WEB NEWS Notable Share Transactions
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On June 6, 2016, XcelMobility, Inc., a Nevada corporation (the “Company”) filed a Certificate of Amendment to the Company’s Articles of Incorporation to increase the total number of authorized shares of common stock from 800,000,000 to 4,200,000,000 (the “Certificate of Amendment”). As disclosed in the Company’s Schedule 14C Information Statement filed with the Securities and Exchange Commission on May 16, 2016, on April 29, 2016, the board of directors of the Company and shareholders holding 51% of the voting power of the outstanding capital stock, took action by written consent for the purpose of approving the Certificate of Amendment.
Deal Flow
SECTION 1 – REGISTRANT’S BUSINESS AND OPERATIONS
Item 1.01. Entry into a Material Definitive Agreement.
On May 18, 2016, XcelMobility, Inc., a Nevada corporation (the “Company”), entered into two convertible promissory notes in the aggregate principal amount of USD $1,000,000 (the “Notes”) with two foreign accredited investors (the “Investors”).
The Notes mature on December 31, 2016 and accrue interest at the rate of 5.0% per annum. The Notes are convertible at any time prior to August 18, 2016, in whole or in part, at the Investors’ option into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to $0.001 (as adjusted for stock splits, stock dividends, stock combinations or other similar transactions).
The Notes contain customary representations, warranties and covenants by, among and for the benefit of the parties and contain similar terms as the convertible promissory note issued by the Company to Biz Wit Holdings Ltd. as filed with the Securities Exchange Commission on May 6, 2016.
SECTION 3 – SECURITIES AND TRADING MARKETS
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth under Item 1.01 of this Report is incorporated by reference into this Item.
The Notes were issued in reliance upon Regulation S of the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder (the “Securities Act”), to investors who are “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act, or in offshore transactions (as defined in Rule 902 under Regulation S of the Securities Act), based upon representations made by such investors.
Comments & Business Outlook
XCELMOBILITY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the Three Months Ended
March 31,
2016
2015
Revenue
$
20,574
$
74,371
Cost of Revenue
(917
)
(299
)
Gross Profit
19,657
74,072
Operating Expenses:
Selling expense
25,461
50,149
General and administrative expense
151,828
175,393
Total Operating Expenses
177,289
225,542
Loss from Operations
(157,632
)
(151,470
)
Other Income (Expense):
Interest income
21
72
Amortization of debt discount
(67,065
)
(133,982
)
Gain on derivatives
279,071
253,982
Total Other Income (Expense)
212,027
120,072
Income (Loss) Before Taxes
54,395
(31,398
)
Income tax expense
-
-
Net Income (Loss)
54,395
(31,398
)
Foreign currency translation adjustment
(83,215
)
(544
)
Comprehensive loss
$
(28,820
)
$
(31,942
)
Earnings (loss) per share - Basic
$
(0.0001
)
$
(0.0001
)
Earnings (loss) per share – Dilutive
$
(0.0001
)
$
(0.0001
)
Basic weighted average number of shares outstanding
333,925,553
223,132,358
Diluted weighted average number of shares outstanding
333,925,553
223,132,358
Deal Flow
Item 1.01. Entry into a Material Definitive Agreement.
The Note matures on December 31, 2016 and accrues interest at the rate of 5.0% per annum. The Note is convertible at any time prior to August 6, 2016, in whole or in part, at Biz Wit’s option into shares of the Company’s common stock, par value $0.001 per share, at a conversion price equal to $0.001 (as adjusted for stock splits, stock dividends, stock combinations or other similar transactions).
The Note contains customary representations, warranties and covenants by, among and for the benefit of the parties.
SECTION 3 – SECURITIES AND TRADING MARKETS
The Note is attached hereto as Exhibit 10.1, and is incorporated herein by reference.
Auditor trail
Item 4.01. Changes in Registrant’s Certifying Accountant.
(a) Resignation of Independent Certifying Accountant
As a result of the Merger, AWC resigned as the Company’s independent registered public accounting firm on April 30, 2016. On May 4, 2016, the Company engaged DCAW (CPA) Limited as its independent registered public accounting firm. The engagement of DCAW was approved by the Company’s board of directors on May 4, 2016.
The audit reports of AWC on the financial statements of the Company as of and for the years ended December 31, 2015 contained disclaimer of opinion and December 31, 2014 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles but modified to a going concern.
In connection with the audits of the Company’s financial statements for the fiscal years ended December 31, 2015 and 2014 and through the date of this Current Report, there were: (i) no disagreements with AWC on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of AWC, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports, and (ii) no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K.
The Company has provided AWC with a copy of the foregoing disclosures and requested that AWC furnish the Company with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter is filed as Exhibit 16.1 to this Current Report on Form 8-K.
(b) Engagement of Independent Certifying Accountant
On May 4, 2016, the Company engaged DCAW (CPA) Limited as its independent registered public accounting firm. The engagement of DCAW was ratified by the Company’s board of directors on May 6, 2016.
Comments & Business Outlook
XCELMOBILITY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Years Ended
December 31,
2015
2014
Revenue
$
384,520
$
171,452
Cost of Revenue
6,556
5,550
Gross Profit
377,964
165,902
Operating Expenses:
Selling expense
211,522
24,226
General and administrative expense
1,266,177
1,889,077
Total Operating Expenses
1,477,699
1,913,303
Loss from Operations
(1,099,735
)
(1,747,401
)
Other Income (Expense):
Interest income
250
137
Interest expense
(40,000
)
(46,452
)
Amortisation of debt discount
(329,545
)
(335,250
)
Gain (loss) on derivative
414,230
(373,850
)
Other income
89,282
2,657
Other expenses
-
(624
)
Total Other Income (Expense)
134,217
(753,382
)
Loss Before Taxes
(965,518
)
(2,500,783
)
Income tax expense
-
-
Loss from continuing operation
$
(965,518
)
$
(2,500,783
)
Discontinued Operation:
Income from discontinued operation
-
739,181
Loss on disposal of interest in subsidiary
-
(1,790,285
)
Net income (loss) from discontinued operation
-
(1,051,104
)
Net loss
(965,518
)
(3,551,887
)
Foreign currency translation adjustment
422,063
100,248
Comprehensive loss
(543,455
)
(3,451,639
)
Basic and diluted loss per share:
Continuing Operation
$
(0.00189
)
$
(0.0239
)
Discontinued Operation
-
(0.0100
)
(0.00189
)
(0.0339
)
Basic and diluted weighted average number of shares outstanding
287,008,887
104,626,234
Comments & Business Outlook
Item 1.01 Entry into a Definitive Material Agreement
Separation Agreement – Ronald Strauss
On December 31, 2015, XcelMobility, Inc., a Nevada corporation (the “Company”) entered into a Separation Agreement (the “Separation Agreement”) with Mr. Ronald Edward Strauss, pursuant to which Mr. Strauss’ service to the Company and all of its subsidiaries terminated effective December 31, 2015 . In full satisfaction of all amounts owed to Mr. Strauss for his services and for certain releases and indemnities provided for under the Separation Agreement, Mr. Strauss shall receive severance pay of $15,000 in accordance with the terms of the Separation Agreement.
