares of Common Stock are to be issued. The Corporation shall, as soon
as practicable thereafter and in any case within ten (10) business days of the Corporation’s receipt of the notice of conversion, issue and
deliver at such office to such holder of Series A Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid; provided that such holder or nominee(s), as the case may be,
shall be deemed to be the owner of record of such Common Stock as of the date that written notice is given to the Corporation of such holder’s
properly completed and executed election to convert and the surrender of the certificates representing the Series A Stock being converted, duly
endorsed, at the office of the Corporation or its transfer agent (or an indemnification agreement as set forth in Section 5(c) hereof in case such
certificates have been lost, stolen or destroyed). A certificate or certificates will be issued for the remaining shares of Series A Stock in any
case in which fewer than all of the shares of Series A Stock represented by a certificate are converted.
(d)
Issue Taxes. The Corporation shall pay all issue taxes, if any, incurred in respect of the issue of shares of Common
Stock on conversion. If a holder of shares surrendered for conversion specifies that the shares of Common Stock to be issued on conversion are
to be issued in a name or names other than the name or names in which such surrendered shares stand, then the Corporation shall not be
required to pay any transfer or other taxes incurred by reason of the issuance of such shares of Common Stock to the name of another, and if
the appropriate transfer taxes shall not have been paid to the Corporation or the transfer agent for the Series A Stock at the time of surrender of
the shares involved, the shares of Common Stock issued upon conversion thereof may be registered in the name or names in which the
surrendered shares were registered, despite the instructions to the contrary.
(e)
Valid Issuance. All shares of Common Stock which may be issued in connection with the conversion provisions set
forth herein will, upon issuance by the Corporation, be validly issued, fully paid and nonassessable, free from preemptive rights and free from
all taxes, liens or charges with respect thereto created or imposed by the Corporation.
6.
Adjustment of Conversion Price. The number and kind of securities issuable upon the conversion of the Series A Stock and the
Conversion Price shall be subject to adjustment from time to time in accordance with the following provisions:
(a)
Reorganization, Reclassification. In the event of a reorganization, share exchange, sale, conveyance, or reclassification,
in a transaction or series of related transactions, including where there is a shift in more than fifty percent of the voting power of the
Corporation (“Change of Control”) other than a change in par value, or from par value to no par value, or from no par value to par value or a
transaction described in Section 6(b) below, each share of Series A Stock shall, after such reorganization, share exchange or reclassification, be
convertible at the option of the holder into the kind and number of shares of stock and/or other securities, cash or other property which the
holder of such share of Series A Stock would have been entitled to receive if the holder had held the Common Stock issuable upon conversion
of such share of Series A Stock immediately prior to such reorganization, share exchange or reclassification.
(b)
Consolidation, Merger. In the event of a merger or consolidation to which the Corporation is a party which results in a
Change of Control, each share of Series A Stock shall, after such merger or consolidation, be convertible at the option of the holder into the
kind and number of shares of stock and/or other securities, cash or other property which the holder of such share of Series A Stock would have
been entitled to receive if the holder had held the Common Stock issuable upon conversion of such share of Series A Stock immediately prior
to such consolidation or merger plus all accrued and unpaid dividends on such shares of Series A Stock through the conversion.
7.
V oting Rights. The Series A Stock shall not have voting rights other than as herein described. The holders of shares of Series A
Stock shall vote as a separate class on all matters adversely affecting the Series A Stock. The authorization or issuance of additional Common
Stock, Series A Stock or other securities having liquidation, dividend, voting or other rights junior to or on a parity with, the Series A shall not
be deemed to adversely affect the Series A Stock. In addition to the other voting rights of the holders of the Series A Stock specified herein,
for so long as any shares of Series A Stock are outstanding, the Corporation will not, and it will cause its subsidiaries not to, without the
affirmative vote, or the written consent pursuant to the Delaware Business Corporation Act, of the holders of a majority of the outstanding
shares of Series A Stock:
(a)
amend, waive or repeal any provisions of, or add any provision to, (i) this Certificate or (ii) any provision of the
Certificate of Incorporation or By-Laws of the Corporation or any other certificate of designation filed with the Secretary of State of Colorado
by the Corporation in a manner that would adversely effect or impair the rights of the holders of the Series A Stock;
(b)
merge or consolidate with any other corporation, other than a merger in which the Corporation is the survivor and the
stockholders of the Corporation immediately prior thereto continue to represent at least fifty percent (50%) of the combined voting power of
the voting securities of the Corporation outstanding immediately after such merger or consolidation; or
(c)
sell or dispose of all or substantially all of the Corporation’s assets.
8.
Redemption or Retirement of Preferred Stock
The Corporation shall have the right to redeem its Class A preferred stock, or any number of shares thereof, issued and outstanding, at
any time by paying to the holders thereof the sum of $1.00 per share. The Corporation shall have the right at any time to purchase all or any
part of its Class A preferred stock issued and outstanding by paying to the respective holders thereof the sum of $1.00 for each share of such
stock redeemed together with the amount of such accrued dividends as may have accumulated thereon at the time of redemption.
The Corporation may apply toward the purchase or redemption of preferred stock as herein provided any part of its surplus funds or an
amount of its stated capital which shall not be greater than the stated capital represented by the shares purchased or redeemed, but under no
circumstances shall the Corporation apply any other funds or any further part of its stated capital toward the purchase or redemption of such
stock. The purchase or redemption of any such stock shall not be made where the effect of any such purchase or redemption and application of
stated capital thereto shall be to reduce the net assets of the Corporation below the stated capital remaining after giving effect to the
cancellation of such shares, or if the Corporation is insolvent or would thereby be made insolvent.
The Board of Directors of the Corporation shall have full power and discretion to select from the outstanding Class A preferred stock
of the Corporation particular shares for redemption or purchase, and its proceedings in this connection shall not be subject to attack except for
actual and intentional fraud. In all instances, the Board shall have complete authority to determine upon and take the necessary proceedings
fully to effect the purchase or redemption of the shares selected for redemption, and the cancellation of the certificates representing such
shares. Upon the completion of such proceedings, the rights of holders of the shares of such preferred stock which have been redeemed and
called in shall in all respects cease, except that such holders shall be entitled to receive the redemption price for their respective shares.
Whenever any shares such preferred stock of the Corporation are purchased or redeemed as herein authorized, the Corporation may,
by resolution of its Board of Directors, retire such shares, and thereupon this Corporation shall, in connection with the retirement of such
shares, cause to be filed a certificate of reduction of stated capital.
9.
Future Preferred Stock Issues. The Corporation may issue one or more additional Series of Preferred Stock without the
consent of the holders of Series A Stock, provided, however, that the rights and preferences of such subsequent series of preferred stock as to
liquidation, dividends, voting, redemption, and registration rights shall not be superior (but may be pari passu) to those of the Series A Stock.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designations as of this 15 day of November, 2002, and affirms that
this Certificate of Designations is his act and deed and that the statements contained herein are true under penalties of perjury.
EXEO ENTERTAINMENT, INC.
BY:
ITS CEO
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Series A Preferred Stock)
The undersigned hereby irrevocably elects to convert ____________ shares of Series A Preferred Stock (the " Conversion "), represented by
stock certificate Nos(s). ___________ (the " Preferred Stock Certificates "), into shares of common stock (" Common Stock ") of Exeo
Entertainment, Incorporated (the " Corporation ") according to the conditions of the Certificate of Designations, Preferences and Rights of
Series A Convertible Preferred Stock (the " Certificate of Designation "), as of the date written below. If securities are to be issued in the
name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. No fee will be charged to
the holder for any conversion, except for transfer taxes, if any. A copy of each Preferred Stock Certificate is attached hereto (or evidence of
loss, theft or destruction thereof).
The Corporation shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
undersigned or its nominee (which is _________________) with DTC through its Deposit Withdrawal Agent Commission System (" DTC
Transfer ").
The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable to the undersigned upon
conversion of the Series A Preferred Stock shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as
amended (the " Act "), or pursuant to an exemption from registration under the Act.
In lieu of receiving the shares of Common Stock issuable pursuant to this Notice of Conversion by way of DTC Transfer, the
undersigned hereby requests that the Corporation issue and deliver to the undersigned physical certificates representing such shares of Common
Stock.
Date of Conversion:
Applicable Conversion Price:
Number of Shares of Common
Stock to be Issued:
Signature:
Name:
Address:
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: EXEO Entertainment, Inc., a Nevada corporation;
Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel to EXEO Entertainment, Inc., a Nevada corporation (the “Company”), in connection with the registration
statement on Form S-1 (the “Registration Statement”), filed by the Company with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the “Securities Act”), for the registration, offer and sale of up to 510,000 shares (the “Shares”) of common
stock, par value $0.001 per share, of the Company.
We have examined the originals, photocopies, certified copies or other evidence of such records of the Company, certificates of
officers of the Company and public officials, and other documents we have deemed relevant and necessary as a basis for the opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as
certified copies or photocopies and the authenticity of the originals of such latter documents.
Based on our examination mentioned above, we are of the opinion that the Shares being sold pursuant to the Registration Statement
are duly authorized and will be, when issued in the manner described in the Registration Statement, legally and validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to our firm in the
related Prospectus. In giving the foregoing consent, we do not admit that we are in the category of persons whose consent is required under
Section 7 of the Act, or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ South Milhausen P.A.
EMPLOYMENT AGREEMENT
Employment Agreement, between EXEO ENTERTAINMENT, INC., (the "Company") and Jeffrey A. Weiland (the "Employee").
1.
For good consideration. the Company employees the Employee on the following terms and conditions.
2.
Term of Employment. Subject to the provisions for termination set forth below this agreement will begin on December 16, 2011,
unless sooner terminated.
3.
Salary. The Company shall pay Employee a salary of $60,000 per year (five thousand per month), for the services of the
Employee, payable at regular payroll periods. In addition, Company agrees to reimburse Employee for compensation earned prior to the
incorporation of the Company for services rendered on behalf of the Company. This amount equals $10,000 and the parties agreed to provide
Employee with founder's shares at par value for this amount rather than pay the amount owed in cash. The date of this recording within the
books of the Company is May 20, 2011.
4.
Duties and Position. the Company hires the Employee in the capacity of President. The Employee's duties may be reasonably
modified at the Company's discretion from time to time.
5.
Employee to Devote Full Time to Company. The Employee will devote full time, attention, and energies to the business of the
Company, and, during this employment, will not engage in any other business activity, regardless of whether such activity is pursued for profit,
gain, or other pecuniary advantage, unless approved in advance by the majority of Directors. Unless otherwise provided below, employee is not
prohibited from making personal investments in any other businesses provided those investments do not require active involvement in the
operation of said companies. Employee is precluded from making an investment into any of our direct competitors if such investment is a
material portion of the Employee's total investment portfolio.
6.
Confidentiality or Proprietary Information. Employee agrees, during or after the term of this employment, not to reveal
confidential information, or trade secrets to any person, firm, corporation, or entity. Should Employee reveal or threaten to reveal this
information, the Company shall be entitled to an injunction restraining the Employee from disclosing same, or from rendering any services to
any entity to whom said information has been or is threatened to be disclosed. The right to secure an injunction is not exclusive, and the
Company may pursue any other remedies it has against the Employee for a breach or threatened breach of this condition, including the
recovery of damages from the Employee.
7.
Reimbursement of Expenses. The Employee may incur reasonable expenses for furthering the Company's business, including
expenses for entertainment, travel, and similar items. The Company shall reimburse Employee for all business expenses after the Employee
presents an itemized account of expenditures, pursuant to Company policy.
Employment Agreement
Page 1
8.
