SEATXCHANGE 1270 Granville Ave. Los Angeles, CA

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1 September 13, 2016 (inception) SEATXCHANGE 1270 Granville Ave. Los Angeles, CA SXC LIVE INC. dba SEATXCHANGE BALANCE SHEET (unaudited) Information Current as of December 31, 2016 BALANCE SHEET: Current Assets Cash: $46, Patent $4, Website $4, Total Assets $54, Liabilities and Stockholder's Equity: Related Party Advance $25, Total Liabilities: $25,

2 Stockholder's Equity: Common Stock (10,000,000 shares authorized $ par value $0.0001, 6,709,441 issued (please note that not all of the issued shares have vested. Please see Note 1 below). Additional Paid-in Capital $209, Retained Earnings: -$154, Total Stockholder's Equity: $29, Total Liabilities and Stockholder's Equity: $54, ****NOTE 1: Please See Vesting Schedule below for shares issued SHAREHOLDER SHARES DATE BECAME NOTES (e.g. vesting schedule, if applicable) (common) SHAREHOLDER Amir Amini (Founder) 6,000,000 9/13/16 Per Bylaws; BOD Minutes Scot Richardson (Advisor) Dave Mathews (Advisor) Jordan Edelson (Advisor) 130,434 11/1/16 Advisory Agreement. One year term. 65,214 shares immediately vested. Remaining 65,214 shares equal amounts each quarter over one year term. 130,434 10/26/16 Advisory Agreement. One year term. 65,214 shares immediately vested. Remaining 65,214 shares equal amounts each quarter over one year term. 104,347 12/21/16 Advisory Agreement. One year term. 20,869 shares immediately vested. Remaining shares vest equal amounts each quarter over one year term. Brent Seals (Advisor) 91,304 11/30/16 Advisory Agreement. One year term. Shares vest in equal quarterly amounts over one year term. Nick Price 130,434 10/22/16 Subscription Agreement US Law Group (Corporate Counsel) 122,488 9/7/16 Retainer Agreement payment by common stock up to 2% of the company valued at $750,000 in exchange for legal services at a rate of $425/hour. 2

3 September 13, 2016 (inception) SEATXCHANGE 1270 Granville Ave. Los Angeles, CA SXC LIVE INC. dba SEATXCHANGE INCOME STATEMENT (unaudited) Information Current as of December 31, 2016 STATEMENT OF OPERATIONS: Revenues: $0.00 Expenses Research & Development $152, Sales & Marketing $0.00 General & Administrative $2, Net Loss: -$154,

4 SEATXCHANGE 1270 Granville Ave. Los Angeles, CA SXC LIVE INC. dba SEATXCHANGE STATEMENT OF CASH FLOW (unaudited) September 13, 2016 (inception) Information Current as of December 31, 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss: -$154, Total: -$154, CASH FLOWS FROM INVESTING: Acquisition of Patent: $4, Website: $4, Total: $8, CASH FLOWS FROM FINANCING: -$193, CHANGE IN CASH FLOWS: Beginning Cash: $0.00 Ending Cash: $46,

5 SEATXCHANGE 1270 Granville Ave. Los Angeles, CA SXC LIVE INC. dba SEATXCHANGE STATEMENT OF STOCKHOLDERS EQUITY (unaudited) September 13, 2016 (inception) Information Current as of December 31, 2016 STATEMENT OF STOCKHOLDERS EQUITY: Common stock Paid-in Capital Retained Earnings Shares Amount Beginning Balance: Founders stock: 6,000, Shares Issued for Services: 709, Contributed Capital: - - $209, Net Loss: $154, December 31, 2016: 6,709,441 $ $209, $154,

6 NOTES FROM OPERATIONS NOTE 1 NATURE OF OPERATIONS SXC Live Inc. dba SEATXCHANGE ( Company ) was incorporated on September 13, 2016 ( Inception ) in the State of Delaware. The Company s headquarters are located in Los Angeles, California. The Company is developing a mobile peer-to-peer marketplace where users can securely and affordably connect, buy, sell, and exchange event tickets/seats before and during an event. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amount of expenses during the reporting periods. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Include other inputs that are directly/indirectly observable in the marketplace. Level 3 - Unobservable inputs which are supported by little or no market activity. 6