The foregoing description of the Separation Agreement is qualified in its entirety by reference to the provisions of the form of Separation Agreement filed as exhibit 10.1 to this Current Report on Form 8-K, which is incorporated herein by reference.
Transfer of Preferred Stock
On December 31, 2015, in connection with the Separation Agreement, Mr. Ronald Edward Strauss agreed to transfer 2,500,000 shares of the Company’s Series A Convertible Preferred Stock to Mr. Zhixiong Wei in consideration for Mr. Zhixiong Wei’s service as a member of the Company’s Board of Directors (the “Board”).
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2015
2014
2015
2014
Revenue
$
83,286
$
298,581
$
250,283
$
1,772,556
Cost of Revenue
97,854
137,542
173,475
365,828
Gross Profit
(14,569
)
161,039
76,808
1,406,728
Operating Expenses:
Selling expense
73,338
5,774
187,250
50,098
General and administrative expense
227,741
178,354
542,446
1,084,312
Total Operating Expenses
301,079
184,128
729,696
1,134,410
Income (loss) from Operations
(315,648
)
(23,089
)
(652,888
)
272,318
Other Income (Expense):
Interest income
149
35
224
117
Interest expense
(760
)
(21,751
)
(1,128
)
(48,000
)
Gain (loss) on derivative
(320,518
)
(68,467
)
314,493
(169,980
)
Amortization of debt discount
131,093
(163,143
)
(12,435
)
(322,159
)
Other income (expense)
-
-
-
66,247
Total Other Income (Expense)
(190,036
)
(253,326
)
301,154
(473,775
)
Income (loss) Before Taxes
(505,684
)
(276,415
)
(351,734
)
(201,457
)
Income tax expense
-
-
-
-
Net Income (Loss)
(505,684
)
(276,415
)
(351,734
)
(201,457
)
Foreign currency translation adjustment
(315,637
)
(316
)
340,971
10,115
Comprehensive (loss) income
(821,321
)
(276,099
)
10,763
(191,342
)
Basic income (loss) per share:
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Diluted income (loss) per share:
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Basic weighted average number of shares outstanding
253,896,191
79,794,261
253,896,191
75,554,068
Diluted weighted average number of shares outstanding
253,896,191
79,794,261
253,896,191
75,554,068
Deal Flow
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On July 9, 2015, the Board of Directors of XcelMobility, Inc., a Nevada corporation (the “Company”) approved a Certificate of Designation, included as Exhibit 3.1 hereto, which sets forth the rights, preferences and privileges for a new class of preferred stock of the Company, to be known as Series A Convertible Preferred Stock. The Company is authorized to issue up to 5,000,000 shares of Series A Convertible Preferred Stock. Holders of Series A Convertible Preferred Stock shall be entitled to the number of votes equal to 51% of the total number of votes entitled to be cast on any matters requiring a stockholder vote. The shares of Series A Convertible Preferred Stock are convertible at a one to one ratio into shares of common stock. The holders of Series A Convertible Preferred Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds, on an as-converted basis. However, the current policy of the Board of Directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of Series A Convertible Preferred Stock are entitled to share ratably in all assets that are legally available for distribution after payment in full of any preferential amounts, on an as-converted basis.
Deal Flow
12,600,000 Shares of Common Stock
XCELMOBILITY, INC.
Common Stock
The Prospectus, any prospectus supplements filed before the date hereof, and this Prospectus Supplement No. 3 relate to the resale of 12,600,000 shares of our common stock, par value $0.001 per share, by Hanover Holdings I, LLC (“Hanover”), including (i) 10,769,230 shares of the Company’s common stock issuable upon conversion of the principal of the senior convertible promissory note issued to Hanover as of May 30, 2014 (the “Convertible Note”); (ii) 71,508 shares of the Company’s common stock issuable upon conversion of the accrued interest under the Convertible Note; and (iii) 1,759,262 shares of our common stock issuable upon exercise of a warrant issued to Hanover as of May 30, 2014 (the “Warrant”).
We will not receive any proceeds from the sale of the shares of common stock offered by Hanover. We may receive proceeds of up to $150,000 if the Warrant is exercised for cash. Any proceeds received from the exercise of the Warrant will be used for working capital or general corporate purposes.
Our common stock is quoted on the OTCQB marketplace, operated by OTC Market Group, Inc., under the symbol “XCLL.” The shares of our common stock registered hereunder are being offered for sale by Hanover at prices established on the OTCQB during the term of this offering. On April 8, 2015, the closing bid price of our common stock was $0.03 per share. These prices will fluctuate based on the demand for our common stock.
Comments & Business Outlook
PALO ALTO, Calif., May 18, 2015 /PRNewswire / -- XcelMobility, Inc. (XCLL), a leading online lottery service provider, today updates investors on lottery business market in China.
In January of this year the Company announced the strategic decision to focus the company on its online lottery opportunity. The company is proud to announce that we have completed the transition and we are now expanding our facilities and services to keep up with the demand in China. The company is now fully operational to meet the needs of online lottery players in China. Our lottery business expansion included these important changes and additions:
Completing our move into new and larger facilities to allow the lottery group to grow rapidly without worry of disruptions. The new facility is located in the Central Business District of Shenzhen China in the heart of the very modern Futian business district.
The Company has launched a new and updated corporate website.www.xcelmobility.com to better reflect the new lottery business direction of the company.
The company has launched a new online lottery portal allowing for lottery players to quickly and easily administer lottery accounts and purchase lottery products.
Numerous experienced gaming professionals were added to help grow the lottery business.
The company is adding third party distribution partners in all regions of China.
The company recently announced an important marketing partnership with China Mobile to make it easy for customers to buy lottery products and collect lottery winnings.
Xcelmobility's mobile lottery business is now fully operational and is servicing mobile lottery customers in China. We have begun to generate revenues from lottery services and we expect to see a rapid growth in service revenue in the second half of the calendar year. The Company's CEO Ryan Ge comments "The Xcelmobility team has worked hard to make this important transition to the lottery market. We are happy to see things fully operational so that we can grow quickly in this lucrative and high growth market. Our recent partnership with China Mobile gives us great credibility with lottery players. Having strong and trusted partners is an important ingredient for lottery business success in China."