Vacation. The Employee shall be entitled to a yearly vacation not in excess of two weeks at full pay. Any unused yearly vacation
accrual shall be forfeited.
9.
Disability. The Company provides no long term disability insurance policy for the benefit or our employees. We provide a
maximum of ten business days as sick leave for any short term disability.
10.
Termination of Agreement. Without cause, the Company may terminate this agreement at any time upon 30 days written notice to
the Employee. If the Company requests, the Employee will continue to perform his/her duties and may be paid his/her regular salary up to the
date of termination. In addition, the Company will pay the Employee on the date of the termination a severance allowance equal to one month's
pay less taxes and social security required to be withheld. Without cause, the Employee may terminate employment upon 30 days' written
notice to the Company. Employee may be required to perform his or her duties and will be paid the regular salary to date of termination but
shall not receive severance allowance. Notwithstanding anything to the contrary contained in this agreement, the Company may terminate the
Employee's employment upon 30 days' notice to the Employee should any of the following events occur:
a)
The sale of substantially all of the Company's assets to a single purchaser or group of associated purchasers; or
b)
The sale, exchange, or other disposition, in one transaction of the majority of the Company's outstanding corporate shares; or
c)
The Company's decision to terminate its business and liquidate its assets;
d)
The merger or consolidation of the Company with another Company resulting in a change in control of the majority of our
issued and outstanding common shares.
e)
Bankruptcy or chapter 11 reorganization.
11.
Death Benefit. Should Employee die during the term of employment, the Company shall pay to Employee's estate any
compensation due through the end of the month in which death occurred.
Employment Agreement
Page 2
12. Restriction on Post Employment Compensation. For a period of two years after the end of employment, the Employee shall not control,
consult to or be employed by any business similar to that conducted by the company, either by soliciting any of its accounts or by operating
within Employer's general trading area.
13. Assistance in Litigation. Employee shall upon reasonable notice, furnish such information and proper assistance to the Company as it
may reasonably require in connection with any litigation in which it is, or may become, a party either during or after employment.
14. Effect or Prior Agreements. This Agreement supersedes any prior agreement between the Company or any predecessor of the
Company and the Employee, except that this agreement shall not affect or operate to reduce any benefit or compensation inuring to the
Employee of a kind elsewhere provided and not expressly provided in this agreement.
15. Settlement by Arbitration. Any claim or controversy that arises out of or relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration Association. Judgment upon the award rendered may be entered in any
court with jurisdiction.
16. Limited Effect of Waiver by Company. Should Company waive breach of any provision of this agreement by the Employee, that
waiver will not operate or be construed as a waiver of further breach by the Employee.
17. Severability. If, for any reason, any provision of this agreement is held invalid, all other provisions of this agreement shall remain in
effect. If this agreement is held invalid or cannot be enforced, then to the full extent permitted by law any prior agreement between the
Company (or any predecessor thereof) and the Employee shall be deemed reinstated as if this agreement had not been executed.
18. Assumption of Agreement by Company's Successors and Assignees. The Company's rights and obligations under this agreement will
inure to the benefit and be binding upon the Company's successors and assignees.
19. Oral Modifications Not Binding. This instrument is the entire agreement of the Company and the Employee. Oral changes have no
effect. It may be altered only by a written agreement signed by the party against whom enforcement of any waiver, change, modification,
extension, or discharge is sought.
Dated effective December 16, 2011
/s/ EXEO ENTERTAINMENT, INC.
EXEO ENTERTAINMENT, INC.
Employment Agreement
/s/ JEFFREY A. WEILAND
JEFFREY A. WEILAND
Page 3
EMPLOYMENT AGREEMENT
Employment Agreement, between EXEO ENTERTAINMENT. INC., (the "Company”) and Robert Scott Amaral (the "Employee").
1.
For good consideration, the Company employees the Employee on the following terms and conditions.
2.
Term of Employment. Subject to the provisions for termination set forth below this agreement will begin on December 16, 2011,
unless sooner terminated.
3.
Salary. The Company shall pay Employee a salary of $60,000 per year (five thousand per month), for the services of the
Employee, payable at regular payroll periods. In addition, Company agrees to reimburse Employee for compensation earned prior to the
incorporation of the Company for services rendered on behalf of the Company. This amount equals $8,675 and the parties agreed to provide
Employee with founder's shares at par value for this amount rather than pay the amount owed in cash. The date of this recording within the
books of the Company is May 20, 2011.
4.
Duties and Position. The Company hires the Employee in the capacity of Chief Executive Officer, Secretary, Treasurer and Chief
Financial Officer. The Employee's duties may be reasonably modified at the Company's discretion from time to time.
5.
Employee to Devote Full Time to Company. The Employee will devote full time, attention, and energies to the business of the
Company, and during this employment, will not engage in any other business activity, regardless of whether such activity is pursued for profit,
gain, or other pecuniary advantage, unless approved in advance by the majority of Directors. Unless otherwise provided below, employee is not
prohibited from making personal investments in any other businesses provided those investments do not require active involvement in the
operation of said companies. Employee is precluded from making an investment into any of our direct competitors if such investment is a
material portion of the Employee's total investment portfolio.
6.
Confidentiality or Proprietary Information. Employee agrees, during or after the term of this employment, not to reveal
confidential information, or trade secrets to any person, firm, corporation, or entity. Should Employee reveal or threaten to reveal this
information, the Company shall be entitled to an injunction restraining the Employee from disclosing same, or from rendering any services to
any entity to whom said information has been or is threatened to be disclosed. The right to secure an injunction is not exclusive, and the
Company may pursue any other remedies it has against the Employee for a breach or threatened breach of this condition, including the
recovery of damages from the Employee.
7.
Reimbursement of Expenses. The Employee may incur reasonable expenses for furthering the Company's business, including
expenses for entertainment, travel, and similar items. The Company shall reimburse Employee for all business expenses after the Employee
presents an itemized account of expenditures, pursuant to Company policy.
EMPLOYMENT AGREEMENT
Page 1
8.
Vacation. The Employee shall be entitled to a yearly vacation not in excess of two weeks at full pay. Any unused yearly vacation
accrual shall be forfeited.
9. Disability. The Company provides no long term disability insurance policy for the benefit or our employees. We provide a maximum of
ten business days as sick leave for any short term disability.
10.
Termination of Agreement. Without cause, the Company may terminate this agreement at any time upon 30 days written notice to
the Employee. If the Company requests, the Employee will continue to perform his/her duties and may be paid his/her regular salary up to the
date of termination. In addition, the Company will pay the Employee on the date of the termination a severance allowance equal to one month's
pay less taxes and social security required to be withheld. Without cause, the Employee may terminate employment upon 30 days' written
notice to the Company. Employee may be required to perform his or her duties and will be paid the regular salary to date of termination but
shall not receive severance allowance. Notwithstanding anything to the contrary contained in this agreement, the Company may terminate the
Employee's employment upon 30 days' notice to the Employee should any of the following events occur:
a)
The sale of substantially all of the Company's assets to a single purchaser or group of associated purchasers; or
b)
The sale, exchange, or other disposition, in one transaction of the majority of the Company's outstanding corporate shares; or
c)
The Company's decision to terminate its business and liquidate its assets;
d)
The merger or consolidation of the Company with another Company resulting in a change in control of the majority of our
issued and outstanding common shares.
e)
Bankruptcy or chapter 11 reorganization.
11.
Death Benefit. Should Employee die during the term of employment, the Company shall pay to Employee's estate any
compensation due through the end of the month in which death occurred.
EMPLOYMENT AGREEMENT
Page 2
12.
Restriction on Post Employment Compensation. For a period of two years after the end of employment, the Employee shall not
control, consult to or be employed by any business similar to that conducted by the company, either by soliciting any of its accounts or by
operating within Employer's general trading area.
13.
Assistance in Litigation. Employee shall upon reasonable notice, furnish such information and proper assistance to the Company
as it may reasonably require in connection with any litigation in which it is, or may become, a party either during or after employment.
14.
Effect or Prior Agreements. This Agreement supersedes any prior agreement between the Company or any predecessor of the
Company and the Employee, except that this agreement shall not affect or operate to reduce any benefit or compensation inuring to the
Employee of a kind elsewhere provided and not expressly provided in this agreement.
15.
Settlement by Arbitration. Any claim or controversy that arises out of or relates to this agreement, or the breach of it, shall be
settled by arbitration in accordance with the rules of the American Arbitration Association. Judgment upon the award rendered may be entered
in any court with jurisdiction.
16.
Limited Effect of Waiver by Company. Should Company waive breach of any provision of this agreement by the Employee, that
waiver will not operate or be construed as a waiver of further breach by the Employee.
17.
Severability. If, for any reason, any provision of this agreement is held invalid, all other provisions of this agreement shall remain
in effect. If this agreement is held invalid or cannot be enforced, then to the full extent permitted by law any prior agreement between the
Company (or any predecessor thereof) and the Employee shall be deemed reinstated as if this agreement had not been executed.
18.
Assumption of Agreement by Company's Successors and Assignees. The Company's rights and obligations under this agreement
will inure to the benefit and be binding upon the Company's successors and assignees.
19.
Oral Modifications Not Binding. This instrument is the entire agreement of the Company and the Employee. Oral changes have
no effect. It may be altered only by a written agreement signed by the party against whom enforcement of any waiver, change, modification,
extension, or discharge is sought.
Dated effective December 16, 2011
/s/ EXEO ENTERTAINMENT, INC.
EXEO ENTERTAINMENT, INC.
EMPLOYMENT AGREEMENT
/s/ ROBERT SCOTT AMARAL
ROBERT SCOTT AMARAL
Page 3
Consulting Agreement
THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered into this 4th day of
June, 2013 (The “Effective Date”)
By and between
Exeo Entertainment, Inc., a Nevada corporation duly organized under law and having a usual place of
business at 4478 Wagon trail Ave, Las Vegas, NV 89118 (hereinafter referred to as the “Company”)
And
Hildebrandt Technologies Inc., an Alberta Corporation (hereinafter referred to as the “Consultant”).
WHEREAS , the Company wishes to employ the advisor to offer the services described herein and Consultant makes agreement to provide the
services for the reimbursement and otherwise in harmony with the terms and conditions of this Agreement,
NOW THEREFORE, in consideration of the prior, and for other good and valuable consideration, the receipt and adequacy of which
are hereby recognized, acknowledged and approved to, the Company and the Consultant, aiming to be officially bound, agree to the terms set
forth below.
1.
TERM. Beginning as of the Effective Date, and enduring for a period of 12 months (the “Term”), unless prior finished pursuant to
agreement hereof, the Consultant makes agreement that he/she will serve as a consultant to the Company. This Agreement may be changed or
extended for any period as may be agreed by the parties.
2.
DUTIES AND SERVICES.
(a) Consultant’s duties and responsibilities shall be to assist Exeo Entertainment, Inc. in the sales and distribution of its products
including, but not limited to, i. Extreme Gamer®, ii. Zaaz™ keyboard, iii. Psyko ® headphones, and iv. Exeo Portable Gaming
System. (Jointly, the “Duties” or “Services”). Specific tasks assigned to consultant are outlined in addendum A attached hereto.
(b) Consultant makes agreement that during the Term he/she will give up to ten (10) days per month to his/her duties. The Company
will occasionally offer the Consultant with a schedule of the requested hours, responsibilites and deliverables for the pertinent period
of time. The duties will be programmed or an as-needed basis.
(c) The Consultant corresponds to and guarantees to the Company that he/she is under no contractual or other limitations or
compulsions which are not in agreement with the carrying out of this Agreement, or which will obstruct the performance of his/her
duties. Consultant symbolizes and guarantees that the completing and performance of this Agreement will not violate any policies or
procedures of any other person or individual for which he/she carries our services concurrently with those performed herein.
