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Investment in Equity Instruments
9 Months Ended
Nov. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Equity Instruments

Note 3 – Investment in Equity Instruments

 

We assess the potential impairment of our equity method investments when indicators such as a history of operating losses, negative earnings and cash flow outlook, and the financial condition and prospects for the investee’s business segment might indicate a loss in value.

 

The Company reclassified the Equity investment account of Verus International, Inc. (formerly known as RealBiz Media Group, Inc. (“Verus”)) common stock from the “Investment in unconsolidated affiliate” account to the “Investment in unconsolidated affiliate – Short-term” account. As of November 30, 2019, the Company held 87,059,682 shares at a value of $0.015 per share which amounted to $1,305,895. The Company plans to liquidate the Verus common stock within a year. The reclassification has no impact on net loss.

 

Verus International, Inc. and NestBuilder.com Corp.

 We have recognized an impairment loss on investment in unconsolidated affiliate. As of November 30, 2019, and February 28, 2019, Monaker owned 18,907,601 and 44,470,101 shares of Verus Series A Preferred Stock, respectively. This interest was written down to zero ($0) as of February 28, 2015.

 

On December 22, 2017, we entered into a Settlement Agreement with Verus, NestBuilder.com Corp. (“Nestbuilder”) and American Stock Transfer & Trust Company, LLC (“AST”) relating to the dismissal with prejudice of certain pending lawsuits with Verus, including Case No.: 1:16-cv-24978- DLG (the “Lawsuits”). As part of the Settlement Agreement, Monaker agreed to pay Nestbuilder $100,000 and to issue 20,000 shares of Monaker’s restricted common stock to person(s) designated by Nestbuilder; Verus reinstated to Monaker 44,470,101 shares of Verus Series A Convertible Preferred Stock and ratified all rights under the Certificate of Designation as reformed and amended (to provide for a conversion ratio of 1 share of Verus common stock for each 1 share of Verus Series A preferred stock converted) and remove any dividend obligations. The Verus designation was also amended to provide us with anti-dilution protection below $0.05 per share. Also, as part of the Settlement Agreement, Monaker received 49,411 shares of common stock of Nestbuilder. The agreement further provided for each party to dismiss the Lawsuits with prejudice and for general releases from each party. As a result of the settlement, (i) the investment in equity securities, representing 18,907,601 and 44,470,101 shares of Verus Series A Preferred Stock, at November 30, 2019 and February 28, 2019, is recorded at $0 as of November 30, 2019 and February 28, 2019, and (ii) the investment in equity securities, representing 49,411 shares of Nestbuilder’s common stock, is recorded at $0 as of November 30, 2019 and February 28, 2019.

 

On April 10, 2019 and effective on February 8, 2019, we entered into an Inducement Agreement with Verus (the “Inducement Agreement”), pursuant to which we agreed to amend the designation of the Series A Convertible Preferred Stock of Verus (the “Series A Preferred Stock”)(which converts into common stock of Verus, and votes on all stockholder matters, on a one-for-one basis, subject to the Ownership Blocker (discussed below)), to remove certain anti-dilution rights described therein; and Verus agreed to issue us 152,029,899 shares of its common stock (valued at approximately $2.2 million, based on the then current trading price of Verus’ common stock of approximately $0.015 per share), following Verus’ planned increase in authorized shares of common stock, pursuant to the anti-dilution rights of that certain Settlement Agreement. The 152,029,899 shares were issued to the Company in April 2019.

 

The designation of the Series A Preferred Stock, as amended, includes a 9.99% beneficial ownership limitation, preventing the Company from converting such Series A Preferred Stock into common stock of Verus (and reducing the voting rights of such preferred stock proportionally), if upon such conversion, the Company, its affiliates and/or any group which it is a part of, would own greater than 9.99% of Verus’ common stock (the “Ownership Blocker”).

 

In July 2019, 4,744,053 shares of Verus common stock held by the Company were sold to the public in open market transactions. The Company received net proceeds of $113,591 from such sales. A total of $43,758 was realized in net income (loss) as other income, valuation loss, net, as a result of such sales.

 

In August 2019, 15,054,725 shares of Verus held by the Company were sold to the public in open market transactions. The Company received net proceeds of $283,692 from such sales. A total of $97,342 was realized in net income (loss) as other income, valuation loss, net, as a result of such sales. In addition, 5,042,373 shares held by the Company of Verus were transferred to the Chief Executive Officer of the Company as described under “Note 4 – Acquisitions and Dispositions”, below.

 

In September 2019, 16,758,457 shares of Verus common stock held by the Company were sold to the public in open market transactions. The Company received net proceeds of $422,428 from such sales. A total of $1,326 was realized in net income (loss) as other income, valuation gain, net, as a result of such sales.

 

In October 2019, 12,613,557 shares of Verus common stock held by the Company were sold to the public in open market transactions. The Company received net proceeds of $252,275 from such sales. A total of $28,826 was realized in net income (loss) as other income, valuation loss, net, as a result of such sales.

 

In November 2019, 10,757,052 shares of Verus common stock held by the Company were sold to the public in open market transactions. The Company received net proceeds of $156,653 from such sales. A total of $30,800 was realized in net income (loss) as other income, valuation loss, net, as a result of such sales.

 

As of November 30, 2019, the remaining 87,059,682 shares of Verus common stock held by the Company (not including shares of common stock issuable upon conversion of shares of Series A Preferred Stock) were valued at $0.015 per share which amounted to a fair value of $1,305,895.