The Ministry of Finance announced that 2014 was another record year for lottery business growth. Total lottery sales in 2014 came to US $61.5 Billion, up 23.6% from 2013's total.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the Three Months Ended
March 31,
2015
2014
Revenue
$
74,371
$
129
Cost of Revenue
(299
)
(43
)
Gross Profit
74,072
86
Operating Expenses:
Selling expense
50,149
4,905
General and administrative expense
175,393
140,930
Total Operating Expenses
225,542
145,835
Income (loss) from Operations
(151,470
)
(145,749
)
Other Income (Expense):
Interest income
72
16
Amortization of debt discount
(133,982
)
(75,437
)
Gain on derivatives
253,982
27,898
Total Other Income (Expense)
120,072
(47,523
)
Income (Loss) Before Taxes
(31,398
)
(193,272
)
Income tax expense
-
-
(31,398
)
(193,272
)
Discontinued Operation:
Income from discontinued operation
-
292,248
Net income (loss) from discontinued operation
-
292,248
Net Income (Loss)
(31,398
)
98,976
Foreign currency translation adjustment
(544
)
7,057
Comprehensive income (loss)
$
(31,942
)
$
106,033
Earnings (loss) per share – Basic
$
(0.0001
)
$
0.0014
Earnings (loss) per share – Dilutive
$
(0.0001
)
$
0.0014
Basic weighted average number of shares outstanding
223,132,358
73,127,686
Diluted weighted average number of shares outstanding
223,132,358
77,644,969
Management Discussion and Analysis
Revenue
Our revenue for the three months ended March 31, 2015 totaled $74,371 compared to $129 for the three months ended March 31, 2014. This increase in revenue was primarily due to removal of Jifu for the period of March 31, 2014 and inclusive of Silvercreek for the period of March 31, 2015.
Our net (loss) was ($31,398) for the three months ended March 31, 2015, compared to net income of $98,976 for the three months ended March 31, 2014. The change from net income to net loss was primarily due to removal of Jifu.
Comments & Business Outlook
PALO ALTO, Calif., April 21, 2015 /PRNewswire / -- Xcelmobility, Inc. (OTCQB: XCLL, OTCBB: XCLL), a leading online lottery service provider, today announced that it has signed a strategic partnership agreement with China Mobile Group Fujian Company Limited, a subsidiary of China Mobile Limited ("China Mobile"), to expand the reach and ease with which payments can be made for the Company's mobile lottery products. The agreement will provide easy and convenient payment services for lottery players regardless of the user's device, through China Mobile's vast subscriber network.
According to the terms of the agreement, The Company will work in close cooperation with China Mobile Group Fujian Company Limited to both expand the mobile lottery user base and provide for the most convenient and easy to use transaction system. China Mobile subscribers will be able to quickly and easy purchase lottery products as well as receive lottery winning through their China Mobile accounts.
Founder and Executive Chairman of Xcelmobility, Inc. commented, "We are extremely excited to have reached such a mutually beneficial agreement with China Mobile. China Mobile is well respected by online lottery players and offers the most secure, trusted and widely used payment services. With China Mobile as a partner we are excited about our future online lottery success. Having a trusted partner like China Mobile for payment services allows us to expand our leading online lottery platform, innovative purchase tools and technology, and superior mobile services."
Comments & Business Outlook
XCELMOBILITY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Years Ended
December 31,
2014
2013
Revenue
$
171,452
$
76,449
Cost of Revenue
5,550
39
Gross Profit
165,902
76,410
Operating Expenses:
Selling expense
24,226
26,285
General and administrative expense
1,889,077
1,236,861
Total Operating Expenses
1,913,303
1,263,146
Loss from Operations
(1,747,401
)
(1,186,736
)
Other Income (Expense):
Interest income
137
274
Interest expense
(46,452
)
(42,025
)
Amortisation of debt discount
(335,250
)
(504,195
)
Gain (loss) on derivative
(373,850
)
188,176
Other income-government grant
-
15,647
Other income
2,657
408
Other expenses
(624
)
(874
)
Total Other Income (Expense)
(753,382
)
(342,589
)
Loss Before Taxes
(2,500,783
)
(1,529,325
)
Income tax expense
-
-
Loss from continuing operation
$
(2,500,783
)
$
(1,529,325
)
Discontinued Operation:
Income from discontinued operation
739,181
1,024,477
Loss on disposal of interest in subsidiary
(1,790,285
)
-
Net income (loss) from discontinued operation
(1,051,104
)
1,024,477
Net loss
(3,551,887
)
(504,848
)
Foreign currency translation adjustment
100,248
(182,640
)
Comprehensive loss
(3,451,639
)
(687,488
)
Basic and diluted loss per share:
Continuing Operation
$
(0.0239
)
$
(0.0223
)
Discontinued Operation
(0.0100
)
0.0149
(0.0339
)
(0.0074
)
Basic and diluted weighted average number of shares outstanding
104,626,234
68,606,084
Management Discussion and Analysis
Revenue
Our revenue for the year ended December 31, 2014 totaled $171,452, as compared to $76,449 the year ended December 31, 2013. This increase in revenue was primarily due to the new lottery business.
A net loss of ($3,551,887) resulted for the year ended December 31, 2014 compared to net loss of ($504,848) for the year ended December 31, 2013. The increase in net loss was primarily due to the increased operating expenses and other expenses for the year ended December 31, 2014.
Deal Flow
Item 1.01 Entry Into a Material Definitive Agreement.
Acquisition Activity
Mutual Settlement Agreement
Comments & Business Outlook
PALO ALTO, Calif., Feb. 3, 2015 /PRNewswire / -- XcelMobility, Inc. (OTCQB: XCLL, OTCBB: XCLL) ("Xcel" or the "Company"), a leading online lottery service provider, today announced it will focus the company's resources on the fast growing online lottery business in mainland China. The directors and officers of the company have developed a new strategic plan to grow the company as quickly as possible with the goal to up-list the company to a major stock exchange in 2016. Over the past 3 months the company has redeployed all corporate resources to grow and expand the online lottery business.
"ExcelMobility has a wealth of opportunity and technology for a small developing company. But Success comes by focusing on your best opportunity allowing management to target limited resources for the highest return. We want to be great at our best opportunity so it was an easy decision by the leaders of XcelMobility to decide to focus entirely on our online lottery business with market growth rates approaching 90% year over year." said Ronald Strauss, Executive Chairman of XcelMobility.
A part of this decision the company has done the following:
Redeploy all engineering and service resources to expand our online lottery offerings.
Consolidate all employees under our new lottery facility located in Shenzhen, China.
Open a support and service facility in Fujian province.
Hire experienced lottery professionals to help manage the fast growing online lottery group
Rebrand the company as a leading online lottery services company in China
XcelMobility's mobile lottery business is now fully online and servicing mobile lottery customers in China. The company is currently in discussions with a number of major Provinces in China to provide them with online mobile lottery services in the future. The company is also in talks with China Mobile to provide mobile payment services allowing our lottery subscribers to easily access their lottery accounts.
The Chinese lottery market is experiencing strong growth. Total lottery sales in Mainland China reached US$55.8 billion during the first 11 months of 2014, an increase of 24.1 percent compared to the year-prior period.
Comments & Business Outlook
PROSPECTUS SUPPLEMENT NO. 2
12,600,000 Shares of Common Stock
XCELMOBILITY, INC.
Common Stock
The Prospectus, any prospectus supplements filed before the date hereof, and this Prospectus Supplement No. 2 relate to the resale of 12,600,000 shares of our common stock, par value $0.001 per share, by Hanover Holdings I, LLC (“Hanover”), including (i) 10,769,230 shares of the Company’s common stock issuable upon conversion of the principal of the senior convertible promissory note issued to Hanover as of May 30, 2014 (the “Convertible Note”); (ii) 71,508 shares of the Company’s common stock issuable upon conversion of the accrued interest under the Convertible Note; and (iii) 1,759,262 shares of our common stock issuable upon exercise of a warrant issued to Hanover as of May 30, 2014 (the “Warrant”).