(d) In performing the Services, Consultant shall obey, to the best of his/her information, with all business manners, regulatory and
health and safety guidelines recognized by the Company for any governmental power with respect to the Company’s business.
3.
CONSULTING
FEE:
(a) According to the agreement terms hereof, the Company shall pay Consultant a consulting fee of ten thousand ($10,000) Dollars for
each month of Services provided to the Company (the “Consulting Fee”). Consultant’s time spent in addition to the ten (10) days per
month shall be charged to the Company at one hundred and twenty ($120) Dollars per hour. The Consultant shall present weekly, on
the Company’s regular reporting form, a listing of his/her hours, the Duties executed and a outline of his/her actions. The Consulting
Fee shall be paid within three (3) days of the Company’s receipt of the report and invoice.
(b) Consultant shall be permitted to prompt repayment for all pre-approved expenses made in the performance of his/her Duties, on
submission and endorsement of written statements and receipts in agreement with the then regular procedures of the Company.
(c) The Consultant agrees that all Services will be rendered by him/her as a self-governing contractor and that this Agreement does not
generates an employer-employee relationship among the Consultant and the Company. The Consultant shall have no right to receive
any employee benefits including, but not limited to, health and accident insurance, life insurance, sick leave and/or vacation.
Consultant makes agreement to pay all taxes including, self-employment taxes due in respect of the Consulting Fee and to indemnify
the Company in the event the Company is required to pay any such taxes on behalf of the Consultant.
4.
EARLY
TERM:
TERMINATION
OF
THE
(a) If the Consultant willingly stops performing his/her Duties, becomes physically or mentally unable to perform his/her Duties, or is
ended for cause, then, in each case, the Consulting Fee shall come to an end and terminate as of such date. Any termination shall be
made in good reliance by the Company’s Board of Directors.
(b) This Agreement may be ended without grounds by either party upon written notice of by either party to the other with not less than
thirty (30) days written notice.
(c) Upon termination, neither party shall have any further responsibilities under this Agreement, except for the compulsions which by
their terms endure this termination hereof. Upon termination and, in any case, upon the Company’s request, the Consultant shall
return instantly to the Company all Confidential Information as hereinafter defined, and copies thereof. The Company will complete
any payments due to Consultant.
5.
RESTRICTED ACTIVITIES: During the Term and for a period of 6 months thereafter, Consultant will not, directly or indirectly:
(i) Solicit or request any employee of or consultant to the Company to give up the employ of or cease consulting for the Company;
(ii) Importune or ask any worker of or consultant to the Company to join the employ of, or begin consulting for, any individual or
entity that researches, develops, markets or sells products as a competitor of the Company;
(iii) Importune or ask any individual or body that researches, develops, markets or sells products that compete with those of the
Company, to employ or keep as a consultant any employee or consultant of the Company; or
(iv) Persuade or try to provoke any supplier or seller of the Company to finish or violate any written or oral agreement or
understanding with the Company.
6.
PROPRIETARY
RIGHTS
(a) Definitions. For the purposes of the terms set forth below shall have the following meanings:
(i) Concept and Ideas. Those perceptions and thoughts made known by the Company to Consultant or which are first developed by
Consultant during the time of the performance of Services hereunder and which relate to the Company’ present, past or potential
business activities, services, and products, and limited to the field of video gaming hardware and not including the fields of
headphones, audio and acoustics. The Consultant shall have no publication rights of the Concepts and Ideas and all of the same shall
belong exclusively to the Company.
(ii) Confidential Information. For the purposes of this Agreement, Confidential Information shall mean and collectively include: all
information involving the business, plans and/or technology of the Company including, but not limited to technological information
including inventions, techniques, tactics, procedures, conditions, uniqueness, assess, raw data, scientific preclinical or scientific data,
records, files, formulations, clinical procedures, tools design, know-how, knowledge, and trade secrets; developmental, promotion,
sales, customer, trader, consulting relationship information, in service, performance, and cost information; computer programming
system whether in physical or intangible form, and all record bearing media containing or disclosing the preceding information and
techniques including, written business plans, patents and patent applications grant applications, notes, and memorandum, whether in
writing or presented, stored or maintained in or by electronic, magnetic, or other means.
In spite of the previous, the term “Confidential Information” shall not include any information which: (a) can be established to have
been in the public area or was publicly known or accessible earlier to the date of the disclosure to Consultant; (b) can be established in
writing to have been lawfully in the ownership of Consultant prior to the disclosure of such information to Consultant by the
Company; (c) becomes part of the public domain or publicly known or available by publication or otherwise, not due to any
unauthorized act or omission on the part of Consultant; or (d) is supplied to Consultant by a third party without binder of
confidentiality, so long as that such third party has no responsibility to the Company or any of its associated companies to maintain
such information in confidence.
(b) Nondisclosure to Third Parties. apart from as required by Consultant’s Duties, Consultant shall not, at any time now or in the future, openly
or indirectly, use, publish, distribute or otherwise make known any Confidential Information, thoughts: or Ideas to any third party without the
prior written consent of the Company which consent may be deprived of in each case and all of the same, together with publication rights, shall
belong exclusively to the Company.
(c) Documents, etc. All documents, diskettes, tapes, practical manuals, guides, stipulations, plans, drawings, designs and similar materials,
properly maintained lists of present, past or prospective customers, customer offers, requests to submit proposals, price lists and data relating to
the pricing of the Company’ products and services, records, notebooks and all other materials containing Confidential Information or
information about Concepts or Ideas (including all copies and reproductions thereof), that come into Consultant’s control or control by reason
of Consultant’s performance of the link, whether prepared by Consultant or others: (a) are the property of the Company, (b) will not be used by
Consultant in any way other than in connection with the performance of his/her Duties, (c) will not be provided or shown to any third party by
Consultant, (d) will not be removed from the Company’s or Consultant’s premises (except as Consultant’s Duties require), and (e) at the
termination (for whatever reason), of Consultant’s relationship with the Company, will be left with, or forthwith returned by Consultant to the
Company.
(d) Patents, etc. The Consultant makes agreement that the Company is and shall remain the elite owner of the Confidential Information and
Concepts and Ideas. Any interest in copyrights, discoveries, technological improvements, trade names, brand, service marks, copyrights,
copyrightable works, developments, designs, procedures, methods, know-how, data and analysis, whether registrable or not (“Developments”),
which Consultant, as a result of providing Services to the Company under this Agreement, may visualize or develop, shall: (i) immediately be
brought to the notice of the Company by Consultant and (ii) belong entirely to the Company. No license or transportation of any such rights to
the Consultant is allowed or implied under this Agreement.
(e) Assignment. The Consultant hereby assigns and, to the extent any such assignment cannot be made at present, hereby makes agreement to
allocate to the Company, without additional return, all of his/her right, identify and interest in and to all perceptions, Ideas, and Developments
that are conceived during the Consultant’s work with the Company and limited to the field of video gaming hardware and not including the
fields of headphones, audio and acoustics. The Consultant will execute all documents and perform all lawful acts which the Company
considers necessary or advisable to secure its rights hereunder and to carry out the intent of this Agreement.
7. EQUITABLE RELIEF: Consultant makes agreement that any breach of clauses mentioned above by him/her would ground irrevocable
harm to the Company and that, in case of such breach, the Company shall have, in addition to any and all remedies of law, the right to an order,
definite performance or other reasonable benefit to prevent the breach susceptible violation of Consultant’s obligations hereunder.
8. WAIVER: Any waiver by the Company of a violation of any condition of this Agreement shall not function or be interpreted as a waiver of
any succeeding violation of the same or any other condition hereof. All waivers by the Company shall be in writing.
9. SEVERABILITY; REFORMATION: In case any one or more of the conditions or parts of a stipulation included in this Agreement shall,
for any cause, be held to be unacceptable, unlawful or unenforceable in any respect, such invalidity, misconduct or unenforceability shall not
affect any other condition or part of a condition of this Agreement; and this Agreement shall, to the fullest extent lawful, be reformed and
construed as if such invalid or illegal or unenforceable provision, or part of a provision, had never been included herein, and such provision or
part reformed so that it would be applicable, lawful and enforceable to the maximum degree possible. Without limiting the previous, if any
condition (or part of provision) included in this Agreement shall for any reason be held to be excessively wide as to duration, activity or
subject, it shall be interpreted by limiting and reducing it, so as to be enforceable to the fullest level compatible with then existing applicable
law.
10. ASSIGNMENT: The Company shall have the right to allocate its rights and responsibilities under this Agreement to a party which
supposes the Company’ obligations hereunder. Consultant shall not have the right to allocate his/her rights or obligations under this Agreement
without the previous written permission of the Company. This Agreement small be obligatory upon and inure to the benefit of the Consultant’s
successors and legal representatives in the event of his/her death or disability.
11. HEADINGS: Headings and subheadings are for expediency only and shall not be considered to be a part of this Agreement.
12. AMENDMENTS: This Agreement may be altered or customized, in whole or in part, only by an instrument in writing approved by all
parties hereto. Any adjustment, permission, verdict, waiver or other action to be made, taken or given by the Company related to the
Agreement shall be made, taken or given on behalf of the Company only by power of the Company’s Board of Directors.
13. NOTICES: Any notices or other communications required hereunder shall be in writing and shall be considered given when distributed in
person or when posted, by qualified or registered first class mail, postage prepaid, return receipt requested, addressed to the parties at their
addresses mentioned in the foreword to this Agreement or to such other addresses of which a party shall have notified the others in harmony
with the provisions of this clause.
14. COUNTERPARTS: This Agreement may be executed in two or more complements, each of which shall comprise an original and all of
which shall be considered a single agreement.
15. GOVERNING LAW: This Agreement shall be construed in accordance with and governed for all purposes by the laws of Nevada
applicable to contracts executed and wholly performed within such jurisdiction. Any dispute arising hereunder shall be referred to and heard in
only a court located in Clark County Las Vegas, Nevada.
16. SURVIVAL: The provisions of concerned sections of this Agreement shall endure the ending of the Term or the termination of this
Agreement. This Agreement succeeds all previous agreements, written or oral, between the Company and the Consultant relating to the subject
matter of this Agreement
EXECUTED, under seal, effective as of the Effective Date
Exeo Entertainment, Inc.
CONSULTANT
By:
/s/ Robert Scott Amaral
Robert Scott Amaral
Hereunto Duly Authorized
/s/ James Hildebrandt
President
Hildebrandt Technologies Inc.
CEO
ADDENDUM A
To Consulting agreement by and between Exeo Entertainment, Inc. a Nevada Corporation and Hildebrandt Technologies Inc. an Alberta
Corporation dated June 4, 2013.
Specific Duties of consultant to include:
1. ) Selection of new manufacturing facility for Psyko headphones.
2. ) Calls to big box retailers to secure distribution for:
a. Extreme Gamer
b. Zaaz Keyboard
c. Psyko Headphones
d. Portable gaming system
3. ) Re-design of Psyko headphones for future release for the following intended models:
a. Standard PC / Standard Console (currently Krypton)
b. Limited PC / Limited Console (currently Carbon)
c. Wireless limited Console.
Exeo Entertainment, Inc.
/s/ Robert Scott Amaral
Robert Scott Amaral
Consultant
Hildebrandt Technologies Inc.
/s/ James Hildebrandt
James Hildebrandt, President
June 24, 2013
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (this “Agreement”) is entered into this 4th day of June 2013 (the “Effective Date”), between
PSYKO AUDIO LABS, a Canadian corporation (“PSYKO”) and EXEO ENTERTAINMENT, INC., a Nevada corporation (“Licensee).