7 The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of July 19, The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. Cash and Cash Equivalents For purpose of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Revenue Recognition The Company is pre-revenue. It expects to recognize revenue from transaction fees after the app is launched. Stock Based Compensation The Company accounts for stock options issued to employees under ASC 718 Share-Based Payment. Under ASC 718, share-based compensation cost to employees is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee s requisite vesting period. The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes option valuation model. The Company measures compensation expense for its non-employee stock-based compensation under ASC 505 Equity. The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty s performance is complete. The fair value of the equity instrument is charged directly to stock-based compensation expense and credited to additional paid-in capital. Income Taxes The Company applies ASC 740 Income Taxes ( ASC 740 ). Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if any and the change during the period in deferred tax assets and liabilities. 7

8 ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position is recognized only if it is more likely than not that the position is sustainable upon examination by the relevant taxing authority based on its technical merit. The Company is subject to tax in the United States ( U.S. ) and files tax returns in the U.S. Federal jurisdiction and Delaware state jurisdiction. The Company is subject to U.S. Federal, state and local income tax examinations by tax authorities for all periods since Inception. The Company currently is not under examination by any tax authority. Concentration of Credit Risk The Company maintains its cash with a major financial institution located in the United States of America which it believes to be creditworthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits. Recent Accounting Pronouncements The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements. NOTE 3 DEBT Please see Note 6 for more detail on a Related Party Advance. NOTE 4 COMMITMENTS AND CONTINGENCIES The Company is currently not involved with or knows of any pending or threatened litigation against the Company or any of its officers. NOTE 5 STOCKHOLDER S EQUITY Common Stock The Company has authorized the issuance of 10,000,000 shares of its stock (common and/or preferred) with par value of $ The Company as of December 31, 2016, has issued and outstanding 6,709,441 shares of common stock. NOTE 6 RELATED PARTY TRANSACTIONS Founder Amir Amini provided a Loan Advance to the Company on November 29, 2016, in the amount of $50, at zero percent interest until such time Company could reimburse Mr. Amini. On December 8, 2016, the Company repaid Mr. Amini $25,000.00, 8

9 leaving a balance of $25, On July 3, 2017, the Company repaid Mr. Amini an additional $20,000.00, leaving a balance of $5, As of July 19, 2017, the Company continues to owe Mr. Amini $5,000.00, however it is expected that the loan will be repaid in full by September 1, Further, two (2) percent of the then vested shares of the common stock (immediately following the issuance of 6,000,000 founder shares to Mr. Amini) were issued to Nick Price who invited Mr. Amini to the football game during which Mr. Amini conceived of the idea that became seatxchange. NOTE 7 SUBSEQUENT EVENTS The Company has evaluated subsequent events that occurred through July 19, 2017, the issuance date of these financial statements. Although the Company is a C-Corporation, the Company s 2016 tax returns were inadvertently filed as an S-Corporation. On December 28, 2016, the Company notified the IRS of the inadvertent error and requested to revoke the Company s election as an S-Corporation. On February 27, 2017, the IRS issued a letter notifying the Company that it revoked the Company s election to be treated as an S- Corporation beginning January 1, As such, as of January 1, 2017, the Company will be treated as a C-Corporation, however, for the period ending December 31, 2016, the Company was treated as an S-Corporation. Further, since January 1, 2017, the Company has issued an additional 1,042,977 shares of common stock as set forth in the following table: Head of User Acquisition -- Robert Gleason Advisor -- Kenny Edmonds aka "Babyface" Advisor -- Marvin Epstein Advisor -- Paresh Ghelani Advisor -- Bob Sabouni /9/17 Employee Agreement. 4% shares (305,780) vested immediately, The remaining 5% vests per vesting schedule: (i) 1.25% after one year of full employment with SXC; (ii) the remaining 3.75% vests in equal monthly installments over 36 months /7/17 Advisory Agreement. One year term. Equal quarterly shares /15/17 Advisory Agreement. One year term. One quarter, or 13,043 shares vest each quarter over the one year term /9/17 Advisory Agreement. One year term. Shares vest in equal quarterly amounts over one year term /15/17 Advisory Agreement. One year term. Shares vest in equal quarterly amounts over one year term. 9

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