We will not receive any proceeds from the sale of the shares of common stock offered by Hanover. We may receive proceeds of up to $150,000 if the Warrant is exercised for cash. Any proceeds received from the exercise of the Warrant will be used for working capital or general corporate purposes.
This Prospectus Supplement No. 2 should be read in conjunction with the Prospectus and any prospectus supplements filed before the date hereof. Any statement contained in the Prospectus and any prospectus supplements filed before the date hereof shall be deemed to be modified or superseded to the extent that information in this Prospectus Supplement No. 2 modifies or supersedes such statement. Any statement that is modified or superseded shall not be deemed to constitute a part of the Prospectus except as modified or superseded by this Prospectus Supplement No. 2.
Our common stock is quoted on the OTCQB marketplace, operated by OTC Market Group, Inc., under the symbol “XCLL.” The shares of our common stock registered hereunder are being offered for sale by Hanover at prices established on the OTCQB during the term of this offering. On November 12, 2014, the closing bid price of our common stock was $0.02 per share. These prices will fluctuate based on the demand for our common stock.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2014
2013
2014
2013
Revenue
$
298,581
$
1,229,908
$
1,772,556
$
1,272,310
Cost of Revenue
137,542
358,881
365,828
358,892
Gross Profit
161,039
871,027
1,406,728
913,418
Operating Expenses:
Selling expense
5,774
140,712
50,098
149,346
General and administrative expense
178,354
1,009,019
1,084,312
1,716,420
Total Operating Expenses
184,128
1,149,731
1,134,410
1,865,766
Income (loss) from Operations
(23,089
)
(278,704
)
272,318
(952,348
)
Other Income (Expense):
Interest income
35
61
117
269
Interest expense
(21,751
)
(28,289
)
(48,000
)
(64,370
)
Gain (loss) on derivative
(68,467
)
(147,447
)
(169,980
)
162,240
Amortization of debt discount
(163,143
)
(77,869
)
(322,159
)
(407,332
)
Other income (expense)
-
57,316
66,247
72,840
Total Other Income (Expense)
(253,326
)
(196,228
)
(473,775
)
(236,353
)
Income (loss) Before Taxes
(276,415
)
(474,932
)
(201,457
)
(1,188,701
)
Income tax expense
-
-
-
-
Net Income (Loss)
(276,415
)
(474,932
)
(201,457
)
(1,188,701
)
Foreign currency translation adjustment
316
(30,299
)
10,115
10,392
Comprehensive (loss) income
(276,099
)
(505,231
)
(191,342
)
(1,178,309
)
Basic income (loss) per share:
$
(0.00
)
$
(0.01
)
$
(0.00
)
$
(0.02
)
Diluted income (loss) per share:
$
(0.00
)
$
(0.01
)
$
(0.00
)
$
(0.02
)
Basic weighted average number of shares outstanding
79,794,261
72,671,628
75,554,068
67,104,384
Diluted weighted average number of shares outstanding
79,794,261
72,671,628
75,554,068
67,104,384
Management Discussion and Analysis
Revenue
Our revenue for the three months ended September 30, 2014 totaled $298,581 compared to $1,229,908 for the three months ended September 30, 2013. This decrease in revenue was primarily due to a decrease in the number of new projects in the third quarter of 2014.
Our net (loss) was ($276,415) for the three months ended September 30, 2014, compared to net (loss) of ($474,932) for the three months ended September 30, 2013. This decrease in net loss was primarily due to reduced loss from operations.
Comments & Business Outlook
PALO ALTO, CA--(
Marketwired - Oct 15, 2014) - XcelMobility, Inc. (OTCQB: XCLL) (OTCBB: XCLL) ("Xcel" or the "Company"), a leading mobile internet application development and marketing company, today announced that it received a Sport Lottery License from the Fujian Administration of Sport and Gaming to provide sports lottery services using a mobile device. "We're very excited to receive the Mobile Lottery License" said Ronald Strauss, Executive Chairman of Xcelmobility. "We see this as recognition of our company as a leading mobile lottery provider in China. The new license will allow XCLL to quickly grow our lottery brand and revenues in the fast growing mobile lottery market in China." Xcelmobility's mobile lottery business is now fully online and servicing mobile lottery customers in China. The company is currently in discussions with a number of China based lottery game suppliers to provide them with XCLL's growing national mobile lottery services. The Chinese lottery market has experienced strong growth in recent years as a result of positive macro trends in China, such as robust economic growth, increases in disposable income and a more positive shift in public perception towards the lottery business. Total lottery sales in China is projected to be $61 billion and $73.3 billion in 2014 and 2015, respectively, representing a 21.5% and 20.3% increase in 2014 and 2015 from their respective preceding years, according to an iResearch Report. The iResearch Report projected online sales amount for sports lottery products to be $2.2 billion and $3.2 billion in 2014 and 2015, respectively, representing 47.3% and 44.8% increase from the respective preceding years.
Acquisition Activity
Item 1 Entry Into a Material Definitive Agreement
Pursuant to the terms of the Agreement, CC Power will acquire certain assets of Silvercreek relating to its online sports lottery business unit (the “Assets”) in exchange for the issuance of up to 80,000,000 shares of common stock of the Company (the “Shares”) to the Selling Shareholders (the “Transaction”). No Shares will be issued upon the closing date of the transaction. The Shares will be issued to the Selling Shareholders on a pro rata basis and upon achievement of the following milestones: (i) 10,000,000 Shares to be issued in the event that CC Power derives initial online lottery sales revenue (“Lottery Revenue”) of over 10,000 RMB per month from the business developed in connection with the Assets on or before October 1, 2014; (ii) 10,000,000 Shares to be issued in the event that CC Power derives Lottery Revenue of over 3,000,000 RMB per month from the business developed in connection with the Assets on or before March 31, 2015; (iii) 10,000,000 Shares to be issued in the event that CC Power derives initial online lottery sales revenue of over 20,000,000 RMB per month from the business developed in connection with the Assets on or before December 31, 2015; (iv) 40,000,000 Shares to be issued in the event that CC power obtains a lottery gaming license from the People’s Republic of China; and (v) 10,000,000 Shares to be issued based on the achievement of certain incentives as determined by the board of directors of the Company.
The Agreement and the Transaction has been approved by the boards of directors of the Company, CC Power and Silvercreek. Subject to any requisite approvals, and other customary closing conditions, the Transaction is expected to be completed no later than three (3) business days after the closing conditions set forth in the Agreement have either been satisfied or waived by the appropriate party.