RECITALS
WHEREAS PSYKO has created, developed and manufactures true 5.1 surround sound headphones for use in the video gaming space gaming
and related intellectual properties, documentation, patents and materials more particularly described on Exhibit “A” attached hereto (the
“PSYKO Products”); and
WHEREAS PSYKO desires to grant to Licensee an exclusive license to develop, manufacture, distribute, market, advertise, sublicense and
otherwise commercially exploit the PSYKO 5.1 surround sound products - within the “video gaming” segment throughout the Territory (as
described below) upon the terms and conditions set forth herein.
AGREEMENT
1.
GRANT OF RIGHTS . Subject to the terms of Paragraph 5 below, PSYKO hereby grants to Licensee an exclusive, perpetual, nontransferable right and license throughout the Territory to develop, manufacture, distribute, market, advertise and sublicense the PSYKO
Products, within the video gaming segment, throughout the Territory during the Term
2.
TERM . The term of this Agreement shall commence upon the date hereof and shall continue in perpetuity so long as the Licensee
remains in compliance with all material terms of this Agreement, or unless mutually terminated by the parties (the “Term”). In the event of a
breach of this Agreement, Licensee shall be given 60 days to cure any such breach. If such breach is not cured within said 60-day period then
the Agreement shall expire and termination shall be PSYKO’s sole and exclusive remedy in the event of any such breach, other than if breach
by Licensee is due to lack of payments of amounts due by Licensee to PSYKO, in which case the amounts due remain payable by Licensee to
PYSKO.
3.
TERRITORY . The territory shall be the World (the “Territory”).
4.
LICENSE FEE . Licensee agrees to pay any expenses related to moving the PSYKO manufacturing facilities in Shenzhen China to a
lower cost per unit manufacturer. Licensee agrees to complete this process as soon as a suitable facility has been identified and no later than 9
months from the execution of this agreement.
5.
ROYALTY/AUDIT RIGHTS . Licensee hereby agrees to pay a royalty equal to 5% of any and all gross revenue, less returns and
allowances, generated from the commercial exploitation of the PSYKO Products (the “Royalty”). The Royalty shall be paid on a quarterly
basis, 15 days after the end of each quarter, according to the schedule in Section 13.
Sales Period
Oct 1 - Dec 31
Jan 1 - Mar 31
April 1 - June 30
July 1 - Sept 30
Payment Date
Jan 15
April 15
July 15
Oct 15
4478 Wagon Trail Ave • Las Vegas, NV 89118 • Phone 702-361-3188 • Fax 702-361-4359
ROBERT AMARAL
For purposes of this Agreement, a “sale” shall be considered to have taken place upon the shipment of any PSYKO Product and the creation of
an invoice. The Royalty shall be due and payable based upon any such sale whether or not such funds have actually been collected or received
by Licensee. In case of any breach of this Agreement Licensee shall continus to owe Psyko for Royalty for product sold before and after any
breach.
5.1
Prepayment of Royalties. Exeo Entertainment, Inc. hereby agrees to make a one-time non-refundable payment of $50,000
upon execution of this agreement to be applied against future royalties in the following manner:
a. For the first 5 (five) quarters that payments are owed $10,000 shall be discounted from the initial amount owed (thus adding up to
the $50,000 initial payment).
Once every twelve (12) months, PSYKO shall have the right, at its own cost and expense, to inspect and audit the books and accounting
records of Licensee related to products sales, licensing, fee for services, contracts for sale of products including all renewals and modifications
to verify proper distribution and payment for Royalties paid out and disbursed by Licensee on a monthly basis. Such inspection shall be made
by an outside independent Certified Public Accountant, upon reasonable written notice during normal business hours of normal business days.
In the event such audit reveals a discrepancy in favor of PSYKO in excess of 5%, Licensee shall bear the cost of the audit.
PSYKO shall have the right to have its representative inspect the factory production and storage facilities at any time.
6.
PRODUCT FOR MARKET. Licensee shall market all PSYKO Products upon mutually acceptable pricing schedule for each of the
PSYKO Products to be provided by PSYKO upon the execution of this Agreement. Except as otherwise provided in this Agreement, no
ownership of any intellectual property rights to any PSYKO Products or services are conveyed to Licensee under this Agreement, and all
PSYKO Products and any and all intellectual property rights thereto shall remain the sole and exclusive property of PSYKO.
Tools, materials and information provided by PSYKO remain the property of PSYKO. Examples include, but are not limited to, intellectual
property, data, designs, trademarks, tooling and production tooling and equipment.
7.
MARKETING COSTS, EXPENSES AND PACKAGING . Except as otherwise set forth in this Agreement, Licensee shall be
responsible for all of its development and marketing costs and related expenses.
8.
MANUFACTURE, WARRANTY, MAINTENANCE AND SUPPORT . Licensee hereby agrees to manufacture, service and warrant
all PSYKO Products. Licensee warrants all products marketed or distributed by Licensee and Licensee’s customers shall be covered under
Licensee's established warranty policies, as amended from time to time. Licensee also agrees to maintain and support the PSYKO Products.
PSYKO shall provide upgrades, modifications and enhancements to Licensee and its customers at PSYKO’s sole cost and expense. However,
in the event PSYKO does not have sufficient funds, or is otherwise unable to provide such upgrades, modifications and enhancements,
Licensee shall have the right to undertake such upgrades, modifications and enhancements at its own expense. PSYKO shall incur no obligation
to warrant, support or maintain any of the PSYKO Products marketed or distributed by Licensee. For purposes of this paragraph, “Licensee’s
customers” shall include Licensee’s direct customers or end-users, and any sub-distributor, sub-marketers of Licensee and the customers or
end-users, or any end-users of any such sub-distributor or sub-distributor.
2
ROBERT AMARAL
9.
RIGHT OF FIRST REFUSAL . Licensee shall have the right of first refusal on any and all products, or intellectual property PSYKO
develops in the future related to video gaming PSYKO is under no obligation to develop future products. Licensee shall exercise its first refusal
right by notifying PSYKO in writing no later than 10 days after PSYKO has informed Licensee in writing of the availability of any such future
products, the terms on which such products are offered and what the royalty rate will be for such products.
10.
TECHNOLOGY ESCROW . No later than 30 days from the date of this Agreement, PSYKO shall enter into a technology escrow
agreement with a reputable escrow company for the benefit of Licensee with respect to the PSYKO Products, so as to protect Licensee and its
rights herein in the event of the insolvency of PSYKO. Such technology escrow agreement will be in a form acceptable to Licensee and
PSYKO. Costs associated with setting up and maintaining the technology escrow will be paid by Licensee.
11.
REPRESENTATIONS AND WARRANTIES OF PSYKO . PSYKO represents and warrants to Licensee that it is a corporation duly
incorporate and in good standing in Alberta, Canada, owns all right, title and interest in and to the PSYKO Products, has full authority to enter
into this Agreement and effectuate the transactions contemplated hereunder, and that executing this Agreement shall not infringe upon any third
party right.
12.
REPRESENTATIONS AND WARRATIES OF LICENSEE . Licensee represents and warrants to PSYKO that it is a corporation
duly incorporated and in good standing in the State of Nevada, has obtained any and all necessary approvals, and has the authority to enter into
this Agreement.
13.
ROYALTY PAYMENTS. Licensee hereby agrees to pay the following minimum royalty amounts. If sales in any quarter are above
these minimums the full royalty amount is due.
Royalty payments are due 15 days after the end of each calendar quarter. Minimum royalty amounts ramp up according to the following
schedule. After the last date listed the last quarterly minimum amount continues.
Time Period
(3 months ending)
Minimum Performance
Requirement
September 30, 2013
December 31, 2013
March 31, 2014
June 30, 2014
September 30, 2014
December 31, 2014
March 31, 2015
June 30, 2015
Each quarter after June 30, 2015
S0
CDNS20,000
CDNS30,000
CDNS40,000
CDNS50,000
CDNS75,000
CDNS100,000
CDNS100,000
CDNS100,000
14.
Amount owed after
credit from initial
payment
S0
CDNS10,000
CDNS20,000
CDNS30,000
CDNS40,000
CDNS65,000
CDNS100,000
CDNS100,000
CDNS100,000
Date Due
Oct 15, 2013
Jan 15, 2014
April 15, 2014
July 15, 2014
Oct 15, 2014
Jan 15, 2015
April 15, 2015
July 15, 2015
15 days after quarter end
GENERAL
14.1
Governing Law and Venue . This Agreement shall be governed and interpreted in accordance with the laws of the state of
Nevada without regard to principles of conflict of laws. Nevada courts (state or federal) will have the exclusive jurisdiction over any
controversies regarding this Agreement; any action or other proceeding which involves such a controversy will be brought in such Nevada
courts and not elsewhere.
3
ROBERT AMARAL
14.2
Assignment . Neither party shall assign any of its rights or obligations under this Agreement other than with prior written
consent of the other, to an entity owning or acquiring all or substantially all of its stock or assets. Neither Psyko nor Licensee shall
unreasonably withhold their consent to said parties notice and request to assignment of their rights.
14.3
Publicity; Licensee Marks . In no event shall PSYKO or Licensee publish or otherwise release any press release or other
article, announcement or publication concerning this Agreement or the subject matter related hereto without first obtaining the other party’s
written approval thereof, and to the content and timing thereof, which approval may be given in its sole discretion. In no event shall PSYKO or
Licensee use any trademark, service mark, or trade name of the other party without the prior written approval of the rights- holder in such
trademark, service mark, or trade name.
14.4
Remedies . To the extent permitted by applicable law, the rights and remedies of the Parties provided under this Agreement
are cumulative, and the exercise or failure to exercise any particular right or remedy will not be in limitation of any other right or remedy,
whether hereunder, at law or equity or by contract.
14.5
Confidentiality . Each party shall use its reasonable efforts to (i) keep confidential the terms of this Agreement and all other
information obtained from the other party pursuant to this Agreement, provided that such terms and/or information are identified, in writing, as
confidential, (ii) keep confidential all information which is specifically designated in writing as “trade secret” for so long as the information
remains secret, and (iii) not divulge to or discuss with any third parties the results of any testing and/or evaluation of the PSYKO Products
which Licensee may carry out under this Agreement. All business terms of this Agreement are to be considered as confidential. Except as
otherwise specified in section (ii) of this Section 14.5, these obligations shall survive for a period of two (2) years following the date of the
termination of the Term, but such obligations shall not apply to information already known to the recipient at the time of disclosure and not
subject to terms of confidentiality, independently developed by the recipient, or otherwise generally publicly available. Notwithstanding
anything to the contrary contained in this Section 14.5, it shall not be deemed to be a breach of this Section 14.5 or of this Agreement if either
party is required to disclose confidential information pursuant to: (a) any statute, regulation, order, subpoena or document discovery request,
provided that, if allowed by applicable law, prior written notice of such disclosure is furnished to the disclosing party as soon as practicable in
order to afford the disclosing party an opportunity to seek a protective order (it being agreed that if the disclosing party is unable to obtain or
does not seek a protective order and the receiving party is legally compelled to disclose such information, disclosure of such information may
be made without liability); or (b) in connection with an audit or review by any taxing authority, provided that, if allowed b y applicable law,
prior written notice of the request thereof is furnished to disclosing party.
14.6
Entire Agreement . This Agreement constitutes the entire agreement between the parties, and supersedes any and all prior
written or oral agreement or understanding relating to the same subject matter. No change to this Agreement will be effective unless made in
writing and signed by both parties.
14.7
whatsoever.
Headings . The use of headings in each Section of this Agreement is for convenience only and will have no legal effect
4
ROBERT AMARAL
IN WITNESS WHEREOF, this Agreement is entered into this 10th day of June, 2013 and Licensee acknowledges that the Agreement is
subject to the approval of the Psyko board of directors which approval shall be communicated to Licensee upon such approval having been
obtained from the Psyko board of directors.