 

6,142,856 shares of Bettwork Industries Inc. Common Stock (OTC Pink: BETW)

 On July 2, 2018, three Secured Convertible Promissory Notes aggregating $5,250,000 (as described in “Note 2 – Note Receivable”), evidencing amounts we were owed by Bettwork, were exchanged for 7,000,000 shares of Bettwork’s common stock at $0.75 per share, for a fair value of $5,250,000 as of July 2, 2018. Bettwork’s common stock has a readily determinable fair value as it is quoted on the OTC Pink market under the symbol “BETW”.

 

On November 29, 2018 and December 6, 2018, the Company entered into Stock Purchase Agreements with each of (a) the Donald P. Monaco Insurance Trust, of which Donald Monaco is the trustee and the Chairman of the Board of Directors (the “Board”) of the Company; and (b) Charcoal Investment Ltd, which entity is owned by Simon Orange, a member of the Board of Directors of the Company, respectively (collectively, the “Purchasers” and the “Stock Purchase Agreements”). Pursuant to the Stock Purchase Agreements, the Company agreed to sell each of the Purchasers 428,572 shares of restricted common stock (857,144 in total) of Bettwork, which the Company then held (out of the 7 million shares of restricted common stock obtained by the Company pursuant to that certain Debt Conversion Agreement entered into with Bettwork, dated July 3, 2018, as previously disclosed) for an aggregate of $300,000 ($600,000 in total), or $0.70 per share. The purchase price for the Bettwork shares was determined by the Board of Directors of the Company, based on among other things, then recent trading prices of Bettwork’s common stock on the OTC Pink Market, as publicly reported. As additional consideration for entering into the Stock Purchase Agreements, the Company granted each of the Purchasers an option to acquire an additional 1,000,000 shares of restricted common stock of Bettwork for $700,000 ($0.70 per share), which option is exercisable by the applicable Purchaser at any time prior to the twenty-four (24) month anniversary of the closing date of the applicable Stock Purchase Agreement. The allocation of the original acquisition price to the shares purchased by the Monaco Trust resulted in a realized loss on the sale of marketable securities of $21,429. The allocation of the original acquisition price to the shares purchased by Charcoal resulted in a realized loss on the sale of marketable securities of $21,429.

 

As of August 31, 2018, the Company had valued the above-noted shares of Bettwork’s common stock at the stock’s trading price which was $0.70 per share. The carrying value of the Bettwork shares have been marked to market at the end of each reporting period through November 30, 2019.

 

On February 28, 2019, the shares of Bettwork’s common stock were trading at $1.24 per share which increased the fair value of the 6,142,856 remaining shares of Bettwork common stock to $7,617,414 and caused an accumulated fair value gain of $2,988,572 ($2,945,714 offset by the $21,429 loss allocated to Monaco Trust and offset by the $21,429 loss allocated to Charcoal) to be realized. The change in fair value of $2,988,572 is recognized in net income (loss) as other income, valuation gain, net, as a valuation gain as of February 28, 2019.

 

On November 30, 2019, the shares of Bettwork’s common stock were trading at $0.20 per share which decreased the fair value of the 6,142,856 remaining shares of Bettwork common stock to $1,228,571 and caused an accumulated fair value loss of $6,388,570 to be realized. The change in fair value of $6,388,570 is recognized in net income (loss) as other income, valuation loss, net, as a valuation loss as of November 30, 2019.

 

Recruiter.com Group, Inc. formerly Truli Technologies Inc (OTCQB: RCRT).

 On August 31, 2016, Monaker entered into a Marketing and Stock Exchange Agreement with Recruiter.com (“Recruiter”). The Agreement required Monaker to issue to Recruiter 75,000 shares of Monaker common stock in exchange for 2,200 shares of Recruiter common stock. Also, Monaker issued to Recruiter an additional 75,000 shares of Monaker common stock for marketing initiatives within the Recruiter platform. In essence, Monaker issued 75,000 shares of its common stock to purchase 2,200 shares of Recruiter, and Monaker issued an additional 75,000 shares of its common stock as a prepayment for marketing and advertising within the Recruiter platform. Recruiter was at that time a private company with a platform that companies and individuals use for employment placements.

 

On January 15, 2019, pursuant to an Agreement and Plan of Merger / Merger Consideration, Truli Technologies Inc which subsequently changed its name to Recruiter.com Group, Inc. (OTCQB: RCRT) (“Recruiter.com”) acquired Recruiter and Monaker exchanged its 2,200 shares in Recruiter for 11,141,810 shares of Recruiter.com common stock.

 

As of February 28, 2019, each share of Recruiter.com’s common stock was valued at $0.043. Therefore, as of February 28, 2019, the 11,141,810 shares of Recruiter.com common stock were valued at $479,098 which is included in the valuation gain as of February 28, 2019.

 

On August 22, 2019, Recruiter.com announced a reverse stock split of its issued and outstanding common stock at a ratio of 1-for-80. This resulted in a reduction in the shares of Recruiter.com’s common stock held by the Company from 11,141,810 shares to 139,273 shares, which shares were valued at $2.70 per share at market closing on the date of the reverse.

 

As of November 30, 2019, each share of Recruiter.com’s common stock was valued at $1.26 per share which decreased the fair value of the 139,273 shares of Recruiter.com common stock to $175,484 and caused an accumulated fair value loss of $298,043 to be realized. The change in fair value of $298,043 is recognized in net income as other income, valuation loss, net, as a valuation loss as of November 30, 2019.