The Agreement includes customary representations, warranties and covenants of the Company, CC Power, Silvercreek and the Selling Shareholders made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Agreement and are not intended to provide factual, business, or financial information about the Company, CC Power, Silvercreek and the Selling Shareholders. Moreover, some of those representations and warranties (i) may not be accurate or complete as of any specified date, (ii) may be subject to a contractual standard of materiality different from those generally applicable to shareholders or different from what a shareholder might view as material, (iii) may have been used for purposes of allocating risk among the Company, CC Power, Silvercreek and the Selling Shareholders, rather than establishing matters as facts, or (iv) may have been qualified by certain disclosures not reflected in the Agreement that were made to the other party in connection with the negotiation of the Agreement and generally were solely for the benefit of the parties to that agreement. The Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company that has been, is or will be contained in, or incorporated by reference into, the Forms 10-K, Forms 10-Q, Forms 8-K, proxy statements and other documents that the Company files with the SEC.
The Company has agreed to appoint Mr. Zhixiong Wei as an officer of the Company. Mr. Wei will also be appointed as a member of the board of directors of the Company if the Company derives Lottery Revenue of at least 20,000,000 RMB per month from the business developed in connection with the Assets on or before December 31, 2015.
The Agreement includes various termination provisions, including the right of the parties to terminate the Agreement (i) upon mutual agreement, (ii) upon a material adverse change or material breach by either party, (iii) or if the Transaction is not consummated on or before September 30, 2015.
The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which is included as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Deal Flow
PROSPECTUS SUPPLEMENT NO. 1
12,600,000 Shares of Common Stock
XCELMOBILITY, INC.
Common Stock
This Prospectus Supplement No. 1 supplements and amends our Prospectus dated July 31, 2014. This Prospectus Supplement No. 1 includes our attached Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, as filed with the Securities and Exchange Commission on August 14, 2014.
The Prospectus, any prospectus supplements filed before the date hereof, and this Prospectus Supplement No. 1 relate to the resale of 12,600,000 shares of our common stock, par value $0.001 per share, by Hanover Holdings I, LLC (“Hanover”), including (i) 10,769,230 shares of the Company’s common stock issuable upon conversion of the principal of the senior convertible promissory note issued to Hanover as of May 30, 2014 (the “Convertible Note”); (ii) 71,508 shares of the Company’s common stock issuable upon conversion of the accrued interest under the Convertible Note; and (iii) 1,759,262 shares of our common stock issuable upon exercise of a warrant issued to Hanover as of May 30, 2014 (the “Warrant”). We will bear all costs associated with this registration.
We will not receive any proceeds from the sale of the shares of common stock offered by Hanover. We may receive proceeds of up to $150,000 if the Warrant is exercised for cash. Any proceeds received from the exercise of the Warrant will be used for working capital or general corporate purposes.
This Prospectus Supplement No. 1 should be read in conjunction with the Prospectus and any prospectus supplements filed before the date hereof. Any statement contained in the Prospectus and any prospectus supplements filed before the date hereof shall be deemed to be modified or superseded to the extent that information in this Prospectus Supplement No. 1 modifies or supersedes such statement. Any statement that is modified or superseded shall not be deemed to constitute a part of the Prospectus except as modified or superseded by this Prospectus Supplement No. 1.
Our common stock is quoted on the OTCQB marketplace, operated by OTC Market Group, Inc., under the symbol “XCLL.” The shares of our common stock registered hereunder are being offered for sale by Hanover at prices established on the OTCQB during the term of this offering. On August 13, 2014, the closing bid price of our common stock was $0.04 per share. These prices will fluctuate based on the demand for our common stock.
Comments & Business Outlook
XCELMOBILITY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
For the Three Months Ended
For the Six Months Ended
June 30,
June 30,
2014
2013
2014
2013
Revenue
$
629,448
$
16,028
$
1,473,976
$
42,402
Cost of Revenue
93,445
11
228,297
11
Gross Profit
536,003
16,017
1,245,679
42,391
Operating Expenses:
Selling expense
9,307
4,147
44,324
8,634
General and administrative expense
386,837
425,469
905,958
707,401
Total Operating Expenses
396,144
429,616
950,282
716,035
Income (loss) from Operations
139,859
(413,599
)
295,397
(673,644
)
Other Income (Expense):
Interest income
82
173
82
208
Interest expense
(5,550
)
(23,541
)
(26,250
)
(36,081
)
Gain (loss) on derivative
(129,411
)
309,687
(101,513
)
309,687
Amortization of debt discount
(83,579
)
(216,941
)
(159,015
)
(329,463
)
Other income (expense)
43,699
1,560
66,312
15,524
Total Other Income (Expense)
(174,759
)
70,938
(220,384
)
(40,125
)
Income (loss) Before Taxes
(34,900
)
(342,661
)
75,013
(713,769
)
Income tax expense
-
-
-
-
Net Income (Loss)
(34,900
)
(342,661
)
75,013
(713,769
)
Foreign currency translation adjustment
2,742
21,294
9,799
17,116
Comprehensive (loss) income
(32,158
)
(321,367
)
84,812
(696,653
)
Basic income (loss) per share:
$
(0.00
)
$
(0.01
)
$
0.00
$
(0.01
)
Diluted income (loss) per share:
$
(0.00
)
$
(0.01
)
$
0.00
$
(0.01
)
Basic weighted average number of shares outstanding
73,666,997
67,849,391
73,398,831
64,022,491
Diluted weighted average number of shares outstanding
73,666,997
67,849,391
86,238,476
64,022,491
Management Discussion and Analysis
Revenue
Our revenue for the three months ended June 30, 2014 totaled $629,448, an increase of $613,420 or 3,827% from $16,028 for the three months ended June 30, 2013. This increase in revenue was primarily due to the acquisition of Jifu in the middle of 2013, which generated revenue of $617,588.
Net income (loss)
Our net (loss) was ($34,900) for the three months ended June 30, 2014, compared to net (loss) of ($342,661) for the three months ended June 30, 2013. This decrease in net income was primarily due to the acquisition of Jifu, which generated a net income of $311,466 for the three months ended June 30, 2014.
Deal Flow
PROSPECTUS
12,600,000 Shares of Common Stock
XCELMOBILITY INC.
Common Stock
This prospectus relates to the resale of 12,600,000 shares of our common stock, par value $0.001 per share, by Hanover Holdings I, LLC (“Hanover”), including (i) 10,769,230 shares of the Company’s common stock issuable upon conversion of the principal of the senior convertible promissory note issued to Hanover as of May 30, 2014 (the “Convertible Note”); (ii) 71,508 shares of the Company’s common stock issuable upon conversion of the accrued interest under the Convertible Note; and (iii) 1,759,262 shares of our common stock issuable upon exercise of a warrant issued to Hanover as of May 30, 2014 (the “Warrant”). We will bear all costs associated with this registration.
We will not receive any proceeds from the sale of the shares of common stock offered by Hanover. We may receive proceeds of up to $150,000 if the Warrant is exercised for cash. Any proceeds received from the exercise of the Warrant will be used for working capital or general corporate purposes.
Our common stock is quoted on the OTCQB marketplace, operated by OTC Market Group, Inc., under the symbol “XCLL.” The shares of our common stock registered hereunder are being offered for sale by Hanover at prices established on the OTCQB during the term of this offering. On July 5, 2014, the closing bid price of our common stock was $0.05 per share. These prices will fluctuate based on the demand for our common stock.