PSYKO AUDIO LABS,
EXEO ENTERTAINMENT, INC.,
an Alberta corporation
a Nevada corporation
By:
By:
Kip Fyfe Chairman of the Board
/s/ Robert Scott Amaral
Robert Scott Amaral, CEO
By:
Werner Gartner
5
ROBERT AMARAL
EXHIBIT A
Description of PSYKO Products and intellectual property
Psyko™ name as it relates to the actual product, i.e. the Psyko Carbon or the Psyko Krypton.
Patent ( US # 8.000.486
) for the delivery of 5.1 surround sound through headphones.
Tooling for the manufacturing of the Krypton and Carbon headphones.
Engineering (Solid Works) files on the Carbon, Krypton, and Dolby converter box.
Prototypes, and related design documentation for Dolby converter box
Psyko Krypton – all associated patents, copyrights, trademarks, trade names, service marks, CAD files,
Psyko Carbon – all associated patents, copyrights trade names, trademarks, service marks, CAD files,
Converter Box - all associated patents, copyrights trade names, trademarks, service marks, design documentation, prototypes,
6
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (this “Agreement”) is entered into this 25th day of May, 2011 (the “Effective Date”), between
DIGITAL EXTREME TECHNOLOGIES, INC., a Delaware corporation (“DXT”) and EXEO ENTERTAINMENT, INC., a Nevada
corporation (“Licensee).
RECITALS
WHEREAS DXT has created, developed and owns certain gaming technology products and related intellectual properties, documentation,
domain names and materials more particularly described on Exhibit “A” attached hereto (the “DXT Products’’); and
WHEREAS DXT desires to grant to Licensee an exclusive license to develop, manufacture, distribute, market, advertise, sublicense and
otherwise commercially exploit the D XT Products throughout the Territory (as described below) upon the terms and conditions set forth
herein.
AGREEMENT
1.
GRANT OF RIGHTS . Subject to the terms of Paragraph 5 below. DXT hereby grants to Licensee an exclusive, perpetual, nontransferable right and license throughout the Territory to develop, manufacture, distribute, market, advertise and sublicense the DXT Products
throughout the Territory during the Term
2.
TERM . The term of this Agreement shall commence upon the date hereof and shall continue in perpetuity so long as the Licensee
remains in compliance with all material terms of this Agreement, or unless mutually terminated by the parties (the “Term”). In the event of a
breach of this Agreement, Licensee shall be given 60 days to cure any such breach. If such breach is not cured within said 60 day period then
the Agreement shall expire and termination shall be DXT’s sole and exclusive remedy in the event of any such breach.
3.
TERRITORY . The territory shall be the World (the “Territory”).
4.
LICENSE FEE . DXT hereby agrees to waive any initial licensing fee in consideration of Licensee’s agreement to complete product
development on the Extreme Garner and Black Widow Keyboard. Licensee agrees to complete product development on (i) the Extreme Gamer
no later than 12 months from the date of this Agreement, and (ii) the Black Widow Keyboard no later than 18 months from the date of this
Agreement. For purposes of this Agreement, “Completion of Product Development” is defined as complete working units capable of being
mass produced, including, but not limited to, all hardware, software, design documentation, packaging and UPC codes.
4478 Wagon Trail Ave
Las Vegas, NV 89118
1
5.
ROYALTY/AUDIT RIGHTS . Licensee hereby agrees to pay a royalty equal to 5% of any and all gross revenue generated from the
commercial exploitation of the DXT Products (the ‘‘Royalty”). The Royalty shall be paid on a monthly basis commencing 30 days after the
initial sale of any DXT Product, and on the same date of each month thereafter. For purposes of this Agreement, a “sale” shall be considered to
have taken place upon the shipment of any DXT Product and the creation of an invoice. The Royalty shall be due and payable based upon any
such sale whether or not such funds have actually been collected or received by Licensee. Further, in the event Licensee fails to complete the
development of the DXT Products within the timeframes set forth in this Paragraph 4, Licensee shall pay to DXT an additional monthly royalty
of 0.25% upon the commencement of the sale of any DXT Products. Once every twelve (12) months, DXT shall have the right, at its own cost
and expense, to inspect and audit the books and accounting records of Licensee related to products sales, licensing, fee for services, contracts
for sale of products including all renewals and modifications to verify proper distribution and payment for Royalties paid out and disbursed by
Licensee on a monthly basis. Such inspection shall be made by an outside independent Certified Public Accountant, upon reasonable written
notice during normal business hours of normal business days. In the event such audit reveals a discrepancy in favor of DXT in excess of 5%,
Licensee shall bear the cost of the audit.
6.
PRODUCT FOR MARKET. Licensee shall market all DXT Products upon mutually acceptable pricing schedule for each of the DXT
Products to be provided by DXT upon the execution of this Agreement. Except as otherwise provided in this Agreement, no ownership of any
intellectual property rights to any DXT Products or services are conveyed to Licensee under this Agreement, and all DXT Products and any and
all intellectual property rights thereto shall remain the sole and exclusive property of DXT.
7.
MARKETING COSTS. EXPENSES AND PACKAGING . Except as otherwise set forth in this Agreement, Licensee shall be
responsible for all of its development and marketing costs and related expenses. Licensee further agrees to utilize the DXT logo on any and all
packaging for the Extreme Gamer, the Black Widow, or the Reality Pro and to acknowledge via the use of words such as: by, or in cooperation
with, that clearly illustrate that the DXT Products were a combined effort of both DXT and Licensee. DXT has the right, in its sole discretion,
to review and approve any and all use of its corporate logo, trademarks, service marks or associations between Licensee and DXT prior to use
by Licensee.
8.
MANUFACTURE. WARRANTY. MAINTENANCE AND SUPPORT . Licensee hereby agrees to manufacture, service and warrant
all DXT Products. DXT warrants that it is the sole manufacture of its software products. Licensee warrants all products marketed or distributed
by Licensee and Licensee’s customers shall be covered under Licensee’s established warranty policies, as amended from time to time. Licensee
also agrees to maintain and support the DXT Products. DTX shall provide upgrades, modifications and enhancements to Licensee and its
customers at DXT’s sole cost and expense. However, in the event DXT does not have sufficient funds, or is otherwise unable to provide such
upgrades, modifications and enhancements. Licensee shall have the right to undertake such upgrades, modifications and enhancements at its
own expense. DXT shall incur no obligation to warrant, support or maintain any of the DXT Products marketed or distributed by Licensee. For
purposes of this paragraph, “Licensee’s customers” shall include Licensee’s direct customers or end-users, and any sub- distributor, submarketers of Licensee and the customers or end-users, or any end-users of any such sub-distributor or sub-distributor.
4478 Wagon Trail Ave
Las Vegas, NV 89118
2
9.
RIGHT OF FIRST REFUSAL . Licensee shall have the right of first refusal on any and all products DXT develops in the future. DXT
is under no obligation to develop future products. Licensee shall exercise its first refusal right by notifying DXT in writing no later than 10
days after DXT has informed Licensee in writing of the availability of any such future products.
10.
TECHNOLOGY ESCROW . No later than 30 days from the date of this Agreement, DXT shall enter into a technology escrow
agreement with a reputable escrow company for the benefit of Licensee with respect to the DXT Products, so as to protect Licensee and its
rights herein in the event of the insolvency of DXT. Such technology escrow agreement will be in a form acceptable to Licensee.
11.
REPRESENTATIONS AND WARRANTIES OF DXT . DXT represents and warrants to Licensee that it is a corporation duly
incorporate and in good standing in the State of Delaware, owns all right, title and interest in and to the DXT Products, has full authority to
enter into this Agreement and effectuate the transactions contemplated hereunder., and that executing this Agreement shall not infringe upon
any third party right.
12.
REPRESENTATIONS AND WARRATIES OF LICENSEE . Licensee represents and warrants to DXT that it is a corporation duly
incorporate and in good standing in the State of Nevada, has obtained any and all necessary approvals, and has the authority to enter into this
Agreement.
13.
GENERAL .
13.1
Governing Law and Venue . This Agreement shall be governed and interpreted in accordance with the laws of the State of
Nevada without regard to principles of conflict of laws. Nevada courts (state or federal) will have the exclusive jurisdiction over any
controversies regarding this Agreement; any action or other proceeding which involves such a controversy will be brought in such Nevada
courts and not elsewhere.
13.2
Assignment . Neither party shall assign any of its rights or obligations under this Agreement other than with prior written
consent of the other, to an entity owning or acquiring all or substantially all of its stock or assets. Neither DXT nor Licensee shall unreasonably
withhold their consent to said parties’ notice and request to assignment of their rights.
4478 Wagon Trail Ave
Las Vegas, NV 89118
3
13.3
Publicity; Licensee Marks . In no event shall DXT or Licensee publish or otherwise release any press release or other
article, announcement or publication concerning this Agreement or the subject matter related hereto without first obtaining the other party’s
written approval thereof, and to the content and timing thereof, which approval may be given in its sole discretion. In no event shall DXT or
Licensee use any trademark, service mark, or trade name of the other party without the prior written approval of the rights-holder in such
trademark, service mark, or trade name.
13.4
Remedies. To the extent permitted by applicable law, the rights and remedies of the Parties provided under this Agreement
are cumulative, and the exercise or failure to exercise any particular right or remedy will not be in limitation of any other right or remedy,
whether hereunder, at law or equity or by contract.
13.5
Confidentiality . Each party shall use its reasonable efforts to (i) keep confidential the terms of this Agreement and all other
information obtained from the other party pursuant to this Agreement, provided that such terms and/or information are identified, in writing, as
confidential, (ii) keep confidential all information which is specifically designated in writing as “trade secret” for so long as the information
remains secret, and ( iii) not divulge to or discuss with any third parties the results of any testing and/or evaluation of the DXT Products which
Licensee may carry out under this Agreement. All business terms of this Agreement are to be considered as confidential. Except as otherwise
specified in section (ii) of this Section 13.5, these obligations shall survive for a period of two (2) years following the date of the termination of
the Term, but such obligations shall not apply to information already known to the recipient at the time of disclosure and not subject to terms of
confidentiality, independently developed by the recipient, or otherwise generally publicly available. Notwithstanding anything to the contrary
contained in this Section 13.5, it shall not be deemed to be a breach of this Section 13.5 or of this Agreement if either party is required to
disclose confidential information pursuant to: (a) any statute, regulation, order, subpoena or document discovery request, provided that, if
allowed by applicable law . prior written notice of such disclosure is furnished to the disclosing party as soon as practicable in order to afford
the disclosing party an opportunity to seek a protective order (it being agreed that if the disclosing party is unable to obtain or does not seek a
protective order and the receiving party is legally compelled to disclose such information, disclosure of such information may be made without
liability); or (b) in connection with an audit or review by any taxing authority, provided that, if allowed by applicable law, prior written notice
of the request thereof is furnished to disclosing party.
13.6
Entire Agreement . This Agreement constitutes the entire agreement between the parties, and supersedes any and all prior
written or oral agreement or understanding relating to the same subject matter. No change to this Agreement will be effective unless made in
writing and signed by both parties.
13.7
whatsoever.
Headings . The use of headings in each Section of this Agreement is for convenience only and will have no legal effect
4478 Wagon Trail Ave
Las Vegas, NV 89118
4
IN WITNESS WHEREOF, this Agreement is entered into this 25 th day of May, 2011.
DIGITAL EXTREME TECHNOLOGIES,
INC., a Delaware corporation
EXEO ENTERTAINMENT, INC.,
a Nevada corporation
By:
By:
/s/ Jeffrey Weiland
Jeffrey Weiland, President
/s/ Robert Scott Amaral
Robert Scott Amaral, CEO
4478 Wagon Trail Ave
Las Vegas, NV 89118
5
EXHIBIT A
Description of DXT Products
Extreme Gamer – all associated patents, copyrights, trademarks, trade names, service marks, acquisition of any and all design documentation
including: prototypes, beta units, any work in process, CAD files, portfolios, marketing materials, and the rights to patent “Multi Video Game
Changer #20100048306” Also to include any prospective customer lists, marketing research, business, marketing, manufacturing, distribution,
or operational plans, including the following domain names:
www.digitalextremegamer.com
www.digitalextremegamer.info
Black Widow Keyboard – all associated patents, copyrights trade names, trademarks, service marks, design documentation, prototypes, any and
all marketing materials, prospective customer lists, marketing research, business, marketing, manufacturing, distribution, or operational plans.
Reality Pro – all associated patents, copyrights, trade names, trademarks, service marks, design documentation, prototypes, any and all
marketing materials, prospective customer lists, marketing research, business, marketing, manufacturing, distribution, or operational plans, and
including the following domains:
www.motionsimpro.com
www.motionsimpro.net
www.vrealitypro.com
www.vrealitypro.net
www.vr-forum.com
4478 Wagon Trail Ave
Las Vegas, NV 89118
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Modification Dated Effective May 24, 2012
In reference to the Exclusive License Agreement (the “Agreement”) dated May 25, 2011 between Exeo Entertainment, Inc., a Nevada
corporation (the “Company” or “Licensee”) and Digital Extreme Technologies, Inc., a Nevada corporation (“DXT” or “Licensor”), the Parties
agree to modify such Agreement as follows:
Section 4 License Fee:
Current language : Licensee agrees to complete product development on (i) the Extreme Gamer no later than 12 months from the date of this
Agreement, and (ii) the Black Widow Keyboard no later than 18 months from the date of this Agreement.
Replace with the following language: Licensee agrees to complete product development on (i) the Extreme Gamer no later than 24 months
from the date of this Agreement, and (ii) the Black Widow Keyboard no later than 30 months from the date of this Agreement.
IN WITNESS WHEREOF the undersigned have executed this Agreement as of the day and year first written above.
EXEO Entertainment, Inc.
Scott Amaral
By:
/s/ Scott Amaral
Its:
CEO
November 30, 2012
Jeff Weiland
By:
/s/ Jeff Weiland
Its:
President
November 30, 2012
PROJECT MANAGEMENT AGREEMENT TERMS & CONDITIONS
This Agreement is made on the 15th July 2013 (hereinafter referred to as date) between Elite Product Management Ltd , the Vendor, which
has premises at Room 703, Kowloon Building, 555 Nathan Road, Kowloon, Hong Kong (hereinafter referred to as “EPML”) and Exeo
Entertainment, Inc. (hereinafter referred to as “Exeo”).
1.
Purpose of the Agreement
1.1. EPML undertakes to provide management of product transfer to new manufacturing factory and product development services to
Exeo to support its design, product development, product re-engineering and manufacturing management.
1.2. This agreement are covering three products
2.
1.2.1.
Psyko™: http://www.exeoent.com/products/krypton.html
1.2.2.
Zaaz™: http://www.exeoent.com/products/Zaaz.html
1.2.3.
Extreme Gamer®: http://www.exeoent.com/products/extremGamer.html
Contract Term
This agreement is one-year contract effective with the contract signed date.
3.
EPML Responsibilities
The key roles are outlined below:
3.1. Product Sourcing, which will be made available to Exeo on request
3.2. Production Management
3.3. Manage factory relationships – act as first point of contact for Exeo /Psyko
3.4. Develop and maintain production plan with each factory for every product
3.5. Review and evaluate supplier BOMs making recommendations to factories and Exeo where appropriate to save money or improve
on quality of components
3.6. Work with factories to find solutions to production issues to ensure that any delays in production are minimal and any defaults by
the factory are managed and solutions applied
3.7. Quality Control
3.7.1.
Develop Product Testing Plan
3.7.2.
Agree standards with Exeo
3.7.3.
Ensure standards are communicated to factories and are signed off in advance of production
3.7.4.
Evaluate samples and prototypes
3.7.5.
Develop and monitoring the product reliability testing procedures
4478 Wagon Trail Ave · Las Vegas, NV 89118 · Phone 702-361-3188 · Fax 702-361-4359
4478 Wagon Trail Ave · Las Vegas, NV 89118 · Phone 702-361-3188 · Fax 702-361-4359
Exeo Entertainment, Inc.
3.7.6.
Regularly visit factories to inspect and test at various stages of production from delivery of components to finished products
3.7.7.
Analyze and report on problems incurred in mass production work with Product Manager and Vendors to find solutions
3.7.8.
Conduct periodic vendor audits
3.8. Product development and design modifications
3.8.1.
Work with supplier to provide the product engineering development (2D modification and 3D drawing etc.)
3.8.2.
Product improvement and re-engineering.
3.8.3.
Supervise the development of CAD (as required by Exeo) and arrange the tooling transfer
3.8.4.
Supervise the Tooling modification – output will be the Product Validation Test (PVT) Samples.
3.8.5.
Review the tooling, and if satisfied request that the Engineering Product (EP) samples are produced.
3.8.6.
Undertake the EP testing and if satisfied proceed to testing stage.
3.8.7.
On approval of test samples instruct the factory to produce the Golden Sample.
3.9. QA Pre-Shipment Inspection
3.10. New technology research and introducing
3.11. Vendor Management
4.
3.11.1.
Provide assistance to negotiate commercial terms and improve payment terms with factories on behalf of Exeo
3.11.2.
EPML will undertake an on-going program to ensure Vendor conformity and performance standards which will include:
3.11.2.1.
Conformity and validation of certification requirements for each product relevant to the target market into which the
goods will be sold by Exeo.
3.11.2.2.
A program of factory audits which will be made available to Exeo on request
3.11.2.3.
Regular vendor performance evaluation
3.11.2.4.
Continual Quality Control programs to maintain conformance to the golden sample and BOM.
3.11.2.5.
Undertake testing of samples and provide feedback to Exeo
3.11.2.6.
Review and Work with suppliers to meet or improve on agreed target FOB costs as agreed with EXEO.
Pricing and payment terms
4.1. The service costs are structured as a flat monthly payment with one-year contract.
4478 Wagon Trail Ave · Las Vegas, NV 89118 · Phone 702-361-3188 · Fax 702-361-4359
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Exeo Entertainment, Inc.
4.2. EPML will be paid US$5,250 as a monthly retainer for design, development and management for products.
4.3. The service fee will be payable monthly on the 15 th day of each calendar month.
4.4. US$5,250 will be payable upon the contract signed as one month pre-payment
5.
Governing law
This agreement shall be governed by and interpreted in accordance with Hong Kong law.
The headings in this agreement are for convenience only and have no legal effect.
IN WITNESS of the above the parties have executed this agreement on the date written at the head of this agreement.
Signed for and on behalf of EMPL:
Signed for and on behalf of Exeo:
/s/ Robert Scott Amaral
Name: Kitty Lo
Name: Robert Scott Amaral
Position: Managing Director
Position: Chief Executive Officer
Date:
Date: July 15, 2013
4478 Wagon Trail Ave · Las Vegas, NV 89118 · Phone 702-361-3188 · Fax 702-361-4359
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CONSULTING SERVICES AGREEMENT
This Consulting Services Agreement is entered into this 10th day of August 2012 by and between Markel Enterprises LLC, hereinafter referred
to as "Consultant", and Exeo Entertainment, Inc., hereinafter referred to as "Client".
Whereas Consultant is engaged in the business of project development and engineering and Client desires to retain Consultant to provide
services related to the project known as Zaaz Keyboards , hereinafter referred to as "Product", Consultant has agreed to provide such services
under the terms and conditions set forth herein.
Now therefore, for and in consideration of the payments hereinafter specified to be made by Client to Consultant, the parties hereto do hereby
agree as follows:
Section I.
SCOPE OF WORK
Consultant shall perform the work specifically indicated in Attachment "A" and any additional work authorized by subsequent addenda as
outlined under Section II (4) herein.
ESTIMATED FEES for services outlined in Attachment "A":
$
8160.00
RETAINER Due upon Execution of Agreement:
$
2000.00
1. Fee Estimate. Actual fees may be more or less than the estimated amount depending upon extent of drawing revisions or modifications,
client meetings and other factors. In addition to fees, Client agrees to pay for all project- related expenses incurred by Consultant in accordance
with Section II, Paragraph 2, herein.
2. Exclusions to Scope of Work . Fee estimate is based on the specific scope of work outlined in Attachment "A". For example, scope of
work does NOT include any hours for the following:

Offshore work: time spent at factories, with suppliers, sourcing, traveling to/from/in China
If Client elects to expand scope of work to include the above or other unspecified additional work, fee estimate will be adjusted accordingly.
Consulting Services Agreement – EXEO – Page 1
Initials
Section II.
AGREEMENT PRICE AND TERMS OF PAYMENT
In consideration of Consultant providing the services and work set forth herein, Client shall pay Consultant on a time and materials basis as
hereinafter provided:
1.
Fees shall be paid by Client for the time that Consultant and Consultant's employees or agents are directly engaged in the work
outlined herein. Hours worked shall be recorded daily in fifteen-minute increments (0.25 hour). Where work related to Client's project is
performed but accounts for less than fifteen minutes in any one day, a minimum 0.25 hour charge shall apply. Client shall pay fees in
accordance with Consultant's current billing rate schedule, which at the date of this agreement is as follows:
$120.00 per hour
Engineering Services / Product
Development
Consultant's billing rates may change from time to time. However, the rates outlined herein shall be guaranteed for a minimum of 90 days from
the date of this agreement. Any change in rates requires a thirty-day advance written notification from Consultant.
2.
For all expenses incurred by Consultant in conjunction with performance of the work outlined herein, Client shall reimburse
Consultant's actual cost. Such expenses may include but are not limited to:
 expense of shipping, courier or overnight delivery service, long distance communications and wire charges
 reasonable out of town transportation and living expenses (e.g. lodging, meals,, rental cars, gasoline, airfare, tolls, cab fare) incurred
in connection with the scope of work
 expense of reproductions, renderings, prototypes, and mock-ups requested by Client
 expense of tests, surveys, focus groups and research authorized by Client
 expenses related to camera-ready artwork for printing, screen printing, and embroidery
Consultant reserves the right to decline to incur any or all expenses associated with performance of the work herein, in which case Client must
pay directly for such expenses. Further, Client may elect to use its own account numbers for FedEx / UPS shipping and similar services and/or
to directly pay vendors/suppliers for expenses in excess of $50.00, in which case Client shall notify Consultant of such election prior to start of
project.
3.
At his option, Consultant may subcontract portions of the work outlined herein. All provisions of this agreement shall apply to the
subcontractor, and Consultant shall so inform subcontractor(s).
4.
Should Client desire to change the scope of Consultant's work hereunder, then prior to such change of scope the Agreement price
(i.e., fees and expenses) shall be subject to adjustment, at Consultant's discretion, by an amount to be mutually agreed upon to reflect the value
of such change. Any change in scope of work and fees shall be documented by written addenda executed by both Client and Consultant.
5.
Consultant shall submit invoices to Client on a bi-monthly (every other week) basis. Payment shall be due fifteen (15) calendar days
from the date of the invoice. Late payments shall be subject to a service charge of 1-1/2% per month or the legal rate, whichever is greater. The
retainer will be held and applied to the final invoice – retainer amount will not be applied to bi-monthly invoices. Consultant agrees to keep
records pertaining to all charges applicable to this agreement.