Deal Flow
SUBJECT TO COMPLETION, DATED JULY 14, 2014
PROSPECTUS
12,600,000 Shares of Common Stock
Common Stock
We will not receive any proceeds from the sale of the shares of common stock offered by Hanover. We may receive proceeds of up to $150,000 if the Warrant is exercised for cash. Any proceeds received from the exercise of the Warrant will be used for working capital or general corporate purposes.
Deal Flow
Item 1.01 Entry into Material Definitive Agreement
Securities Purchase Agreement, Senior Convertible Note and Warrant
entered into a securities purchase agreement dated as of the Closing Date (the “Purchase Agreement”) with Hanover Holdings I, LLC, a New York limited liability company (“Hanover”). Pursuant to the terms of the Purchase Agreement, Hanover purchased from the Company on the Closing Date (i) a senior convertible note with an initial principal amount of $350,000 (the “Convertible Note”) and (ii) a warrant to acquire up 3,716,091 shares of the Company’s common stock (the “Warrant”), for a total purchase price of $250,000. The Convertible Note was issued with an original issue discount of approximately 28.57% .
$40,000 of the outstanding principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without any cash payment by the Company) if (i) the Company has properly filed the Registration Statement (defined below) with the Securities and Exchange Commission (“SEC”) on or prior to the Filing Deadline (defined below) covering the resale by Hanover of the shares of Common Stock issued or issuable upon conversion of the Convertible Note and (ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date. Moreover, $60,000 of the outstanding principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without any cash payment by the Company) if (i) the Registration Statement has been declared effective by the SEC on or prior to the Effectiveness Deadline (defined below) and the prospectus contained therein is available for use by Hanover for the resale by Hanover of the shares of Common Stock issued or issuable upon conversion of the Convertible Note and (ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date.
The Convertible Note matures on May 30, 2016 (subject to extension as provided in the Convertible Note) and, in addition to the approximately 28.57% original issue discount, accrues interest at the rate of 8.0% per annum. The Convertible Note is convertible at any time, in whole or in part, at Hanover’s option into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a conversion price equal to the lesser of (i) the product of (x) the arithmetic average of the lowest three (3) trade prices of the Common Stock during the 10 consecutive trading days ending and including the trading day immediately preceding the applicable conversion date and (y) 65%, and (ii) $0.12 (as adjusted for stock splits, stock dividends, stock combinations or other similar transactions). The Warrant entitles Hanover to purchase up to 3,716,091 shares of Common Stock at any time for a period of one year from the Closing Date at an initial exercise price of $0.040365 (as adjusted for stock splits, stock dividends, stock combinations or other similar transactions) (the “Exercise Price”). The Warrant may only be exercised for cash, and the Company has the right to accept or decline any exercise of the Warrant by Hanover.
At no time will Hanover be entitled to convert any portion of the Convertible Note or exercise any portion of the Warrant to the extent that after such conversion or exercise, Hanover (together with its affiliates) would beneficially own more than 4.99% of the outstanding shares of Common Stock as of such date (the “Maximum Percentage”). The Maximum Percentage may be raised to any other percentage not in excess of 9.99% at the option of Hanover upon at least 61 days’ prior notice to the Company, or lowered to any other percentage, at the option of Hanover, at any time.
The Convertible Note includes customary event of default provisions. Upon the occurrence of an event of default, Hanover may require the Company to pay in cash the greater of (i) the product of (A) the amount to be redeemed multiplied by (B) 135% (or 100% if an insolvency related event of default) and (ii) the product of (X) the conversion price in effect at that time multiplied by (Y) the product of (1) 135% (or 100% if an insolvency related event of default) multiplied by (2) the greatest closing sale price of the Common Stock on any trading day during the period commencing on the date immediately preceding such event of default and ending on the date the Company makes the entire payment required to be made under this provision.
The Company has the right at any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Convertible Note in cash at a price equal to 135% of the total amount of such Convertible Note then outstanding. If at any time after the Closing Date, (i) the Closing Bid Price (as defined in the Warrant) of the Common Stock is equal to or greater than 140% of the Exercise Price for a period of 30 consecutive trading days (the “Measuring Period”), (ii) no Equity Conditions Failure (as defined in the Warrant) shall have occurred, and (iii) the aggregate dollar trading volume of the Common Stock for each trading day during the Measuring Period exceeds $3,000 per day, then the Company shall have the right to require Hanover to exercise all, or any part, of the Warrant (up to the Maximum Forced Exercise Amount (defined below)) (the “Forced Exercise”) at the then applicable Exercise Price. The Company will not be permitted to effect a Forced Exercise if, after giving effect to such Forced Exercise, the Company shall have received more than $150,000 in cash, in the aggregate, from one or more exercises of the Warrant. “Maximum Forced Exercise Amount” means, as of any given date, the lesser of (x) the number of shares of Common Stock issuable upon exercise of the Warrant as of such given date and (y) 500% of the average trading volume (as reported on Bloomberg) of the Common Stock on the Company’s principal market on each of the 10 consecutive trading days ending and including the trading day immediately prior to such given date.
The Company agreed to pay up to $40,000 of reasonable attorneys’ fees and expenses incurred by Hanover in connection with the transaction.
Comments & Business Outlook
For the Years Ended
December 31,
2013
2012
Revenue $
2,781,745
$
277,406
Cost of Revenue
494,485
17,953
Gross Profit
2,287,260
259,453
Operating Expenses:
Selling expense
298,496
41,136
General and administrative expense
2,372,864
986,908
Total Operating Expenses
2,671,360
1,028,044
Loss from Operations
(384,100
)
(768,591
)
Other Income (Expense):
Interest income
274
853
Interest expense
(42,025
)
(122,268
)
Amortisation of debt discount
(504,195
)
(340,816
)
Gain on derivative
188,176
669,329
Other income-government grant
237,488
126,724
Other income
408
-
Other expenses
(874
)
-
Total Other Income (Expense)
(120,748
)
333,822
Loss Before Taxes
(504,848
)
(434,769
)
Income tax expense
-
-
Net Loss $
(504,848
)
$
(434,769
)
Foreign currency translation adjustment
(182,640
)
2,381
Comprehensive loss
(687,488
)
(432,388
)
Basic and diluted loss per share
$
(0.01
)
$
(0.01
)
Basic and diluted weighted average number of shares outstanding
68,606,084
60,000,000
Management Discussion and Analysis
Results of Operations
Comparison of the Years Ended December 31, 2013 and 2012
Revenue
Our revenue for the year ended December 31, 2013 totaled $2,781,745, an increase of $2,504,339 or 902.8% from $277,406 for the year ended December 31, 2012. This increase in revenue was primarily due to the acquisition of Jifu in 2013, which generated revenue of $2,705,296, while the revenue of CC Power was dropped to $76,449 for the year ended December 31, 2013 from $277,406 for the year ended December 31, 2012, by ($200,957) or (72.4%).
For the year ended December 31, 2013, the revenues from software products and those related services were $2,289,808, an increase of $2,012,402 or 725.4% from $277,406 for the year ended December 31, 2012. For the year ended December 31, 2013, the revenues from hardware products were $491,937, when comparing with nil of these revenues for the year ended December 31, 2012.
Net loss
A net loss of ($504,848) resulted for the year ended December 31, 2013 compared to net loss of ($434,769) for the year ended December 31, 2012, the loss increase $(70,079) was primarily due to increase in other expenses by $454,570, though the operation expenses decreased to $384,100, by ($384,491) or (50.0%), for the year ended December 31, 2013.
Comments & Business Outlook
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2013
2012
2013
2012
(Restated)
(Restated)
Revenue $
1,229,908
$
72,000
$
1,272,310
$
198,800
Cost of Revenue
358,881
4,000
358,892
11,900
Gross Profit
871,027
68,000
913,418
186,900
Operating Expenses:
Selling expense
140,712
6,100
149,346
35,400
General and administrative expense
1,009,019
262,500
1,716,420
823,200
Total Operating Expenses
1,149,731
268,600
1,865,766
858,600
Loss from Operations
(278,704
)
(200,600
)
(952,348
)
(671,700
)
Other Income (Expense):
Interest income
61
100
269
800
Interest expense
(28,289
)
-
(64,370
)
(13,429
)
Gain (loss) on derivative
(147,447
)
(451,309
)
162,240
(451,309
)
Amortization of debt discount
(77,869
)
-
(407,332
)
(76,479
)
Other income (expense)
57,316
173,557
72,840
108,800
Total Other Income (Expense)
(196,228
)
(277,652
)
(236,353
)
(431,617
)
Loss Before Taxes
(474,932
)
(478,252
)
(1,188,701
)
(1,103,317
)
Income tax expense
-
-
-
-
Net Loss
(474,932
)
(478,252
)
(1,188,701
)
(1,103,317
)
Foreign currency translation adjustment
(30,299
)
(600
)
10,392
1,700
Comprehensive (loss) income
(505,231
)
(478,852
)
(1,178,309
)
(1,101,617
)
Basic and diluted loss per share:
$
(0.01
)
$
(0.01
)
$
(0.02
)
$
(0.02
)
Basic and diluted weighted average number of shares outstanding
72,671,628
60,000,000
67,104,384
60,000,000
Comments & Business Outlook
XCELMOBILITY INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
For the Three Months Ended
For the Six Months Ended
June 30,
June 30,
2013
2012
2013
2012
(Restated)
(Restated)
Revenue $
16,028
$
63,600
$
42,402
$
126,800
Cost of Revenue
11
3,600
11
7,900
Gross Profit
16,017
60,000
42,391
118,900
Operating Expenses:
Selling expense
4,147
9,400
8,634
29,300
General and administrative expense
425,469
248,000
707,401
560,700
Total Operating Expenses
429,616
257,400
716,035
590,000
Loss from Operations
(413,599
)
(197,400
)
(673,644
)
(471,100
)
Other Income (Expense):
Interest income
173
400
208
700
Interest expense
(23,541
)
(24,907
)
(36,081
)
(54,241
)
Gain on derivative
309,687
-
309,687
-
Amortization of debt discount
(216,941
)
(9,311
)
(329,463
)
(119,624
)
Other income (expense)
1,560
66,800
15,524
19,200
Total Other Income (Expense)
70,938
32,982
(40,125
)
(153,965
)
Loss Before Taxes
(342,661
)
(164,418
)
(713,769
)
(625,065
)
Income tax expense
-
-
-
-
Net Loss
(342,661
)
(164,418
)
(713,769
)
(625,065
)
Foreign currency translation adjustment
21,294
300
17,116
2,300
Comprehensive (loss) income
(321,367
)
(164,118
)
(696,653
)
(622,765
)
Basic and diluted loss per share:
$
(0.01
)
$
(0.00
)
$
(0.01
)
$
(0.01
)
Basic and diluted weighted average number of shares outstanding
67,849,391
60,000,000
64,022,491
60,000,000
Investor Alert
Item 4.02 - Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
EFP Audit Report
On June 17, 2013, XcelMobility, Inc., a Nevada corporation (the “Company”) was informed by EFP Rotenberg, LLP (“EFP”), the Company’s former independent accounting firm, that EFP had sent a letter to the Securities and Exchange Commission (the “EFP Letter”) which indicated that in the view of EFP, the Company had not taken timely and appropriate remedial actions with respect to discrepancies and/or issues relating to the Company’s financial records that were previously conveyed to the Company on May 29, 2013.
On May 29, 2013, the Company received a notice from EFP, that disclosures should be made and action should be taken to prevent future reliance on their previously issued audit report related to the consolidated balance sheets of the Company and its subsidiaries as of December 31, 2011, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for the year then ended (the “2011 Financials”), which were included in the Company’s 2012 Annual Report.
The Company was informed by EFP that (i) its 2011 audit report was included in the 2012 Annual Report without the consent of EFP, and (ii) the audit report included with the 2011 Financials was dated March 30, 2013 instead of March 30, 2012, despite an instruction from EFP to correct the date of the audit report which was sent to the Company on March 28, 2013. This initial notice from EFP was rescinded on the condition that Company would file an amendment to the Company’s Annual Report on Form 10-K filed on April 1, 2013 (the “2012 Annual Report”) by June 3, 2013. However, this amendment was not filed within the deadline set by EFP.
The Company’s Executive Chairman has discussed the foregoing issues with EFP and Albert Wong & Co., LLP (“AWC”), the Company’s current independent accounting firm, and has concluded that that Company will file an amendment to the 2012 Annual Report to correct these errors and provide EFP with an opportunity to review and consent to the inclusion of its 2011 audit report in the 2012 Annual Report, with any changes or revisions to the 2011 Financials as they may deem appropriate.
Acquisition Activity
REDWOOD CITY, CA--(Marketwired - May 28, 2013) - XcelMobility, Inc. (OTCBB : XCLL) (OTCQB : XCLL) ("Xcel" or the "Company"), a leading developer of mobile internet products and services, announced today that it has acquired the video encoding and compression group of Shenzhen Jifu Communication Technology Co., Ltd., a professional manufacturer specializing in video surveillance system, software platforms and fiber optic solutions.
Shenzhen Jifu develops video encoding and compression technology for Geospatial Multimedia applications. The group has over 50 engineers working on algorithms and applications including the merging of real-time video with location-based technology. The technology enables video, imagery & audio streams to be recorded together with navigation (e.g. GPS), as well as, orienatation (e.g. Digital Compass) sensor information. The team has filed and received numerous patents related to video and image encoding.
Ron Strauss, Executive Chairman of the Board of XcelMobility, Inc., commented, "The launch of our Mach 5 LBS product made it easy to develop location-based solutions that assist in corporate image display, new store expansion, operations management and sales promotion, among others. The need for the most advanced location-based technology has become essential in order to compete in today's competitive smartphone industry."
Strauss continued, "By combining Jifu's video solutions team with our LBS group, our combined engineering team and salesforce has the potential to deliver the industry's most advanced application for location-based technology on mobile devices. Most important, we are entering the market with expected sales of over $3 million in 2013. We look forward to the strong potential that lies ahead for continued financial growth."