Consulting Services Agreement – EXEO – Page 2
Initials
Section VI.
TERMINATION
1.
Either party to this Agreement shall have the right to terminate the Agreement at any time by giving written notice to the other party
in accordance with Section VI herein. If Client exercises this right, Consultant shall immediately upon receipt of written notice cease all
services in progress and invoice for all work performed and expenses incurred up to and including the notice date. Client shall make payment
of the final invoice amount on the basis set forth in Section II herein. Upon payment in full by Client of all invoiced amounts, Consultant shall
deliver to Client the results of all services performed to date, together with copies of drawings, specifications, and other documents as Client
may have furnished to Consultant for use in connection with the services.
Section VII.
NOTICES
1.
Any notice required or permitted to be given hereunder shall be hand-delivered or sent by registered mail to Client and Consultant at
their respective addresses shown below. Any such notice delivered as aforesaid shall be deemed to have been received by the party to whom it
is addressed on the date and at the time it is so delivered, and any notice mailed as aforesaid shall be deemed to have been received by the party
to whom it is addressed the fifth day following the date of the mailing. All addresses for service of notices shall be street addresses and not
post office boxes . The addresses for service of any notices and reports hereunder to and/or by the Consultant and the Client shall be
respectively as follows:
CONSULTANT
CLIENT
Markel Enterprises LLC
45885 Verba Santa Drive
Palm Desert, CA 92260
Attention: Jeff Kelsoe
Exeo Entertainment, Inc.
4478 Wagon Trail Ave
Las Vegas, NV 89118
Attention: Jeff Weiland
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year written above.
Consulting Services Agreement – EXEO – Page 4
Initials
EXHIBIT A
2012 EMPLOYEES/CONSULTANTS STOCK COMPENSATION PLAN
OF
EXEO ENTERTAINMENT, INC.
SECTION 1. ESTABLISHMENT AND PURPOSE
The Plan was established on July 6, 2012, effective July 6, 2012, to offer directors, officers and selected key employees. advisors and
consultants an opportunity to acquire a proprietary interest in the success of the Company to receive compensation, or to increase such interest,
by purchasing Shares of the Company’s common stock. The Plan provides both for the direct award or sale of Shares and for the grant of
Options to purchase Shares. Options granted under the Plan may include non-statutory options, as well as ISOs intended to qualify under
section 422 of the Code.
The Plan is intended to comply in all respects with Rule 16.3 (or its successor) under the Exchange Act and shall be construed
accordingly.
SECTION 2. DEFINITIONS.
(A)
“BOARD OF DIRECTORS” shall mean the Board of Directors of the Company, as constituted from time to time.
(B)
“CODE” shall mean the Internal Revenue Code of 1986. as amended.
(C)
“COMMITTEE” shall mean a committee of the Board of Directors, as described in Section 3(a).
(D)
“COMPANY” shall mean EXEO ENTERTAINMENT, INC., a Nevada corporation.
(E) “EMPLOYEE” shall mean (i) any individual who is a common-law employee of the Company or of a Subsidiary. (ii) an
Outside Director, (iii) an independent contractor who performs services for the Company or a Subsidiary and who is not a member of the Board
of Directors, including consultants and advisors that provide professional, technical, financial, legal, accounting, capital markets related and
other services. Services as an Outside Director or independent contractor shall be considered employment for all purposes of the Plan, except as
provided in Subsections (a) and (b) of Section 4.
(F)
“EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as amended.
(G) “ EXERCISE PRICE” shall mean the amount For which one share may be purchased upon exercise of an Option, as specified
by the Committee in the applicable Stock Option Agreement.
(H)
“FAIR MARKET VALUE” shall mean the market price of Stock. determined by the Committee as follows:
(i) If Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the
closing price reported for such date by the applicable composite-transactions report:
(ii) If stock was traded over-the-counter on the date in question and was traded on the Nasdaq system or the Nasdaq
National Market, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the Nasdaq system or
the Nasdaq National Market:
(iii) If Stock was traded over-the-counter on the date in question but was not traded on the Nasdaq system or the Nasdaq
National Market, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices
quoted for such date by the principal automated inter-dealer quotation system on which Stock is quoted or, if the Stock is not quoted
on any such system, by the "Pink Sheets" published by the National Quotation Bureau. Inc.; and
(iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in
good faith on such basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.
(I)
“ISO” shall mean an employee incentive stock option described in section 422(b) of the Code.
(J)
“NON-STATUORY OPTION” shall mean an employee stock option not described in sections 422(b) or 423(b) of the Code.
(K) “OFFEREE” shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other than
upon exercise of an Option)
(L)
“OPTION” shall mean an ISO or Non-statutory Option granted under the Plan and entitling the holder to purchase Shares.
(M)
“OPTIONEE” shall mean an individual who holds an Option.
(N) “OUTSIDE DIRECTOR” shall mean a member of the Board of Directors who is not a common–law employee of the Company
or of a Subsidiary.
(O) COMMITTEE PROCEDURES. The Committee shall designate one of its members as chairman. The Committee may hold
meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a
quorum exists. or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee.
(P) COMMITTEE RESPONSIBILITIES. Subject to the provisions of the Plan, the Committee shall have the authority and
discretion to take the following actions:
(i)
To interpret the Plan and to apply its provisions:
(ii)
To adopt, amend or rescind rules, procedures and forms relating to the Plan:
(iii)
To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the
(iv)
To determine when Shares are to be awarded or offered for sale and when Options are to be granted under the Plan:
(v)
To select the Offerees and Optionees:
(vi)
To determine the number of Shares to be offered to each Offeree or to be made subject to each Option:
Plan:
(vii) To prescribe the terms and conditions of each award or sale of Shares, including (without limitation) the Purchase Price,
and to specify the provisions of the Stock Purchase Agreement relating to such award or sale:
(viii) To prescribe the terms and conditions of each Option, including (without limitation) the Exercise Price, to determine
whether such Option is to be classified as an ISO or as a Non-statutory Option, and to specify the provisions of the Stock Option
.Agreement relating to such Option:
(ix) To amend any outstanding Stock Purchase Agreement or Stock Option Agreement, subject to applicable legal
restrictions and, to the extent such amendments adverse to the Offeree’s or Optionee’s interest, to the consent of the Offeree or
Optionee who entered into such agreement:
(x)
To prescribe the consideration for the grant of each Option or other right under the Plan and to determine the sufficiency
of such consideration: and
(xi)
To take any other actions deemed necessary or advisable for the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and
all persons deriving their rights from an Offeree or Optionee. No member of the Committee shall be liable for any action that he or she
has taken or has failed to lake in good faith with respect to the Plan, any Option, or any right to acquire Shares under the Plan.
SECTION 3. INTENTIONALLY OMITTED
SECTION 4. ELIGIBILITY.
(A) GENERAL, RULES. Only Employees (including, without limitation, independent contractors, consultants and legal counsel
who are not members of the Board of Directors) shall be eligible for designation as Optionees or Offerees by the Committee. In addition. only
Employees who are common-law employees of the Company or a Subsidiary shall be eligible for the grant of ISOs. Employees who are
Outside Directors shall only be eligible for the grant of the Non-statutory Options described in Subsection (b) below.
(B) OUTSIDE DIRECTORS. Any other provision of the Plan notwithstanding, the participation of Outside Directors in the Plan
shall be subject to the following restrictions:
(i)
outside Directors shall receive no grants other than the Non-statutory options described in this Subsection (b)
(ii) All Non-statutory Options granted to an Outside Director under this Subsection (b) shall also become exercisable in fill
in the event of the termination of such Outside Director’s service because of death. Total and Permanent Disability or voluntary
retirement at or after age 65.
(iii) The Exercise Price under all Non-statutory Options granted to an Outside Director under this Subsection (b) shall be
equal to 100 percent of the Fair Market Value of a Share on the date of grant, payable in one of the forms described in Subsection (a),
(b), (c) or (d) of Section 6.
(iv) Non-statutory options granted to an outside Director under this Subsection (b) shall terminate on the earliest of (A) the
10th anniversary of the date of grant. (B) the date three months after the termination of such Outside Director’s service for any reason
other than death or Total and Permanent Disability or (C) the date 12 months after the termination of such Outside Director’s service
because of death or Total and Permanent Disability.
The committee may provide that the Non-statutory Options that otherwise would be granted to an Outside Director under this
Subsection (b) shall instead be granted to an affiliate of such Outside Director. Such affiliate shall then be deemed to be an Outside
Director for purposes of the Plan, provided that the service related vesting and termination provisions pertaining to the Non-statutory
Options shall be applied with regard to the service of the Outside Director.
(C) ATTRIBUTION RULES. For purposes of Subsection (c) above, in determining stock ownership, an Employee shall be deemed
to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock
owned, directly or indirectly. by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its
stockholders, partners or beneficiaries. Stock with respect to which such Employee holds an option shall not be counted.
(D) OUTSTANDING STOCK. For purposes of Subsection (c) above. “outstanding Stock” shall include all Stock actually issued
and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options
held by the Employee or by any oilier person.
SECTION 5. STOCK SUBJECT TO PLAN.
(A) BASIC LIMITATION. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate
number of Shares which may be issued under the Plan (upon exercise of Options or other rights to acquire Shares) shall be 5,000,000 Shares,
subject to adjustment pursuant to Section 9. The number of Shares which are subject to Options or other rights outstanding at any time under
the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company, during the term of the
Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.
(B) ADDITIONAL SHARES. In the event that any outstanding Option or other right for any reason expires or is cancelled or
otherwise terminated, the Shares allocable to the unexercised portion of such Option or other right shall again be available for the purposes of
the Plan. In the event that Shares issued under the Plan are reacquired by the Company pursuant to a forfeiture provision, a right of repurchase
or a right of first refusal. Such Shares shall again be available for the purposes of the Plan.
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
(A) AGREEMENT. Each award or sale of Shares under the Plan (other than upon exercise of an Option) shall be evidenced by an
Agreement between the Offeree and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for
inclusion in an Agreement. The provisions of the various Agreements entered into under the Plan need not be identical.
(B) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right to acquire Shares under the Plan (other
than an Option) shall automatically expire if not exercised by the Offeree within 30 days after the grant of such right was communicated to the
Offeree by the Committee. Such right shall not be transferable and shall be exercisable only by the Offeree to whom such right was granted.
(C) PURCHASE PRICE. The Purchase Price of Shares to be offered under the Plan shall not be less than 90 percent of the Fair
Market Value of such Shares. Subject to the preceding sentence, the Purchase Price shall be determined by the Committee at its sole discretion.
The Purchase Price shall be payable in a form described in Section 6.
(D) WITHHOLDING TAXES. As a condition to the award, sale or vesting of Shares, the Offeree shall make such arrangements as
the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that arise in connection with
such Shares. The Committee may permit the Offeree to satisfy all or part of his or her tax obligations related to such Shares by having the
Company withhold a portion of any Shares that otherwise would be issued to him or her or by surrendering any Shares that previously were
acquired by him or her. The Shares withheld or surrendered shall be Valued at their Fair Market Value on the date when taxes otherwise would
be withheld in cash. The payment of taxes by assigning Shares to the Company, if permitted by the committee, shall be subject to such
restrictions as the Committee may impose, including any restrictions required by rules of the Securities and Exchange Commission.
(E) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares awarded or sold under the Plan shall be subject to such special
forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Purchase Agreement and shall apply in addition to any general restrictions that may apply
to all holders of Shares.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
(A) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement
between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.