Under the terms of the agreement, XcelMobility will issue an aggregate of 30,000,000 shares of the Company's common stock to the Jifu Stakeholders. The shares will be released after the Company has reviewed Jifu's audited financial statements for the year ended December 31, 2013 and Jifu has achieved revenues of at least $4,000,000.
Comments & Business Outlook
REDWOOD CITY, CA--(Marketwired - May 13, 2013) - XcelMobility Inc. (OTCQB : XCLL), ("Xcel" or the "Company"), is pleased to announce that it has retained Consulting for Strategic Growth 1 (CFSG1) as its primary investor relations and corporate development firm in order to drive investor awareness of the Company's expanding suite of mobile internet products and services.
CFSG1, with offices in New York and Atlanta, is a leader in investor and media relations and corporate development consulting. They specialize in the development of access to capital for early-stage growth companies. With decades of hands-on experience and broad personal outreach in the private and public investment communities, CFSG1 is focused upon putting XcelMobility in front of the right decision-makers. These decision makers, along with market makers and accredited investors are intimately familiar with the online mobile industry, and are positioned to participate in the successful development of the XcelMobility opportunity of delivering superior cellular connectivity to wireless users worldwide.
Stanley Wunderlich, CEO of CFSG1, remarked, "We are extremely pleased to be working with XcelMobility as they take on a leadership role within China's continuously expanding mobile market. The completion of Xcel's online product portal has driven a significant amount of consumer attention to the Company's products and services that uniquely enhance internet access and deliver more advanced applications to mobile devices. Now that Xcel has successfully captured the interest of the mobile industry, we are excited to share their success and continued growth with our wide-ranging investor and financial media."
Ron Strauss, Executive Chairman of the Board of XcelMobility, Inc., commented, "In the past year, we have grown our business significantly by partnering with leading players within China's mobile industry and expanding our products suite to offer the most advanced mobile technologies. We believe we have hit a critical point in our development with the introduction of our location-based service product due to its strong demand and the wide-ranging opportunities to incorporate the technology in cellular devices. We are excited to share the progress of these exciting growth opportunities as CFSG1 helps deliver our next milestones to the forefront of the investment community."
Comments & Business Outlook
For the Three Months Ended
For the Six Months Ended
June 30,
June 30,
2012
2011
2012
2011
Revenue $
63,600
$
4,600
$
126,800
$
39,200
Cost of Revenue
3,600
900
7,900
2,200
Gross Profit
60,000
3,700
118,900
37,000
Operating Expenses:
Selling expense
9,400
4,900
29,300
10,300
General and administrative expense
191,800
22,800
560,700
42,700
Total Operating Expenses
201,200
27,700
590,000
53,000
Loss from Operations
(141,200
)
(24,000
)
(471,100
)
(16,000
)
Other Income (Expense):
Interest income
400
-
700
-
Interest expense
(12,700
)
-
(24,500
)
-
Other income (expense)
10,600
400
19,200
(100
)
Total Other Income (Expense)
(1,700
)
400
(4,600
)
(100
)
Loss Before Taxes
(142,900
)
(23,600
)
(475,700
)
(16,100
)
Income tax expense
-
-
-
-
Loss from continuing operation $
(142,900
)
$
(23,600
)
$
(475,700
)
$
(16,100
)
Discontinued Operation:
Income from discontinued operation
-
5,200
-
4,100
Gain on disposal of interest in subsidiary
-
8,900
-
8,900
Net income from discontinued operation
-
14,100
-
13,000
Net Loss
(142,900
)
(9,500
)
(475,700
)
(3,100
)
Less: income attributable to non-controlling interest
-
2,000
-
1,600
Net loss attributable to XcelMobility $
(142,900
)
$
(11,500
)
$
(475,700
)
$
(4,700
)
Net Loss
(142,900
)
(9,500
)
(475,700
)
(3,100
)
Foreign currency translation adjustment
300
500
2,300
4,700
Comprehensive (loss) income
(142,600
)
(9,000
)
(473,400
)
1,600
Less: Comprehensive Income attributable to Non-controlling interest
-
5,000
-
1,400
Comprehensive (loss) income attributable to XcelMobility
(142,600
)
(4,000
)
(473,400
)
3,000
Basic and diluted loss per share attributable to XcelMobility shareholders:
Continuing Operation
$
-
$
-
$
(0.01
)
$
-
Discontinued Operation
-
-
-
-
Basic and diluted loss per share attributable to XcelMobility shareholders:
$
-
$
-
$
(0,01
)
$
-
Basic and diluted weighted average number of shares outstanding
60,000,000
77,700,000
60,000,000
77,700,000
Pump and Dump Watch
REDWOOD CITY, CA--(Marketwire - Jan 30, 2012 ) - XcelMobility Inc. (OTCBB : XCLL) ("Xcel" or the "Company"), a developer of high speed web browsing solutions and related performance enhancing products for mobile devices, is pleased to announce a contract to install Xcel's flagship Mach 5 Xcelerator on an initial product run of 1,000,000 USB mobility devices in a licensing agreement with telecommunications giant ZTE ( www.zte.com.cn/en).
ZTE manufactures the devices for China Unicom, the third largest mobile provider in the world. Should the initial trials prove successful as anticipated, ZTE has advised Xcel that it is projected that in future up to 30 million units per year could be installed with the Mach 5 Xcelerator.
ZTE Corporation is a leading global provider of telecommunications equipment and network solutions. Founded in 1985, it is China's largest publicly listed telecom equipment company. ZTE has the industry's most comprehensive product range of end-to-end solutions covering virtually every telecommunications sector including wireless, access & bearer, VAS, terminals and professional services. The company's expertise in these areas allows it to satisfy the demands of global operators and assist them in their pursuit of innovation. ZTE delivers its high-quality, cost-effective products and services to over 500 operators in more than 140 countries around the globe.
Xcel CEO Ryan Ge comments, "This is an extraordinary opportunity to really fast-track the introduction of our products to an ever wider audience through the auspices of an exceptional global partner like ZTE. The culture at ZTE is based on innovation that responds to market drivers and this represents a tremendous opportunity for us to work with a partner with a similar outlook regarding the future of mobility. We anticipate very competitive consumer pricing and the public can expect product availability shortly."
Liquidity Requirements
We anticipate generating losses in the near term, and therefore, may be unable to continue operations in the future. We require additional capital, and we may have to issue debt or equity or enter into a strategic arrangement with a third party to obtain such capital. In order to meet our planned strategic two to four acquisitions, we estimate requiring up to US$3,000,000 in capital.
Reverse Merger Activity
On August 30, 2011 became a public entity via a
reverse merger transaction .
Company Snapshot:
Developing mobile applications directly for the mobile devices that utilize cellular networks to connect to the Internet and hardware/software products to increase the speed of Virtual Private Networks.
Post Merger Share Calculation :
77,700,000: Pre reverse merger outstanding shares
48,000,000: Shares cancelled as part of the Share Exchange
30,300,000: Newly issued shares of Common Stock
GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: 60,000,000
Financial Snapshot : December Year End
No meaningful revenues (development stage)