(B) NUMBER OF SHARES. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and
shall provide for the adjustment of such number in accordance with Section 9. The Stock Option Agreement shall also specify whether the
Option is an ISO or a Non-statutory Option.
(C) EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be
less than 100 percent of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(c). The Exercise Price
of a Non-statutory Option shall not be less than 85 percent of the Fair Market Value of a Share on the date of grant. Subject to the preceding
two sentences, the Exercise Price under any Option shall be determined by the Committee at its sole discretion. The Exercise Price shall be
payable in a form described in Section 8.
(D) WITHHOLDING TAXES. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the
Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that arise in connection with such
exercise. The Optionee shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or
foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option. The
Committee may permit the Optionee to satisfy all or part of his or her tax obligations related to the Option by having the Company withhold a
portion of any Shares that otherwise would be issued to him or her or by surrendering any Shares that previously were acquired by him or her.
Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. The payment of taxes by
assigning Shares to the Company, if permitted by the Committee, shall be subject to such restrictions as the Committee may impose, including
any restrictions required by rules of the Securities and Exchange Commission.
(E) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify the date when all or any installment of the
Option is to become exercisable. The vesting of any Option shall be determined by the Committee at its sole discretion. A Stock Option
Agreement may provide for accelerated exercisability in the event of the Optionee’s death. Total and Permanent Disability or retirement or
other events. The Stock Option Agreement shall also specify the term of the Option. The term shall not exceed 10 years from the date of grant,
except as otherwise provided in Section 4(c). Subject to the preceding sentence, the Committee at its sole discretion shall determine when an
Option is to expire.
(F)
NON TRANSFERABILITY. During an Optionee’s lifetime, such Optionee’s Option(s) shall be exercisable only by him or her
and shall not be transferable, unless permitted by the Stock Option Agreement. In the event of an Optioneets death, such Optionee’s Option(s)
shall not be transferable other than by will, by a beneficiary designation executed by the Optionee and delivered to the Company, or by the
laws of descent and distribution.
(G) TERMINATION OF SERVICE (EXCEPT BY DEATH). If an Optionee’s Service terminates for any reason other than the
Optionee’s death, then such Optionee’s Option(s) shall expire on the earliest of the following occasions:
(i)
The expiration date determined pursuant to Subsection (e) above:
(ii) The date 90 days after the termination of the Optionees Service for any reason other than Total and Permanent
Disability: or
(iii)
The date six months after the termination of the Optionee’s Service by reason of Total and Permanent Disability.
The Optionee may exercise all or part of his or her Option(s) at any time before the expiration of such Option(s) under the
preceding sentence, but only to the extent that such Option(s) had become exercisable before the Optionee’s service terminated or
became exercisable as a result of the termination. The balance of such Option(s) shall lapse when the Optionee’s Service terminates.
In the event that the Optionee dies after the termination of the Optionee’s Service but before the expiration of the Optionee’s
Option(s). all or part of such Option(s) may be exercised (prior to expiration) by his of her designated beneficiary (if applicable), by
the executors or administrators of the Optionee’s estate or by any person who has acquired such Option(s) directly from the Optionee
by bequest or inheritance, but only to the extent that such Option(s) had become exercisable before the Optionee’s Service terminated
or became exercisable as a result of the termination.
(H) LEAVES OF ABSENCE. For purposes of Subsection (g) above. Service shall be deemed to continue while the Optionee is on
sick leave or other bonafide leave of absence (as determined by the Committee). The foregoing notwithstanding, in the case of an ISO granted
under the Plan. Service shall not be deemed to continue beyond the first 90 days of such leave, unless the Optionee’s reemployment rights are
guaranteed by statute or by contract.
(I) DEATH OF OPTIONEE. If an Optionee dies while he or she is in service, then such Optionee’s Option(s) shall expire on the
earlier of the following dates:
(i)
The expiration date determined pursuant to Subsection (e) above: or
(ii)
The date six months after the Optionee’s death.
All or part of the Optionee’s Option(s) may be exercised at any time before the expiration of such Option(s) under the
preceding sentence by his or her designated beneficiary (if applicable), by the executors or administrators of the optionee’s estate or
by any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance, but only to the extent that such
Option(s) had become exercisable before the Optionee’s death or became exercisable as a result of the Optionee’s death. The balance
of such Option(s) shall lapse when the Optionee dies.
(J) NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with
respect to any Shares covered by his or her Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be
made, except as provided in Section 9.
(K) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the limitations of the Plan, the Committee may
modify, extend or renew outstanding Options or may accept the cancellation of outstanding Options (to the extent not previously exercised) in
return for the grant of new Options at the same or a different price. The foregoing notwithstanding, no modification of an option shall, without
the consent of the Optionee, impair such Optionee’s rights of increase his or her obligations under such Option.
(L) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon exercise of an Option shall be subject to such special
forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to
all holders of Shares.
SECTION 8. PAYMENT FOR SHARES.
(A) GENERAL RULE. The entire Purchase Price or Exercise Price of Shares issued under the Plan shall he payable in lawful
money of the United States of America at the time when such Shares are purchased, except as follows:
(i) In the case of Shares sold under the terms of a Stock Purchase Agreement subject to the Plan payment shall be made
only pursuant to the express provisions of such Stock Purchase Agreement. However the Committee (at its sole discretion) may
specify in the Stock Purchase Agreement that payment may be made in one or all of the forms described in Subsections (e). (f) and
(g) below.
(ii)
In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the
applicable Stock Option Agreement. However, the Committee (at its sole discretion) may specify in the Stock Option Agreement that
payment may be made pursuant to Subsections (b), (c), (d), (1) or (g) below.
(iii)
In the case of a Non-statutory Option granted under the Plan, the committee (at its sole discretion) may accept payment
pursuant to Subsections (b), (e), (d), (f) or (G) below.
(B) SURRENDER OF STOCK. To the extent that this Subsection (b) is applicable, payment may be made all or in part with Shares
which have already been owned by the Optionee or his or her representative for more than 12 months and which are surrendered to the
Company in good form for transfer. Such Shares shall be valued at their fair Market Value on the date when the new Shares are purchased
under the Plan.
(C) EXERCISE/SALE. TO THE EXTENT THAT THIS SUBSECTION (C) is applicable, payment may be made by the delivery
(on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to
deliver all or part of the sales proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.
(D) EXERCISE/PLEDGE. To the extent that this Subsection (d) is applicable, payment may be made by the delivery (on a form
prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company as security
for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding
taxes.
(E)
SERVICES RENDERED. To the extent that this Subsection (e) is applicable. Shares may be awarded under the Plan in
consideration of services rendered to the Company or a Subsidiary prior to the award. If Shares are awarded without the payment of a Purchase
Price in cash the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the
sufficiency of the consideration to meet the requirements of Section 6(c).
(F)
PROMISSORY NOTE. To the extent that this Subsection (f) is applicable, a portion of the Purchase Price or Exercise Price. as
the case may be. of Shares issued under the Plan maybe payable by a full recourse promissory note, provided that (i) the par value of such
Shares must be paid in lawful money of the United States of America at the time when such Shares are purchased, (ii) the Shares are security
for payment of the principal amount of the promissory note and interest thereon and (iii) the interest rate payable under the terms of the
promissory note shall he no less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject
to the foregoing, the Committee (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other
provisions of such note.
(G) OTHER FORMS OF PAYMENT. To the extent that this Subsection (g) is applicable. payment may be made in any other form
approved by the Committee, consistent with applicable laws. regulations and rules.
SECTION 9. ADJUSTMENT OF SHARES.
(A) GENERAL. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration
of a dividend payable in a form other than Shares in an amount that has a material effect on the value of Shares, a combination or
consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spinoff or a
similar occurrence, the Committee shall make appropriate adjustments in one or more of (i) the number of Shares available for future grants
under Section 5. (ii) the number of Non-statutory Options to be granted to Outside Directors under Section 4(b). (iii) the number of Shares
covered by each outstanding Option or (iv) the Exercise Price under each outstanding Option.
(B) REORGANIZATIONS. In the event that the company is a party to a merger or other reorganization, outstanding Options shall
be subject to the agreement of merger or reorganization. Such agreement may provide. without limitation, for the assumption of outstanding
Options by the surviving corporation or its parent, for their continuation by the Company (if the Company is a surviving corporation) . for
payment of a cash settlement equal to the difference between the amount to be paid for one Share under such agreement and the Exercise
Price, or for the acceleration of their exercisability followed by the cancellation of Options not exercised, in all cases without the Optionees’
consent. Any cancellation shall not occur until after such acceleration is effective and Optionees have been notified of such acceleration. In the
case of Options that have been outstanding for less than 12 months, a cancellation need not be preceded by acceleration.
(C ) RESERVATION Of RIGHTS. Except as provided in this Section 9. an Optionee or Offeree shall have no rights by reason of any
subdivision or consolidation of shares of Stock of any class, the payment of any dividend or any other increase or decrease in the number of
shares of stock of any class. Any issue by the Company of shares of Stock of any class, or securities convertible into shares of Stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with respect to: the number or Exercise Price of Shares subject to an
Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments.
reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
SECTION 10. SECURITIES LAWS.
Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all
applicable requirements of law. including without limitation) the Securities Act of 1933. as amended, the rules and regulations promulgated
thereunder, state securities laws and regulations, and the regulations of any stock exchange on which the Company’s securities may then be
listed.
SECTION 11. NO RETENTION RIGHTS.
Neither the Plan nor any Option shall be deemed to give any individual a right to remain an employee, consultant or director of the
Company or a Subsidiary. The Company and its Subsidiaries reserve the right to terminate the service of any employee, consultant or director,
at any time, with or without cause, subject to applicable laws, the Company’s certificate of incorporation and by-laws and a written
employment agreement (if any).
SECTION 12. DURATION AND AMENDMENTS.
(A) TERM OF THE PLAN. The Plan, as set forth herein, shall become effective as of July 6. 2012. The Plan shall terminate
automatically 15 years after its initial adoption by the Board of Directors on July 5. 2027. and may be terminated on any earlier date pursuant
to Subsection (b) below.
(B) RIGHTS TO AMEND OR TERMINATE THE PLAN. The Board of Directors may. subject to applicable law. amend, suspend
or terminate the Plan at any time and for any reason. An amendment to the Plan shall require stockholder approval only to the extent required
by applicable law.
(C) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or sold under the Plan after the termination
thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereto shall not
affect any Share previously issued or any Option previously granted under the Plan.
SECTION 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors on July 6. 2012. the Company has caused its authorized officer to
execute the same.
EXEO ENTERTAINMENT, INC.,
a Nevada corporation
By:
/s/ Robert Scott Amaral
Robert Scott Amaral. CEO
August 15, 2013
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
U.S. Securities and Exchange Commission
Washington, DC 20549
Ladies and Gentlemen:
We hereby consent to the incorporation and use in this Registration Statement of Exeo Entertainment, Inc. on Form S-1 of our audit report,
dated July 25, 2013 relating to the accompanying balance sheets as of November 30, 2012 and December 31, 2011 and the related statements of
operations, stockholders’ equity (deficit), and cash flows for the year ended November 30, 2012, for the period from inception (May 12, 2011)
to December 31, 2011, and for the cumulative period from inception (May 12, 2011) to November 30, 2012, which appears in such
Registration Statement.
We also consent to the reference to our Firm under the title “Interests of Named Experts and Counsel” in the Registration Statement and this
Prospectus.
De Joya Griffith, LLC
/s/ De Joya Griffith, LLC
Henderson, NV
August 15, 2013
Corporate Headquarters:
De Joya Griffith, LLC
2580 Anthem Village Drive , Henderson, NV 89052 Phone: (702) 563-1600 Fax: (702) 920-8049